Social Welfare Bill, 1994: Second Stage.

Minister for Social Welfare (Dr. Woods)

I move: "That the Bill be now read a Second Time."

The Bill gives legal effect to the increases in social welfare payments announced in the budget and provides for other improvements to strengthen the social welfare code for families, workers, carers, lone parents and others who rely on social welfare.

In this Bill, the Government is more than maintaining the real value of social welfare payments by providing increases in the weekly rates from next July of 3 per cent for more than 822,000 people and their 627,000 dependants which includes pensioners, widows, lone parents and families who are out of work because of illness or unemployment, and extra increases which amount to; 10 per cent for 112,000 people getting disability or unemployment benefits, and 6 per cent for 185,000 people on the lowest short term payments such as unemployment assistance and supplementary welfare allowance to bring them up to the priority rates recommended by the Commission on Social Welfare.

We are providing a major extra cash boost for 1,100 invalidity pensioners over age 66 who will get an increase of £10.20 a week in their personal rates of pension to bring them up to the old age contributory pension rate of £71 a week.

I am introducing for the first time a new survivor's pension covering widowers on the same basis as widows. From October for the first time some 9,000 widowers will be eligible for a contributory pension on either their own or their late spouse's PRSI record. We are improving child benefit for 270,000 children through an increase in the rates from £20 to £25 for the third child and from £23 to £25 for each child thereafter. We are extending the weekly income thresholds for eligibility for family income supplement by £10 thereby giving an additional £6 a week to 9,600 families.

We are introducing a package of measures to support jobs in hard-pressed labour intensive sectors, such as clothing manufacturing and footwear, and to help those at work on low pay. These measures include PRSI reliefs for employers and levy exemptions which will amount to a cash injection of some £89 million in support for jobs in labour intensive sectors.

The measures include a reduction in the employer's share of PRSI from 12.2 per cent to 9 per cent where employees earn £173 or less per week; an exemption from both the 1.25 per cent health contribution and the 1 per cent employment and training levy for employees and self employed people on low incomes; the ending of the liability of employers of medical card holders to pay the levies — 2.25 per cent — on behalf of these employees; a new two year employers' PRSI exemption scheme, and improvements in family income supplement for families at work on low pay. Part of this package includes an increase in the PRSI ceiling for employers to £25,800, instead of £22,200, to offset a portion of the £46 million cost of the PRSI reductions.

I am improving the means-test by giving additional disregards which will benefit carers whose spouse is working, lone parents who take up employment, and certain unemployed people who earn extra income from traditional indigenous activities, such as seaweed gathering on the western seaboard.

We are continuing certain secondary social welfare benefits, such as rent supplements, in the case of unemployed people and other social welfare recipients who are participating in community employment or educational opportunities initiatives at second or third level. I am exempting certain casual workers from the requirement to have to incur a "substantial loss of employment" in order to qualify for unemployment benefit. I am providing authority to social welfare inspectors to investigate a claim by an Irish resident for social security payments from another member state of the EU, at the request of that member state, and we are requiring contractors and sub-contractors to produce employment records for social welfare inspectors and to make them liable in certain circumstances to repay social welfare payments fraudulently received by an employee.

For the first time in the history of the State, I am introducing a contributory pension for widowers which will put widows and widowers on equal terms in relation to survivor's pension provision. This new pension is a huge breakthrough in the development of our social insurance system and puts Ireland foremost among our European Union partners in providing equal treatment for men and women who become widowed.

It is by far the most significant social welfare measure to be introduced since I brought the self-employed into social insurance in 1988. More than 9,000 widowed men and their families will benefit for the first time under the new arrangements which will come into effect from next October. Under those arrangements, men and women who are widowed will be able to qualify for a contributory pension on the same basis, that is on either their own or their late spouse's PRSI record and subject to the same contribution conditions. The cost of the new survivor's pension will be about £6 million this year and up to £27 million in a full year.

The implementation of equality of treatment between men and women in the area of survivors benefits has been under consideration at European Union level for some years, but little progress has been made. I understand from the National Pensions Board that some ten OECD countries provide pension payments to both widows and widowers but, generally speaking, more stringent qualification conditions apply to men.

