I was pointing out that in relation to the social insurance section, we have maintained the position of the social welfare recipients who are dependent on social welfare insurance by the increases which are included in section 3 of the Bill. In addition to doing that, as Deputies will see when we come to the next section, we have targeted those who are on the lowest levels to ensure that they will receive increases which are greater than the general level which has been applied. I commend the section to the House.
Private Members' Business. - Social Welfare Bill, 1988: Committee Stage (Resumed).
SECTION 3.
Question again proposed: "That section 3 stand part of the Bill."
Question put and agreed to.
SECTION 4.
Amendments Nos. 7 to 10, inclusive, are out of order in so far as they would impose a charge on revenue.
Question proposed: "That section 4 stand part of the Bill."
I accept that the amendments mentioned by you, a Leas-Cheann Comhairle, are out of order but I should like to address myself for a few moments to the principle underlining these amendments. We all welcome the fact that there is a family income supplement because of the direct contribution it makes to those people who are living on the lowest levels of income and also because we are interested in increasing the attraction of employment to the furthest possible extent. When we talk about people who have very low incomes and whose very budget barely stretches over the week, we should also take into consideration that nothing should add to that burden or poverty. To that extent it is important that we should consider the deletion of the words "up to and including the fifth child". I am sure the Minister and his officials within the Department of Social Welfare are aware that this would be very desirable. I should like the Minister to think seriously about that and agree to it.
With regard to the family income supplement the Minister should, in the context of social welfare, see it and judge it on net income and, in particular, he should disregard as income any amounts deducted for income tax and social insurance contributions. The purpose of these amendments is to remove so far as possible the poverty traps and to encourage people who have an opportunity to do so to work so that they will have a higher level of income and a higher level of satisfaction both financially and psychologically than if they were to depend on social welfare as their means of support. We must provide more financial help and more psychological and practical support for people who are working but on low incomes — and God knows there are many of them in this country — so that they will be motivated to work and end up living more comfortably, if I can use that word in the circumstances. Anything in this Bill and in the amendments which we have put down which can be used in that direction and which will raise the income of families on low incomes has got to be welcomed and worked at. We know from the people who are in receipt of long term social welfare that it leads to a lowering of self esteem, a lack of confidence, a sense of dependency and an erosion of energy and it becomes almost impossible for them to get back into the mainstream. Above all, the margin of life they find themselves living on ——
I am reluctant to interrupt you Deputy Barnes in your eloquence but I thought that perhaps you were treating section 5, which deals specifically with family income supplement, as section 4 which, inter alia, refers to supplementary welfare allowance. Section 5 refers specifically to the family income supplement. I say this only to discover whether or not you are dealing with section 5 or section 4.
I crave your pardon a Leas-Cheann Comhairle and I also acknowledge your indulgence. I am sorry but I misheard and I was treating section 4 as section 5. I was not aware that it was section 4 we were speaking on. If section 4 has not been dealt with yet I will immediately sit down so that it can be dealt with.
Section 4 provides for the increases in the social assistance schemes. It specifically provides the increases for those who are on social assistance. In section 4 we are providing an 11 per cent increase in the personal rates of unemployment assistance and supplementary welfare allowance and a 6 per cent increase in the rates for the dependent children of these recipients. The rate of single woman's allowance is being increased by 4.2 per cent which again is above the 3 per cent which applies generally. The idea here is to bring it into line with the long term urban rate of unemployment assistance. The single woman's allowance — and I am sure Deputy Barnes will be glad to note this fact — is being increased above the norm to bring it into line with the personal rate for the long duration unemployment assistance of £42 per week. The other rates, of course, have been increased by 3 per cent.
The opportunity is being taken in the context of higher increases being granted to unemployment assistance and supplementary welfare allowance recipients to eliminate the different rate for single persons who have children but do not have adult dependants. The new rates are set out in the Schedule. The increases are in line with the Government's commitment to maintaining the overall level of social welfare benefits and, within the resources available, to provide greater increases for those receiving the lowest payments.
The increases mean, in effect, that the long duration personal rate for urban unemployment assistance increases from £37.80 to £42, an increase of £4.20 so that the payment to a person with an adult dependant will increase by £5 from £65 to £70. This increase is in line with the recommendation of the Commission on Social Welfare to bring up the personal rates which were at the lowest levels. The personal rates at the lowest levels were for unemployment assistance and for supplementary welfare. That is what we have done in the measures we are taking here.
The cost of these measures in a full year is £53 million. If we had increased the rates of payment by 3 per cent, this would have cost £23 million but to pay increases in the way we have done — allocating more resources to those at the lowest level — costs an additional £30 million per annum, bringing the total to £53 million. In effect, it is a transfer of an additional £30 million to this area, and that is what it adds up to at the end of the day. Of course it has an effect on the rates for families because we have also in this category increased the child dependant rates — the allowances for children — out of line with the 3 per cent. Consequently, the family will gain more substantially because of the combination of the unemployment assistance personal rate plus the extra increases given in the case of children. For example, a family with three children in receipt of unemployment assistance at the long-term urban rate will receive an increase of £6.70, bringing their rate up to £98.80 per week from July next. A widow with three children would receive an increase of £2.80 per week bringing her rate to £93.30, a widow on unemployment assistance would not be in the lowest categories and, therefore, would not benefit from the 11 per cent increase but would simply benefit from the 3 per cent across-the-board increase.
We have taken the opportunity also to streamline the child dependant allowances. In general, there are at present four different rates for each social welfare scheme which are being reduced to two rates in the current Bill. The rate for the first and second child is being averaged and the rate for the sixth and subsequent children will be the same as that payable for the third to fifth child. This is a streamlining measure and there has been a cost involved because we ensured that nobody would lose and everybody would get the increases that were being applied, and in addition we averaged some of them up to the same level. In that way, we were able to have the number of dependant allowances. That is an important step in that direction and I hope it will be possible to do more along those lines in future.
These are the main provisions of this section. The Schedule gives all the effects in all the different areas. Of course you have to combine the different rates to see the effect on families, and obviously the effect on a larger family is considerably greater. In the examples I have used I have shown the effect on a three child family but the effect on larger families will be even greater. That is the main purpose of this section.
