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Dáil Éireann debate -
Tuesday, 14 Mar 1989

Vol. 388 No. 3

Social Welfare Bill, 1989: Committee Stage.

Sections 1 and 2 agreed to.
SECTION 3.
Amendments Nos. 1 to 5, inclusive, not moved.
Question proposed: "That section 3 stand part of the Bill."

This is a major section of the Bill and deals with social insurance benefits. The measures included in this Bill represent an unprecedented improvement in the level of income maintenance support provided by my Department and will significantly improve the position of those dependent on social welfare, particularly families. The approach I have adopted is to concentrate the available resources on improving the basic levels of payment in line with the recommendations contained in the report of the Commission on Social Welfare and in the ESRI poverty report.

The 1988 and 1989 budgets provided significant increases for those dependent on the lowest levels of payment and it must be recognised that these increases are not reflected in the results of the ESRI survey. Deputies will recognise the major improvements I have brought about since the ESRI survey was carried out. This section deals specifically with the social insurance side of these improvements. I have maintained the complete system of social insurance and since last year have extended coverage under the social insurance scheme to bring in the self-employed. Of course, this has resulted in additional considerable income being brought into the social insurance fund and a reduction in the cost to the contributor. Therefore, the PRSI payer is benefiting under the more equitable arrangements introduced last year and this is reflected in the cost of providing the increases under this section. Consequently, there has been no increase in the PRSI contribution rates, either this year or last year. In addition, we have through better management and control also made considerable savings for the taxpayer and for the PRSI member while, at the same time providing a better service. The overall package of social welfare improvements of which this is part will this year cost £157 million on a full year basis.

Subsection (1) of section 3 provides for an increase of 3 per cent in the weekly personal adult and child dependant rates of both social insurance and occupational injuries benefits. The new rates of payments are set out in Schedule A to the Bill. These levels of increase are in line with the commitment contained in the Government's Programme for National Recovery,“to maintain the overall value of social welfare benefits” and have been achieved without any increase in PRSI contribution rates.

Since taking up office the Government have more than honoured their commitment to maintain social welfare payments in real terms. The personal rates of social welfare payments generally have increased by 6 per cent since July 1988 while the personal rates of long term unemployment assistance have increased by 24.3 per cent over that period. To give some examples of the results of these increases in social insurance benefits, an old age contributory pensioner with an adult dependant, in other words, a couple on old age pension, will now receive £102.20 per week; a contributory pension for a widow with three children or for a deserted wife with three children will now be £96 per week; a person on invalidity pension with an adult dependant under 66 years of age will receive £85.60 and with three children will receive £119.80 per week. A person in receipt of unemployment benefit with three children will now receive £124.30 per week. This is a payment of £105.80 plus £18.50 in pay-related benefit, and is on the basis of the full pay-related benefit rate of 12 per cent which applies right throughout the period. A person on unemployment benefit, with three children, and who is in receipt of pay-related benefit will receive £124.30. In addition, in this section we have been streamlining the adult and child dependant allowances. Since July 1988 the number of different rates of child dependant allowances for all social welfare schemes has been reduced by two thirds, from 36 to 12, and a minimum child dependant allowance of £10 per week per child is being introduced. On the social insurance side an estimated 385,000 recipients with 278,000 dependants, a total of 663,000 people, will benefit, therefore, from these increases. The effective dates are: for unemployment benefit 20 July, for retirement pensions 27 July and for old age and widow's pensions 28 July. The date, July, is similar to last year's date in this respect.

This is very fair, worth while maintenance of the social insurance fund and of the benefits which members have from this fund. Because of both the savings we have been able to have over the period through increased control and management and the improved income as a result of the self-employed participating at this time, we are able to do this without increasing the rates of social insurance contributions.

First, it is accepted on all sides of the House that the amounts involved are modest and many of the people who are living in poverty are those in receipt of unemployment benefit or unemployment assistance. That is why a number of the amendments I have tabled to this Bill relate to what I believe to be the main cause of poverty, that is lack of jobs. I hope the Minister, even if he does not take the amendments I have tabled fully on board, will approach the social welfare legislation with a view to eliminating all aspects of the Bill which are a disincentive to employment. If that is done we can tackle the cause of poverty and there will be more resources to increase the amounts available to those who will not be able to secure jobs. I will return to that point in relation to a number of other sections, but I have to state here my fundamental approach to social welfare legislation. It is absolutely necessary that this review take place so that all disincentives to employment be removed from the system. That will ensure that we have more people working and more resources available to increase the quite modest amounts that are available for unemployment benefit and unemployment assistance in particular and, indeed, for the other social welfare categories.

Secondly, I suggest to the Minister that further streamlining of this system is possible. Look at the figures now in regard to unemployment assistance and unemployment benefit. In many cases more money is available to those in receipt of unemployment assistance than to those in receipt of unemployment benefit. The latter, of course, have made contributions. The figures range from £42 to £45 unemployment benefit and £42 to £47 unemployment assistance. The Commission on Social Welfare suggested that there should be a margin in favour of those who have paid their contributions; 10 per cent was the suggested differential in favour of those who had paid contributions and were in receipt of benefit. I suggest the entire distinction be abolished altogether and the trend which has now developed be changed so that the amounts available to people on unemployment be the same. The differential then would arise only from the point of view of means. Those with contributions would be entitled to their payment based on their contributions, irrespective of means. The amounts should be the same, and I commend to the Minister very strongly an approach for the future towards that end result.

I am surprised at the Minister opening his contribution here today with yet another attempt at undermining the figures which show the level of poverty in our society. I dealt with that on Second Stage and I am surprised the Minister should return to it and try to claim — or imply at least — that the levels of poverty are not as bad as shown by the ESRI because some improvement has been introduced in the meantime. It may well be there are marginal improvements here and there, but the poor remain poor and nothing the Minister has done by and large has dramatically affected that.

As another speaker on this section has said, the only effective way to tackle poverty is through job creation but not just any kind of job creation. They have to be decent jobs with decent pay. The ESRI report showed that a significant number of people living in poverty have jobs and they are in poverty precisely because they are on low pay and deprived of benefits which they might get if they were not inclined to work at all.

I had nine amendments down to section 3 and all nine have been ruled out of order. The amendments I put down sought two things, first to bring the dates on which the improved social welfare payments are paid back from the end of July to early April; second, to highlight the gap that still has to be filled to even go significantly towards meeting the proposals of the Commission on Social Welfare which urged massive increases in social welfare in order to alleviate the worst effects of poverty. All those amendments have been ruled out of order, and because of that I propose to call a vote on section 3. I am not satisfied that it is satisfactory that the payments being made or the slight increases being offered to those in poverty are deferred yet again to the end of July. It is totally unsatisfactory that over the years, certainly since I came into this House, gradually these increases have been deferred from April to July.

In relation to the increases we are proposing in the rates, I have proposed that there be an increase of up to £50, that social assistance, for instance, would not be less than £50 a week. I picked that figure, not on an arbitrary basis but on the basis that it is necessary to move to that figure as a step towards full implementation of the recommendations of the Commission on Social Welfare. In a budget submission my party made to the Minister for Finance, we called for a target date for meeting the goals set in the commission's report. We urged that the figures proposed by the commission be met within a two-year period and that it would not be acceptable if the poor in our society remained so much under the breadline in 1992 when this country, we are told, will be open to all the vagaries of the open market, with its effects on the poorest. It is significant that, according to the EC estimate, there are 44 million people on the poverty line and 16 million unemployed in the Community as a whole. We contribute substantially to those figures. Something like one-third of our population has been estimated to be on the poverty line and we have 250,000 people unemployed. These are just the official statistics. We all know there are others who are not included in the unemployment figures because they are on jobsearch or training schemes or have simply emigrated.

I would like to refer to the way young people and those not so young are dealt with by our social welfare system when they are living at home. If a young person aged between 16 and 18 is living at home with parents, at least one of whom is working, there will be no benefit for that young person. If that person or an older person is living at home with parents who are working, they are means tested to the point where in many cases the money they get is a mere pittance. I have referred previously to the case of a 35-year old man living at home with elderly parents whose unemployment assistance consisted of £12 per week. That cannot be acceptable.

I am concerned that the Minister continues to attempt to undermine the figures, demonstrating the levels of poverty in our society. I am concerned that the dates for the payment of the increases being given are again deferred to the end of July. I am also concerned that the amounts being allocated to those who are poor are quite unsatisfactory, while no indication has been given to when the targets set out by the Commission on Social Welfare will be met.

My first comment relates to the points made by Deputy De Rossa. Whatever about bringing payments forward to April, which I know would involve costs, I see no justification for paying the increases in one set of benefits on 20 July, increases in disability benefit and deserted wife's benefit from 27 July and increases for old age pensioners and widows from 28 July. The reason it is necessary to have three different dates is beyond me. The increases should all be effective from the same date. If taxpayers are to get the benefit of tax changes in April — and we are moving in the direction of improvements in the tax system for workers — I should like to think that welfare recipients would also get their benefits from April. The welfare and tax years should coincide with each other. That is the most effective way of introducing any proposed changes either in social welfare or taxation.

The Minister has made great play of the increases to the long-term unemployed in particular. As Deputy O'Keeffe said, in certain situations those on long-term unemployment assistance will actually receive more than those on unemployment benefit. This brings into question the whole concept of social insurance. I know the option has been given to take the higher rate. It begs the question as to whether social insurance is insurance in the strict sense or merely another form of tax. I will deal with that at greater length when we come to the sections on PRSI. I see no justification for paying two different rates to people who are unemployed, for always paying somebody who never had the chance of a job and, therefore, never had the possibility of paying PRSI, a lower rate than some who did have that opportunity. It is to move away from that distinction between the two categories.

The ESRI in their report for the Combat Poverty Agency highlighted the dire poverty which exists. They took three different sets of income against which to measure poverty. The overwhelming cause of poverty is the huge level of unemployment. The greatest level of poverty is being suffered by the families of the unemployed. The most effective way to bring up the rates for families is not by increasing the recipients' rates but by, perhaps, leaving them static for the moment and trying to bring up the rate of benefit for the spouse. The spouse of an unemployed person or somebody on disability benefit receives about £28 per week. I tabled Dáil Questions recently asking what it would cost to bring that figure up to, say, £42 per week, which would be a huge increase for a family. It is the only way of ending the anomaly between single people and married people with families. The cost would not be by any means prohibitive. For the unemployed it would be approximately £58 million in a full year, but since the increases are not coming into effect until well into the year, the figure would be about half that. This is less than the amount given in increases to the long-term unemployed and the other categories included. It is the most effective way of helping families who are dependent on social welfare.

I am pleased that the Minister is moving towards further rationalisation of the child dependant allowances. The number of allowances has been reduced from 36 to 12, but there is still a long way to go. My view is that we need two rates, one for younger children to the age of ten and a slightly higher rate for children over that age, whose requirements in terms of school uniforms and so on are obviously more expensive. I see no reason for the Minister not moving further along this road in the next year. He could have done it in this budget. It would mean some loss for some families but overall it would simplify the social welfare code, make people aware of their exact entitlements and help them to avail of them. Obviously we would like to move away from the system whereby welfare is calculated to a large extent on the number of children but that will not be possible.

Many people make the point that income is not calculated on the number of children in a family, that the worker receives a salary for the job and is expected to live on that amount. We would all like to think that eventually our welfare allowances will be so reasonable that it will not be necessary to take into account the number of children in a family, that a couple or a single person will be paid a certain rate. However, our financial circumstances are such that we cannot in the short or medium-term move along that road. The best we can do is to rationalise the number of payments in respect of children and, in particular, to pay a higher rate in respect of the older children whose needs and demands are greater than younger children. Families on social welfare who have teenage children find it very difficult to cope.

