First, I should like to refer to the contents of a letter I received from you, Sir, stating that a number of the amendments I had tabled are out of order because they involve a potential charge on Revenue. I fail to understand why you should have ruled in this way because, if you look at the first amendment, which asks the Minister to make these increases payable from the beginning of April rather than July, there is not any reason why it should create a new charge on the Exchequer: the Minister could pay 5¼ per cent over 12 months rather than 7 per cent. Before this Government came to office it had been the custom to have these increases payable from 1 April, and I fail to see how my amendment can be ruled out of order on the basis that it would involve a potential charge on the Exchequer.
Social Welfare Bill, 1984: Committee and Final Stages.
I am taking that statement as a submission regarding admissability of these amendments. I have given the amendments very full consideration, and having done so I have ruled them out of order for the reasons stated. It would not be in order to have a discussion in the House about them. It is clear that they involve a potential charge on the revenue.
Though I bow to your ruling I do not accept it as being logical——
The Deputy will have an opportunity to say much of what he wants to say when we come to the sections.
In these circumstances we have no option but to oppose the section to which amendment No. 1 relates. We are not opposing the giving of increases to social welfare recipients — indeed we believe they are not receiving sufficient to keep abreast of the cost of living — but this year alone inflation is running at more than 10 per cent yet the Minister is offering 7 per cent to those who depend on social welfare benefits for their livelihood. They are the most under-privileged people in our society.
I do not like to interrupt the Deputy, but section 1 deals merely with the Short Title to the Bill.
Amendments Nos. 1 and 2 have been ruled out of order.
We are opposing the section for the reasons I have stated. We believe that a 7 per cent increase is completely insufficient at a time when inflation is running at more than 10½ per cent. Last year these beneficiaries received only 12 per cent, and if we add the 12 per cent of last year to the 7 per cent of this year we get only 19 per cent. That increase over two years is far less than the annual 25 per cent they had been receiving in the previous three years when Fianna Fáil were in power. If society is to be judged by the way the under-privileged are treated — the old, the ill, the handicapped, the unemployed, the widows and many others — this Government will be harshly judged by the people for the manner in which they are treating those depending on social welfare benefits.
The Ministers for Finance and Social Welfare came into the House to defend their actions in this respect. The Minister for Finance told us that the Government came to office with a commitment to keep short-term social welfare benefits in line with increases in the take-home pay of workers, and to maintain the living standards of other weekly welfare recipients. In his budget speech the Minister told us that the Government had more than met that commitment. Of course the Government have not met that commitment, because there is no doubt that those depending on social welfare benefits had a serious reduction in their living standards last year as a result of the very low award given to them, only for nine months, not 12 as previously had been the case. Because of the 7 per cent this year their standard of living will drop even further. It is appreciated by all authorities that in times of recession the levels of support for the needy must be maintained. That was pointed out very clearly in Report No. 61 of the NESC. The 7 per cent increase this year will not in any way meet the commitments of the social welfare classes. They are subject to increases in the cost of living like everybody else, to VAT on clothes, and some of them are subject to the drug refund charge of £28, an increase of £12 since this Government came to office only 14 months ago.
They are just examples of the commitments those people have to meet. At present, as the Minister well knows, we have a new poor in our society, those who find themselves unemployed through no fault of their own. I am very critical of the Government's economic policies because I believe that this high unemployment has come about as a result of their policies. For example, last year they reduced the original allocation for capital expenditure — the original Fianna Fáil estimate — by £220 million. Not alone that but they did not spend £180 million of their own allocation on capital expenditure, making a total of £400 million. I have no doubt that the reason we have so many unemployed at present is as a result of the Government's economic policy, particularly the decision not to spend that £400 million which had been allocated for capital expenditure. That would have given employment to many people and would have maintained and created many jobs in peripheral industries.
We will be opposing this section. In view of the figures published recently which indicate inflation running at 10½ per cent I appeal to the Minister to reconsider his allocation of 7½ per cent. He should give a higher award to social welfare beneficiaries and pay it from the beginning of April, as has been done in previous years, and not from the beginning of July.
As the House is aware the Bill provides for an increase of 8 per cent in the rates of unemployment assistance for the long term unemployed and 7 per cent in other social assistance payments, including the children's allowances, social insurance benefits and occupational injuries payments. Those increases will take effect from the beginning of July next for the weekly payments and from August in the case of children's allowances. The overall cost of what is proposed will amount to almost £70 million this year, a substantial sum of money, and in a full year it will be of major importance in terms of the carry-over effect. The social insurance increases, leaving aside the social assistance side of the cost, will amount to £36.26 million in 1984. The cost of the increases in occupational injuries benefits will be about £1 million. That benefit is borne by the occupational injuries fund, which is financed in full by employers' contributions.
The number of persons on social insurance benefit is about 400,000 and they have about 320,000 dependants. About 760,000 people will benefit from these increases. I would wish that we had more Exchequer resources available to give larger increases, but a consideration we have to bear in mind for this year is that there has not been any increase in the rate of pay-related social insurance. Those rates are in operation at the 1982 levels. There has been no actual increase in PRSI rates as such. We have the full effect of the £13,000 limit which was increased last year and there was not an increase in that limit this year. A difficult choice has to be made. There is hardly an insured worker, or an employer, who is not acutely aware of the level of pay-related social insurance contributions. We need those contributions to pay for the increases in benefits. What has happened this year is that the £70 million will be paid out of Exchequer contributions, it will be paid by the taxpayer in a form other than through PRSI. The House may remember that in the early part of 1983 there was a major sense of grievance on the part of many insured workers because of the extent of the pay-related social insurance contributions they were obliged to pay. Members will be aware that employers must pay about twice as much again. I do not have the exact figure, but we are talking about a total contribution of about 21 per cent of payroll now between employer and employee contributions.
They are the strict and rigid limitations within which the budget was framed. There has not been any reduction in food subsidies. The effect of the budget on the underlying inflation rate, the effect of it on the CPI, this year is less than half of 1 per cent, roughly about .48 per cent. We have retained the food subsidies although the Opposition confidently predicted we would abolish or almost wholly withdraw them. Unquestionably those on social insurance and assistance draw proportionately from the benefit of food subsidies although they are indiscrimate and across the board. One must bear in mind that there was a marginal increase in tax free allowances, that there was an income levy exemption which benefited the vulnerable low income groups, that we have to provide for 227,000 people who are unemployed in the form of social insurance and assistance, and the Government came down in favour of increases of the order of 8 per cent and 7 per cent.
I would wish that the increase could have been higher, but the important criteria in many respects is the rate of inflation. Previous administrations gave an increase of 25 per cent at a time when inflation was running at 25 per cent. Later an increase of 20 per cent was granted when inflation was running at 22 per cent. If we can get down the rate of inflation then the real value of the increases will be maintained. There should be some method in Government, and in the Houses of the Oireachtas in particular, of insisting on those who put forward proposals to increase the rates by 10 per cent or 15 per cent specifying where the Exchequer resources will come from to pay for those increases. The parallel exercise is to propose an increase in the PRSI rates or propose other forms of taxation. Next year, in order to continue the increase in payments of this year, we will have to have another £70 million for openers. The Government will have to consider finding that amount of money in October or November when the Estimates are prepared. It is clear that in 1985 the further additional increment will be another £75 million or £80 million for a full year payment, including a full year payment of children's allowances. That is the situation.
I will conclude by giving the precise increases in 1984. On the social insurance side we are providing £36.3 million extra, on the social assistance side we are providing £24.2 million extra and on children's allowances we are providing £5 million. The total budget provision for 1984 is £65.5 million. In a full year social insurance will be £73.6 million, social assistance £49.4 million and children's allowances £12 million, a total of £135 million, which will be reflected in the 1985 Estimate which I will prepare in a few months time.
As I said, there is no increase in social insurance contributions. It is the old story: if you do something all hell breaks loose; if you do not do something it passes over even though it is a real gain. The level of social insurance contributions by an employer is 11.3 per cent, excluding the levies, and for an employee it is 5.5 per cent. The employers pay occupational injuries and redundancy levies of .8 per cent. If tomorrow morning I take on a worker, as an employer I must immediately set aside 12.1 per cent of gross earnings for social insurance contributions.