An estimated weekly average of 335,000 recipients and their 301,000 dependants will gain from the social assistance measures, a total of some 636,590 people altogether. Together with the insurance benefit increases, a total of 737,000 recipients on average each week and their 571,000 dependants will gain from the measures, an estimated total of 1.3 million people. Those who benefit under section 4 are all on assistance and are, therefore, on means-tested schemes. I have outlined the main features. The effective dates are similar to those in section 3, with unemployment assistance increases starting from 20 July 1988.
The amendments put down in The Workers' Party name have been ruled out of order but nevertheless the points made already in relation to section 3 stand with regard to this section. Although it would be churlish of anyone in this House not to welcome the increases which the Minister has given, particularly the 11 per cent increase for the long-term unemployed — which I think will be generally welcomed by the poorest sections in our society — nevertheless, it has to be said that it is a long way from the recommendations of the Commission on Social Welfare which in today's terms would be in the region of £60 to £65 per week for the single person on unemployment assistance. I think it is important to bear in mind that the principle should not be to increase the levels of allowance and assistance simply in line with inflation, but to increase the real level of income for people in this situation. For that reason I welcome the increases provided for in this section.
On Second Stage, I complimented the Minister and the Cabinet for bringing forward increases in the social welfare system. Section 4 is probably one of the best sections in the Bill as it increases the long-term rate of unemployment assistance by 11 per cent. As Deputy De Rossa has said, this is some way from the recommendations of the Commission on Social Welfare which have to be acknowledged, but given the financial state of the country at present it is difficult to increase it any more. It is a substantial increase and I am glad to see the House generally welcomed it. I am sure if the Minister had the money he would increase it further. I think he has done an excellent job providing more for those in the lower income group. Given the cutbacks which have had to be made because of the economic situation, social welfare is probably one of the areas which has been least affected. That is a compliment to the Minister who has fought his corner to ensure that the lower income groups were given substantial increases.
Deputy Mitchell spoke about targeting various areas. It is acknowledged that by bringing forward these increases, the Minister is targeting the areas which need to be looked at because the amount paid to a person on long term unemployment benefit is fairly small, but this allowance has been increased substantially.
I am glad to note that the single woman's allowance has been increased by 4.2 per cent to bring it in line with the urban rate of long term unemployment assistance. This is to be welcomed because it is bringing a little equality into the system. It is astounding that these increases will affect so many people. The 11 per cent increase in unemployment assistance will affect a substantial number of people, at a cost of £53 million in one year. The Minister mentioned that our social welfare benefits cost somewhere in the region of £7 million a day. That is nothing to be sneezed at.
The Commission on Social Welfare produced an excellent report and made some laudable suggestions. The Minister has given a commitment that he hopes to implement some of those recommendations, and I am sure it will be the wish of this House that whatever money is available will be channelled towards the people on the lower rung of the ladder.
Deputies mentioned the alleviating measure. The Minister is to be congratulated for this move. It was very worrying that this £10 per week would be taken from 22,000 households, but the Minister has given an assurance that this money will continue until the end of the year, costing £22 million. That, too, is to be welcomed. I know a number of my constituents were very worried that this money might be taken from them.
The streamlining of the child dependant rates is to be welcomed because this scheme contains a myriad of rates. The Commission on Social Welfare recommended that this system should be streamlined and the Minister is going down part of that road. Supplementary welfare allowances were also mentioned. This is something I am sure every public representative knows about. I note that this scheme is being continued. In the Six Counties they are scrapping a similar scheme and bringing in a scheme of loans. That may have a good effect on the economy but it could have a very detrimental effect on the people in my constituency if they were to take out loans rather than grants. Maybe this scheme is designed to prevent loan sharks from operating in these areas. I hear of such loan sharks in my constituency although I understand the problem is much more serious in Dublin. I would be worried if there was a move towards the loan system in the Twenty-Six Counties. The supplementary welfare scheme, as operated at present, works reasonably well. Any increases which can be given in this area as well as the unemployment assistance would be very welcome.
The House has to acknowledge that these increases are quite substantial given the economic problems facing the country. Not too many people get an increase of 11 per cent in their wages nowadays, and this 11 per cent increase is much higher than the rate of inflation given the fact that it starts from a very low base, and these people are on the lower end of the income scale. Any money we have to provide increases should be given to these people rather than any others.
The old age pension is being increased substantially, although it is not as large an increase. It is to be welcomed that we can give an increase in this area.
I find myself at variance with my colleague, Deputy Ahern, in respect of the supplementary welfare allowances not so much on the basis of the payments but on the administration. As I said on Second Stage, it is time the Minister looked at this scheme because I do not believe it is administered fairly. In my view, it would be nearly impossible to administer this scheme fairly and equitably. It varies not only from county to county but from community welfare officer to community welfare officer. It is virtually impossible to police this scheme. Very often the community welfare officer has to depend entirely on the information provided by the applicant, and that is not always accurate. The community welfare officer has to interview the applicants, check the facts and so on. I would prefer to see this come under social welfare benefits. It would be better if we did not have this scheme and if the recommendations of the Commission on Social Welfare were implemented. I believe that very often the wrong people get these benefits. The interpretation of the regulations governing this scheme seems to be variable, to say the least of it.
We tend to consider discrimination against women — and there is a great deal of discrimination in the social welfare code — but we forget about deserted husbands. That may not have been a very big problem some years ago but it is a very big problem now. The fact is that a husband deserted by his wife and who may have to cater for three or four, or even ten children — there are many deserted husbands in my constituency — is paid substantially less than a deserted wife. I do not know how the Minister can justify that. A deserted husband will have to stay at home and take care of the children just as a deserted wife has. Under those circumstances it is most unjust to pay a deserted husband less.
I would much prefer to have a woman looking after children; I may be a bit oldfashioned in that view but I believe a woman is better qualified, and I know that from experience. It may not be possible to rectify the discrepancy in the allowances this year but the Minister should bear it in mind when preparing the Social Welfare Bill next year. He should eliminate that discrimination.
From my experience as chairman of the Southern Health Board I disagree with the suggestion to transfer supplementary benefits to the Department of Social Welfare. I accept that it would reduce administrative costs and that it was recommended by the Commission on Social Welfare. However, I have to bear in mind that, for example, in 1976 in the Southern Health Board area 54 per cent of all supplementary benefits, amounting to more than £1 million, were paid by that board because of delays in dealing with claims which were eventually approved. There is no doubt that the delays were caused by the Department of Social Welfare although I accept that since the introduction of computerisation the position has improved tremendously.