The Minister told us that the amount of unemployment benefit paid in respect of a husband, a wife and three children was £124.30. The point to make about that benefit, which includes PRSI, is that many of those who pay PRSI do not qualify for a number of reasons. Those who pay PRSI do not have any guarantee that they will receive a payment in addition to the flat rate benefit. It will depend on the level of earnings and the net take-home pay of the individual.

Benefit under the PRSI system has been whittled down from 30 per cent of earnings to about 12 per cent and that represents a bad investment for any worker. It would be better if it was integrated into the flat rate benefit. If it is contemplated reducing that benefit further, we should give workers the option of investing the amount they pay in PRSI in savings certificates because they would get a better return when unemployed. In effect, PRSI amounts to additional taxation on the PAYE sector. It is worth remembering that benefit under that system is not paid for the first five weeks with the result that a huge proportion of workers do not receive any benefit.

The Minister has told us that there has been an increase of 3 per cent, 5 per cent and 11 per cent in benefits but that does not amount to very much. It would represent a good increase if the percentages related to a figure of £20,000 but those percentage increases related to figures of £40 or £50 and do not amount to much. We must bear in mind that most of those who receive the increase have to pay more in rent and the usual increases in the cost of food. One cannot claim that they are better off as a result of those increases. I do not see how anybody can claim that a person in receipt of social welfare benefit will be a lot better off if he or she receives an increase of £1.20 or £1.40 per week.

We all welcome the increase in the benefit paid to the long-term unemployed but it is still far short for that recommended by the commission. Had the recommendations of the commission been introduced on a phased basis over five years we would have made progress. Such a formula has been accepted in wage agreements. At the rate we are going I do not think we will reach the figure recommended by the commission. Inflation and other hidden costs are seldom taken into account with the result that we will always have people living below the poverty line.

I agree with the sentiments expressed by Deputy De Rossa about the system. Last year I tabled 50 amendments to the Social Welfare Bill but I discovered to my horror that they were ruled out of order because they involved a charge on the State. That brought home to me the fact that we do not have any way to amend sections which are deemed to be financial sections. Standing Orders should be changed to give us an opportunity to amend such sections. We are forced into the position that while we may agree with certain aspects of a section we must vote against it in order to lodge a protest against the system. Procedurally that is not correct but we do not have any option if we are to voice our objections on behalf of the under-privileged. We will be opposing the section on the basis that the increases are below the recommendation of the commission.

A huge proportion of those who emigrated — 32,000 last year — left because they did not see any future here. They were disgusted with the system. In my constituency I met young people who, having been means tested, were told that they were entitled to the huge sum of £15 or £10 per week. In one case a young person was awarded 50p per week and he had to travel five miles to collect it. That demoralises our young people who have spent years at school and reached a high standard of education. They are forced to sign on at employment exchanges because they cannot find employment. If their mothers or fathers are employed they suffer in that they receive £10 unemployment benefit. It is an insult to hand a young person £10 and expect him or her to get by for one week. There is no incentive for our young people to stay around to see if they can find employment. The Minister should have another look at the system of means testing. That is a sore point with young people.

I agree with Deputies O'Keeffe, Bell and De Rossa that the provision of jobs is the best approach. That is the Government's objective in their economic programme. As Deputies will be aware, last year was the first year there was an increase in the number recorded at work and those who compile such statistics expect that there will be a further increase this year. The Government are concentrating on the provision of jobs but in the meantime we have many people who depend on the payments we make through the social welfare system. I accept what Deputy O'Keeffe has said about avoiding any disincentives to employment but that involves a greater debate and a look at the PRSI system as a whole. For instance, employers are anxious to have their level of contribution reduced or abolished. Our rates of contribution are, generally, lower than those of our EC partners. In the one case where they are slightly higher, the employer has to pay on the total income. That does not apply here. I would, of course, be interested in anything that will remove disincentives while not upsetting or reducing employee's benefits.

Deputy O'Keeffe and others mentioned that since we increased unemployment assistance for the long-term unemployed it is now, as a basic rate, ahead of unemployment benefit. This was a choice we had to make. There was a certain amount of money available and we had to decide if we were going to bring up long-term unemployment assistance to £47. Short-term unemployment benefit is higher than short-term unemployment assistance. It is only when comparing short-term unemployment benefit with long-term unemployment assistance that the assistance is higher than the benefit, but even here there is a potential difference of £18.50 a week in pay related benefit which applies to unemployment benefit. I recognise the point made by Deputy Bell that not everybody may get pay related benefit, but the average is over £12 a week in any event. That is a fair indicator of what happens with that scheme. The commission suggested that that should be abolished and incorporated in the basic benefit to maintain the differential between benefit and assistance but these are all things which will have to be looked at further in the future.

Deputy De Rossa said the improvements generally were marginal and was concerned that I was attempting to undermine the figures of the ESRI. I recognise the value of the ESRI figures but the survey done by the ESRI was in 1986 and beginning of 1987, so their figures are now fairly old. That is not to take from the trends they showed because such trends went back over a number of years and indicated particular things which I will come back to in a moment. What I want to point out is that the increases last year and this year were made since those figures were published and must be taken into account when talking about the extent of the poverty, the size of benefits and payments made.

I was on a radio programme recently. I am sorry it was a recorded programme because the part I am going to refer to was cut out. The gentleman questioning me asked me if there were thousands of families living on less than £50 a week. Let us get our facts straight. There are no families getting less than £50 a week. With these increases the basic personal rate is £47 a week and after that there are other increases. The people who were identified by the ESRI as the people in greatest need, the long-term unemployed with families, are the group who have received priority from the Government.

In that connection a family with five children were on £107.90 a week pre-July 1988 and will be on £127 a week post-July 1989, an increase of £20.65 a week and they will have another £1.55 increase from child benefit on top of that. This increase was aimed at helping larger families generally, particularly the larger families of the unemployed. It is in that context that I want to talk about the ESRI figures. These increases have been given since those ESRI figures were garnered.

Let us take a look at some of the other figures. A special scheme was brought in for widowers. A widower with five children will get an increase to £40.30 per week, and allowing for inflation, the real increase there is £35.90. A married couple with five children on long-term unemployment assistance will get an increase of £19.10 which in real terms, allowing for inflation, is an increase of £12.70 per week. I mention those figures to emphasise the fact that the increases in that period are substantial and contribute substantially to tackling the problems in our society today. We have greatly improved benefits especially for the people who were identified as in most need by the ESRI report.

Obviously the rural unemployed have done a little bit better in that period because we have brought them level with the unemployed rate generally. Given the economic difficulties at the moment, especially last year and this year, that is a very substantial step in the direction suggested by the Commission on Social Welfare.

A number of amendments have been ruled out of order because they have financial implications. There is no opportunity to discuss that aspect now, but every Deputy had an opportunity to discuss and vote on the financial note in the budget debate. That is really where the extra finance comes in, and that is where the opportunity to debate those extra financial provisions arise.

Deputy Harney talked about the different rates. The main reason for the two different rates is that one is paying a back week and the other is paying from that week forward. In regard to the question of bringing the date forward to April, as Deputies know, the previous Coalition Government, just before they left office, proposed a November date. At very considerable cost, the incoming Government brought that date back to July and have maintained it. Deputy De Rossa proposed and Deputy Harney proposed bringing the date back. The cost of paying the increases from April would be £37 million in 1989. I think Deputies will recognise that we are trying to achieve particular priorities in the payments system, bringing certain people up to the same level as other people or whatever, especially when those people are at low levels. That is what we gave priority to and that is where the money has been spent this year. Obviously the cost of any of those steps we have taken would be much greater for the whole year.

Deputy Harney talked about the need to rationalise the rates further. There has been a very substantial rationalisation in the rates and that rationalisation always has been upwards and at a cost. If I remember rightly, the commission suggested that we rationalise some of the rates downwards and get to a minimum of £10 per child per week; we have now done that. I would like people to at least recognise that that has been achieved, without reducing the rates for any other children. It has been achieved by rationalising the rate upwards.

As Deputies will be aware, some of the rates such as those for widows and deserted wives in particular are higher rates. We have allowed those higher rates to remain at their present level and we have also applied the 3 per cent increase to those rates but to bring all the rates up to that level would be particularly expensive and would, needless to say, bring in a lot of other implications. I think we have gone a good way in improving the position in regard to rationalisation.

Some comments were made about the PRSI system generally and perhaps they are more appropriate to the later sections of the Bill. In relation to this section which deals with insurance contributions, young people are included in unemployment benefit if they are over 16 years of age. It is with the unemployment assistance — and I am sure Deputy Bell is aware of that — that the problems arise. Once these people get work, if they are over 16 years of age they are included in the system.

These were some of the main comments made by Deputies on this section. I understand from what has been said that The Workers' Party and the Labour Party plan to vote against the section. I regret this because I think a great deal has been achieved this year and that that will be recognised on the ground. When the increases come into being they will be recognised as substantial increases. I know from my own communications and contacts, from meeting people fairly regularly, that it is recognised that there has been a substantial increase, especially for those on lower payments. There is widespread welcome within the community for the increases that are being given in this Bill. Naturally, people will be very anxious to see this Bill passed and to see the increases come into law. Consequently, I welcome the support of those Deputies in the House who support these increases and who recognise that they are needed. They are substantial and will do a great deal to redress the situation that exists at present.

I am putting the question, "That section 3 stand part of the Bill." I think the Question is carried.

Will the Deputies who claim a division please rise in their places?

Deputies Mac Giolla, De Rossa, McCartan and Kemmy rose.

As fewer than ten members have risen in their places I declare the question carried and the names of the Deputies who claimed a division will be recorded in the Journal of the proceedings.

Question declared carried.
SECTION 4.
Amendments Nos. 6 to 9, inclusive, not moved.
Question proposed: "That section 4 stand part of the Bill."

This is the section dealing with new rates of social assistance payments. We discussed the increases in general terms on the first sections. What I had to say on section 3 applies with great force to this section because those in receipt of social payments, especially those on long-term unemployment assistance, generally are the people in receipt of the lowest level of payments.

Subsection (1) provides for increases in the rates of social assistance. This subsection, in conjunction with section 11, also provides for the abolition of the lower rate of unemployment assistance. Therefore, in many ways this is an historic section in that it provides for the removal of the lower rural rate of unemployment assistance, a differential that has existed since 1934. We are now removing that differential so that, henceforth those in receipt of unemployment assistance, whether in city areas or areas hitherto defined as rural—areas such as parts of Tallaght, parts of Cork, parts of Blanchardstown and some major towns—will now receive the same rate of unemployment assistance as is applicable to the remainder of the country. Henceforth there will be one long-term rate and one short-term rate of unemployment assistance; there will be no differential obtaining.

The increases provided for in subsection (1) are 12 per cent in the case of personal rates of long-term unemployment assistance and single woman's allowance, over 7.5 per cent in the personal rates of short-term unemployment assistance; increases ranging from 3 per cent to 6 per cent in the adult dependant rates payable to recipients of unemployment assistance and increases ranging from 3 per cent to 25 per cent to child dependants in the case of recipients of unemployment assistance. This is in part what I referred to when I spoke about averaging up the child dependant rates, the increases in some instances being quite substantial. For example, in the case of personal rates of supplementary welfare allowance, there is an increase of over 11 per cent, a 6 per cent increase in the adult dependant rate of supplementary welfare allowance and increases ranging between 5 per cent and 25 per cent for child dependants payable to recipients of supplementary welfare allowance. Therefore, it will be seen there are major increases for those in receipt of supplementary welfare allowance. As we all know, it is those on long-term unemployment assistance and supplementary welfare allowance who were the two groups most clearly identified in the studies indicating those at greatest risk in our society.

