Vol. 195 Wednesday, No. 3 29 April 2009

DI´OSPO´ IREACHTAI´ PARLAIMINTE PARLIAMENTARY DEBATES

SEANAD E´ IREANN

TUAIRISC OIFIGIU´ IL—Neamhcheartaithe (OFFICIAL REPORT—Unrevised)

Wednesday, 29 April 2009.

Business of Seanad ………………………………75 Order of Business …………………………………75 Social Welfare and Pensions Bill 2009: Second Stage …………………………………89 Committee Stage ………………………………121 Proposed National Asset Management Agency: Motion …………………143 Social Welfare and Pensions Bill 2009: Report and Final Stages ……………………………170 Motion for Earlier Signature……………………………176 Adjournment Matters: Visa Applications ………………………………177 Local Authority Staff………………………………180 Cancer Screening Programme …………………………182 SEANAD E´ IREANN

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De´ Ce´adaoin, 29 Aibrea´n 2009. Wednesday, 29 April 2009.

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Chuaigh an i gceannas ar 10.30 a.m.

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Paidir. Prayer.

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Business of Seanad. An Cathaoirleach: I have received notice from Senator that, on the motion for the Adjournment of the House today, she wishes to raise the following matter:

The need for the Minister for Justice, Equality and Law Reform to outline the way in which he will provide for a more efficient and easier visa system for students wishing to choose Ireland as a base for studying the English language.

I have also received notice from Senator of the following matter:

The need for the Minister for the Environment, Heritage and Local Government to sanc- tion the appointment of lifeguards on Irish beaches.

I have also received notice from Senator Brian O´ Domhnaill of the following matter:

The need for the Minister for Health and Children to confirm the roll-out of BreastCheck in County Donegal; and if she would confirm the exact position and the associated timeframe relating to the delivery of this service.

I have also received notice from Senator of the following matter:

The need for the Minister for Health and Children to approve a derogation from the recruitment freeze in the public sector to allow the employment of radiographers so the BreastCheck service can be provided to the women of Donegal before the end of the year.

I regard the matters raised by the Senators as suitable for discussion on the Adjournment and they will be taken at the conclusion of business. As the matters raised by Senators O´ Domhnaill and Doherty are similar, I suggest they share time in order that both matters might be taken.

Order of Business. Senator : The Order of Business is No. 1, Social Welfare and Pensions Bill 2009, formerly the Social Welfare Bill 2009; No. 1a, motion for earlier signature; and No. 28, Private Members’ motion No. 36 regarding proposals to establish a national asset management agency, NAMA. The Social Welfare and Pensions Bill 2009 will be taken at the conclusion of the Order of Business, spokespersons may speak for 12 minutes and other Senators for seven minutes and 75 Order of 29 April 2009. Business

[Senator Donie Cassidy.] Senators may share time by agreement of the House; Second Stage to conclude not later than 2.30 p.m., if not previously concluded, with Committee and Remaining Stages to commence at 3.15 p.m., to adjourn at 5 p.m., if not previously concluded, and to resume at 7 p.m. if not previously concluded. No. 1a, motion for earlier signature, will be taken at the conclusion of Committee and Remaining Stages of No. 1. No. 28, Private Members’ motion No. 36 regarding a proposal to establish a national assets management agency, NAMA, will be taken at 5 p.m. and conclude not later than 7 p.m. The business of the House shall be interrupted between 2.30 p.m. and 3.15 p.m.

Senator Frances Fitzgerald: In the context of how the business of the House is organised, taking all Stages of the Social Welfare and Pensions Bill is unacceptable. The Second Stage debate should take place and Members should then be given an opportunity to consider the important issues contemplated in the Bill, particularly in light of the report published by the ESRI this morning, before tabling amendments. I spoke yesterday about the need for a Government strategy to increase our competitiveness and for a debate on job protection, job creation and retraining. In light of the ESRI report that was published this morning, we need a debate because the implications of the current situation are very serious for every man, woman and child in the country. The appalling mismanagement by the current Taoiseach when he was Minister for Finance has left no room for a stimulus package so the Government is trying to tax its way out of the recession, offering little scope to employers, as the ESRI report states. Our jobless figure will reach 500,000 by the end of next year, affecting every family in the country, with 300,000 jobs being lost before the end of next year. The rate of unemployment will average 17%, with living standards falling by 15% in comparison to 2007. Economic output will shrink by 10% this year and an additional \1.3 billion of tax receipts will be lost this year. We must face up to the fact that national mismanagement has put us in a position where we have no flexibility. There has been no apology from the Taoiseach. He presided over this as Minister for Finance and is now presiding over it as Taoiseach. The people are looking for a plan that will offer some hope, a plan for training and education and that must be communi- cated. Where is the plan to help the thousands of people signing on the dole? It must come from the Government. What will happen to those claiming social welfare? We must give them some hope and reach out with a proper training programme that is designed to match the future needs of the economy. Proper training must be put in place to give people hope. We should be debating these issues today.

Senator Joe O’Toole: I fully support the points made by Senator Fitzgerald. We asked the Leader for a debate on the economy and the issues in the IMF report last week, and he agreed to find time for it. The Government did not accept the report, which is fair enough, but we should hear all the arguments. A week later we have not discussed it. We now have an ESRI report, which is absolutely shocking. It predicts dole queues growing to 18%, the worst we have ever experienced, and we are being denied the opportunity to discuss it. It is extraordinary that it has taken Private Members’ time from to get an opportunity to discuss NAMA. It is as if the Government is trying to censor debate in the Houses. These issues are all over the radio and the newspapers and they are confronting people in their workplaces. They are discussed at trade union meetings, management meetings and business meetings. Everyone is focusing on them except us. I suggest that, if Ministers do not want to face questioning on these issues, the Government send in their newly appointed econ- 76 Order of 29 April 2009. Business omist from University College Galway so he can explain what is going on. I would like to hear a Government viewpoint and the opportunity to ask a few questions. We are denying the reality of what is happening at a time when there is little or no confidence in the political system and the political classes are held in their lowest ever level of public regard. We should be seen to be grappling with the issues of concern to ordinary people who are looking at their mortgage payments and keeping their jobs and facing the prospect of living on the dole. I appeal to the Leader to give us an opportunity to discuss this matter. I understood the other leaders had agreed to take the Social Welfare and Pensions Bill all day today so I did not object to it, but I certainly agree the Bill is too big to take in one day and there is no reason that it cannot be concluded tomorrow. The time for Committee and Remaining Stages should be put aside and we should have a debate on the economy this evening. I propose an amendment to the Order of Business that there be a discussion on the economy to encompass the IMF report, the ESRI report and related matters.

Senator : I second that proposed amendment. My colleagues are absolutely right about the need for a debate on these issues. Senator O’Toole, when he was speculating about whether the problem is that the Government is trying to censor debate, may be right, but it is more likely that the Government does not know what it would say if such a debate took place. It manifestly has no plan and no basis for hope. That is the problem. It could outline that there will be pain, which we all know must be bourne, but it could also present the possible gains. That should be a part of the role of politics and leadership. People need to take pain for the reasons referred to by Senator Fitzgerald because of economic mismanagement and there is also the international context, but there must be hope that there will be gain in the future. The Government appears incapable or paralysed in some way. It has been unable to articu- late any sense of hope for the future. It is riven with division and paralysed in terms of policy or offering leadership. That is why there has been no debate in this House. I do not expect we will have such a debate. We have been calling for it for months and I expect some response from the Leader but I doubt we will get the sort of debate we are seeking. I am beginning to think we are wasting our breath in calling for that sort of debate. In terms of the standing of politicians, which Senator O’Toole mentioned, we have discussed on many occasions the bureaucratic monster that is the HSE, its inaccessibility and lack of democratic accountability. It has instituted a programme of public relations, the principle pur- pose of which is for it to contact “opinion formers”, celebrity bainisteoirı´ and other mouthy individuals with whom it intends to discuss problems in the health services so it can get feed- back. When was the last time Senators were contacted by the HSE to give feedback? When was Senator MacSharry asked about cancer services in the north west? I heard a HSE communications expert talking about feedback this morning. People are telling us what is happening. An intensive care nurse told me last week that they cannot get the basic equipment to do their jobs and there is a shortage of staff. We could not make this up. This unit in the HSE is engaging in an extraordinary exercise where it contacts these celebrities to give them its spin but it completely lacks democratic accountability in the health service. I get e-mails from it every week, as do other people, but they are spin. I have a question for the HSE about this project: how will it improve health services in this State?

Senator : This House does not lack opportunities to discuss the economy. I accept what other Senators have said about the need to have regular and constant structured debate on the economy. I would be willing to debate recent reports and to put such debates in the necessary context. The global situation is obviously an overriding factor in the economic 77 Order of 29 April 2009. Business

[Senator Dan Boyle.] situation in which Ireland and other countries find themselves. The German economy, for example, has retracted by 6%, while unemployment in Spain reached 4 million in the past week. This is not something unique to Ireland. When we have such a debate there will be a responsibility on all Members of the House to have the proper context in mind and not to seize on every report that reflects their own prejudices or magnify every negative comment. To get ourselves out of the current economic situation we must collectively find measures that will create a more sustainable economy. The danger in having debates is not about censor- ship but about having honest debates. When we acknowledge our current situation we must admit the internal factors that have brought us to this point but we must also accept that the way out of it ultimately depends on an international recovery and particularly on recovery in the countries that are our main trading partners. We can snipe as much as we wish but we must put in place the measures that will control public expenditure and build up the economy’s capacity and capability. When we have debates of that nature, we will be more honest with the Irish people.

Senator Fidelma Healy Eames: Let us have it. Talk to the Leader.

Senator : I support the calls for a debate on the economy. I understand Senator Boyle’s frustrations and why he wishes to blame the global markets. However, it is not the Opposition that is making these statements but the ESRI, an independent organisation. It said in its report that Ireland will experience the sharpest fall in economic growth of any industrial- ised country since the Great Depression. That is the reality. Ireland is more exposed than any other industrialised economy due to the failed policies of Government for the past 20 years. The might not have been in government in that time but it is now and it is about time Senator Boyle realised that. The Senator spoke about honesty. Let us hear it from the Government and hear it apologise for what has happened over the past 20 years. Then we can work out a way forward so Ireland will be best placed to benefit from the upturn when it happens. The ESRI also points out that competitiveness is the key to the economy’s recovery. Ireland must become competitive again across all sectors if it is to be in the best position when the recovery begins. Unfortunately, businesses and families throughout the country are losing hope at a rapid rate. Unemployment is expected to reach 17%. That figure is even higher than the rates in the 1980s, when many people of my generation had to emigrate. The Government has failed the people and when it realises that, apologises and moves on, we will start to make strides into real recovery. What we need from the Government are words of hope, leadership and a way back to basics whereby indigenous industries can again export from this country. Yes, it is good to get foreign direct investment but that is drying up at a rapid rate. The way forward is to invest in indigenous industries, to create employment in communities and to support businesses. Until we can debate those issues in this House and in every other forum in the country, people will not have hope.

Senator Denis O’Donovan: An old hobbyhorse of mine is the fisheries sector. I ask the Leader to arrange a debate on fisheries, particularly as a review of the Common Fisheries Policy is imminent and in view of an emerging report which shows the vulnerability of Ireland’s fishing stocks. There is no reason that Commissioner Borg could not be invited to the Seanad to debate this. It would add to the Seanad’s credibility. Before the referendum on the Lisbon treaty, a prominent EU official was invited to the House to advise Members on the salient features of the EU. Now is the time for action on the fisheries issue. Ireland should demand a 100 miles exclusive limit, at least, for Irish trawlers. A total of 80% of the fish caught in Irish 78 Order of 29 April 2009. Business waters is caught by non-Irish vessels, while Ireland’s fishing fleet is half the size it was ten years ago. When I hear about conservation of stocks and consider the over-policing of Irish vessels, I believe we are being penny wise and pound foolish. The industry is at a critical point. Jobs can be created in the fishing industry as well as in the seafood and fish farming sectors. This country imports much of its fish from places such as Korea, South America and other unusual countries while it is hanging its own fishermen out to dry. I feel very strongly about this issue. Europe is reviewing the Common Fisheries Policy and in that review Ireland must get tough and demand an exclusive 100 mile limit. I ask the Leader to give serious consideration to inviting Com- missioner Borg to the Seanad. If European Commissioners could visit the Seanad once every three or four months to address the House on issues that are pertinent and relevant to Ireland, it would increase the value of this House.

Senator Fidelma Healy Eames: Hear, hear.

Senator Denis O’Donovan: It is something we should consider for the review.

Senator : I seek a debate on the funding of the Garda Sı´ocha´na. I do not make this call as a result of the newspaper report this morning about \1,000 being spent to change three light bulbs — stories like that will come and go — I am far more concerned about the proposed expenditure in this year’s Estimates. Expenditure on maintenance of Garda vehicles is projected to be reduced by 40% while expenditure on maintenance of Garda stations and premises is projected to decrease by 70%. If these savings are efficient, I welcome them. However, I am more concerned that these cuts are another example of the Government skimp- ing on expenditure and that in the long run we will end up with stations that are not running properly and cars that are out of service. I ask the Leader to arrange a debate on whether this is efficiency or just the Government once again failing to provide sufficient funding for the Garda Sı´ocha´na.

Senator Marc MacSharry: I join other Senators in asking the Leader to arrange a debate on the economy so we can discuss a number of issues, including the most recent ESRI report which I agree is shocking. However, in the seven years I have been a Member of the House I do not recall there being as many debates on the economy or on economic issues 11 o’clock as in recent months. It is important we are having so many debates given the very serious crisis at present but if one is following the financial markets and financial matters, there are probably about two reports per day, either national or international, that affect the situation. We should accumulate them and debate them fully. Thankfully, as a result of changes to the Order of Business, if more serious issues arise, we have an opportunity to raise them each day. Much is happening. I look forward to the debate on the National Asset Management Agency, NAMA, this evening. It is important that all Members have an opportunity to discuss it. I have read the amendments proposed by the and the proposal from Fine Gael. There are good measures in them, as there are in the proposal for NAMA. I believe that, in principle, it is the template which will begin to lead the world economy through the toxic debt issue. As Senator Boyle said, many challenges face the world. There was an over-dependency in this country on tax revenues from the property business. We know that and, if it helps, I am sorry about it. Do not forget, however, that when we were spending those resources on public services, which I agree we can no longer afford to provide, the Opposition was calling for increased expenditure on other issues. Senator Hannigan calls for appropriate expenditure on the Garda. I want more money to spend on everything, not least my constituency in the north 79 Order of 29 April 2009. Business

[Senator Marc MacSharry.] west, but that is not possible any more. We must live in the real world. The international situation is far different. Even the revered IMF revised its position in its most recent forecast compared to its January outlook. The ground is continually moving and we must move with it and be honest with ourselves. It would be worthwhile to have a debate on the HSE. As Senator White said — I mentioned this many times previously — I am not entirely happy with an organisation having control of 17% of the country’s tax take this year. Unlike semi-State bodies such as Bord Ga´is, it does not have a commercial mandate and we must consider revising that situation.

Senator : I support Senator O’Donovan’s call for a debate on fisheries. A review of the Common Fisheries Policy is under way at present. It would be useful to invite the Commissioner to the House to discuss the serious issues facing our fishing industry. I hope the Leader will be able to accommodate the Senator’s call for that debate. I agree with my colleagues who raised the ESRI report and the startling headline on the airways this morning that Ireland is facing the biggest decline in its economy of any developed country since the 1930s. That is a clear indicator that international factors are at play here, as they are everywhere else in the world, but also that major domestic issues have contributed to the position we are in. The prospect of 17% unemployment in the near future is shocking. Government Members spoke earlier about the ground shifting quickly. In terms of tax revenues, the supplementary budget three weeks ago is now projected to be out by \1.3 billion. That would indicate the ground is shifting very quickly but in the week before the last election the then Minister for Finance, Deputy Cowen, made an impassioned plea for the general public to trust him — “Trust us” was one of the phrases he used — in terms of running the economy. That trust has been misplaced and people are very angry and upset about the abuse of that trust by this Government in the past few years. Members opposite referred to the fact we have had a number of debates on the economy. Most of the debates we have had on the economy recently were by way of Opposition Private Members’ business. There has been a continuous array of debates on the economy from all the groups on this side of the House with regard to Private Members’ business. Strong internal divisions are emerging within the Government——

An Cathaoirleach: My hands are tied, Senator, in terms of time.

Senator John Paul Phelan: ——and a Government backbencher said the Ta´naiste is not up to the task of being Minister for Enterprise, Trade and Employment. Serious questions arise over her position and it would be useful to have her in the House——

An Cathaoirleach: My hands are tied on time. The Senator has gone over time.

Senator John Paul Phelan: ——as soon as possible.

Senator : I want briefly to add to what has been said about the economy. We have had many reports, and Senator MacSharry is right, but there is a consistency running through those reports and it is not good. We had the Paul Krugman one last week and one from the International Monetary Fund, which the Government has made a rather flimsy effort to rubbish. The message was the same and both of those are independent reports but the ESRI one is even more important because the reality is that the ESRI is not independent. It is Government funded. There was a time when the former leader—Ido not know if he was leader at the time — Michael McDowell used to say it was the Government’s 80 Order of 29 April 2009. Business house trained poodle. It must be remembered that it is coming from a position of appointments by the Government and it is under the control of the Government. The credibility of the ESRI, therefore, is something we should not question in any way. It is more powerful because it is coming from that source and its criticisms of the Government, therefore, are more powerful. They are also damning. I am tired of hearing people in this House and outside it saying that this is a global problem. It is to some extent a global problem but the message coming through all these reports is that it is much worse here.

A Senator: That is right.

Senator Shane Ross: There is no doubt about it. I do not wish to just take the anti-Govern- ment view because that is not my job here but it has been quoted on this side time and again, and already today, that all the figures indicate we are worse off and that Ireland is bottom of the league. We must ask why we are bottom of the league and we will not get any solutions by people getting up in this House and saying the position is bad in Germany and Spain. It is bad in Germany and Spain but it is worse here because the damage is self-inflicted here. It is not time for a blame game. Stale politics have been introduced in this House, and it has been done already, when people just knock the Government, say it did wrong in the past and it ought to apologise. It ought to apologise. It ought to come forward with solutions. It should say we are worse off and set out what it intends to do. It is incumbent not just on the Government but the Opposition and ourselves to come together, produce solutions and not simply knock what has happened in the past, deplorable as it is, because the position, according to the ESRI, is too serious for that.

Senator : I listened with interest to the previous speaker but it is important to say that some of the ESRI reports produced in the past have not always been correct. On many occasions they were far from the mark. I concur with other speakers who referred to the economic and financial position in Ireland but it is connected to the global position and whatever we do here will not be sufficient in itself. There must be a global response to the global position that pertains. Those are two issues of which we must not lose sight.

Senator Fidelma Healy Eames: Deflect, deflect.

Senator Ivor Callely: Regarding a previous speaker’s comments about the Ta´naiste, anybody who would like to join the great party of which I am a member would be invited——

Senator Paudie Coffey: Come into the real world, Senator.

Senator Ivor Callely: ——to the parliamentary party meeting. We had an invigorating party meeting yesterday.

Senator Paudie Coffey: It might not be the case for much longer.

An Cathaoirleach: Please. Questions to the Leader. I am not interested in party meetings.

Senator Jerry Buttimer: What did Deputy John McGuinness say?

Senator Paudie Coffey: Was Deputy McGuinness left outside?

Senator Jerry Buttimer: What did Deputy Noel O’Flynn say? 81 Order of 29 April 2009. Business

Senator Ivor Callely: Great confidence was instilled in our membership by the words spoken by both the Taoiseach and the Minister for Finance regarding the economic and financial position that prevails.

Senator Fidelma Healy Eames: That makes a change.

Senator Ivor Callely: Confidence was expressed——

Senator Jerry Buttimer: Not in the Ta´naiste.

Senator Ivor Callely: ——in the Ta´naiste. Will the Leader either arrange for representatives of the Money Advice and Budgeting Service to come before the appropriate committee or advise on the level of additional supports and services being given to MABS——

Senator Frances Fitzgerald: It needs more staff.

Senator Ivor Callely: ——because of the current position and the great demand for its services?

Senator Jerry Buttimer: I ask the Leader to provide time for a rolling debate on the economy. This morning we hear that our standardised unemployment rate rose to 11.4% in April. That figure represents Irish people without a job. Senator Boyle may lament the fact that those of us on this side of the House are critical of what is happening but the reality is that there is no leadership, no plan and no vision. Those of us on this side have offered solutions including A NewERA for the Irish Economy, a response to the budget. We offered the hand of friendship in terms of the budget and it was slapped away by the Government. We must have a real debate on what is called leadership in Government. I ask the Leader for an urgent debate, and I want him to answer this question when replying to the Order of Business, because we have an extraordinary position where this morning the Health Service Executive is introducing a new communications strategy. The place for com- munication and for answers is either here, in the Da´il or in the health committee where the elected Members on behalf of the people can ask direct questions of the HSE. If Mr. Connors and his crew want to bring in people to ask why the HSE and the health service is sick, so to speak, he should bring in the ordinary person who is suffering, the family of the late Susie Long and the families of people who have been on trolleys for days and let us have a real debate and real communication.

Senator Paudie Coffey: Hear, hear.

Senator Jerry Buttimer: We should forget this codology about celebrity questions and answers. Who is the HSE codding? That is an example of why this Government has failed the Irish people. It thinks it can bring in Gerald Kean for an hour and a half and have platitudes on the reason the health service is so good. It is not good. I want the Minister for Health and Children, Deputy Mary Harney, to come in here but, more importantly, perhaps it is time we brought Professor Drumm in here and asked him about his policy on communications. It is appalling, at a time when trust and confidence in the health service is at an all-time low, to hear the national director of communications of the HSE on an RTE radio programme this morning and quoted in the newspapers saying these are “opinion formers” and that it is part of its “open mind policy”. How dare he insult the ordinary person who is sick and struggling to get access to health care. I want the Minister for Health and 82 Order of 29 April 2009. Business

Children to come into this House as a matter of urgency. I ask the Leader to reply to that specific request on the Order of Business.

Senator : Other speakers mentioned the ESRI report published this morning. Listening to it I was struck by how essential it is that supports would be put in place. Previous speakers mentioned the importance of retraining opportunities, freeing up credit to small and medium businesses and the flexibility of banks towards mortgage holders. Those are essential and they are happening but it is also essential that we put in place supports for people’s psycho- logical well-being. Job loss and financial anxiety and worry are directly linked to the onset of depression and substance abuse such as alcohol and drugs, and these are risk indicators. They increase the risk of suicide. I ask the Leader if it is possible to invite the Minister of State, Deputy Moloney, to the Chamber to allow us examine the way limited resources can be specifically targeted at those most in need and how those limited resources in the area of mental health and psychological well-being would reflect the changing times we are now in and offer practical supports to people who, having listened to these reports this morning, may find themselves close to panic.

Senator : I support the amendment put forward by Senator O’Toole and seconded by Senator Alex White that we would have a debate on the economy today and, if necessary, defer some of the Stages of the Social Welfare and Pensions Bill until tomorrow. That is an important motion that we all should support in light of the very depressing and concerning news of the report from the ESRI. I ask those who say that this is an international problem and it is no worse here to look at what the ESRI is saying. The ESRI is saying Ireland is set for the sharpest fall in economic growth experienced by any industrial country since the great depression. Ireland is worse than anywhere else. I do not know how often we on the Opposition side must say it for the Government to understand that but it is certainly something of which everyone in the country is aware as the reality bites and unemployment rises. We are looking at a return to the 1980s as there are projected unemployment figures of 17%. When I graduated in 1989 it was 18% and we were told by the late Brian Lenihan that this island would be too small for all of us. We are facing a return to those grim economic days of the 1980s. I also thought we were returning to the 1980s when I saw reports in The Irish Times today that we are to see a return of the crime of blasphemous libel proposed by the Minister for Justice, Equality and Law Reform. The last thing we need is to see blasphemous libel being placed on the Statute Books. I would be very concerned about that. We have seen enough religious domination in this country. I ask for an answer from the Leader on what is happening with the Adoption Bill and whether we will have it back next week in this House for Report Stage. I received a disturbing report that the processing of inter-country adoptions in Ireland effectively has been frozen because Vietnam has not agreed the draft agreement we were to have signed with it to allow inter-country adoptions continue. I also heard that the processing of adoptions from Russia has been frozen as a result of dissatisfaction of the Russian authorities with the Health Service Executive, HSE, on post-adoption reports. This is of great concern. There are many prospective adoptive parents in Ireland who are very concerned about this. We need the Minister of State, Deputy Barry Andrews, back in this House to answer questions on that from the Opposition, to debate the Adoption Bill and to try to resolve this problem for parents in Ireland.

Senator : I call on the Leader again to have a debate on the economy at the earliest opportunity and when the Minister returns. No doubt Ireland has experienced the most significant fall in growth in the OECD area, as outlined by the ESRI report. However, Ireland is not the worst performer and that is what has been presented to us today. In fact, the worst 83 Order of 29 April 2009. Business

[Senator John Hanafin.] performing countries have been those which have gone bust, such as a country that is six months and one letter away from us — Iceland — where the International Monetary Fund, IMF, had to intervene, Estonia, Mexico and Hungary. We have seen much more difficult times in the real world. We have seen debt at 130% of gross domestic product, GDP, interest rates of 20% and 20% unemployment and we got through it all. With a solid faith that what we are doing is right and necessary for the country, I look forward to that debate. I would welcome a debate on blasphemous libel. Perhaps we could highlight the tyranny of the liberals, in particular Irish liberals who seem to be some of the most intolerant people in the world.

Senator : The Leader and his predecessor avoided like the plague in the pre- vious two parliaments the practice of taking all Stages of a Bill in one day. The Leader himself often spoke about it as extremely bad parliamentary practice. All of those who have spoken have laid great stress on the difficult times we are in and the reports we are receiving, especially the ESRI report. It is logical that we should set aside time today to discuss those more serious matters and take the remaining Stages of the Social Welfare and Pensions Bill tomorrow. Until we get the banks situation sorted, until we know the level of the right downs and until we have a floor under the bad loan losses, we will not be able to get stuff transferred into the proposed national assets management agency, NAMA. On the recapitalisation and restructuring, we are hearing nothing of the structuring. The recapitalisation has taken place in one bank, Bank of Ireland. I hope it will happen in the others and the speedier the better. This morning I received an important message from a small businessman who sold a property for \290,000. He agreed the net sale proceeds of \195,000 with his bank, Bank of Ireland, and the bank is ratting on the deal. How are we to keep the economy moving? How are we to keep the wheels of industry and commerce oiled? The man thought he had it agreed. He got a written undertaking. His solicitor gave the usual under- takings. He wants to pay his advisers, accountant, capital gains tax and VAT on rental income, and look what the bank is doing. This messing must stop. As all the other speakers have said, we should debate the more urgent business now and postpone some Stages of the Social Wel- fare and Pensions Bill.

Senator Mary M. White: It is my pleasure to let the Members of the Opposition know that at 5.40 p.m. yesterday a motion of mine was before the parliamentary party meeting to the effect that the Minister for Finance put pressure on the banks, particularly the Bank of Ireland and AIB, to loosen up the lending of money to small and medium-sized businesses. In my presentation on the motion I stated that we are looking into a big black abyss unless the Government frees up money to companies to keep their businesses going, to pay their employees and to cover current expenditure. At 7.10 p.m. my colleagues in the parliamentary party——

An Cathaoirleach: I want questions to the Leader. To be honest, it does not worry me what happens at parliamentary party meetings.

Senator Mary M. White: ——were still speaking and supporting me on my motion.

Senator Shane Ross: Hear, hear.

Senator Mary M. White: I was happy with the response of the Minister for Finance, Deputy Brian Lenihan. 84 Order of 29 April 2009. Business

Senator Jerry Buttimer: What did he say?

Senator Mary M. White: He stated he is not waiting for NAMA to be up and running, that he will delivering the goods and that money will be freed up speedily.

Senator Jerry Buttimer: It has not happened yet.

Senator Mary M. White: I left Leinster House at 7.15 p.m. to chair a meeting in Navan on suicide. One of the most inspiring events of the evening was I met Shane Horgan. Does every- body know who Shane Horgan is?

Senator Paul Coghlan: No.

An Cathaoirleach: Questions to the Leader, please.

Senator Paudie Coffey: Is he a Kilkenny footballer?

(Interruptions).

An Cathaoirleach: It is the Order of Business. Questions to the Leader.

Senator Mary M. White: On the document I produced on suicide prevention I put forward that we should not have alcohol sponsorship of sporting events.

Senator Ro´ na´n Mullen: Hear, hear.

Senator Mary M. White: Sport is supposed to be good for one’s health, physically and men- tally. During the course of this meeting I chaired, I drew the group’s attention to the below- the-radar suffering of those going through this economic recession. To get the point quickly——

An Cathaoirleach: The Senator’s time is up.

Senator Mary M. White: ——after the meeting I asked Shane Horgan how he competes——

An Cathaoirleach: I must call Senator Quinn.

Senator Mary M. White: ——and what was his attitude to alcohol. His replied that if he and his colleagues were drinking, even on celebratory occasions, they would not be able to compete. I was enlightened and inspired that this young man, who is a hero in our country, is giving such great example of winning, to which we in Ireland must get back.

An Cathaoirleach: The Senator’s point is made. The time is up.

Senator Jerry Buttimer: Can we get the minutes of the parliamentary party meeting?

An Cathaoirleach: No interruptions, please.

Senator : I ask the Leader to draw to the attention of the Ministers responsible the challenge facing qualified people, not just graduates but others, of the lack of internship. For many years we in Ireland had this tradition of internship where people who were qualified could work in State organisations and learn their skill — I believe the buzzword is upskilling — to the extent that they were qualified to do the job and, with the experience, were able to step into such jobs subsequently. I was not aware that in recent times for various reasons State bodies are saying they do not or cannot do that anymore. One of the reasons given for this is insurance costs and another is that unions object to it. It sounds as though these are excuses. 85 Order of 29 April 2009. Business

[Senator Feargal Quinn.]

This is something that will not cost any money but that will provide opportunities, for instance, to economists who have graduated from the universities. There is a lack of economists in the Department of Finance. These are bright young people who could work in the Depart- ment of Finance but who for some reason or other are not being given the chance. In other European countries what I suggest takes place continuously. There must be some reason why it is not taking place in Ireland. I ask the Leader to draw to the attention of the various responsible Ministers the opportunities for upskilling in this community.

Senator Fidelma Healy Eames: I am outraged about Senator Coghlan’s case concerning a bank reneging on its undertaking to a client, particularly when we are bailing out the banks.

An Cathaoirleach: Questions for the Leader please.

Senator Fidelma Healy Eames: This matter needs to be addressed immediately. I have never before heard of a bank reneging on a commitment such as that described by Senator Coghlan. This morning we learned from the ESRI that between now and next year 300,000 more people will be on the live register. I am particularly concerned about the pressures on parents and the fall-out this will cause in education. University students are about to start their examinations. On the doorsteps, parents have informed me that if fees are returned, an Arts degree will cost approximately \6,000 to \8,000 extra next year. The costs for, say, a dentistry degree would be far more. Ireland is the second most expensive country in the EU, apart from the UK, for university. It costs \10,000 a year for a student to cover living costs. Yesterday on “Liveline” I heard some schools are charging registration fees of \100. What is the status of that? These are cash-strapped schools. Who will again have to pay but the parent? Up to 2,000 young teachers will graduate this year but will have no jobs. Who again will it fall back on but their parents? I have one instance of where 137 children for English as a second language will be divided between two teachers. We must think of the effect this will have on the children. Ultimately, it is the parents who are concerned. It is time the Minister for Education and Science, Deputy Batt O’Keeffe, and the Minister for Finance, Deputy Brian Lenihan, got their act together and produced a co-ordinated approach to education and its importance to the economy. Can we have a joint debate between these two Ministers?

An Cathaoirleach: The Senator’s time is up.

Senator Fidelma Healy Eames: Can we have some joined-up thinking?

An Cathaoirleach: I call Senator Mullen.

Senator Fidelma Healy Eames: Will the Leader address that point? We need to see joined- up thinking in debates and not just unilateral approaches——

An Cathaoirleach: The Senator’s time is up.

Senator Fidelma Healy Eames: ——that do not realise the effects they may have on other sectors.

Senator Ro´ na´n Mullen: Like many others, I too woke up to the latest round of depressing news about the economy in the ESRI report. I note Senator John Hanafin’s point that we have 86 Order of 29 April 2009. Business been here before to a considerable extent. At a time like this, it is inevitable Opposition will oppose and Government will defend. What is becoming ever clearer is that we are facing a serious test of our national character, a test that is becoming more challenging and difficult. There will be a need for great realism, but also combined with a need for optimism, in tackling these economic problems with the resources at our disposal and our national genius. We need to motivate each other and work on bringing out the best in our society, not the worst. The worst could come out so easily at a time like this. There is a need for unity and persistence in the face of the challenges. My colleague, Senator Bacik, referred to the proposal to introduce an offence for blasphem- ous libel. This was one of those occasions where one had to go to the print media to get the detail one needs. I certainly did not hear the detail of the proposal in the broadcast media this morning. To me, the proposal is somewhat reasonable. It is important we recognise freedom of expression is fundamental in our society. However, it must be balanced with respect for other people. It seems to me that the proposal drafted by the Minister requires there would be an intention to cause outrage. There is freedom for people to express their political and religious views, including criticism of other people’s religious views, which is vital. It is damag- ing to society and the public good where that spills over into intent to offend or cause outrage. It is appropriate there might be some recourse to the courts in such circumstances.

Senator : Today’s ESRI report refers to extraordinary figures of 12% unem- ployment, gross domestic product falling by 9% and the national debt at more than 55% of gross domestic product. What is most frightening about this is that it does not take into account the cost associated with the creation of NAMA and the taking over of toxic assets from our commercial banks. We will have a debate later today on this but the Government must be forthcoming with regard to the real cost of this operation. Senator Boyle stated earlier that debate on the economy is a bad thing because people are watching. However, we have had quite a number of debates in the House on the banks. Over a series of a months there was a denial by the Government that recapitalisation was necessary. There is still a denial that nationalisation is necessary at this stage but many, including Dr. Alan Barrett, one of the authors of today’s ESRI report, argue one might as well go straight away to nationalisation. There is a point that overall adversarial debate on the economy can be a bad thing. What have the Taoiseach, the Minister for Finance and the Government, however, done to endeavour to secure a bipartisan approach on the economy, the banks or the state of the public finances? No joint Oireachtas committee has been asked to look into these matters. No finance commit- tee has been established to examine them. There has been no reaching out to the Opposition to have a formula or expert opinion brought in to adopt a consensual approach. No Member on this side of the House has been adverse to such an approach. The Fine Gael spokesperson on finance has frequently requested such. Consensus is possible and important. However, the Taoiseach has said on numerous occasions that the Opposition talks while the Government makes the big decisions, as if it were the brightest pupil in the class.

An Cathaoirleach: The Senator’s time is up.

Senator Eugene Regan: That adversarial approach is where we are today.

Senator Donie Cassidy: Senators Fitzgerald, O’Toole, Alex White, Mary White, Boyle, Coffey, MacSharry, John Paul Phelan, Ross, Callely, Corrigan, Bacik, Hanafin, Coghlan, Healy Eames, Mullen and Regan gave their opinions on the ESRI’s serious report published this morning. We must certainly allow time for this to be debated. All day today and all night 87 Order of 29 April 2009. Business

[Senator Donie Cassidy.] tonight, possibly very late tonight, we have the Social Welfare and Pensions Bill in the House. In Private Members’ time we will be discussing the new proposal for NAMA. All these matters pertain to the finances of the State. I was reared and listened to the budgets in the hard 1950s. Most commentators would have said the Minister for Finance was the most important person in the Government. As far as my generation was concerned the most important person was the social welfare Minister. I look forward to the presence of the Minister for Social and Family Affairs, Deputy Mary Hanafin, in the House today. She has been a great supporter of this House. When she was Minister for Education and Science, she always supported her Bills here. Senators Alex White, MacSharry and Buttimer called for an up-to-date debate with the Minister for Health and Children on the Health Service Executive. They also raised the point of feedback to directors of services and politicians not being consulted. I certainly regret if this is the case. The real representatives of the people are the politicians and public representatives. We will seek clarification from the Minister. I have already requested a debate on the various other health matters raised in the House over the past several weeks. Senators O’Donovan and John Paul Phelan called for a debate on fisheries. This is timely with the EU reviewing the Common Fisheries Policy. After the Order of Business, I will discuss with the Cathaoirleach and party leaders the proposal made by the Fianna Fa´il deputy leader, Senator O’Donovan, on inviting the Commissioner for Fisheries and Maritime Affairs to the House. Perhaps it is something we can take to the next meeting of the Committee on Procedure and Privileges. I have felt for a long time that there is huge opportunity for employment and exports in the fishing industry. It is an indigenous industry and the suggestion by Senator O’Donovan of a 100 mile exclusive limit for Irish fishing trawlers seems very realistic and timely. I assure the House that I will have the longest possible debate, as required of me by Members, and this will take place at the earliest opportunity. Senator Hannigan called for a debate on the funding of the Garda Sı´ocha´na, which I will be only too pleased to arrange considering the good work the Garda is doing, particularly in regard to drug trafficking. There will be an all-day debate in the House tomorrow on gangland crime, to which Senator Hannigan referred. I look forward to the contribution of many Senators on this issue. Senators Hanafin, Bacik and Mullen called for a debate on blasphemous libel. I understand this matter came from the Oireachtas All-Party Committee on the Constitution. I have no difficulty in passing on the views of colleagues to the Minister. Senator Callely highlighted the funding of the services provided by MABS, and I will pass on his views to the Minister. Senators Corrigan and Mary White called for the Minister of State, Deputy John Moloney, to come to the House to discuss the resources that can be made available under his portfolio for the people who are most at risk and under serious pressure and stress in the context of the economic difficulties they are experiencing. It is a timely call and I will ensure this debate takes place. Senator Bacik referred to the Adoption Bill, on which I understand progress is being made. The Minister will update us further on this in the very near future and, while I do not have the timeframe for the Bill at present, I understand progress is being made with regard to Russia and Korea.