I would prefer to see a more humane approach adopted and to have the superintendent, the social welfare officer or the welfare officer involved. I am worried about the proposed change because the officials who decide on the claim might be involved in policing the scheme. I should like to pay tribute to the Minister for the work he has done in the Department. He has done a lot to eliminate delays. Before he took office the position in Cork was chaotic. Certificates travelled back and forth to Dublin about six times before a decision was made. Thankfully, by use of the computer a claim can be dealt with very speedily. Details of the claim are transmitted to Dublin and a decision entered on the computer within a matter of minutes. Had such a scheme been in operation in Cork and Kerry in 1986 more than 50 per cent of the delays would have been eliminated. I disagree with the decision to transfer supplementary benefits to the Department but I must commend the Minister on his moves to eliminate delays.
The benefit to families on long-term unemployment assistance and those on supplementary welfare will be very considerable. A family of six children in receipt of unemployment assistance at the long-term urban rate will receive an increase of £9.70 per week bringing the rate to £124. Deputy De Rossa, acknowledging that there have been improvements in the system, mentioned the desirability of moving as quickly as possible along the lines recommended by the Commission on Social Welfare. The commission, at the time they issued their report, recommended £45 as a minimum, which is equivalent to a current rate of £48.30. They recommended that we should reach that level as a matter of urgency and that we should, ultimately, try to reach a figure between £50 and £55 per week. That figure would be greater now in real terms. In my view we have gone a good distance along that road although I accept that a lot more needs to be done. I should like to tell Deputies De Rossa and Bell that the cost of granting a minimum payment of £55 across the board in a full year would be an additional £315 million. The House will realise the extent of the problem I am faced with.
Deputies Bell and Dennehy dealt with supplementary welfare benefits and were concerned about delays. I should like to tell the Deputies that it is my intention to try to reduce the need for such benefits. We have introduced interim means tests on a pilot basis for unemployment assistance and they are going very well. It is our intention to extend them. We are having across-the-desk assessments followed up by checks. We are also introducing other systems to reduce the delays. In our one-stop-shop concept we are bringing the officials together to try to get early decisions on claims. We want to reduce delays and the need for supplementary welfare benefits. Deputy Bell will recognise that at the end of the day we must have a system which provides discretionary income in certain circumstances but we can do a lot more to reduce delays and the need for supplementary welfare benefits. Deputy Bell raised a question about deserted husbands but, as Deputy Mitchell has an amendment about that matter, I will deal with it when we reach that amendment.
The commission, when recommending a minimum basic level of social welfare, also recommended various ways of raising additional income such as lifting the ceilings on PRSI which would mean that the net cost would be a lot less than the figure of £300 million mentioned by the Minister. However, I do not propose to dwell on that. As we are dealing with the question of assistance, deserted wife's allowance, single mother's allowance and so on I should like to draw the Minister's attention to the 14,000 men and women who are signing on for unemployment assistance but are not getting any money. Presumably they are not getting any money because they are living with their parents or with a spouse who is working.
It seems to me that there is a need in equity to ensure that people who are unemployed, regardless of the circumstances in the home, regardless of the circumstances of the parents or the spouse, get a minimum amount of money which they can call their own. If the individuals concerned left home, deserted their wife or husband or left the parental home, they would then qualify for unemployment assistance. In those circumstances we are indirectly discriminating against persons who choose not to leave their homes. Given the great commitment of this House to the family over a long number of years, it appears we are contradicting ourselves in allowing 14,000 people to sign for unemployment assistance and not receive any money at all. There must be tens of thousands of others who are merely receiving a few pounds a week.
I have mentioned here before a man in his forties, living with his parents, who is in receipt of £12 a week. That was all that he was allowed following a means test of his parents' income, although his parents were elderly and were not by any means well off. Such individuals live in poverty regardless of the home circumstances. They are unemployed, available and fit for work, but are not receiving any assistance. Because they are not in receipt of unemployment assistance, they are automatically disqualified from participating in social employment schemes.
The other element of that discrimination is that of those over 25 years of age some 9,000 of the 14,000 are women. Again, there is a clear imbalance there. Because of the nature of employment in our society and of the social mores, it is far more difficult for women to qualify for unemployment benefit, to acquire the number of contributions needed to get benefit. The Minister should clearly look at this matter.
We put down an amendment today which comes under section 5 but which should be more correctly under section 4. This sought to amend the main Act which would have excluded any benefit deemed to arise from residing at home with the family. It is amendment No. 11, if the Minister wishes to refer to it. It has been ruled out of order and thus cannot be moved here. It involves something to which many Deputies have referred in the House, certainly during the few years since I came into it. There would not be great cost involved in ensuring that the 14,000 people to whom I have referred would get some minimum amount of money, having paid their bus fares to get to the labour exchange and get home. There are many people in my constituency who walk from Finglas to Gardiner Street and home again simply because they have not the bus fare. There is a need to deal with that problem.
There is another aspect to which I would draw the Minister's attention. It concerns the unmarried mother's allowance or single parent's allowance. Despite what Deputy Bell says about the mother being the best person to rear the children, there are men who very courageously are trying to rear children on their own. I know of one such person who was married in England, whose wife wanted to abort their child but was prevailed upon by him not to do so. The father got custody of the child in England, got a divorce, came home to Ireland and is now living in my constituency. He is not entitled to a single parent's allowance. He is unemployed and is rearing the child alone. He is entitled to unemployment assistance for as long as he can "prove" the fiction that he is available for work, but as soon as the labour exchange decides that because he is caring for his child he is not available for work he will lose that money also. In terms of the small numbers involved there would not be great cost to the State in ensuring that where men fulfil the same conditions as women they should also get the single parent's allowance. I would urge the Minister to look into that matter.
I want to make one more point in relation to the supplementary allowance scheme also covered in this section by way of increases. I would be reluctant to see the scheme being transferred from the health board to the Department of Social Welfare. Apart from that, there is a need to look at the way in which the scheme is administered. By and large, it is necessary to retain the flexibility which community welfare officers have in dealing with individual cases. If your purse or wallet has been stolen or you have been robbed and you are on unemployment assistance or deserted wife's allowance or whatever and are absolutely panic-stricken, it is important to be able to go to a community welfare officer who will listen sympathetically to your case and be able to give you some money to help you to survive over the weekend. That situation happens quite often.