The weekly personal adult and child dependant rates of all other social assistance beneficiaries are being increased by the standard 3 per cent. The new rates of payments are set out in Schedule B of the Bill. These increases are in line with the Government commitment to maintaining the overall value of social welfare benefits and, within available resources, to provide greater increases for those receiving the lowest payments. For example, the basic personal rate of unemployment assistance goes up from £42 to £47 per week, an increase of £5, whereas the payment to a person with an adult dependant goes up by £6 to £76 per week.

A married couple on long-term urban unemployment assistance with five children will have their payment increased to £127 per week. Henceforth rural recipients of long-term unemployment assist-ance—that is a married couple with five children—will receive a similar amount, £127 per week.

The single woman's allowance is being increased by £5 per week, from £42 to £47 per week and the non-contributory widow's and deserted wife's basic allowance is being increased to £49 per week. I have already mentioned the streamlining of the child dependant allowances. The different rates of child and adult dependant allowance increases payable under the various social assistance schemes are being further streamlined. The number of different rates of child dependant allowance is being reduced from ten to five. In addition, a minimum child dependant allowance of £10 per week is being introduced. This, of course, has a very significant effect in the case of unemployment assistance because the rates previously were considerably lower. There are currently four different rates of adult dependant increases payable under the unemployment assistance scheme. This will be reduced to two rates from July. In the past two years the number of different rates of adult dependant increases under the various social insurance and assistance schemes will have been reduced from ten to six.

In this section I am providing also three new social assistance schemes: the pre-retirement allowance scheme which will be payable at the same rate as long-term unemployment assistance; the widower's non-contributory pension and deserted husband's allowance schemes, both of which will be payable at the same rate as the widow's non-contributory pension. The maximum personal and adult and child dependant rates for these payments are also specified in Schedule B of the Bill.

The numbers who will benefit under this section are estimated at 350,000 recipients weekly with 330,000 dependants, a total of 680,000 people. If we take this figure together with those who will benefit from insurance benefit increases, a total of 735,090 recipients with 609,000 dependants will gain, an estimated total of 1.3 million will benefit under these two sections of the Bill. These are very important improvements. This is the second year in which such improvements have been made in this area, not only have the basic rates been increased but we have gone further and introduced three new social assistance schemes.

With regard to the widower's non-contributory pension and the deserted husband's allowance scheme, this is the first time that such schemes have existed and we are bringing into being these two new schemes together with the pre-retirement allowance scheme. Some Deputies will wonder about the pre-retirement allowance scheme because we had previously made arrangements whereby we could make special provisions for people over the age of 60 years, in particular. The difference is that we are providing a scheme which will be a much more satisfactory and comprehensive arrangement for those who will come into the pre-retirement category. I commend the section to the House.

I do not oppose the section but there are a number of points that I would draw to the Minister's attention. I ask the Minister to bear these points in mind in any future reform of the social welfare system. They relate to assistance payments. First, a more determined effort will have to be made to reach the poorest of the poor, in particular, those in receipt of supplementary welfare allowances and where the personal rate or the child and spouse dependant rate is applicable.

The most appalling statistic in the Combat Poverty ESRI report was the fact that a significant number of people were not even in receipt of the lowest payment available to them. I urge the Minister, from the point of view of reaching out to the poorest of the poor, that the first thing that must be done is to ensure that there is full uptake by those who are in greatest need and every effort be made to reach those who for one reason or another are not receiving their just basic minimum entitlements. As far as resources permit, priority should be given to increasing those basic minimum payments. I agree with the point made by Deputy Harney that there should be a concentration on the payment to the spouse, which is very low indeed. I urge that those at the bottom of the pile should receive priority in any future changes.

Second, I wish to refer to the benefit and privilege provision in the assessment of unemployment assistance. This arises when somebody is living in a family home, whether with their parents, cousin or brother—and this was discussed in detail by the Commission on Social Welfare. They concluded that for those over the age of 25 years it was altogether wrong that there should be an assessment against their unemployment assistance by reason of the fact that they were living at home. As you know, a Cheann Comhairle, the procedure is that the very low level of unemployment assistance can be reduced further, and in some cases entirely eliminated because of the fact the applicant is residing at home. That might make some sense in the case of a young person but it certainly makes no sense whatever for an adult. I have seen cases where lonely bachelors of 47 to 50 years of age are left with either a reduced rate of unemployment assistance or nothing at all merely because they are living with a relative. I urge the Minister very strongly to consider eliminating that provision in so far as it relates to those over the age of 25 years.

Third, I wish to refer to the assessment of means for old age and blind pensions. One of the greatest anomalies is that pensioners are being assessed with means they do not have. This is altogether unfair. It arises because of the small return they get on their bank deposits. Despite the fact that they might be getting 3 per cent net on their few pounds funeral money in the bank, they are being assessed as in receipt of interest at the artificial rate of 10 per cent. That is altogether wrong and is very poor treatment of the senior citizens of this State. I urge that a change be made and that the assessment of means be made of the person's actual income. Surely it is not an outrageous proposal that people are entitled to be assessed on what they are getting and not be assessed at a notional artificial rate?

Fourth, I wish to refer to supplementary welfare. I think it was Deputy De Rossa who referred to poverty among the low paid. I have an amendment down which provides for access by the low paid to supplementary welfare, particularly for rent supplements but I have been told by the Ceann Comhairle that as this would involve a charge on the Exchequer the amendment falls.

I take the opportunity on this section to urge the Minister to give serious consideration to allowing access to the social welfare system to those on low pay. If we are to provide a bridge for those on unemployment assistance and jobs, the kind of disincentives that exist have to be broken down and we have to build up the plans so that people can be encouraged to take up jobs. Those jobs may not in all cases be well paid but we should certainly remove any obstacles that exist to having them taken up, so that at least people would have the dignity of work as opposed to spending years on the dole.

A major disincentive is the fact that those who are in receipt of rent supplement while on the dole cannot get the same rent supplement when they take up low paid employment, even though the net amount they will receive from that employment will be no greater than they will get on the dole. If we were actively trying to stop people coming off the dole, that is surely a way of doing it. My approach to this Bill is that one of the main things that needs to be done is to isolate in the social welfare system any disincentive to employment. The one I have outlined is a particular disincentive and I would urge the Minister to take that on board.

This section provides for increases. I do not oppose the increases. I wish we were in a position to vote more substantial increases. I would seriously ask the Minister to consider the four points I made—reaching to the poorest of the poor, removing the ridiculous anomaly which is assessing pensioners with more income than they are actually getting, removing the anomaly for people over the age of 25 where their assistance is reduced because of living with a relative and, lastly, providing access to the social welfare system for those on low pay.

A number of the points I made in relation to the last section apply here, for instance, the fact that the rate of payment for the spouse of those on unemployment assistance, or on assistance generally is still so low that it places families in very difficult circumstances and puts many of them into poverty. The same applies in relation to the number of payments for children. As I said earlier, we need just two rates. I accept what the Minister said, that that would mean bringing the higher rates down somewhat, but if we are to simplify the system we have to move in that direction as soon as possible.

This is as good a time as any to welcome the decision of the Minister to end the distinction between the urban and rural rates of unemployment assistance. This distinction dated back to 1934. It was ludicrous in this day and age because it meant that in many parts of the country people living in the same circumstances, in the same estates, were getting different rates of payment. It was time that distinction was ended.

Deputy O'Keeffe referred to the means testing of persons for old age non-contributory pensions. I agree with what he said. The figure that is taken in relation to the remuneration on savings and bank accounts is wrong and is very unfair to elderly people. As a result many elderly people keep their savings under the mattress and we know the kinds of problems that leads to in terms of crime. They are afraid that if they place their small savings in a bank or building society they will lose a lot of their entitlements. Many elderly people save small amounts of money, perhaps £1,000 or £1,500 to pay for their funerals. I first came across this when dealing with elderly constituents after I had been elected as a representative to the Seanad. I was surprised at the need they had and the pride they had in providing for their funerals. I thought it was very sad that that was the case but I say that even the poorest of the poor of elderly people will try to put some money aside to pay for a decent burial. Given that that is the case we need to be a bit more flexible when it comes to the non-contributory old age pension, which is very low anyway. Everybody in the House would agree that generally speaking the elderly do not defraud or abuse the social welfare code. By and large they are the group who are the least likely to try to get something to which they are not entitled.

I put down an amendment in relation to means testing and it will probably come up later. The amendment was ruled out of order on the basis that it would be a charge on the Exchequer. My purpose in putting it down was to save money and to end the plethora of schemes in existence and redeploy some of the people involved in means testing to other sections of the welfare system. If we were to introduce a single means test on the basis of self assessment it would save a huge sum and not cost any money. I will deal with that at a later stage. I was very disappointed that my amendment was ruled out or order for what I would regard as a phoney and wrong reason.

We need to move along the lines I suggest, particularly when it comes to establishing a person's financial means for the purpose of paying social assistance. When we realise that almost 250,000 means tests are carried out each year and that 235 officers of the Department are involved in this task, we can see that it is in all our interests and particularly in the interests of the Department of Social Welfare to simplify the process of establishing a claimant's means, as quickly as possible.

Reference was made in this section to increases in the supplementary welfare allowance. I support the operation of a supplementary welfare system as it is important to have a fire brigade system that deals on an emergency basis with those who are in great need and that essentially is what the supplementary welfare system does. However, the system, because it is arbitrary and left very much to the discretion of the local community welfare officers, is implemented on a different basis in different parts of the country. In the Dublin area some community welfare officers will not give any payment towards mortgage repayments and so on. Yet in other parts of the country—which is the correct approach—the officer decides to examine the person's actual circumstances and they do not automatically rule out certain categories of persons simply because of the way they might receive particular weekly payments. That is very important. I know that guidelines are issued by the Department to the community welfare officers. It is important that these guidelines are such that there is not such an arbitrary and different system in place in different health board areas. Although the system is operated by the Department of Health through the health boards, since these are essentially welfare measures, it is important that the Minister for Social Welfare would ensure that the scheme is not so arbitrary as to effectively be meaningless in the Dublin area in particular and in the Eastern Health Board area in general. I would like the Minister's comment on that.

In the section the increases are to come into effect on different dates. I take the point the Minister made in relation to the comments I made on section 3, but I do not accept that they are valid. All the increases, no matter which category of welfare is involved should come into effect on the same day. I know there may be bureaucratic difficulties so far as that is concerned because of the complicated nature of our system, the issuing of books and so on and the different dates that apply to the payment of welfare allowances but it is only fair and just that whatever date is selected apply to all payments. I see no justification whatever, although it may lead to simplification and to less bureaucracy—for having a whole collection of different dates for the application of the increases.

In relation to the allowances paid to deserted wives and prisoners' wives and people in that category there seems to be a very long delay in the processing of these applications. Last week, I paid tribute to the great improvements which have been made in the Department of Social Welfare in recent years. Those comments were well deserved but I believe that in relation to these applications in particular the delays are unnecessarily long. I believe this has something to do with the establishment of means and so on and a person's financial circumstances. That is why a simplification of the means test procedure would go a long way towards expediting these applications. They deserve attention because a long time seems to elapse after an application has been made until a decision is subsequently arrived at. I am aware that in some cases a delay must occur because of the requirements of the scheme concerned but even where that delay exists it is still a long time after the passing of the date in question before a decision is made. We could go a long way to improving that position with a little more efficiency and a simplification of the method of establishing means.