Senator Fidelma Healy Eames: It was Vietnam.

88 Social Welfare and Pensions Bill 2009: 29 April 2009. Second Stage

Senator Donie Cassidy: Senator Quinn raised the issue of internship and upskilling. The Senator brought a serious matter to our attention. I will have inquiries made and will be in touch with the Minister’s office later today regarding what has been highlighted in the House. Senator Healy Eames called for the Minister for Education and Science to come to the House for a debate. I have no difficulty in making this request at the earliest opportunity.

An Cathaoirleach: Senator O’Toole has proposed an amendment to the Order of Business: “That a debate on the IMF, the ESRI and related matters be taken today.” Is the amendment being pressed?

Senator Joe O’Toole: Yes.

Amendment put.

The Seanad divided: Ta´, 19; Nı´l, 26.

Ta´

Bacik, Ivana. Mullen, Ro´ na´n. Burke, Paddy. O’Toole, Joe. Buttimer, Jerry. Phelan, John Paul. Cannon, Ciaran. Prendergast, Phil. Coffey, Paudie. Quinn, Feargal. Coghlan, Paul. Regan, Eugene. Fitzgerald, Frances. Ross, Shane. Hannigan, Dominic. Ryan, Brendan. Healy Eames, Fidelma. Twomey, Liam. McFadden, Nicky.

Nı´l

Boyle, Dan. Hanafin, John. Brady, Martin. MacSharry, Marc. Butler, Larry. McDonald, Lisa. ´ Callanan, Peter. O Domhnaill, Brian. ´ Callely, Ivor. O Murchu´ , Labhra´s. O’Brien, Francis. Carty, John. O’Donovan, Denis. Cassidy, Donie. O’Malley, Fiona. Corrigan, Maria. O’Sullivan, Ned. Daly, Mark. Ormonde, Ann. de Bu´ rca, De´irdre. Phelan, Kieran. Ellis, John. Walsh, Jim. Feeney, Geraldine. Wilson, Diarmuid. Glynn, Camillus.

Tellers: Ta´, Senators Ivana Bacik and Joe O’Toole; Nı´l, Senators Camillus Glynn and .

Amendment declared lost.

Question, “That the Order of Business be agreed to”, put and declared carried.

Social Welfare and Pensions Bill 2009: Second Stage.

Question proposed: “That the Bill be now read a Second Time.” Minister for Social and Family Affairs (Deputy Mary Hanafin): The Bill gives legislative effect to the social welfare elements of the supplementary budget of April 2009. In the context of the current economic circumstances it has been necessary for the Government to take steps 89 Social Welfare and Pensions Bill 2009: 29 April 2009. Second Stage

[Deputy Mary Hanafin.] to reduce overall public expenditure to restore order to and stability in the public finances. In the context of very tough decisions having to be made across the range of Government expendi- ture, social welfare was prioritised in the supplementary budget. Almost \21.3 billion is being provided for welfare services in 2009. This represents an increase of \1.7 billion, or 8.7%, on the amount originally provided for this year in the last budget and is \3.6 billion or approxi- mately 20% higher than the actual amount spent in 2008. This additional expenditure arises mainly from increases in unemployment, with the expected average live register figure for 2009 having been adjusted upwards, unfortunately, from 290,000 to 440,000 between the October and April budgets at an extra cost of \1.97 billion. Significant extra expenditure also arises from the cost of the improvements announced in the October budget which provided for increases of between 3% and 3.8% in the basic social welfare payment rates. At that point, the expected rate of inflation for 2009 was 2.5%. This inflation forecast has, however, not been realised and instead deflation of almost 4% is now anticipated. With social welfare recipients getting between 3% and 3.8% more in their weekly payments and with prices having fallen in recent months, their living standard therefore has been protected. After this budget, total gross spending on social welfare is expected to account for 29% of gross total Government expenditure in 2009. Putting aside borrowing, the social welfare expen- diture provided in this budget is expected to account for \6 out of every \10 of the anticipated Exchequer current revenue from tax and other sources. At a time when Government expendi- ture must be controlled as much as possible, this very significant investment in social welfare is a clear demonstration of the Government’s commitment to protecting the vulnerable and helping those who rely on the State for their basic income. The Bill provides for certain amendments to the social welfare code, as announced in the Minister for Finance’s Supplementary Budget Statement of 7 April 2009. It also provides for amendments to the Pensions Act 1990, the Health Contributions Act 1979 and the Financial Emergency Measures in the Public Interest Act 2009. It does not contain any provisions regard- ing the Christmas bonus as the budget decision not to pay the bonus this year does not require legislation. As I indicated on the day of the budget, if there were to be a windfall of finances at any stage towards the end of the year, of course this would be the first issue the Government would like to restore. I understand, however, that Senators are concerned about the non- payment of the bonus and I assure them that if at all possible it is the aim of the Government to pay it. It would cost \223 million to pay the 100% Christmas bonus in December 2009. The Government faced very difficult decisions in the budget. We have had to increase taxes and borrowing to pay for the rising cost of welfare services. We did that and avoided welfare cuts as much as we could, but we were also conscious that if we did not make some cuts and savings in the welfare budget to try to keep it at a level that the State could afford, much bigger ones would have to be made later. In deciding on how to achieve savings of \300 million in the welfare budget, there were no easy options. Everything had to be considered, including a cut in the weekly rates of payment to all welfare recipients. This would have meant taking money from everyone straight away, with little advance notice. It would also have involved the recall of all social welfare payment books, with the distress that would have caused, especially for older people. In the end, we felt that instead of doing this it would be fairer to give people almost nine months notice that the Christmas bonus would not be paid. In making this decision, we were aware that it would be difficult for people, but we felt that the alternative of cutting all weekly payments would have a much greater effect on households and on a greater number of people. It was not an easy decision nor a choice that any of us took lightly, but we felt it was the fairest option. 90 Social Welfare and Pensions Bill 2009: 29 April 2009. Second Stage

I will detail the main provisions of the Bill to the House. First, the Bill provides for the changes in the rent supplement scheme that were announced in the supplementary budget. The purpose of the rent supplement scheme is to deal with emergencies and short-term needs that arise when a person suffers a change in circumstances, for example, when a tenant becomes unemployed and can no longer afford his or her rent. There are currently almost 85,000 people in receipt of rent supplement, an increase of 42% since the end of December 2007. The sup- plementary budget provides for a net increase of \29 million in rent supplement. This consists of an increase of \77 million for additional claims arising from the increase in the live register and a saving of \48 million in 2009 — \75 million in 2010 — as a result of the following measures. First, from the end of this month rent supplement will be restricted to individuals who have been existing tenants for six months. Individuals who have not been tenants for six months or who are forming new households must be placed on a local authority housing list following a full housing assessment before they are eligible for a rent supplement payment. These measures will apply to all new applicants for rent supplement. Exemptions will apply where a housing authority designates that a person is homeless or a person has already been identified by a housing authority as having a housing need, the person is a tenant of a voluntary housing body — capital assistance scheme tenants — or is aged over 65 or in receipt of a disability type payment. These exemptions will ensure that young people coming out of residential care, such as foster homes, will be protected. Rent supplement will continue to provide support where the housing authorities are not in a position to respond within a reasonable timeframe and where the person is at risk of experiencing homelessness and-or hardship. The second change being made to the rent supplement scheme is an increase in the minimum contribution that individuals and families make towards their rent. This is being increased by \6to\24 from 1 June 2009, which will align the rent supplement more closely with the rents that local authority tenants have to pay. In Dublin city this is a minimum of \25.80 a week and averages approximately \59 a week. One of the reported impediments to the transfer of rent supplement claimants to the rental accommodation scheme is the significant difference between the contribution which is required of the tenant under the rent supplement scheme and the contribution which they are required to pay through the differential rent scheme. The third rent supplement change is a reduction in the maximum level of rent supplement payable by the State in respect of all new tenancies or on renewals of tenancies. The limits will be reduced by 6% to 7% on average, ranging up to 10%, depending on the geographical area and household size and by reference to an analysis of rent supplement and the Private Residen- tial Tenancies Board rent data as well as downward trends in private rents as published by the CSO. As Senators will be aware, trends in the private rent sector indicate that rents have fallen considerably in the past 12 months. This is evident from data available from the Private Residential Tenancies Board and the Daft property website. I am sure Senators will agree it is vital that taxpayers’ money is not used to pay landlords inflated rental prices. This change will help to ensure that this is not the case in respect of new rent supplement tenancies. However, with more than \490 million being spent by the State on the rent supplement, we must ensure that landlords of existing tenants are also not charging too much. To this end, from 1 June 2009, the rent supplements for all existing tenancies will be reduced by \6 to reflect their additional contribution towards their rent and by a further 8% to reflect the impact of the new rent supplement limits. While tenants are contractually obliged to pay the rent agreed to in their lease, we expect landlords to decrease the rent in recognition of the fact that rents have fallen generally and that there are now a large number of vacant rental properties nationally. I urge all Senators to support this and help us to send a clear message out to landlords that tenants supported by the State will not be overcharged. 91 Social Welfare and Pensions Bill 2009: 29 April 2009. Second Stage

[Deputy Mary Hanafin.]

On a positive note, agreement has been reached with the Department of the Environment, Heritage and Local Government on 1,000 transfers from rent supplement to the longer-term rental accommodation scheme in 2009. This will bring the total number of such additional transfers to 9,000 this year. The Bill also provides for the legislative changes required to the early child care supplement scheme announced in the budget. The Government appreciates that this scheme has been a significant support to families with young children and we were glad to have been able to introduce it when funding allowed in 2006. However, in the current economic climate, very difficult decisions had to be made in the budget and there were no easy options in reducing expenditure. The early child care supplement cost \480 million in 2008. We need to achieve better results with fewer resources. It was announced in the supplementary budget that the monthly early child care payment would be halved to \41.50 per child from 1 May 2009 and that it would be abolished in full at the end of 2009. However, it will be replaced in January 2010 with a free pre-school year of early childhood care and education for all children between the ages of three years and three months and four years and six months. As Senators know, evidence and research show that children who participate in early childhood education benefit significantly. The Social Welfare Bill provides for changes to the jobseeker’s allowance, which are designed to incentivise 18 and 19 year old jobseekers to avail of education and training opportunities and to try to avoid them becoming welfare dependent from a young age. The rate of jobseeker’s allowance that will be paid to new claimants under the age of 20 will be reduced from \204.30 per week to \100 per week, with effect from the first week of May 2009. When jobseekers on the reduced rate of jobseeker’s allowance reach the age of 20 but still qualify for the allowance, they will be entitled to the full adult rate. The full adult rate of the relevant scheme will be paid to 18 and 19 year olds who participate in a full-time Youthreach course for young early school leavers or a full-time course in a senior Traveller training centre, qualify for the back to education allowance, BTEA, pursue a full- time second level course or post leaving certificate course or participate in a full-time FA´ S training course. To qualify for the BTEA they must have been out of formal education for at least two years and been in receipt of a jobseeker’s payment for at least three months. They can also participate on a PLC course or third level course on the same basis as any other young person and may qualify for a third level grant. A wide range of opportunities is available. For example, the Youthreach programme for early school leavers provides approximately 3,700 places. Approximately 1,000 places are pro- vided in senior Traveller training centres, 50,000 places are provided nationally on adult literacy training courses and 32,000 places on post leaving certificate courses. FA´ S also offers a range of places, at various levels across a very wide range of disciplines, from sports and leisure to electronics and engineering. As announced on budget day, the Departments of Enterprise, Trade and Employment and Education and Science are also to provide an additional 23,435 places in education, training and employment opportunities and 18 and 19 year olds can be facilitated as part of that. The reduction in payment rates will also apply to new claimants of supplementary welfare allowance who are under 20 years of age. The numbers affected will be small at first as it will only affect new applicants from the first week in May, but the numbers affected will rise on a weekly basis. Based on current figures and an expected overall live register average for 2009 of 440,000, we expect a weekly average of 5,000 18 and 19 year olds to be affected by this change in 2009 and a weekly average of 9,000 to be affected by it in 2010. These changes have 92 Social Welfare and Pensions Bill 2009: 29 April 2009. Second Stage the potential to generate savings of \12 million in 2009 and \26 million in 2010. If take-up of the education and training opportunities is high, less savings will be achieved in the short term, but the long-term savings generated by helping young people to avoid welfare dependency would be expected to be significant. The qualified adult rate for a spouse or partner payable in these cases will also be reduced to \100 per week. This will mean that a couple, where the primary payment is to the 18 or 19 year old, will get a total of \200 per week, down from \339.90. This applies to new claimants. It is important to note that a number of people will not be affected, those being 12 o’clock existing claimants, young people with dependent children, those who qualify for the jobseeker’s benefit and people transferring to jobseeker’s allowance immedi- ately after exhausting their entitlement to jobseeker’s benefit or those transferring from the disability allowance directly to jobseeker’s allowance, thereby avoiding a large income drop. Vulnerable 18 and 19 year olds leaving the care of the Health Service Executive will also be exempt. Where an existing jobseeker’s assistance claimant under 20 years of age who is being paid \204.30 gets a job and leaves the scheme but loses that job and ends up back on jobseeker’s assistance within 12 months, he or she will get \204.30 per week rather than \100. Were this not done, there would be little incentive for those on jobseeker’s assistance to take up offers of work. Senators will be aware that the budget had a major focus on helping people to stay in employment and to return to work, with initiatives such as a \100 million enterprise stabilis- ation fund, a pilot training scheme for workers on a three-day week and increased training places through FA´ S and in the education sector. These will be enhanced by improvements in welfare supports. The back to education allowance, BTEA, scheme allows qualifying job seekers to return to education and maintain their welfare payments. The number of recipients increased signifi- cantly from 5,247 in 2004 to 7,952 in 2008. The Government is determined to maximise the scheme’s potential and the Bill provides a number of improvements. Job seekers who have been out of formal education for at least two years will be able to access the second level back to education allowance once they have been in receipt of jobseeker’s allowance or benefit for at least three months, down from six months. Earlier access is also being provided to the BTEA third level scheme. There is a general requirement that a person be in receipt of a jobseeker’s payment for 12 months before being able to access the scheme. People can access it at nine months if recommended by a FA´ S employment services officer. This is now being extended so that they will also be able to access it at nine months if recommended by one of the facilitators of the Department of Social and Family Affairs. To respond effectively to the growing numbers on the live register, the changing profile of job seekers generally and the current employment situation, it has been decided to refocus the existing resources from the back to work schemes to helping people into self-employment. The intention is to support enterprises that will, in due course, create further employment opportunities. To this end, the employee strand of the back to work allowance will be closed to new applicants and the duration of the enterprise scheme will be two years, as distinct from four years. These resources will be used to support significant improvements in the back to work enterprise allowance, BTWEA. Currently, to qualify for the BTWEA, a person must be in receipt of a jobseeker’s payment for two years. Access will now be available much earlier under two distinct schemes. First, people who are entitled to jobseeker’s benefit and have been awarded statutory redundancy or been employees paying full rate PRSI contributions for at least two years prior to their claims to jobseeker’s benefit can access a shorter BTWEA scheme immediately. This new 93 Social Welfare and Pensions Bill 2009: 29 April 2009. Second Stage

[Deputy Mary Hanafin.] scheme will be payable for the duration of their jobseeker’s benefit entitlement while they are establishing their enterprises, for example, for a maximum of either nine or 12 months. Second, access to the general BTWEA scheme is also being improved. It will now be possible to access the BTWEA at 12 months instead of two years provided a person has an underlying entitlement to jobseeker’s allowance. Further flexibilities are being introduced into the scheme, including allowing a person who has availed of it previously and exhausted his or her entitlement to participate a second time after a period of at least five years has elapsed. The overall purpose of the new arrangements is to assist those on the live register financially to set up a business almost immediately upon becoming unemployed, thereby ensuring their knowledge, skills and expertise are fully utilised at an early stage to promote enterprise and employment in the economy. The Government has been working since the publication of the pensions Green Paper to table proposals to help the pensions industry. With the recent economic downturn and the significant losses in the equities markets in the past 18 months, it is important to put together a package of measures to underpin pensions provision. The Government’s initiative started in December with the announcement of a number of short-term measures aimed at reducing the pressure on underfunded defined benefit schemes by allowing greater flexibility and time to recover funding positions. In acknowledging the likelihood that some defined benefit schemes are likely to wind up owing to the current economic situation, the measures I am announcing are a timely next step in our response to the crisis. Furthermore, I expect to follow this in the near future by announc- ing details of the Government’s national pensions framework which will set out the long-term future of pensions policy. People should be confident and secure about their retirement expec- tations. They should not arrive at pension age and find that their incomes are well below what has been promised to them. Our system must provide surety so that all of us can look forward to retirement, confident that our pensions are safe. It is estimated that in excess of 90% of defined benefit schemes are in deficit, with estimates suggesting a shortfall of up to \30 billion. The Government is aware of the threat the current financial environment is presenting for some defined benefit schemes where the employer becomes insolvent, leading to a winding up of the scheme. The Government is conscious of the difficulties the global financial crisis is creating for Irish pension funds and the challenge it presents for the trustees of pension schemes. These amendments are the next logical step in the Government’s approach to pensions provision. They will help to support the job of the pension fund trustees in addressing the challenges that they face. I will table an amendment to enable the Minister for Finance to provide for a pensions insolvency payment scheme, PIPS. Currently, if a defined benefit scheme is in deficit and the sponsoring employer becomes insolvent, the trustees must first provide pensions for the retired members of the scheme, usually by buying annuities. Whatever is left is apportioned among the active and deferred members of the scheme. The more expensive the annuities, the less money available for those yet to retire. Annuities provided on the open market are priced to include certain costs such as commissions and expenses as well as a profit margin. PIPS will provide an alternative for trustees of defined benefit schemes in deficit with an insolvent employer. In simple terms, trustees of participating schemes would pay to the Exchequer the amount necessary to cover the cost of providing pensions to its retired members. With ancillary costs distilled from the equation, PIPS should be able to provide these payments at less expense to the trustees. This should then free up extra money to go towards the pensions of those yet to retire. The scheme is not a bail-out of pension schemes in deficit and has been 94 Social Welfare and Pensions Bill 2009: 29 April 2009. Second Stage carefully designed to ensure that it will be cost neutral from an Exchequer point of view. We must be careful that our attempt to assist those in need is not misrepresented. My amendment will set out the necessary enabling provisions to allow the Minister for Fin- ance to introduce the scheme and to provide for the detailed arrangements to be set out in regulations. PIPS can commence once those regulations are in place and operate on a pilot basis subject to a review within three years of its establishment. Employer insolvency will invariably lead to the winding up of pension schemes. In the event of such a wind-up, the Pensions Act stipulates the order in which the resources of the scheme must be disbursed. It gives priority to the liabilities accruing to pensioners before it distributes the remaining assets to other scheme members. The calculation of the liabilities includes pro- vision for post-retirement increases in the third of schemes that provide for such increases. The Seanad will acknowledge that, with increases in pension costs, the liability for post-retirement increases can be substantial. Where a severely underfunded scheme is wound up, the allocation of assets for pensioners in payment can significantly reduce the assets available for other scheme members. Therefore, I will table an amendment to re-order the wind-up priorities by moving the pro- vision for post-retirement increase to a lower priority. This change will not impact on the current pension payments to pensioners, but it will enhance the level of resources available to other scheme members. Once the basic pension entitlements of all scheme members are covered, the distribution of scheme assets for post-retirement increases will then be applied. This is an important change in the priority order and will, without impacting on the pensions of those already retired, improve the situation for other scheme members. It is desirable to ensure pensions legislation supports the viability of pension schemes and that nothing in current legislation should be considered restrictive in the ongoing maintenance and sustainability of a pension scheme. To ensure this, I will table an amendment to the scope of the Pensions Act regarding its provisions for the restructuring of a pension scheme. Current legislation provides for the restructuring of a defined benefit pension scheme, but only by adjusting the benefits of those currently employed by the employer sponsoring the scheme. This restructuring does not extend to the accrued benefits of scheme members who are no longer employed in the company or to post-retirement increases in benefits. This limitation in restructuring a scheme could give the trustee no option but to wind it up. The proposed amendment will broaden the scope for the restructuring of a scheme to include those who have ceased and the provision of post-retirement increases as well as current employees. It must be stressed that this change will not impact on the pensions currently in payment to pensioners, merely to any post-retirement increases for which the scheme may provide. This amendment will help the trustees to maintain the ongoing viability of the pension scheme and hopefully to avoid the scenario of a scheme wind-up. It is important to point out again that the measures I have outlined will retain the current priority given to pensions in payment, which means employees who have retired and those who have reached normal retire- ment age will not see any diminution in their entitlement to a pension. Members will agree it is crucially important that any moneys deducted from an employee for pension purposes are remitted to the trustees of the pension scheme. Difficulties are being experienced at present by the pension regulator in bringing successful prosecutions against employers who fail to remit employee contributions to the trustees of a pension scheme. This is due mainly to the standard of proof required, based on oral evidence, which often is required to be given by an employee of the employer in question. In response to this, I am bringing forward an amendment to the Pensions Act to strengthen the role of the pensions regulator by establishing a separate offence for such a breach of the 95 Social Welfare and Pensions Bill 2009: 29 April 2009. Second Stage

[Deputy Mary Hanafin.] Act and by enhancing the admissibility of documentary evidence. While the main focus of the amendments I am bringing forward pertain to supporting the work of the trustees in situations that threaten the future of a pension scheme, it is important to ensure the legislation is strong when an employer fails to remit pension contributions to the trustees of a scheme. While I must acknowledge the vast majority of employers comply with this requirement, I must ensure that those who fail to comply are pursued. Finally, I have introduced an amendment to provide a court with the power to relieve a trustee from liability for a breach of trust. This proposal is aimed at protecting trustees who have acted honestly and reasonably in the performance of their duties. To conclude, this Bill is necessary to implement some of the changes announced on budget day and to assist trustees of defined benefit pension schemes in meeting the challenges that confront them. There were no easy options when deciding on where to achieve savings in welfare expenditure but given the requirement to increase both borrowing and taxes to pay the rising welfare bill next year, which I have indicated will be \21,000 million, choices had to be made. It is important for each of the savings measures provided for in the Bill to be con- sidered in the context of the overall economic situation and the need for immediate action to reduce the gap between public income and expenditure. The harsh reality is that unless some cuts are made now, much tougher ones will have to be made later. It is important for all public representatives to be up-front with the people about the stark choices that are required at this time, if the future prosperity of our young people is to be ensured. The changes in this Bill are necessary and I look forward to an informed debate about them today.

Senator Nicky McFadden: I welcome the Minister to the House. I appreciate the serious times in which we are and acknowledge that action, however belatedly, is being taken. I am greatly disappointed by the manner in which this legislation is being rushed through both Houses. I listened intently to the debate in the Da´il yesterday and ask the Minister directly the reason Members of this House were not invited to yesterday morning’s briefing by the Depart- ment. This subject is new to me and I find the legislation relating to pensions to be highly complex. I would have appreciated time to enable me to get my head around it and to have consulted with the various partners and those whom this issue ultimately will affect. I fail to discern the reason for this non-invitation, which shows absolute disrespect for Members of this House, and am greatly disappointed by it. I perceive the manner in which the budget affects people on social welfare as the poor being obliged to pay for the mistakes of the high rollers. This is how I consider the non-payment of the Christmas bonus. I have been knocking on doors and canvassing and it probably is the single most cynical, cowardly and hurtful measure. It is what people such as grandparents use to buy toys for their grandchildren or what hard-pressed mothers use to pay an ESB bill at Christmas. It will force people back to moneylenders. It is paid at the end of the year when people might use the \200 to get themselves on an even keel and to start the new year afresh. The bonus certainly was not used for luxuries. I refer to the idea of taxing those below the minimum wage. When one considers that 30% of those who already are in poverty have a job, bringing such people into the tax net and imposing a levy on them will make matters even worse. It is so hard for them and every second week, members of the Oireachtas Joint Committee on Social and Family Affairs discuss issues such as people trying to keep warm, to keep food on the table or to pay ESB bills. However, the Government has turned around and in not one budget but two, has added further to their heartache. People will go hungry in Ireland and this is evident from the food queues. I under- stand that one day approximately three weeks ago, 340 people queued for food and I shudder 96 Social Welfare and Pensions Bill 2009: 29 April 2009. Second Stage to think how many more people now are queuing for basics such as bread and milk. It is not the case that inflation will decline as people are unable to pay for basic necessities for their families, such as education, health and transport. I wish to touch on a few of the points outlined by the Minister and will table amendments to some of them on later Stages. Cutting by half, or by \100, the jobseeker’s allowance for young people is quite extraordinary. I understand the Minister’s motivation and overheard her interview on “News at One” about people coming across the Border, fraud etc. I realise she was obliged to take action but to reduce the allowance by \100 in one fell swoop is difficult to bear. While I do not wish to sound fanatical or dramatic, I believe people will go hungry. This is not about luxuries but about how young people will try to sustain themselves because they will not survive. In addition, in the last budget the Minister removed child benefit for those who are in college and are over 18 and this sector is being hit quite hard. While I welcome the 25,000 places in training and education, it will not be enough to deal with this group of vulner- able young people. The Minister stated she did not wish to create a welfare culture or to give such people a taste of welfare. While I agree with the Minister that some families exist in which the third generation is in receipt of welfare, cutting the allowance by \100 in one fell swoop will not achieve what the Minister sets out to do. As for rent supplement, fewer and fewer houses are being supplied by my local authority. Consequently, far more people depend on the private sector and on private landlords. While there are a great number of private houses available for rent, landlords certainly are not trying to accommodate the unfortunate person whose rent allowance has been reduced. As the Mini- ster is aware, the landlords’ purpose is to pay their mortgages and to try to support their investments. In this context, \11 is a huge amount of money. I also am aware of people who already must supplement their rent allowance because their landlords have set the rent at such extraordinarily high levels, as the ceiling is so low. The Minister is attacking the vulnerable and not the landlord. As the landlord still will get his or her money at the end of the day, I do not believe this was the right way to have gone about this issue. Moreover, organisations such as the Society of St. Vincent de Paul have been inundated while trying to help people to pay rent supplement top-ups and this certainly will continue because of this measure. I acknowledge the highly positive rental accommodation scheme, RAS, and believe it shows a way we must go, that is, a differential rent should be put in place by the local authorities that could accommodate those who find themselves without houses. The early child care and preschool measures are welcome. How will parents pay for cre`ches? This has not been addressed. Perhaps the Minister can comment on this. There was discussion of enterprise schemes on the radio this morning. The Minister said people would start looking for jobs if the payment of \100 was reduced but there are no jobs. We must be cognisant of this. How can one get a job if there is none? We must consider the successful schemes in the 1980s. Some community employment schemes were successful, some were not. In this way we can figure out what works and what does not. This was suggested on “Morning Ireland” and we can hark back to that time because it is not such a long time since we were in recession. The back to work allowance will apply for two years rather than four years. This is not long enough and does not allow people to establish a business. According to ESRI figures released this morning, it does not look like we will get out of this dreadful recession in the short term. Two years is not long enough for a business to become established when banks are not very free with credit. This period is not sufficient to allow people to get off their feet. These start a 97 Social Welfare and Pensions Bill 2009: 29 April 2009. Second Stage

[Senator Nicky McFadden.] business and back to work schemes were successful in the 1980s and we still see the fruits of those in businesses that are still thriving as a result of these measures in the 1980s. The first I heard of the pension measures was on Sunday night. Even in infancy as an Oireachtas Member, I know the idea that something can be mooted on Sunday evening without briefings or discussions with partners is not the way to do business. We suddenly have serious legislation, some of which is positive, that will affect our country for a long time to come. Why did the Minister decide on three years rather than one year? We have read about Bord na Mo´ na, ESB, SR Technics and Waterford Crystal, companies that are solvent but whose pension funds have dried up. People have no recourse. How will they be accommodated? What galls me and makes me angry is that Mr. Fingleton’s pension stands at \27.6 million. How will the Minister affect the likes of him, CEOs and people who have ripped off our country? It is a disgrace that they call themselves Irish when people who have worked for semi- State companies such as ESB or Bord na Mo´ na or solvent companies like SR Technics for 30 years may have no benefit at the end. I acknowledge the necessity to take action on pensions but the Minister is not hitting the high rollers. This is based on a brief examination of the Bill over the past 24 hours. I ask the Minister to explain this in more detail. I will table amendments and elaborate on these later.

Senator : I propose to share time with Senator Walsh. I welcome the Minister. I welcome the improvements in the back to education allowance scheme, which allows job- seekers to return to education and maintain welfare payments. Senator McFadden referred to cuts. We would prefer if there were no cuts but one cannot give what one has not got. We must be upfront with people. Senator McFadden also referred to pension funds, many of which are in trouble. I was involved in a pension fund and one of the main reasons they are in trouble is that pension funds are invested and once shares slip, pension funds slip. The Eircom pension fund and others are in trouble. People are left in the lurch but I do not have the answer to how we get around it. Senator McFadden’s point is taken. Investments in property have dipped. The pen- sion fund in Eircom is \6 million in debt. The problem is widespread. Another element in the Bill concerns welfare fraud. I congratulate the Minister for tackling this, which was widespread, particularly in Border areas. Surveillance on that is ongoing and these measures in the Bill are positive. I ask for clarification on the belief held by many people that immigrants get free hairdos, free mobile phones and cheques to buy cars from social welfare. People believe this and I hear it every day. I would like this cleared up. A garage man told me an immigrant had given him a cheque for \3,000 to buy a car. I assume that was arrears due but I ask the Minister to clarify so that I can speak with some authority on these matters.

Senator Jim Walsh: I thank Senator Brady for sharing time. I welcome the Minister and compliment her on the initiatives she has taken in the Department. What she has outlined shows she has a formula for dealing with the unprecedented fiscal situation, which is not easy. The background is that the social welfare increases have exceeded the rate of inflation. The Minister and her predecessors were emphatic in ensuring the economic benefit of those years would also accrue to those in the social welfare system. This is correct and old age pensioners who spoke to me were extremely appreciative of the increases they enjoyed during the period. The Minister pointed out that the social welfare bill, at \21.3 billion, is a very significant proportion of overall expenditure as it must be approaching 40% of total spend. It is 20% 98 Social Welfare and Pensions Bill 2009: 29 April 2009. Second Stage higher than in 2008, which reflects Senator McFadden’s point about the growing number of people who are unemployed and the ESRI report, which was very alarming. It shows that we, in addition to various countries across the globe, are far from emerging from this very deep recession. I hope it will not be as bad or as long as the Great Depression in the 1930s but it is the closest we have come to it. I hope the process can be arrested globally because, as an exposed economy, we are dependent on such a recovery. With the budget in October, there was an increase of between 3% and 3.6% in social welfare rates. We are in a deflationary period with a predicted deflation rate of 4% this year, which means there is between 7% and 7.5% in increased spending power for those on social welfare. It is difficult to envisage how those rates of social welfare payments can be increased next year or the year after. I presume that if we remain in deflation, the spending power of those on social welfare may be enhanced, although the rates of payment will not be increased. The decision on the Christmas bonuses would have been difficult for the Minister as such payments were appreciated by those on social welfare but the Minister’s decision was correct. It is more acceptable, in so far as a cut in anybody’s income is acceptable, than cutting the rates. The figure involved, at \223 million, is very significant. Although it may be difficult to do it this year or next year, something may emerge in the future which would allow us to revisit the decision and seek to ameliorate the position, particularly with regard to pensioners. There may be a stage where economies will recover and we will find ourselves in such a position. I hope we will avail of the opportunity if it presents itself. There are many anomalies within the rent supplement system. I compliment the Minister on the examination she has carried out and the decisions she has made are absolutely right. Rents are falling and the Minister has decided to reduce the maximum rent levels by up to 10%, with the average being 6% to 7%, as the Minister mentioned in her speech. She is also correct to increase the minimum contribution by \6to\24 but I wonder if that is sufficient. The contribution of anybody availing of the rent subsidy scheme should be no less than what they would pay under the differential rent scheme. It makes absolutely no sense that people are not enthusiastic about trying to get a local authority house simply because it will cost more than the rent subsidy scheme. There has been a wedge in that regard and if that remains, it should be removed because it is not logical. At \490 million, the scheme is way in excess of what was originally intended in this regard. There should be a total root and branch examination of the scheme and how it works. We should also examine whether it is right to see it continued to be administered through community welfare officers or whether it should be in some way integrated with the local authority system. Local authorities have responsibilities in such areas and I am a firm believer that where we can focus the jobs of people in a common direction, having them under one umbrella would be helpful. I do not agree with Senator McFadden with regard to the reduction in the jobseeker’s allow- ance. Paying people who have just left school can create a dependency culture. Although the Minister has reduced the payment to a certain demographic to \100, it is still almost 100% more than what similar people in Northern Ireland are being paid. I support the back-to-work and back-to-education initiatives. I compliment the Minister on the changes in the pensions legislation. There is a need to address the requirements in particular of private pension schemes. Defined benefit schemes have been seriously affected because of losses incurred in the economic downturn and through investment losses, particularly over the past 12 to 18 months. The decision to allow time and flexibility to recover that funding was essential and sensible, and such action should be continued. 99 Social Welfare and Pensions Bill 2009: 29 April 2009. Second Stage

[Senator Jim Walsh.]

In all this debate I have heard unions and others talk about defined pension schemes and there is also the public pension scheme. As I stated before, although I am a beneficiary of it I do not believe it is sustainable and it must be examined. I do not see why we do not integrate the public sector pension with the State pension. Anybody in the private sector would pay PRSI and be entitled to the State pension so why should this not happen in the public sector? Why should the State pension not be integrated and factored into the calculation of the pen- sion entitlement? There is a coterie of people who have moved from a defined benefits scheme to a defined contribution scheme, although not through their own choice. They have shipped the same level of losses as those who have been in defined contribution schemes and they are severely impaired with regard to future pension entitlements. The area must be looked at. Uninformed people speak about bringing pension contributions to the standard rate of income tax for relief, which shows an ignorance of how the system works and fails to recognise that less than 50% of people in the private sector can avail of any particular pension. That must be addressed. While we may be cosseted in the public sector, we should be mindful of the productive sector of the economy as the 1.7 million people working in it also have entitlements. I agree with the pensions insolvency payment scheme, PIPS, and I compliment the Minister on her introduction of this good idea. The cost-neutral scheme will allow those in defined contribution schemes to avail of annuities. For a long time the financial services industry, particularly pension companies, has exploited pension schemes with annuities. I remember looking at some quotations for annuities where the payback was something like 3% or 3.5%. To get one’s money back, a person would have to live for 25 years after retirement; if a person retired at 65, he or she would have to live until 90 before the capital sum being used to pay the insurance company was covered. On an actuarial basis, that must have been highly profit- able for insurance companies and, not before time, the State is correctly stepping in on the issue. I hope the scheme will be developed further as there are other areas where it could be used to the benefit of those on defined benefit and defined contribution schemes. The investment of those moneys is another issue and the State could perhaps utilise the significant amounts of money in private pension funds and give a modest enough return. We must at least ensure that the capital sum is protected. If people had been as wise five or ten years ago as they are today, I do not doubt that they would have been happy to invest their capital sums with the State on the basis of receiving a 1% or 2% return. Had they done so, they would be in a far better position now, particularly when one considers that some of the funds in which they invested their money have lost 30% or 50% of their value.

Senator Nicky McFadden: Hear, hear.

Senator Jim Walsh: I wish to sound a note of caution regarding the Minister’s assertion that the post-retirement element of people’s pension entitlements will attract a lower priority under this scheme. That is fine and no one would argue with what is proposed, especially in circum- stances where there is deflation or extremely low inflation. However, some economists are predicting that following this serious recession, and as a result of the stimulus packages that have been put in place in the United States and elsewhere, there could be a period of significant inflation or even hyper-inflation. In the 1970s, people who retired on private sector pensions which did not take account of inflation discovered that the value of their pensions was quickly eroded because inflation rose to between 14% and 16%. Over a period of four or five years, the value of the pensions to which I refer fell by a half or two thirds. In the context of the 100 Social Welfare and Pensions Bill 2009: 29 April 2009. Second Stage change being introduced in the Bill, the Minister must take account of the example I have outlined and ensure that people are protected.

Senator Ivana Bacik: With the permission of the House, I wish to share time with Senator Quinn.

An Leas-Chathaoirleach: Is that agreed? Agreed.

