There is one thing for which poor people are grateful, that is, this is, thankfully, the last budget the Government will ever introduce. Fianna Fáil and its partners will be judged on their record over five years, not just five months. It is quite shocking to discover that in the past four budgets two thirds of all surplus resources have been allocated to tax reductions for the richest 30% of our society who have received over half of all available resources. Yesterday's budget will not undo the damage caused by the previous four in the name of the Minister for Finance, Deputy McCreevy.
The people have already seen through the half-baked accountancy exercise presented in the House last night. This is arguably the most dubious budget ever presented. Whoever forms the next Administration will have to deal with the projected 3 billion deficit as we enter 2003. Yesterday, the Minister for Finance put a small elas toplast over the difficult financial situation that we face. He was fooling nobody when he suggested that no borrowing would result from measures announced yesterday. In fact, he borrowed away the future benefits of workers when he decided to raid the social insurance fund.
The social welfare system is just one of the ways the State can help and intervene to protect the standard of living of low income families. In recent years, despite the considerable resources at the disposal of the Government, the real standard of living for some of the poorest people in the country has substantially disimproved. Their story can be seen in the misery inflicted on over 120,000 people awaiting social housing or in the poor condition of the public health service for the needy of the country. Poverty is wider and deeper than the issue of income alone. As was admitted recently by the Government, in excess of 50,000 local authority homes have no central heating. A scandal in our country must be the level of fuel poverty, particularly at this time of year, for those living in the social housing sector.
It does not matter how the Minister for Finance dresses up the figures – the Government has allowed the sharpest rise ever on the issue of relative income poverty. This is a fact, not a philosophical construction. The gap between rich and poor is growing at an alarming rate and this budget will do nothing to help those in difficult income situations. The Government should be ashamed. A weekly income of £93 for a person on unemployment assistance or social welfare allowance is not just or acceptable. More progress should have been made to meet the £100 target for the lowest rate of social welfare, a key target of the Programme for Prosperity and Fairness.
I now know the reason the Minister for Social, Community and Family Affairs has refused to sign up to the majority recommendation of the benchmarking and indexation group which recommended that by 2007 the lowest rate of social welfare should represent 27% of gross average industrial earnings. The Minister knows that it will be virtually impossible to make progress in linking welfare rates to general wage levels in the economy when the financial situation looks so grim in the years ahead. The proposed £8 increase in all social welfare schemes is ahead of projected inflation next year. However, there is a projected 8% increase in wage inflation over the same period. As long as the situation continues where wage inflation outstrips the consumer price index, we will continue to see a substantial rise in relative income poverty.
The small increases in various social welfare schemes announced yesterday had Members opposite in wild applause. They greeted the announcements as if something significant had happened. The real issue is that for a significant minority the problem of putting food on the table for their families will continue in the year ahead. In their world they live with ever increasing food bills which make it more difficult to make ends meet. The St. Vincent de Paul Society has already highlighted the fact that 60% of the weekly income of low income families is spent on food. Increasing VAT, petrol and other old reliables will only add to the increasing difficulty this group will face.
The social insurance fund raid by the Government is the greatest con job since the days when Fianna Fáil decided to buy the votes of the people in the 1977 general election campaign. The move is illegal and flies in the face of providing a social security fund which benefits those who have paid into it. Those who pay PRSI have seen their fund decimated by the trickery announced by the Minister for Finance yesterday. The PAYE sector must now look upon this fund as nothing more than tax through the back door. If the Minister really wanted to hand something back from it to the PAYE sector, why did he not reduce employee PRSI? If we pay into something, we expect to get something back. People make contributions on the basis that the fund will be available for future benefits. The raiding of the fund ensures that future benefits, such as paid paternity leave or enhanced redundancy payments, cannot be put in place by a future Government. This raid is also irresponsible given the likely increase in the number of unemployed in the next year. The reduction in employer's PRSI will further reduce the fund for possible future benefits.
The policy is a sham. The Government wants to borrow on the backs of future generations of workers, but they will not get away with it as this money does not exist for electioneering. Did the Minister for Social, Community and Family Affairs have discussions with the Irish Congress of Trade Unions before the decision was taken to raid the fund? He owes it to people inside and outside the House to appear here this afternoon to explain what discussions took place with ICTU.
One of the most appalling things about the budget is the fact that the Department of Social, Community and Family Affairs cannot pay what are relatively small increases in social welfare from 1 January. No other category of customer who deals with the State would accept this. The Minister knew for over two years that it was the Government's intention to realign the tax year from 1 January 2002, but, despite this, many social welfare recipients will have to wait until February to obtain a small backdated payment. It is clear that prompt payment legislation does not exist for those on low incomes.