I have fought in this House for 15 years to have that system brought in and maintained and to ensure that employers do, and should, pay it. With a few other Labour Deputies I pioneered the abolition of the flat rate social insurance contribution. It was a long standing policy of the trade union and Labour movement that we needed a contributory pay related system as being the more equitable system. In the process, employees pay a 5.5 per cent contribution and the other 3 per cent levies — 1 per cent health contribution, 1 per cent of income and the 1 per cent youth employment levy. This means the employees' contribution stands at 8.5 per cent. The total contribution to the Exchequer is 20.6 per cent. That is a substantial amount of money.
The moneys accruing to the Exchequer are diminishing because the number of insured employees and employers, by virtue of the severity of the recession in 1981, 1982 and 1983, and the number of employees being made redundant, have fallen. As a parallel development, although the growth in social insurance contributions and PRSI returns to my Department has increased, the rate of increase has been substantially diminished. I have to take on board a severe double barrelled impact of a rise in the number of unemployed, a diminution in the income of pay related contributions, and a backlash from many people who feel that paying 20 per cent of the total pay roll for social insurance and social assistance is the most they wish to pay.
It is facile for a large number of politicians, particularly those in Opposition, to exploit the preoccupation of many people with their own affairs. Most employers are preoccupied about their employment and their level of returns on their capital investment while most employees are preoccupied about their income, their family income, their prospects of employment and the level of social insurance they pay. That is the kind of society we live in. Very few people have a preoccupation about the national contributions. People personalise their roles in life and are intentionally preoccupied about their own prospects and their own contributions. Hence, we as politicians with a social awareness have a fundamental obligation to combat and oppose resolutely that kind of social culture which is rampant in our community. We must try to convince people that if they pay one shilling in social insurance contributions another less fortunate citizen will unquestionably benefit from it. I try to convince people of that every day, but I find that those who profess to be most preoccupied about social deprivation frequently cut the ground from under me by getting back to the particular rather than the general and availing of it to party political advantage. Fortunately, Deputy O'Hanlon has never succumbed to that type of argument, but it is rampant in the political parties to the extent that it is so easily exploited. It was very nearly exploited to the full early in 1983 when we had campaigns not to pay PRSI contributions, and not send that money to the Exchequer. Some employers nearly fell for that kind of argument advanced by some people. I had to strenuously oppose that. Fortunately, commonsense and the conscience of many trade unionists prevailed over that kind of intense self-preoccupation about one's own job, where people showed little concern for those who are unemployed and tried to help them maintain their income in their personal tragedy.
The limits of contributions I have to make are contained in this Bill. The cost of the improvements in 1984 are being met in full by the Exchequer because there is no change in the rates of social insurance contributions or in the earnings ceiling for contributions. I make this point — it is a rather narrow party political point and I do not want to give it any more credence than that — that the £13,000 limit was set by the previous Administration when they were framing the 1983 Estimates. I have not touched that £13,000 limit. It is high enough. Only one in ten earn more than that figure. Ninety per cent of insured workers earn under £13,000 a year and it is arguable that the limit should be abolished. If it were abolished, it would bring in comparatively little in the first year — £10 million or £14 million. Those earning £13,000 and over are paying very high rates of income tax. We will have a problem in regard to middle management people and skilled tradesmen in the event of the recession easing because the level of income tax and PRSI here is 15 per cent or 18 per cent higher than in the UK. There has been substantial easing of tax rates, of which I do not necessarily approve, in the higher tax bands in Britain and it is noticeable that middle management people here relative to their colleagues in Britain are paying very much higher rates of tax. All of this affects the provision for social welfare and is of critical importance.
I would have wished to give much more. I do not regard our current flat rates as being in any way generous. I regard them as being in many respects the bare subsistence level and if the recession eases and we have more people at work paying PRSI then we can make major changes in raising the real level of benefits in the near future.
Amendments Nos. 1 and 2 which Deputy Mac Giolla and I put down to section 3 have been ruled out of order. The amendments sought to bring forward the date of the increases from July to April. In his response the Minister has attempted to imply that such a proposal is in some way an expression of selfishness, the Opposition parties playing up to an element of society who think only of themselves. He is losing sight of the fact that this section relates to increases for people on social welfare and does not relate to people who are paying PRSI. Obviously the more people at work the more tax and PRSI is available to pay benefits.
I would emphasise that the Government agreed to maintain the income of social welfare recipients. They gave that undertaking only eight months after losing office and they cannot claim to have been unaware of the financial situation or the trends in the economy. The Joint Programme for Government agreed by Fine Gael and Labour states:
Unemployment and disability benefits will be kept in line with take home wages and salaries. Expenditure on other social benefits will be maintained in the light of inflation so that, even if a drop occurs in the immediate future in the purchasing power of better off groups in the community, the living standards of the section of the community dependent on social welfare payments will be maintained.
The Minister has not attempted to argue that the increases he is introducing will maintain the living standards of those on social welfare, as promised in the joint programme. The increases are at least 2 per cent and in some cases 3 per cent below the inflation level. Deputy O'Hanlon has indicated that if these increases were spread over the full year they would amount to little more than 5 per cent. There is no point in the Minister trying to claim that there is an attempt by the Government to maintain the living standards of those on social welfare.
The Minister also said that any politician looking for better social welfare benefits should also indicate where the resources to pay for increased benefits are to be found. The Government are in power to govern and it is their responsibility to manage the finances of the State as best they can. The recently published Finance Bill contains concessions to various sectors of society who are engaged in business of one kind or another and when one considers the loss in revenue to the Exchequer which will result from these concessions one is bound to conclude that the Minister is probably speaking with tongue in cheek when asking us to come up with ideas as to where he should find additional resources.
A substantial amount of resources could be found through the taxation of the banks. The section 74 lending concession enjoyed by the banks would, if eliminated, produce up to £55 million for the Exchequer. These financial institutions pay virtually no tax. One of them, the Bank of Ireland, announced late last year that they had decided to increase their tax contribution to the Exchequer in the coming year. It seems extraordinary that large financial institutions have the power, with the connivance of the Government, to decide what tax they will pay and can use the tax system to deprive the Exchequer of resources that could be used to pay social welfare benefits.
The Minister for Finance indicated when introducing the budget that social welfare increases of 7 per cent and 8 per cent were being offered on the basis that the Government expected the rate of inflation to be no more than 7 per cent or 8 per cent at the end of the year. Recent forecasts indicate that the inflation rate will probably stand around 10 per cent, depending on whether present trends continue on the world scene in relation to the dollar and so forth.
The Government's expectation that the increases offered to social welfare recipients would be in line with the inflation rate for the year is now proving to be false. Rather than arguing, as Deputy O'Hanlon seems to be doing, that the proposed rates should be applied from April of this year right across the board giving a 5 per cent increase for the full year, we argue very strongly that, if the Government are to honour their commitment on taking office, there should be a substantial increase in the rates proposed.
I should like to respond to some of the remarks made by the Minister. He said that the PRSI rates were at the 1982 level, but the workers are paying a much larger amount by way of various contributions than they were in 1982. The Minister said the ceiling for contributions had been raised from £9,500 to £13,000 and gave the impression to the House that Fianna Fáil were responsible for that. That increase in the ceiling was introduced by the Minister in section 4 of the Social Welfare Bill last year. This Government increased the ceiling for PRSI contributions to £13,000. In effect, the workers have been paying more since this Government took office. It does not matter to the workers whether there is an increase in the rate or in the ceiling. It is more money out of their pockets. The same applies to the 1 per cent levy introduced by the Government last year. That is another 1 per cent out of the workers' pockets.
There is a small increase of ½ per cent in the rate of contributions towards the occupational injuries fund and the redundancy fund. While the employer is paying that, nevertheless it is an increase in the contributions to the State from the workforce. I cannot accept the Minister's reason that one half of 1 per cent will be the inflationary effect of this year's budget. The increase in the cost of petrol and the effect that that will have on the cost of the distribution of goods, and the very marginal change in income tax, mean that the workers will not benefit. VAT on clothes and so on must contribute to increasing the inflation rate by more than one half of 1 per cent.
The Minister said that if the Opposition wanted an increase in benefits they should point out where the money would come from. The obligation is on the Government of the day to discharge their responsibilities. This Government promised to keep social welfare benefits abreast of the cost of living. They failed to do that. Because the Opposition call for justice for the less privileged in our society, that is not a reason for the Minister to say that the Opposition should indicate where the money would come from.