The introduction of this new survivor's pension underlines the Government's commitment to the principle of equality of treatment between men and women. The implementation of that principle in the social insurance area has presented us with a number of difficulties in the past because of different entitlement conditions across schemes. However, I am convinced of the need to confront those difficulties in our own way and at our own pace. Above all, our plans must be implemented in a fair and equitable manner while at the same time protecting the entitlements of existing recipients.

There are more than 85,500 widows receiving a contributory pension at an annual cost of £282 million. I want to make it clear that their situation will not be changed in any way by the introduction of this new equal treatment measure.

This progressive move is a practical recognition of our changing family structure. Given our young population, increasingly both spouses are participating in the workforce. In these circumstances, a surviving spouse — whether a woman or man — with the responsibility of a young family is clearly in need of income support. I am pleased that the Government decided to introduce this progressive measure which is a major breakthrough in the development of pension provision in Ireland.

I am also pleased to provide in this Bill for an extra increase for older invalidity pensioners which was not announced at budget time. This is a very significant improvement for those who are among the most vulnerable in our soceity. This special increase is in line with the recommendation of the National Pension Board. Some 1,100 invalidity pensioners who have attained age 66 years will from next July have their weekly pensions boosted up to the old age (contributory) pension level. This increase will mean an extra £10.20 a week for a single person bringing their new weekly payment to £71. A married couple currently getting £100.90 will receive £112.30, an increase of £11.40 a week. Under this Bill, child dependent increases for larger families dependent on invalidity pension have also been substantially improved. The weekly rate goes from £14.90 to £15.20 for each of the first two children and from £12.80 to £15.20 for the third and subsequent children.

The Bill before the Dáil today contains a number of important measures which, taken together, will bring about substantial changes in the system of PRSI contributions and the various income levies directed at supporting jobs in labour intensive industries and those at work on low pay. Deputies should also be aware of the other budget measures dealt with in the Finance Bill, namely, the abolition for all taxpayers of the 1 per cent temporary income levy plus the improvements in the income tax regime relating to exemption limits, personal allowances and the expansion of the tax bands. The net effect of these measures proposed here today plus the other related measures in the Finance Bill is clear, simple and directed at what we all agree is our greatest national priority — the creation and maintenance of jobs.

The cost to employers of creating and retaining jobs has been cut while take home pay for employees will be improved. The incentive for employers to create jobs and the incentive for unemployed people to seek and take up those jobs will be enhanced as never before. Against the background of an improving economic climate internationally and low domestic interest rates I would expect these measures to contribute towards a better employment performance over the coming years. I hope to see both a more rapid creation of new jobs and the maintenance of existing jobs in the labour intensive sectors at which these measures are directed.

Section 10 of the Bill provides for a new employers' PRSI exemption scheme which will operate on a similar basis to the very successful 1993-94 scheme which has generated some 4,250 jobs over the past two years. Under the new scheme, employers who take on additional employees from the live register between 6 April 1994 and 5 April 1995 will not have to pay the employer's share of PRSI contributions in respect of those employees during the two year period 6 April 1994 to 5 April 1996, provided the employees concerned represent a net increase in the number of employees in their employment over that applying on 21 February 1994. The value of this concession to an employer is considerable. It can be worth £1,268 a year in respect of a new employees with earnings of £200 per week.

Section 7 introduces a new employers' PRSI contribution of 9 per cent down from 12.2 per cent, which will apply across all sectors of employment in cases where an employee earns £173 or less per week. The cost of this concession to the social insurance fund is substantial — in the region of £31 million this year. In order to offset it in part, the contribution ceiling on the employer's contribution has been raised to £25,800 instead of £22,200. This will contribute an estimated £3 million this year bringing the net cost of these PRSI changes to £28 million in 1994. The full year investment in this concession is £46 million. Even those sectors which do not receive a direct boost because their staff earn more than the £173 per week threshold will benefit through their purchases of services — catering, cleaning and courier services, for example — from firms who do.

