Is breá an rud é go bhfuil mé ar ais sa tSeanad. Seo an chéad ócáid dom Bille a cur ós comhair an tSeanaid. I am very pleased as Minister for Social and Family Affairs to introduce my first Bill in this House. This is one of two Bills, intended to implement the social welfare package announced in the recent budget.
This year's social welfare package amounts to €530 million and represents some 40% of the total budget allocation of €1.3 billion. This is a reflection of the Government's priority to protect the living standards of social welfare recipients at a time when difficult decisions have to be made with regard to the management of the public finances.
Since the Government took up office in 1997, Ireland has changed dramatically for the better. The number of people at work has risen by 400,000 to 1.8 million, the rate of unemployment has fallen dramatically from 10.3% to 4.6% and the number of long-term unemployed has dropped from 90,000 to 22,000. Social welfare spending rose by over €3.5 billion between 1997 and 2002, well in excess of the rate of inflation, and payment rates for both recipients and their families have improved very considerably in real terms. Between 1997 and 2002, we increased the main payment amount for a pensioner couple by 50%.
As I outlined to Senators last month during the debate on the development of the social welfare system, the policies pursued by the Government over recent years in combating unemployment and in bringing about real improvements in social welfare have led to significant reductions in the level of consistent poverty. In 1994, the level of consistent poverty was 15.1% and this was reduced to 6% in 2000, the latest year for which figures are available.
However, this Government is most anxious to protect the weak and vulnerable in our society and to safeguard the gains made in building social inclusion. We are delivering an additional €833 million in social welfare spending next year, bringing the projected level of spending to over €10 billion for the first time. Social welfare expenditure in 2003 will be €4.5 billion higher than it was in 1997, an increase of nearly 80%.
The objectives of the social welfare package are to increase or maintain the value of all rates of payment in real terms, to give additional increases to those aged 66 and over, in particular those on widow's and old age pension, to continue to increase pensions in line with the programme for Government commitment to increase the State pension to €200 by 2007, to increase or maintain the real value of all qualified adult rates of payment and to ensure that they do not fall as a proportion of the associated personal rate and to make significant progress in our programme of increases in the level of child benefit.
I will now outline the main provisions of the Bill. Sections 2 and 3 of the Bill provide for an increase of €10 in the personal rates of old age, retirement and invalidity pensions,over age 65, per week. This will bring the rate of old age contributory pension to €157.30 per week and the old age non-contributory pension to €144 per week. This confirms our commitment to pensioners and marks a substantial first step in implementing our intention, announced in the programme for Government, to increase the State pension to €200 per week. In overall terms, it represents an increase of about 59 per cent over the rate payable in 1997, well ahead of the increase in inflation.
In 2000 we gave a commitment to increase the widow's and widower's contributory pension for those over 66 to the full old age contributory pension. I am pleased to say that the special increase of €11 for this category, provided in section 2 of the Bill, will bring the new rate to €155.80, within €1.50 of the full old age contributory rate.
The Government is also conscious of the needs of other vulnerable groups in society, particularly those who fulfil a caring role, widows, widowers and those on invalidity pension. We are providing for an increase of €7 in the personal rates of those payments. This will bring the standard personal rates of invalidity and widow's pensions to €130.30 for a pensioner under age 65 and the rate of carer's allowance for a carer aged under 66 to €129.60 per week.
We are also committed to protecting the real value of other social welfare payments. Over the period from 1997 general social welfare increases have increased well ahead of inflation and average earnings. In this budget, we are maintaining the value of these payments in line with inflation by providing an increase of €6 per week in the personal weekly rate of disability and unemployment payments, one parent family payment, supplementary welfare allowance and farm assist.
We are also providing for further increases of €7.70 per week for contributory pensioners, qualified adults aged 66 and over, with proportionate amounts for those on reduced payments. A pensioner couple on a full social welfare payment will therefore get an increase of €17.70 per week. The qualified adult allowance for a person over 66 has risen from 72% of the old age contributory pension in 1997 to 77% in 2003 and now represents 84% of the old age non-contributory pension. As promised in the programme for Government this will be increased in the coming years to the full old age non-contributory pension rate to benefit women in the home who do not qualify in their own right for the contributory pension.
Other qualified adult allowances are being maintained in line with increases in the relevant personal rates. The increases in these allowances are as follows: €6.70 per week for old age non-contributory pensions where the qualified adult is aged under or over 66 and for contributory pensions where he is aged under 66; €5 per week for invalidity pension where the qualified adult is under 66 and €4 per week for all other qualified adult payments. Proportionate increases will be applied where persons are in receipt of reduced rate QAA payments.
Now that the tax year has moved to the start of January, the budget increases will again become payable from the first pay-day in January. People receiving short-term payments such as unemployment payments will receive their increases immediately in the first week in January. In the case of certain people on long-term payments such as pensions, because of the time needed to print and distribute pension books, pensioners will receive their increases in arrears somewhat later. However, those who receive long-term payment by means of electronic payment through a post office or bank will, this year, receive their increases on the first pay-day in January.
Some 235,000 people, mainly widows, widowers, one-parent families, invalidity pensioners and persons receiving carer's allowance, will receive a lump sum arrears payment for six weeks of the budget increases in mid February. This will be included in their new order books effective from that date. For example, a widow on a contributory pension over 66 years of age will receive a backdated payment of €66. A further 262,000 recipients, mainly old age and retirement pensioners and disability allowance recipients who are due to get their new order books in April, will receive a special payment in mid-February comprising six weeks arrears of the budget increase and seven weeks' advance payment. For example, a pensioner couple over age 66 will receive a lump sum payment of €260 in mid-February.
Section 4 of the Bill increases the weekly income thresholds for family income supplement from January next by €17 per week. This will lead to a net gain of €10.20 per week in the average FIS family payment. These increased payments for all FIS recipients will be paid immediately in the first week in January.
Sections 5 and 6 of the Bill provide for an increase in the earnings ceiling from €38,740 to €40,420 per year for employees' social insurance (PRSI) contributions and in the income ceiling for payment of optional contributions. Section 6 of the Bill also provides for a restructuring of the rate of optional contributions payable by share fishermen The standard rate of contribution is being reduced from 5% to 4% and the minimum flat rate contribution is being reduced from €253 to €200 per annum. In addition, the PRSI free allowance is being increased from €1,321 to €2,500 per annum. These changes reflect reductions already made in recent years for most other PRSI contributors.
This Social Welfare Bill, the first of two instalments, builds on the progress made in the social inclusion area by this Government over recent years. It safeguards the living standards of those who rely on social welfare and prioritises the allocation of resources in favour of those most in need.
Gabhaim buíochas leis na Seanadóirí uilig as éisteacht liom agus tá súil agam go mbeidh díospóireacht breá againn. I commend the Bill to Seanad Éireann and look forward to a constructive and useful debate from Senators.