Earlier this morning I gave an example of where money could be provided if the Government had taken the right economic decisions on the creation of employment. Last year the Government allocated £180 million for capital expenditure which they did not spend. Obviously they had that money, or presumably they would not have allocated it. Still they did not spend it. If that money had been put into the construction industry, it would have created numerous jobs directly in that industry and numerous peripheral jobs. It costs the Exchequer £1 million for every 2,500 people unemployed. The cost of unemployment to the Exchequer this year is £580 million. If the Government got their economic policies right they could create jobs for the 65,000 young people who are unemployed and the other 216,000 people who are unemployed. We should try to keep more people at work instead of having all the closures we have had over the past 12 months. Then the Minister would have sufficient money to give a realistic increase to recipients of social welfare benefits.
Last year the Opposition pressurised the Minister to give a double payment to social welfare recipients at Christmas. The Minister resisted that on the basis that he did not have the funds available. He resisted it right up to the weeks before Christmas. Then he was able to produce £18 million to pay those double benefits. I know the Minister recognised that it was necessary to give those double payments to enable social welfare recipients to get through the Christmas period. The Opposition highlighted that payment all through last year because it did not appear in the Social Welfare Bill. But for that, the Minister might have let Christmas go by without accepting his responsibility. It is unreasonable to suggest that when the Opposition call for justice for the less privileged in our society they are being in some way irresponsible.
Last year when the Minister gave 12 per cent to those in receipt of social welfare benefits he said he fully appreciated that many persons dependent on social welfare incomes, the sick, the unemployed, the widowed and the retired, were finding it extremely difficult to make ends meet in the severe and prolonged recession. That was at a time when he gave 12 per cent which was less than half of what they had received in the previous three years. This year the Minister offers them 7 per cent. How could the Minister have made a statement like that last year and offer social welfare recipients 7 per cent this year?
Deputy De Rossa may not have been here when I started my contribution this morning. I pointed out that our objection to this section was to the low rate of increase and the fact that it was not being paid until July. We do not accept that an increase of 7 per cent is sufficient. It should be double that to ensure that those who are dependent on social welfare benefits will be able to survive on minimum living standards throughout the year.
I should like to ask the Minister a question. Last year's budget included a provision for a family income supplement for the lower paid workers. The scheme was scheduled to be introduced in October 1983. It was then postponed until December but, in fact, it was never implemented. Money was provided in the budget for the scheme, I should like to know what happened to that money. It could be used to implement this increase next month. This was a very important aspect of last year's budget. Every Member of the House applauded its introduction. What happened since? When the Minister is replying he might give the House some indication as to what happened to that money.
I want to make a number of points. We have to appreciate that there has been a quite dramatic reduction in the rate of inflation. Understandably that has to be taken into account by the Government in setting the level of the increase. The Government issued a statement on 22 March saying that the increase in consumer prices this year, to November 1984, should be around 7 per cent. The quarterly price increase up to February 1984 of 2.4 per cent includes the budgetary impact of about half of 1 per cent. It is estimated that the year-on-year increase at February, excluding the budgetary factors, was about 7¼ per cent.
We are endeavouring to estimate at present the outlook for the end of 1984. If we can contain the impact of wage increases on consumer prices, we have made a projection — admittedly slightly optimistic but not beyond the bounds of economic policy — of a consumer price increase of below 5 per cent in the year to February 1985. We are correct in trying to achieve this target.
In the years ahead Deputies may find themselves in the position in which I am now, and I wish very strongly to remind them that a 1 per cent increase in social welfare benefits in one year costs £17.3 million, which is a great deal of money. I have provided for 227,000 unemployed people on the live register. I did not fiddle that figure. If I had knocked 1,000 off the figure it would have been £2 million less in the Estimate, because for every 1,000 on the live register approximately £2 million in liquid cash has to be provided. I do not accept the view of Deputy De Rossa that all we had to do was to take more from the banks. They would just pass it on to ordinary customers, especially those obtaining credit. It sounds impressive but it is a facile argument, just as it is to say that we could have provided the money under section 85. The provision in the budget under section 85 is £3 million in 1984, £7 million in a full year, that is a quarter of 1 per cent increase in social welfare. A sum of £3 million would not pay for two days social welfare benefits. There are about 6,000 jobs riding on section 84, people who had a particular tax benefit. It became quite evident to the Government——
The banks are getting the tax benefits.
The benefit was not accruing to the Exchequer, it was accruing by virtue of double taxation agreements outside this country. Other people used the particular benefit——
Is it accruing to the banks?
The other simple option is that the banks simply increase their charges to the industries concerned.
Is there no price control?
There is a very simple option facing the Government on that issue, and I will explain it to the Deputy. There are about 6,000 jobs here in firms which have availed of section 84 in manufacturing, and these jobs were hanging by a thread. There was about £3 million available to the Exchequer, and the choice was very simple. Does one want to make another 6,000 people redundant or to continue a particular tax concession? A figure of 6,000 people on the live register means that it costs £12 million per annum in social welfare and a further reduction in PRSI. That does not in any way diminish the established argument that we would be better off without those concessions, but in a recession one has to be extremely careful not to exacerbate the level of redundancies, which is running at the rate of 30,000 per year.
I challenge the Opposition to state where the money would come from. This is something we must face up to. This year the Government have provided for a current budget deficit of over £1 billion. Every single pound of that deficit will have to be borrowed, either domestically or abroad. It does not matter what political party are in power, if you want to have a current budget deficit you have to go to a bank either at home or abroad to ask for money to run the country. You get the money at a rate which has to be negotiated, and this year, as I said, the deficit is over £1 billion. That is a very substantial deficit, which was not envisaged in The Way Forward. If we had now been following the rigours of The Way Forward we would have a current budget deficit of about £500 million. To bring us through the recession, the Government have eased any form of deflationary budgeting and we have kept the deficit on a plateau. We have tried to contain it but we certainly have not slashed it. It is now running on 7½ per cent of GNP.
Simultaneously, we have endeavoured to maintain the level of social welfare payments. The 12 per cent last year and the 10 per cent for short-term benefits in retrospect does not look as bad as I thought it would considering the rate of inflation. Of course I should like to have a lot more money available to me, but there has been a major increase in social welfare requirements. Social welfare spending will increase by 13 per cent this year relative to 1983 in spite of the weekly payment increases of 7 per cent generally. The actual increase was 13 per cent. The additional increase in expenditure would have to be provided for in any event this year due to the growth in the number of recipients, particularly with regard to unemployment payment, and the need to meet the cost for a full year of the 10 per cent and the 12 per cent increases granted in 1983. All of that must be provided in full in 1984. The proportion of social welfare expenditure to be met this year by the Exchequer will be nearly 15 per cent or £161 million more than in 1983. That shows the recognition by the Government that the capacity of the workforce and employers to make further direct contributions to social insurance through PRSI contributions is extremely limited.
In deference to Deputy O'Hanlon — although I address this more to Deputy Woods — I would point out that I introduced the Social Welfare Bill last year. When I took office in December 1982 the first question I asked was whether there were any changes in the rates of PRSI. Although the then Government did not say anything about it during the election campaign, in the Estimates they had prepared and which we accepted as the basis on which the election would be fought, the PRSI ceiling had been increased from £9,500 to £13,000. We took on board that very substantial increase and I put it into the Social Welfare Bill in 1983. I do not cavil at the fact that it was done. It is history now. It was necessary to do it because the other option was to increase the rates of PRSI and leave the ceiling at £9,500. However, that would have been manifestly unjust and it was better to increase the ceiling.
This year earnings have increased by 10 per cent to 12 per cent and in many cases the percentage has been greater. I would have been justified in putting into this Bill a new ceiling of £14,000. However, we decided not to do so in order to give people a break with regard to paying more through social insurance. The only increase this year has been in the health contribution limit where the ceiling has increased from £11,000 to £12,000 in accordance with the long-established practice of keeping the health contribution increase relative to increases in earnings in the transportable goods industries. Strictly speaking, the £13,000 limit should have been £14,000 but if we did that the Opposition would maintain we were putting a further burden on workers. In effect, the Minister for Social Welfare is in a no-win situation, although I do not complain about that.