Senator Ivana Bacik: Everyone acknowledges that we are facing into an unprecedented econ- omic crisis. The ESRI published a report earlier today which states that we are set for the sharpest fall in economic growth experienced by any industrialised country since the Great Depression. In light of this extraordinary and deeply depressing prognosis, we all acknowledge the need to make savings. I wish to be fair-minded in assessing the Bill. In that context, there are some aspects of it which I welcome, particularly the move that will herald the introduction of a new provision in respect of child care. The latter is overdue. However, there are many aspects of the Bill which are deeply regrettable. In that regard, there are certain savings that could be made elsewhere and I am sure that imaginative solutions could have been found to deal with particular matters. The Minister stated that there will be an increase of 8.7% on the amount originally provided in respect of welfare services for this year. However, she proceeded to state that this additional expenditure arises mainly as a result of increases in unemployment and indicated that the expected average live register figure for 2009 will be adjusted upwards. From what the ESRI is predicting and from what we know from members of our families and our friends who are receiving news of redundancies on a daily basis, we are aware that the figure for unemployment will increase by even more than the Minister is projecting. As a result, spending on social welfare will increase accordingly. We must, therefore, consider the introduction of more radical adjustments to the social welfare system. The decision not to pay the Christmas bonus is deeply regrettable, particularly as those who need this money will be most affected. There will also be a severe knock-on effect on the retail sector in that people’s spending power will be reduced at a time of the year when a large number of businesses rely on increased spending. This decision will have an unwelcome effect in that it will ensure that the market for consumer goods will contract even further. We will see evidence of this when people make adjustments to their spending in the run-up to Christmas. Imaginative approaches have been taken in other jurisdictions in respect of social welfare. I refer, in particular, to Germany, where the system has been adjusted to take account of the needs of people who live in regions that have a major reliance on the automobile industry. In light of the decline in consumer demand for new cars, that industry has taken a huge hit. With the change to the social welfare system in Germany — I am sure the Minister is aware of this — the state now pays automobile companies to top up the wages of workers who would other- wise be made redundant. Effectively, those workers have been placed on short-term work. Something similar is happening in the private sector in this country. Rather than making two out of ten employees redundant, employers are placing all ten on short-term work. This is being done in a low-key way and it is an extremely creative solution. Most people take the hit on their wages so that their colleagues can remain in work. In Germany, however, the state is stepping in on a larger scale and is topping up the pay that employees receive from their private sector employers. This means that businesses can remain solvent and that they will still have highly skilled labour available to them when the upturn occurs, which one hopes will happen quickly. The idea is that people can be kept off the live register. While the state essentially subsidises the private sector under this model, there is potential for it to make great savings. A mechanism of that imaginative nature would have 101 Social Welfare and Pensions Bill 2009: 29 April 2009. Second Stage

[Senator Ivana Bacik.] been of great assistance in a Bill such as the one we are discussing. Instead, we have been presented with a slash-and-burn approach. During the debate in the Da´il, Deputy Burton pointed out that people who need to make savings in the context of their household incomes do not merely cut everything, they target their cuts. Those of us in opposition want the Government to take a more targeted approach in respect of cutting public spending. The consequences of such an approach must be thought through. We must ensure that what we do does not have an extremely negative impact on the entire economy. With regard to pensions, I welcome any changes that make people more secure in their retirement. In that context, the fact that there will be some protection for workers who are members of pension schemes is a good development. However, the Bill does not go far enough in the context of providing sufficient protection. The future for workers at Waterford Glass is dreadfully uncertain because their pension schemes are insolvent and they do not know whether they will receive the payments they are due upon retirement. This has a knock-on effect on the economy because it stops people from spending. People who are five or ten years from retirement are looking to the future with uncertainty and, as a result, are less likely to spend. We require further information on what will replace child care supplement. The supplement, which involves the payment of \1,000 per year, was always a blunt instrument. I have a personal interest in this regard because I am in receipt of the payment. As stated, it is a blunt instrument which comes nowhere near offsetting the real cost of paying for private cre`che care. To remind those who are not aware, out of one’s net income it costs at least \1,000 per month per child to secure such cre`che care or to place one’s child in a pre-school group.

Senator Nicky McFadden: Hear, hear.

Senator Ivana Bacik: I welcome the idea that there will be a better targeted and more thoughtful way of providing child care support to parents. However, I am alarmed that payment will be made in the form of a capitation grant to child care providers who will then be expected to pass on the discount to parents. The Minister must provide more information in respect of this matter. To whom will the grant be paid? Will it be paid to every child care provider or to a select few? If the latter is the case, how will those providers be selected? Will it apply in respect of the parents of all children and will we be obliged to move our children out of existing facilities to avail of the grant? Further information is required, but I broadly welcome this move. I thank Focus Ireland for providing many Members with a useful briefing on its concerns about the changes to jobseeker’s allowance, supplementary welfare allowance and rent and mortgage supplement. Focus Ireland made a number of points that are worth reiterating and asked that the Minister for Social and Family Affairs provide a public assurance that no person will become homeless as a result of the changes that will be made to these allowances. Will the Minister provide such an assurance? She appeared to suggest that landlords should pass on reduced rents because the rent and mortgage supplement is being reduced. Where is the pre- scriptive element in that regard? We must ensure that rents are reduced. If we do not do so, tenants will be made homeless.

Senator Feargal Quinn: I thank Senator Bacik for sharing time and I welcome the Minister. I am going to break one of my rules, I am going to read a letter that appeared in the Irish Independent two weeks ago. 102 Social Welfare and Pensions Bill 2009: 29 April 2009. Second Stage

Dear Sir,

I recently had a long conversation with a friend of mine who lost his job. He was in a reasonably good job and after a little bit of overtime was earning a gross salary of \35,000 per year. So I asked him the obvious question of how he was going to cope now with four children to feed and I have to be honest the answer startled me, he was actually a lot better off and now in a position to go out golfing every day when his children are at school. Frankly I did not believe him until I sat down and did the sums. On a salary of \35,000 his annual net income after the mini budget was \28,854, after all deductions. Now he is on the supplementary welfare allowance which, with a wife and four children, gives you \443.90 per week or \23,083 annually. As he also has a mortgage he is entitled to mortgage interest supplement which pays all the interest on your mortgage so in his case \1,200 per month of his \1,500 mortgage or \14,400 per annum. He is also entitled to back to school and footwear payment of \905 per year for four children, a medical card which we will say is worth on average say \500 per year (probably more) and a heating supplement which I cannot quantify. In total he now therefore has tax free income of \38,888, an increase in his net income of \10,034 per year working on his handicap. Based on the calculations after the mini Budget you would need to earn more than \47,000 per year if you have four children to justify continuing to work. Now this is even before the costs of working like petrol, car maintenance, tolls, lunches etc. Now in any civilised society and especially a society in a deep recession with a huge welfare bill surely the Government must give people an incentive to go out and work. Making the child benefit taxable or means for golf tested later this year is just going to make the situation far worse and encourage more people to give up work and rely on the state to live. It could even drive our small economy to collapse as the welfare bill gets bigger and bigger as more people, including myself, say why should I bother to go out to work when it is basically costing me money to work? Unless something radically changes I will be joining my mate on the golf course very soon.

The letter is signed by Mr. Andy McNamara, Drogheda, County Louth. That letter startled me. If we are to get out of the financial crisis we must make Ireland more competitive and find ways to encourage people to work. This may be a freak situation but if it is an example of the current system, we will not become more competitive or correct the economy, we will get deeper into trouble. I spoke to a number of people in Dundalk who had been made unemployed when a Super- quinn shop closed. I asked two of them where they would find work and they replied that they did not know. I mentioned that Newry is only 15 minutes away and there is work there. They said that the would not go to Newry because pay rates there are only a third of those in Dundalk. We have a problem with the competitiveness of our economy and while we cannot solve it at the stroke of a pen, we will not solve it if we create incentives to stop work and rely on the 103 Social Welfare and Pensions Bill 2009: 29 April 2009. Second Stage

[Senator Feargal Quinn.] State so those who are working pay for those who do not work. We must try to get out of the financial crisis and while I am not sure how we go about this, if we are going to succeed we must make some changes, one of which is to ensure there is no incentive to stop working and to rely on the State. I say this in the knowledge that things were going the other way in other years when I have spoken on this. I did not realise until I read the Irish Independent two weeks ago that such a situation could exist. If it is so, it acts as a disincentive to work and might act to encourage people to give up work to have the State pay for them.

Senator Dan Boyle: The scale of the social welfare system can be measured by the fact that its current budget is some \21 billion, two thirds of the money we will collect in all taxes next year. The decisions we make, therefore, will have serious consequences. There is no doubt the scale of that budget is justified because many of those relying on social welfare do so on the basis of income maintenance. The deteriorating economic situation means there are ever more people becoming unemployed and their needs must be met, especially in the short term. We must ask, however, whether the money is being spent effectively, producing the ends desired by those depending on such income. The room for manoeuvre is painfully small. Most social welfare benefits, such as unemployment benefits, pensions, disability payments and pay- ments to lone parents, go directly to people who need them. The amount of discretionary funding available is small in terms of the overall budget. It has come to a stage now, however, given the scale of spending and the resources available to meet that budget, that we must look at its wider aspects. The extent to which people receive income from social welfare when they have sufficient means themselves means payments from the social welfare budget do not benefit those in need but third parties. The Bill also highlights the extent to which abuse occurs within the system, diverting resources from those who need them. In that context and in the current difficult situation, these proposals are all that could have been done. The alternatives were unpalatable. One of the social partners indicated that the 3% increase in October could have been rolled back. Even though we are now in a deflationary situation, resulting in a net benefit increase in October of 7% in terms of income, we should not try to take that money back. An unfortunate but unavoidable decision was made on the Christmas bonus. Even that decision, however, constitutes little more than 1.5% of the overall budget. That shows the impact these changes have had on the overall budget. We all hope that if the programme to address fraud in the system is successful it will open up an avenue by which the Christmas bonus might be partially addressed. The other decisions were made in the context that if it was not a matter of income mainten- ance, it had to be examined. The decision on the early child care supplement, one of the more recent decisions, was made in the context that we cannot give out money to everyone, partic- ularly those who have sufficient income, that will not have an impact on the effective spending of resources. The decision to replace it with a guaranteed, targeted preschool place will be a more beneficial use of resources. The decision to cut the jobseeker’s allowance for 18 and 19 year olds seems harsh on the surface but where we are trying to avoid the introduction of a dependency culture in terms of families and communities, it is the right decision. People should not start their working lives with an expectation that payments will be made directly with no incentive to seek whatever work is available. 104 Social Welfare and Pensions Bill 2009: 29 April 2009. Second Stage

The other decisions relating to how contributions could be more fairly distributed are right, and in future budgets they must be addressed further. With regard to how we contribute to the social welfare fund, I and my party are of the belief there must be greater equity and greater contribution from those on higher incomes, even if that goes against the principle of the fund in that such individuals are unlikely to benefit directly from it. It is a principle of solidarity and I welcome the moves towards achieving that in this and previous Bills in recent years. The difficulty is where we go from here and what is likely to happen. I believe it is unlikely, given the current economic situation and deflation figures, that social welfare will have the capacity to increase in the short term. However, there must be clear markers that there are elements of social welfare spending that cannot be affected and that there are 1 o’clock people within the social welfare system who should not have a fear that such decisions will be made. The Minister has made those principles a part of her decision making, both in October and in this Bill, in the decisions relating to pensioners and carers, taking account of the impact of ever-growing numbers of unemployed and how the scant resources, which are decreasing, can be distributed over such a huge budget. In future legislation, particularly relating to unemployment, we must examine the six month and one year periods of unemployment and how people who find themselves in that position can avoid a situation of enforced entropy. We do not wish for a return to the 1980s. I had two periods of three months unemployment and three periods of six months unemployment in the 1980s. It is one of the most soul destroying experiences of a person’s life. The responsibility of the Government and Department is to ensure that when people find themselves at these bench- marks, there are opportunities for them to remove themselves from unemployment through incentives to employers to take people on either on a training or employment basis, if necessary using the resources being made available through the jobseeker’s allowance to offer such incentives. The Social Welfare Bill that will follow the December budget will need to consider this, given the scale of the problems facing the country. I am confident the Minister has the resources to deal imaginatively with the decisions that must be made to ensure this difficult period can be made less difficult, if possible.

Senator : I welcome the Minister and thank her for her attendance. The Government has a track record of not understanding the theory of unintended consequences, and that is being charitable. Each time the Government introduces a budget, there are impli- cations it fails to consider. This has disastrous results for the Government’s accounting and, more importantly, for the people who are affected. In due course I will refer to the weaknesses in the Bill and propose amendments. With regard to how people are affected, I read the letter in the Irish Independent a couple of weeks ago in which a gentleman outlined in clear detail how he was better off being supported by the State due to the effects of the budget. First, however, I will reflect on the effects of this Bill for the wider economy. The Bill is part of a wide range of policies introduced in response to the recession. There must be economic activity to get out of the recession. The Government appears to have overlooked the fact that the people targeted by this Bill are spenders. All their income goes into shop tills and to commercial service providers. The measures in the Bill are aimed at saving approximately \150 million but they will make more people unemployed and reduce the spending power of recipi- ents of welfare payments. That fact appears to have been overlooked. In fact, it is not even understood when one considers the remarks of the Minister for Finance in the Da´il last week. He said that when one takes the 3% increase provided for this year with the 5% drop in the cost of living, it is a real increase in social welfare provision of 8%. It is alarming that the Minister should think that way. He betrays a lack of understanding of low 105 Social Welfare and Pensions Bill 2009: 29 April 2009. Second Stage

[Senator Phil Prendergast.] income family budgeting. These households have differing spending requirements and the con- sumer price index does not reflect that. It does not know the make-up of households. Many people on social welfare, for example, do not have a car or a mortgage so falling fuel costs and mortgage repayments are not relevant to them. Most of their money goes on food, which has been increasing in price. The Minister, Deputy Brian Lenihan, is correct in one sense about real increases but they are not in spending power but in costs. This Bill increases the cost of putting a roof over one’s head if one is on rent allowance. There is no deflation in accommodation costs for those people. I refer to Focus Ireland’s comment in that regard. It stated that young people in transitional accommodation currently contribute \18 per week to their rent, but under changes to the rent supplement scheme this will increase to \24 per week. The reduction in jobseeker’s allowance means these young people will experience a combined weekly reduction of at least \110, leaving them with \76 per week after paying rent. This will create serious financial difficulty for those people. There is a similar impact on people on rent allowance. Rents might be falling in Dublin but not in places such as Clonmel. For people on rent supplement living in accommodation in Clonmel there is no change in rent. In fact, rents are increasing because landlords’ costs are increasing. Additional pressure is being put on people on rent allowance and it is definitely having a very serious effect. I recently received a telephone call from a distressed single gentleman of 68 years of age. He is very happy in his rental accommodation. He is getting on extraordinarily well in so far as he knows his neighbours and the locality and he lives near the church and the shop. All his needs are being met in the rent supplement scheme. He is frequently called in to have his needs reassessed in the context of offering him a house that he does not want. He is very happy where he is. Now he is worried the increases will affect him and that he will not be able to afford them. This reflects the worry of thousands of people in this situation. Thousands have fallen on hard times and this Bill brings no comfort for them. The cut in rent allowance was based on the premise that landlords would accordingly reduce the rent charged. That might not be the reality. I do not wish to tar all landlords with the same brush because some are genuinely delighted with their tenants and will not use this as an opportunity to put them further into hardship. However, there are others who are, in a business sense, suffering “the pain” and they would have no qualms about increasing the top-up that people might have to pay. Where is the basis for the claim of an 8% real increase for those relying on social welfare? It is an illusion or delusion; it is not real, as the Minister, Deputy Brian Lenihan, claims. The people who will be victims of this deluded thinking are not those who caused the recession but those who were victims of the Celtic tiger. Many of the people who paid market rates for houses in 2007 could find themselves homeless. This will cause an increase in costs for the Department. That is an example of how the Bill represents false economy. The Bill reflects a Government that is not in touch. It does not target the people who gained most during the boom but has a very negative effect on the people who were floating along nicely but are really hurting now. The negative effect of reducing mortgage interest supplement to seven years will affect thousands of families and will be a significant additional hardship. The era of Government under Deputy and Deputy Brian Cowen saw hyper inflation in the housing market. That was well flagged by all sides of the House. Many people were encouraged to buy houses for huge sums, yet there were massive tax incentives for land- lords. Ordinary people were offered mortgages beyond their wildest dreams and were encour- aged to buy into the dream of having it all and having it now. I accept that this says something about ourselves, our willingness to listen to the advertisements and fall into the cosy idea that 106 Social Welfare and Pensions Bill 2009: 29 April 2009. Second Stage we could have everything now and pay in the long term. As a result, the recession is having a far worse effect. They were given mortgages without any plan or conditions attached that could have offered solace when this major spiral began. We are still in that spiral. The struggle to pay those mortgages has been made even more difficult because the banks, which the Government guaranteed on behalf of this country, are not passing on all the interest rate cuts. I am delighted with the provision in the Bill of one year’s free child care because that was one of our policies but it should not be a back door to cutting the early child care supplement. Cutting the Christmas bonus to all social welfare recipients, for whatever reason, is a dreadful act at a time of high expense. In some cases Christmas starts here before Hallowe’en, which is appalling. If shops did not display Christmas decorations until 1 December it would make far more sense economically and might reduce the long lead in and the associated hype that goes with Christmas and the worry people experience. It might also restore some semblance of the meaning of Christmas. Taking this bonus from people at a time of greatly increased need is a callous act and will considerably increase the hardship of older people. As the Labour Party spokesperson on older people I am already getting a great deal of contact from worried older people. Cutting the jobseeker’s allowance for those under 20 is another unwelcome decision as opportunities for graduates diminish and places become scarcer. Will those who wish to con- tinue to stay in training or education be able to do so? The Bill does not offer much hope to many people and I am interested in hearing the Minister’s responses. I have tabled some amendments which will be dealt with later. I thank the Minister for the offer of a briefing on pensions.

Senator Lisa McDonald: I welcome the Minister to the House. The task that befell her to make a saving of \300 million in the social welfare budget in 2009 in difficult times is no mean feat. I commend her on not making a general cut in the weekly social welfare payment. I note the concerted effort that will be made to deal with social welfare fraud. There are cuts in the Bill that are unavoidable but social welfare fraud is the most serious issue that must be tackled in terms of finding areas in which savings can be made. The Minister must be very strong on that issue. I accept that she is being strong. I note there are people who may be doing nixers who were employed originally by people still doing the same work but on a day on, day off basis. That must be examined. Issues arise also concerning people spending abroad and social welfare payments being made into banks. Now that we have additional people on the boards of the six Irish banks there might be some form of liaison in the area of social welfare fraud to track payments. Regarding house visits by inspectors, more staff are needed in the Minister’s Department in this time of need. Some Departments do not need some of the staff they have but I accept that the Department of Social and Family Affairs needs more house inspectors. I believe the public would welcome a crackdown on social welfare fraud because it is one of the main questions that arises on the doorsteps in the lead up to the local elections. There is no denying it is an area where savings can be made, and I welcome that. The Minister has said that if the crackdown on social welfare fraud is successful she will, if possible, bring in some form of Christmas bonus. No one can deny the Minister’s bona fides in this area, which is welcome. If we can make savings in this area the people who deserve a Christmas bonus can have one. There has been a mixed response to the Christmas bonus issue on the doorsteps. Some people say it was better to lose the bonus rather than have a cut in their weekly rate because they can now plan. Also, toys in shops are much cheaper now than they will be at Christmas. 107 Social Welfare and Pensions Bill 2009: 29 April 2009. Second Stage

Senator Jerry Buttimer: It is not about toys, Senator.

Senator Lisa McDonald: I do not know how often Senator Buttimer goes into toy shops but I can assure him I go in every week.

Senator Jerry Buttimer: It is about putting food on the table and paying bills for light and heat.

Senator Lisa McDonald: Christmas bonuses are to provide for Christmas presents——

Senator Jerry Buttimer: The luxuries are gone.

An Cathaoirleach: No interruptions, Senator.

Senator Lisa McDonald: ——particularly for children. That is what they should be used for. This is an area where——

Senator Jerry Buttimer: People cannot afford to buy any more, never mind toys.

Senator Lisa McDonald: A Chathaoirligh, can I speak without interruption?

An Cathaoirleach: There must be no interruptions.

Senator Lisa McDonald: People have been using Christmas bonuses, child care allowances and the early child care supplement for purposes for which they were not intended. Social welfare benefits should be used for the purposes for which they were intended and not the way they are sometimes used, as the Senator is well aware. Unfortunately, there are people who will be under pressure at Christmas. Last year the Minister brought in a widely welcomed money advice and budgeting service, MABS, advertis- ing scheme. That may need to be widened this year to assist people under pressure who, instead of turning to loan sharks, will be able to get the support required to plan for Christmas which is, as Senator Prendergast said, a time when because of advertising and so on, they can go off on a tangent and spend too much money. We must guard against that. The Minister made an effort in that regard last year and I would welcome a similar measure this year. I welcome the fact that the early child care supplement scheme has been abolished. It did not provide for incentivising mothers to go back to work. The provision of a preschool place for every child of four or five years of age will give them some form of equality in entering the primary school system. My concern is that the current establishments will not be in a position to provide for that in 2010. We need to examine the private sector to determine what is avail- able in that regard. The community child care schemes are run very well and some of the private establishments, unfortunately, have had to close recently. We must examine the issue of placements, etc. I am aware the Minister for children is examining that issue but it will be a matter for this Minister in terms of providing the funding, etc. This measure must be used to incentivise mothers to retrain. If we examine that, and this is the point Senator Bacik was making, it will achieve the desired purpose. There are those with two or three children and providing a preschool cre`che place for a child of four when the mother is at home with two or three other children will not assist in that area. That is something we can build on for the future but this measure is an excellent first step. When the early child care supplement was introduced I would have preferred to see the provision of a preschool place for children than the way it was done initially. 108 Social Welfare and Pensions Bill 2009: 29 April 2009. Second Stage

At some stage, and I accept it is not in the social welfare brief, we must examine the question of giving tax incentives to parents who are paying cre`che fees, but that is a matter for another day. I welcome the reduction in rent supplement. I listened to some of the debate on landlords not reducing rent but the market dictates the level of the rent. If a landlord does not reduce the rent tenants should threaten to move. I have advised people in my constituency to do that and it has worked. With the amount of money being provided few people will not want to assist in bringing down rent that typically was \700 a month or, as is the case in my own constituency, \600 a week. That has happened across the board. The landlords who are not co- operating must be told by their tenants that they are moving to another area. On that, we have a major bank of empty houses and apartments throughout the country. We must examine house ownership because it is my experience that people who have a house provided by the county council tend to have pride in their own back garden and keeping it maintained but that is not always the case among those on rent supplement. If these house banks are available, we need to adopt an imaginative approach as to how we can provide a long-term housing solution in respect of perhaps letting tenant purchase schemes be applied to the private sector. That would take some of the housing out of the big bank that is, unfortu- nately, accruing. I note Senator Quinn’s letter in the Irish Independent on the incentive to work. This is an important area that needs to be looked at — persons on \40,000 a year who are under pressure.

An Cathaoirleach: The Senator’s time is up.

Senator Lisa McDonald: Unfortunately, I have run out of time. I also welcome the cut in the jobseeker’s allowance for 18 to 20 year olds. There was a generous welfare system over the Celtic tiger years and we need to look at system reform in general in order to provide incentives for training and work. The Minister is moving in the right direction. This was, we must remem- ber, an emergency budget. I look forward to more change in the system in the autumn budget.

Senator Jerry Buttimer: I welcome the Minister and thank her for being here because that is important. Whenever she has been in the House she has stayed, unlike some of her col- leagues. That is a good sign. Senator McDonald, in her passionate speech, made reference to the Minister’s task as no mean feat, and she was correct. What the Minister has done is no mean feat. It is extraordinary that the Bill before us is a far cry from the manifesto of two years ago, and from the promises that were made——

Senator Fiona O’Malley: Where has Senator Buttimer been for the past two years?

Senator Jerry Buttimer: ——and the big announcements made by Government. If the Members on the Government benches had listened to our proposals on savings that could be made that would not affect those on social welfare and the vulnerable, perhaps we would not be doing this. It is an extraordinary time. If one goes into social welfare offices and speaks to community welfare officers, one hears of the queues. Sometimes Government speak refers to outcomes and statistics, and we see the figures released this morning. In the Bill we are talking about people, not figures or statistics. People are looking for hope. Today is President Obama’s 100th day in office. Whatever else one may say about him, he has given people hope. His approval ratings are extraordinary for a man who is president in the middle of this economic recession. 109 Social Welfare and Pensions Bill 2009: 29 April 2009. Second Stage

[Senator Jerry Buttimer.]

People want leadership and vision and nobody is fooled anymore by this Government. Senator McDonald spoke of going out to the local election campaign. I invite her to come out with me any night of the week to experience the venom and hostility out there.

Senator Fiona O’Malley: I do not think Senator McDonald should be looking for support for Fine Gael.

Senator Jerry Buttimer: I can tell Senator O’Malley that the people are waiting. Former Taoiseach, the late Charles J. Haughey, once said of a Fine Gael/Labour budget that it was a cold calculated computer print out, and I say this is part two. This is a budget that attempts to tackle a broken economy but fails miserably. It is devoid of humanity and is lacking compassion and understanding of the modern Irish family. There is no appreciation whatsoever of families and young people who have been forced to buy houses, as Senator Prendergast stated, at inflated prices and who are stuck with mortgages. The Bill does not take cognisance of the fact that today’s Irish families are struggling. I challenge the Members on the Government benches to come to any of the four corners of this country to see that it is not the rich who are struggling. Everybody in middle-income and low-income Ireland is struggling. Senator Prendergast is correct in stating there is no account taken whatever of the different spending requirements of families and individuals. This is best exemplified by the fact that Ministers took a percentage decrease in their salaries but that was it. They have the entourage with them always and they have the all the different apparatus of State around them, and it sends the wrong message. Senators and Deputies should not receive ministerial pensions along with their salaries. It is wrong. The Minister and I were in the same position on our teaching salaries, where we did not take the money for those jobs. That provision is wrong and should not apply. One should forget about the journalists who are trying to drive this campaign. We did not take it, not because of a journalist but because we felt it was wrong. We need leadership in this House. People are distressed and upset. This is not make-up and it is not populism. The Irish people are looking for change and inspiration and it is no wonder the political class is getting it in the neck because we have not seen leadership. There was a botched attempt at a budget last month. The Minister for Finance outlined the measure in the House and three weeks later it is changed. One cannot blame the people for being angry. The golden egg is rotten. It is no more. As the Minister will be aware, we go out knocking on doors every night and the people say they have bailed out the banks, bailed out the Govern- ment and the Government has let them down. I am out four days a week talking to people and knocking on doors and that is what they are telling us. That is a fact. They feel let down and they read in the newspapers where developers do not turn up in court to pay their debts. What are we saying to people? Undoubtedly, this debate is taking place in difficult times. As the Minister will be aware, people are on social welfare for a reason. Thousands of them do not want to be on social welfare. The ESRI report today shows we are in big trouble, much of it of our own making due to over reliance on construction and property. Unemployment is at 11.84% and the ESRI is predicting 17%. With 17% of our workforce unemployed, forget about what former Taoiseach, the late Jack Lynch, said about 100,000. Look at the 17% as people devoid of work, devoid of hope and looking for help. Are we real in this House at all? We are talking about people. On a positive note, there is a willingness among people to take some pain. They will take some pain but they have been asked to take a great deal. As the Minister will be aware, there 110 Social Welfare and Pensions Bill 2009: 29 April 2009. Second Stage is significant pressure on the staff in social welfare offices and I thank them for doing great work dealing with an inordinate amount of people. They do not get credit.

An Cathaoirleach: The Senator has one minute left.

Senator Jerry Buttimer: The live register is only here to be talked about. I want to hear the Minister’s views on how the Department will implement the early child care education. Child care is important and we have not planned for it properly up to now. We must provide incentives for people to go to work. Senator Quinn eloquently put it on the record. People have not got that so far and we need to do that. We need to be creative regarding community employment schemes and we need to allow people the opportunity to go back to work. The black economy is thriving, whether Senator McDonald likes it or not. I agree with the Minister that we must tackle social welfare fraud. I will give her every support to tackle fairly and properly the people who are abusing social welfare. The black economy is alive and well, and it is well Senator McDonald knows it. It is back in action because of this Government. People do not want to go to work now because it costs them money and that is not right. Senator Boyle speaks about the dependancy culture, but where are the places for the young people? We are cutting LCA classes. The Minister, Deputy Hanafin, is a former Minister for Education and Science. The most innovative measure brought into schools was the leaving certificate applied, which I taught for eight years. The resources of that great programme have been reduced, and that is daft. In the Gallery this morning during the Order of Business there was a group of leaving certificate applied students who had a new lease of life because they had no dread of being at school. Will we return to the bad old days? I agree there is a need to modify rent supplement but we need to look at how the PRTB operates and who will negotiate on behalf of the tenant on the big issue of landlords not passing on the reduction in the cost of living.

Senator Fiona O’Malley: I welcome the Minister to the House. It is amusing to listen to Senator Buttimer’s single transferable speech. At the end of it all he realised he had no time left to make the points he genuinely wanted to make about the Bill because of this rant about whether we were being real and whether the Minister had any idea of the challenges of families and people who are forced to exist on social welfare. The Minister knows the challenges these people and families face. I was amused listening to Senator Buttimer calling for more in social welfare benefits and then asking if the Government was for real while he quoted this morning’s ESRI report. Is Senator Buttimer for real? Does he have any idea what it is like to run a country on a limited budget? Time and again he comes into the Chamber demanding that more moneys be spent on this, that and the other but with no real debate on what needs to be prioritised. I perish the thought of Senator Buttimer finding himself in government — it would be an awful peril. He would then find out that government means prioritising and taking unpalatable decisions when economic times are hard. I commend the Social Welfare and Pensions Bill for those reasons. The Minister did not have it easy in deciding to make certain cuts but she achieved fairness and a balance. She made an important choice in not cutting social welfare rates. Had she done so, she would have been deafened by the howls from the Opposition. She, instead, made the savings through cutting the Christmas bonus, the fairest choice because not every welfare recipient receives it. The Minister has indicated that if economic circumstances allow in the future, she will seek to have it restored. 111 Social Welfare and Pensions Bill 2009: 29 April 2009. Second Stage

[Senator Fiona O’Malley.]

Hopefully, economic circumstances will change. The reality, however, is the Minister must manage her budget in the face of the shocking growth in the unemployment rate and the predictions of this morning’s ESRI report. On the child care supplement changes, she stated we need to achieve better results with fewer resources. These changes are to be welcomed. As Senator McDonald pointed out, the supplement was available to parents facing challenges at a time when we had the money to do so. However, with the replacement scheme investing in a child’s education will yield much more. It is also an investment in the schools infrastructure and teachers, a wise decision by the Minister. While no one likes to have money taken from them, parents of young children in receipt of the scheme have told me this is a much better investment. The Minister’s priority when framing the Bill was to protect the vulnerable while avoiding the creation of a welfare dependency, a task she has achieved. Naturally, we all wish more money were available to support those who face the challenges of living on social welfare but one must operate within a budget. Experience of the recession in the 1980s is reflected in the Bill. I welcome the refocus on the back to work scheme which will encourage people to become self-employed. Opening up access to funds sooner rather than later is also a good development. Senator Boyle eloquently spoke of his personal experience of unemployment. Thankfully, I have never been unemployed so I have no idea of the personal trauma that it causes. The Minister has recognised how unemployed people must keep themselves upskilled. I welcome this change in the terms of various welfare allowances to include this. Regarding rent supplements, some Members are not living in the real world if they believe rents are not going down. I welcome the changes to rent supplement which reflect this reality. The Minister is the protector of these precious resources of the State which are becoming ever more precious as the amounts of moneys coming into the coffers decrease while the numbers on social welfare and dependent on the State rise. We must ensure these resources are allocated appropriately and to the people who need them most. That is why I welcome the changes in the qualification for rent supplement. It is never easy to make it more difficult for people to qualify for a supplement but the criteria must be made appropriate. The pensions area is a complex and difficult issue. The circumstances in this area have changed so much over the past five years that it has become a challenge to encourage people to invest in their own pensions. Support is needed for those who spent a lifetime working and supporting a pension scheme only to discover it may be insolvent. I am glad a framework scheme to deal with this critical area will be launched soon. Yesterday the Opposition was annoyed about how quickly this scheme will be introduced. However, it is necessary for many companies that are becoming insolvent. I wish the Minister well in tackling this complex situation. The Minister has a challenging brief which will become even more so. I welcome the fairness and flexibility with which she has framed the social welfare budget. I look forward to the Bill’s passage in the House.

Senator : When I heard Senator O’Malley lecturing Senator Buttimer on budgets, the words, “kettle”, “pot” and “black” came to mind. Unfortunately, we are in the middle of one hell of a budget buster, the worst ever seen in the State’s history. This has been a disastrous budget for the people. There is a need for more honesty from the Government as to what exactly will happen in the coming months. When the Minister for Social and Family Affairs, Deputy Mary Hanafin, delivered her original social welfare budget in October, she could not have expected the massive and rapid increase in unemployment. It must throw the 112 Social Welfare and Pensions Bill 2009: 29 April 2009. Second Stage figures worked out for the budget. Will she inform us what considerations have been given to further possible large increases in the unemployment rate for this and future budgets? How much groundwork has been prepared by the Minister with the Department of Edu- cation and Science with the early school places scheme? Will there be a smooth transition between its introduction and the phasing out of the current child care supplement? It is important people are informed exactly what these changes will entail. The take-home pay for every single family has been slashed by this new budget. If there are to be changes to child benefit, we need to know now what they will be. Families are trying to work out how much money they have now and how much they will have in six or 12 months so they can plan their budgets. There is no point telling them child benefit might be means tested or changed completely. Families deserve to know what the Government intends in this regard because it is a major issue. A comment was made during the budget debate that some families would only suffer a \7 change in their weekly income following the budget. The early child supplement is a significant part of the family income where there are three or four young children in a family. These are the same households that are being hit with negative equity and the biggest mortgages because they are the young who got married recently. They will also suffer the most from the changes being made to child benefit. The Minister must be honest with these families and tell them what is coming down the tracks. There is no point hitting them over the head with a hammer next November. The Government must give the people some idea what is happening due to the changes in the economy, some of which have been radical and have had a disproportionate psychological and financial effect on individuals. The Minister has given her reasons as to why people on social welfare will not get the Christmas bonus and the Minister’s colleagues in Fianna Fa´il and the Green Party are adamant they will not get it. There is a need to revisit this measure, however. Christmas is an important time of the year for families and to play Scrooge with them in these difficult times is wrong. The Government should not be so harsh on the most vulnerable in society with this sort of sledgehammer approach to making savings, which results from the dire financial circumstances the Government finds itself in. I was disappointed Ministers did not feel the need to take on much pain in the budget but they expect the rest of the people to suffer. As someone who still does a certain amount of general practice work, I find that people are having difficulty getting their claims processed, not just social welfare claims but also with regard to medical cards and a number of other services for which they must apply. There has been no reduction in the number of civil servants working for Ministers, however, and many of the civil servants working for the Minister, Deputy Hanafin, and for other Ministers are literally doing constituency work. Across all Departments, the Government should seek to put staff into those sectors of Government where backlogs are building up at a tremendous rate. It is amazing how long people must wait to get medical cards, which is causing serious hardship for families. I do not see a sense of urgency from any of the Departments that they must do something to transfer staff from one Department to another. There are many Departments where staff are under- utilised because of the changes in our economy. There is not the sort of radical approach and response to needs that would be the case in a normal business. With regard to changes to the Pensions Act, there is a sense — perhaps I am wrong in this — that the Minister must do this, that she is obliged under EU legislation to make some of these changes to protect private pension funds and that she is left with no recourse but to move in the direction in which she is moving. It is important that the Minister would again make her 113 Social Welfare and Pensions Bill 2009: 29 April 2009. Second Stage

[Senator Liam Twomey.] plans for the scheme as clear as possible so we can assess its full cost and decide whether it would be the most beneficial approach for everybody involved. The Minister has probably dealt with many of these issues during the debate on the Bill in the Lower House. What we are looking for here, more than anything else, is clarity. We want to see exactly what the Minister is doing and to know she has a plan for the future and that, if the situation gets worse, she will explain her plan for dealing with that eventuality. Most of all, we want the Minister to let the people know what she is considering so they can make changes in their own lives. People out there are reeling at present because of the massive financial hits they are taking and are about to take. There needs to be honesty and straightforwardness when dealing with the people of Ireland.

Senator John Paul Phelan: I welcome the Minister for this important discussion. The Govern- ment’s decision in the mini-budget to remove the Christmas bonus is very short-sighted and there is a great level of anger about it. I was on the campaign trail in Senator Twomey’s home area of Wexford over the weekend and it was an issue that was continuously raised with me by people who were directly affected. It is short-sighted in the sense that the Christmas bonus was not money that was put in people’s pockets and kept there; it was money that was spent in the economy in the run-up to Christmas. The cut will remove a great deal of spending capability for the people who receive such bonuses. It is also downright mean-spirited for that time of year. I am particularly struck by the number of pensioners who have raised the issue with me. They used to spend the money at Christmas but it will no longer be available to them. The fact that this is a direct cash injection into the economy at Christmas time and not money that would be saved or kept in any other way highlights the short-sightedness of the move by the Government. I deeply regret the decision to remove the Christmas bonus as announced in the mini-budget two weeks ago. I also wish to refer to the issue of pensions. In my area of the south east, the big issue with regard to pensions in recent months has been the case of Waterford Crystal. Many workers, having given a lifetime of service to that company, find that the pension fund contains no funds and that after perhaps more than 40 years of service, they have no pension provision. I was disappointed with the Minister’s remarks in a television interview that they could fall back on the State pension. It is not good enough that people would pay into a pension scheme such as that at Waterford Crystal over a lifetime’s work and then, when the company gets into financial difficulty, find that the pension scheme as instituted no longer exists. This results from a complete failure of the Government to implement EU directives and goes back to the early 1980s, when an EU directive specifically dealt with the area of pensions and pensions protection but was never fully transposed into Irish law. As a result of the Govern- ment failure to transpose the directive, these workers in Waterford Crystal and other bodies across the country find themselves with no pensions. It is interesting to look across the water to Britain, which has protected similar pension schemes up to, I understand, a total of £30,000, depending on years of service. The British Government has produced a programme where those pensions would be protected. A similar programme should have been introduced in this country and should still be introduced to protect those people who find themselves in that unenviable situation. It is particularly galling for people in that situation when they read about the lavish pay-offs to the Ministers of State who were removed from their positions last week by the Taoiseach and received \53,000 in a golden handshake. The Minister and some of her colleagues have featured in the media recently on the level of pension provision they will receive, which is 114 Social Welfare and Pensions Bill 2009: 29 April 2009. Second Stage particularly galling for people who find themselves after a lifetime’s work without any hope of the pension scheme they believed would support them in their retirement years. The Bill is a bit of a smokescreen. The Government has delayed tackling the serious obli- gations towards workers’ pension entitlements that we have discussed on the Opposition ben- ches for many months. The Government ignored the EU insolvency directive by failing to transcribe it into Irish law. That directive has been on the books for approximately 30 years. The Government continually tells people why they should vote in a particular way on the Lisbon treaty, but it is difficult to square that message with the failure of Government to transcribe a European directive that would have directly improved the lives of retired workers if it were implemented here. I am also disappointed at the time allowed for the Bill. I do not know why Second Stage could not have been taken today with Committee and Remaining Stages taken tomorrow or next week. I believe it could have been taken next week.