I want to raise two points on the section. The Minister, in introducing this section, was at pains, and from his point of view, rightly so, to tell us about the advances that it makes in terms of increased assistance to recipients. These increases ring very hollow indeed for a certain number of people who find themselves excluded from any benefit by virtue of the interpretation by this section of the assessment of means. By way of background, I should say that I have recently had a case of a person in north Longford living on a smallholding in the ownership of his brother. That person applied for unemployment assistance—he has no other income as the holding is not big enough to provide income for himself and his brother — but he has effectively been ruled out on the grounds of means. The Department has applied section 146 (1) (e) of the 1981 Act and they say that it provides that the means of a person has to take account of the yearly value of any benefit or privilege enjoyed by him; that is fair enough. In practice, the Department take the benefit of the board and lodgings the applicant has, in this case as a guest in his brother's house. Legally, that is all he is. If the Department assessed board and lodgings strictly speaking this person would be entitled to some, if not all, of the entire weekly benefit. In effect, the Department assessed against him, not just a figure for board and lodging, but a notional figure attributing to him a distributive share in the holding. In this case the parents are on the holding plus two sons. In such a case the Department take the entire yearly value of the holding, divide it by four and assess a quarter of the yearly value against the applicant. A quarter of the yearly value far exceeds what could be a reasonable figure for board and lodgings.

In applying that method of assessment the Department effectively exclude the person I am speaking of from unemployment assistance. No doubt he would hear with a rather grim humour and in an ironic sense, the Minister's self praise in telling us about the advance in benefits under this Bill. The Department of Social Welfare are applying a method of assessment which is certainly inappropriate and is probably illegal. I have had correspondence with the Department and they say this is the way it is done and that is that. I would have no objection to a notional figure for board and lodging being assessed against an applicant because it is a yearly benefit under the Act but I strongly object to board and lodgings being translated into a notional distributive share in the holding in question because the applicant has absolutely no legal entitlement, and no moral entitlement, to reside on the holding or to receive any part of its rent or profits. As a result of the interpretation of "the yearly value of any benefit or privilege" by the Department the person in question is deprived of any assistance whatsoever and must now live entirely on the charity of his brother. The alternative is to emigrate because there is no employment in the locality except, perhaps, an odd day here or there but even that is doubtful. I am quite certain that the Minister, whose party had billboards plastered only a couple of years ago with notices indicating their hostility to emigration, would not like to see this legislation interpreted in such a way as to force this unfortunate person to go abroad.

We are now in the position of deciding whether we go to the Ombudsman, who may very well say this is not a question of maladministration, it is a question of legal interpretation of the section, or we have to take law. That would be an intimidating process for a young man with no means to face into a legal battle with the Department of Social Welfare on the correct interpretation and application of section 146 (1) (e) of the Social Welfare (Consolidation) Act, 1981. I would say to the Minister that a serious injustice is being done to applicants against whom the section is being interpreted in the way I have outlined. By all means assess a figure for board and lodgings but do not equate a figure for board and lodgings with a notional distributive share or entitlement in the holding in question.

The second point relates to the rates of increase. I note from the explanatory memorandum that, for example, persons aged 80 years or more and married couples will get an extra £1.60 per week. I have heard it said in County Meath that that increase of £1.60 has been immediately swallowed up by a rent increase of £2 per week which is being imposed on many of these people living in county council houses or cottages. In effect, one arm of the State, the Department of the Environment, are imposing a penury by increasing the rents by £2 per week and undoing what the other arm, through the Minister for Social Welfare, is doing by granting an increase. There is not much point in giving an increase of £1.60 per week if there is going to be a net loss as a result of the activities of another Government Department. I would ask the Minister to have a look at anomalies such as that and not come in here and tell us that there is an increase of £1.60 per week when the result for the unfortunate recipients is a loss of 40p per week.

I will deal first with the points raised by Deputy O'Keeffe. He suggested that we should try to reach the poorest people in any steps we are taking. We have given priority to the lowest paid generally. That has been the policy of these increases. The Deputy is concerned about non-take up where this occurs. I would certainly be concerned about that also. The actual surveyed amounts of non-take up are fairly small except for some schemes such as the family income supplement scheme which is a special case and which we have discussed separately. I accept the point made by Deputy O'Keeffe that we must give priority to the lowest paid. If there are some among the lowest paid who are not taking up the entitlements which are available for them, we must give our attention to that and ensure that they are made aware of the benefits that are available for them. Deputy O'Keeffe also talked about concentrating on the spouse in that context. This point was made also by Deputy Harney. It relates to bringing up the payment in respect of a dependent spouse as one of the principal ways of dealing with poverty. There is a general figure of a factor of 0.5 which is often used by EC countries in relation to a dependent spouse. The commission decided on a factor of 0.6 in their study and used that factor. If we look at the position at present for those on long-term unemployment assistance, we are increasing this payment to £47 per week and the dependent spouse will receive £29 per week, which is just a little over the factor of 0.6. Therefore, in the increase which has been given to the dependent spouse, we have more than maintained the factor the commission proposed. This matter will have to be looked at further in future budgets but it is noteworthy that we have maintained that ratio. In fact, we have more than maintained the ratio, which would represent a sum of £28.20, by giving £29 to the dependent spouse.

Deputy O'Keeffe also referred to rationalising the means test, and I think Deputy Harney also raised this matter. We are looking at and reviewing this means test at present. I recognise the questions which were raised and the difficulties which can arise but no matter what arrangements one makes, once there is a means test there will always be difficulties in assessing means. There will be difficulties for everybody involved, including the staff who will have difficulties in establishing what the means are. I am anxious to make progress on this issue. I think Deputy Harney referred to self-assessment in one of her amendments and as the Deputy knows we have introduced a degree of self-assessment already in relation to unemployment assistance payments. I am currently reviewing the possibility of self-assessment in other areas. Widows pensions and old age pensions are two areas where this might be possible.

Deputy O'Keeffe also raised the question of benefit and privilege. This question was raised by a number of other Deputies, including Deputy Cooney. It is a fairly large question and I will deal with it in a moment. With regard to Deputy Harney's point on the possibility of having a single means test, we are trying to rationalise the means test so far as we can. We have made some progress in this regard and we hope to go further on it.

Deputy Harney also referred to the question of supplementary welfare allowance and the fact that this can vary from health board to health board. We are carrying out an examination of supplementary welfare allowance and this is a major study. As Deputies know, we have done a number of things to rationalise some of the payments within that area. I would refer in particular to the free fuel scheme and the footwear scheme. We are working further on this issue. I accept that there are variations. One of the difficulties is that if you give discretion there will almost inevitably be some variations but needless to say we want to try to keep those within reasonable limits so that they do not vary too much from one place to another. This is all part of the examination of the supplementary welfare allowance scheme which is going on at present. Deputy Harney also talked about bringing all these payments in on the same day. They are all coming in in the same week. I know one is a back week and the other is a forward week but basically the payments are being made for the same week. With regard to delays in the payment of, for example, deserted wife's allowance there are, of course, problems in an area like that but I will certainly look into the question which was raised by Deputy Harney in this respect.

Deputy Cooney spoke about means generally. The question of means came up several times and I should like to point out that in general applicants for social assistance payments who have capital are assessed with a notional income from that capital. Under existing arrangements, in relation to capital alone a married couple could have joint capital of over £53,000 and still qualify for the minimum rate of pension. Under the notional income the percentage rates used vary but the maximum 10 per cent rate of assessment is applied under the old age pension and unemployment assistance schemes to amounts of capital over a certain level. The assessment system is not related to interest actually earned but is based on the determination of a capital value. Under the old age pension scheme a person can, of course, have means and as Deputies will be aware it is £6 per week for a single person or £12 for a couple. The question of any changes in the present means testing arrangements would, of course, be a matter for consideration in a budgetary context because it would have financial implications.

Under the system which is in operation at present a man with a wife and two children with savings of £43,900, can receive the minimum rate of unemployment assistance, a widow on a non-contributory pension with savings of £51,000 can receive the minimum rate and the maximum rate if she has savings of £5,400. The same applies to the deserted wife's allowance where a deserted wife can have £5,400 in savings. Some Deputies, and I think Deputy Harney in particular, spoke about the need to set aside some money for funeral expenses. A certain sum is allowable in relation to this. With regard to the other areas, such as the old age non-contributory pension, a married couple can have almost £6,000, £5,975, and still receive the maximum rate of old age non-contributory pension and can have up to £51,700 and still receive the minimum rate of old age non-contributory pension.

Significant amount of capital can be held by people as capital. A notional value is assessed on this capital and people can still get the minimum rate even if they have substantial amounts of capital. This applies also to supplementary welfare allowance where a man with a wife and two children can have up to £40,000 and still receive the minimum rate of supplementary welfare allowance. There is considerable scope in this regard.

With regard to the calculation of the value of benefit and privilege there are no statutory criteria in relation to this but over the years two distinct formula have evolved which are used in this assessment: the first is that the applicant is residing in a household supported by a farm income and the second is that the applicant is residing with a wage earning family. A combination of both methods is used if there are both wages and a farm income in the household. The method of assessing benefit and privilege for both farming and non-farming families has been set out on several occasions. This method is under review at present and I can assure Deputies they will hear more about this in the future.

With regard to the cost involved, the abolition of benefit and privilege would cost, at a minimum, £14 million in a full year. That is fairly substantial. When it comes to allocating resources, the decision for any Minister for Social Welfare is whether to put that money into something else or to apply it in that area.

How much would it cost to confine it just to those over 25 years of age, as in the proposal?

Possibly somewhere in the region of £7 million to £10 million, but that is only part of the cost, of course.

The question of rents was raised by Deputy Cooney. I shall certainly look into that. An increase in rent is decided on by the appropriate local authorities. Judging by some figures I saw recently, the increases were not anything like the order suggested by the Deputy. Let us take some examples. I give the actual increases for the Dublin area. If the increase on an old age pension was £3, the rent increase came to £1.10. In the case of an old age non-contributory pension in the Dublin area where the increase is £1.40, the rent increase is 20p. For a married couple on old age non-contributory pension, if the social welfare increase is £2.20 the rent increase is 50p. Those ratios would not appear to apply in the case of Dublin Corporation rent increases or a number of other cases which I saw recently.

In the area of long-term unemployment assistance, there is an increase on the personal rate of £5 per week and the rent increase is 50p. For a married couple on long-term unemployment assistance who have four children, if the social welfare payment is £9.50 the rent increase taken by the local authority is £1.30. The Deputy mentioned an increase of £1.60 leading to a loss of £2. I would be very surprised at that, but I will look into the individual case. The cases that have come to my attention would indicate a very much lower rent increase by the local authorities.

I wish to make two further points on this section, both in relation to the assessment of means. In the light of the Minister's reply is there not obviously a clear discrimination as between farm and non-farm families? This arises in the context of how much is assessed against an applicant for unemployment assistance for the privilege of living on the charity of a relative. It is now clear from the Minister's reply that although there is no statutory basis for it, somebody living with a relative who happens to own a farm can have a much greater assessment made against him or her than if that same relative were living on a salary in a town or city. That is most unfair and is a major discrimination against the rural community. To the applicant himself or herself, it makes no difference. That person is not entitled to nor does he or she receive, any portion either of the salary in the case of the relative living in the town or city or of the farm income in the rural household. It is quite outrageous that merely because such people are living in a farmhouse they may find a notional figure put against them that, effectively, will eliminate their entitlement to unemployment assistance, even though they have not a bob to their names. The Minister should, as the Commission on Social Welfare did, go along the road of eliminating that discrimination against rural families.