In times of recession we have a major problem. Recently I have been meeting colleagues in other European countries and I shall meet more of them next Wednesday at an informal meeting of Ministers for Social Security. In those countries there has been no increase in disability and other benefits. In England they have abolished PRB completely. In France under a socialist government, in Belgium and in Italy all social insurance benefits and pensions have been reduced in real terms, with no question of maintaining them to keep in line with inflation. In a number of countries their social insurance funds have run out of money. That has been a measure of the impact of inflation in those countries which profess to have very sophisticated systems of social insurance and social assistance. Relatively speaking, we are more than holding our own on the European scene but it is at a high cost in payment of PRSI and general income taxation. What we are endeavouring to do in this Bill — minimal as it inevitably must be — is to strike that best balance.
Will the Minister comment on the family income supplement? This was provided for in last year's budget. What has happened to the money? I assume we are talking about a sum of £1.5 million. Was that money spent for the double payment at Christmas or for some other purpose?
There is a section later dealing with family income supplement.
We are talking here about additional moneys.
I appreciate the point the Deputy is making.
Would the Minister like to comment?
The sum was £5 million and this was provided for in the budget.
The sum of £5 million was used last year to pay for the substantial over-run that emerged in the middle of the year in terms of social welfare provisions despite the fact that we had provided for what we anticipated would be the level of unemployment in 1983. That was the Estimate provision that we inherited but the over-run was more than we thought. Last year there was a reduction in pay-related social insurance contributions and we dropped about £30 million. It all balanced out in the end. There was also a decision by the Government to pay the long-term unemployed an increase of 5 per cent from October and this was a new budget decision. The money was absorbed into that area. I can assure the Deputy it was spread very thinly in terms of what was available.
Money was provided in a budget for a particular service and this was applauded by the House. However, we are told that the service has not been provided. It makes a laughing-stock of the House.
If that is the point the Deputy wishes to make he is not in order. I thought he was making another point to which I could not seriously object.
May I raise a matter when we come to the section in question?
Yes.
Tá
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- Sheehan, Patrick Joseph.
- Spring, Dick.
- Taylor, Mervyn.
- Taylor-Quinn, Madeline.
- Timmins, Godfrey.
- Yates, Ivan.
Níl
- Ahern, Bertie.
- Ahern, Michael.
- Aylward, Liam.
- Barrett, Michael.
- Barrett, Sylvester.
- Brady, Gerard.
- Brady, Vincent.
- Brennan, Mattie.
- Brennan, Paudge.
- Brennan, Séamus.
- Briscoe, Ben.
- Browne, John.
- Burke, Raphael P.
- Byrne, Hugh.
- Byrne, Seán.
- Calleary, Seán.
- Connolly, Ger.
- Coughlan, Cathal Seán.
- Daly, Brendan.
- De Rossa, Proinsias.
- Doherty, Seán.
- Fahey, Francis.
- Fahey, Jackie.
- Faulkner, Pádraig.
- Fitzgerald, Gene.
- Fitzgerald, Liam Joseph.
- Fitzsimons, Jim.
- Flynn, Pádraig.
- Foley, Denis.
- Gallagher, Denis.
- Gallagher, Pat Cope.
- Geoghegan-Quinn, Máire.
- Gregory-Independent, Tony.
- Harney, Mary.
- Haughey, Charles J.
- Hilliard, Colm.
- Hyland, Liam.
- Kirk, Séamus.
- Kitt, Michael.
- Lemass, Eileen.
- Leonard, Tom.
- Leyden, Terry.
- Lyons, Denis.
- McEllistrim, Tom.
- Mac Giolla, Tomás.
- MacSharry, Ray.
- Morley, P. J.
- Moynihan, Donal.
- Nolan, M. J.
- Noonan, Michael J. (Limerick West).
- O'Dea, William.
- O'Hanlon, Rory.
- O'Kennedy, Michael.
- O'Malley, Desmond J.
- Ormonde, Donal.
- O'Rourke, Mary.
- Power, Paddy.
- Reynolds, Albert.
- Treacy, Noel.
- Tunney, Jim.
- Wallace, Dan.
- Walsh, Joe.
- Walsh, Seán.
- Wilson, John P.
- Woods, Michael.
- Wyse, Pearse.
Amendments Nos. 3, 4, 5, 6 and 7 have been ruled out of order.
We are opposing this section for the same reasons we opposed the previous one, namely that we believe 7 per cent is totally insufficient to meet the commitments of those people on social welfare assistance. We believe also that it should have been paid from the beginning of April rather than from the first week in July.
I do not understand why my amendments to this section have been ruled out of order because they would not entail any additional charge on the Exchequer but rather that the money would be spread over 12 rather than nine months. To offer 7 per cent to those on the lowest incomes, at a time when inflation is running at over 10 per cent, demonstrates that the Minister and the Government are totally out of touch with the reality of how these people will survive in the ensuing year. The main group of people in receipt of social welfare assistance are those on unemployment assistance, many of whom are now on long-term unemployment assistance. The Minister stated here this morning that he is giving them an extra 1 per cent, namely, 8 per cent, but that is still totally insufficient for them. Many such unemployed people are those who lost their jobs through no fault of theirs, who may have been in secure employment and who became redundant as a result of factories where they worked closing down. In many such instances that was the result of the Government's economic policies about which we spoke here earlier this morning.
The Minister in speaking about the proposed increases referred to The Way Forward. What was significant about The Way Forward and the allocation of the Fianna Fáil Government for capital expenditure was that, when the present Government came to power, they reduced that allocation by £220 million. Additionally £180 million of what they had themselves allocated was not spent making a total of £400 million for capital expenditure last year that was not expended. We know that had that money been spent, particularly in the construction industry, we would not now have our present unemployment figures. Unemployment rose by 28,000 last year. The projected figure of the Government themselves for this year is that another 30,000 will become unemployed. I regard that as a defeatist attitude on the part of the Government. Had they got their economic policies correct it would not then be necessary to provide so much money for unemployment — because many of these people would be working — and the Government would be in a position to pay a realistic increase to those dependent on social welfare for their existence.
Reverting to the other groups, I might say that to offer a single woman £35 a week or a widow a personal rate of £40.50 a week and expect them to live on such amounts in this day and age is totally unrealistic. The Minister should review his allocation and offer these people a realistic increase so that they will be able to maintain at least a minimum standard of living.
Last year the Minister effected a change in the administration of the national fuel scheme. In the letter he issued to the various health boards there was a paragraph stating that those in receipt of unemployment assistance were to be excluded from the provisions of that scheme. That is the first time this happened and it created further hardship for these people. I ask the Minister to have another look at it. Small farmers on the notional system receive no increase irrespective of their means. The Minister promised they would be factually assessed within three years but this year small farmers living on poor land on the west coast who have a supplementary income will not get any increase as a result of the Minister's decision.
We are opposing this section. The rates are far too low to keep pace with the cost of living and with inflation which is now running at 10½ per cent. If one takes a 7 per cent increase and spreads it out over the whole year it is 5¼ per cent which is half of the current inflation rate. We cannot accept this derisory increase to those who depend on social welfare assistance.
Many workers over the age of 50 years who are made redundant will never work again. I know of a case in Limerick where a man was made redundant 16 months ago. He got a lump sum of £10,000 in a redundancy settlement. His daughter was getting married and he decided to give that to her to help her to set up home. He decided that was the best thing he could do as he had no other way of helping her. His unemployment benefit has ceased and he will be receiving unemployment assistance. He started signing-on on 29 January. He has not received a penny since because officers from the Department of Social Welfare are trying to find out what he did with his redundancy settlement.
As a trade unionist I negotiated settlements which were the best of their kind. We have a peculiar position here in that the level of redundancy payments are much lower than they are in other countries because the laws governing redundancy there are far more stringent. When Pan-American Airlines pulled out of Shannon in 1974 we negotiated an excellent settlement. When there were similar redundancies in Italy involving the same airline, some of the pilots retired to the Algarve for the rest of their lives on the settlements they received. Our rates were kept deliberately low as an incentive to foreign companies to come here.
A redundant worker is entitled to severance payments of up to £6,000 before paying tax. It goes up to £10,000 for what is called top slice relief if the person was not made redundant before. The Department seem to be penalising people who are made redundant. People who are made redundant have nothing else to live on but their redundancy payments. It is given to them as a form of compensation. They are now being hounded by officers in the Department of Social Welfare. I ask the Minister to look at this. It rings very badly to the people I represent. We are nodding very generously in the direction of the banks and companies, and yet we are telling workers who are kicked out of their jobs without any compassion that they are to be penalised for being made redundant. It is difficult to persuade workers that there is an element of justice in all this.