Acting Chairman (Senator Fiona O’Malley): The Senator has one minute remaining.

Senator John Paul Phelan: The provisions of the Bill make it clear that the Minister has an ear to listen to the pensions industry rather than those people who are losing their long-term pension entitlements, such as those who worked for Waterford Crystal. In recent years the Government has granted additional tax write-offs up to, I believe, approximately \50 billion for people who want to pay into private pension schemes. That money is directly foregone by the Revenue Commissioners because the Government has decided to go down that route. I am sad that policy is being continued in the Bill.

Acting Chairman: The Senator should conclude at this point.

Senator John Paul Phelan: I remind the Minister of a meeting of the Oireachtas Joint Com- mittee on Social and Family Affairs in November 2005 where Patrick Burke, then vice-chair- person of the Irish Association of Pension Funds, said:

There is cause for the Oireachtas and the State to support the defined benefit system. We have made some recommendations in that regard, which the joint committee will see in the material provided, one of which relates to the State annuity fund.

In response Liam Murphy, principal officer in the Department of Finance, said:

In administering this fund, the State is faced with the same factors as private sector pro- viders, namely, demographic factors, longevity, interest rates and investment returns. There is no reason to suggest that the State could deliver any real cost reductions compared to private sector providers. The State would also be forced to establish a new administrative apparatus and pay for appropriate skills. As an official in the Department of Finance, I must state that there is a danger that the State annuity fund could end up putting a new and indeterminate liability on the Exchequer and general body of taxpayers.

I ask the Minister to outline what has changed since 2005. I stated that we have written off approximately \50 billion. We have given a \50 billion Government subsidy directly to those who have invested privately in pension provision.

Acting Chairman: The Senator is now out of time.

Senator John Paul Phelan: I will finish on this point. I saw no commensurate measures being taken for those who are not in a position to provide private pensions for themselves. The Bill does nothing to address that anomaly. 115 Social Welfare and Pensions Bill 2009: 29 April 2009. Second Stage

Senator : I welcome the Minister to the House once again. Dealing with the Social Welfare and Pensions Bill usually gives the opportunity not simply to reflect on the matters contained in the Bill but also to discuss some of the issues affecting the Department of Social and Family Affairs that need urgent consideration. I appreciate the very difficult economic times in which we find ourselves. The ESRI report published today shows the chal- lenges the Department will face in the next 12 months or two years. The level of social welfare spending that will be necessary to respond to the economic crisis will be huge. It will be a challenge for the Minister to secure sufficient funding from the Department of Finance. There is also a challenge to society to respond to the stresses and pressures that will come in particular on families who are experiencing poverty perhaps for the first time. The non-payment of the Christmas bonus has been the cause of much public debate and concern. We are all aware that for many, particularly the elderly, the Christmas bonus was seen as integral to their financial package for the year and there is upset, disappointment and concern at its removal. The Minister indicated that should sufficient savings be made under other headings within her Department’s budget she would be in a position to review the matter. I hope those savings can be made and she will be in a position to reinstate the bonus, which would be very much welcomed by the majority of people not just here in the Oireachtas but also in the wider population. On the previous occasion the Minister was in the House I spoke about the carer’s allowance schemes operated by the Department of Social and Family Affairs. I expressed my disappoint- ment that the progress the Department made for a number of years under the stewardship of the late Se´amus Brennan appears to have come to a halt. The late Minister was 2 o’clock very generous in his response to carers. He made significant improvements to means testing by increasing the income disregard. He certainly ensured that a significant number of additional people qualified for carer’s allowance. I appreciate where the Minister is coming from financially, but we need to continue to work to improve carer’s allow- ance. We need to reflect further on what the former Minister was working on. Certainly he indicated here on a few occasions that he was sympathetic to the possibility of removing the financial means test for carers and providing the full carer’s allowance for full-time carers of people in need of full-time care. The figures presented here some years ago by Mr. Brennan were relatively modest. I hope this is a matter the Minister will consider. While I appreciate the financial position in which the Government finds itself, there are certain sectors in which we must continue to make efforts to improve society and care of the elderly is very much towards the top of my agenda in that regard. The carer’s allowance scheme, which works very well, needs to be reviewed and expanded. I presume the Minister for Health and Children will finalise the fair deal nursing home scheme at some stage in the near future. Under that scheme the taxpayer will still foot a considerable proportion of the bill. Under the carer’s allowance there is a much better equation financially and from a societal point of view. We can allow the maximum number of people to remain in their own homes and communities if we can expand on the carer’s allowance scheme. I hope the Minister will give some policy consideration to the matter. At the kernel of improv- ing the carer’s allowance would be the abolition of the means test, making a bold statement of where we stand as a society, that we are willing to support those people who support the elderly in their own homes and communities. I hope we can return to that debate again. I appreciate the changes in the rent supplement scheme are causing some confusion and concern to people. However, I accept that rents in the current economic climate should be reducing substantially and therefore the Department would hope that less rent allowance per applicant would be sufficient. It is important to ensure rent allowance is paid as quickly as possible. I came across a few cases recently where people on rent allowance had to change 116 Social Welfare and Pensions Bill 2009: 29 April 2009. Second Stage accommodation. They found it difficult to move seamlessly from accommodation A to accom- modation B without their rent allowance being cut off and having to reapply for it. They then had to get the arrears sorted out. The State does not gain, but the applicant suffers over a month or six weeks without receiving the supplement. We must try to resolve those anomalies. I am aware the Minister is attempting to address the need for sufficient staff in local offices to deal with claims. Sadly, unemployment benefit claims will go through the roof over the course of the next two years, but we must try to ensure that those claims are processed and paid as quickly as possible. That will require staffing improvements.

Minister for Social and Family Affairs (Deputy Mary Hanafin): I thank Senators for their contributions and for the informed debate we have had. Everybody recognises this has been the most difficult budget for many years. The decisions made were not taken lightly as we were very conscious of their impact on people and their families throughout the country. However, we have had to increase taxes and borrowing to pay for social welfare. It is sad that because of the large numbers of people losing their jobs, we needed to increase the provision for the social welfare budget, which is now over \21 billion. The best way to reduce the need for this is to get people back into work, remove them from social welfare and ensure they are contributing again to the economy through work and taxes. However, until that happens, we need to make provision for them. It is not sustainable for us to spend \6 out of every \10 on social welfare when demand is so great on health, education, infrastructure and across all sections of society. For that reason, it was important when making provision in the budget to increase social welfare to examine how money could be saved in the Department and we did that at the absolute minimum. Reference has been made to the ESRI. The ESRI recognises that the Government is taking measures to deal with the deterioration in the public finances and acknowledges that the measures taken are appropriate. Until we get the public finances in order, we will not be in a position to improve services and financial provision for those on welfare. Our overall aim is to keep people at work and to support them and their families. I accept that this is a difficult time for people. It is difficult for people who lose jobs or take a drop in income and for young people who cannot find jobs. As politicians, we know how distressing it is in our clinics to hear the despair of people who come in for advice. When we get our public finances back in order through the measures we have taken — the guarantee to the banks, capitalisation, nationalis- ation of Anglo Irish Bank, the agreements reached with the banks, the setting up of NAMA and removal of toxic assets so that the banks can free up money to professionals and businesses and offer credit and loans — it will help regenerate the economy. I understand it is difficult to see the link between the big banks and the small businessman, but the big banks are currently so busy servicing their big debts that they are not looking after small businesses. That is the reason the Government has taken the measures it has taken. In the meantime, we have had to take decisions that have impacted severely on people. I know how difficult that is for them. One of the most difficult decisions we made related to the Christmas bonus. It would have been unthinkable to cut the weekly rates of assistance because far more people are being paid social welfare every week than receive the Christmas bonus. It is bad enough for people to lose their jobs and to be told they will only receive \204.30 a week without suddenly turning to them and telling them that will be cut also. That would have been extremely difficult for far too many people. Out of all the cuts, the Christmas bonus is the one the Government would most like to be able to restore. That will depend on whether we have some windfall or whether we are able to make additional savings. However, the full benefit of the Christmas bonus costs \223 million, and that amount is not found easily. Notwithstanding the fact that cutting the Christmas bonus was a difficult decision and is very tough on people, 117 Social Welfare and Pensions Bill 2009: 29 April 2009. Second Stage

[Deputy Mary Hanafin.] every effort will be made to try to restore it. However, the warning must go out that it is a significant amount of money. The introduction of the early child care pre-school provision has been generally welcomed. It is, undoubtedly, a far better way of utilising the money than by making direct payments. Ultimately, the children will benefit most. Children who go into early child care and education will gain long-term benefits for their education and future lives. Senators have asked how the scheme will work. It will operate under the Office of the Minister for Children and will ensure equality of opportunity for all children. Community and private pre-school services that meet the requirements of the scheme will be invited to register by the end of May 2009. Then parents will choose a facility in their local area to which they want to send their child. The children enrolled in playschools will receive free pre-school provision of three hours per day, five days a week over a 38-week year. This equates to a weekly capitation grant of \64.50 and there will be no charge to the parent. Where children are enrolled in full-time or part-time child care services, which receive free pre-school provision of two hours and 15 minutes per day five days a week over a 50-week period, the weekly capitation grant will be \48.50, with parents paying for their child care net of that amount. The financial benefit of the scheme for a single child is worth over \2,400. All children aged between three years and three months and four years and six months in September each year will be eligible and parents can enrol their child in the participating service of their choice. The provision comes into effect in January 2010. It is a very good example of how, with fewer resources, we can make better use of the money available. Senators have also raised the issue of clamping down on fraud, which has been a priority for me since I took up my position. Senators will be well aware of the initiatives we took last July to ensure people collect their money every week at the post office. This is a control measure as the money does not automatically go into accounts through electronic transfer. This measure has been strengthened further by requiring that claimants have photo ID when collecting pay- ments because there was evidence — not only anecdotal evidence — that the wrong people were collecting payments or that people were returning to the country to collect them. To counteract this, we have officers working with the immigration bureau at the airport so as to catch people who are solely welfare tourists. We have also made a serious attempt to clamp down on cross-Border welfare tourism and fraud and our multi-agency checks on the Border have been very successful. Our inspectors have also increased the number of house visits made. In some cases they found people at an address who were not resident there or sometimes far too many people who claimed to be resident, all of whom were claiming social welfare. Our child benefit controls are very strict. We made significant savings in that area last year. The European wide situation is that people working in one country whose children are in another can receive child benefit — in Ireland this applies to the early child care supplement also even though the children are not resident here. However, in recent months, because of the downturn in the economy, many people who had been making a very good contribution to this economy have lost their jobs and gone home. We must ensure they do not still claim the child benefit and we have been successful in clamping down on that. There is evidence, as mentioned by Senators, of an increase in the black economy. It is just as important that we clamp down on people who are claiming jobseeker’s benefit when they are not genuinely seeking work. We must also clamp down on people who are claiming other benefits under false pretences, such as disability allowance. There is huge pressure on our staff to ensure we investigate these areas. The public has been especially helpful, given the 500% increase in the number of notifi- cations by the public last year. Each instance is investigated without any reference to the complainant who does not need to give information on him or herself. We investigate irrespec- 118 Social Welfare and Pensions Bill 2009: 29 April 2009. Second Stage tive of how or to whom the complaint is made. As it is a serious and time-consuming element of the Department’s work, staffing is an issue in that we must ensure there are no undue delays in processing jobseeker’s payment applications. Through the public service system, we have been able to get approximately 260 additional staff but we have requested and expect more. They must be trained and placed to protect the processing side of the applications, which must be dealt with speedily, while handling fraud matters. People have mentioned the Bill’s rent supplement provisions. Rents are decreasing through- out the country. People in private accommodation who are still working and are not in receipt of rent supplement payments are negotiating reductions with their landlords. It would be unthinkable that a State client could determine the limit on rent. Landlords have become realistic because they know that the rent supplement is a regular income from the State via tenants. Elsewhere, many people who have lost their jobs or accepted income cuts are finding it difficult to meet their payments. As such, it is important we make these reductions. Regarding 18 and 19 year olds, it is welcome that Senators recognise the importance of the incentives in the Bill. The number of places in courses in the Department of Education and Science and FA´ S has been increased. There are sufficient places but young people must be given incentives to take them up. In a number of pilot projects, young people were sent on training courses instead of being given their jobseeker’s payments. The projects did not work because the young people knew they did not need to do them and could get the money while sitting at home. I am not implying that every 18 or 19 year old who is signing on does so willingly but there is a cohort of intergenerational welfare dependants who must be guided in the right direction early. This is the best incentive to do so. The other major consideration in the Bill is the pensions provision which is complex and important. The number of insolvent companies has doubled in the past year and the number of pension funds winding up has increased significantly in recent months. The Bill tries to give an added benefit to the workers involved. It is unfair that someone who retired last month can not only get a guaranteed pension, but an increase as well, whereas the worker who is still contributing to the fund might not get any entitlement owing to its being in deficit. The industry has been making a good profit on the purchase of annuities. Where a fund is in deficit, the money in question could be going to the workers. The relevant provisions in the Bill, namely, those that change the order of priorities on post-retirement increases where a fund is being restructured or wound up and those regarding the new pensions insolvency pay- ment scheme, PIPS, as opposed to market annuities, will give workers extra money. We were anxious to include these provisions as quickly as possible since companies are becoming insol- vent or, having already taken the decision to wind up their funds, are working to meet their liabilities. The provision is limited to pension funds in deficit where a company is insolvent because we must be conscious of state aid and competition issues. We cannot be seen to be distorting the market or favouring certain undertakings, goods or supports. It is correct to have a three-year review period if we are to determine how the scheme works. We will keep a close eye on how it benefits workers and supports companies. I appreciate that these significant and complex changes are being made late in the consideration of the Bill but they are intended to support as many workers as possible while protecting current pensions. The Department’s overall aim is to support families and people. Today’s debate saw a con- flict. On the one hand, we were saying that we should be more generous and do more to look after carers and the unemployed, which I accept. On the other, an example was provided in a letter which outlined that a family’s members were better off on welfare than at work. We can never allow a situation to develop in which someone is better off not working.

Senator Nicky McFadden: That has been the case. 119 Social Welfare and Pensions Bill 2009: 29 April 2009. Second Stage

Deputy Mary Hanafin: As public representatives, we cannot ask that social welfare payments be protected while people’s incomes are decreasing. There must be a correlation between the two. I would rather be a Minister for Social and Family Affairs who could give significant increases, but those were the days in which people’s incomes were increasing and the Exchequer received considerable tax revenue. It is no longer the case that money is available to the State. We must be cognisant of the fact that those workers who are supporting their families despite wage cuts and large mortgage repayments should be better off than people on social welfare. It is an issue of competitiveness. I would have viewed the figure supplied in the letter to be an underestimate. If I remember correctly, a medical card has a value of \500, but its value to a couple with four children would be higher, given initial pharmacy bills of \100 per month. Devising our budgets to protect the most vulnerable while encouraging people into the workforce is challenging. The Bill tries to provide for the \21 billion that is required to pay for social welfare and to protect the vulner- able who are dependent on it. It also takes new initiatives, namely, the early child care scheme, encouraging people into enterprise and education, ensuring rent supplement does not dictate the market and protecting workers in defined benefit schemes to some degree. As with every- thing the Government does, it is a balancing act and a matter of difficult choices. While it is difficult to make decisions in these times, the situation is more difficult for families who are suffering and the more than 384,000 people on the live register. They are my prime concern and are the reason for this Bill. I thank Senators for their consideration.

Senator Nicky McFadden: I thank the Minister.

Question put. The Seanad divided: Ta´, 27; Nı´l, 20.

Ta´

Boyle, Dan. McDonald, Lisa. Brady, Martin. O´ Domhnaill, Brian. Butler, Larry. O´ Murchu´ , Labhra´s. Callanan, Peter. O’Brien, Francis. Carty, John. O’Donovan, Denis. Cassidy, Donie. O’Malley, Fiona. Corrigan, Maria. O’Sullivan, Ned. Daly, Mark. Ormonde, Ann. de Bu´ rca, De´irdre. Phelan, Kieran. Ellis, John. Quinn, Feargal. Feeney, Geraldine. Walsh, Jim. Glynn, Camillus. White, Mary M. Hanafin, John. Wilson, Diarmuid. MacSharry, Marc.

Nı´l

Bacik, Ivana. Hannigan, Dominic. Bradford, Paul. Healy Eames, Fidelma. Burke, Paddy. McFadden, Nicky. Buttimer, Jerry. O’Toole, Joe. Phelan, John Paul. Cannon, Ciaran. Regan, Eugene. Coffey, Paudie. Ross, Shane. Coghlan, Paul. Ryan, Brendan. Cummins, Maurice. Twomey, Liam. Donohoe, Paschal. White, Alex. Fitzgerald, Frances.

Tellers: Ta´, Senators Camillus Glynn and Diarmuid Wilson; Nı´l, Senators and Nicky McFadden.

120 Social Welfare and Pensions Bill 2009: 29 April 2009. Committee Stage

Question declared carried.

An Cathaoirleach: When is it proposed to take Committee Stage?

Senator Donie Cassidy: At 3.15 p.m. Question, “That Committee Stage be taken at 3.15 p.m.”, put and declared carried.

Sitting suspended at 2.30 p.m. and resumed at 3.15 p.m.

Social Welfare and Pensions Bill 2009: Committee Stage. An Leas-Chathaoirleach: I welcome the Minister for Social and Family Affairs back to the House.

Sections 1 and 2 agreed to.

NEW SECTION.

Senator Phil Prendergast: I move amendment No. 1:

In page 6, before section 3, but in Part 2, to insert the following new section:

3.—The Minister shall as soon as may be after the passing of this Act prepare and lay before both Houses of the Oireachtas a report on the implications of new control measures to make it compulsory for a registered nursing home (public and private) to notify the Department if a person is resident with them for a month or more.”.

I welcome the Minister. She would already be aware that we have had cases where an older person has been admitted to a nursing home but continues to receive a household benefit package and fuel allowance long after he or she has left the home. Currently, the issue is left to the person or his or her family to deal with when it would be the last thing on their mind.

Minister for Social and Family Affairs (Deputy Mary Hanafin): As I mentioned earlier, control measures for combating fraud are a serious issue which I have prioritised. I am not suggesting for one moment that fraud is behind this issue but older people in long-term residen- tial care are not entitled to the household benefits or the living alone allowance. We do not have a system where there is an automatic notification from the nursing homes, although we have our own measures, even by way of investigating where usage is very low or non-existent with regard to electricity, for example. We may be able to terminate household benefits in such an event. We may also contact families in writing, etc. It is a good idea for us to have a greater connection between nursing homes and ourselves. I do not propose to accept the amendment because it is looking for a report, although I am aware that is the mechanism which must be used. The idea behind it is a good one and I will investigate over the next few months how we can have a greater relationship with nursing homes and how they may notify us of issues.

Amendment, by leave, withdrawn.

Section 3 agreed to.

Amendment No. 2 not moved.

Section 4 agreed to. 121 Social Welfare and Pensions Bill 2009: 29 April 2009. Committee Stage

SECTION 5.

Question proposed: “That section 5 stand part of the Bill.”

Senator Phil Prendergast: My party is opposed to this entire section because there is a com- plete lack of clarity with regard to how the new section 62(5)(a)(iv) will operate. The Minister failed to answer any of the questions put to her in this regard on Second Stage.

Deputy Mary Hanafin: This section relates to customer activation, information profiling, the new short-term schemes, etc. The Department of Social and Family Affairs is fortunate that it has access to the skills of 60 facilitators and 40 adult guidance officers. It also has access to vocational education committee information officers, is involved with FA´ S and is involved in partnerships with local employment schemes. These various individuals and groups are in a position to provide people with information. This is significant for two groups of people, the first of which is that comprising 18 or 19 year olds. We need to ensure these individuals can obtain access to the courses they wish to pursue. It is important that people who are claiming the jobseeker’s allowance should make them- selves available for training. The national employment action plan has been extremely success- ful in removing people from the live register. This section will ensure they do not merely sit back and state that they are not willing to participate. We are merely putting into legislation what is, in effect, already happening with regard to the number of people we are referring. The section is designed to encourage people to avail of upskilling, training and educational opportunities in order that they might take up good job opportunities when they arise.

Question put and agreed to.

SECTION 6.

Amendments Nos. 3 and 4 not moved.

Senator Nicky McFadden: I move amendment No. 5:

In page 9, between lines 47 and 48, to insert the following new subsection:

“(5) The Minister shall, prior to the commencement of this section, publish the types of courses that shall apply under this section, the availability of those courses and the arrange- ments that have been made to ensure sufficient provision of public transport to such course.”.

This amendment relates to the publication of information relating to particular courses and suggests that sufficient public transport be made available to those attending such courses.

Deputy Mary Hanafin: Section 6 is designed to encourage increasing numbers of young people to avail of educational and training opportunities. Our priority, therefore, is to ensure an adequate number of places will be available in the first instance. The Ta´naiste and Minister for Enterprise, Trade and Employment, the Minister for Education and Science and I have, through meetings of the Cabinet sub-committee on economic renewal, made good progress on ensuring we can meet the needs of the young people to whom I refer. Thousands of courses are available throughout the country because different VECs and FA´ S centres provide such courses. In addition, courses are available at Traveller training centres and people can avail of adult literacy courses. As a result, it would be impossible to publish a list of courses for the entire country. However, we are making arrangements to make available to 18 and 19 year olds who are signing on information on courses provided locally. This will allow them to investigate the courses that might best suit their needs. Their facilitators will 122 Social Welfare and Pensions Bill 2009: 29 April 2009. Committee Stage then decide whether the courses they have chosen are appropriate. If the latter proves to be the case, these people can then be transferred to the relevant courses and instead of just receiving \100 jobseeker’s benefit they will also obtain the allowances attaching to the courses they have chosen to pursue. I accept that the intention behind the amendment is to ensure information is made available. However, it would be impossible to provide such information on a nationwide basis. We will, therefore, provide such information on a local basis.

Senator Nicky McFadden: I thank the Minister for that. Will she ensure that in areas where public transport is either limited or non-existent, consideration will be given to providing such transport?

Deputy Mary Hanafin: People on FA´ S courses are paid travel and child care allowances. It will depend, therefore, on the nature of the course on which a person obtains a place whether he or she will obtain an allowance for travel.

Amendment, by leave, withdrawn.

Question proposed: “That section 6 stand part of the Bill.”

Senator Phil Prendergast: I oppose this section for the same reason I opposed section 5. There is a complete lack of clarity with regard to how the new section 141(4)(d) will operate. Again, the Minister did not provide clear answers to the questions put to her on Second Stage.

Deputy Mary Hanafin: As already stated, an 18 year old who signs on will, if he or she is fully qualified, receive a payment of \100 per week. However, he or she will also be given information on the providers of education and training courses in the local area. If he or she participates in a Youthreach, FA´ S, Traveller centre or back to education course, he or she will also qualify for the relevant allowance. This provides young people with a real incentive to participate in courses rather than beginning their adult lives by being dependent on social welfare payments. The Bill indicates what will be the actual allowance. As already indicated, however, there are many exemptions. For example, those with children, those leaving State care and those who are homeless and vulnerable will be exempt. People with a genuine need and who do not have families to support them are specifically listed. We must encourage young people to avail of education and training opportunities. As stated earlier, the two pilot schemes were not successful. The reason for this was that there was no financial incentive for the young people involved. There are those who do not want to be on welfare payments and who want to get off them as quickly as possible. However, there are others whose families have been on such payments for generations and who would be happy to remain in their current situation rather than taking control of their lives and ensuring they are no longer dependent on welfare. We must target these individuals.

Question put and agreed to.

SECTION 7.

An Leas-Chathaoirleach: Amendments Nos. 6 to 9, inclusive, are related and can be taken together by agreement. Is that agreed? Agreed.

Senator Nicky McFadden: I move amendment No. 6:

In page 10, line 1, to insert the following new subsection: 123 Social Welfare and Pensions Bill 2009: 29 April 2009. Committee Stage

[Senator Nicky McFadden.]

“(1) The Minister shall, within three months of the commencement of this section, ensure that all rents the subject of this section shall be renegotiated to reflect existing market conditions.”.

I welcome what the Minister said in respect of this matter on Second Stage. Amendment No. 8 states:

(1) The Minister shall, within three months of the commencement of this section, ensure that the Revenue Commissioners are notified of the details of all properties to which a payment under this section applies or shall apply in the future.

We are seeking that landlords and their properties should be registered and that they should pay tax at the correct rate. In other words, those who are set to gain the most should pay the tax.

Deputy Mary Hanafin: Everyone wants to ensure the rent scheme will operate properly and that ultimately the money will only be paid to legitimate landlords who are providing accommodation of a proper standard. At present, community welfare officers are responsible for disbursing this funding. However, matters such as housing, the condition thereof, etc. come under the remit of the local authorities. I have been working closely with the different groups to try to ensure that not only will we obtain best value for money but also that the needs of the people who avail of the scheme will be met. One of the difficulties which arises is that rent supplement is not paid directly to landlords. It is paid to tenants who then pay it to their landlords. Currently there is great choice available so there is no reason for a tenant to be in substandard accommodation or to have a dodgy landlord. That can be rectified. We are examining the operation of the rent supplement scheme to see how it can be improved. The changes in the Bill reflect the current property and econ- omic situations and that is why we had to introduce them.

Senator Nicky McFadden: I welcome the Minister’s reply. Unfortunately, not all properties conform to the prescribed standard. Better legislation and enforcement is required to ensure landlords are compliant and pay their dues. I look forward to the Minister introducing the necessary provisions.

Amendment, by leave, withdrawn.

Senator Nicky McFadden: I move amendment No. 7:

In page 10, line 1, to insert the following new subsection:

“(1) The Minister shall ensure that any reduction made in a payment made under this section shall be proportionate and reflect the market reality in the residential area to which it applies.”.

An Leas-Chathaoirleach: Is amendment No. 7 being pressed?

Senator Nicky McFadden: I wish to comment briefly on the amendment.

An Leas-Chathaoirleach: It was discussed with amendment No. 6.

Senator Nicky McFadden: So I cannot speak on it.

An Leas-Chathaoirleach: Is amendment No. 7 being pressed? 124 Social Welfare and Pensions Bill 2009: 29 April 2009. Committee Stage

Senator Nicky McFadden: Yes, because the Leas-Chathaoirleach would not let me speak on it.

Amendment put and declared lost.

Amendments Nos. 8 and 9 not moved.

Senator Pearse Doherty: I move amendment No. 10:

In page 11, lines 24 to 48 and in page 12, lines 1 to 10, to delete paragraph (c).

The amendment deals with child benefit as outlined in page 11 of the Bill. We are especially concerned about low income families with teenage children in education. The Bill proposes to remove their only form of support while they continue their education. As the Minister well knows from her previous portfolio there are many families with teenage children in education and many low income families with children who are still in second level education at 18 years of age who rely on child benefit while their children do their leaving certificate. We feel strongly on this point and look forward to the Minister clarifying the section.

Deputy Mary Hanafin: I thought amendment No. 10 was about rent supplement changes.

Senator Pearse Doherty: I am sorry. I got the amendments mixed up. I wish to withdraw that amendment.

Amendment, by leave, withdrawn.

Question proposed: “That section 7 stand part of the Bill.”

Senator Phil Prendergast: I wish to make only one comment on section 7 because it was discussed very well on Second Stage. The new proposals on the rent supplement put many people at risk of homelessness.

Deputy Mary Hanafin: Owing to mobile telephone interference I did not catch what the Senator said.

Senator Phil Prendergast: I do not know what happened there.

Deputy Mary Hanafin: It was somebody else’s telephone.

Senator Phil Prendergast: Yes. The new proposals will put many people at risk of home- lessness.

Senator Nicky McFadden: I received a representation on this issue at lunch time. The person in question, who is a single man, will not be able to afford his existing accommodation because of the changes in rent supplement. I have raised previously the issue of single men who are down on their luck. That man will not be able to continue to pay his rent. It has been stated that rents have come down but that is not the case everywhere. We also discussed negotiating with the landlord about the rent. That is easier if one is in private rented accommodation and one is working. If a landlord knows that one is getting supplementary welfare he or she will not be as amenable to negotiation because he or she is under the illusion that the tenant is getting the money from the State.

Deputy Mary Hanafin: To try to support tenants in that situation we will be writing to them outlining the reductions that have been made to the rent supplement so that they can use the 125 Social Welfare and Pensions Bill 2009: 29 April 2009. Committee Stage

[Deputy Mary Hanafin.] information in discussions with their landlords. We will also be advertising in the national print media so that landlords will be aware that cuts have been made. It will not be a case of them assuming that tenants are receiving money from the State and that they do not believe them. Landlords throughout the country are reducing rents for private tenants and we are expecting they will do the same for those on rent supplement. I accept that rents for single people have not reduced to the same extent. We will take that into account in our review of new tenancies and rent reviews.

Senator Nicky McFadden: Especially for single men.

Deputy Mary Hanafin: Yes.

Question put and agreed to.

SECTION 8.

Question proposed: “That section 8 stand part of the Bill.”

Senator Phil Prendergast: I oppose the section because it halves and eventually abolishes the early child care supplement.

Deputy Mary Hanafin: There is a bit of a conflict in that people welcome the introduction of the preschool year. They think it is a good idea but it has to be funded from somewhere. We are not in a situation where we can continue to pay the supplement and introduce the preschool year. On balance, it is better to take the direction we did.

Senator Nicky McFadden: We oppose the section also. We acknowledge the provision of preschool hours for every morning but I am not sure whether the way the Minister is dealing with the matter will target the children who are most in need. For that reason we oppose the section.

Question put and agreed to.

SECTION 9.

An Leas-Chathaoirleach: Amendments Nos. 11 and 12 are related and can be taken together by agreement. Is that agreed? Agreed.

Senator Phil Prendergast: I move amendment No. 11:

In page 12, line 22, after “benefit” to insert the following:

“, including information relating to a claimant’s language skills, educational attainment and length of residency in the State,”.

We are opposed to this section because it appears to provide for a reduced rate of payment for social welfare allowances and jobseeker’s allowance for under 20s without guaranteeing a place on a course and without providing for a full payment when the claimant does not secure a place on a course.

Deputy Mary Hanafin: There are courses for everybody. There are more courses available throughout the country than ever before. We will work with the Department of Education and Science to ensure priority is given to 18 year olds and 19 year olds. We would like to see them doing courses that would lead to them getting skills that would help them to get jobs. That is 126 Social Welfare and Pensions Bill 2009: 29 April 2009. Committee Stage what is behind the Youthreach programme. Many young people, especially those who left school early, have not completed their leaving certificate and there is a great incentive for them to do that. On the one hand it might seem harsh that one is just cutting the payment for 18 year olds and 19 year olds but it is important to remember that it is only for new claimants. It is not as if those people have got used to receiving \204 per week and suddenly they are on \100. Getting \100 per week provides a great incentive for a young person to go and do something better for himself or herself.

Amendment, by leave, withdrawn.

Senator Nicky McFadden: I move amendment No. 12:

In page 12, between lines 36 and 37, to insert the following:

“(1C) The Minster shall, within three months of the commencement of this section, lay before the Houses of the Oireachtas the details of what is required to be furnished by persons affected by this section.”.

Perhaps the Leas-Chathaoirleach would outline where we are at.

An Leas-Chathaoirleach: We are on section 9, amendment No. 12.

Deputy Mary Hanafin: It is about profiling.

Senator Nicky McFadden: Go raibh maith agat. The amendment seeks that “The Minister shall, within three months of the commencement of this section, lay before the Houses of the Oireachtas the details of what is required to be furnished by persons affected by this section.” The Minister indicated there are courses for everyone but people need to be made aware of what is available to them.

Deputy Mary Hanafin: One of the first things that struck me with regard to people who make applications for social welfare is the fact that we gather very little information about them. Then we send them to FA´ S, which fills in another form and gathers the information that is needed. It would be better, more efficient and in the client’s best interest if they give infor- mation such as their age, education experience or work experience when they fill in the form in the first instance. It is not appropriate to list specifically in the Bill what information would be required because we need to do this in the best interests of the client. We would have that information and refer the client as quickly as possible to the jobs facilitator or whoever might be able to advise them on what is necessary for them. This provision allows the Department to build up a better profile of the person. We already get the information on habitual residency, which is important, but the issue is how best we can use that information in the interests of the client. It is not appropriate to be specific at this stage other than to give the power to get the type of information which would facilitate targeted interventions for people and support them into training.

Senator Nicky McFadden: My concern is that there would not be duplication of courses. There should be a type of portfolio of what people have done already so they could be directed towards a course that would be most applicable to that experience. The ultimate goal would be that they would get a job at the end of the process.

127 Social Welfare and Pensions Bill 2009: 29 April 2009. Committee Stage

Deputy Mary Hanafin: That is the ultimate goal. I am trying to ensure there is no duplication and that we can finally get agencies, Departments and systems talking to each other in the interests of the individual.

Senator Nicky McFadden: Exactly.

Amendment, by leave, withdrawn.

Section 9 agreed to.

Sections 10 and 11 agreed to.

SECTION 12.

Question proposed: “That section 12 stand part of the Bill.”

Senator Phil Prendergast: I oppose section 12 because it introduces extra taxes on people with low and modest incomes.

Question put and agreed to.

Sections 13 to 15, inclusive, agreed to.

SECTION 16.

Senator Dominic Hannigan: I move amendment No. 13:

In page 21, line 7, after “Pensions Act 2009,” to insert the following:

“or whose liabilities are commenced to be discharged after that date”.

Currently the clause is limited to schemes that are wound up after the passing of this Bill. However, we wish to have one scheme included in this, the SR Technics scheme, which was wound up three weeks ago. We ask that this amendment be accepted. It provides for companies whose liabilities are commenced to be discharged after the date. A total of 1,000 workers lost their jobs at the airport in north County Dublin recently. Their pensions are at risk and this amendment seeks to ensure they can gain from the worthwhile provisions in this Bill.

Deputy Mary Hanafin: When we published the amendments yesterday, we became aware of the fact that we might be excluding some companies which had made the decision to wind up but had not discharged their liabilities. However, following an amendment I tabled yesterday, the Bill before the Seanad includes the provision Senator Hannigan seeks. The Bill now reads: “or had wound up and had not discharged any of the liabilities of the scheme at the date of the passing of the Social Welfare and Pensions Act 2009”. If a company had already made the decision to wind up but had not yet got to the stage of going to the market, for example, to purchase the annuities, it is covered, provided it is an insolvent company and there is a funding deficit.

Senator Dominic Hannigan: I think that would suffice but I seek absolute clarity that the Bill as it stands will allow SR Technics to benefit from it. Is that what the Minister is saying? If so, I can withdraw the amendment.

Deputy Mary Hanafin: I am not saying that. Any company which is insolvent, has a pension fund in deficit and which has already made the decision to wind up or has yet to make the decision to wind up and has not discharged any of the liabilities of the scheme as of the date 128 Social Welfare and Pensions Bill 2009: 29 April 2009. Committee Stage of the passing of the Bill will qualify under the provision. I cannot speak about any particular company because obviously there is a process the companies must go through regarding certifi- cation and so forth relating to their insolvency.

Senator Dominic Hannigan: That sounds very promising but I am concerned about the word “insolvency”. The SR Technics company is not technically insolvent in the current state of play. I believe the Minister has gone a long way with this provision but I seek absolute clarity before I can withdraw the amendment.

Senator Nicky McFadden: I support Senator Hannigan. We spoke about other companies this morning such as Waterford Glass. Bord na Mo´ na and the ESB. Their pension funds are in trouble yet they are solvent companies.

Deputy Mary Hanafin: This is a specific scheme with two important criteria — an insolvent company and a pension fund in deficit. Those criteria must be met under the scheme. Where a company meets those criteria, even if it has made the decision to wind up and has not discharged its liabilities, it is covered. The Senator’s amendment is already in the Bill but I cannot say whether it covers a specific company in the country. The specific criteria the com- pany must meet are insolvency and the pension fund in deficit.

Senator Dominic Hannigan: I thank the Minister. I have tabled a later amendment which deals specifically with the insolvency issue and seeks to change the wording in the Bill. I will not press this amendment but I will ask the Minister later in the debate to re-examine the issue of insolvency.

Amendment, by leave, withdrawn.

An Leas-Chathaoirleach: Amendment No. 15 is related to amendment No. 14. Is it agreed that amendments Nos. 14 and 15 may be discussed together? Agreed.

Senator Nicky McFadden: I move amendment No. 14:

In page 21, after line 52, to insert the following:

“(1C) The trustees shall have the power to set limits on the amount that shall be paid out based on the salary of the employee in the event of a winding up.”.

This is a worthwhile amendment. Based on the annuities the trustees would have the responsi- bility and the power to decide on the amounts that would be paid out. This is what we discussed this morning in the context of Mr. Fingleton. The unfortunate people who have been working 30 years of their lives deserve to get a decent pension. The amendment would ensure someone would set the limit. It is about limitation.

Deputy Mary Hanafin: I do not propose to accept the amendment which effectively would impose a cap on the level of benefits based on salary. This would reduce the benefits of those on higher salaries who have an expectation of a higher pension. Scheme members paid into the scheme according to the salary they were paid.

Senator Nicky McFadden: They did not expect it to be obliterated.

Deputy Mary Hanafin: They paid a percentage of their salary into the scheme so they will only get benefits according to what they put into it. Where a fund is in deficit, people on the higher salaries will lose more because they had higher entitlements. It is worth noting that there are different schemes within companies whereby people of a similar salary range or status 129 Social Welfare and Pensions Bill 2009: 29 April 2009. Committee Stage

[Deputy Mary Hanafin.] within the company have their own scheme. One often finds that the higher executives have one scheme while the ordinary workers have a different scheme. Setting the cap would not have an impact on the lower paid workers in those schemes. They are different schemes.