The second point I wish to raise is the question of means testing. The Minister would be doing much for the Department of Social Welfare if he were prepared to accept the principle of a single means test at this stage. That would open up many possibilities from the point of view of graduated entitlement to various benefits but without that single means test that kind of approach cannot be adopted. At the moment, we have a plethora of different means tests within social welfare and outside it. We have many other means tests. I am thinking about the health board means tests, of which there is a number. These apply to medical card applicants, disabled person's maintenance and others. In other areas there are further means tests. Local authorities have a means test from the point of view of differential rents. The Department of Education, through the local authorities, have a means test for educational grants.

Deputy Harney and I raised this matter and we are ad idem on what the end result should be, although our approach to it is somewhat different. Essentially, it is to remove the plethora of means tests within social welfare and other areas and to establish a single certificate of eligibility. Based on that, a person would be entitled to the appropriate entitlements, from the social welfare services or otherwise. There would be huge savings in administration but, more important, because one would be able to use such an approach to bridge the gap for those on the dole queue to paid employment, the single means test could be the greatest contribution from the Minister for Social Welfare to job creation.

At the moment, there are people in receipt of social welfare benefits who cannot take a job because of the loss of non-cash benefits. They may lose their medical cards and, in addition, their council rents may go up and other benefits to which they are entitled while on the dole are lost. Surely the Minister must recognise that to be a major barrier to employment. If we want to use every effort to create jobs, the Minister must ensure that his contribution is made. I believe very strongly that this is perhaps the greatest single contribution that could come from him. I urge him to give very sympathetic consideration to the establishment of a system which will involve a single means test and, following that, graduated entitlement can be given, irrespective or whether a person is on the dole or in employment. We will then not have the ludicrous situation where someone on a low paid job will lose out as a consequence. We will have established a system where his entitlement can remain even if his salary increases to the limit of the graduation.

I want to mention another category, children who are assessed on the basis of their parents' means. The Department of Social Welfare apparently consider those aged between 18 and 25 to be still in the care of their parents and to assess them on the means of the parents. At a time when we have introduced legislation to reduce the age of majority from 21 to 18 years of age and when for all legal purposes a person is no longer a minor after reaching the age of 18, it is unreasonable that the Department of Social Welfare should assess an applicant in that age group on the basis of the parents' income. For the purposes of claiming social welfare and unemployment assistance generally, a young person pretends to move away from home—and in many cases leaves the home—to claim these allowances. Deputy Bell referred to this on Second Stage and said we are encouraging young people to leave home and to move into inadequate living conditions for the purpose of getting an income they can call their own.

It is unreasonable to expect parents to keep their children until they are 25 years of age when there is so much unemployment. It is also unfair and unjust to treat people of 18 to 25 years as dependent on their parents and to treat them as children. It is not possible for many of them to get employment and, therefore, they cannot qualify on their own pay-related social insurance. I remember raising this matter at Question Time and the Minister said it would cost about £14 million per annum to assess young people in this category on an independent basis. Regardless of that, there is no justification for the Department of Social Welfare to arbitrarily say that a person under the age of 25 will be assessed on the basis of his parents' means.

The child dependant allowance should also be paid to children in full-time education and depending on their parents. The present position is the worst of all worlds when people are not in education or do not have a job where they can qualify for PRSI. As Deputy Bell rightly said, it has forced many young people to leave home and to live in totally unsuitable conditions. Constituents of mine in this category tell of me of people who invent addresses and I am sure that happens as it is probably impossible to prove where somebody lives. I should like the Minister to tell the House how much a proposal of this kind would cost and to give a commitment in this regard. It is not possible for us to table an amendment because it would be a charge on the Exchequer. However, this reform is long overdue.

I agree with many of the comments made by other Members including those of the Minister's party because they receive the same complaints as I do. This is one of the biggest bones of contention among young people and it is encouraging them to emigrate. They feel very sore at the community, Dáil Éireann and the whole administration. As I said before, the system forces people out of their own homes to take up accommodation in broken down flats at an exorbitant rent. Five or six people can be living in one house which is rented to them by a speculator. The young people are removed from parental control. It is degrading to have to live in these conditions and I cannot understand why they should have to go to an employment exchange to receive £10 or £15 although I believe the average is £12. They certainly cannot afford to give anything up at home from a sum of £12 per week. That amount would hardly take an 18 year old to a disco and it is one the greatest injustices perpetrated on young boys and girls.

These young people have spent years in school and have achieved a high academic level within the educational system. Because we cannot provide them with full-time employment they leave home and go into a miserable flat or caravan in order to receive full unemployment assistance. We must find a way to overcome the problem because a father cannot possibly afford to clothe, feed and provide the basic requirements for a young person and provide money for entertainment. An 18 year old cannot watch television for seven nights per week. Indeed, a 20 year old may be considering getting married and we are leaving them with no hope. In some cases it leads them into bad company with the resultant problems.

I am pleased, the Minister recognised the anomaly in the urban-rural rates. He said they had been in operation since 1934 and that many Governments have come and gone since then. Perhaps it made some sense in 1934 when people living in the country could live more cheaply but that is no longer the case. Even people who have cattle no longer churn as it is cheaper to buy butter and other essentials in the supermarket. They do not even grow vegetables at present. Outside the urban area of Dundalk and the borough boundary of Drogheda there are two separate rates so I see the problems at first-hand in my own constituency. I have received correspondence and calls from all over the country in relation to this anomaly which I am glad has now been eliminated. There are many more anomalies but at least this is a step in the right direction.

Deputy O'Keeffe raised the question of benefit in privilege and considered that the system discriminated against those living in rural areas, for example, on farms. It is widely recognised that there is a difficulty in assessing farm income, as against assessing income which is fairly well known, set out and established. There is a difference but this is due to the fact that the running of a farm is a business and consequently it is necessary to assess the income which arises from the activities on the farm. Therefore it would be difficult to get away from having two different kinds of assessment. I can assure the Deputy that there is no intention to discriminate in any way against those living in rural areas. Very often the opposite is the case. As the Deputy is aware from his own experience, as a result of it being so difficult to assess farm income a person could receive benefits which a person in an urban area whose income is very well known would not receive. I think this is a problem that will be with us for all time to come because of the difficulty of assessing farm or other business income.

Deputy O'Keeffe also referred to the means testing system. The Department of Social Welfare are moving towards a single means testing system. There may be cases where allowances are paid which would not apply for other people but these could be assessed in a single means test. The Department of Social Welfare are moving in that direction. I cannot speak for other Departments but I can say in relation to differential rents that as far as local authorities are concerned they very frequently use the findings of our assessments. For example, if we carry out an assessment in respect of an application for unemployment assistance they will accept the findings and use them for their own purposes. The same applies in respect of medical cards. There is co-operation and I think this is what the Deputy is referring to.

Deputy O'Keeffe also raised the question of those in receipt of unemployment assistance not taking up jobs because they may lose a medical card or a fuel allowance as a result. This is something which militates against me as Minister for Social Welfare in getting increases for people in receipt of unemployment benefits. It is an argument used against me all of the time. The argument is that the more we give the more difficult it is to get people to go back to work. Nevertheless I would argue and I know the Deputy would argue that certain basic levels should be provided. We would aim to meet those basic living requirements. That is our approach and philosophy and it is one which I think is supported on all sides of the House, but it does leave us with some difficulties. Obviously, there should be an adequate wage for a job and a balance needs to be struck in this area.

We have tried to address this problem in two ways. First of all, we made available a family income supplement which will be reviewed very shortly. This supplement is paid to people on low incomes at work so as to enable them get over this problem which has been recognised by Deputy O'Keeffe. Secondly, a new scheme was introduced in this year's budget, the child-related tax exemption scheme, which will result in a benefit for a family with five children of £13 per week. The aim is to make it worthwhile to be at work. A difficulty arises as regards the number of children. We are giving a minimum of £10 per child to those in receipt of unemployment payments but of course this will not be given to someone at work. We have taken certain steps to tackle this problem, such as making available the family income supplement to those in receipt of low wages and introducing the child-related tax exemption scheme in this year's budget.

Deputy Harney also referred to the abolition of benefit and privilege and the figure she quoted, £14 million, is the right one at the minimum. That would be the sum required to abolish benefit and privilege in respect of those on reduced rates at present. Others would be brought in, not included at present, and this would result in an additional cost above the figure of £14 million. It would be very difficult to calculate the figure but going on the number of people on reduced rates at present the figure would be just over £14 million. If we were to implement this we would have to make some kind of estimate as to how many extra people would benefit as a result. A substantial additional cost would be involved. I referred to this earlier when Deputy Harney was not present in the House— perhaps she was having a well earned cup of tea, which we could all use.

I was on the telephone.

We had a discussion on this point at that stage. The question of assessing 18 to 25 year olds on their parents' income was also raised. In response let my say that the household income applies regardless of whether a person is over or under 25 years of age or living on a farm. In the case of a farming household, the household would be in receipt of the farm income. Therefore they are assessed on the household income.

Deputy Bell also referred to the question of benefit and privilege and talked about people being in receipt of £12 per week as a result. Funnily enough, the commission recommended a minimum of £10 per week. At the end of the day I suppose it is a question of more money. I made the point earlier in reply to Deputy Harney that any Minister for Social Welfare has to decide what the priorities should be. Up until now certain other areas have taken priority in respect of the £10 million or £14 million that was available. We are examining this matter at present and it is one for further consideration in the future.

Deputy Bell welcomed the removal of the anomaly in urban and rural rates and I must say that I am very heartened by the fact that Deputies on all sides of the House have welcomed this step. I welcome their support for this very important measure. It means there is the same payment whether it is in a rural area or an urban area even bearing in mind all the anomalies which existed, and they were extraordinary. I welcome the support Members on all sides of the House have given to the removal of the low rural rate and the raising of the rates uniformly all over the country to one single unemployment assistance rate broken into two parts, long term and short term.

The Minister may be missing the point we raised in relation to the single means test. There should be a single means test. It would save a great deal of money in administration. It should be based on net income. The very point the Minister raised, that there is an argument against him for the time he will be in Government seeking better assistance rates and more support for social welfare, is taken care of under a single means test based on net income which would then permit a graduated entitlement to various allowances and benefits. It would make no difference then to the person whether he or she was on social welfare, wages or a salary. Whatever is the net figure in the salary or whatever amount the person is getting from social welfare would fix that person at the position on the single means test of entitlement to various State benefits. That is why I urge the Minister to give very serious consideration to the proposal. It could provide one of the greatest incentives to job creation.

The second point relates to the benefit and privilege provision. Again, the Minister has missed the point. This was covered by the Commission on Social Welfare who clearly point out that in the application of benefit and privilege a distinction is made between non-farm families and farm families. Having looked at this distinction, I am convinced it amounts to discrimination against farm families. Why? When you are talking about non-farm families the method of assessment puts a comparative notional value on board and lodgings in households with different levels of net income and family size, whereas in relation to a farm the procedure is to assess the net yearly income from the farm and divide it between the members of the household, even though the person applying for unemployment assistance might not be entitled to a shilling of that farm income.