I question the Minister on this aspect of the Bill. When a person is made redundant and receives redundancy payment they are entitled to contributory social welfare. The fact that they are questioned about their redundancy payment automatically makes them non-contributory. We are talking about the Act itself. They are entitled to all the services because they are contributory but if officers from the Department are calling to doors and asking what has been done with redundancy payments, the people automatically become non-contributory. Is that true? We must clarify that. Some of these people would have had 40 years' service. Why are they now being questioned?
Regarding the points raised by Deputies Prendergast and Wyse, we must accept the fact that, under unemployment assistance legislation, when a person is assessed for unemployment assistance all income is taken into account. That arises where people, for one reason or another, may decide to divest themselves of their present means in order to qualify for unemployment assistance.
I am talking about redundant workers. They are not claiming unemployment assistance but unemployment benefit.
I will deal with the issue raised by Deputy Prendergast first. In many respects, the point raised by Deputy Wyse is parallel to that. The social welfare officer is obliged to take into account all income and means available to a person applying for unemployment assistance. Every case is assessed on its merits. The amount of £10,000 mentioned by Deputy Prendergast would not necessarily be assessed against him. It would be taken into account and would depend on his circumstances. People are not questioned in relation to unemployment benefit. The only question asked is about their eligibility and the extent to which they are available for work. They are not questioned about the amount of redundancy payments for benefit purposes. To that extent the issue does not arise.
If one gets a substantial amount of money from an employer and then decides to give it away or spend it, social welfare officers are entitled to inquire what has happened to it and take it into account in assessing the social assistance which is means tested.
Regarding the overall point raised by Deputy O'Hanlon, section 4 of the Bill provides for a 7 per cent increase in short-term weekly assistance payments and similar increases are being made in the monthly rates of children's allowances. The rates of unemployment assistance for long duration recipients were increased by 5 per cent last October and they are being increased by 8 per cent now. The proposed new rates for this category are shown in Schedule B, Part I. 1 A (1). The effect of this is to link the means test for the purposes of entitlement to a qualification certificate as provided for in section 136 (3) of the Consolidation Act to the higher long duration rates. This change is being made to avoid anomalies which might arise if the means of living continued to be linked to the standard rates of unemployment assistance. I make that general technical point.
Finally, the estimated average weekly number of persons in receipt of unemployment assistance rates is 287,000 and they have 273,000 dependants, a total of about 560,700 people benefiting from the social assistance increases. Together with the social insurance benefit increases which we have just dealt with in section 3 with 683,300 recipients and 593,900 dependants, we have a grand total of 1,277,200 persons benefiting from the overall increases. Finally, an estimated 1.2 million children will benefit from the children's allowance increases. As Deputies know, there is no change in the overall structure of children's allowances this year.
Regarding the notionally assessed smallholders, the system of means assessment by reference to the rateable valuation is being phased out due to the unconstitutionality of the rateable valuation base. Notionally assessed rates of UA payments are not being increased, but smallholders can opt for factual assessment at any time. Factually assessed smallholders are eligible for the appropriate increase in unemployment assistance, namely 7 or 8 per cent, from July 1984. Rates of unemployment assistance payable to such persons were last increased in 1982 and about 12,800 persons are in receipt of these rates of payment at present. That in brief is the position regarding the notionally assessed smallholders. I am precluded under the High Court decision from giving them any increase but I am not precluded if they opt for factual assessment.
Section 4 (2) (d) of the Bill deals with children's allowances. I reject totally the 7 per cent increase that the Minister is giving. In 1983 there was no increase at all and we had not the normal double allowance that we had become accustomed to over the past number of years. There was no double allowance in the autumn or at Christmas 1983. Children's allowance is the only direct payment there is at the moment to those women who work full-time in the home. At every budget time it comes up for discussion and there was a great deal of discussion this year in relation to possibly the withdrawal altogether or some kind of control of children's allowances. As a result of that speculation the Oireachtas Joint Committee on Women's Rights sent the Minister a letter, as he knows, with a recommendation in it from the committee to ask the Department of Social Welfare to leave the children's allowances as they were until we could have a full look at the position of women in the home and direct payments to those women who work in the home.
A number of things have happened over the past year and a half that would affect in particular those women who work in the home fulltime and their children. Charges have been introduced in relation to school transport. The 8 per cent VAT on clothes, of course, is not relevant to children under ten years of age, but at the same time, as was proven here in the House by a number of mothers including myself, you cannot categorise children. The fact that they are under ten years of age does not necessarily mean that they take size eight or nine in clothes. Children vary in size, therefore it is wrong to categorise children according to the sizing on clothes regardless of the size of the child. The new family income supplement covers only the first five children and after that makes no provision. The 7 per cent that the Minister is planning to give this year means 20p per week for the eight-month period involved and if you take that over a 12-month period it means 14p per week which is in effect 2p per day per child. No Government, particularly a Government who claim to be caring of people most in need — obviously this category of people are very much in need of support from the Government and Department of Social Welfare — can expect that 20p a week or, worse still, 14p a week or 2p a day, will be acceptable in this day and age when one considers the litany of increases that have affected and brought tremendous hardship to this category of people. Has the Minister made provision this year for double payments in relation to children's allowances?
The amendment which Deputy Mac Giolla and I put down on this section and which has been ruled out of order was an attempt to bring the payment dates for the increases from July back to April. The case for doing that stands in relation to social assistance benefits as it does for the previous section. The position at present is that while the Government have not increased the PRSI contributions, pay-related benefit itself is being reduced in this Bill, again from 2 April, not from July when the benefits are to be paid to social welfare recipients. The benefits, generally speaking, would be paid in July, children's allowances in August, and we are told that the family income supplement will be introduced in November, although that date is not included in the Bill. The scheme will be introduced by regulation by the Minister, but again, given the fact that we were promised this family income supplement last year and money was set aside for it then and it never materialised, it is quite on the cards that it may not materialise this year either. Therefore, generally the benefits are being put on the long finger while the cuts in the benefits are being implemented from April or even earlier in some cases.
A point worth raising is the manner in which the cuts apply to young people between the ages of 16 and 25. We have the extraordinary situation that young people up to 25 years can be forced to be totally dependent on their parents should both parents or either parent be working. Some weeks ago I raised a particular case where a 19 year old had his unemployment reduced from £19 a week to £3 a week because his father got an increase in his salary. In this day and age of independent young people that seems to me to be totally unsatisfactory. It is, in fact, leading to many young people leaving their homes or being forced to lie about where they are living in order to get some kind of half adequate income.
How does the Minister expect a young unemployed person getting £3 a week unemployment to travel around looking for a job? This pittance would not even pay for the young person to go in to the exchange and collect his unemployment money. Bus fares would eat up the £3. The increases proposed here are totally inadequate but, apart from that, young people are being treated very badly in regard to unemployment assistance. Does the Minister propose either this year or next year, or at any time during the lifetime of this Dáil, to introduce changes in that unsatisfactory system?
With regard to unemployment assistance, a young boy or a young girl entitled to unemployment assistance with no hope of employment who decides to take up an educational course is automatically disallowed unemployment assistance. They inform the social welfare officer they are available for work at any time but while waiting for employment they are taking up an educational course, whereupon they are disallowed unemployment assistance. I think the Minister said he would have another look at this. It is vitally important that a young person who wants to continue his or her education should be allowed to do so and should be entitled to unemployment assistance. There are hundreds of young people more than anxious to continue their education but because they would lose this income they are deprived of that facility. Would the Minister address himself to that aspect of unemployment assistance and give these young people a chance? If the time of these young people is occupied, be it with education or something else, there is bound to be a decrease in vandalism and associated anti-social acts.
A number of points have been raised. Deputy Geoghegan-Quinn asked if there was any provision for double payment of increases in benefit for children next September. There is no such provision. The only reason why it was provided at the particular time was that it was a particular deal done by the Leader of the Deputy's party when he met Deputy Gregory who asked him for a double payment that September. That was the first time ever such a payment was made. We have not provided for it.
There is double payment at Christmas.
There is no provision for that double payment. There never has been any provision for that in any of the Estimates. In any of the Estimates over the past four years there has never been a provision for double payment. The situation is considered each year. That has been the practice of successive Governments. When I inherited the Estimates for 1983 there was no provision for double payment. It was a Government decision. Having gone through the Estimates again we came up with the provision. It was about £19.8 million.