Senator Nicky McFadden: I must accept what the Minister says. I appreciate that she tried to arrange a briefing for me at lunchtime but I could not attend it. I could make the same point I made this morning about more time. I understand the Minister must rush the Bill through the House and acknowledge she is trying to correct the position but at the same time I do not accept what she said about limits. It is about protecting the people. The trustees should have the power and I am sorry the Minister cannot see a way to accept the amendment.

Deputy Mary Hanafin: It is not possible to set a limit at this stage when people have been paying in over their working lives, albeit at a higher rate. They were paying in at a higher rate because they were on a higher salary and have an expectation of a higher benefit. I do not believe it is possible to turn around at this late stage of a person’s contributions and cap that.

Amendment, by leave, withdrawn.

Section 16 agreed to.

Section 17 agreed to.

Amendment No. 15 not moved.

Section 18 agreed to.

Sections 19 to 21, inclusive, agreed to.

SECTION 22.

Senator Dominic Hannigan: I move amendment No. 16:

In page 30, subsection (17)(d), line 17, after “1984” to insert the following:

“or where the liabilities of the employer exceed its assets”.

This amendment returns to the issue of insolvency and the definition of insolvency. We want that widened to include the position where the liabilities of the employer exceed its assets. That is currently the case with SR Technics. It is in a position whereby it could be some years before it goes into liquidation because there are outstanding issues. It will not happen today or tomorrow and it may not even go into liquidation but it is clearly the case that its liabilities exceed its assets. I have had conversations with workers in SR Technics and am aware they appreciate the efforts the Minister and the Department have gone to recently on these issues. In recognition of that they hope she will be able to see fit to grant this change but they are asking for the specific wording to be included so that they, too, can benefit from this measure.

Deputy Mary Hanafin: There are three different elements in the Bill that affect workers. The issue regarding insolvency only applies to the purchasing of what would be known in the open market as annuities, the purchasing of the PIPS, but the restructuring and the changing of the priorities will benefit a fund that is winding up, even if the company is not insolvent. Where the company is not insolvent but the pension fund is in deficit they can benefit from the restructuring elements but they will not benefit from the purchasing of the PIPS. 130 Social Welfare and Pensions Bill 2009: 29 April 2009. Committee Stage

The purpose of all of this is to try to give as much as we possibly can to workers who have been paying into a scheme all their working lives, but this PIPS must be a scheme of last resort. It is important we do this so that we do not interfere with any state aid or competition issues. It is very confined in the companies to which it can apply and for that reason I cannot accept the amendment.

Senator Dominic Hannigan: It is an area we must examine because for a company such as SR Technics this is a last resort. I am aware of people who were weeks away from retirement, having completed almost 40 years of service, and who will not get the full pension entitlement they were expecting six months ago. The issue of purchase of annuities on an open market is something of which we must be aware. Currently, annuities are going for a very low rate and while some people’s expectation in terms of their pensions was, say, an index of 100, they are now down to 50% of that. This is seriously impacting on many hundreds of workers at companies such as SR Technics. I will have to press the amendment and I will be looking to those Members on the Govern- ment benches from the north side who know at first hand from talking to their constituents the difficulties being faced by many ex-workers who have seen their pensions being reduced significantly. If the Minister cannot see fit to include this technical change to the issue of insolvency, I will have to press this amendment.

Senator Nicky McFadden: While acknowledging the State-owned annuities, which is a wel- come step forward, will PIPS be a type of bail out for employees when a company such as SR Technics is not looking after its employees, even though it is solvent, as Senator Hannigan said? Is this like a State guarantee for employees? Are we guaranteeing people’s pensions?

Deputy Mary Hanafin: Unfortunately, I cannot speak about any particular company but this scheme is not a bail out of pension funds. A total of 90% of defined benefit pension funds in the country are in deficit. There is no way the State can take on the liability of all of those funds but where there is the double whammy of a fund which is in deficit and a company which is insolvent, we are trying to give something back to the workers in that position. In fairness to employers, they have made great strides in making good the gaps that have arisen in pension funds but some of those gaps are so large it would be impossible for them to do so in the short term. Where a company has run into difficulty, that fund must wind up. We are conscious of the fact that there are people who have retired who have their full rights and then workers who have been paying in all their lives who do not have those rights. These measures will at least give some extra money to those people but it is not a pension protection fund. It is not the State taking over the liabilities of every defined pension scheme in the country. It is a restructuring of the priorities, not taking from anybody, and setting up a scheme where annuities can be purchased more cheaply to give more back to the workers. The cost of purchasing an annuity on the open market is very expensive. There is commission and profit but there is also the cost of having to have the assets to back up the cost of the pension, and none of those will fall on the State. There will be some minor administrative cost but it should reduce substantially the cost of the actual annuity on the open 4 o’clock market, and that can go straight back to the worker. It is not possible, however, for the State to take over the liability of all the defined pension schemes. If Senator Hannigan’s amendment was simply a technical one, as he said, it might be feasible to do that but it is not because it opens it up to every scheme in the country. I am sure we would also be liable under state aid and competition rules were we to do that. 131 Social Welfare and Pensions Bill 2009: 29 April 2009. Committee Stage

Senator Dominic Hannigan: I appreciate to an extent what the Minister is saying but there may be some way to accommodate my amendment without opening it up to a wider base. I have tabled two amendments and either one of them would have allowed SR Technics to be part of the scheme. If she will give a commitment to introduce a change on Report Stage that would specifically allow for this company to be part of it, I would be happy to withdraw the amendment but failing that, I will have to press it.

Deputy Mary Hanafin: I cannot give a commitment to put into legislation something that benefits just one company. That would not be possible. It would have an enormous knock-on effect for other companies. It may even be illegal to put something into legislation which is for the benefit of one company.

Senator Dominic Hannigan: I am sure the Minister could find a wording.

Deputy Mary Hanafin: I regret I cannot give that commitment because the liability that would fall on the State would be far greater than any of us would be able to meet.

Senator Dominic Hannigan: At this stage never the twain shall meet. I appreciate the Mini- ster’s time but——

An Leas-Chathaoirleach: Is the amendment being pressed?

Senator Dominic Hannigan: Yes.

Amendment put.

The Committee divided: Ta´, 16; Nı´l, 28.

Ta´

Bradford, Paul. Hannigan, Dominic. Burke, Paddy. Healy Eames, Fidelma. Buttimer, Jerry. McFadden, Nicky. Phelan, John Paul. Cannon, Ciaran. Prendergast, Phil. Coffey, Paudie. Regan, Eugene. Coghlan, Paul. Ryan, Brendan. Cummins, Maurice. Twomey, Liam. Fitzgerald, Frances.

Nı´l

Boyle, Dan. McDonald, Lisa. Brady, Martin. O´ Domhnaill, Brian. Butler, Larry. O´ Murchu´ , Labhra´s. Callanan, Peter. O’Brien, Francis. Callely, Ivor. O’Donovan, Denis. O’Malley, Fiona. Carty, John. O’Sullivan, Ned. Cassidy, Donie. Ormonde, Ann. Corrigan, Maria. Phelan, Kieran. Daly, Mark. Quinn, Feargal. de Bu´ rca, De´irdre. Ross, Shane. Feeney, Geraldine. Walsh, Jim. Glynn, Camillus. White, Mary M. Hanafin, John. Wilson, Diarmuid. MacSharry, Marc.

Tellers: Ta´, Senators Dominic Hannigan and Phil Prendergast; Nı´l, Senators Diarmuid Wilson and Camillus Glynn.

132 Social Welfare and Pensions Bill 2009: 29 April 2009. Committee Stage

Amendment declared lost.

Question proposed: “That section 22 stand part of the Bill.”

Senator Paudie Coffey: I want clarification on some of the provisions of the pensions insol- vency payment scheme. The Minister may not even know me but I am a Senator from County Waterford. I am aware she spoke in the other House about the Waterford Crystal workers’ pension scheme, which has taken a big hit. There is serious concern in Waterford that for the workers who have contributed for up to 40 years to the scheme there will be nothing left of it as the company goes into liquidation. Many of the families affected will be knocking on the Minister’s door for assistance. I am sure the Minister’s party colleagues have informed her about how the pension contributions in Waterford Crystal have been wasted away. There is much concern in Waterford and the region about the workers’ pension entitlements. Over the years Waterford Crystal workers contributed not only to Waterford but to the national economy, building up the company name as an international brand. If these provisions for the pensions insolvency payment scheme were in place one year ago when Waterford Crys- tal was solvent, would it have made any difference to the workers’ pension entitlements? The workers affected and their families are interested in the answer to that question.

Senator Maurice Cummins: I support Senator Coffey in raising this matter. We have the awful debacle in Waterford where people with 40 or more years’ service with Waterford Crys- tal, who paid their taxes and their pension contributions have found there is little or nothing in their pensions. People who were expecting to have a reasonable pension have been forced to apply for social welfare pensions. It is of paramount importance that the Minister clarifies whether this section will be of any benefit to the Waterford Crystal workers. I do not believe it will be but it is a step in the right direction. Many of the workers have been with the company for over 40 years. I know of two workers who began there at 14 years of age but whose first three years are not counted in their redundancy payments. This is another smack in the face to the workers. The people of Waterford are angry that the Waterford Crystal factory, which gave good employment to them through generations, was let go the way it was by the Government. It is an absolute disgrace. Guinness and Waterford Crystal are two iconic national brands. Would the same happen if Guinness were to shut down? It is a shame the Government has allowed Waterford Crystal to be sold off to venture capitalists and the workers treated in such a manner. The brand means much, not alone to the people of Waterford but the south east and the country. Manufacturing at Waterford Crystal should have been supported by the Government. Will the Minister do all she can to ensure the Waterford Crystal workers are assisted with their pension entitlements and that their redundancy payments are calculated properly? With the forthcoming elections, I have found on the doorsteps that former Waterford Crystal workers are so angry about this matter that they do not want to talk to any politician. There is a need for clarification of their entitlements. There is also a need for a task force to examine this matter. However, with unemployment predicted to reach 600,000 by next year we may need a task force for the entire country. Waterford has been hit worse than many other cities. Will the Minister outline whether the pensions insolvency payment scheme will assist Waterford Crystal workers and, if not, will she explain why?

Senator Jim Walsh: I have sympathy for those in private pension funds who now find they are unlikely to get a full pension, or in many instances no pension, because of the investment failures that have occurred in the past year and a half. However, I cannot see how the Govern- ment can be expected to step in. Even if the Government were of a mind to address these 133 Social Welfare and Pensions Bill 2009: 29 April 2009. Committee Stage

[Senator Jim Walsh.] issues, the resources are simply not there. Concern has been expressed about pension schemes in some third level institutions, with calls to take over funds and for the State to meet their liabilities. The pensions area is extremely complex. On Second Stage, I complimented the Minister on being the first to take certain measures, such as this Bill’s provisions, which will be beneficial in this area. Many private pensions, be they defined contribution or defined benefit schemes, have trus- tees who in most instances have been nominated by an employer. It may be necessary to examine the legislation to ascertain whether employees or their unions could also have nomi- nees appointed as trustees. In so far as that right would be given to them, it would be essential that the person nominated would have the expertise and knowledge to make a sensible and constructive contribution at that level. However, there might be a need to consider the balance between employers nominating people and trustees, who have legislative responsibilities to deal with this issue. It is a complex area, as the Minister told us earlier. We must be careful in the way we propose to tackle it. To be fair, across the House we should recognise that the steps the Minister has taken are positive for the people involved. They will not and cannot meet the full shortfall in funds that exists but it is a small step in the right direction and sets a foundation for doing more.

Senator : When the Bill is passed, will it be the case that the workers at Waterford Crystal will still not have their pensions but that workers in the ESB, where there is also a big shortfall in the pension fund, will be covered under the scheme? The Minister stated that there could be more than one pension scheme within a company, one for the higher end or management level and the other for the ordinary workers. Could there be a situation where a company would let the ordinary workers’ pension scheme go and not fund it properly and, at the same time, have a well funded scheme for the management? There might be trustees in both of the schemes but the situation could arise within one company where the management level scheme would survive while the ordinary workers’ scheme would not survive.

Deputy Mary Hanafin: The trustees are nominated by both the employers and the unions, and all trustee boards allow for members of the schemes to be selected. The unions normally hold elections for their members of the board and pensioners are also normally represented. The issue raised by Senator Walsh is covered. With regard to the timing of the Bill and what companies it may or may not have affected a year ago, the pension funds have suffered as part of the global financial crisis because private pension funds are, after all, investment funds. Where the value of the stocks and shares have collapsed, so too have the values of those pension funds. This has happened over the past year and has meant that 90% of defined benefit pension schemes are in deficit. However, this is as a result of the global market rather than anything legislation could have done. The situation in Waterford Crystal is a particularly difficult one for the workers. We were all very sad to see the company go because it is an iconic brand, it has a well recognised national and international name and it has provided great employment to the people of Waterford over the years. The Waterford Crystal company is insolvent and its pension fund is in deficit. There are two criteria that must be met if a company is to be allowed to participate in the State annuity scheme, namely, that the company must be insolvent and the fund must be in deficit. Even if the fund has already taken a decision to wind up but the company has not discharged its liabilities, then, subject to the criteria being satisfied, it will qualify under this legislation. The two strict criteria are an insolvent company and a fund which is in deficit. 134 Social Welfare and Pensions Bill 2009: 29 April 2009. Committee Stage

With regard to changing the priorities, which will affect some companies, this does not require the company to be insolvent. It just requires the company to be either restructuring its fund or winding up its fund. Different elements apply in this event. With regard to the question of whether the trustees can act for one scheme and not for the other, the answer is “no”, they must work for the benefit of all scheme members. Any changes must be brought about by negotiations and the Bill provides that a company must indicate if it is considering restructuring and changing the priorities. The Pensions Board is the body that will approve of any restructuring. In the first instance, therefore, if a company wants to restruc- ture or if a company is insolvent and wants to go down any part of this road, it goes to the Pensions Board to sign off on that.

Senator Maurice Cummins: I am still not clear whether the workers will be covered. From the best information to hand, the company is insolvent and there is then the question of its funds being in large deficit. If, from what the Minister said, the company comes under the legislation, what type of benefit will accrue to the workers? Will they get their full pensions? That is the bottom line for the workers in Waterford Crystal. They want some certainty at this point of uncertainty in their lives so they will know exactly what they will get from the pensions into which they have paid for up to 40 years. The Minister should clarify the situation. Will they get their full pension based on the company being insolvent and the pension fund being in deficit?

Senator Paudie Coffey: I thank the Minister for outlining the criteria under which companies will qualify under this section of the pensions scheme. I too would like clarification, specifically with regard to Waterford Crystal workers who have contributed not only to Waterford city and its environs but to the country in tax receipts over many years. I am sure the Minister is aware that only one year before the company went into receivership, some directors retired from the company and took over \1 million in pension entitlements. While it is a private pension fund, it is a kick in the face to those workers to see directors walking away with that amount of pension when the workers see their pensions wasted away. I would like the Minister to consider that fact, particularly when we see some of those directors subsequently being appointed to State boards, with further incomes. In the present climate, pension entitlements and what happens to pensions is an area that needs Government focus. While I accept the Minister is giving this matter her attention, it would be welcome if she would deal with the questions from Senator Cummins and me with regard to the Waterford Crystal workers.

Senator Dominic Hannigan: I join fellow Senators in asking for specific examples of certain companies which will be helped. Senator Coffey referred to Waterford Crystal and I would be interested to hear the Minster’s response. I also ask what succour she can give to the 1,000 past employees of SR Technics who recently lost their jobs in north Dublin. Will she clarify exactly how they will benefit from the Bill with regard to their pensions?

Deputy Mary Hanafin: A pension fund which is in deficit and which it is intended will be restructured or wound up can benefit from the changing of the priorities which we have put into the legislation. That will ensure that the rate of payment of current pensioners is protected but the increases they will be due to get will receive a lower priority than the entitlements of the workers, so the workers will gain some additional money from that. On a separate issue, where the pension fund is in deficit and where the company is insolvent, workers can benefit from the purchasing of the pension insolvency payment scheme, PIPS, but those two criteria must be met. What does this mean for a company? It does not mean that 135 Social Welfare and Pensions Bill 2009: 29 April 2009. Committee Stage

[Deputy Mary Hanafin.] the full pension is guaranteed because the pension fund is the amount of money contained in the fund. If an insolvent company satisfies the criteria and has its pension fund in deficit, it will only give to the State the amount of money which the State deems it will cost to provide a pension for that pensioner for the rest of his or her life. Whatever savings are made in giving it to the State rather than giving it to a private company will go back into the fund so they are then available to be disbursed among the remaining workers. The cost of the scheme will depend on each individual pension fund and scheme. It will depend on the age profile, the interest rate used, the actuarial advice and so on. There is no blanket scheme that will apply to all. It will depend on each individual fund. However, workers can benefit. The amount to which they will benefit will depend on their own individual fund, but this is not a pension protection fund. It does not guarantee that the money that workers have paid in throughout their lifetimes will come back to them in their pension. However, it will give them a bit more than they would have got if we did not have the legislation.

Senator Paddy Burke: I thank the Minister. When a company’s pension scheme gets into some bother, will the national assets management agency take it over and run it after that? Regarding the banks, Anglo Irish Bank has been nationalised by the Government. Down the road when property values increase the Government would hope to make money out of it. In this case with the pensions, will the national assets management agency now be buying pensions with units with a very low value? I assume that the collapse in the pension scheme means the investment the brokerages have made have collapsed and that the units are very cheap. The national assets management agency is probably buying units that have collapsed in value and are very cheap at the moment. Down the road is it possible that the national assets management agency will realise a large increase in the value of those pensions or does it mean that the taxpayer must take the full hit where it takes over a company’s pension scheme to pay the workers? Will there be any possibility that down the road the pension that the national assets management agency will take over and manage might come back to the level the company had initially envisaged for the employees who took out the pensions?

Senator Maurice Cummins: I thank the Minister for trying to explain it. I am especially interested in the situation of the workers in Waterford Crystal. If I am to go back to those workers and recite what the Minister has just told the House, they would be probably just as confused as they were beforehand. There is still no degree of certainty regarding what they will get. Admittedly every person will be different. Many people have worked there for 30 years. Surely after 30 years of contributions there should be some kind of certainty on what they will get from the scheme. Will they get another 20% or 30%? The Minister has said they will not get it all, which obviously they will not. However, there should be some degree of certainty. A considerable amount of work must have gone into this at the time when Waterford Crystal sought Government aid. These types of matters must have been considered at that point. People have been working there for 30 years on average. Surely there should be some certainty. The Minister should be able to tell me what percentage of their pension they will get based on what they have contributed over 30 years. Can any degree of certainty be gleaned from the section? If there is nothing for them, let us tell them that. The last thing people want is to be led up the garden path and be told they will get more money in their pension and then not get it. We need to be straight with these people. As it stands their dignity is on the ground. These are people who have been skilled craftsmen for many years and now find they cannot educate their children and their future seems gone. They are devastated. We need some certainty at this point. We do not need to hear that they might get something. Let us spell out exactly what they will get based on an average of 30 136 Social Welfare and Pensions Bill 2009: 29 April 2009. Committee Stage years’ employment in the factory. We need to be able to go back with some certainty and tell the people what they will get and let them know they will be somewhat better off than they were. I would ask the Minister to do that if she can do so. If she does not have that information on Committee Stage, perhaps we could have it on Report Stage. We want to have some cer- tainty that we can bring to the people and let them know their entitlements and what they will get as a result of this.

Deputy Mary Hanafin: I do not hold and will not hold the details of each individual scheme and what each individual pensioner or prospective pensioner or worker is entitled to within that scheme. This provision will allow a company that is insolvent with a fund in deficit to purchase from the State. Rather than purchasing from a private company it will be able to add on some percentage to the value of the pension available to the existing worker. Whatever people have been told they are getting in light of the size of the fund, this will add some percentage on top of that. It is a saving for them. In any of the funds that are in deficit it does not guarantee the full pension that people thought they would get because the pension fund itself is in difficulty because the value of that fund has declined. The State is not taking over the pension fund of any company in doing this. The State is setting up the new scheme to operate as follows. Trustees, who are winding up a fund and need to make provision to pay existing pensioners and also ensure they have money to go back in to provide for a product for the existing workers, should go to the open market. Once they establish what it would cost to provide pensions for their existing pensioners, they can then go to the State and see which one gives the better offer. I have no doubt the State one will give a much cheaper option to the trustees because we will not be taking the commission or profit and will not need all the capital assets to back it up, etc. It will be cheaper for the trustees to buy the product and the State will then pay the pension. However, it will only take from the trustees the amount required to pay the pensions for those existing pensioners. The trustees of the company then have whatever savings remain to put back in for the workers. It is not NAMA that will take control of this; it is the National Treasury Management Agency. However, we are not taking over the entire fund, the assets and everything that goes with it. It is like selling a product at a better deal to the trustees than they would get on the open market so that they can save money to give to the workers.

Senator Maurice Cummins: The Minister has clarified that the State will not be taking over the fund but will be taking over what the people will be due. Am I correct in that? Is the Minister saying the State is not taking over the pension but what the individuals’ entitlement will be which can be invested to get their pension? The Minister mentioned a pension guarantee fund. It is easy to be wise after the event. However, there was a similar situation in the UK where there was no pension guarantee fund as is laid down in EU legislation. The British Government was found to be in breach of that directive and was advised that it needed to have a pension guarantee scheme in place. I have no doubt the unions and the people involved in Waterford Crystal will eventually take the Government to the European Court for not having a pension guarantee system in place. If that guarantee had been in place people would not be in the situation they now find themselves. I accept it would have been a greater risk for the Government. However, all other governments across Europe have undertaken such a pension guarantee scheme. Like our counterparts in the UK, we did not, but they will now have to cough up because they have been found to be in breach of EU legislation. There is no question that the same will happen to the Irish Government. Although the time will probably not come for several years, we will have to face the issue eventually. People are prepared to eke out an existence 137 Social Welfare and Pensions Bill 2009: 29 April 2009. Committee Stage

[Senator Maurice Cummins.] on social welfare for three or four years but they still want their entitlements. The pension guarantee scheme should have been put in place and I do not doubt that the decision will favour the workers when it is eventually made by Europe. This is the case not only for Waterford but also for the workers in SR Technics and other companies who have seen their pensions dissolve before their eyes.

Senator Paddy Burke: Despite listening closely to the Minister’s contribution, I remain mysti- fied as to how the scheme will operate. I commend her on trying to make this work but I fail to understand many aspects of it. If, for example, a company becomes insolvent, the Minister suggested that it will purchase a product from the NTMA. However, its insolvency means that it will have no money other than its pension funds. Will it sell its remaining assets to the NTMA? An insolvent company may still own reserves after selling its properties or when the liquidators are put in place. Will the pension fund have first call on these reserves before banks or the Revenue Commissioners? The Minister’s intention is to build up pensions for the people who encounter these problems. As Senator Coffey noted, some of the directors of Waterford Crystal walked away with millions of euro whereas ordinary workers who paid into the pension fund for years receive nothing. It is a terrible situation and I feel very sorry for those workers. I commend the Minister on attempting to ensure that people will not face the same problems in the future but I am unclear how her proposals will work in practice. If I cannot fully compre- hend the scheme, I am sure the public will not understand it until they face the same situation as the workers in Waterford.

Deputy Mary Hanafin: The UK’s pension protection fund has incurred enormous liabilities. Approximately 90% of defined benefit pension funds in Ireland are in deficit, possibly to the tune of \30 billion. There is no possibility that the State can take on that liability. Through this legislation we are trying to give some comfort to workers regarding funds which are restruc- tured or wound up, particularly in respect of insolvent companies. I can see why Senators find these issues difficult to understand. Pension legislation is the most complex area of public policy. When a scheme in deficit is wound up, the pensions of retired members must be paid in full before any money is given to those who have not yet retired. Protecting existing pensioners is sacrosanct but if the pension fund is being wound up it can no longer be in a position to pay their pensions. The normal course of action in such an event is to purchase an annuity from a life assurance company which would give the pensioner a guaranteed regular income for life. Instead of trustees dealing with private companies and paying the associated fees and commissions, they will now have the option of asking the Exchequer how much it will charge. The savings they make give them more money to spend on the pensions of existing workers.

Senator Maurice Cummins: The Minister stated that the pensions of existing retirees are sacrosanct. They will have to approach either a life assurance company or the State to get the best possible deal on their pensions. Some workers who received part of their redundancy payments last year agreed to requests from their employers to defer the remainder until this year. They have borrowed money in expectation of these payments but now they find they cannot meet the loan repayments. I still cannot explain to a former employee of Waterford Crystal what he or she will get as a result of this provision because it does not offer certainty. The union will have to enter detailed discussions with trustees and life assurance companies to provide clarity. I had hoped to receive clarity today because, as the Minister noted, this is a confusing matter. If it is difficult for us to comprehend it, how will it be for the workers on the ground? 138 Social Welfare and Pensions Bill 2009: 29 April 2009. Committee Stage

Senator Dominic Hannigan: If a pension fund wishes to purchase annuities on the open market, the cost at present is in the order of 3.5%, although I would not like to sign my life away on that figure. This scheme would allow the Government to offer a higher rate by means of a bond issuance. The Government is trying to arrange funding for this year’s \20 billion budget deficit. If a deal could be done to attract more money into purchasing annuities from the State as opposed to from the open market, it would be a win-win situation. I am surprised we are not trying to make allowances for pensioners who have lost heavily due to the fall in the annuities market. Extending the scheme would allow the Government to borrow funds at a slightly lower rate than would have otherwise been the case. The half way mark between the cost of an annuity on the open market and the cost of Government borrowing would give pensioners a higher rate of annual payment.

Senator Lisa McDonald: Putting questions on the Waterford Crystal scheme to the Minister in the course of a debate on this Bill was unfair. I have the height of sympathy for people from my county of Wexford who work for Waterford Crystal. The Minister is doing her utmost by introducing this legislation, the workings of which she has explained clearly approximately five times. However, actuarial advice on each worker’s case is not available. Like Senator Cummins, I have been asked these questions, but it is not possible to give individual answers. Therefore, the Minister has responded to the best of her abilities. Senator Cummins was being unfair in ambushing her.

Senator Maurice Cummins: No.

Senator Lisa McDonald: He did.

Senator Paddy Burke: That is uncalled for.

Senator Lisa McDonald: It is not possible for any Minister to attend the House and comment——

Senator Paddy Burke: This is the time to ask questions.

Senator Lisa McDonald: May I speak, please?

An Cathaoirleach: Senator McDonald without interruption.

Senator Lisa McDonald: It is not possible for anyone to attend the House and comment on an individual scheme, which I know from my private family law work as a practising solicitor. Pensions are a complex matter and it is difficult to give the answers right now. Since people would need to sit down and work out the exact figures, the Senator is being unfair.

Senator Maurice Cummins: I am not. I have not addressed the matter in a confrontational way. The people who approach me are seeking answers and I do not accept that none can be provided today. The Minister is in the job and should know the situation. On behalf of Waterford Crystal’s workers, the unions sat down with the Government to discuss these points prior to the national pay talks. As the Minister and her Department should know the exact position, there is no point in the other side lecturing us and telling us it is unfair to ask the Minister questions, which she appeared to answer.

Senator Lisa McDonald: Unreasonable. 139 Social Welfare and Pensions Bill 2009: 29 April 2009. Committee Stage

Senator Maurice Cummins: They are not unreasonable where the people of Waterford Crys- tal and SR Technics are concerned.

Senator Lisa McDonald: This is a social welfare Bill.

Senator Maurice Cummins: Those people, including senior craftsmen who never wanted to be on the dole, are in receipt of social welfare payments only. They wanted their pension entitlements, which they had paid for all of their lives. I am not being unreasonable in asking for answers. I reject that suggestion. The workers of Waterford Crystal, SR Technics and many other companies are not unreasonable in asking for their rights. I make no apologies in asking these questions on behalf of workers.

Senator Dominic Hannigan: Hear, hear.

Senator Paudie Coffey: I understand where Senator McDonald is coming from. With due respect, were we to raise such an issue on the Order of Business and ask the Leader to arrange a debate, he would tell us he would do so or that we could discuss it under a certain Bill. This is the Bill under which to discuss workers’ pension entitlements. We are elected representatives and I take exception to Senator McDonald stating we cannot speak out or ask relevant ques- tions on behalf of citizens. It is what we will do. In fairness to the Minister, she has explained this section as well as is possible. We do not need the Senator to lecture us from her side of the House.

Senator Lisa McDonald: Clearly the Opposition does. It has asked the question again. It has been answered.

An Cathaoirleach: Section 22, the Minister to reply.

Senator Paudie Coffey: We are entitled to ask questions on behalf of workers who, for the past four decades, have contributed to the State considerably. Senator McDonald mentioned that some of them were in her constituency. Perhaps she should start speaking out at her parliamentary party’s meetings on their behalf because we have not heard a tweet out of her in the past six months or year.

An Cathaoirleach: That is not relevant. Did Senator McDonald wish to speak on section 22?

Senator Lisa McDonald: I want to respond to that attack on my character.

An Cathaoirleach: No, we are on section 22.

Senator Lisa McDonald: On that section, the question has been answered. Repeating it three or four times is unreasonable, since an answer to the specific question cannot be given at this time. Therefore, asking it is a waste of time.

Senator Maurice Cummins: That is the Senator’s opinion.

Senator Lisa McDonald: Yes. I am entitled to voice it——

Senator Maurice Cummins: She is.

Senator Lisa McDonald: ——ten times like Senator Cummins.

An Cathaoirleach: The Minister to reply. 140 Social Welfare and Pensions Bill 2009: 29 April 2009. Committee Stage

Senator Maurice Cummins: Senator McDonald is not representing her constituents in New Ross and elsewhere well.

Senator Lisa McDonald: Let that be a matter for my constituents.

Senator Maurice Cummins: She is not doing them any justice. No one other than her has been confrontational.

Senator Lisa McDonald: Senator Cummins has been. I just pulled him up on it.

An Cathaoirleach: The Minister will reply to the questions raised.

Deputy Mary Hanafin: I can appreciate that all Senators are concerned about the deficit in pension funds, particularly where the companies are insolvent. The people involved are being affected doubly, in that they have lost their jobs and watched the value of their pensions decline drastically. Suffice it to say, the Bill’s measures in respect of qualifying companies will ensure the workers gain an additional percentage. It will be different from worker to worker and from scheme to scheme. For those who qualify, there will be something extra, which is what the legislation is trying to ensure.

Senator Paddy Burke: The Minister mentioned that the exposure could be approximately \30 billion and that the State could not take on the full liability. Under this legislation, what would be the exposure to the State?

Deputy Mary Hanafin: It is cost neutral to the taxpayer.

Senator Lisa McDonald: As the Minister stated on Second Stage.

Question put and declared carried.

Section 23 agreed to.

Question put: “That the Title be the Title to the Bill.”

The Committee divided: Ta´, 27; Nı´l, 19.

Ta´ 5 o’clock Boyle, Dan. MacSharry, Marc. Brady, Martin. McDonald, Lisa. Butler, Larry. O´ Domhnaill, Brian. Callanan, Peter. O´ Murchu´ , Labhra´s. Callely, Ivor. O’Brien, Francis. Carty, John. O’Donovan, Denis. Cassidy, Donie. O’Malley, Fiona. Corrigan, Maria. O’Sullivan, Ned. Daly, Mark. Ormonde, Ann. de Bu´ rca, De´irdre. Phelan, Kieran. Ellis, John. Walsh, Jim. Feeney, Geraldine. White, Mary M. Glynn, Camillus. Wilson, Diarmuid. Hanafin, John.

Nı´l

Burke, Paddy. Coffey, Paudie. Buttimer, Jerry. Coghlan, Paul. Cannon, Ciaran. Cummins, Maurice. 141 Social Welfare and Pensions Bill 2009: 29 April 2009. Committee Stage

Nı´l—continued

Donohoe, Paschal. Prendergast, Phil. Fitzgerald, Frances. Quinn, Feargal. Hannigan, Dominic. Ross, Shane. Healy Eames, Fidelma. Ryan, Brendan. McFadden, Nicky. Twomey, Liam. O’Toole, Joe. White, Alex. Phelan, John Paul.

Tellers: Ta´, Senators Camillus Glynn and Diarmuid Wilson; Nı´l, Senators Maurice Cummins and Nicky McFadden.

Question declared carried.

Bill reported without amendments.

An Cathaoirleach: When is it proposed to take the next Stage?

Senator Donie Cassidy: Now.

An Cathaoirleach: Is that agreed?

Senator Frances Fitzgerald: No, we want a break between Committee Stage and Report Stage. It is not acceptable to go from Committee Stage to Report Stage. We have amendments to make.

Senator Nicky McFadden: I thank the Cathaoirleach for his indulgence. Amendments have been submitted.

Senator Dominic Hannigan: Further amendments will be submitted but we have not had a chance to do so because we have just finished Committee Stage. We require a break.

An Cathaoirleach: I asked when the next Stage would be taken and the Leader said it would be now.

Senator Joe O’Toole: On a point of order, it is not acceptable to submit an amendment for the Fourth Stage while the Third Stage is still in progress. That has always been the convention. What is proposed is not an acceptable legislative process. There must be time to submit amend- ments. The Cathaoirleach’s advisers will tell him that even during Second Stage they are reluc- tant to accept amendments for Committee Stage. It is not an acceptable practice.

Senator Frances Fitzgerald: Is the Leader trying to force through the Social Welfare and Pensions Bill without time to submit amendments for Report Stage or a break in proceedings between Committee Stage and Report Stage? He prides himself on never guillotining legis- lation. Is he trying to push through this important legislation?

Senator Dominic Hannigan: The Leader told us he would not guillotine any more Bills. Was he misleading the House? He made that point three months ago.

An Cathaoirleach: My understanding was that Report Stage would take place at the con- clusion of Private Members’ business.

Senator Donie Cassidy: We propose to have Private Members’ business between 5 p.m. and 7 p.m. We will do anything we can do to assist colleagues with amendments. Colleagues will be allowed the fullest opportunity to make their points. 142 Proposed National Asset 29 April 2009. Management Agency: Motion

Senator Frances Fitzgerald: The Leader is trying to do the opposite.

An Cathaoirleach: My understanding was that Report Stage would take place at the con- clusion of Private Members’ business. Is that agreed? Agreed.

Senator Paul Coghlan: The Cathaoirleach’s understanding was correct.

Proposed National Asset Management Agency: Motion. Senator Liam Twomey: I move:

That Seanad E´ ireann,

— noting the Government’s proposal to establish a national asset management agency, NAMA, to purchase up to \90 billion of developer loans from banks;

— noting the testimony from the Financial Regulator last October that at least \15 billion of these loans are secured only on the underlying lands-properties, and noting market reports that the value of these underlying lands and properties has declined by as much as 80%;

— noting the inconsistency of the objectives for NAMA set by Government of (i) pur- chasing the distressed loans from the banks at a fair price; (ii) ensuring that the banks remain adequately capitalised; and (iii) keeping the banks in private ownership;

— noting the vastly superior information available to senior bank executives in the valua- tion of these loans, and their incentives to over-value them;

— noting that the establishment of so-called ‘bad banks’ in other countries — such as the USA and Sweden — involved fundamentally different processes that did not create the same problems in bad loan valuation;

— noting that the purchase of over-valued loans from the banks has the potential to further undermine Ireland’s already damaged credit rating in international markets, and to drain resources away from vital public services over the next two decades,

calls on the Government

— to reverse its decision to establish NAMA; and

— to commission swiftly a study into Fine Gael’s alternative, superior proposal to capital- ise ‘good banks’ that are ready to lend, and to minimise taxpayers’ exposure to loan losses by ensuring that the vast bulk of banking losses are absorbed by the providers of risk capital and debt to the banks.’

I propose to share time with Senator Phelan.

Acting Chairman (Senator Feargal Quinn) ): The proposer cannot share time. The proposer will have 12 minutes but it is not the tradition to allow the proposer to share time. The seconder can share time.

Senator Liam Twomey: I welcome the Minister of State to the House to discuss this matter. The discussion of NAMA in both Houses is incredibly important in light of the huge amounts of funding that is involved. We must keep in mind other options that we could consider. One option is the good bank, which has been tried out in other jurisdictions. Recently, I suggested using one of the smaller building societies to help out. There is a fully functioning building 143 Proposed National Asset 29 April 2009. Management Agency: Motion

[Senator Liam Twomey.] society with a relatively low level of toxic debt compared to the big banks that could be taken over by the Government without too much difficulty. The State could provide funding of \500 million and lending could start immediately after the summer. We should consider using the small and medium-sized enterprise unit in Anglo Irish Bank, which could work with EBS to provide much funding to the business sector. I do not mind stopping if the Minister of State wishes to discuss some matter. I accept that this is complex and he may want to talk to others about it. It is no problem if he requires time to do so.

Deputy Martin Mansergh: I apologise.

Senator Liam Twomey: We could use what we own already, Anglo Irish Bank, and its expert- ise in small and medium-sized businesses. We could also examine taking over the EBS and use Government funding to loan to that institution. Lending could start in the Irish banking sector very quickly compared with what the Minister wants to do. In a recession a lower amount of lending takes place but the problem we experience is that solvent companies and businesses are experiencing difficulties in accessing credit. This could lead to their demise and must be dealt with urgently. Waiting for NAMA to be established is not good enough. We did something similar to what I am proposing at ICI some years ago. The State took responsibility for this and got it going relatively quickly. It had an impact. When we take away the operational part of Anglo Irish Bank, we would be left with NAMA because the toxic debts at Anglo Irish Bank are massive, \60 billion to \70 billion. They are being managed by staff in Anglo Irish Bank. The EBS option is much cheaper for the taxpayer and could be up and running very quickly. This is along the lines of the good bank model, with the Government supporting it. It is not as big, complex or expensive as the Minister’s option. If the Minister insists on NAMA, our proposal could be run in conjunction with it. The difficulty with NAMA is that it could take up to two years before it is functional. That would be too late for the Irish economy. This is just one of the Opposition proposals and I would like to hear the views of the Minister. He may agree or disagree. He may understand why there is a problem with it. The Government’s policy, which is to bring about NAMA, is incredibly complex and we have not faced the practicalities of the proposed body.