The commission further mentioned that in the case of families engaged in farming, a notable feature of the method used is that a nil assessment cannot occur in any case, and the amounts assessed can be fairly substantial even at very low levels of income. That highlights the point. The commission mentioned that, particularly where the family farm income ranges below £90 a week, the applicant can end up with a figure which clearly would be far less than he would get in the town. The commission recommended that there should be a common method of assessment between farm and non-farm households. That seems to be the obvious way forward to remove this discrimination.

The problem is not the amount of the farm income. I know that is difficult to assess. That is done commonly nowadays in relation to small farmer's assistance etc., but a proportion of that farm income is assessed to the applicant who is not entitled to any part of it, whereas in a non-farm family a different approach is followed. There should be a common approach and this discrimination should be removed. That seems to be the obvious solution.

I have said there is a difficulty in assessing income in farming. I take the Deputy's point that the kind of assessment is somewhat more restrictive in the farm situation. We are looking at that in the context of our review of the means assessment and I assure the Deputy we will bear his comments in mind in that review.

Question put and agreed to.
SECTION 5.
Question proposed: "That section 5 stand part of the Bill."

I welcome the section. I should declare interest. I am father of a large family and I suppose in the light of other controversies one should be very careful about the comments one makes where there is a possible, albeit very minor, personal benefit.

I want to raise two matters with the Minister. First, while the Minister and his party have made great play of the fact that, at the very minimum, allowances and benefits have kept pace with inflation, child benefit has not. There has been no increase in child benefit since this Government came to office. I think the last increase in child benefit was in 1986. There has not been an increase even to keep pace with inflation.

The payment of child benefit is a vehicle which if resources permit, should be used more and more. Its advantage is that it is not means tested. In other countries their population is falling and they are now, at a very late stage, trying to increase their child benefit and children's allowances. All the demographic trends clearly indicate a decline in the fertility rate here. There is a fall projected at around 16 per cent in child population under 15 over the next ten years. It is important that Government take note of that and, rather than leaving matters too late as has happened in Germany, France and other countries of the western world, the need for at least updating child benefit must be accepted by this Government. I am not saying the amount of child benefit has a major bearing here, but our whole approach to child support is important. The fact that this is the one area of social welfare where there has not been an increase, even to keep pace with inflation, is an indication that this trend has been ignored.

The other point I want to make on this section is that it would be helpful if the Minister in this House now made a very clear statement as to the future of child benefit. We all recall the confusion that arose from the half-baked proposal of his colleague in his Budget Statement that some child benefit would be withdrawn. There followed a whole series of statements from the Taoiseach and colleagues of the Minister which made it clear that that ill-considered proposal was, at the very minimum being reconsidered. The Minister seems to imply on Second Stage that the half-baked proposal to withdraw child benefit from some mothers had been shelved. It would be helpful if the Minister would clearly and unequivocally confirm that this is the case.

It is important that child benefit be targeted in particular to poorer families. The Minister made the point very clearly in his Second Stage speech that giving a higher increase to the fifth and subsequent child is to help larger families. If there is justification for helping larger families—and obviously there is—there is certainly even more justification for giving more to poorer families. To pay each mother the same child benefit regardless of her financial circumstances is wrong, regardless of the political controversy it may have caused. I said in my Second Stage speech that unlike most women in this House I felt it should be targeted. However, the Official Report, perhaps because I was not very audible, does not have the word "unlike"; rather it has the word "like". There is a very important distinction. I believe it is important to target child benefit. The suggestion that £30,000 should be the limit was a good one, although it would have saved only £5 million per year. That could have been targeted to the poorest families in the social welfare code.

During his Second Stage speech the Minister in a very clearly worded sentence made reference to the fact that every mother would continue to receive child benefit. That was put in after a suggestion that it would be targeted to lower and middle income families rather than paid equally to everybody. That was to be done through the taxation system. He referred to the fact that in about 70 per cent of cases the Department with the Revenue Commissioners could match income to child benefit and it was hoped it could be done for all families. This would be the way of targeting benefit, which I presume would mean the benefit would be considered part of income and tax accordingly. The next morning when the Minister went on to explain what he had said he, or somebody acting on his behalf, briefed the political correspondents and the media generally that the child benefit was now to stay and that he had made this announcement in the Dáil, which I do not think was very clear. In an interview the following morning he certainly made it anything but clear that child benefit was to stay and when pressed constantly by the interviewer as to whether it would stay the Minister kept referring to the proposals for this year. He did not give a firm commitment that child benefit is to stay. There is a lot of confusion. Despite the Minister's own view that it should stay, that view is not shared by his colleagues in Government. It is important once and for all that the Minister should make it very clear whether child benefit is to stay. Is the proposal by the Minister for Finance, which it seems was backed up by the Taoiseach's comments during the budget debate, now gone or is it still under discussion? If so, when will the matter be resolved?

I reiterate my strongly held belief that the payment of child benefit on the same basis to every mother regardless of her financial position is not fair or just. I accept that women, be it in the tax system or the social welfare system, who are not independent and do not have their own income deserve special attention. I do not believe that the only way to do this is by the payment of child benefit. If that were the case it would mean that a married woman who had no children and no income would not be entitled to anything from the State. Similarly a woman whose children were beyond the age for child benefit would not be entitled to anything. If this was the only way of remunerating wives dependent on husbands it would not be the best course of action. It might be better to pay directly to them the tax free allowance for a dependent spouse. There are better ways of helping spouses who are dependent on other spouses for financial aid. It is no argument that persons may be married to wealthy spouses who may not give them their due amount of money. I have heard this argument used by many people. It is no argument for having child benefit because a woman with no children would get nothing and neither would a woman whose children were beyond child benefit age. The State would have a responsibility to do something for those women.

This issue has been around for a long time and is a political hot potato. In 1962 when the Taoiseach was Minister for Finance he said in his budget speech that he intended over the next 12 months to look at the possibility of having a selective system of children's allowance. Twenty-seven years later it is still paid across the board to everybody. I did think that once and for all we were going to bite this bullet and move in the right direction. I am sorry that it seems we are not. Perhaps the Minister would spell out clearly the Government's exact intentions in this regard. There is a lot of confusion in the minds of the public, including those who support the continuation of the present system and those who want to see it changed, as I do. At best, taxing child benefit will at the top tax rate of 56 per cent recoup only 56 per cent to the Exchequer. It is an expensive way of paying out from one Department and taking back by another. There are much better ways of targeting this benefit and I should like to think we will go down that road as soon as possible.

Naturally we would all welcome an increase in child benefit, especially since that aspect of social welfare has fallen very far behind in the past few years because of the lack of recognition of the need for increases. The ESRI report by Nolan and Callan clearly established that poverty was greatest among families with four children or more. I am not suggesting that there is not poverty among families with fewer than four children, but they identified that poverty was at the highest level among families with four or more children. While the impression may be created that the increase is very substantial, we are talking about an increase of £6.70 for families with five children or more, which is effectively £1.54 each per week. That would not be recognised as a major assault on poverty in relation to families of this size. The Minister might explain why the increase should apply only from the fifth child. It would have made a major contribution if that type of increase had applied to all the children or certainly to families with more than two children.

It is clear that women would under no circumstances tolerate the elimination of child benefit, whatever excuse might be given. This is one benefit which goes directly to a mother. There are five children in my own family and I have never seen the children's allowance book. My wife felt it was something she should have so that every month she could buy clothing and footwear for the children. It was something she would look forward to. No argument put to her would justify the removal of the child benefit. There will be difficulty in justifying a reduction in the benefit irrespective of the level the Minister decides to set. Women consider that benefit as something special for them, something they earn for themselves. Any Government, or Minister, who considers abolishing that benefit or altering it to the detriment of women will have to answer to the women of Ireland. Women are discriminated against in many ways and do not have any rights. Successive Governments have promised to do this, that and the other in recognition of motherhood, in recognition of the hours women work in the home and their lack of social activity but they have done very little for them. The Labour Party will resist any attempt to interfere with that benefit.

The section provides for an increase in child benefit for the fifth child and successive children from £15.05 per month to £21.75 per month. The payment for each child up to the fourth child will be £15.05 per month. The increase in benefit will cost £3 million in a full year and it is estimated that 35,000 families will benefit. Several Members have asked why we did not apply the increase to the third and fourth child. Deputies also made it clear that for many years proposals for some degree of selectivity in the system were considered. Deputy Harney said she would like to see some selectivity and targeting of the resources while Deputy Bell was anxious that the benefits be improved across the board, when we can. Both points of view have some degree of merit if our resources permit but it is because our resources are scarce that the Government had to consider how best to target the increases this year to those most in need.

I accept that Members did not need a study by the ESRI to know where we should direct our resources. It is clear that our priority should be to help families. It is a matter for the Government to decide how to allocate the available resources. Obviously, those in receipt of unemployment assistance and supplementary welfare benefit are in the lowest income bracket and, therefore, we should direct the greatest amount of money we can to them. The child dependant allowance for those recipients was increased to the minimum recommended by the commission. We streamlined the system upwards which meant further increases for those families. In the case of some of those child dependant rates the increase amounted to 25 per cent. The emphasis is on improving the benefits to such families.

The difficulty the Government had in regard to child benefit was how to direct available resources to those most in need. It is clear that the larger families are under considerable pressure and the decision to increase the benefit in respect of the fifth and additional children was a step in the right direction. The Government allocated a further £20 million but instead of giving that to child benefit paid it out in the form of a child related tax exemption which meant that those on the lowest incomes benefited. It is clear that those on low incomes, whether at work or in receipt of social welfare payments, are in need of support and that was the thinking in the budget. As a result of the increase a family with five children and living on an income of £7,000 per year can benefit to the tune of £13 per week. The benefit tapers off for those on an income between £7,000 and £9,500 per annum. We have devised a good system for getting money to those who need it most.

The Taoiseach has made clear what the position will be next year, that these matters will be up for discussion and, as Deputy Harney has pointed out, such discussions have been going on for many years. There are various ways one could approach this. If the economic position improves next year we will be able to do more but we are not likely to have enough money to raise all the benefits across the board. Undoubtedly, we would be in a position to consider increases for specific cases.

Earlier Deputy Harney suggested that we should grant an increase in respect of school-going children. She made the case that there was a need for a higher rate of social welfare for families who have children at school. That may have been suggested in the report by the commission. I am aware that when children reach the age of 12 they consume a lot more and they also need more footwear. In Germany, for example, there is an increase in benefit for those between the ages of 20 and 25 but the increase is not paid to those above a certain income.

The suggestions made by Deputies are matters for a future budget and, if adopted, for implementation in a future Social Welfare Bill. Deputy Harney mentioned the £30,000 income limit. Even at this income a person paying full PAYE and PRSI has a net take home pay of £18,000. So £30,000 looks like a lot of money on paper but what is taken home is substantially less. Families with five, six, seven or eight children would stand to lose a large proportion of their net take home pay. All these factors have to be considered when these measures are debated and I drew up all the necessary tables relating to this long before these recent debates started because it is important to know exactly what one is doing.

When resources are scarce and one wants to target those resources in a particular direction then one has to be selective. The debate on this issue will go on and can go further between this and next year. We will continue to match incomes with people. We only know that we pay child benefit to 475,000 families, just under 1.2 million children. We know about the children and the families, but we know nothing about their incomes. There is considerable administrative difficulty in relation to incomes because one has self-employed incomes and PAYE incomes and so on and one has to define the exact income situation in individual cases. I am aware of all these things and they must be borne in mind when looking at any of these proposals. The Revenue Commissioners are providing us with information about the incomes. The matching process is 70 per cent complete at this stage and can go on to completion in due course to provide future Governments with the opportunity to look at these relationships in the context of taxation and ploughing the money back into the system or in the context of giving special increases only in particular areas, for example, increasing across the board by 3 per cent, and in the case of particular groups by more than 3 per cent, if that is what the Government wanted to do in the future.