Deputy O'Hanlon asked why not spend the money on environmental works or the construction industry. This approach is becoming quite alarmingly fashionable. Now Deputy De Rossa has a considerable awareness of the issues and I really despair when I hear him succumbing to that kind of argument. I am now about to deny the argument advanced by Deputy De Rossa's own party that I should take a couple of hundred million out of social welfare——
I did not suggest that. I said you allocated £180 million last year to capital expenditure. That money was not spent so why should it not be applied in another direction?
That is not true.
That is correct.
That is not true. The situation was that at the end of the year there may have been £15 million or £20 million which was not spent. I can assure you that was not the fault of the Government. Allocations are made but the money is not always spent.
I did not advance that argument.
It has been advanced by many Deputies and it was implicit in the statements made even by Deputy O'Hanlon.
I did not suggest any money should be transferred from the Minister's Department to other Departments.
I am very glad to get that confirmation because a great deal of the argument has gone in that direction, the argument advanced by members of the Deputy's own party. One gets it every day in the week at many different levels. One gets it in connection with local authorities in the west of Ireland.
It was an argument made by the Minister for Labour, Deputy Ruairí Quinn.
The Minister for Labour is well able to fight his own corner. Naturally he would wish to have money for his particular schemes. It is important to point out here that this additional Exchequer cost would represent about 35 per cent to 50 per cent for each employee in the event of such work being done. I keep saying to local authorities and various other Government Departments that if you take even the highest payment of unemployment and pay-related benefits and the differential between them and ordinary trade union basic rates of pay for, say, an environmental or local authority worker and take into account the tax tables and return to the Exchequer by way of PRSI, income tax and so on, there is still a gap to be filled of between 35 per cent and 50 per cent. That data has been available in the Department of Finance. I hold the view that it should be more widely available, to stop the nonsensical view which is rampant that all one need do is take £400 million or £500 million of social welfare money and set people to work. One could do that, provided there is another £400 million or £500 million of Exchequer expenditure and that we increase our current budget deficit from £1,100 million up to £1,700 million or £1,800 million. At that point we are told to take a running jump into the nearest river because no bank, domestic or international, will fund that self-perpetuating slide into total bankruptcy. It cannot be done and the sooner that observation is made, the better.
Educational courses have been mentioned. I point out very strongly that the availing of an educational course does not necessarily lead to automatic disallowance of unemployment assistance. It will depend, again, on the circumstances and there is a multiplicity of educational courses. I am concerned to encourage more use by unemployed persons of their own time, either in courses or in voluntary work, providing these do not interfere with their normal availability for work. That is perfectly acceptable to me and I have issued directions to the employment exchanges throughout the country that if people want to do voluntary work for the community, they should not lose benefit. As I understand it, they do not lose entitlement to unemployment assistance. It is of critical importance that we act in a constructive and sensitive way towards the unemployed.
I now come to the point raised by Deputy Geoghegan-Quinn about children's allowances. Ultimately, the community will have to face up to the fact that we are spending this year £174 million on childrens' allowances to 460,000 families for 1.2 million children, without any reference whatsoever to any income of the family. I put it to Deputy Geoghegan-Quinn that it is questionable that she and I, in terms of our separate or joint incomes, should receive childrens' allowances irrespective of our marital status, as we do receive them, tax free and without reference to income, apart from the fact that these are payable to the mother. That, apparently, is the only criterion, but there should be other criteria. I believe in equity and that people who are in poverty and mothers who are purely dependent on the small extent of childrens' allowances should be helped. I believe that the 10 or 15 per cent of families who would not suffer greatly by a reallocation of that £174 million should be considered. However, it is almost impossible to talk politically about a rational, social policy on this issue. Automatically, every politician outside of those who wish to talk rationally takes immediate advantage and accuses one of being anti-mothers, anti-children, antifamily and anti-childrens' allowances. Time and time again I have spoken to Members on all sides of the House who privately agree wholly with me that the system is not equitable or fair, or the best use of resources, but it is virtually impossible rationally to discuss the matter on the basis of a reallocation of resources to those in greatest need in the community. One or other political party will immediately take narrow, party-political advantage of a perceived deprivation of particular families.
I do not see any justification in very wealthy people across the board, without any reference to their income receiving childrens' allowances in that way. No account is taken in taxation measures, or in respect of any other income allocation to them. I do not know of that happening in any other European country in that setting. I throw the matter out for discussion and for consideration by the House. Every time I have raised the matter the hare has been chased unmercifully to death around the House, with no effort to assess the degree of equity on this issue as between one family and another.
Those who are most vociferous about the levels of income tax here and who scream about levels of PAYE and PRSI should reflect on the fact that that £174 million comes from them and is redistributed back across the board to all families. I made no proposals whatsoever in this Social Welfare Bill in relation to that matter. There was a great deal of speculation that that might have been done. Frankly, I would be amazed, in the light of the extent to which opportunism resides within the Irish political system — a most blatantly opportunistic system — if that opportunism did not immediately raise its head, even though I have brought up this matter merely by way of observation and not as a proposal.
I come to a far more serious matter in relation to unemployment assistance. It was raised by Deputy De Rossa. As I pointed out to him, if we excluded all board and lodging assessments when arriving at the means of young people, we would require another estimated £25 million per year. The latest figure I have, which is for 1980, is about £21.5 million a year. The figure must be much higher now. Automatically it would add another 25,000 to the live register. Deputy De Rossa gave an instance. I do not know the case but I have been trying to work out on the basis of the information given what the circumstances in that case are likely to be.
Subject to correction, I have estimated that if the means assessed against that applicant derived from the value of board and lodgings only, the parents' net income, calculated on the information available, is at least £207 per week, that is double the average weekly industrial net earnings. The calculation in the case of wage earning families is to deduct from the gross income the income tax, PRSI contributions, rent and mortgage repayments, with a parental allowance which is £90 for a two-parent family and £80 for a one-parent family, and to divide the remainder among the non-earning members of the household. The assessment of means is limited to 12½ per cent of the net parent income. As I have said, in the case cited by Deputy De Rossa, those parents would be in receipt of £207 per week net.
It is necessary to include in our assessments any benefit or income enjoyed by the applicant, including board and lodgings if he is residing in the home with parents or relatives. The purpose is to achieve some degree of equity as between applicants enjoying relatively easy circumstances and those who are particularly poor. These matters are kept under constant review and are revised in relation to wage and cost of living increases.
I do not regard the level of social assistance as being adequate. I know that many families living on assistance are well below the poverty thresholds, particularly those on long-term unemployment assistance, those who have been on unemployment assistance for 15 months or more. At least 50,000 such families are on the poverty line. Many of those families would want to be super-human managers of the money they receive if they are not to be hungry each week. I believe that the political system we have must be transformed radically if we are to ensure that such families do not suffer from poverty. I do not make any apology for stressing that view, but I deplore the fact that political parties are prepared to use obsessional opportunism. Their sole rationale is to obtain personal political power, to be driven around in State cars and to regard the fulfilling of that ambition as a contribution towards national social development. I regard that as an irrelevant substandard form of democracy. Successive groups of politicians become involved in a power struggle rather than in a struggle to rid the country of poverty and deprivation. The country has been plagued by this obsession with power and it has become an endemic part of the Opposition ethos——
Would the Minister please return to section 4?
They have virtually nothing else to contribute.
Does that justify the 7 per cent?
I do not have any sense of exultation about that. I do not regard it as being a discharge of my obligation. I wish it could have been much more.
Why, then, is the Minister criticising the Opposition when they complain about it?
I completely exclude Deputy O'Hanlon whom I do not regard as being part of that culture.
But all the rest of us are included? If not, would the Minister give us a list?
My job is to reply to the Opposition spokesman. I exclude Deputy O'Hanlon but I do not exclude the Opposition leaders, some of the front bench Members with whom the leader of the party is surrounding himself. The increases are barely enough. I would have wished that they would have been substantially more but I was faced with a situation of having to provide for 227,000 unemployed people, many on unemployment assistance. A 5 per cent increase was granted last October and there is an 8 per cent increase now. That will just about maintain the level of low payments in this area. It refutes the widespread argument that the rates might be a type of disincentive to work. I must stress that the most important incentive to work is to have a job and not to be dependent on unemployment assistance.