Senator John Paul Phelan: Hear, hear.

Senator Liam Twomey: If I was a big developer with \2 billion or \3 billion in assets, I would not manage such assets on my own. I would have a staff of between 50 and 100 people to help me out. If many of these assets were toxic — they are for many developers — my bank would work with me to try to get the best value from such assets. If NAMA takes over these toxic assets, neither the developer nor the banker will have responsibility to work these assets. The Minister of State knows getting assets to work means trying to develop and add value to them to get the best deal possible. There are approximately 50 to 60 big developers holding most of these toxic assets. How will NAMA replace the financial, legal and property expertise that these 50 to 60 developers have at this time? It is a crucial question in explaining how NAMA will work for us. When the banks, developers and their staff are absolved of their responsibility in running these toxic debts, how will NAMA do it and where will the Government find the personnel for this? It is incredibly important that this question is answered. 144 Proposed National Asset 29 April 2009. Management Agency: Motion

The Government’s proposed amendment states that the developers would have to repay those loans. In it the Government “notes that the developers will be required to repay their loans and to the extent that they have made losses, they would have to recognise those”. It is a little simplistic to say that they must recognise their losses as I am sure they will do so. That is not to say that the Government will go after developers with regard to funding. I am sure the Minister for Finance is well acquainted with many big developers and, as a barrister, I am sure he fully understands these individuals’ constitutional and legal rights. I am sure the Minister of State also understands them. Will the Minister of State explain how NAMA will get over the constitutional and legal rights relating to contracts and property rights that the people concerned hold under the Constitution when the Government chases good assets as well as toxic assets? The Government could find itself in the courts for the next 20 years because of challenges in this regard. I am afraid that some of the tough talk coming from Government about how it will chase these developers is nothing more than talk. The same truth applies to the levy which the Government will hit the banks with if NAMA fails to do its job. If NAMA buys the assets at too high a price and fails to pass on these assets in time, the Government is threatening to put a levy on the banks. This is ridiculous as it will be another issue for international investors and banks when they give loans to Irish banks. They will have a levy hanging over them that they will have no way of quantifying as it will depend on whether a Government organisation called NAMA is successful or a failure. That is a problem. How will the levy work and what is the potential cost to the banks? This will have a knock-on effect on the international market. We are discussing putting a value on toxic loans so we will take one that is very prominent in most people’s minds. What is the value of the Jury’s Ballsbridge site where a developer wanted to build a little piece of England on a number of years ago? Never mind the other half- finished housing estates or commercial parks right across the country, what is the value of the Jury’s site? I would not be able to value it and I do not believe the Minister of State or anybody in the Department of Finance could do so. Who will value that site and all the others for NAMA? The banks told us \3.5 billion in recapitalisation was enough but when the Department of Finance carried out due diligence, it found that an extra \1.5 billion was required. That means the banks are either incompetent or misleading the Minister because they answer to share- holders rather than the Irish taxpayer. The banks are not in a position to value these sites. Could the estate agents who are tied into banks and building societies value these sites? Could they really work for the Government? Who will value the sites to be purchased for \80 billion or \90 billion across the country? The question requires an answer. Many of the ordinary men and women in this country are afraid that we are returning to a scenario like the actions of Larry Goodman, the beef tribunal and the events which brought that about. There may have been a valid reason for Charles Haughey to bail out Larry Goodman all those years ago and there may be a valid reason for the Government taking its present approach to the banking crisis. There is nevertheless a concern that the Government is not being as inquisitive as it should be with the bankers and developers, or that the Government is perhaps taking too much notice of what is important for bankers and developers rather than paying attention to what it should be watching over, which is how this will affect the taxpayer. When we discussed the legislation nationalising Anglo Irish Bank a number of months ago, I moved an amendment which would have meant no more than \10 billion of taxpayers’ money would be spent on the banking crisis. The response of the Minister for Finance, Deputy Brian Lenihan, in this House was that he did not envisage that amount of money being necessary to stabilise the banking crisis. That was only a few months ago but we are now committing our- 145 Proposed National Asset 29 April 2009. Management Agency: Motion

[Senator Liam Twomey.] selves to multiples of that figure. At the same time we are unsure as to what the Government is doing and the role NAMA will play, despite it probably being the single biggest investment made by any Government in the State’s history. There is no clear direction on where the Government is going with it. We need this debate as taxpayers will lose out significantly. We are not yet sure how share- holders in AIB and Bank of Ireland will lose out and it is quite possible that with the way NAMA is going, the Government will be left with no choice but to nationalise Allied Irish Banks and Bank of Ireland, no matter what the Minister of State indicates now. He may say that the Government is not interested in nationalising them but there may be no choice. If these issues concern a functioning banking system or the survival of the current system, we must ask ourselves whether the taxpayer should be expected to pay for it, if the cost is too great, whether there are other options, to what extent have they been discussed and to what extent is the Government willing to discuss its own idea and alternatives with others in the country? I have made my questions fairly clear and straightforward. I must leave the Chamber for a moment but I will be back to hear the Minister of State’s contribution.

Senator John Paul Phelan: I wish to share time with Senator Coghlan, with the permission of the House.

Acting Chairman: Is that agreed? Agreed.

Senator John Paul Phelan: I formally second the motion proposed by my colleague, Senator Twomey, and I welcome the Minister of State, Deputy Mansergh, to the House. I have some questions as this is the first time we have had an opportunity for a detailed discussion on NAMA since the mini-budget three weeks ago. The source of the problems from an Opposition perspective and that of the public is that there is not enough information available as to how NAMA will operate. It is seen by many as another half-baked idea, although I do not necessarily believe that to be the truth. Nevertheless, there is a perception that the Government has had three or four bites of the cherry with budget proposals and the restructuring of our banking system but there is no confidence in this. The lack of information surrounding this proposal is fuelling that lack of confidence. There is also the perception that the Government is supporting its friends in the banks to the tune of billions while small and medium enterprises, farmers, fishermen and different people across the country are suffering. I know what lies behind the Government’s introduction of NAMA but I would like the Minister of State to address the lack of information on how the body will function. Many or virtually all those small businesses across the country are having difficulty in accessing credit and it is clear that an economy cannot function without good credit lines, which we do not have at present. The Government must act to resolve that difficulty. I question the action the Government has taken to date. I also question whether establishing NAMA is the correct route to take or whether we should have taken the route proposed by Senator Twomey and Fine Gael. Perhaps the Minister of State might shed some light on the issues relating to NAMA. The first part of the Government amendment states that Seanad E´ ireann “notes that the Government’s proposed National Asset Management Agency (NAMA) will pay significantly less than the estimated \80 billion to \90 billion potential book value of the loans to be trans- ferred to it”. We have been informed that NAMA will pay significantly less but we have no 146 Proposed National Asset 29 April 2009. Management Agency: Motion idea of the amount it will pay. The potential liability that could be entered into on behalf of the taxpayer is massive. That is the nub of the problem and the first part of the Government amendment highlights this. Perhaps the Minister of State might shed some light on the matter. Will the Minister of State also indicate who will be responsible for valuing the assets that will be purchased by NAMA? What criteria will be used in this regard? Clarity has not be forthcoming in respect of this matter. It is obvious that a write-down of anything over 20% could have potentially devastating consequences for either of the two main banks. It has been suggested in some quarters that losses incurred by NAMA will be recovered from the banks by means of some form of levy. Surely threatening to impose a such a levy defeats the purpose of trying to remove bad debts from the books of the banks. The position in respect of this matter has not been clarified. As Senator Twomey stated, it is unclear whether NAMA will be in a position to extend new loans to borrowers in order that they might complete projects that are unfinished at present. NAMA will be a new State entity and I presume it will take some time to establish it. Infor- mation has not been provided with regard to how long the process of establishment will take. There is a perception among many developers responsible for these bad debts that NAMA will be a soft touch. I hope the Minister of State will be in a position to indicate whether that will in fact be the case. Many of the developers in question seem to be of the view that NAMA will be easier to deal with than the banks which will no longer be pursuing them. Perhaps the Minister of State will clarify the position.

Senator Paul Coghlan: I welcome the Minister of State. I do not believe we should be arguing about this subject which is of critical national importance. The Minister for Finance should have discussed this matter with Deputies Bruton and Burton and reached an agreement in respect of it. The two concepts on offer are the same; it is just that we are of the view that ours is superior. However, an accommodation could have been reached in that regard. Everyone is aware that stability in the banking sector is essential to our economic recovery. In the absence of such stability, it will not be possible to create the climate that will be con- ducive to such a recovery. The \80 billion to \90 billion in loans to be transferred to NAMA are spread over the six covered institutions and are merely an estimate. I would like to believe that the final amount to be transferred will be nothing of that order. We need to know the level of the write-downs and we must be able to identify the bottom line in respect of the banks’ losses regarding these bad loans. As already stated, I am of the view that what might need to be transferred to NAMA might not have a book value of anything approaching \80 billion to \90 billion. The final figure may come to \20 billion less than that. Whatever State asset management agency is put in place should not be obliged to take on loans with a book value of \80 billion to \90 billion, especially when one takes into account the write-down or haircut, so to speak, that will be applied. There is a State guarantee in place in respect of the banks and Bank of Ireland has already been recapitalised. AIB is due to be recapitalised on 13 May. The State asset management agency should continue to allow the financial institutions to administer these loans on an agency basis. I agree with the suggestion regarding the interim board. This is not an ideal development but there is initial scoping work that must be carried out. My colleagues referred earlier to the difficulties involved in allowing experts to become involved in the valuation process. However, I am of the view that there is a sufficient number of professional valuers — members of reputable institutes such as chartered surveyors — who are suitably qualified and who can work with NAMA in this regard. Those to whom I refer are people of proven probity and integrity. These are the type of individuals who will have to serve on the board of NAMA. We cannot turn the 147 Proposed National Asset 29 April 2009. Management Agency: Motion

[Senator Paul Coghlan.] latter into a monster agency that hires massive numbers of people. Whatever agency is eventu- ally put in place will, as already stated, be obliged to use those in the banking industry who possess the relevant expertise to manage these bad loans. We must move quickly because if we do not do so, further uncertainty will be created. As everyone is aware, a slack market will not be of assistance when it comes to pricing. The State will also be obliged to extend its guarantee to the banks beyond September 2010 as a result of the need to deal with a number of bonds which will come to maturity around that time. I received an e-mail this morning from a concerned citizen. The e-mail in question relates to Bank of Ireland which has already been recapitalised. The person who sent it indicates that he received a price of \293,000 in respect of a sale in which he was involved. He also indicates that before signing a contract:

I sought written confirmation from the bank that they should accept 195,000 as the net sale proceeds. This written acceptance was obtained and I signed the contract and my solicitor gave the usual undertakings.

When the sale closed the bank sought a breakdown of the monies deducted and I duly got this done by my accountant. The bank then wrote to my solicitor saying they ‘would not release funds for accountants fees, VAT on rental income or capital gains tax.

This is clearly ridiculous as I cannot trade without being able to pay my advisers, VAT and capital gains tax. I took this up with the bank on the basis that they had their deposits guaranteed, [had been] given a 3.5 billion [recapitalisation] by the government and yet would not allow me retain funds to pay my taxes to the same government that gave them the [recapitalisation] in the first instance. I am waiting for their reply.

I have written evidence of all of the above and intend to go public shortly and would appreciate if you could raise this matter [at the earliest opportunity in the Seanad]

I am raising this matter because banks cannot be allowed to bring the economy to a halt. We put the recapitalisation in place to prevent the latter from happening. I await the Minister of State’s comments on that matter and on the matter of the restructuring of the banking sector, which will be essential.

Senator Marc MacSharry: I move amendment No. 1:

To delete all words after “Seanad E´ ireann” and substitute the following:

— notes that the Government’s proposed national asset management agency, NAMA, will pay significantly less than the estimated \80 billion to \90 billion potential book value of the loans to be transferred to it;

— notes that account will be taken of the loss in value of the underlying assets and that this will be reflected in the amount that NAMA will pay;

— notes that the State will not take all of the risk in the acquisition of assets because they will be valued on a basis that is sustainable for the taxpayer and which will entail losses by the banks. In the longer term, if the agency were to fall short of recouping all of the costs, the Government intends that a levy should be applied to recoup any shortfall;

148 Proposed National Asset 29 April 2009. Management Agency: Motion

— notes that developers will be required to repay their loans and to the extent that they have made losses, they will have to recognise those — it will not be the function of NAMA to “go easy” on them: NAMA’s mandate will be a commercial one;

— notes that banks have to take the appropriate write-down in value of loans, as the aim of NAMA is to operate commercially and optimise the return on such loans over time;

— notes that the clear and consistent objective of NAMA is to provide the banks with stronger balance sheets, considerably reduced uncertainty over bad debts and as a consequence underpin the flow of credit on a commercial basis to individuals and businesses in the real economy;

— notes that Government has had, and NAMA will have, expert financial, economic, legal and valuation advice;

— notes that NAMA will not be a bank, it will not be taking deposits and it will not have a banking licence. It will be an asset management company dealing with a mix of loans, good and bad, transferred from banks;

— affirms the importance for the Irish economy of a functioning banking system which includes banks having market presence, operating within market disciplines and con- straints;

— supports the Government’s decision to establish NAMA as part of a structured and measured approach to the issues facing the financial sector. This approach includes:

— the guarantee on deposits up to September 2010 to stabilise the funding position of the banks and add a further level of protection for depositors;

— recapitalisation programme of Allied Irish Banks and Bank of Ireland and the commitment to look at the needs of other institutions;

— the nationalisation of Anglo Irish Bank, necessitated by particular circumstances at the time, to provide protection and support;

— the Government also intends in line with its previous indication to put a State guarantee in place for the future issuance of debt securities with a maturity of up to five years;

— review and reform of the structures, role and functioning of the Financial Regu- lator and the relationship with the Central Bank in light of the current situation; and

— the ongoing commitment to work with the EU to frame a common approach to the issues faced by the financial services sector;

— expresses its confidence in the Government’s actions to stabilise and revitalise the banking system including establishment of NAMA as part of this range of considered measures.

I welcome the Minister of State. I am delighted to have the opportunity to comment on the proposed establishment of NAMA. I thank Fine Gael for using its Private Members’ time to raise this issue. 149 Proposed National Asset 29 April 2009. Management Agency: Motion

[Senator Marc MacSharry.]

I will begin by being somewhat facetious. I found it humorous when Senator Coghlan stated that his party’s proposal is superior to ours. We in Fianna Fa´il never think of ourselves as being superior, rather we look on ourselves as equals. That is the difference between our two parties historically.

Senator Paul Coghlan: I was referring to the merit of the proposal. I assure the House that I did not intend any offence.

Senator Marc MacSharry: Those of us on this side of the House support the Government decision to establish NAMA as a structured and measured approach to the issues faced by the financial sector. As everyone is aware, our amendment indicates that this approach includes the guarantee on deposits up to 2010 to stabilise the funding position of the banks and adding a further level of protection for depositors, the recapitalisation of Bank of Ireland and Allied Irish Banks plc, the nationalisation of Anglo Irish Bank which was necessitated by particular circumstances at the time to provide protection and support, and the fact that the Government also intends, in line with its previous indication, to put a State guarantee in place for the future issuance of debt securities with a maturity of up to five years. In terms of the anecdotal evidence mentioned by Senator Coghlan, one of the main reasons for what we have been trying to do is to get the financial system working again, to get credit flowing. While there has been recapitalis- ation, and we need to see banks lending again, we still have an issue with the confidence of international investors investing in banks and apart from the interbank market, banks secured their money through depositors. They lend from the deposit base, not capital. There are still issues there that must be developed. While there are many details to tease out, the principle is good. It will be the template for all economies in the EU to lead their countries out of the toxic debt problem. We all want to ensure that banks return to lending to the real economy as soon as possible, with a clean bill of health, strengthened balance sheets and reduced uncertainty over debts. NAMA will acquire the loans at an appropriate discount from the face value of the loans held on the banks’ balance sheets. Developers whose loans are transferred to NAMA will, however, continue to be liable for the entire face value of the loan application. The income from the assets, and the proceeds from their eventual sale, will accrue to NAMA and these income streams will mitigate the cost to the Exchequer of servicing the additional debt. If, upon wind up, NAMA has made a profit, it will accrue to the State. If it makes a loss, however, the Government will apply a levy to the banks to recoup the short-fall. The principle behind this is perfect. There are difficulties on the technical side so the Govern- ment should establish NAMA on an interim basis so we can proceed with relevant scoping and HR issues and find the appropriate personnel to get it up and running. There are huge diffi- culties for which we do not have the detail and I look forward to seeing it as soon as it can be worked out. How will cross-collateralisation of debts be worked out? There are many details and I hope the Minister for Finance and his advisors will come up with the answers as quickly as possible. I am glad, however, that they are not coming in with them today because these questions are far too complex to be answered in a number of weeks. We must proceed with this as soon as possible. I support the remarks of my senatorial colleague in valuation, Senator Coghlan, on valuation. There are many fine firms within the State that can assist with the valuation process. I am not necessarily talking about auctioneers or surveyors but I have noted in certain quarters that it has been suggested we do not use national authorities. That is fundamentally wrong because that expertise exists here and those who are more informed of the situation in this country will 150 Proposed National Asset 29 April 2009. Management Agency: Motion contribute to the valuations. They can be cross-checked through different bodies, such as the professional institutes, so that we achieve optimum value. As there is no market for property at the moment, it is hugely difficult to place an accurate value on it. The true values will not be known until the assets are disposed of, which could take 20 years. We would all like to hammer the developers and bankers for leading us into this mess, which many of us felt was unsustainable. We want our pound of flesh, where we pay at least 50% less than the \90 billion in assets. I disagree, however, because that would wipe out any equity investors might have. I do not know the appropriate discount but we must strike a balance between the pound of flesh and what needs to be done. Over a period, if these assets are managed well, their value would not equate to less than 70% of the supposed \90 billion. I would like to say I had the solution to the valuation issue, it is complex, but we must be careful about how we do this. We must use as many sources of advice as possible. While it is not connected to this issue, we should do something to help those people who cannot make mortgage repayments at this time. There might be a provision where they could make any level of payment or make the term of the loan longer. There are a number of options that could humanely help some of the many hard luck stories at the moment. If families start to break up, it is a disaster for the State socially and economically. If all defaulters are punished within the 12 month period, we should think about a payment moratorium or come up with other innovative ways that take account of the genuine distress felt by families at present. I support the Government amendment but I also thank Fine Gael for raising this issue and look forward to debating it on a continuing basis as other details become available.

Senator Joe O’Toole: I welcome the Minister of State and thank my colleagues in Fine Gael for putting down this motion. It is crucial but it is a pity it was left to the Opposition to put down for debate an issue of such national importance. The Government should be placing such issues in front of us and engaging with us on them. I support the concept behind NAMA. I am not completely happy with the Fine Gael motion, or with the Government amendment. The problem is that we do not know enough, as Fine Gael has pointed out repeatedly. The attraction of the NAMA proposal is that we will own the property and the rights and that is an attractive idea. It is preferable to buying the banks, taking on their equity without being clear what our relationship with the property might be. Apart from the quantum — I understand the Government could not disclose the figure involved — how will the process work? The Government can decide to value the property and hand the money to the banks or capitalise them against it. It could put money up front with a registered debt for the remainder to be collected through equities, profits or cash. There are so many different permutations that Fine Gael Senators are right when they call for an indica- tion of some sort. There should be a discussion of the possible permutations. Valuation is an interesting issue. Senator MacSharry’s own profession should examine this question. I accept what he says but there must be ways of valuing that take account of more than the market value. Things have an intrinsic value. If I hold up a 32 carat diamond and no one buys it, it does not mean it is worthless; it has an intrinsic value. In France and in Italy, people put their houses on the market knowing what they are worth and will not settle until they receive that amount. There are three elements to the cost of a property. We could use a property in Ballsbridge as an example. There are three elements to the cost of that property — the value of the site, the cost of building it and the cost of wages and salaries outside the building part and profit. The latter two can be worked out; it is easy enough to estimate how much it costs to put up a building at present and it is not difficult to estimate the appropriate level of profit and the cost 151 Proposed National Asset 29 April 2009. Management Agency: Motion

[Senator Joe O’Toole.] of planning, engineering, architecture and so forth. That leaves the price of the site. At least one can arrive at certain values. One can create parameters and boundaries, and people should get active on that task. I am anxious to hear the Minister’s views on the approach to that. It is not all bad news for the Government. It behoves us to look at this both ways. I agree with Fine Gael that the Government made serious mistakes in depending on the construction sector for income and tax revenue, and that dependence has created a huge problem. People did shout “stop” and we ignored them. Everybody ignored them and I share some of that responsibility. On the other hand, the Government got it absolutely right with the deposit guarantee. It has been right so far in its approach to the banks. So far, it has not put the taxpayer any more at risk than might reasonably be expected. It can also be said in the Govern- ment’s favour that the budget deficit is less than that of the UK and our debt to GNP ratio is less than that of the UK and far less than that of the US. At present — I stress that it is only at present — our unemployment rate is less than that of Spain and other countries. Even if it is not all bad news, there is no point in denying that the issues mentioned are putting Ireland at the bottom of the league. I do not wish to have Ireland bunched with Iceland, Lithuania and the other countries mentioned this morning. That was hard to take. Let us be realistic and balanced. There are things the Government has done right and there are things that have not worked out. The economist John FitzGerald said six months ago that even if the Government had got everything right, the amount it could have impacted on the economy, irrespective of international trends, would be no more than 30%. I do not know why he came to that conclusion but I do not consider it unreasonable. However, I agree with Fine Gael that the Government has not inspired trust and confidence. Certain things must be done. There must be a plan for the future. It must be a plan for job creation, to give a stimulus to the green economy and which examines the service level required of public services. I believe the Government should call the social partners to a meeting and say: “These are our objectives as a Government; this is what we want to achieve in terms of growth, job creation and the service level in health, education and other sectors; now, guys, tell us how to achieve it.” There should be agreement on the objectives, after which people can put forward their proposals and show how each of their proposals brings us closer to the objectives.

Senator Feargal Quinn: I thank Senator O’Toole for sharing time with me. I welcome this debate and thank Fine Gael for putting forward this motion. I was at a business meeting in Stockholm yesterday and, naturally, the discussion was on the financial crisis hitting the world. Sweden has much more difficult figures than Ireland at present. It has experienced a huge drop in exports while we have not experienced the same drop. While the figures are bad, let us not talk ourselves into a worse depression. It is interesting to recall that Sweden went through the same sort of problem in the early 1990s that the national asset management agency, NAMA, is now facing. It had a real crisis on its hands. Can we learning anything from what Sweden did? It came out of the crisis very well in the end. I believe we can too and the NAMA solution appears to be rather similar to the solution adopted by the Swedes. There was also reference yesterday to Paul Krugman, who referred to “Erin go broke” last week in a newspaper column in the United States. One of the speakers at the conference yesterday had heard Paul Krugman speak last month. Mr. Krugman said that we must get the solution right because President Roosevelt did not get it right in the 1930s. He said that what happened was not a ten year recession, as we thought, but a 70 year recession due to the mistakes the Americans made in the 1930s. I am not sure if that is correct, but Mr. Krugman 152 Proposed National Asset 29 April 2009. Management Agency: Motion went on to say that if we do not get it right now, the depression could continue until 2079. That should wake us up. I am aware that concern has been expressed about the large number of people needed to staff NAMA; there has been talk of 1,000 employees costing millions of euro every year. The agency denies this and says it is not planning to recruit large numbers. How will it do this? The agency is expected to rely on the same framework used for other bodies under the control of the State, such as the National Development Finance Agency. Those bodies employ outside contractors. Contracting out parts of the work is fraught with difficulty over control issues. Staffing would have to avoid any suggestions of conflict of interest. If somebody moved to the agency from a bank, for example, they could not be permitted to be involved in working on loans they were dealing with while they were employed by the bank. At the beginning of the crisis I expressed concern about the controls that would be placed on the amount of remuneration if the State is to get involved in business, be it banking or otherwise. I said that if I was running a bank, I would wish to ensure that we employed the best person and if the best person needed to be paid more, we should do that. I have changed my mind on that now. There are so many ex-bankers available for work it will not be necessary to pay the outrageous sums that were paid on that basis previously. The Government had to make a decision on the toxic loans held by the banks. It decided to create NAMA on the advice of Dr. Peter Bacon and his associates. The option is worthy of being given a chance. We should run with it. Hopefully, during further debates on the issue we will adjust, temper or amend it to improve it. Dr. Alan Aherne said last week that “commercial banks function better than State-owned banks”. We might argue that commercial banks did not do a very good job in recent years but they were supposed to be overseen by the State- owned Central Bank, so let us not assume blame should automatically be placed there on that basis. If there is to be a recovery from the financial crisis, it will have to be export led. We have not taken strong enough account of that. This is an issue that is not recognised. I believe the Minister of State understands that, but others do not. I am concerned by a report in the Sunday Business Post that smaller development loans may remain under the management 6 o’clock of the country’s banks. This is intended to allow the NAMA to concentrate its resources on higher value lending relationships. It is obviously complex to take over a large number of smaller loans but it appears strange that when we need work such as this to be done through a new public sector body, we intend to recruit from the private sector when we have civil servants who are among the highest paid in Europe and far more of them than we require. It is understandable that the public gets cynical when moves such as this occur. Has it been decided for definite whether these smaller loans will be left to the banks? Will the foreign-owned banks operating in Ireland, which have privately expressed interest in signing up for the new scheme, be part of NAMA? At what stage are the negotiations? I accept they are not yet concluded but this problem has confronted us for at least six months, as has the possibility of this occurring. We have taken our time on this issue. I am anxious to see some urgency on this scheme. When we get around to dotting the i’s and crossing the t’s, we will have had sufficient time to think about it. The motion tonight is worthy of being the first debate on that to take place.

Senator Dan Boyle: Last weekend, at a Green Party event, I spoke about the need for co- operation in dealing with international as well as national economic problems. Obviously, we must work with other countries that find themselves in a similar situation. Earlier today I mentioned that Germany’s economy has retracted by 6% and the 4 million figure for unemploy- 153 Proposed National Asset 29 April 2009. Management Agency: Motion

[Senator Dan Boyle.] ment in Spain. We heard today that the first quarter figures for the United States indicate its economy has shrunk by 6%. That is the international context in which we are operating. There is need also for co-operation among our social partners and while that has become difficult in respect of decisions made in recent months, I am confident that process, which has served us well in the past, is being restored somewhat in how we deal with the future. We also need political co-operation, and when speaking at the event I mentioned I pointed out some of the difficulties we face in achieving that. In terms of Government expenditure and fiscal policies, there are obvious alternatives to a Fine Gael approach that wants to control public expenditure to a degree more than other political parties and a Labour Party approach that wants to protect the public sector and allow it operate as it is without any public input and in a way other political parties might not believe is acceptable. It will always be difficult to find a political consensus on those issues but the way we deal with toxic debt is the prime political issue that requires the greatest degree of political co-operation. I will examine the alternatives available to us, the first of which is to allow banks to collapse. That would result in an immediate and large-scale cost to the taxpayer. Establishing a bad bank would also bring about an immediate cost to the taxpayer. On the nationalisation of banks, I read with incredulity some of the comments made regarding instant nationalisation. In terms of buying at current equity values, most of the financial institutions would cost \2 billion. That is the extent of the cost to this State, which is a nonsense because we would immediately acquire the bad debt, which would probably become accelerated in terms of the way that becomes redeemed, and the cost to the State would be even greater. The national asset management agency model, as opposed to the bad bank and the national- isation models, is the best option in terms of protecting the interest of the taxpayer because it takes the debt from commercial institutions, places it with a State agency, gives it a longer time perspective in which the market can appreciate and, depending on the success of the first part of that process, which is the discounting of the bad debt itself, allows the taxpayer to make a gain. In terms of a principle to understand, that is the argument we must make to the people. They must first understand that it is an action being done on behalf of the Government to make sure the interest of the Irish nation and the people is protected. There is a desire to protect that interest in the Fine Gael motion but the reference to the cost of NAMA being \90 billion is unfair. It states also that Fine Gael has an alternative proposal, which is undoubtedly true, but to suggest that is superior does not help political debate. We must be more open and honest on issues such as this. There is a potential for public dialogue and a debate on the issues surrounding this because the decisions we make will last for generations and will impact not only on the current citizenry of this country but on gener- ations to come. That is the reason we must conduct the debate in a proper context and be confident we are making the right decisions. On the process of NAMA, in political debating terms people have talked about bale outs of banks and bale outs of developers. There is no doubt we are in this position because of a level of incompetency and undoubted greed that existed in many of our financial institutions, but without a dynamic financial sector we lack the means to have an engine by which we can recover our economy. Everyone in this Chamber is agreed about the need to restore the degree of activity needed in that sector. In terms of these proposals, I am disappointed that people believe these proposals are some- how politically inspired. The people who are thinking through these proposals are representa- tive of some of the best civil servants in this country. There will be a direct relationship with the National Treasury Management Agency, the body many accept as one of the most effective 154 Proposed National Asset 29 April 2009. Management Agency: Motion agencies we have in this State and one that has done an excellent job in trying to reduce and control our national debt in the past 20 years. If people believe there is potential for NAMA to go off the rails, that presupposes there is a vote of confidence in the NTMA and what it has done. There will be an intricate relationship between those two bodies and because of that experience and that success, we can be happier that what NAMA will achieve will be better than the alternatives of direct nationalisation or allowing institutions to collapse. In terms of those who want nationalisation now, they should consider the experience of other jurisdictions. I ask them to show me where that route has been taken. Other countries such as the United States, the United Kingdom and some European countries have pumped in additional resources in terms of buying equity in many of their main banks but none has taken the route of making sure such banks are 100% owned by their governments or countries. The best example is the United Kingdom where its largest bank, the Royal Bank of Scotland, has a potential ownership by the British Government, the British taxpayer, of 90% of its equity. There is still 10% in private hands. The logic of that is that if those banks are allowed to trade commercially and override the current economic circumstances to increase the value of their stock holdings because they continue to have a private and commercial element, it allows the state’s stakeholding also to appreciate and that stock to be drip-fed into the market in terms of getting a return in the period that a body like NAMA would set in a situation like the one that pertains with our financial institutions. Far from taking a headless chicken approach to solving the problems of our financial sector and how it operates internationally, this is a considered approach. It is not something that is bound up in the excesses or the mistakes of the past. It is a credible model which can most readily succeed if the principles behind it and its ability to function find the widest possible support in our political system because to compromise that by seeking a narrow political advan- tage from a short-term perspective is to play politics with the issue that is most at stake in terms of this country’s viability and the prosperity of its citizens. On that basis, while I accept the importance of moving the motion and the sincerity with which other political parties want the best possible model to be put in place, I also ask them to consider that the Government has given adequate and due consideration to this issue and its belief is that NAMA is also the best model we could have in place to meet our current needs.

Senator Ciaran Cannon: I want to share time with Senator Healy Eames, five minutes to me and three minutes to the Senator.

An Leas-Chathaoirleach: Is that agreed? Agreed.

Senator Ciaran Cannon: The decision to use taxpayers’ money to buy out toxic loans is unjust and unwise on so many levels it is difficult to know where to start. First, the NAMA plan had a far from auspicious start in trying to estimate the real value of these toxic loans. The interim Financial Regulator told the Oireachtas economic and regulatory affairs committee in January that the amount of toxic development loans in Irish financial institutions was of the order of \39 billion. However, on a daily basis that figure is being revised upwards to the point where now some are suggesting it could be close to double that. Such confusion and uncertainty surrounding the real level of banking debt does not build confidence in any plan to get us out of the mess we are in. If we are to ask what NAMA will cost us and the generations to come, the most honest answer at this point is that we simply do not know. Senator Boyle’s statement that he believes 155 Proposed National Asset 29 April 2009. Management Agency: Motion

[Senator Ciaran Cannon.] the NTMA will have a major role in running NAMA and deciding policy within NAMA implies he does not know what type of corporate governance control will exist in NAMA. The owner of any business, from a corner shop to a multinational corporation, would not make an investment on behalf of his or her family or shareholders without having all the facts available. We should not expose our people to this high risk strategy. The Government now plans to buy the bad assets of our two major banks at a discount from their book value, but the key question is how big this discount will be. Analysts at Davy stockbrokers have suggested a discount of approximately 15% would be appropriate, but what would this mean for the taxpayer? If one considers that the total loan book of Bank of Ireland and AIB is of the order of \50 billion, then we would be looking at a discount of \7 billion. However, Goodbody Stockbrokers has estimated that upcoming loan losses at these two banks alone will be close to \19 billion. If the Government acquires these loans at a discount of only \7 billion, this would imply the taxpayer taking on losses in Bank of Ireland and AIB alone of \12 billion — a colossal amount of money when one considers that the recent swingeing budget cuts saved us a mere \3.25 billion this year. The bottom line is that NAMA is a no-win proposal for the taxpayer, whose interests we should be seeking to protect. If we underpay for the banking assets the taxpayer will once again have to dig deep to recapitalise the banks. If we overpay for the assets, which is the more likely scenario, the risk to the taxpayer is colossal. Of course we are being placated with an assurance that a levy system will be put in place to protect the taxpayer against any heavy losses in the eventuality that NAMA makes a loss over the long term. In other words, in ten years’ time the Government may end up setting a levy on banks that they can then pay back over time. Once again, ask yourself how that corner shop owner would approach this arrangement. Would he or she borrow \100 at 6% to give to somebody who then promised to pay them back \5 a year for 20 years starting in ten years’ time? They most certainly would not. It is this sort of basic business acumen that seems to be so sadly lacking in every move this Government makes. Fine Gael has put forward a fair and more economically sound model for the stabilisation of our banking system. We propose a solution that does not put the innocent taxpayer first in line to suffer the losses, thus allowing institutions who knowingly took on these high risks for the promise of high return to walk away unscathed. Professor Paul Krugman, in a recent article outlining the banking options open to the US Government, agreed that a privately held banking system is the correct way to go but went on to say that a taxpayer-funded toxic bank is most certainly not private enterprise. He described it as lemon socialism, where banks get all the upside but taxpayers bear the risks. It is now time to look at a different model, which would create good banks with clean balance sheets into which the taxpayers’ recapitalisation would go. The Fine Gael proposal would involve separating from within each bank a new bank which would hold all the State guaranteed deposits and which would buy those parts of the loan book such as residential mortgage loans and business overdrafts which can be easily valued from the existing parent bank. A legacy bank would be left behind in each case which would no longer engage in any lending. Its role would be to manage the remainder of the loan book and recoup maximum value from it over time. The legacy bad banks would still be owned by their shareholders and would owe obli- gations to their bond holders. These groups, not the taxpayer, would then assume the risk they contracted for in the first place. Terrence McDonough, professor of economics at NUI Galway, quite rightly suggested that one really attractive aspect of this proposal is that the existing management could be left to 156 Proposed National Asset 29 April 2009. Management Agency: Motion manage the remaining assets. If these managers are as clever as their bonuses imply, perhaps they can dig the legacy banks out, but if not, there is always the bankruptcy court with the owners, lenders and managers, rather than the taxpayer, squarely in the gun sights where they belong. I ask that any new banking legislation would include a provision to immediately allow all borrowers on fixed interest rates the option of moving to a variable rate with little or no penalty. It galls me and many others to see the same banks that now depend solely on the taxpayer for their survival continuing to charge punitive interest rates on hard-pressed home and business owners. The Government guarantee, the nationalisation of Anglo Irish Bank and the recent \7 billion bail out of AIB and Bank of Ireland has not bought the taxpayer a single solitary modicum of influence on day-to-day banking policy. It is high time all our banking chiefs ate a little humble pie and, as a minimum gesture of gratitude to the taxpayer, immedi- ately agreed to allow all borrowers on fixed rates to change to variable rates. It is the least that they should do.

Senator Fidelma Healy Eames: I thank Senator Cannon for sharing his time with me. I support his point about fixed-rate mortgages. The setting up of NAMA provides an ideal opportunity for giving consideration to releasing fixed-rate borrowers so that they can renego- tiate downwards in line with the ECB rate to more favourable fixed-rate or variable rate mortgages. NAMA is an interesting concept which has potential, but only if implemented properly. By that I mean that it must be independent from all politicians. It must not have any political appointees on the board. That is critical. The board must be independent and it must have integrity. This country has seen where the opposite has been the case. For example, in the case of FA´ S, where there were many political appointees, we saw much corruption. If we are to go forward, the right people must be at the top of this agency with a clear mandate. My first key point is that NAMA must be completely independent from politicians, and I would like to hear the response of the Minister of State, Deputy Mansergh, to that. I also suggest strongly, and consistent with what the Information Commissioner, Ms Emily O’Reilly, suggested, that NAMA should come within the remit of the Freedom of Information Act. It will be a public body. It is time we extended the scope of freedom of information. If NAMA will come under the remit of the Freedom of Information Act, we will have confidence in it. It is ludicrous that currently neither the Financial Regulator nor the Central Bank comes within the remit of the Freedom of Information Act which means they are not publicly account- able, and we have seen the fall-out of that. It is important the right people are put in place to conduct detailed analysis of the value for which the loans will be written down and assessment of the collateral behind each loan, and this must be done case by case. One fear I would flag is the fall-out of NAMA for subcontractors. This has been brought to my attention by subcontractors who are quite worried about how, once the land banks and the assets are taken from the developers, they will get what they are due from the developers. To ensure they will get some money, these subcontractors, such as joiners, window providers and carpenters, are going to the courts to get winding-up orders and judgments. This involves an array of expense that they really should be spared. NAMA must take cognisance of the fall- out for those involved in the entire cycle of development. We are trying to turn the banks into clean banks. That is the purpose of NAMA. Running alongside this, the State guarantee of deposits and international lending runs out in September 2010. Our goal should be that by September 2010 we should be able to lift that State guarantee 157 Proposed National Asset 29 April 2009. Management Agency: Motion

[Senator Fidelma Healy Eames.] and all banks should be clean banks by then so that we can release the taxpayers from the risk to which they are currently exposed. I thank the Minister of State for his time and look forward to hearing his responses.