This time the Government decided to spend a certain amount of money on improving the position of those at work as well as those on social welfare by increasing the allowance for the fifth child and giving more money to lower income families via the child-related tax exemption. This arrangement is a novel one and we will have more information about that before considering anything for next year. All these matters can be discussed in future budgets but this is what we are proposing to do as part of the package this year.

The Minister has sent out more back pedalling signals but the Government should, in fairness to the people, particularly the mothers, make a clear statement on this issue. So far this has not been done. There was a specific proposal in the Budget Statement of the Minister for Finance on 25 January. The Minister said:

In order to introduce a measure of targeting of resources under the scheme, the Government propose that, as from early next year, child benefit will be confined to families with income below a certain level.

That was a clear statement of a Government proposal. I accept that on Second Stage on 7 March the Minister, by implication, suggested that that proposal no longer existed because on that date he referred to the matching of the tax and social welfare systems and mentioned that this would enable the Government to use the child benefit system "not only to make payments to every mother but also to direct additional resources to lower and middle income families". That seems to imply that the proposal as announced by the Minister for Finance in the budget no longer stands. All I am asking is that the Minister would say clearly that that is the case. I accept what he has to say in regard to discussions for the future. Of course, everything is up for discussion in the budget each year. The point I am making is that there was a specific Government proposal announced by the Minister for Finance in the budget and I want to hear from the Minister that it has been withdrawn. Thereafter it is a matter for discussion. None of us can see into the future, but the mothers of this country are entitled to know whether or not that proposal has been withdrawn. I believe strongly that it should be withdrawn because there has been a lot of confusion about it. The role of child benefit is to redistribute income from childless individuals and families to families with children. Its main role is horizontal equity and that is particularly relevant in the absence of tax allowances for children. It is not a policy instrument for vertical redistribution across income groups. There are other policy instruments available for that purpose and I am all in favour of their use.

The role of child benefit cannot be considered in isolation but must be looked at in conjunction with tax allowances, tax credits, social welfare and child dependency allowances and so on. There should be a review of all the support available for children and out of that a view can then be formed as to what is to be done in future. What is needed now is a clear and unequivocal yes or no from the Minister that the proposal as enunciated by his collegue, the Minister for Finance, is off the table. If so we can start from scratch and discuss all the aspects of child support. The mothers of this country are entitled to know that it is off the table. We have been through all the winks, nods and signals. I would like the Minister to say specifically that that proposal is now off the table and that we will start from scratch.

What might be a more interesting debate is why the proposals regarding children's allowances was withdrawn, in so far as it was withdrawn at all, and what pressures were put on the Government to back-pedal on that particular statement in the budget. I have my own views on that. Nevertheless, I welcome the fact the the Government have withdrawn somewhat from the very clear indication that they intend to restrict payment of children's allowances to certain unspecified categories.

I have to admit that my internal alarm bells ring when I hear the term "targeting" used, specifically when it is used with regard to withdrawing some benefit or other in order to redirect the money spent on some other category. That is a favourite ploy of the Prime Minister of our sister country across the Irish sea. It is, by and large, an attempt to use one section of people to subsidise another. Generally one will find that the people who are affected by retargeting of social welfare in this way, the people who suffer, are people on middle incomes. They end up subsidising those who are less well off than themselves rather than those who can well afford to assist the less well off. That can only be achieved equitably through the tax system, not by withdrawing social welfare benefit of one kind or other from those who are already in receipt of it.

That is a trend which I find disquieting with regard to what this Minister is doing, for instance, in relation to so-called abuse or fraud in the social welfare system and I propose to deal with that matter in a later section of the Bill. It seems that money is being taken from one category of people who are not that well off and is being given to the least well off. Targeting, based on withdrawing a benefit and giving it to someone else, generally means that there is some other hidden agenda involved.

Various people have indicated that any such attempt to confine children's allowances to people below a gross income of £30,000 a year would provide very little money at the end of the day for those who, it is claimed, would benefit from this withdrawal. I am sure the Minister could provide us with the figures of what it would cost first to pinpoint the people who earn incomes of £30,000 or more. Some form of administrative system would have to be applied to pinpoint those people and then it could be decided who would get what. A whole range of other administrative functions would have to be instituted to create this new system of child benefit.

An example of what I have in mind— the Minister touched on it when he talked about how to pinpoint the self-employed and so on—is the higher education grants system which is applied on the basis of income. Constituents of mine have complained to me that they cannot qualify for a higher education grant because they are PAYE workers and earn over a certain limit, while the self-employed and farmers in certain categories qualify although their standard of living and their income is far higher than that of the PAYE workers. That is a system whereby grants are targeted at particular categories based on income and it is clear it does not work fairly or equitably.

Another suggestion, which might produce more fair results, would be to look at the whole question of tax reliefs and how they are applied. Sufficient money could be saved by leaving the children's allowance, or child benefit as it is now known, as it is. Tax relief on mortgages, for instance, is granted on the basis of the tax bracket that you are in. If you pay tax at the rate of 56p in the pound the relief on your mortgage will be granted at the rate of 56p in the pound whereas if you pay tax at the rate of 32p in the pound your relief will be only 32p in the pound. Clearly the people on lower incomes benefit less from this tax relief. The same is true in relation to tax relief on health insurance and I am sure there are other areas also where tax relief works in this unfair way. That area could reasonably be looked at to ensure that tax and reliefs on housing and health insurance are equitably spread.

The tax relief granted under section 23 on so-called holiday homes is another area where there is a boom because people with income of a particular level can benefit from it. There are a whole range of areas, which the Progressive Democrats and people like them could target, which could be considered to bring about equity other than attacking the child benefit which the vast majority of women in this country enjoy. Those who do not require or need it because of their own personal incomes or that of their spouses could choose, as I think the wife of the Minister for Finance did, not to collect it. I am sure there are quite a number of people who choose not to collect it but I do not think we should penalise women who have no other income of their own by using this spurious approach of targeting and withdrawing benefit from those who already receive it.

The irony about a debate like this is that people like Deputy De Rossa advocate that those who can afford to pay should always pay their due amount——

Through the tax system.

——as he said, through the tax system, but when it comes to welfare matters obviously mothers, regardless of their ability to pay or what their circumstances are, should receive welfare. He seems to think that the middle income group are being asked to subsidise the poor but the wealthy are being let away with it but when it comes to child benefit he does not seem to have any qualms about paying the exact same rate per child to everybody, regardless of their circumstances. There is no justification whatever, no matter from which side of the political spectrum you view Irish society and no matter how you wish to order events in this country, for paying the same amount to every family; in other words that people will get the same amount for the first four children whether they are earning an income of £3,000 or £53,000. It was interesting also to hear Deputy de Rossa say that we would not save very much because there are not many people on incomes above £30,000 a year. Yet when it comes to his party's view on taxation——

That is not what I said.

He seems to think half the country is avoiding paying their due taxes because so many people are earning very high incomes and are not paying their correct amount of tax.

If the Deputy checks the record she will see I did not say that.

There should be no interruptions.

I understood the Deputy to say that and he asked the Minister to clarify the fact that we would not save very much money because there are not many people in this category.

That is not what I said.

Perhaps I misunderstood the Deputy, and if so I am sorry. The Minister's comments on this matter will add to the confusion. As I said last week on Second Stage, in a very carefully worded statement which I have before me the Minister said that every mother would continue to receive child benefit. That was in the context of clawing back through the taxation system. That was picked up to some extent by members in the House; it was not really picked up by the media. Subsequently they were briefed by somebody on the Minister's behalf—because they might have missed it — and told that the child benefit was to stay, that the Government had rowed back or whatever, which was the view they put on it. Even the political correspondent from RTE—on all of the bulletins I heard the next morning — made much of the fact that the Government had now withdrawn their proposal. Then the Minister came on "Morning Ireland". He did not say the Government had withdrawn their proposal. He did not make the position clear at all. When he was pressed on whether they had he simply spoke in terms of this year. The Minister has added confusion to the position by refusing to say this evening whether this proposal is still on the table. In so far as he endeavoured to clarify the matter he said: of course, in the context of targeting child benefit, it is open for discussion in the context of next year's budget. Certainly that seems to me to indicate that the matter is very much up for discussion. If that is the case, we should say so and at least be honest about it rather than trying to further confuse people.

The Minister spoke about the fact that even if one has £30,000 per annum after tax and PRSI probably one would nett approximately £18,000 only. I would agree with him. But that is not a justification for child benefit. That is a justification for changing the tax and PRSI systems. It is not a justification for making everybody in the country a social welfare recipient, for ensuring that to some extent everybody is dependent on receiving some kind of remuneration from the Department of Social Welfare.

I do not agree with Deputy Jim O'Keeffe that child benefit is there — as I think he said — as a means of horizontal distribution of income, that childless people are to help families with children. I do not accept that as its raison d'être. I do not think most people in the country accept that either. The general argument advanced is that it is there to help women. Obviously it helps mothers only because one has to have children to receive it and the children must be under a certain age. That scheme grew up at a time when there was an effort being made to help the rearing of children. There are now better ways of having income maintenance policies than having a child benefit that is paid across the board to everybody on the same basis. If there is any justification for helping families and children, there is a justification for paying different amounts to families in different circumstances and not simply paying the same right across the board.

The Minister spoke about the difficulties of verifying income for the purpose of clawing back some of this money, or for the purpose of targeting it at people below certain incomes. That is an argument for doing nothing on any front. There are difficulties in verifying income, particularly the income of self-employed persons. But that is no justification for not pursuing certain principles, for not making every effort to ensure we have a welfare policy that is fair, just and helps those most in need. That is required particularly at a time when our resources are not as great as we might wish.

The Minister spoke about the fact that 1.2 million children benefit under the child benefit system. Obviously that is the case. In many cases mothers require this money to buy essential clothing, footwear and so on for their children, or to supplement their weekly expenditure in running their households. Other people are in a position in which they literally save that money, or regard it as some kind of luxury which is spent on luxury items. Different people use this money for different purposes. Even though the Minister for Finance's wife might be one of the very few — and I should love the Minister to tell me how many there are — who do not claim this benefit I know from experience that if somebody is entitled to claim something, they certainly do claim it. It is very naive of Deputy De Rossa to say simply: if you do not need it do not claim it. That is like saying: if you are not paying your just tax, please pay it. I should love to think we lived in that kind of society but, let us be realistic, we do not; if somebody is entitled to something, they will claim it. Probably the Minister for Finance's wife is one of half a dozen people in the whole country who do not claim it. I should like the Minister for Social welfare to say how many people do not claim this benefit because I have no doubt it is very few indeed. Nobody will ever voluntarily give back something they are entitled to.

The State should be involved only where necessary to target whatever resources are available — whether we be in a good or bad position; — only to those who need them. Other means — through family law, the taxation system, through the direct payment of the tax-free allowance for a dependent spouse — should be found of remunerating mothers, or wives who are solely dependent on their husbands.

There is a category of women who are not dependent on their husbands and who also receive child benefit. So the argument advanced that it should be given to people who have no other income is not valid either. There are women who have very good incomes in their own right and they, too, receive it. Therefore, whatever justification there is for giving it to the bank manager's wife who does not receive any money from the bank manager — as I heard argued recently on radio programmes — what is the justification for paying it to the woman who has a large income in her own right as well?