The Minister has been wasting a lot of time dealing with extraneous matters that do not have any relevance to section 4.
They are germane to the Irish position.
I should like the Minister to return to the section and deal with a topic he mentioned at the outset. That topic has been referred to by the many deputations from local authorities who met the Ministers for the Environment and Labour in recent months. Will the Minister tell the House if there is a Cabinet sub-committee in existence of which he is a member for the purpose of considering the whole area of the transfer of resources in social welfare?
No. I am aware that it is not customary to discuss internal Cabinet matters but the Government as a whole frequently, and more extensively than ever before, even in the time of previous Coalition Governments, consider major social policy issues. It is better that such matters should be considered by the Government as a whole. Cabinet sub-committees, like all sub-committees, have a habit of developing a life of their own. All the points I mentioned this morning were raised by me at Cabinet level. We act as a collective unit and bring forward a collective consensus. I accept collective Cabinet responsibility in that direction. I am not enamoured of Cabinet sub-committees. The Security Committee of the Government is understandable but otherwise the Government should be fully aware of all matters.
As the Minister referred to the transfer of resources I should like to ask him if the Cabinet have specifically discussed that area?
That matter has been discussed by the Cabinet extensively and it will be discussed throughout the year. I have prepared a lot of documentation for the Cabinet. Reports such as NESC reports and reports of the Commission on Taxation — the Deputy will be aware that a second report will be published in the near future — are discussed exhaustively at Cabinet level. At times one gets exhausted from the extent of the discussion but such matters are considered.
I should like to refer the Minister to my query in regard to educational courses and unemployment assistance and the young people who are involved in community work. The Minister announced that he has sent a directive to local offices about this aspect of unemployment assistance and I should like to know when it was forwarded.
In relation to voluntary work, I recall a circular going out. I will check if a formal circular went out in regard to educational courses and I will inform the Deputy. A detailed circular was issued at about Christmas in regard to voluntary work and I will have copies of that sent to the Deputy.
The Minister should send a further reminder to offices throughout the country about this aspect of social welfare.
Fair enough.
For two reasons, we are opposed to this section which provides for an increase from £36 to £43 in the amount of weekly earnings disregarded in calculating the rates of pay-related benefit. The first reason is that it will reduce further the amount that those on unemployment, disability and maternity benefits will receive. People who become unemployed for any period of time, particularly people on disability benefit who may take ill suddenly and find themselves in hospital, will not be able to meet their commitments. The Minister expects to save £2.8 million as a result of this provision and one must add to that the fact that by regulation the Minister intends to reduce to 75 per cent the amount a person on disability benefit can receive this year and to reduce from 80 per cent to 70 per cent the amount a person on maternity allowance can receive.
We are concerned that such people will find their incomes so reduced that they will be unable to meet their commitments. I do not intend to deal with the section in detail because there are other matters I wish to raise before we conclude the debate on the Bill at 1.30 p.m. We believe this provision will create serious hardship for workers when they find themselves ill or unemployed through no fault of their own.
I am opposed to this section because we are reaching a situation where, in spite of the fact that workers are paying PRSI and are insuring themselves against unemployment and disability, there is a constant attack on the level of benefit they are paying for. The Minister is making a great case out of the fact that he has not increased the PRSI contributions this year but the fact that he is reducing the benefit a person receives is an attack on the whole pay-related benefit system.
When the pay-related benefit scheme was introduced in 1974 a proportion of the reckonable weekly earnings used in calculating the rate of benefit was disregarded. This disregard, or the floor as we call it, was set at more than twice the prevailing rate of flat rate benefit at £14. It remained unchanged until 1981 even though the flat rate benefit was significantly increased in the meantime. If the floor had been increased in line with the formula used in 1974 it would now stand at £74 per week instead of £43 as is proposed. Under the 1981 amendment Act the floor was automatically linked to the maximum rate of flat rate of either DB or UB at the beginning of January of each year. This provision was removed under the Social Welfare Act, 1983 when the floor was set at £36. It is being increased now to £43 in order to keep the overall level of benefit in proportion to the earnings they are now intended to replace. The change will apply to periods of interruption of employment commencing on or after 2 April of this year.
I should like to point out that pay-related benefit has continued to increase. We had a provision of £75.1 million for PRB in 1983. This year the provision is £88 million, an increase of £13 million. This year pay-related benefit will be paid to 70,000 people on disability benefit and to 111,000 people on unemployment benefit. The saving is very small, about £2.8 million per annum, but the overall increase in PRB has jumped considerably from £75 million last year to £88 million this year. Between unemployment benefit and disability benefit 118,000 people will benefit from that extra money used to pay pay-related benefit. While every European country has dramatically reduced the amounts paid under this type of scheme we have maintained it. In Northern Ireland pay-related benefits are no longer paid but in this country we will pay £88 million to 118,000 people.
While disability benefit is being reduced from 80 per cent to 75 per cent, maternity allowance is being reduced from 80 per cent to 70 per cent. Why the extra 5 per cent reduction in the case of maternity allowance?
It was to maintain the maternity allowance at 100 per cent replacement. I can readily understand why Deputies say maternity allowances are being reduced from 80 per cent to 70 per cent, but with the increase in earnings and the changes in the tax rates what has happened is that there was a 110 per cent replacement of earnings in the period 1983-84. Under the Maternity Protection Act there is a specific provision that in accordance with changes in tax rates and pay-related social insurance, there will be a 100 per cent replacement. To achieve a 100 per cent replacement the 80 per cent figure had to be reduced to 70 per cent. This gives full replacement.
I have been accused, quite wrongly, by people who should know better, of reducing maternity allowance. I am not. I am maintaining the allowance at a 100 per cent replacement. I met a woman the other day who had been giving her employer her maternity allowance payment, which, on average was 10 per cent higher than her net take home pay. I would have been very loath to reduce maternity allowances in any way. I question if I would have had legal entitlement to reduce it, but under the Act the payment is slightly more than 100 per cent. If I wanted to be absolutely accurate I should have reduced it to 68 per cent.
At Question Time one day we had a discussion on the extension of the maternity allowance scheme and again on the Estimate some weeks ago. We raised the question of the problems facing a mother with a new baby who takes a conscious decision to nurse her baby. When her maternity allowance runs out she is still nursing the baby and she is technically available for employment but cannot be employed because nursing facilities are not available in most places of employment. Therefore she has to stay at home. I asked the Minister to look at the possibility of extending the maternity allowance over a longer period in the case of nursing mothers or make them eligible to receive payment of unemployment benefit. The Minister refused. As late as this morning I got the final reply from the Department saying this could not be done and that they would not consider doing it. As a move in the right direction to encourage mothers to nurse their babies — from a health point of view this is the best way — would the Minister consider doing for these mothers what is done in the case of an insurable person who stays at home to look after an elderly person entitled to a prescribed relative allowance? In that case credited contributions are made for the insurable person. Could that work for these mothers? I know the Minister cannot give a direct answer now but I would like him to consider it seriously because it could be done at some time in the future.
I will examine that when I am examining a number of measures relating to equal treatment and so on. I will be having discussions with the trade union organisations in the near future and that could be one of the items for discussion with them. I will get in touch with the Deputy on the matter.
I move amendment No. 8:
In page 6, subsection (1) (a), line 39, after "use" to add "or, at his choice, the yearly value ascertained in the prescribed manner of all property belonging to him (not being property personally used or enjoyed by him) which is invested or is otherwise put to profitable use or is capable of being but is not invested or put to profitable use;".
The Bill proposes that the leasing of lands will be taken into account where a person leases the land over a long period. Formerly the capital value of the land was taken into account. The purpose of this amendment is to leave that option with the claimant — to have the capital value of the land taken into account or the profit from the leasing of the land.
Briefly, assessment on the basis of capital value is appropriate where assets are invested or capable of being invested on a long-term basis. What we are dealing with in this Bill is the case where land is leased on a short or medium term basis — three, five or seven year leases. At present even where land is leased for a shorter term than three years the legal advice is that it must be assessed on the capital value basis. In principle, however, it appears to be more equitable that in such cases the person should be assessed on the actual income from the lease, and not on the capital value of the land.
It would be totally inappropriate in assessing means for social assistance purposes to offer a choice in regard to the method of assessment to be used. The social assistance scheme is not intended to be used as a pick and choose system. We have been in close contact with the Department of Agriculture on the matter.