Senator Larry Butler: I welcome the Fine Gael motion. It is important we respond positively and look at all options, which we are doing. It is obvious to any fair-minded person that the present banking system is not working and that we, as a Government, must deal with the loans drawn down from these banks which prevent them lending to small and medium businesses. I mentioned at the parliamentary party meeting last night that I received a letter from a company which has 25 employees, a substantial annual turnover and a \200,000 overdraft facility which it had not used for approximately 15 years. Its representatives went to the bank to have this overdraft facility put on order and was told it no longer existed. These are the kinds of diffi- culties being encountered in the current banking system. To move away from this, we are examining the establishment of NAMA. This is the correct course of action. Liabilities in the banking system can be removed from it, placed in NAMA and managed by the agency over a period. The banks can then be recapitalised to ensure proper lending to the business community and proper mortgage restructuring. At that stage, investment in the banks will return with their share prices improving. Evaluating the land holdings in question will be a difficult process because the market is subdued. However, I am encouraged that over 30% of the lands in question are overseas in London, Manchester, Liverpool, America and Europe. That is good because we are likely to see faster upturns in land values in these areas because of the scarcity of land in them. Land is a finite but always a good investment. Its value may be down today but it is very much like gold; it does rise when there is a demand for it. We will see demand increase, maybe not in the next three years but certainly in five. The length of investment in NAMA is ten to 15 years. The NAMA approach is the right way to go in that it protects the taxpayer. As Senator Healy Eames said, we should be in a position to moderate the guarantees we have given to the banks. People have not yet realised the importance of the bank guarantee scheme. It is our money and deposits from which the banks work. Without the guarantee, if there were a run on a bank in the morning, we would all have to go and withdraw our money. It must be recognised the Government’s bank guarantee has stabilised and protected our banking system. The six banks under the guarantee are still in working order. While we have nationalised one, I do not believe we should take the nationalisation route with the others because the State would be assuming all their debts. Nationalisation should be the last route. In the case of Anglo Irish Bank, we did not have a choice because we had to ensure the overall banking system was maintained. It is a cost to the taxpayer with certain risks. Putting NAMA in place will ensure the risk is minimised. If there were a long-term risk, the banks will have to pay some price for it. Senator Healy Eames referred to freedom of information requests. However, the information that NAMA will handle will be very sensitive material and I do not believe it should be handed out. When the valuations are done, a bond could be created to sell to the European Central Bank for a period. This could also be invested for recapitalisation of the banks which would, in turn, stimulate their share prices. These are options that will ensure there is an upside to NAMA for the taxpayer. There will be an upturn in the US, UK and European economies in which NAMA will have substantial land-banks. As Senator MacSharry stated the NAMA model may be the forerunner which other countries may later adopt. It should not be forgotten that Ireland was the leader in guaranteeing its banks. While we were criticised for doing so, it certainly worked in assisting our system. 158 Proposed National Asset 29 April 2009. Management Agency: Motion

NAMA is the right decision. It is also important that such decisions are measured and exam- ined. I hope I have given the House an outline of my vision for NAMA. The main problem will be around the land valuations. I do not believe \90 billion is realistic. Property prices have fallen, by 50% in some cases. While we cannot devalue the properties and lands in questions that much because it would affect the banking system, we must get a middle valuation that would be of benefit to all — the bank and the taxpayer. NAMA will be established by legis- lation in which the House will have its input. I thank Fine Gael for putting down this motion which has led to a constructive debate. I hope it will provide a better insight into how NAMA can progress.

Senator : I welcome the Minister of State, Deputy Mansergh. He was one of the first on the Government side to acknowledge the economic security of our State was being threatened and questioned by many of the developments in the past six months. It is no secret to the Minister of State that our party would like to be on his side of the House but I am glad he has continued with this acknowledgement. While I differ with him on his answers to some of these economic problems, he at least knows they exist and is able to quantify their magnitude and point out the difficulty they might pose for our State. My colleagues, Senators John Paul Phelan and Twomey, have detailed how Fine Gael’s proposals for the NAMA model would be different to the Government’s. We believe our proposals are superior and correct for the taxpayer and the future economic well-being of our State. In my contribution, I want to focus on four questions that I would like the Minster of State to answer. The answers are important with regard to allowing our citizens to have more confi- dence in the proposal that has been laid out being the right way to go. There are three features in particular of which we must be cognisant in the discussion we are having about NAMA and the current recession. The first is that the recession we are facing is unique in modern economic history in that it is balance sheet led. There is a huge amount of personal and private debt sitting either on the balance sheets of companies or on the credit cards or mortgages of individuals, and this will be at the root of the difficulty our country and the global economy has in emerging from our current difficulties. This leads on to the second point, which provides part of the rationale for NAMA. Unless we find some way of dealing with the issue of toxic debt within our economy and the global economy, it will be the millstone that pulls us back in our efforts to recovery and to getting our economy back into sustainable growth. We must find some way of resolving the issue of how much debt exists and finding a way of liquidating that debt and getting it on to a healthier footing. Unless that is in place, the framework we need for the entire economy to prosper will not exist. While I have been critical of NAMA, in many ways the idea of creating an institution to deal with this issue should be welcomed. One of the criticisms of the efforts to lead the world and Ireland to recovery up to this point is that the institutional innovation has not been in place to ensure we recognise that we are in a far more dangerous world than we have been in recent years. If one considers the efforts of President Roosevelt to lead the world out of the Great Depression in the 1930s, he was creating new kinds of institutions under political leader- ship every year in recognition of a different problem. We need new people to deal with these issues who will be accountable to the Government and will have the expertise to do this. If one considers the efforts to get out of difficulties following the Second World War, we saw the creation of the welfare state and brand new arrangements between the economy and the State to find a way to lead the world and this country out of the problems we were in at that time. Therefore, while we are supportive of the idea of a “good bank”, it is very welcome to see 159 Proposed National Asset 29 April 2009. Management Agency: Motion

[Senator Paschal Donohoe.] Ireland stepping forward and saying we need a new way of dealing with the banking structure and our economy, and this is our contribution to doing it. One of the four questions I will come back to is that many of the institutions I praised earlier were under political leadership and were accountable. Members from both sides of the House spend much time being critical of the HSE and its lack of political accountability or being critical of the difficulty politicians, even those in government, have in finding out what is going on in the country and our community. One of the questions that must be answered is how NAMA will work and what is the political structure within which it will be accountable. The quantity of debt we are dealing with will potentially be the millstone around the neck of future generations. It is not good enough to say this problem is so specialised that politicians cannot have anything to do with it. We are the ones who carry the responsibility for the welfare of our country and there must be some way of ensuring the organisation that will be in place has accountability to the Government and the Oireachtas. This leads to the particular questions I would like to put to the Minister of State in regard to this new body. The first concerns how this organisation will work without at least the partial nationalisation of our two main banks. The reason I put the question is that one of the main jobs of NAMA will be the pricing of the so-called bad debt that exists. There will be a real contradiction because, on the one hand, the taxpayers will want the lowest price possible to ensure they are not weighted down with a vast amount of debt but, on the other, the banks will want the best price possible to ensure their capital value is not further undermined. The lower the price that NAMA agrees with the banks for the debt in question, the weaker the capital value of the banks. They will then turn around to the Government and say they need equity, otherwise the capitalisation and value of the banks will be further undermined. I cannot understand how we can have a process of valuing the debt in question which will not lead to at least the partial nationalisation of the two banks in question, Bank of Ireland and Allied Irish Banks. Again, it appears that a fair price for the taxpayer will be one that will undermine the capital value of the banks in question and, in turn, they will turn to the taxpayer seeking further capitalisation. I find it odd to be arguing for this approach given my outlook on these issues. Nonetheless, one benefit of at least partial nationalisation is that the whole issue of how one values this debt will almost disappear because the Government as at least the partial owner of the bank would be able to determine what the debt will be and its value. The point I want answered is how this organisation will work without at least some nationalisation taking place. My final question relates to the whole idea of moral hazard. One of the main reasons we are going down this route is that we have ended up with a couple of banks that we term as having structural value to the Irish economy — they are too big to fail and we cannot let them go under. We can never let this happen again. We can never find ourselves in a situation where any single bank or organisation is of such value to our country that it is unthinkable that it will go under. The reason for this is that the lessons we are learning are basically that if banks get involved in dealing that is not sustainable and that threatens the future value of the Irish economy, the taxpayer will bail them out. We cannot let ourselves be in a similar situation again. To ensure this happens, we must find ourselves in a situation where it is a viable option for banks to go bankrupt. I note with interest that Martin Wolf, who is the columnist for the Financial Times and one of those who spotted this crisis on the way, said that an essential feature of the new banking system and landscape that emerges is that banks have to be allowed to go bankrupt. If we do not find a way of allowing that to happen, we condemn ourselves to history being repeated again and again. This is the one lesson we must learn and on which we must act in the future. 160 Proposed National Asset 29 April 2009. Management Agency: Motion

Minister of State at the Department of Finance (Deputy Martin Mansergh): I am glad to be back in Seanad E´ ireann for what has been a very good debate. Obviously, it is dealing with a matter where some of the details and precise answers will be given in legislation but this debate may perhaps help to inform, in some part anyway, the drafting of that legislation. I will seek in the course of my remarks to take up as many of the large number of questions that have been raised by Senators. As a final preliminary remark, it is one of the good features of this House that even in a two-hour debate on Private Members’ business, it is possible for up to a quarter of the Senators to participate. The legislation will be brought forward as soon as possible, either this summer or early in the autumn, by which I mean September. The recent global financial crisis has resulted in governments around the world having to react with extraordinary measures. Governments have intervened time and again to preserve financial stability and maintain their banking systems, and Ireland has been no exception. Though Irish banks are generally not exposed to complex structured products, concerns about which prompted this financial crisis, they have suffered from the severe tightening in inter- national funding markets. The difficulties faced by Irish banks have been compounded by a sharp fall in domestic and UK property prices. The Government’s actions have been taken on the basis that the health of the economy is inextricably linked to the banking sector and vice versa. The continued flow of credit is vital for our economy. The Government’s objective is to ensure that the banks continue to lend to individuals and businesses in the real economy. The banking sector is the life-blood of the economy. The Government’s approach to the financial crisis has been structured and con- sidered, with the Government demonstrating its commitment to preventing the failure of any systemic institution and to protecting deposit-holders. The bank guarantee scheme was introduced to ensure that the banks would have sufficient liquidity to operate on a day-to-day basis. In the Minister for Finance’s supplementary budget speech, he announced the Government’s intention to put a State guarantee in place for the future issuance of debt securities with a maturity of up to five years. Access to longer-term funding in line with the mainstream approach in the EU and consistent with State aid rules will contribute significantly to supporting the funding needs of the banks and to securing their continued stability. The disclosures relating to loans to directors undermined confidence in and weakened the funding position of Anglo Irish Bank. Furthermore, the due diligence exercise undertaken as part of the planned recapitalisation brought to light further concerns regarding corporate governance in the bank. The Government therefore decided to take Anglo Irish Bank into full public ownership with effect from 21 January 2009 to ensure the stability of the bank and the financial system generally. Market expectations with regard to the capital that banks hold have altered significantly. As a result, banks have had to compete vigorously for deposits and other forms of funding in a weakening economic environment. Banks have also been forced to seek capital in a market unwilling to finance banks, resulting in an array of state recapitalisation programmes across the developed world. The recapitalisation of Bank of Ireland was approved at its EGM at the end of March 2009 and the National Pensions Reserve Fund has invested \3.5 billion into that financial institution in return for preference shares. The AIB proposed that recapitalisation of \3.5 billion is to be put to the shareholders at its EGM on 13 May 2009. The Minister for Finance welcomes AIB’s statement last Monday that it intends to strengthen its capital position by a further \1.5 billion over and above the State capital injection of \3.5 billion. This move will further boost confidence in AIB’s ability to 161 Proposed National Asset 29 April 2009. Management Agency: Motion

[Deputy Martin Mansergh.] weather the financial storms we have experienced and to emerge in a stronger position when conditions improve. The strengthening of its capital position will improve the bank’s balance sheet and better position it to lend to businesses in support of economic recovery. Similar stress tests that applied to Bank of Ireland under its due diligence did not indicate to the Minister a need for further capital beyond the \3.5 billion invested by the Government. In Ireland, through the bank guarantee scheme, bank recapitalisation and the protection of public ownership, we have provided very substantial support to the banking sector. The bank guarantee scheme and the recapitalisation of AIB and Bank of Ireland were implemented to ensure there is sufficient liquidity in the system and that the banks are adequately capitalised. While this range of measures has gone a long way to supporting the banking sector and ensuring its stability, Ireland, like many developed countries around the world, is finding that this is not enough and there is a need to react with more radical measures. That is why the Minister for Finance announced earlier in the month the Government’s decision to bring forward measures to address the issue of asset quality in the banking system. A national asset management agency, NAMA, will be established on a statutory basis under the aegis of the National Treas- ury Management Agency. The principles of NAMA are clear. Certain assets will be transferred from bank balance sheets to NAMA at a significant discount. This process will bring certainty for international markets on the position of the banks enabling them to raise funds to maintain the flow of credit to the economy. By definition, detailed work will be required to determine the discount to be applied to transferred assets, but the overarching principle and rationale are clear. The objec- tive of NAMA is to strengthen the banks’ balance sheets, to considerably reduce uncertainty over bad debts and as a consequence ensure the flow of credit on a commercial basis to the real economy, to protect and increase employment, while also maximising and protecting the interest of taxpayers. The potential book value of loans that will be transferred to NAMA is in the region of \80 billion to \90 billion, although the amount paid by the agency will be considerably less than that. The State will not take all the risk in the acquisition of such assets. In the first instance, the price of the assets will have regard to current and expected market value of the relevant assets, and what is sustainable for the taxpayer. In the longer term, if the agency were to fall short of recouping all the costs, the Government intends that a levy should be applied to recoup any shortfall incurred. The levy serves as a safeguard for taxpayers in the future on the assets taken on by NAMA in the short term. This does not conflict with the objective of giving certainty on the position of the banks because the levy would be applied in the future and over time. This is no more of an uncertainty for banks than, for example, changing tax rates or changes in the regulatory environment. The possibility of a levy ensures that two key objectives of NAMA are met — certainty on the position of the banks and protection for taxpayers. Significant further detailed work and extensive due diligence on the loan books will be needed to ensure that the appropriate categories or portfolio of loans are transferred and that the banks are cleared of the identified riskiest loans by NAMA. The riskiest identified loan category for banks in Ireland is that of land and development and the largest aggregate exposures across the institutions. Entire portfolios of loans will be transferred to the agency, which will provide the banks with stronger balance sheets and considerably reduced uncertainty over bad debts. The Government has received expert financial, economic, legal and valuation advice at every step of its measured response to the recent turbulence in the banking sector. Likewise, specialist expertise will be procured by NAMA in all relevant areas to ensure that NAMA is established in the most efficient manner so as to safeguard taxpayer interests. The Government has been 162 Proposed National Asset 29 April 2009. Management Agency: Motion clear that a significant discount will be applied to assets transferred from the banks to NAMA. Detailed work will be required to determine the exact discount to be applied, but it goes without saying that the Government’s objective will be to set a fair economic price and ensure protection for taxpayers. NAMA will manage the overall process, including valuations. Neces- sary expertise whether relating to determination of land values, asset quality or any legal issues arising will be sourced to ensure that the valuation process is thorough and accurate. There are important legal issues to be considered and these can be considered in full in the process of legislating for NAMA. There will be more debate on this matter. The Government is prioritising the setting up of NAMA. While the full process of transfer- ring assets to NAMA will take time, this is not unexpected. International markets will have confidence in an asset management process that is well executed and well managed rather than rushed and hastily assembled. With a question of legal challenge it is important to be clear that this is not a bail-out for developers. Their debts, whether held by the banks or NAMA, will remain unchanged. The only discount in question is that for the State in taking on the management of certain assets. While it cannot be anticipated whether certain legal challenges will be erased, these could be thought to be akin to the normal legal issues encountered in the proper and efficient manage- ment of property debts in banks. I must stress, in this context, that developers will continue to be required to repay their loans in full. Where borrowers have made losses, they will be required to recognise and take such losses. It will certainly not be the function of NAMA to go easy on them. NAMA will operate on a full commercial basis and will be determined to recover moneys owed to it to the fullest extent possible. No decision has yet been taken on whether NAMA should directly manage or supervise the management of smaller development loans. As has been noted, there will be staffing and resource implications as well as questions on how to best extract maximum value from the assets to consider in working out the details of NAMA’s operation. NAMA will not be a toxic bank. It will not be a bank in that it will not take deposits and it will not have a banking licence. NAMA will have loans on its books based on real physical assets and while some of these will undoubtedly be of better quality than others, they will be a mix of good or performing loans and bad or non-performing loans. The stream of income from the assets and the proceeds from the eventual sale of the underlying asset or the repay- ment of the loan will accrue to NAMA. This will be used to pay interest on the bonds issued to pay for the assets and eventually to repay these bonds. NAMA will be developed and implemented within the common EU framework detailed in the European Commission guidance on the treatment of impaired assets, working closely with the European Commission to obtain prior state aid approval. By drawing on the best advice and experience available internationally, we are committed to ensuring that this very significant measure will be an example of best practice and meets all the objectives that the Government has set for it. It is universally accepted that bank regulation on a global scale is in need of reform. Ireland is no exception in this regard. A well regulated financial system is essential for a proper func- tioning banking system that will stimulate economic recovery. The actions of those who have tarnished the reputation of Ireland will be dealt with through the appropriate processes. As the Minister for Finance announced in his Budget Statement, the role of the Central Bank of Ireland will be reformed to place it at the centre of financial supervision and financial stability oversight, providing for full integration and co-ordination of the prudential supervision and 163 Proposed National Asset 29 April 2009. Management Agency: Motion

[Deputy Martin Mansergh.] stability of individual financial institutions with that of the financial system as a whole. The Central Bank of Ireland will in the future be headed by a commission, chaired by the governor. The Minister for Finance has asked the former deputy governor of the Bank of England and former member of the UK monetary policy committee, Sir Andrew Large, to advise on the process to select a new head of financial regulation within the new institutional structure. This search will be wide-ranging and the person chosen will be of the calibre, reputation, experience and expertise to lead the reforms of financial regulation that the Minister has outlined. There is much media debate proposing the nationalisation of Irish banks, particularly AIB and Bank of Ireland. The Government’s strategy is to ensure that the lending needs of the real economy are met. A commercially focused banking system, which includes banks having a market presence, operating within market disciplines and constraints, is best equipped to achieve this aim. The Minister for Finance considers that where banks are of systemic import- ance, viable and sustainable, they should, where possible, be maintained as market listed public limited companies open to private investment. Internationally the prospect of wholesale nationalisation would be very damaging to Ireland’s reputation and attractiveness to inter- national investors. No country is currently adopting a policy of wholesale bank nationalisation and there is no reason for Ireland to adopt such a policy. Nationalising a small institution, as has been suggested in the course of this debate, would not provide for the country’s credit needs. NAMA is a system wide approach which will enable all participating institutions to provide credit to the economy. There has been much talk about creating a “good bank” system. This is based on a concept which proposes separating the “good bank” aspects from within each bank. The proposal does not, however, identify what is to happen to the “bad” parts of the banks. NAMA, on the other hand, is a solution whereby the banks will have a stronger balance sheet and considerably reduced uncertainty over bad debts and, as a consequence, will underpin the flow of credit on a commercial basis to individuals and businesses in the real economy. On the question of costs to the taxpayer, the key point is that NAMA will manage assets over time. The assets will not need to be written down and losses realised up-front, as would be the case for banks and for the various loss projections that exist currently. As economic conditions improve, and as the property market reopens, NAMA will be able to maximise the economic return on the assets it holds. This feature, contained within the substantial framework to be applied to transferred assets, and the safeguards of a levy in the future will protect taxpayers while ensuring the health of our tax system. On the question of how the board of NAMA will be nominated, that must be decided under the legislation that implements NAMA. It is unlikely, however, that this information will be released under freedom of information requests as it will include much commercially sensitive information that is not normally released under the Act. Senator Cannon raised an issue referred to in an earlier debate about fixed interest mort- gages being converted to variable ones. This was asked in almost the same breath as extolling a business approach to issues. Inevitably, if the Government was to take an attitude on that issue, that would further burden the banks which we are trying to get back up on their feet. That is not a realistic approach. People entered these arrangements. There were pros and cons to the arrangements at the time and it is not possible for the Government to convert them, however desirable that might be from the social and environmental point of view. I am reminded in much of this debate of one of the founding theses of the school of econ- omics or economists in the 18th century, that land is the source of all wealth. In those days they meant territorial land or agricultural land. Nowadays, and listening to this debate, one 164 Proposed National Asset 29 April 2009. Management Agency: Motion would think development land was the source of all wealth. However, we are trying to get away from that situation and to not return to it in the future. It would be lovely if, as Senator Donohoe recommended, we could get to a situation where, in future, even systemically important banks would be allowed to go bankrupt by the State. I am sceptical as to when and whether we will reach that Utopia. The creation of the national asset management agency is part of a range of considered measures introduced by the Government to stabilise and revitalise the banking system. The Irish economy needs a functioning banking system that enjoys the trust of depositors, inter- national markets and the community at large to withstand the current economic and financial position. The strategy pursued is the best way to secure the position of the financial services sector while keeping in mind the requirements of the EU and the interests of the State. I commend this counter motion to Seanad E´ ireann.

Senator Alex White: I wish to share time with Senator Ross.

An Cathaoirleach: Is that agreed? Agreed.

Senator Alex White: The Minister of State was dismissive of the point made by one of my colleagues with regard to freedom of information, but whatever about this applying in the case of NAMA, what proposals does the Government have, if any, to ensure some measure of transparency for the public and taxpayers with regard to what will occur? The Minister has regularly said that there will be a considerable discount on these assets. In other words, they will be purchased at a considerable discount. That is the objective. I understand that and it is a laudable objective. We can all see why the Government makes that point. I understand it is impossible to say when we will know what the discount is. Presumably, we will reach a stage, whether next month or next year, when there will be some clarity as to what the discount is, if indeed there is a discount. By what mechanism will the taxpayers who are carrying the can and paying the bill know this? How will they get the information as to what precisely the discount is? Whether through freedom of information or otherwise, it is clear the Government will have to declare and come clean with the public so we can understand and know what is being done in our name with our money, our earnings and our future. We need either freedom of information or something far more robust. It is no use for the Minister of State or the Minister to say with certainty that the amount that will be paid by the agency will be “considerably less than” \80 billion to \90 billion. They have no more of an idea than we have. That is an aspiration. It is a genuine aspiration on their part, and no more than that. However, it is said with a tone of certainty. The Minister of State referred to the promise of a change to the Central Bank and regulatory institutions. He stated: “As the Minister for Finance announced in his Budget Statement, the role of the Central Bank of Ireland will be reformed to place it at the centre of financial supervision and financial stability oversight, providing for full integration and 7 o’clock co-ordination of the prudential supervision and stability of individual financial institutions with that of the financial system as a whole.” What was it supposed to be? Is this new? When I studied economics, I believed this was what the Central Bank was, namely, at the centre of financial supervision and stability oversight “providing for full inte- gration and co-ordination” and so on. Is this a new idea of what a Government bank should be? Suggesting that the Government will do this, as if to gift a newly discovered approach to the people, is ludicrous. Have central banks not been doing this for the past 50 or 60 years? The suggestion that it has only been discovered now is extraordinary. 165 Proposed National Asset 29 April 2009. Management Agency: Motion

[Senator Alex White.]

The Minister of State referred to nationalisation, a matter in which I am interested. We proposed an amendment to the Fine Gael motion, although it cannot be moved in accordance with the rules of the House. I have no particular difficulty in that regard. The question of nationalisation is a serious element of this debate. Senator Donohoe was correct and the Mini- ster of State should answer his question on how this measure can be delivered without at least partial nationalisation of the two main banks, AIB and Bank of Ireland. Many people believe that this will occur in any event. The Minister of State’s words were an example of giving hostages to fortune. He and the Government are constantly telling the Opposition to be careful about the language used. He stated: “Internationally the prospect of wholesale nationalisation is very damaging to Ireland’s reputation and attractiveness to international investors.” The word “wholesale” was a nice distinction to make as no one else has used it. The apparent point is that nationalisation would damage Ireland’s reputation and attractiveness to international investors. If this is what the Government must do in six months’ time, what will he say then? The difficulty is that these words can be thrown back at him. On 15 September 2008, for example, the Minister of State’s colleague, the Minister, Deputy Brian Lenihan, stated:

Our banking system has shown resilience in the face of such banking trends. Our banks uniquely have weathered the storm to date despite many more venerable institutions being unable to do that.

Several months later, in reference to recapitalisation, the Minister stated: “There will be no exposure to the taxpayer on this because, as a result of the good times, we do have substantial money amassed in the pension fund.” We must have spent that four or five times. According to the Minister, there is no question of a fresh expense being incurred. These comments were made in December 2008. I draw the House’s attention to a ministerial statement on the report of the Central Bank and the Financial Regulator on 29 November. It stated:

The report confirms that the capital position of each of the institutions reviewed is in excess of regulatory requirements as at 30 September 2008. The report also concludes that even in certain stress scenarios the capital levels in the financial institutions will remain within regulatory requirements in the period to 2011.

An Cathaoirleach: The Senator is taking time from Senator Ross.

Senator Alex White: On hostages to fortune, I respectfully advise the Minister of State not to say that nationalisation would damage Ireland’s reputation, as it may, for perfectly good and legitimate reasons, be necessary in a few months’ time.

Senator Shane Ross: I thank Senator Alex White for giving me two minutes of his time. I will continue in the same vein. I agree with virtually everything he said as this is just another step in the Government’s retreat in the face of the banks. I can do nothing except express my shock at this measure. Senator Alex White has eloquently referred to the hostages to fortune given by the Government. Every time it justified what it did, it claimed that it would not do the next thing, at which point it proceeded to do exactly what it stated was so dangerous. Nationalisation is probably coming. 166 Proposed National Asset 29 April 2009. Management Agency: Motion

Why was there an extraordinary blanket guarantee? The banks put the gun to the Govern- ment’s head. It was not a voluntary situation. Rather, the banks came to Merrion Street one night and claimed that if the guarantee was not given, Anglo Irish Bank would go bust. The Government agreed to the guarantee. When the banks stated that they would not need recapit- alisation, the Government was fine that there would not be another cost. However, each of the two main banks has been given \3.5 billion and AIB needs another \1.5 billion. Apparently, the latter amount will be raised by AIB, but I doubt that it will be. Rather, the Government will need to do it. NAMA, a final bail-out, will be set up. The Minister of State and his senior Minister do not like us discussing bail-outs, but this is what NAMA is. It tells the banks that they will go bust if they hold on to their toxic debts. I agree with the Minister of State that it is not a toxic bank, but it is a toxic institution. The Government and the taxpayer will pick up the bill. The liability is extraordinary in light of the liability taken on under the guarantee. It is a mad gamble with taxpayers’ money that puts the taxpayer at risk. Why has the Government in stage after stage surrendered to the banks’ wishes at the expense of the taxpayer?

Senator Fiona O’Malley: I wish to share time with Senator Callely.

An Cathaoirleach: There will not be much time left. Is that agreed? Agreed.

Senator Fiona O’Malley: As I look for a political home at this point in my career, something is for sure, namely, that it will not be in the Labour Party or socialism. I was listening to——

Senator Liam Twomey: The Senator does not need to worry.

Senator Alex White: She is lost so.

Senator Fiona O’Malley: Certainly not.

Senator Alex White: She should keep shopping around.

Senator Fiona O’Malley: Senator Alex White referred to giving hostages to fortune. Our actions have consequences, but we must remember that, had we taken the Labour Party’s position in October, we would be dealing with a collapsed economy.

Senator Alex White: What have we now?

Senator Fiona O’Malley: The banking sector would have collapsed. The Labour Party has the luxury of not needing to deal with this in opposition. Thankfully, the Government does not need to deal with it either as the right decision was taken at the time. I accept the comments of Senators Alex White and Ross on the Government moving its position. However, this situation is unprecedented. Since Senator White has had the good fortune of studying economics and, no doubt, banking, I am sure he knows that every textbook on banking has been thrown out the door. It is no wonder that the Government has changed its tack. The wisest counsel says that when circumstances change, people change their opinions. I welcome NAMA’s establishment as it is important that the banking sector is cleansed. As we know, it is in a state of inactivity. While deposits in banks remain high thanks to the Government guarantee, which is overlooked, the money in question is not being leveraged and brought into the economy. This is due to the uncertainty surrounding the banks’ debts. Funding for our system will be acquired internationally and, through NAMA’s establishment, the Government is taking steps to cleanse the system. In future, a reversion to traditional banking practices will be necessary. 167 Proposed National Asset 29 April 2009. Management Agency: Motion

[Senator Fiona O’Malley.]

A fair price must be paid for the assets to be transferred to NAMA. Senator Donohoe referred to this by stating we are caught in a bind, which is the case. The taxpayer must be protected in respect of the cost of the asset and equally so that it does not jeopardise the capitalisation of the banks. The Government and whoever will run the National Asset Manage- ment Agency, NAMA, must toe this fine line and we must have faith in this regard. I agree with the Minister of State’s comment that this is a highly commercially sensitive area and that such information cannot be subject to freedom of information requests. This commercial sector is vitally important to the State and NAMA must be given the requisite strength to cleanse the system and reignite the banking sector.

Senator Ivor Callely: If possible, I wish to share the final two minutes of my time with Senator Hanafin.

An Cathaoirleach: The Senator must be quick as less than two minutes remain to him.

Senator Ivor Callely: I welcome the opportunity to participate in this Private Members’ debate on the establishment of NAMA. It is important in our approach to address the current financial crisis to have a clear understanding of the realities of the present financial and banking system that prevails in Ireland and the world around us. The global financial crisis is a serious challenge that affects nearly every country in the world. The short answer regarding the cause of the crisis is that it was caused by over-stretching of financial liberalisation, lack of regulation and lack of oversight of the financial markets. The impact of this financial crisis is that the world’s economy is in severe recession, which has serious political and social consequences. This crisis is akin to the global economic crisis of the 1930s, which led to widespread insecur- ity and a threat to human rights. In responding to the current crisis, it is important to keep our history in mind. Not only should those lessons provide a sense of urgency to national govern- ments in implementing an effective and co-ordinated approach to recovery, but it is equally important to monitor carefully the related social and political upheaval and to respond appro- priately. The consequences of failing markets and policies have grave financial and political outcomes. The political consequence is that governments are likely to face an increasingly insecure population, as unemployment increases and standards of living decrease. The prescription for the current crisis must involve job creation, provide social supports where necessary and develop alternative industries that will spur growth and diversity in the markets. Infrastructure spending designed to stimulate economies will have a positive effect as it addresses critical projects and creates employment. Such actions would release cash into the market and would drive economies towards a fresh start. However, this is only part of the answer. The continued availability of money from the banks is vital for the economy. We must ensure that the financial institutions lend money to individuals and businesses. This is the reason the prescription must include the medicine to absorb the toxic debt and to allow the financial institutions to recover from such negative investments. The final dose of medicine might look different from what constitutes current thinking. However, it is most likely to involve a combination of medication. My understanding in respect of current thinking on NAMA is that it is to correct our banks’ balance sheets and books, remove the toxic debt and therefore ensure a flow of credit to the banks from international credit lines, which in turn will place our banks on a solid footing to open their doors for real business by lending money to individuals and businesses. What remains to be seen is how each individual country, Europe and the rest of the globe adapt to the international crisis and whether they have the ability to ride out the storm. 168 Proposed National Asset 29 April 2009. Management Agency: Motion

An Cathaoirleach: One minute now remains to the Senator.

Senator Ivor Callely: Countries around the globe have been putting in place plans to stabilise their own financial markets, some of which may complement each other but others of which may impede global recovery. Given the large number of bail-outs in individual countries’ responses to certain sectors, it is likely to place some more open to doing business since they have greater resources. While this will free up markets as intended, it could impede growth. My view is that much more work must be done. For example, the G20 meeting in London concluded with several positive steps. It received some innovative proposals, particularly in respect of the new global economic council. However, the solution to the current global crisis must involve both what Ireland is doing with NAMA, which I gather has been approved in principle by Europe, and a globally co-ordinated recovery effort shaped to account for the many unique economies involved.

Senator John Hanafin: I thank my colleague for sharing time. In a nutshell, the upshot of the financial crisis in the world meant that the World Bank and the bankers’ federation decided in Basel that there would be an increase in the tier one capital ratios for banks. In other words, banks would be obliged to hold more cash in reserve. This was decided at the time when banks’ loan books were tied up with non-performing assets. If we are to move forward and get the economy moving again, the only way to get money to business is through the banks. To so do, the Government was obliged to free up the toxic assets. In this way, the Government has afforded itself the opportunity to buy such assets at a discounted rate, with a guarantee that when the economy turns again, as it inevitably will as night follows day, and if there is a shortfall, the Government will be able to revert to the banks and ensure it gets the difference between what may or may not have been lost. However, I draw Members’ attention to the Swedish experience. When the world economy picked up again, the Swedish Government made a significant profit.

Senator Liam Twomey: Other Members, such as Senator John Paul Phelan, pointed out the hardship that Irish people will endure on foot of increased taxes and pension levies, as well as the losses of their jobs and businesses. Agriculture, fishing and mortgage holders with fixed rates are not being bailed out and elderly people will not receive Christmas bonuses. It is amazing that 50 to 60 developers, egged on by a few select bankers and Fianna Fa´il Ministers, got us into this mess. It should not be forgotten in any debate that 50 to 60 individuals cost the taxpayer a sum that eventually will exceed \40 billion. The Minister of State was incorrect to state, when asked about fixed mortgage rates for individuals, that it somehow had nothing to do with the Government. Bankers also broke their contracts with their shareholders and bondholders, as well as with the people of Ireland, when they got their institutions into such a mess. We are bailing them out even though they broke their contracts. Although many others have done what they were not meant to do, we are bailing them out. Consequently, it is a bit rich to dismiss this issue as though it is tough luck because it only pertains to the little people and the Government’s purpose is to bail out the big people. The Minister of State must acknowledge the Government is moving too slowly in respect of this banking crisis. The Government must demonstrate what it envisages and how it will work and must provide Members with the nitty-gritty detail. While macroeconomics is great and macroeconomic solutions always look very easy on paper, when one delves into the microecon- omic realm as to how one might actually implement such solutions, one suddenly learns how messy and difficult it can become. Members must be provided with more microeconomic detail as to how the Government intends to handle such issues. For example, I asked the Minister of 169 Social Welfare and Pensions Bill 2009: 29 April 2009. Report and Final Stages

[Senator Liam Twomey.] State how the Government intends to transfer the legal, development and financial personnel to NAMA, from where will they come and how it intends to deal with the constitutional and legal issues. The Government must answer those important questions. I would appreciate an answer from the Minister of State on the initial proposal I put to him regarding the use of an institution such as the EBS or Anglo Irish Bank’s small and medium business unit to speed up the process of lending money to those who seek it. NAMA will take too long and other solutions exist. While such solutions are not as extensive, big or complex, I seek a response in this regard from the Minister of State. I raised this issue in the House a couple of times and while it might be a little boring for the Minister of State, I would appreciate his opinion in this regard. While the Government perseveres with NAMA — who knows where that eventually will go or how much change to it will come about — I would appreciate the Minister of State’s opinion on the other proposals we could use.

Amendment put.

The Seanad divided: Ta´, 28; Nı´l, 19.

Ta´

Boyle, Dan. MacSharry, Marc. Brady, Martin. McDonald, Lisa. Butler, Larry. O´ Domhnaill, Brian. ´ Callanan, Peter. O Murchu´ , Labhra´s. Callely, Ivor. O’Brien, Francis. O’Donovan, Denis. Carty, John. O’Malley, Fiona. Cassidy, Donie. O’Sullivan, Ned. Corrigan, Maria. O’Toole, Joe. Daly, Mark. Ormonde, Ann. de Bu´ rca, De´irdre. Phelan, Kieran. Ellis, John. Walsh, Jim. Feeney, Geraldine. White, Mary M. Glynn, Camillus. Wilson, Diarmuid. Hanafin, John.

Nı´l

Bradford, Paul. Healy Eames, Fidelma. Burke, Paddy. McFadden, Nicky. Buttimer, Jerry. Phelan, John Paul. Cannon, Ciaran. Prendergast, Phil. Coffey, Paudie. Regan, Eugene. Coghlan, Paul. Ross, Shane. Doherty, Pearse. Ryan, Brendan. Donohoe, Paschal. Twomey, Liam. Fitzgerald, Frances. White, Alex. Hannigan, Dominic.

Tellers: Ta´, Senators Camillus Glynn and Diarmuid Wilson; Nı´l, Senators Maurice Cummins and Liam Twomey.

Amendment declared carried.

Motion, as amended, put and agreed to.

Social Welfare and Pensions Bill 2009: Report and Final Stages. An Cathaoirleach: I welcome the Minister back to the House. Before we commence I remind Senators that a Senator may speak only once on Report Stage, except for the proposer of an 170 Social Welfare and Pensions Bill 2009: 29 April 2009. Report and Final Stages amendment, who may reply to the discussion on the amendment. Each amendment on Report Stage must be seconded.

Senator Nicky McFadden: I move amendment No. 1:

In page 10, line 1, to insert the following:

“(1) The Minister shall, within three months of the commencement of this section, ensure that all rents the subject of this section shall be renegotiated to reflect existing market conditions.”.