I will keep the possibility of further concessions on PRSI under review. The social insurance fund, which is the source from which the various social insurance benefits are paid, is in a sound financial state and it is this which has allowed me to make the present concession. This is in part due to the continued success of our efforts to reduce black economy working. The value of these activities is clear; in that they improve receipts to the fund and they allow rates for the legitimate economy to be set at the lowest possible level. I would hope, having regard to the primary objective of the social insurance fund which is to provide pensions and benefits for workers, to continue down the road of shaping the PRSI system so as to encourage employment.

Employers will also benefit from the waiving of the health contribution and the employment and training levy for low paid workers. Up to now they have been responsible for paying these levies on behalf of employees who are medical card holders. These levies amount to 2.25 per cent resulting in an employer's PRSI contribution of 14.45 per cent in some cases. It is estimated that 100,000 workers have medical cards so the measure will represent a significant benefit — of up to £200 per employee — for their employers.

This move will not only reduce PRSI costs but it will also simplify administration of the system for all 125,000 employers. This measure is in line with the advice of the expert working group on the integration of the tax and social welfare systems in their interim report. The waiving of these levies, provided for in sections 33 and 34 of the Bill, is not confined to people with medical cards but will also provide a boost to the take home pay of all lower paid employees and self-employed people who do not have medical cards. From 6 April 1994, employees who earn £173 or less per week and self-employed people whose annual income is £9,000 or less will no longer be liable to pay the 2.25 per cent levies. The combined cost of these two measures is estimated at £25.6 million in 1994 and £43 million in a full year.

Therefore, the combined impact of the new low rate of employers' PRSI and the levies exemptions amounts to a major boost — to the tune of about £89 million a year — in the lower paid sectors of the economy. About 80,000 employers that is two thirds of all employers, 400,000 employees and occupational pensioners and about 60,000 self-employed people will benefit from one or more elements of this package. Add in the PRSI exemption scheme and the family income supplement and it is clear that we are making a major investment in jobs. I am making this investment in the expectation of a return in the form of jobs retained and jobs created and jobs made increasingly available to long term unemployed people.

The family income supplement has shown a dramatic increase of almost 25 per cent on this time last year. There are now some 9,600 families receiving FIS and over 30,000 children benefiting from this payment. The measures in this Bill will give FIS recipients an additional £6 per week in their weekly payment from next July.

An overall increase of 10 per cent in unemployment benefit and disability benefit will increase the payment for recipients up to £61 per week. That arises from a decision of the Government to discontinue pay related benefit payable with unemployment benefit in the case of new claims only with effect from next July. Those savings are being devoted in full towards this special increase which will also apply to disability benefit, from which pay related benefit was discontinued in 1992. The special additional increase will cost an extra £2.7 million this year.

Other measures in the Bill include sections 3 and 4 which deal with increases in the weekly rates of social insurance and social assistance payment. Section 5 deals with increases in child benefit. Sections 7 to 10 provide an increase in the ceiling in respect of PRSI contributions by employees from £20,000 to £20,900 per annum and an increase in respect of self employed from £20,000 to £20,900 per annum. Section 9 provides for an increase from £235 to £250 in the annual rate of voluntary contribution. Sections 11 to 14 cover the new survivor's pension which will be brought into operation by way of a commencement order at the beginning of October.

There is a number of improvements in means tests. Section 15 provides for improvements in the means test for lone parent's allowance while section 16 provides for improvements in the means test for carer's allowance. These improvements will come into effect from 28 July next. An additional 500 carers will get the allowance for the first time and a further 350 existing carers will get increases in their weekly payments. A full-time carer with a spouse earning £160 a week, who would not previously have been entitled to any payment, will receive a weekly carer's allowance of £34.

Section 18 introduces a number of improvements in the means test for social assistance schemes, including disregarding the maintenance element of higher education grants for the purposes of the third level allowance scheme; disregarding mobility allowances or rehabilitation training allowances for all social assistance payments; exempting child benefit payments received from another member state of the European Union; extending the exemption of home help income so as to include employment by an agency approved by a health board and taking regulatory powers to exempt income derived from certain prescribed activities. I have in mind here the exemption of certain incomes from traditional activities such as seaweed collection along the western seaboard.