I do not agree with Deputy Bell that there are people who are getting supplementary welfare benefits who are not entitled to them and who do not deserve them. I have not come across that. I know that the community welfare officers operate in a very humane way and obviously within guidelines provided by their supervisors. In some cases the guidelines may be a little too strict because of various requirements for tightening up on payments. There may be the odd person who has fallen through the net and is not getting help which is absolutely needed. Rather than a tightening up of the system, I would like to see a loosening. I would rather see one or two people getting assistance who may not need it as badly as they claim than even one or two people not getting it when they absolutely need it. I would appreciate it if the Minister would consider the points I have made.
I shall not delay the Minister too long. I do not know if he would have information available to deal with the queries raised by Deputy De Rossa. I agree wholeheartedly with that Deputy with regard to holding the family together and not allowing discrimination which can force people to move out from under the family roof. I am sure other Deputies are aware of cases of married women not receiving allowances for which they are completely eligible. If they have had a baby recently they seem to be discriminated against by the supervisors of some of these exchanges. Women have had to resort to an appeals tribunal to get what is theirs by right.
I know the Minister would like to think that because of the European Directive on Equal Treatment in Social Security we no longer have biased or discriminatory interviewing of married women, particularly under the availability for work clause. However, from what I hear of the practical experience of women — particularly married women — there is still biased interviewing and discrimination, sometimes to the extent of depriving them of their own contributions. I wonder if the Minister, in monitoring this, might have to issue a more strict directive to ensure that all personnel working in employment exchanges are aware that it is no longer not just unacceptable but illegal to treat married women in this way.
I should like to endorse what Deputy De Rossa said in regard to the single parent's allowance in so far as the equality of justice for men and women is concerned. I positively encourage the parenting role of the father — the husband, if he is married — but he is the father even if he is unmarried. As Deputy De Rossa said, the numbers may not be that large but I know of men in relationships with women who bore children outside marriage and where the men took full responsibility for parenting. Apart from not having full acceptance of that role from the community such a man is not given the single parent's allowance. The Minister should transfer the unmarried mother's allowance to a single parent's allowance and base it on the eligibility and responsibility taken by whichever parent takes on the role of caring for the child which is of the greatest importance and should be encouraged.
I do not know if the Minister has any information in regard to continuing biased, discriminatory treatment of married women to hand or how it can be completely eliminated.
Deputy De Rossa raised the question of 14,000 beneficiaries who are signing for credits only. I do not have a breakdown readily available but very few of those people are young.
If it is any help to the Minister, there are 1,100 under 25 years of age.
But they would not have been previously insured. Some of the people signing on have retired from work and are doing so to keep their pension rights. Some are married women who are not working for the time being but intend to work at a future date. Theoretically, they are supposed to be available for and actively seeking work but that is not pressed too hard. They are just keeping their record alive, this also applies to maternity cases and these groups keep their records open for treatment benefits.
It will be interesting to see what happens now that the spouse can have treatment benefits, which may have some influence on the numbers signing for credit. We do not know exactly why people sign but we know these categories are involved. The question of unmarried mothers, deserted husbands and single parents is a problem that will have to be addressed. Obviously, this has very wide financial implications because widowers and deserted husbands are involved. We will certainly have to address this matter in future and one of the major problems is the question of cost and specifying the arrangements to be made so as they are not open-ended or unduly subject to abuse.
Deputy Barnes raised the question of discrimination against married women with children and seeking unemployment assistance. She complained that they were asked about arrangements for minding the children and that the same should apply to men in general. In some areas the old attitudes still prevail. However, I sent out a repeat of an earlier circular, with some modifications, a few weeks ago emphasising the fact that married women with children are to be treated in the same way as anybody else. Computerisation will help to some extent because it will be easy to see whether the man's wife is working and, if so, he will have to give a satisfactory answer regarding the minding of their children, I sent that circular to ensure that this would happen.
I do not wish to labour the point but in relation to the 14,000 people who are signing for credits, the answer I received in answer to a parliamentary question was that 9,100 women over 25 were signing for credits and were not in receipt of any assistance; 3,500 men in the same category, over 25 years of age, were signing for credits and were not in receipt of assistance. I understand that 1,110 men and women under 25 years of age are in the same circumstances. While accepting that there may be elements in those figures of people who are signing on simply to maintain their record contribution, the Minister must be aware that since the introduction of equality legislation there are men signing on for credits who are not in receipt of unemployment assistance. Previously it did not matter whether the wife was working because she was automatically regarded as an adult dependant and the husband, in those circumstances, was not only entitled to his own unemployment assistance but was entitled to an allowance for his "adult dependant" even though she may have been working. The reverse is now the case. The wife is working and the husband is claiming unemployment assistance and not getting it because his means are assessed on her income. Women suffered that discrimination for many years.
That is what they called equality treatment.
Equal treatment.
Equal discrimination. The Minister must also be aware that there are a considerable number of people living at home with parents who are means tested on their parents' income and are not in receipt of money. The Minister should ensure that people in those circumstances get a basic minimum amount of money each week in their own name.
Regarding the single parent's allowance for men, I am quite certain that there are possibly only a handful who would fall into that category. If the Minister thinks about it and if the conditions were to be the same as for women then no two people — the mother and father — could claim for the same child. The vast majority of women at present claiming unmarried mother's allowance are claiming for a single child. There are a number who are claiming for more than one child, so the cost would be minimal. I would urge the Minister not to push it away into the future. I know of one person in my own constituency who, at this moment, could do with the income with which the single parent's allowance would provide him and this would mean the difference between sitting in a bare flat with no furniture and possibly having some small comforts for himself and his child.
There is a statutory provision governing the assessment of means for unemployment assistance and that is contained in section 146 of the Social Welfare Consolidation Act, 1981, and was amended by section 13 of the Social Welfare (No. 2) Act, 1985. One of the items taken into account in the means test is the value of any benefit or privilege enjoyed by the claimant. The relevant provision says: "the yearly value of any benefit or privilege enjoyed by him or by his spouse, including the estimated value to the household in the succeeding year deriving from all income earned by his spouse in respect of current personal employment under a contract of service".