I thank the Minister for coming back to the House and answering our questions so comprehen- sively earlier. I will not labour the issues. This is an amendment on which I inadvertently did not get to speak earlier. The changes in the supplementary rent scheme do nothing to protect vulnerable tenants and are likely to worsen their position. Due to the very many changes implemented, such as one in October and one proposed in this Bill, people will have to pay an additional \11 per week towards their rents. The Minister indicated in her speech earlier that the Department of Social and Family Affairs hopes landlords will reduce their rents and release tenants from contracts which they have already signed but there is no incentive for landlords to do so. My amendment asks that within three months of the commencement of this section, the Minister would ensure that such terms would be negotiated and indicate how landlords would comply. There is no legislation which obliges landlords to negotiate such terms. Tenants who are down on their luck and who have very little money are vulnerable and it can be difficult for such a tenant to negotiate with a landlord. It would be unfair to ask tenants to do this and perhaps there should be intervention on behalf of a tenant by a community welfare officer, the local authorities or some other body which would negotiate on behalf of the tenant, such as the Department of Social and Family Affairs. Such agents could call landlords to task and make them reduce rents where applicable. We have evidence that rents are very different in different parts of Dublin. My colleague in the Lower House indicated yesterday that rents fell in Dublin by 13% and by 5.8% in Galway. The Minister has introduced a reduction of \11 nationally, so there is an unfair disparity. I ask the Minister to comment on that.

Senator Maurice Cummins: I second the amendment proposed by my colleague. I agree that the prospect of getting developers and people renting property to reduce their rents even based on present circumstances is slim and people on social welfare will be forced to pay the extra amount. People on the minimum social welfare benefit will have to pay \5 more when subsidies are taken into account. The people on the lower rungs will be the ones hit in this regard. The amendment put forward by my colleague is reasonable and I formally second it.

Minister for Social and Family Affairs (Deputy Mary Hanafin): I do not propose to accept this amendment because in the first instance, the relationship in question is between the Department of Social and Family Affairs and the tenant rather than the landlord. The agree- ments remain between the tenant and the landlords and it is up to them to renegotiate any terms. There are over 85,000 people currently in receipt of rent supplement, which is an increase of 42% since December 2007 and is a very significant number of people. I accept that rents are different throughout the country but there is no doubt that rents have come down and 171 Social Welfare and Pensions Bill 2009: 29 April 2009. Report and Final Stages

[Deputy Mary Hanafin.] landlords are constantly reviewing rents with tenants, particularly for people who have either lost jobs or who have seen a drop in income. It is happening for tenants in the private sector and it is very important the State-supported sector should not be the one determining rents. In fairness to landlords, they are reducing rents. Equally, tenants in receipt of rent sup- plement need to be in a position to negotiate with the landlord. We will be giving a letter to each of those rent supplement recipients so they can show their landlord that they are not getting as much money as they were and we will also be advertising so landlords will have this information. Increasing the amount of money which the tenant has to pay is clearly a cost-saving measure. It also bridges the gap between rent supplement and what a tenant would be obliged to pay if he or she were offered a council house tomorrow. Some tenants turned down the offer of social housing because the private rented accommodation in which they were living was cheaper. Until today, they would have been paying a maximum of \18 per week. In most local authority areas, they would have been obliged to pay upwards of \25 if they were offered social housing. If tenants in Du´ n Laoghaire were offered the opportunity to go on the rental accommodation scheme at present, it would cost them \27. We do not want there to be a deterrent against people coming off rent supplement, which was only meant to be a short-term, temporary measure. We must ensure people are encouraged to partake of the rental accommodation scheme, RAS. The fact that some 9,000 people will be moved onto RAS this year is encouraging. That is the route we want people to take. I accept that in changing the requirements relating to rent supplement we are seeking more money from tenants. However, this is being done in an environment where rents have fallen. We do not want to be dictating the position. The rent limits only come into play when new tenancies are being formed — such tenancies are being restricted — or where rents are being reviewed. I appreciate from where the Senator is coming and it goes without saying that we do not want to make people even more vulnerable. However, community welfare officers retain their discretion in circumstances where someone is particularly vulnerable or has an exceptional need.

Senator Nicky McFadden: I do not accept that the most vulnerable are not being affected. Regardless of how one considers it, these people are being obliged to pay an additional \11. People who live in bed-sits pay \169 per week but there is a cap on the rent supplement of \130 per week and they are, therefore, being obliged to make up the difference. What the Minister is doing is going to make matters worse. As stated earlier, people will not be able to afford to buy food or to keep warm because of the demands that will be placed on them in financial terms. I am extremely disappointed with this provision. The Minister referred to local authorities. In the midlands, local authority rents would never be more expensive than those in the private rented sector.

Deputy Mary Hanafin: If, at the time of his or her annual rent review, a tenant is of the view that his or her rent is too high, he or she may approach the Private Residential Tenancies Board, PRTB, which can mediate on his or her behalf. There is, therefore, a second fall- back position.

Amendment put. 172 Social Welfare and Pensions Bill 2009: 29 April 2009. Report and Final Stages

The Seanad divided: Ta´, 18; Nı´l, 24.

Ta´

Bradford, Paul. Healy Eames, Fidelma. Burke, Paddy. McFadden, Nicky. Buttimer, Jerry. Phelan, John Paul. Prendergast, Phil. Cannon, Ciaran. Regan, Eugene. Coffey, Paudie. Ross, Shane. Cummins, Maurice. Ryan, Brendan. Donohoe, Paschal. Twomey, Liam. Fitzgerald, Frances. White, Alex. Hannigan, Dominic.

Nı´l

Boyle, Dan. Hanafin, John. Brady, Martin. MacSharry, Marc. ´ Butler, Larry. O Domhnaill, Brian. ´ Callanan, Peter. O Murchu´ , Labhra´s. O’Brien, Francis. Callely, Ivor. O’Donovan, Denis. Carty, John. O’Malley, Fiona. Cassidy, Donie. O’Sullivan, Ned. Corrigan, Maria. Ormonde, Ann. Daly, Mark. Phelan, Kieran. de Bu´ rca, De´irdre. Walsh, Jim. Ellis, John. Wilson, Diarmuid. Glynn, Camillus.

Tellers: Ta´, Senators Maurice Cummins and Nicky McFadden; Nı´l, Senators Camillus Glynn and Diarmuid Wilson.

Amendment declared lost.

Senator Dominic Hannigan: I move amendment No. 2:

In page 21, line 7, after “Pensions Act 2009,” to insert the following:

“or whose liabilities are commenced to be discharged after that date”.

We are disappointed with the definition of insolvency and with the debate on insolvency earlier. It was one of the two amendments our party tabled on Committee Stage. We pressed the amendment on insolvency on Committee Stage and, as a result, are unable to resubmit it on Report Stage. We have submitted this amendment instead. We are disappointed the definition was not changed. It would not have required much effort and would not have made a huge difference in the overall scheme of things. It has been a difficult time for the former employees of SR Technics and this amendment would have helped greatly by offering some positivity after the terrible time they have had. It is disappointing the earlier amendment was not accepted. I will not press this amendment. I can anticipate the Minister’s response, that is, that this issue is already dealt with 8 o’clock in the Bill. We will not split hairs about it. While we do not intend to press the amendment, we wish to register our disappointment with the failure to accept earlier amendments. I appreciate the work the Minister has done in this area, but I wish she had gone a little further.

Senator Phil Prendergast: I second the amendment. 173 Social Welfare and Pensions Bill 2009: 29 April 2009. Report and Final Stages

Deputy Mary Hanafin: Senator Hannigan is familiar with the situation. The text of the Bill makes provision for schemes that have not yet discharged their liabilities. Many more workers will benefit than might have previously.

Amendment, by leave, withdrawn.

An Leas-Chathaoirleach: Amendment No. 4 is related to amendment No. 3. Is it agreed that amendments Nos. 3 and 4 be discussed together? Agreed.

Senator Nicky McFadden: I move amendment No. 3:

In page 21, after line 52, to insert the following:

“(1C) The trustees shall have the power to set limits on the amount that shall be paid out based on the salary of the employee in the event of a winding up.”.

I spoke earlier about giving the trustees the power to set the limits on the amount to be paid. While the Minister replied comprehensively, I do not accept her reply. Mr. Fingleton’s pension stood at \27.6 million. He was the sole beneficiary of a defined benefit scheme and was paid \2.4 million last year. There must be an upper limit to ensure it is not inequitable. That is the bottom line. That is an extraordinary pension. The Minister explained the position in detail but this amendment is worthwhile and should be accepted. Amendment No. 4 proposes to include the power to make reductions on a proportionate basis. In the case of the higher earner, it would be reduced to cater for those on the lower scale. Like Senator Hannigan, I appreciate the Minister has made a start on this issue. I look forward to the publication of the White Paper which she mentioned yesterday in the Da´il. This Bill is a start and I compliment the Minister on the work she has done, as have Age Action Ireland and IBEC. There is generally a positive response to it. I welcome the commonsense measure taken by the Minister but I believe it must go further.

Senator Maurice Cummins: I second the amendment. The trustees must be given the discre- tion provided for in both amendments.

Deputy Mary Hanafin: I understand Senators’ outrage that an individual in a scheme would gain extraordinary amounts of money, particularly when financial difficulties are visible throughout the country. As I indicated earlier, schemes are generally based on the contributions people pay into them. If the scheme is in deficit, the higher income earner will lose more. The Government is conscious of the fact that some people had almost no limit to the size of their fund. In 2005, changes were made to limit the size of a fund, which is now set at \5.4 million. At pension age one can withdraw just 25% of the fund tax free. Other changes were introduced in the last budget reducing the earnings cap for pension contribution purposes from \275,000 to \150,000. We are conscious of the self-administered pension schemes, but that is not relevant to this legislation. It is also not appropriate, particularly because schemes are generally not homogenous. There can be different schemes for higher executives from those for ordinary workers.

Senator Nicky McFadden: I accept that people can pay more into schemes. However, they also benefit more. I believe upper limits must be set. The Minister and I will have to agree to disagree.

Amendment put.

174 Social Welfare and Pensions Bill 2009: 29 April 2009. Report and Final Stages

The Seanad divided: Ta´, 18; Nı´l, 25.

Ta´

Bradford, Paul. Healy Eames, Fidelma. Burke, Paddy. McFadden, Nicky. Buttimer, Jerry. O’Toole, Joe. Phelan, John Paul. Cannon, Ciaran. Prendergast, Phil. Coffey, Paudie. Regan, Eugene. Cummins, Maurice. Ross, Shane. Donohoe, Paschal. Ryan, Brendan. Fitzgerald, Frances. Twomey, Liam. Hannigan, Dominic.

Nı´l

Boyle, Dan. MacSharry, Marc. Brady, Martin. O’Brien, Francis. Butler, Larry. O’Donovan, Denis. Callanan, Peter. O’Malley, Fiona. Callely, Ivor. O’Sullivan, Ned. Carty, John. O´ Domhnaill, Brian. Cassidy, Donie. O´ Murchu´ , Labhra´s. Corrigan, Maria. Ormonde, Ann. Daly, Mark. Phelan, Kieran. de Bu´ rca, De´irdre. Walsh, Jim. Ellis, John. White, Mary M. Glynn, Camillus. Wilson, Diarmuid. Hanafin, John.

Tellers: Ta´, Senators Maurice Cummins and Nicky McFadden; Nı´l, Senators Camillus Glynn and Diarmuid Wilson.

Amendment declared lost.

Senator Nicky McFadden: I move amendment No. 4:

In page 24, line 48, after “appropriate” to insert the following:

“including the power to make reductions on a proportionate basis to the amount that is paid out based on the salaries of the employees.”.

Senator Maurice Cummins: I second the amendment.

Amendment put and declared lost.

Bill received for final consideration.

Question put: “That the Bill do now pass.”

The Seanad divided: Ta´, 24; Nı´l, 18.

Ta´

Boyle, Dan. Corrigan, Maria. Brady, Martin. de Bu´ rca, De´irdre. Butler, Larry. Ellis, John. Callanan, Peter. Glynn, Camillus. Callely, Ivor. Hanafin, John. Carty, John. MacSharry, Marc. Cassidy, Donie. O’Brien, Francis. 175 Social Welfare and Pensions Bill 2009: 29 April 2009. Motion for Earlier Signature

Ta´—continued

O’Donovan, Denis. Ormonde, Ann. O’Malley, Fiona. Phelan, Kieran. Walsh, Jim. O’Sullivan, Ned. White, Mary M. O´ Domhnaill, Brian. Wilson, Diarmuid. O´ Murchu´ , Labhra´s.

Nı´l

Bradford, Paul. Healy Eames, Fidelma. Burke, Paddy. McFadden, Nicky. Buttimer, Jerry. O’Toole, Joe. Phelan, John Paul. Cannon, Ciaran. Prendergast, Phil. Coffey, Paudie. Regan, Eugene. Cummins, Maurice. Ross, Shane. Donohoe, Paschal. Ryan, Brendan. Fitzgerald, Frances. Twomey, Liam. Hannigan, Dominic.

Tellers: Ta´, Senators Wilson and Glynn; Nı´l, Senators McFadden and Hannigan.

Question declared carried.

Social Welfare and Pensions Bill 2009: Motion for Earlier Signature. Senator Donie Cassidy: I move:

That pursuant to subsection 2° of section 2 of Article 25 of the Constitution, Seanad E´ ireann concurs with the Government in a request to the President to sign the Social Welfare and Pensions Bill 2009 on a date which is earlier than the fifth day after the date on which the Bill shall have been presented to her.

Senator Nicky McFadden: I am disappointed Minister for Social and Family Affairs has already left the Chamber. The speed at which the Bill was put through the House was most unacceptable. That there was no briefing for Senators shows the disrespect and disregard the Government has for this House, with which I am disappointed.

Senator Jerry Buttimer: Hear, hear.

Senator Nicky McFadden: Will the Leader find out when the Minister expects to publish the White Paper on pensions? While I commended her for initiating the debate on pension pro- vision, a much more indepth consultation and debate is needed.

Senator Donie Cassidy: I convey my thanks to the Minister for staying all day and evening for the passage of the Bill.

Senator Phil Prendergast: I wish to be associated with thanking the Minister for attending the Chamber during the day. I also thank the Leader, the Chair, the sound personnel, others with a part in the Bill and the advisers to the Minister. It was appreciated the Minister gave us a briefing today.

Question put and declared carried.

An Leas-Chathaoirleach: When is it proposed to sit again?

Senator Donie Cassidy: Ag 10.30 a.m. ama´rach. 176 Visa 29 April 2009. Applications

Adjournment Matters.

————

Visa Applications. Senator Fidelma Healy Eames: My Adjournment matter relates to the international English language teaching sector. I requested the Minister for Justice, Equality and Law Reform to outline the way in which he will provide for a more efficient and easier visa system for students wishing to choose Ireland as a base for studying the English language. This is deemed essential in view of the loss of serious revenues to the Irish economy when compared with the UK, Australia and New Zealand in this sector. Ireland earns \500 million per year in revenue from this sector while Australia earns \6 billion, New Zealand, \4 billion and our nearest neighbour, the UK, \12 billion. The main reason for this loss of revenue to Ireland is due to the visa system overseen by the Department of Justice, Equality and Law Reform. It is inflexible, cumbersome and does not address the industry’s needs. With the current visa system a negative image of Ireland is being projected by the Depart- ment of Justice, Equality and Law Reform. While the Departments of Enterprise, Trade and Employment, Foreign Affairs, and Education and Science seek to invite international students to Ireland, the perception among the English language teaching sector is that coming to Ireland to study is too difficult and students, as a result, do not bother applying. To outline some of the facts, we refuse almost 38% of applicants from China whereas the UK refuses just 7%. For Turkey, a country with a population of 80 million, many of whom wish to study English, we refuse 46% of applicants whereas the UK refuses just 11%. For Taiwan, we refuse 30% of applicants whereas the UK refuses just 1%. For Vietnam, while we are dying to adopt their babies, we refuse 58% of applicants for foreign language studies whereas the UK refuses just 15%. The visa system needs to be examined urgently. The second problem is processing times. The UK, Australia and New Zealand commit to giving decisions within particular timeframes and produce figures to prove it which are access- ible on the Internet. The Department of Justice, Equality and Law Reform provides no such figures. Anecdotally, visas can take between four weeks and 14 months. The Minister of State should reflect on this point. A student may be in a hurry to apply to learn English but if it could take up to 14 months, the student would miss the whole study year. In Ireland, the processing times vary so much that it is frequently impossible to explain to clients how there can be such a variation. The third problem is the lack of co-operation with the English language training and edu- cation sector. For the past year, a review of student immigration procedures has been conducted by the Department of Justice, Equality and Law Reform. There has been absolutely no consul- tation of any kind with English language training schools or with the education sector regarding this review. How can a beneficial system be implemented if the major stakeholders are ignored? With regard to how this problem could be fixed, other countries such as the UK, Australia and New Zealand have a co-ordinated and consistent policy which has been led by politicians, not officials. We rely too much on our permanent Civil Service. In the UK, the Prime Minister’s initiative forced the visa officials to co-operate with other government departments. The Australian Government made a decision in the late 1980s to market Australia as an inter- national education destination, with fantastic results. Visa officials in those countries are in regular contact with the educational sector to smooth and streamline the service. In Ireland, there is a lack of political will and too much influence of the permanent govern- ment — the Civil Service. There needs to be a clear, unambiguous policy statement from the Department of Justice, Equality and Law Reform regarding the value of the role of the English language training sector and how the Department will work with the international education sector to help develop that sector. 177 Visa 29 April 2009. Applications

[Senator Fidelma Healy Eames.] At a time like this, we must consider the revenue we are losing and how the current visa system is affecting the English language training sector. We estimate that the English language training industry, combined with the international education sector, could be worth \4 billion a year to Ireland. As it stands, it is worth about \500 million so we are losing valuable revenue. Because of the lack of a politically directed coherent and consistent international education policy which would apply across all Departments, we are not realising the potential that is in the sector. The Department of Justice, Equality and Law Reform is not somehow outside the loop in marketing the Ireland brand. Its sloppy administration and high refusal rates create a negative impression of Ireland and make the job of selling Ireland more difficult than it should be. There needs to be an interdepartmental process through which visa decisions can be examined in the light of expressed Government policy. I am keen to hear the Minister of State’s response on how we can improve this issue and make Ireland a thriving base for language teaching. We have the teachers, we have the confidence; we just need a way to get the students.

Minister of State at the Department of Justice, Equality and Law Reform (Deputy Barry Andrews): I thank the Senator for her contribution. In the absence of the Minister for Justice, Equality and Law Reform, I propose to take this Adjournment debate on his behalf. It should be stated at the outset that the visa process is only one part of the overall immigration regime and many students do not currently require visas to come to Ireland. It is proposed to deal initially with the visa system before commenting briefly on broader picture of non-EEA student migration to Ireland, of which the English language sector is a subset. The fundamental purpose of immigration laws generally, of which visas are a part, is to regulate and control the entry of non-nationals to the State. By way of SI 657 of 2006, nationals of certain countries are required to be in possession of a visa before travelling to Ireland. It should be borne in mind that the granting of a visa is, in effect, only a form of pre-entry clearance. The visa does not automatically confer permission to enter or remain in the state. This permission is given by an immigration officer, who has the authority to grant or deny admission.

Senator Fidelma Healy Eames: Excuse me, is a copy of the Minister of State’s speech available?

Deputy Barry Andrews: I do not have a copy of the speech but I can undertake to circulate it to the Senator at the earliest possible time.

Senator Jerry Buttimer: On a point of information, the speech should be available as a matter of courtesy to the Senator.

An Leas-Chathaoirleach: There is no requirement for that.

Senator Jerry Buttimer: It is not good enough.

An Leas-Chathaoirleach: This is not Senator Buttimer’s Adjournment matter. There is no requirement. The Minister of State should continue.

Deputy Barry Andrews: In addition, nationals of several non-EEA countries are not visa required. However, in common with their visa required counterparts, they must register with the Garda National Immigration Bureau, GNIB, if they intend to stay in the State for more than three months. Thus, all non-EEA students intending to remain in Ireland for longer than three months are required to be registered with the GNIB. With regard to making applications for student visas, including visas for the purpose of studying English, the Irish Naturalisation and Immigration Service, INIS, has had in place for 178 Visa 29 April 2009. Applications a number of years on its website detailed and comprehensive information and guidance on all aspects of student visas. Telephone helplines and e-mail help facilities are also provided. In general terms, the principal criteria applied in deciding whether to grant a visa are that the prospective students should have enrolled in a privately funded, full-time course of study entailing at least 15 hours’ physical attendance per week, should have paid college and tuition fees in advance and should provide evidence of sufficient funds to fully support themselves during the proposed stay in the State. They should be in a position to satisfy the visa officer that the visa is for the purpose stated in the application and that the applicant will return home at the end of the course of studies. To assist with routine living expenses, quite generous allowance is made for the student to work part-time. In terms of the efficiency and effectiveness of the system for visa processing, INIS is not aware of any undue delay in the processing of applications for student visas.

Senator Fidelma Healy Eames: My goodness. It is from four to 14 months.

Deputy Barry Andrews: Straightforward study visa applications are processed comfortably within the timeframe outlined in the guidelines provided to prospective students. It is the view of the Minister that the consideration and processing of student visa applications, including prospective English language students, is in line with international best practice and is compar- able with the policies and practices of other jurisdictions. In common with all types of visa applications, the student visa application is considered on its own individual merits, the onus resting with the applicant to satisfy the Minister as to why the visa should be granted and that the conditions attaching to the visa and any subsequent permission will be adhered to. The Minister is aware that certain aspects of student migration from outside the EEA have given rise to concern in recent years. In the past a minority of traders in this sector have operated in a manner that is not appropriate. There are also concerns that some of the student population is composed of people who are essentially economic migrants. Senators will also be aware of commitments in Towards 2016 in the area of student work permits and greater regu- lation in the language sector. The Minister has directed his Department to review the current system for non-EEA student migration. The purpose of the review is twofold. First, it is generally accepted that there is a need for greater regulation in this area and the review is addressing this requirement. Second, it will draw up proposals for a more coherent approach to student migration consistent with Ireland’s general immigration policy and with the Government’s other policy objectives. In this context, the importance of promoting Ireland’s image as a centre of educational excellence is crucial and this must, of course, be balanced with the Minister’s responsibility to ensure the integrity of the State’s immigration system and the protection of its social and economic interests. The review will be completed in the near future. The ultimate objective is to put in place an updated, comprehensive, well-regulated and transparent system of student migration for the future. I apologise to the Senator for not having a copy of my speech available.

Senator Fidelma Healy Eames: With respect, that response shows the Minister for Justice, Equality and Law Reform is clearly in denial about the current situation. The Minister of State must be surprised at the refusal rates and the length of processing time. Will the Minister of State give a commitment on behalf of the Minister to address the current ineffective visa system that is blocking so many students from coming here?

Deputy Barry Andrews: I visited India for St. Patrick’s Day and met many of the agents who try to provide students for Ireland. They expressed their frustrations along similar lines, namely, that Ireland is a very difficult country for which to get student visas. The Minister recognises this and is carrying out a review on that basis. I will undertake to raise this matter because it was brought to my attention while I was in India. 179 Local Authority 29 April 2009. Staff

[Deputy Barry Andrews.]

As the Senator said, it is fairly clear there is a big market. Ireland has a great reputation for English language training and we have the infrastructure, including the built infrastructure, to provide English language studies, especially in the summer. The point is well made and I will raise it with the Minister.

Senator Fidelma Healy Eames: When do we expect the review?

Deputy Barry Andrews: The reply stated it would be done in the near future, as opposed to the distant future.

Local Authority Staff. Senator Jerry Buttimer: I welcome the Minister of State, Deputy Barry Andrews, and I congratulate him on his reappointment. I am concerned that following media reports yesterday and from investigation with local authorities, we may not have lifeguards on our beaches this summer. As the Minister of State knows, local authorities are rightly constricted and confined by the public service embargo on recruitment and replacement of staff. Lifeguards are tempor- ary in their employment in the summer time, traditionally during the peak holiday season of June, July and August. Safety in the water and on our beaches is an issue of paramount import- ance to everybody, in particular to local authorities under whose remit the beaches come. A ban on the recruitment of lifeguards if it came into being would have a very negative impact and serious implications for everybody who uses our beaches. We have rightly placed considerable emphasis in recent years on safety at sea and on our beaches. The Irish Water Safety Association deserves immense credit and commendation for its advertisements and the campaign it has launched regarding etiquette and behaviour on beaches and at sea. It would be a retrograde step to sacrifice life and sacrifice the pleasure people can get from being at the beach by being economically stringent and prudent. It is imperative that the beaches of Ireland are patrolled by lifeguards. To have no lifeguards would mean having no enforcement of behaviour and that people who get into difficulty in the water would have no recourse except to people who are not trained, in many cases, on beaches. Local authorities have an issue with recruitment. Clarity needs to be brought to the issue and I hope in this debate the Minister of State will bring clarity. Spending summer holidays or Sundays on the beach in Ireland is a pastime in which we all engaged when growing up, going to many beaches. The issue of the blue flag has implications for many beaches if we have no lifeguards to provide safety. That will have implications for local authorities because the coveted blue flag is something to which many coastal communities aspire and cherish. Are we going to undermine the work of local authorities in cleaning up beaches, having them patrolled and providing safety for the people who go there? The recruitment of lifeguards does not just happen. There needs to be an interview, suit- ability testing, induction and training. As was stated in the newspapers yesterday, they represent the front-line emergency service for many. We are not talking about “Baywatch” or Bondi Beach, we are talking about the beaches around our coasts. All of us knew people who drowned and know people who have got into difficulties with tidal conditions and places with undercur- rents and rip currents. We do not all go swimming with strong swimmers. We need to put the safety of people first. I hope that the Minister of State’s reply will contain a guarantee to local authorities that they will be able to recruit and pay lifeguards. If such a cut were to come in, it would be inequitable and would send the wrong message for the reasons I have outlined. I look forward to a positive reply. I do not blame the Minister of State for not having a copy of the speech if he does not have one. However, it is desirable for us to have a copy. As people who raise the items on the 180 Local Authority 29 April 2009. Staff

Adjournment, we have the right to be able to read the reply if we have a supplementary question for the Minister or the Minister of State.

Deputy Barry Andrews: I again apologise for that. I thank the Senator for raising this matter. I will be taking this adjournment on behalf of the Minister for the Environment, Heritage and Local Government, Deputy Gormley. The appointment of lifeguards is a regular part of the provision of water safety measures. As in all such cases involving the recruitment of personnel, it is a matter for the local authority to determine the local requirement subject to overall Government policy on numbers and the authority’s financial position. In accordance with Government policy, as part of the approach to managing the public sector payroll in the current economic circumstances, no public service post, however arising, may be filled by recruitment, promotion or payment of an allowance for the performance of duties at a higher grade. This decision, which came into effect from 31 March 2009, stands until the end of 2010. Local authorities have been requested to comply with these requirements. Any excep- tions to this principle, which will arise in very limited circumstances only, require the prior sanction of the Minister for Finance. The decision also applies to temporary appointments on a fixed-term basis and to the renewal of such contracts. It is essential for the sector, in order to address the financial challenges facing it, to prioritise services for delivery and to adjust staffing levels accordingly. While staffing levels are accordingly being contained and reduced, it is a primary objective of the authorities and the Minister that key front-line services continue to be managed with optimum efficiency and that local authorities both meet the current needs of their customers and act to support the needs of economic. In this context, local authorities have been asked to examine opportunities for redeployment of staff as well as reorganisation and reallocation of work as ways to address staffing require- ments when vacancies arise. They have responded well and the local government sector is to the fore in devising more efficient ways of delivering service. This is a demonstration of responsible management by local authorities at a time when there has been significant growth in other parts of the public sector. It will, of course, be necessary to pursue further reform to ensure that services continue to be delivered in accordance with local needs. The Minister is conscious of the front-line nature of many local government services and their importance in public health and safety terms, as well as in terms of supporting day-to-day economic activity and contributing to social well-being. Having regard to overall Government policy, he will continue to take into account the key nature of certain local government roles and responsibilities and the need for the services and posts concerned to be staffed at appro- priate levels. The Department of the Environment, Heritage and Local Government is con- sulting the Department of Finance on the appropriate application of the overall policy approach to such posts. The Department aims, in this way, to continue to enable arrangements governing local authority personnel recruitment and filling of posts to balance the demands of rigorous management of overall numbers with the need to maintain critical services locally. The recruit- ment of lifeguards, and their role in supporting public safety and tourism, will be covered in this consultation. The provision of lifeguards is funded exclusively by local authorities. Specific central funding is not provided for this purpose and local authorities traditionally meet the costs involved for any proposed recruitment from within their own existing resources. The Minister will advance the approach to dealing with recruitment aspects of such important cases as a matter of urgency.

Senator Jerry Buttimer: I thank the Minister of State for his reply. However, he has not answered the rubric of the motion. In his reply the Minister of State said there would be a period of consultation. I appreciate that it is not his Department, but no hard and fast decision has been made. Owing to the recruitment ban, local authorities cannot employ people. Will there be lifeguards on our beaches this summer? 181 Cancer Screening 29 April 2009. Programme

Deputy Barry Andrews: As the Senator rightly said, this is not something that one can do overnight. The Minister has rightly decided to consult local authorities on the issue. I am a representative of a coastal constituency and we have beaches with blue flags and have a great tradition of sea bathing all along our coast. There are endless dangers to do with tides, jet-skis, alcohol abuse and all sorts of things for which we need lifeguards. They also feed into our tourism industry. The Minister recognises that and there seem to be indications that he may be taking on board the Senator’s concerns in this area.

Cancer Screening Programme. Senator Brian O´ Domhnaill: I wish to raise the issue of the roll-out of BreastCheck in County Donegal. The BreastCheck service provides free mammograms to women aged from 50 to 64 on an area-by-area basis. Following an extensive recruitment campaign by the National Cancer Screening Service, additional radiographers have been identified to provide the service in County Donegal. However, a difficulty has been experienced in rolling out the service to County Donegal in respect of the embargo on employing additional people in the public service. The National Cancer Screening Service issued a press statement on Tuesday stating the plan to extend BreastCheck to counties Donegal, Clare and Leitrim is temporarily on hold while it awaits the decision on the request it made for a number of posts to be exempted from the public sector recruitment moratorium. I understand these are the final three countries seeking to get BreastCheck under the plan set down to roll it out to 13 counties. The national cancer screening service applied in the past two to three weeks for a series of derogations to allow the recruitment of radiographers and other staff, including clerical and administrative staff, to be able to provide the service and roll it out to counties Donegal, Clare and Leitrim. What we in County Donegal are looking for is not excessive. We are looking for equality of access to BreastCheck, nothing more or less. It is an equality issue. We want to ensure the service is rolled out as planned and scheduled in 2009. I commend the work done by the national cancer screening service and its chief executive, Tony O’Brien, with 9 o’clock whom I have been in direct contact on a number of occasions over recent days on this issue. It is important now that the Minister for Health and Children — I am delighted the Minister of State, Deputy Barry Andrews, is here from that Department — the Minister for Finance and the Government allow the National Cancer Screening Service and BreastCheck to recruit the radiographers, administrative and clerical staff. There may be scope for redeployment of staff from the Health Service Executive to the National Cancer Screening Service and I understand that is being explored. I also understand this matter is under immediate consideration. However, I want to ensure the issue is brought to the attention of both Ministers, Deputy Harney and Deputy Brian Lenihan, and that we get the approval or derogation as quickly as possible to allow the work to roll out the service to County Donegal to go ahead. The people of the county are waiting on the service. They deserve it and are only looking for the same access available in other areas. While we have been waiting for some time for the roll out, everyone involved, including the campaigning committees in County Donegal, was satisfied that BreastCheck would be provided this year. We do not want to endanger that. I hope we can have the service provided in County Donegal on a mobile basis in the next number of months, but we need the assistance of Government for that. I hope that will be available.

Senator Pearse Doherty: While I and Senator O´ Domhnaill disagree on many issues, this debate shows there is a united front in Donegal on this issue and this is shared by Deputies across the political parties in the Da´il as well. The demand comes from the ground, from the women who want to avail of this service and from their families and loved ones. When BreastCheck began to be rolled out eight years ago — some areas have had it that long — it was presumed Donegal would be last on the list to receive it. Unfortunately, that has proved to be the case. 182 Cancer Screening 29 April 2009. Programme

I am sick and tired of County Donegal always being at the bottom of the list and always being the last to get the good things and first to get the bad things. When news came through of the impact of the budget announcement on the recruitment of public sector workers and the impact this would have on the recruitment of the radiographers required for the BreastCheck programme, it caused an avalanche of anger in County Donegal. Not only was it last on the list, the process could not continue until an exemption was provided. I understand the Minister introduced the ban on the recruitment of public sector workers for financial reasons. However, in this situation radiographers have already been identified. Earlier this month the process was completed. The National Cancer Screening Service wants to make the offers to the four people who have been identified to take up the positions in the north west. However, it cannot do so because of the budget announcement on 7 April. Tony O’Brien and his team must be commended on the work they have done. On 7 April, the day the Minister made the announcement, an application was made immediately for an exemption for Donegal and the north west. I commend them on their speedy action in that regard. However, that request has been with the Department for three weeks and one day. This issue affects not only Donegal but also Leitrim, Clare and other parts of the north west, west, south and some areas in Dublin. We are talking about 13 radiographers in total who are required to fill the complement in the national cancer screening programme, four of whom are needed to provide the service for the first time to women in Donegal. The question must be asked what price the Minister for Finance or Minister for Health and Children put on the lives of Donegal women. What price do they put on the loss to grieving children who will lose loved ones if the service is not provided? What price do they put on the heartache and agony people must go through because they cannot get the service after they have been diagnosed with breast cancer? These people know that if they lived in a different region they would have had auto- matic screening not only once, but twice or three times by now. The provision of four positions for the north west and 13 positions in total to save people’s lives is not a big price for the Government to pay. It is a price we should be willing to pay. We should be willing to make the statement in the House that the issue will be resolved and the radiographers will come on stream without delay once the paperwork is done so the appoint- ments can be made and BreastCheck rolled out. As I have said publicly previously in Donegal, I have no doubt that every politician in this House and the Da´il agrees that BreastCheck must be rolled out nationally. I do not believe that anyone introduced the moratorium with the thought that BreastCheck would not be avail- able to the women in Donegal. This is a glitch in the system we need to address. We need to address it now. I hope the Minister of State will be able to give that commitment. It will be disappointing if he has not got that commitment in his response. We will continue to aim for the commitment to be given to the women of Donegal and their families that the issue will be resolved within the 2009 timeframe.

Deputy Barry Andrews: I thank Senators O´ Domhnaill and Doherty for raising this important issue which I am taking on behalf of my colleague, the Minister for Health and Children, Deputy Mary Harney. I am pleased to have the opportunity to clarify the situation with regard to the roll-out of BreastCheck. The National Breast Screening Board was estab- lished in 1998 as a specialist agency with the sole remit of providing Ireland’s first quality assured, population-based breast screening programme, BreastCheck, for women aged 50 to 64. Governance of BreastCheck was transferred to the board of the National Cancer Screening Service on its establishment in January 2007. BreastCheck provides free mammograms to women aged 50 to 64, sequentially and area by area every two years. It began offering free breast screening to women in this category in the then Eastern Regional Health Authority, North Eastern and Midland Health Board areas in February 2000 and was extended to Wexford, Kilkenny and Carlow between 2004 and 2006. In December 2007, construction of two new static units — the BreastCheck western unit in 183 The 29 April 2009. Adjournment

[Deputy Barry Andrews.] Galway and the BreastCheck southern unit in Cork — was completed. Screening began from both units in counties Cork and Galway in December 2007. These two static units, together with eight mobile digital units, will provide screening to more than 144,000 eligible women aged 50 to 64 in the south and west. Since December 2007, the BreastCheck service has been extended to nine of the 12 counties in the south and west, namely, Cork, Galway, Kerry, Limerick, Mayo, Roscommon, Sligo, Tipperary and Waterford. The completion of the national roll-out to the three remaining counties will proceed in 2009. The Government decided to introduce a recruitment moratorium across the public service with effect from 27 March 2009 to the end of 2010. However, certain posts in the health sector may be filled, including medical consultants. The focus on these grades is in line with existing Government policy on the prioritisation of certain development areas for which significant funding has already been provided. I am very pleased to confirm that BreastCheck will be extended as planned to Donegal, Clare and Leitrim, with indicative dates of June to reach County Clare, September to reach Donegal and October to reach Leitrim. At the same time, it is vital to stress that any woman, irrespective of her age or area of residence, who has immediate concerns or symptoms should not wait for an invitation to screening from BreastCheck but should contact her general prac- titioner who, where appropriate, will refer her to the symptomatic services in her area. Within the past three weeks, the National Cancer Screening Service applied for a series of derogations to allow the recruitment of radiographers to extend the BreastCheck service to counties Donegal, Leitrim and Clare. This is in accordance with procedures put in place under the recruitment moratorium. The screening service was permitted to proceed with interviews for radiographers last week while the application to recruit for those posts was under consider- ation. I am pleased to confirm that recruitment of radiographers in those counties can proceed immediately. In the wider context, the scope for redeployment of staff from the HSE to the NCSS and within the NCSS itself will continue to be explored with the HSE. In the first instance, however, we will proceed with the recruitment of radiographers as originally planned. It is important to acknowledge the excellent results of BreastCheck to date. In 2008, BreastCheck screened more than 90,000 women around the country. From the commencement of screening in 2000 until 31 March 2009, BreastCheck provided almost 500,000 screening appointments for more than 236,000 women and 3,075 cancers were detected. The continued roll-out of BreastCheck is a priority and Department of Health and Children officials have been working closely with the screening service on the matter. I am pleased that the roll-out of BreastCheck can now proceed on schedule in counties Donegal, Clare and Leitrim.

Senator Brian O´ Domhnaill: I will be brief as I have no question. I thank the Minister of State and I am delighted with his response. Senator Doherty and I raised this matter as a united front and we have received an answer. The people in County Donegal will be happy with a definitive date of September for the rolling out of the service. I thank the Minister of State for addressing the House on this issue.

Senator Pearse Doherty: I also thank and commend the Minister of State and his Department on this answer, which will be greeted with joy in Donegal, given the real concern. I am delighted with the response because we did not know the date, albeit an indicative one, for the roll-out to Donegal. That BreastCheck will reach Donegal in September, Leitrim in October and Clare in June is to be welcomed. I am glad that work is progressing.

The Seanad adjourned at 9.15 p.m. until 10.30 a.m. on Thursday, 30 April 2009.

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