Section 17 deals with the maternity benefit scheme. Maternity benefits will be payable in the case of a still birth after 24 weeks of the pregnancy — the current duration is 28 weeks.

Provision has been made in this year's budget to allow me to implement changes in the rules governing entitlement to unemployment benefit in the case of certain casual or part-time workers. Deputies will be aware of what I am trying to do here. Section 19 exempts people engaged in casual employment from the condition of having to have sustained a substantial loss of employment before qualifying for unemployment benefit. The precise definition of casual employment will be set out in regulations.

Section 20 allows injury benefit and unemployability supplement, payable under the occupational injuries benefit scheme, to be integrated with disability benefit. No one will lose out on their entitlements as a result of this measure. Section 21 deals with pay-related benefit. This section increases the weekly earnings disregarded in calculating the weekly rate of pay-related benefit from £80 to £97.50. That is technically necessary because of the increase in the rate — this measure applies only to people who maintain their pay-related benefit.

Section 22 provides for an increase from £5 to £10 in the minimum weekly rate of unemployment assistance payable to single people whose means are assessed under the benefit and privilege rules. Section 26 gives legislative effect across all social welfare schemes to the six weeks after-death payment of the adult dependant allowance, where appropriate. Deputies raised this matter from time to time, and this represents a very important development.

Section 31 provides for regulatory powers under which entitlement to certain occupational injuries benefits may be extended to categories of workers not covered at present for those benefits. It is my intention to use the regulatory powers in this section to extend occupational injuries benefits to workers whose work arrangements have changed in recent years requiring them to become sub-contractors, and thereby insured for PRSI pensions only, rather than remain as workers insured for the full range of social insurance benefits. Changes in working arrangements in the construction industry will receive particular attention in this regard.

This is substantial social welfare legislation following on the Social Welfare (Consolidation) Act which was passed last year. It continues the Government's commitment to maintain and safeguard the position of those who depend on social welfare. It provides for a number of other improvements, including the new survivor's pension. I expect to bring forward further social welfare legislation in the context of addressing the recommendations of the final report of the National Pensions Board as well as a pensions Bill to take account of necessary regulatory changes in the occupational pensions area since the enactment of the Pensions Act, 1990. I look forward to a constructive debate on the measures proposed in the Bill and I commend it to the House.

Mr. Allen

The Bill has to be taken in the context of how it will affect the lives of the one million Irish people living on or below the poverty line and who have no real control over how they or their families run their lives as they are dependent on the State. The Minister, and the Government, who have spoken as much about the concept of abolishing dependency have taken no real steps in this regard. The basic recommendations of the Commission on Social Welfare have been ignored. The Bill has no direction or vision. It gives very little hope to those who cannot work because of sickness and those who wish to work but cannot do so because of the poverty trap. The Bill demonstrates the Minister's lack of understanding and ideas on how to get the unemployed into real and meaningful employment. He seems to dwell on the often meaningless schemes which offer no real hope.

The high ideals and finely polished words in the Programme for Competitiveness and Work about the poor, under-privileged and unemployed are contradicted in the Bill which demonstrates a further erosion of the insurance-based system. Unemployment benefit is means-tested for those who are made redundant and deserted wife's benefit is similarly limited. There was an outrageous and mean attempt to means-test widow's pensions, but due to the ferocity of the reaction from many women's organisations, and the Opposition parties, the Minister did a u-turn on this measure.

These trends are a corruption of our social insurance system and must not be allowed continue. The attempts to means-test contributory widow's pensions was a reprehensible act by a Minister who is obviously out of touch with what is happening. It was an attack on vulnerable and lonely women. It was a hard-hearted, callous, cowardly measure and the Minister did a u-turn only when he realised he could not push his proposals through the House. How long will it be before proposals to means-test not only widow's pensions but contributory old age pensions are again introduced? I hope the Minister will give guarantees on this when replying to the debate.