The reality is that this State has limited resources. There are people living in dire poverty. In those circumstances we all have a duty to try and use those scarce resources in the most effective manner, helping those most in need of them. In that context there is no justification for paying the same child benefit to two families, one on perhaps £5,000 per annum or below with perhaps four children and another on perhaps £55,000 per annum or more. There is no justification for that.

Regardless of the savings involved the principle is important. We must start moving along the road of selectivity when it comes to social welfare in general; that applies across the board to all welfare payments. The structure of our population is such that, in the future, we will not be able to afford these across-the-board payments to everybody regardless of their financial circumstances. I would encourage the Minister and the Government to bite the bullet in this respect because, as the Minister and I said earlier, it has been around for a very long time. The reason the Government appear to have backed off, is because of the initial backlash. No matter what one tries to do in this country there will always be a backlash. But that does not mean that one should bow down and accept it. It means that the onus is on one all the more to be selective, all the more to be fair, to ensure that these limited resources and the £214 million or whatever currently spent on child benefit go to the people who need it most.

Deputy O'Keeffe spoke about this issue and asked for a definitive statement. He wanted to know what is the position with regard to the proposal. He wanted to make a definitive statement about the statement of another Minister. I think the best I can do is quote from the Taoiseach's remarks in this House on 1 February 1989, column 899 of the Official Report:

One of the drawbacks at present is that because of the complete lack of selectivity Governments are inclined to give increase to better targeted schemes and give those schemes priority over child benefit. If the child benefit scheme is to be improved on a regular basis for those who really need it, there should be some element of selectivity. One way would be to give any new increases up to a certain level of income only.

The Minister for Finance has put forward a proposal for examination and discussion, the Government having decided in principle that all aspects of the suggestion should be examined, and in particular what administrative costs and difficulties would be involved. The income limits contemplated were never intended to affect low or middle income families, and the Government were thinking in terms of not less than £30,000 per annum. It was also the intention that any savings at the upper levels would be used to improve the benefit for those on lower incomes. I wish to state categorically that there was no specific decision taken to include this change in the next budget. This could only be done after all aspects had been fully examined and in particular the administrative difficulties and costs carefully assessed.

Since the question had been raised I was endeavouring to explain the parameters of this whole question. As Deputy Harney pointed out, for many years there have been repeated suggestions and proposals of ways in which this scheme should be treated. One would have to ask oneself the question: why is it that those suggestions and proposals were never adopted? Perhaps it is because the practical difficulties are so great or because of a whole range of other factors. Deputy Harney spoke about political correspondents' assessment of the position. Political correspondents must assess the position as they see it at any given time.

Deputy Harney also mentioned the £18,000 nett which turns out to be £18,110, so I was not far off. The child benefit for eight children in a year would amount to £1,766 at present and the reduction in income in that case would amount to almost 9 per cent. Such factors must be taken into consideration in arriving at any decision. Successive governments over the years may have considered the impact of these proposals but they decided not to take that particular line. I have pointed out that every other country in the European Communities pays child benefit directly to the mother in the same way as we do. In fact, as I mentioned earlier, in Germany extras are paid for educational purposes, but are only paid to families below a certain income level. This is something to be considered in the future.

We are dealing with reality. The Government decided to increase the benefit for the fifth child under the child benefit scheme. Quite naturally, the consideration of the best options is ongoing. This is inevitable whatever Government is in office. The Taoiseach has made the Government's position clear. Beyond that I cannot say much more. Deputy De Rossa asked about the amount of money involved, and the sum of £5 million would be available to be redirected in the scheme, but it would depend on where that money goes. The difficulty at present is to know where you would be directing it because 30 per cent of the child benefit is unmatched. Deputy Harney made the point that this does not cause any problem because the self-employed can be treated the same as everybody else, however it is not as simple as that. The income of the self-employed would be based on their returns for a couple of years back while the figures are right up-to-date for those paying PRSI. Let the Deputy not try to suggest that there are no administrative difficulties, because there are.

How do you calculate the PRSI payments?

That is calculated on the basis of the previous year's income. However we have to pay child benefit on a regular basis and we cannot say that when we work it out we will tell you what is payable. At present the books have been sent out for the next year and they are all out in the post offices. Therefore, if we are to work from the beginning of January, what year's income will the payment to the self-employed be based on? It would not be the last year's income but the year previous to that that would be assessed for the self-employed. Thus you would be going back another year. The changes that will have occurred in their income during this period is another matter to be taken into consideration. There are administrative difficulties involved and the Taoiseach mentioned them in his statement. Needless to say I am very familiar with them because we are dealing with the difficulties. It would not be quite as difficult administratively to operate a system when paying increases, but this is a different point and I will not go into it. However, this is a complicated situation.

Because of the difficulties with selectivity, the Government decided — but I cannot say what any future government will decide — that they could get a substantial sum of money to those at work on low incomes through the child-related tax exemption. The payment for the fifth child was increased across the board because clearly this helps the larger families. That is what has been decided this year and it is now before the House and the tax element will come up later. We have to consider the other things we are doing at the same time and the other mechanism we can use for targeting those we wish to help. Obviously we can use the family income supplement to target families and we also have the child-related tax exemption scheme. Another mechanism, which we are using in part, is that by and large larger families tend to be in the middle or lower income brackets. That is a reality, so by directing more money to that area we are ensuring that a good deal of it goes to the middle and lower incomes. Having said that, I trust the Deputies will be happy to support this measure.

It is as clear as mud.

I am interested, or more intrigued than anything else, by Deputy Harney's statement that a principle is involved. She did not enunciate the principle, as far as I know, but perhaps she did so when I was not in the House. What precisely is the principle? It seems to me that if we go down the road of withdrawing child benefit because of the income in a particular household, we are starting to question why benefit of any kind should be paid to a family over a certain income limit? Why should unemployment benefit be paid to a young person or indeed to an older person who is living with their family, when the family's income is over £30,000 per year? Why should we pay disability benefit, a pension of any kind or a whole range of benefits which are paid to people regardless of the household income? This is quite right for a variety of reasons basically to do with equity and the fact that a certain number of contributions have been paid and this is the way to ensure that people do not end up in a poverty trap. My greatest fear about withdrawing child benefit from certain categories and using artificial cut-off points is that you end up with more people in traps. It gives the government of the day, no matter which government, a licence to move that threshold up and down as it suits the political and economic climate at any given time. My point is that the saving that would be made by withdrawing child benefit from those with incomes in excess of £30,000 — I do not have the figures available to me of how many there might be earning more than £30,000 at this point in time — would be eaten away to a large extent by the administrative costs involved in introducing that selectivity.

Secondly, are we serious about equity and treating families and individuals fairly as between the tax and social welfare systems, because my understanding is that the PD's and indeed other parties, but not The Workers' Party, supported the budget which gives across the board tax reductions to those on very high incomes and those on very low incomes. The tax reduction in the 58 per cent rate, for instance, for people on £50,000 a year or more is worth something like twice what a family with four or five children would be getting for the year in child benefit. There we have a give-away to families on very high incomes through the tax system and here we have people arguing that we should start fiddling around with the child benefit in a way which would create more problems than it would solve and would result in a lot of families and women in particular, suffering.

Section 5 agreed to.
NEW SECTION.

I move amendment No. 10:

In page 6, before section 6, to insert the following new section:

"6.—Where, under the provisions of section 50 (1), 51 (2), 81 (3), 86 (3), 91 (3), 95 (2) or 103 (2) of the Principal Act an increased rate of payment in respect of a prescribed relative is payable, such payment shall be made directly to such relative.".

This amendment has been able to escape the knife of the Ceann Comhairle. It relates to the position of the prescribed relative. We are talking here about what at the moment is an additional payment made to an incapacitated recipient of a social welfare pension. This payment is made where a pensioner has a relative living with him, looking after him. One of the greatest anomalies in our social welfare system is that there is not a direct payment to the carer. A person, very often a woman, has to give up a full-time job to care for an elderly relative and because of that ends up with absolutely no income. I accept that there is an additional sum added on to the pension and paid to the pensioner but that is not satisfactory. I have never understood why, when the prescribed relative allowance was introduced about 21 years ago, it was not paid to the carer. There seems to be no justification for not so doing.

The purpose of my amendment is to ensure that in future the money is paid to the person looking after the elderly relative rather than added on to the pension. This is an outrageous anomaly whereby the pensioner gets the extra sum. Recently in my constituency I came across a problem in relation to this allowance which added insult to injury. An elderly constituent in receipt of a contributory pension and a prescribed relative allowance — the prescribed relative getting nothing — received a tax demand which related to the prescribed relative allowance. I really thought this was going too far altogether and I made the strongest protest to the inspector of taxes concerned. In fact, I had a question down to the Minister for Finance today on the issue. Possibly the inspector of taxes concerned made a mistake but certainly that elderly person aged about 80 and living in the remote Beara penninsula should not have received a tax demand for £300 or £400 related to this allowance. In fact the elderly pensioner should not have been getting the prescribed allowance at all. It should have been paid to the person caring for him. I want this House to accept that from now on the allowance should be paid directly to the relative caring for the pensioner.

I am sure the Department of Finance will prick up their ears when I say that this should be a start to a complete change in relation to the prescribed relative allowance. Down the road there may be cost implications to be taken into account in such changes but, overall, if the prescribed allowance system were used properly there could be a net saving to the Exchequer. At the moment conditions for getting a prescribed relative allowance are very restrictive.

Today with cutbacks on the health side elderly people in need of care in many instances cannot get into hospitals or geriatric homes. In any event, my basic social philosophy is that elderly people are better looked after at home if that is possible. Many elderly people in full health need care and the best care is provided by their own relatives. All State support systems should be designed to ensure that care is available at home. In the foreseeable future there will be more and more difficulty in having elderly people cared for in institutions. I do not want to stray down that road. If there is need for institutional care it should be there but in preference care should be given at home. The policy of the State should be directed towards ensuring that as far as possible every encouragement is given to the provision of care at home. That is why I am moving this amendment. It is a first stage in what ultimately should be a broadening of the whole question of the prescribed relative allowance.

The amount of money is not at issue in my amendment at the moment. If it were the amendment would have been ruled out of order. But, it is no harm that we should have a reasonable discussion as to where we are going in this whole area. The amount at the moment, even as increased by 3 per cent, comes to the magnificent sum of £28 a week and that is not even going to the carer. That is about the most miserable payment available under the social welfare system. I was speaking earlier about focusing payments on the poorest of the poor and about those who fall below the supplementary welfare net. At a very minimum, the amount available to the prescribed relative should be equivalent to the supplementary welfare payment. This issue was looked at some years ago by the Commission on Social Welfare and in fact the recommendation of the commission was slightly different from the approach now adopted by me. The commission recommended that prescribed relatives should be entitled to claim social assistance in their own right and, in that context, that the prescribed relative's allowance be abolished.

The end result, if what I have in mind is ultimately achieved, would be the same because the person who is providing full time care for relatives would, under my proposal as in this amendment, have entitlement in their own right to an assistance payment in lieu of what I would call the prescribed relatives allowance payable directly to them and the commission were talking about an assistance payment in lieu of the prescribed relatives allowance, I am sure, the carer in question would not be concerned in the least about what it is called. The basic consideration is that that person would receive a direct payment. This would be the foundation on which ultimately those moneys could be improved so that this allowance would be equivalent to the supplementary welfare level of payment.

Progress reported; Committee to sit again.
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