asked the Minister for Social Welfare how serious is the socalled "poverty trap" in this country and the plans, if any, he has made to eliminate it as far as possible for the future.
Ceisteanna—Questions. Oral Answers. - Poverty Trap.
29.
The poverty trap is caused by a very complex interaction between the social welfare system, the taxation system and health, education and housing entitlements and it is, therefore, very difficult to quantify the extent of the problem. Corrective measures have already been taken in the social welfare area through modifications to the pay-related benefit scheme and the introduction of the family income supplement. The proposed new child benefit scheme will have an impact on neutralising the relative positions of families at work and those in receipt of social welfare payments by giving a much larger monthly payment for children, regardless of the employment status of the family.
Further alleviating measures will be considered in the light of the forthcoming report from the Commission on Social Welfare which is carrying out a detailed examination of this whole area.
The term "poverty trap" was first applied in Britain in the early seventies but to date little or no attention has been paid to it here. Is the Minister aware that there are many families who when they obtain an increase in their annual income find that after deduction of tax and PRSI they are worse off and have less money in their pockets than before? Because they receive a rise in their gross income they may also lose fringe benefits such as medical card eligibility. It would be quite difficult to compute the value of a medical card for any individual because it would vary according to circumstances. Is the Minister aware that this is happening? On the question of rents, when a low paid worker gets a wage increase his differential rent also rises and he ends up being much worse off, both in terms of final income and in terms of fringe benefits.
I am aware of problems in relation to this matter. As I stated in my reply, the Commission on Social Welfare have been specifically asked to look at the interaction between tax and welfare codes. There is no easy answer to this general problem. The possible solution proposed in the NESC report involving the tapering of medical card entitlements and income levies would result in a more complex system. Steps are being taken and the commission's report will be eagerly awaited in respect of this item because it is a problem area where no easy solution is possible. A number of proposals have been put into action which may help in some way and we hope to implement other schemes such as the child benefit scheme which would go towards resolving part of the problem.
Is the Minister aware that in a household consisting of a man, his wife and two children where income rises from £100 to £110 per week the final income actually reduces from £96 to £90 per week and they are £6 worse off as a result of the imposition of various levies and PRSI charges? Is the Minister aware that in the case of a man, his wife and five children where wages increase from £130 to £140 per week their final income will be reduced by £10 per week? That is the degree of loss in monetary terms, apart from the possible loss of fringe benefits such as medical card eligibility.
I am aware of the situation. Already measures have been taken. The matter was referred to the Commission on Social Welfare, so there is a definite awareness. Steps will continue to be taken in this difficult area to do something about it. If we were not aware of it, the commission would not be wasting their time on it.
I accept what the Minister says about the Commission on Social Welfare and I look forward with great anticipation to what they will produce. Will the Minister not concede that there is a general unawareness of the poverty trap and a non-acceptance by his Department of its existence? I have shown clearly by the figures I have given that it does exist to a considerable extent. Probably one of the main reasons for its existence is the method by which incomerelated taxes and benefits for families are administered. For example, the Department of Health deal with eligibility for medical cards, the Department of Social Welfare with children's allowances and unemployment payments, the Department of Finance and the Revenue Commissioners with income tax and pay-related social insurance and then the Department of the Environment with the local authority differential rents scheme. Because it is so diffused between four different Government Departments it has no spearhead or thrust in a single direction. I am asking the Minister if he is aware that this is the reason.
We would not be doing anything about it if we were not aware of it. We are doing something about it so we must be aware of it.
All the Minister has told me is that the Commission on Social Welfare——
I have told the Deputy that other steps are being taken.
I respect the Minister, he is a very decent man, but any time I ask him something to which he does not know the answer he tells me that the Commission on Social Welfare are looking into it. It is like looking into a big hole in the ground. I wish the Department would produce some sort of an answer. I am becoming fed up with these answers.