The Programme for Competitiveness and Work was published just before this Bill. I thought this programme would give priority to addressing the unemployment crisis and that it would include a national strategy on long term unemployment and job creation, that it would deal in some way with the problems of the long term unemployed. However, there is very little hope in the programme for the unemployed and victims of economic failure. There are many aspirations in the programme, but the thrust of the Bill does not signal long-awaited changes that would reflect these aspirations.

The Bill has failed to bring about support for the work concept and to eliminate many of the anti-family provisions in the social welfare code. I expected concentrated attention on this whole area in view of the fact that 1994 is the Year of the Family. I thought the trade union movement would insist on a reversal of the dirty dozen proposals, but that did not happen. I also believed that many of the employment traps in the social welfare system would be removed. Even though this is the Year of the Family, the substantial anti-family elements in the social welfare code are still in place. Young people are still being driven out of their parents' homes in order to qualify for unemployment assistance. Having left home, not only do they qualify for unemployment assistance but they also qualify for a rent allowance from the health boards. This system is not only blatantly anti-family but it is bringing about a socially undesirable situation.

The Minister has again ignored the plight and fears of elderly people in urban and rural areas who are being subjected to attacks. They cannot ask someone to live with them for security reasons because they are afraid they may lose their free electricity and free telephone rental allowances. This is most regrettable as the number of attacks on elderly people has increased substantially in recent years; records show that there have been thousands of attacks on elderly people living alone. Instead the Government penalise elderly people who take steps to protect themselves. For example, old age non-contributory pensioners stand to lose their pensions if they take in someone for security reasons; the extra household income is means-tested.

The Minister has announced marginal improvements in the carer's allowance scheme, but it is still desperately inadequate. When the scheme was announced it raised the hopes of many people. The improvements announced by the Minister will bring an additional 500 people into the scheme, increasing the number of beneficiaries to approximately 5,500, approximately 10 per cent of the number of applicants for the scheme. This inadequate scheme, coupled with the home help scheme which pays carers £2 per hour, demonstrates the Minister's totally inadequate response to the institutionalisation of elderly people who, from a socially desirable point of view, would be better off in the family home. It would be much more cost effective for the State to do this. This woeful situation requires a co-ordinated approach by the Minister for Health and the Minister for Social Welfare. Obviously, this has not been done and both Departments are tackling the problems of the elderly on their own.

The carer's allowance scheme is a good idea in principle, but it has two fundamental flaws. First, the allowance is means-tested so severely that it is out of the reach of thousands of people who should but do not qualify; and, second, there is no provision to pay the allowance, if desired, directly to the person who is disabled. We have heard much recently about empowerment. However, by not paying the allowance directly to those people who need the care and who wish to purchase or buy in care, thus retaining control over their lives, the Department is refusing to empower a certain category of people.

The Department must compare the real cost of providing care or personal assistance in the home with the cost of providing institutional care and act accordingly. The Department should consider paying the allowance directly to those individuals, particularly those with a physical handicap, who receive care or personal assistance. This would reduce the level of dependency, a concept which still exists in this area. The allowance should be recognised as an essential component in helping people who are ill or have a physical disability to live independent lives. Thousands of people who are ill or disabled can and want to live non-institutionalised lives in their community and would do so if they could get varying degrees of help. Unfortunately, the Government has not given any consideration to this concept.

I wish to refer to the problem of moneylending, which has been addressed in some way in the Consumer Credit Bill and the schemes set up by the Minister. Even though the Minister is addressing the problems on the one hand, he is encouraging them on the other. The dirty dozen cuts and the circulars regarding rent and mortgage repayments issued to community welfare officers have and will continue to create a paradise for moneylenders. I thought it was very hypocritical of the Minister of State at the Department of Social Welfare, Deputy Joan Burton, to publicly criticise local authorities by alleging that they were driving people into the arms of moneylenders by insisting that people pay their rent arrears or else face eviction. This is especially hypocritical in view of what she has stood over in her Department since she became Minister of State.