The benefit and privilege concept covers a range of situations but in practice it generally is taken to mean the value of board and lodgings to an applicant for unemployment assistance residing in the home of his parents or with a relative.
If benefit and privilege were not covered in the Act the situation would arise that single persons living with parents in affluent circumstances could qualify for unemployment assistance on exactly the same basis as persons living with poor parents or whose parents had to provide for their keep out of their unemployment assistance payments. The purpose of the assessment of benefit or privilege is, therefore, to achieve a degree of equity between applicants living in relatively better off circumstances and those whose circumstances are poor.
The legislation also covers the situation where a person derives benefit from the earnings of a wife or partner. Where the head of the family is a wage earner the method of calculation is to deduct from the net parental income — that is the gross income less tax and PRSI contributions — an amount to cover such outgoings as rent or mortgage repayments. In addition a parental allowance is deducted. At present this allowance is £105 per week for a married couple and £90 for a single parent. They are intended to cover the personal expenses necessarily incurred by the applicants' parents in a week and the remainder of net parental income is then divided among the non-earning members of the household including the applicant. The figure arrived at is taken as the value of board and lodgings to the applicant. That is the legislative basis on which the calculations are made at present.
Where the earnings are of a wife or partner an allowance of £45 is made for personal expenses and travelling expenses. Income above that figure is treated as income benefiting the applicant and is assessed as means. That did not change with equal treatment. That provision is there a long time and has been applied in those cases. The difference now is that more wives are working and it is affecting more men, whereas in the past it was principally women who were affected. That is the system as it operates.
The Deputy suggests that there may be marginal people and that is something that can be looked at. Basically the purpose of the measure is to ensure that those who are on the lowest income get the benefits which are available. The Deputy will be aware that when you come to spreading around the available money you have to be careful about where it goes and consequently that measure ensures that it goes to families who are on the lowest incomes.
Question put and agreed to.
SECTION 5.
Amendments Nos. 11 to 15, inclusive, have been ruled out of order. In short all the amendments tabled on section 5 have been ruled out of order because their implementation would impose a charge on revenue. That does not preclude Deputies from addressing themselves to the section.
Amendments Nos. 11 to 15, inclusive, not moved.
Question proposed: "That section 5 stand part of the Bill."
The provision for an increase in family income supplement rates is to be welcomed. This scheme has done an enormous amount of good work in helping people to remain at work where the attraction would have been to leave the employment and claim unemployment benefit, pay-related benefit and all the other benefits that are part of social welfare.
I would like the Minister to ask his colleague in the Department of Health to ask the chief executive officers of the eight regional health boards to ensure that as a result of any increase in the family income supplement people will not lose their entitlement to medical cards. I have had cases — and I am sure other Deputies had the same experience — in my clinics where people have been put outside the income limit by some small payment under the family income supplement and the decision of some of the regional health boards in relation to medical cards seems to be counter-productive. On the one hand, the Minister is going to certain lengths to encourage people to stay at work and to make it as attractive as possible for them but on the other hand the Department of Health is withdrawing medical cards, free footwear and other entitlements which is very annoying to those people.
I would ask the Minister to ensure that the income received by way of family income supplement will not be taken into account in the assessment criteria laid down for medical cards and so on. It should be disregarded. It is ludicrous that one Minister is doing his best to alleviate hardship in homes while his colleague, the Minister for Health, is withdrawing help from those who are genuinely entitled to supplementary income. The family income supplement was a tremendous step forward in that it was an incentive to people to remain at work. Unfortunately health boards throughout the country are availing of this opportunity to remove other assistance such as medical cards, free footwear and so on. I know that the Minister is sincere in his desire to alleviate hardship and I would ask him to request the Minister for Health to issue a directive to all health boards that supplementary income should not be taken into account when assessments are made.
I would support what Deputy Wyse has said since I have come across a number of similar cases. The giving of supplementary income to a family should not result in something being taken from them. While I appreciate that there must be an income limit at some stage, it seems unjust that people who are on the borderline lose the benefit of the medical card.
The jibe is often made by people that they would be better off on the dole rather than working because their neighbours who are on the dole are getting everything while they are getting nothing. However, there is never a situation where someone who is unemployed is getting more than someone who is employed. When anyone came to me saying that he was worse off in his employment than a neighbour who was in receipt of the dole, I suggested applying for family income supplement. People have come back and said that it is not relevant and does not help because it amounts to only £1 or £2. I note the Minister's statement on Second Stage that he is undertaking a review of the family income supplement. I welcome this development because simply increasing the income ceiling every year is not the answer. More people on the lower end of the scale should be covered by the scheme. It should be spread out over a wider base. Perhaps it should be publicised more in order to allow for a bigger take-up. The income limit should allow that to happen. I understand that only 5,300 people are availing of the scheme.
I note from the report of the Commission on Social Welfare that the Coalition Government recommended in 1984 that the family income supplement should be abolished and replaced by some form of revamped child benefit scheme. However, the commission recommended that it should be retained in the short term because it had some benefit but that ultimately it could be phased out if the child dependant allowance was rationalised. The Minister said earlier that this is what he is trying to do. People would not then be worse off.
Soldiers from the barracks in Dundalk often come to me and say that somebody down the street is better off than they are. There is some justification for this claim because some of these other people benefit from medical cards and free travel. At the end of the day, however, nobody can say with his hand on his heart that financially people who are unemployed or on pension are better off than those in employment. I would ask the Minister to bring forward this review of the family income supplement. I welcome the increase in the ceilings.
I want to make one point in relation to the amendment. I cannot get a logical explanation as to why the scheme should stop at five children. Large families are in the minority nowadays because it is difficult to afford a large number of children. It seems rather peculiar that a man and wife with ten children should be dealt with in exactly the same way as a family half the size. It does not seem logical. I do not know what the cost would be of extending the scheme to cover large families, who are certainly a minority. Perhaps there should be no limit on the number of children.
I am mindful of the fact that the greater part of my earlier contribution was made erroneously under section 4. I will not take up the time of the House by repeating it. I welcome the fact that the family income supplement enables people to continue working but the fact that we have a supplement for very low income families is an indictment of our failure to establish a minimum basic wage. We will continue to lobby other Ministers in that regard so that it will not be necessary to give people a subsidy to bring them above the poverty line. The family income supplement has acted as a cushion which has enabled people to stay in low paid employment.