Is the Minister telling the country that for the past two years he was unable to develop an administrative system to give social welfare recipients their small increases on time? If he admits that, he is admitting to gross incompetence. No other category of worker would allow a situation to develop where their increases were backdated six or eight weeks. Social welfare customers are dealt with differently by the Government, which shows a clear policy of discrimi nation against them. The Revenue Commissioners practises prompt payment with its customers but social welfare customers are told to wait six weeks. This is not good enough and, with available technology, I do not accept the Minister's arguments that he could not have developed an administrative system to deliver the increases from 1 January.
There has been much play about the increases given to pensioners, but those on non-contributory pensions will continue to see a significant difference between their pensions and those of contributory pensioners. More should have been done to improve non-contributory pensions. The difficult budgetary situation we will face over the next 12 months, as I said earlier, will make it more difficult to improve the lot of pensioners.
The small changes to the free schemes are welcome and I look forward to the opportunity to consider them in the Social Welfare Bill. Tax individualisation, now a permanent feature of our tax policy, does not apply to social welfare recipients. It is unacceptable that a married pensioner couple should not be treated as two individuals when pension income is assessed. This is another Government failure. If the Minister is serious about helping widows, he should have extended all the benefits under the free schemes to help them. They have been treated atrociously by the Government. The £12 increase in the widow's contributory pension only applies to those aged over 66 years. Virtually nothing was done to help young widows. I challenge commentators to read the details of the proposals instead of taking the headline announcements at face value.
After three years in office the Government finally made progress last year in child benefit, following lobbying by the Opposition and many agencies which work in the child poverty area. Increasing child benefit is the most effective way of tackling child poverty. One in eight children experience consistent poverty. As was recently highlighted, Ireland has the sixth highest percentage of children living in income poverty among the 22 OECD countries. Parents should receive child benefit on a weekly or fortnightly basis. The Government should amend the Social Welfare Bill to allow this.
One of the greatest disappointments in yesterday's statement was about child dependent allowances. This is one of the few areas where low income families obtain additional support, but the rates have remained unchanged since 1993 and there are many anomalies relating to the different ones that apply. An opportunity was missed to reform it. Why was a proposal from the PPF, to extend CDAs to all children up to the age of 22 years in full-time education, not brought forward? The proposal to change the back to school footwear and clothing allowance represents a tiny improvement to a scheme which has the potential to help directly low income families. We will return to this in the debate on the Social Welfare Bill.
The Government failed to deliver significant benefits for carers. None of us should forget that family carers save the State about £1.8 billion in unpaid work. The changes announced yesterday will increase the total number who can obtain carer's allowance, but the Department estimates that at least 52,000 full-time carers exist but only 22,000 receive the allowance. The income disregard for a couple will increase to £250, but it should be increased to £370, twice the current minimum wage. Nothing was done to allow carers receive social welfare benefits and their allowance or to introduce a cost of care grant to meet the massive costs involved in caring for a loved one or friend. In short, they are the big losers in the budget. The increase in the respite care grant is not enough to offset the Minister's failure to improve significantly the income disregard for carer's allowance.
The decision to restore mortgage interest relief for those involved in the private rented sector and to substantially reduce stamp duty was castigated by the Minister for the Environment and Local Government, Deputy Dempsey, only three weeks ago in the House when he said:
The Government does not believe that speculators are equal to first time house buyers. When the Government took office, speculators were having a great time in the housing market. They were buying numerous houses, getting rich quickly and squeezing first time house buyers out of the market.
He spoke of why speculators should be taken out of the market and why mortgage interest relief should not be re-introduced for the private rented sector. The Minister was not here yesterday, this morning or now. He has clearly lost another battle at Cabinet. He had other losses over the dual mandate, the planning system and the electoral system. Does he have any credibility at all? The time has come for him to consider his position. In all the areas in which he has stated positions of principle, the Government, and specifically the Minister for Finance, Deputy McCreevy, have dumped on him. He should resign because the Government which he supports is not introducing measures he has outlined. Today or tomorrow, he should make a statement about the announcements on the housing market.
As the Minister for Finance travels in his chauffeur driven car from the corporate box in Croke Park to the reserved enclosure in the Curragh and to dinner in the K Club, life must appear very rosy. It is a long way from the life lived by many people in my constituency. He put himself forward yesterday as the new champion of the poor. After five years in office, the Government has squandered the boom. The social divisions between our people have never been greater. The majority of right-thinking people will reject the McCreevy ideology when it is presented to the people next year in the general election.