While I agree with this section I would ask the Minister if it is possible to have the validity of orders extended to all social welfare benefits and assistance. There are many people, particularly elderly people, who visit their families, perhaps in this country or abroad, but because of the present restrictions they have to come home within three months although they might have gone for the winter period. It would be to their advantage if they could have these orders extended from three to six months in the same way as it is proposed to extend the orders for childrens' allowances.
I will consider that, although I would point out that the real problem is one of administration. There is no extra cost involved in this provision but we have considerable difficulty in getting returns from post offices. If there were a further extension we would have great difficulty in getting returns and finding out what was going on within the system. A very large money transaction is involved but there is no extra cost as a result of this change.
Amendments Nos. 9, 10 and 11 have been ruled out of order.
I move amendment No. 12:
In page 9, subsection (1), line 19, after "shall" to insert "in assessing those damages".
This section deals with the family income supplement. We are very disappointed that there is insufficient time to have a proper and rational discussion on this new scheme. We are not opposed to the introduction of such a supplement and support it in principle but we are concerned about the detail of the scheme proposed. We believe the administration will be difficult and cumbersome and that the scheme should be extended to cover not only those in full-time employment but also part-time employees and the self-employed whose income is within the limits laid down by the Minister. Payment should be made to the spouse rather than direct to the employee where the employee wishes that to be done.
The principal problem relates to the method of calculation. There is an arbitrary income figure of £95 for a husband, wife and one child, to which figure £15 may be added for each child up to a total of five children. The difference is then established between this figure and the wages received by the person and 25 per cent of that amount is payable by way of family income supplement. The maximum weekly supplement is £8 for a family with one child and £15 for a family with more than five children. These figures are too low and there is something seriously wrong if 35,000 employees will qualify for this scheme because their wages are so low. The level of family income below which the maximum supplement will be payable for a family with one child is £63. These figures are unbelievably low.
Rather than introduce this cumbersome method of calculating the amount a person should receive, it would be simpler to remove all contributions payable by employees whose reckonable earnings are less than £5,000 per annum and then give a dependant's allowance. There should be a dependant's allowance for all children and it should not be limited to five. We are speaking about the poorest people who are working for wages which in some instances are below subsistence level. The Minister might consider removing all contributions payable by employees whose reckonable earnings are less than £5,000 and then giving an allowance for their dependants.
Is it possible that Government time could be made available between now and the drawing up of this scheme to allow a full and rational debate on the family income supplement? There is not time today for a full debate on this new scheme but it is not to be introduced until November.
It is unfortunate that there is not enough time left to debate this aspect of the Bill because it is an important initiative in the area of social welfare. It is not one to which I have any specific objection in principle, except that it will encourage the payment of low wages by certain employers, particularly where work places are not unionised. It is of doubtful benefit in the broader sense but certainly there is a need to assist people on low incomes. I would prefer to see the family income supplement tied in with legislation for a statutory minimum wage.
The proposal is confined to families. The Minister is aware of a considerable number of households which would not in the general sense be described as families. There are single adults and elderly people without children who are also receiving very low pay and are on the breadline. The scheme is confined to full-time workers. Is it to be confined to workers working in excess of 40 hours per week? This would be an indirect discrimination on the grounds of sex because about 90 per cent of part-time workers are women.
The introduction of this scheme points to the fact that there is a need for a total restructuring of the social welfare system and the Minister has set up the Commission on Social Welfare to examine that. The Workers' Party have made a detailed submission to them containing proposals which would eliminate many of the anomalies in the code and provide for a basic income for all people whether in employment or in receipt of social welfare.
On a point of order, will it be possible to have a debate on the family income supplement at a later stage?
I will discuss the matter with the Party Whips and endeavour to facilitate the Deputy.
As it it now 1.30 p.m., I must, in accordance with the order made by the Dáil this morning, put the following question:
That amendment No. 17 set down by the Minister for Social Welfare for Committee Stage and not disposed of is hereby made to the Bill. The Bill, as amended, is hereby agreed to in Committee and, as amended, is reported to the House and Fourth Stage is hereby completed and the Bill is hereby passed.
Tá
- Allen, Bernard.
- Barnes, Monica.
- Barrett, Seán.
- Barry, Myra.
- Barry, Peter.
- Begley, Michael.
- Bell, Michael.
- Bermingham, Joe.
- Birmingham, George Martin.
- Boland, John.
- Bruton, Richard.
- Burke, Liam.
- Carey, Donal.
- Collins, Edward.
- Conlon, John F.
- Connaughton, Paul.
- Coogan, Fintan.
- Cooney, Patrick Mark.
- Cosgrave, Liam T.
- Cosgrave, Michael Joe.
- Coveney, Hugh.
- Creed, Donal.
- Crotty, Kieran.
- Crowley, Frank.
- D'Arcy, Michael.
- Deasy, Martin Austin.
- Desmond, Barry.
- Desmond, Eileen.
- Donnellan, John.
- Dowling, Dick.
- Doyle, Avril.
- Doyle, Joe.
- Dukes, Alan.
- Durkan, Bernard J.
- Enright, Thomas W.
- Farrelly, John V.
- Fennell, Nuala.
- FitzGerald, Garret.
- Flaherty, Mary.
- Flanagan, Oliver J.
- Glenn, Alice.
- Griffin, Brendan.
- Hegarty, Paddy.
- Hussey, Gemma.
- Kavanagh, Liam.
- Kelly, John.
- Kenny, Enda.
- L'Estrange, Gerry.
- McGahon, Brendan.
- McGinley, Dinny.
- McLoughlin, Frank.
- Manning, Maurice.
- Mitchell, Gay.
- Mitchell, Jim.
- Molony, David.
- Naughten, Liam.
- Nealon, Ted.
- Noonan, Michael. (Limerick East)
- O'Brien, Fergus.
- O'Brien, Willie.
- O'Keeffe, Jim.
- O'Sullivan, Toddy.
- O'Toole, Paddy.
- Owen, Nora.
- Pattison, Séamus.
- Prendergast, Frank.
- Ryan, John.
- Shatter, Alan.
- Sheehan, Patrick Joseph.
- Skelly, Liam.
- Spring, Dick.
- Taylor, Mervyn.
- Taylor-Quinn, Madeline.
- Timmins, Godfrey.
- Yates, Ivan.
Níl
- Ahern, Bertie.
- Ahern, Michael.
- Aylward, Liam.
- Barrett, Michael.
- Barrett, Sylvester.
- Brady, Gerard.
- Brady, Vincent.
- Brennan, Mattie.
- Brennan, Paudge.
- Brennan, Séamus.
- Briscoe, Ben.
- Browne, John.
- Burke, Raphael P.
- Flynn, Pádraig.
- Foley, Denis.
- Gallagher, Denis.
- Gallagher, Pat Cope.
- Geoghegan-Quinn, Máire.
- Gregory-Independent, Tony.
- Harney, Mary.
- Haughey, Charles J.
- Hilliard, Colm.
- Hyland, Liam.
- Kirk, Séamus.
- Kitt, Michael.
- Lemass, Eileen.
- Lenihan, Brian.
- Leonard, Tom.
- Leyden, Terry.
- Lyons, Denis.
- McCreevy, Charlie.
- McEllistrim, Tom.
- Mac Giolla, Tomás.
- MacSharry, Ray.
- Byrne, Hugh.
- Byrne, Seán.
- Calleary, Seán.
- Connolly, Ger.
- Coughlan, Cathal Seán.
- Daly, Brendan.
- De Rossa, Proinsias.
- Fahey, Francis.
- Fahey, Jackie.
- Faulkner, Pádraig.
- Fitzgerald, Gene.
- Fitzgerald, Liam Joseph.
- Fitzsimons, Jim.
- Morley, P.J.
- Moyníhan, Donal.
- Nolan, M.J.
- Noonan, Michael J. (Limerick West)
- O'Hanlon, Rory.
- O'Kennedy, Michael.
- O'Malley, Desmond J.
- Ormonde, Donal.
- O'Rourke, Mary.
- Power, Paddy.
- Treacy, Noel.
- Tunney, Jim.
- Wallace, Dan.
- Walsh, Joe.
- Walsh, Seán.
- Wilson, John P.
- Woods, Michael.
- Wyse, Pearse.