I agree with Deputy Bell's point that it is extraordinary to have a cut-off point above a certain number of children. I notice that in his amendment Deputy Bell suggests that it should apply to each child up and including the tenth child. I would hesitate in putting any upward number on it. I would like to think that the parents, particularly the mother, could do that.
I did not want to be too greedy.
Has the father not got an equal say?
Perhaps the best way of dealing with this would be to delete the words "up to and including the fifth child". Apart from the fact that such a subsidy is needed, as the Minister and his officials are aware this again reminds us how easy it is to slip into the poverty trap. As Deputy Wyse has said, receiving help in one way could result in a person finding himself losing entitlement to a medical card or other subsidies. Our amendments are geared to achieving as much flexibility as possible. All of us know of people who are so frightened of losing something which they have, small and all that it is, that they are afraid to seek information about other benefits for which they may be eligible. I agree with Deputy Ahern when he says that more information should be made available in regard to eligibility for the family income supplement. We all know of people who are in need of it but because they are afraid of losing benefits in another area they will not make a claim. These are the most vulnerable people in our society. Even if these amendments cannot be accepted because of financial constraints, I hope the direction the Department will take will not alone eliminate the fear which exists but also the traps.
Basically, I want to raise a hardy annual which I have raised with this Minister, previous Ministers and Ministers for Finance, namely, the question of how we target the people who might be entitled to family income supplement but who are not aware or applying for it. Since the scheme was introduced I have suggested that the Revenue Commissioners should be used to distribute information on it. Obviously, these people are employed and whether paying PAYE or not they must still receive a tax-free allowance certificate each year. It seems it would be a relatively simple matter in terms of the computerisation of tax-free allowance certificates for the Revenue Commissioners in consultation with the Department of Social Welfare to inform PAYE workers within a certain income band that the family income supplement exists, that they should apply for it and where they can get further information on it.
I have been told on numerous occasions that there are technical difficulties involved in this but no matter what we try to do there will always be technical difficulties involved. It is important to reach as many people as possible and evidence has shown that if you can reach the individual concerned directly through the mail you are doing a far better job than spending hundreds of thousands of pounds on television and newspaper advertising which may or may not be seen. It seems to me the only effective way of advertising anything these days is to get a mention on "The Late Late Show". That seems to spark everybody in terms of what they want and what they do not want.
That can be a bad thing too.
The Revenue Commissioners should see, even on an experimental basis, whether or not that would get people to apply. There must be people who are afraid to apply for the family income supplement on the basis that they may lose some other benefit, be it a medical card or otherwise. That is a matter to which the Minister should also address himself. It is not right that people who are living on the borderline of poverty and who could be helped, because they may have been misinformed or misunderstand how the system works, are fearful of applying in case they may lose some other benefit.
In relation to the hardy annual as referred to by Deputy De Rossa there is a difficulty, as he probably knows, in that the Revenue Commissioners do not have information on those who do and do not have children but it is possible that something may be done on a trial basis. We will discuss this further with the Revenue Commissioners. Basically, their position is that they do not have information on family sizes and, therefore, are not in a position to make distinctions between people in that way.
Various amendments which were put down on the section were ruled out of order. The section provides for increases in the income limits up to which family income supplement is payable. One of the reasons underlying the introduction of the family income supplement scheme was to deal with the situation where persons on low earnings might have a net income only marginally better than what they would receive if they were on social welfare benefit. The scheme is confined to families with children where one or both parents is in the active labour force. The level of income up to which a supplement is payable at present is £104 for a one child family increasing by £22 per week for each additional child up to a maximum of £192 per week.
The income level at which the maximum supplement is payable is £72 per week for a one child family increasing by £8 for each additional child up to a maximum of £104. The amount of family income supplement payable is half the difference between the weekly family income and the upper limit, subject to a maximum payment for each family size. The maximum weekly supplement is £16 for a one child family increasing by £7 for each additional child up to £44 per week.
Subsections 1 (a) and 1 (b) provide for increases in the prescribed income limits up to which family income supplement is payable. The upper limit of the weekly income up to which the supplement will be payable is being increased from £104 to £108 for a one child family and will rise by £23 per week, instead of the present £22 for each additional child, up to £192 per week. There is no change in the rate of maximum weekly supplement. The level of family income supplement below which the maximum supplement is payable is set by reference to the rate of supplementary welfare allowance grossed up. The rationale for this is that the scheme should not be subsidising wages below the level of supplementary welfare allowance.
The fact that the upper family income limit does not increase for families with more than five children is not a desire not to help large families; the upper limit proposed, £200, is related to a desire not to supplement earnings above average industrial earnings which for transportable goods industries for all employees was £199 per week in June 1987. Deputy Bell raised that question, in talking about the need for a review. Deputy Bell talked about including all children and Deputy Mitchell in his amendment said much the same thing. Deputy Barnes said she could not understand why the upper limit was applied. The previous Government set that limit when the whole scheme was set up.
I did not always agree with that administration.
That was the basis on which this was done. To extend the scheme to families of up to ten children would result in subsidies up to the level of £16,000 per annum. I am naturally concerned about the scheme and, as I said on Second Stage, one of the commitments in the Programme for National Recovery was a detailed study of the working of the family income supplement in order to identify adjustments that might be necessary. This review is being undertaken by an independent consultant and the results will be available reasonably soon. It is therefore considered that for major change it would be best to wait until the review is available to us. I recognise the interest of Deputies generally in this scheme and I will have a further look at it on Report Stage to see if further interim adjustments can be made to meet the points raised by Deputies.
Deputies will realise that we want to bring as many people as possible into the scheme but that will cost more money. We need to look at how we will spend the money we will have in that area. In relation to the major change it would be wiser to have the results of the study which has been going on for some time. This scheme is experimental in many ways. The previous Government introduced it originally at a quarter of the difference and then went to a third of the difference and last year we brought it to half the difference which was a very substantial increase in the amounts of money people were getting. Most Deputies would like to see more people benefiting from it. I have listened to what has been said and we will certainly review the scheme.
Deputy Wyse raised the question relating to the medical card and so on. This problem also bothers me as Minister, as I have to seek these millions of pounds to improve the position of people and I do not like to find that it brings their level of income to a point where their rents are affected or their medical card eligibility is affected. This is something that should be looked at further but it is difficult to see a simple way to overcome that problem. I recognise the point made by several Deputies and this difficulty was also raised on Second Stage. As Minister for Social Welfare I would like to see people benefiting as much as possible from any increases we can give.
I agree with the Minister's point but I totally disagree that the consequences are not the Minister's. The Minister is part of the Government and he is trying to do something good. Consultation should take place between the Minister and the Minister for Health so as to ensure that the Minister for Health will not take something from people as a result of this scheme. The Minister said, and I agree, that we should try to bring more people into the scheme but that it would cost more money. It will not cost more money if on the other hand people are losing the medical card, free fuel and things of that kind. There is a need for co-ordination between the Minister and the Minister for Health because health and social welfare go together on a number of aspects of the services. I strongly recommend consultation with the Minister for Health in this area.
I thought I said earlier that I would have discussions about it. It is not only the Minister for Health but the Minister for the Environment who are involved. I do not see how one readily gets over the problem of equal treatment for other people once the incomes are raised. In my role as Minister for Social Welfare getting increases for people on social welfare, I want their position to be improved as much as possible. I will certainly discuss that question.
I am glad to hear the Minister say he will have discussions. Equity is obviously one of the problems created by schedules and cut off levels. Deputy Wyse or his party suggested, in relation to childrens' allowances, that they should apply at a certain level and then they should be cut off. This creates an anomaly. We have this all along the line in relation to pensions and so on. If a person has £1 or £2 over the limit they are cut off from benefit. At least in the medical card system there is a hardship clause which can be applied but in the other cases there is a cut-off point. I would argue against cut-off points in this area and in relation to education grants where, for instance, people earning £100 more than a certain amount are having to pay fees and expenses costing £6,000 or £7,000 a year.
I am sure it was not intentional, but Deputy Wyse said that the health boards were availing of the benefit to remove medical cards from people. In the Southern Health Board at least where I was a member and a former chairman I do not believe that anybody is waiting to avail of the opportunity to reduce benefits. They have to apply guidelines but in fairness, nobody is waiting to reduce benefits.
I did not say waiting.
That was the term the Deputy used. The Deputy said they were availing of the opportunity to reduce the benefit. The Southern Health Board at least have a very sympathetic approach to people who are marginally over the limit. The guidelines are laid down after discussion with the CEOs. There are tremendous problems in this area and I agree with the Minister that there is no point in his increasing benefits from his budget and the corporation or county council taking them back by way of increased rents or the health board by way of cutting somebody from the benefit of the medical card. There is not an easy answer to this and this is where schedules, cut-off points and means testing comes in.
Generally I welcome the Minister's intention to review the situation to see how the figure of 5,300 families can be increased. The commission strongly pointed out that the sole object of this payment was to ensure that the low income family was not discriminated against on their income, relative to those on social welfare when social welfare was improved. We do not want people to give up work in order to go on social welfare, so this is a move in the right direction. The commission recommended also either increasing the gross wages figure as the Minister is doing or taking net income into consideration. I am glad we are moving along the right road. I hope the Minister will consult on this, but I see no easy answer to the question raised by Deputy Wyse.
I welcome the attention the Minister has given to the FIS. When it was first implemented it was a total disaster because it had not been thought out and many problems arose with its implementation. We have improved it and even though now only about 5,000 people are availing of the FIS we are going in the right direction. I am aware of many families who have availed of it and benefited thereby and it has taken them off the poverty line.
Deputy Wyse referred to people losing out either in rented corporation houses or by losing their medical card. I concur with the previous speaker that this is a problem, but equally problems face people who are not entitled to the FIS, who are working and are just over the limit and at a cut-off point. Unfortunately, cut-off points have created problems right across the spectrum whether people are applying for a house, the FIS, or whatever and there is no easy solution.
I look forward to the report on the review the Minister has under way. This is a vital scheme. As I have said, the numbers availing of it are small but they have increased and many people out in the community would avail of this scheme if they were aware of it. The health authorities have a role to play here; it is not just social welfare. People should be aware of such schemes which cushion the hardship many people experience at present. I compliment the Minister on giving this area the attention it deserves.
In the first year 1,425 participated. The figure in December 1987 was 5,532. That is the current level. A figure of 5,300 was mentioned.
Question put and agreed to.
SECTION 6.
Amendment No. 16 in the name of Deputy Jim Mitchell to be moved by Deputy Barnes. Amendment No. 17 is related and amendment No. 18 is consequential on amendment No. 17. Therefore, for the purpose of the debate, with your agreement we will take amendments Nos. 16, 17 and 18 together for discussion. Agreed.
I move amendment No. 16:
In page 5, lines 1 to 10, to delete subsection (1), and substitute the following:
"6.—(1) Section 10 of the Principal Act is hereby amended by the substitution for paragraphs (b) and (c) of subsection (1) of the following paragraphs:
‘(b) Subject to paragraph (d) of this subsection, to subsection (7) and to regulations under section 7, where in any contribution year a payment is made to or for the benefit of an employed contributor in respect of reckonable earnings of that employed contributor, there shall be payable an employment contribution comprising——
(i) by an employed contributor, a contribution at a rate (to be specified in regulations) of reckonable earnings, the upper limit (if any) of which shall be specified in regulations.
(ii) by an employer, a contribution at a rate (to be specified in regulations) of that employee's reckonable earnings, the upper limit (if any) of which shall be specified in regulations and which may be the same or different to any upper limit specified under subparagraph (i).
(c) (i) The regulations referred to in subparagraphs (i) and (ii) of paragraph (b) may exempt a portion of income under subparagraph (i) or (ii) of paragraph (b) or both, or either make no exemption or different exemptions.
(ii) Any regulations made under this section (including this subsection) may be amended or revoked.
(ii) Where regulations under this subsection are proposed to be made, a draft of the proposed regulations shall be laid before each House of the Oireachtas, and no such regulation shall be made until a resolution approving of the draft has been passed by each such House.'.".
The three amendments are intended to ensure every possible support and encouragement for job creation and to keep our industries labour intensive rather than using other means such as machinery etc., to avoid taking on extra workers because of the expense of the employers' contribution. The amendments would give power to the Minister for Social Welfare, by regulation and with the prior approval of the House, to make certain changes and bring about flexibility without having to put amendment upon amendment and patching year by year on to the 1981 Act. In many of the amendments put down here and in the discussion on them the 1981 Act as amended is referred to. If the flexibility to bring about changes annually could be brought in by regulation, we might avoid constant amendment to legislation.
The OECD have stated that part of the difficulties Ireland suffers with regard to unemployment and job creation is that the combination of our systems here sometimes seems to militate against job creation and employment rather than the other way round. Amendment No. 16 would give the Minister power by regulation to vary the contribution of the reckonable earnings. The amendment provides: "...where in any contribution year a payment is made to or for the benefit of an employed contributor in respect of reckonable earnings of that employed contributor, there shall be payable an employment contribution comprising (i) by an employed contributor, a contribution at a rate (to be specified in regulations) of reckonable earnings, the upper limit (if any) of which shall be specified in regulations". That would be the employed contributor having the flexibility to appeal the upper limit of such employee's contribution.
Paragraph (b) (ii) of the amendment provides for an employment contribution comprising a contribution by an employer at a rate of that employee's reckonable earnings the upper limit of which shall be specified in regulations. For instance, where there is a choice between an employer being able to vary the employment contribution and an employee being able to be reckoned at a lower limit by regulation, the combination of those two should lead to a decision by the employer to take on extra workers rather than either allow present workers to work overtime or, as happens so often now, introduce machines to enable the work to be done with fewer workers. The whole direction of our social security contributions would be to enable the Minister to have such flexibility as to build in a pro-employment attitude rather than an anti-employment attitude as sometimes happens at the moment.
Amendment No. 17 which, as has been pointed out by the Chair, is a continuation of amendment No. 16 provides that as an alternative to all or part of the total sum payable as employers' contributions in any contributory year, the Minister may, by regulation, require the payment by companies of a levy based on a turnover of the company rather than on the number of workers employed. When making regulations under this section the Minister, with the consent of the Minister for Finance, shall define, inter alia, the amount of the percentage, the manner of the computation of turnover and the dates and payments of the levy. Any regulations made under this section, including this subsection, may be revoked or amended. Again, this all points to flexibility and the fact that it could be changed by regulation. Where regulations under this subsection are proposed to be made, a draft of the proposed regulation shall be laid before each House of the Oireachtas and no such regulation shall be made until a resolution approving the draft has been passed by each House. Again, what is being attempted here is to give the Minister the flexibility to introduce it without interfering too strongly with or amending the Bill and to ensure, of course, that the approval of both Houses would be needed to bring it about.
In amendment No. 17, part of all of the total sum payable by employers would be based on a percentage of turnover of the company. This might be more accurate and remove a certain amount of difficulty that is being experienced at the moment with regard to profits and turnover of companies. For instances, the employers' contribution brings in about £600 million per annum, and this is raised by levying 12½ per cent of all they pay up to £16,200. Income above £16,200 is not reckonable either for the employer or the employee contributions. Therefore, the employers' contribution is a direct tax on employment. There can and must be a more constructive and positive way of dealing with that. The Commission on Taxation proposed a social security tax without actually defining what it might be, but stated that it could be all or part of the employers' contribution instead.
Deputy Mitchell asked the Minister to consider providing that this part or total sum would be payable on a percentage of turnover because if it were imposed on the profits alone as they are perceived and interpreted at the moment it could require a very heavy increase in existing profits tax or it could be a further encouragement to companies, if they thought they could get away with it, to understate their amount of profit. It might also be in breach of the Irish commitment to retain the 10 per cent manufacturing profits tax until the year 2000. The Minister for Finance, in a Dáil reply to Deputy Mitchell some time ago did say that turnover tax would, in fact, be £6,000 million. Therefore, we can compute that a 2½ per cent turnover tax would raise £150 million and could reduce the employers' contribution by 25 per cent. A 5 per cent turnover tax would raise £300 million and, therefore, would reduce employers' contributions by 50 per cent.
That would give a sense of equality regarding industries at the moment and remove what can be almost a financial discrimination between industries with more employees and industries that can manage to have a very high turnover because they choose not to take on extra staff and either through overtime or the use of machinery increase their productivity and turnover rather than doing so by labour-intensive industries. It could go as far as actually working against labour-intensive industry. If all or part of that contribution were based on other reckonings rather than on the number of employees, not alone could it bring about a flexibility which would be a more equitable way of collecting a contribution from industries based on their turnover and encouraging them to be labour intensive, it could introduce a flexibility with regard to the employees in that low income and other circumstances could be taken into consideration as well. The Minister by regulation could be flexible with regard to the contribution of the employees by way of perhaps a sliding scale.
What these two amendments are about is to derive another method of having a more equitable and constructive way of encouraging and rewarding employers for taking on and paying contributions for workers based on a system other than the number of workers. Aligned with that the Minister would have flexibility with regard to the workers or employees concerned so that employees' income could be taken into consideration in computing their contribution and thus there would be a more equitable distribution. Instead of the trend we are increasingly seeing, with employers deciding not to take on workers because of the disincentive of the employers' contribution, every encouragement should be given to them to take on more workers because they would be paying on their turnover rather than on the number of workers they employ.
I appreciate the direction the Deputy is taking with these amendments. As they are constructed they would cause a lot of problems. Amendment No. 16 would involve deleting subsection (1) which would have immediate effects financially on the arrangements to come into effect on 6 April. We would have to look further at the construction of the amendment which is here.
What is proposed in amendment No. 17 is a turnover tax to bring in income and thereby provide a means of reducing some of the other costs or broadening the base for bringing income into the whole system. We will have to go into it in more detail tomorrow. It is a very major proposal. In amendment No. 16 the Deputy is proposing that there would be a lower limit of exemption. If there was a £2,000 exemption limit the amount of money waived would be £237 million. The Deputy will realise that there are very big costs in that area. Nevertheless, I recognise that in putting down the amendment Deputy Mitchell and Deputy Barnes are concerned to give the Minister power by way of regulation to do something in relation to these different areas that are mentioned. I have very little time left to go into this matter in detail because there are a couple of major proposals.
Progress reported; Committee to sit again.