The limitations placed on the supplementary welfare allowance scheme have caused widespread hardship and the Minister and Minister of State have guaranteed that the evil of the loan shark will continue despite the measures announced by the Minister. The Department, through its policies and cutbacks, has done more to contribute to the growth in the number of loan sharks in recent times than any other factor. The Bill has failed to deal with this terrible evil. The highly publicised measures in the Bill are merely token gestures. I regret to say that I believe the Minister, the Minister of State and the officials fail to understand that thousands of people are living below subsistence level, are living from day-to-day. I know from my work in my clinics at the weekends that the pressures at Christmas, Communion, Confirmation and new school years are such that they are driving families into the arms of moneylenders. This puts them in a no-win situation and makes it very difficult for them to break out of the vicious downward spiral in which they find themselves. I know the Minister has involved the credit unions in the household management system. However, the limited support given to the credit unions to bail out people in the poverty trap merely shifts responsibility from the Department of Social Welfare to the credit unions, who cannot cope with the extent of the problem.

On a number of occasions I have raised in the House the issue of equality payments to women in an effort to establish why women are not receiving their entitlements in terms of transition payments as a result of the McDermott Cotter II case. Recently at Question Time the Minister for Social Welfare said:

Settlements made in the courts regarding the McDermott Cotter II case were settlements that were made privately and confidentially. These settlements were made in court and it is not my position to say what these settlements were.

This stance is totally unacceptable. The Minister is attempting to undermine the claims for payment put forward by thousands of women. Recently, women in Cork and in other areas met to protest at the Minister's lack of response to claims submitted by them. These women are being forced to hire solicitors to pursue their claims, and in cases where settlements have been made the Minister is refusing to disclose the level of settlements to the women and to the Deputies who represent them. I want to protest strongly at the Minister's action. I could quote letters on my file which I have written to the Minister about his refusal to disclose information requested by me and other Deputies on behalf of women.

Will the Minister tell the House the amount paid by his Department in settling claims made prior to the 1992 regulations? Will he also state the amount paid by his Department in response to claims under the transition payments? Will he stand over statements made by senior officials in his Department that claims amounting to approximately £160 million are with his Department at present and that it is resisting these claims, not on the grounds of whether or not they are legally correct but on the grounds that the figures involved are excessive? I have with me an opinion which states that the State will fully defend any actions instituted subsequent to July 1992. As these cases have a history of being referred to Europe, it could be a number of years before a final resolution is reached. Will the Minister state his Department's position on this issue and whether he will be pushing his opposition to these payments all the way to the European Court if necessary? Women want to know what they are entitled to and the Minister should come clean on this issue. The Minister has no right to decide an issue based on the level of claims, it should be based mainly on the legal merit of the claims and the Minister is denying women their legal entitlements.

In the Dáil debate on the motion dealing with unemployment benefits, the Minister of State, Deputy Eithne Fitzgerald, stated that if any Deputy submitted parliamentary questions requesting information on the level of settlements already made, it would be made available because people should be entitled to such information. She said also that in future she would ensure people get this information under the Freedom of Information Act. She assured me that if I submitted further questions on the level of payments made to women through solicitors, this information would be made available.

I subsequently took the Minister at her word and submitted questions to the Minister for Social Welfare. Again, the information was denied me on the grounds of confidentiality even though the women involved requested me to get that information for them. The Minister is acting irresponsibly on this issue. Some women have been forced to go to solicitors because of the Department's refusal to pay money due to them as a result of the EU equality case. Many of these women cannot find out from their solicitors or the Department of Social Welfare what money was paid to their solicitors on their behalf. Every effort to establish the level of the payments or the settlements have resulted in a cloak of silence from the legal representatives of these women and from the Department. This is a matter the Department and the law society should address immediately. Surely individuals have the right to find out from a Department the amount already paid to legal advisers on their behalf. I am asking the Minister to make a full and comprehensive statement at the end of this Second Stage debate on a situation which is open to exploitation where these women are being refused information regarding the value of settlements.

The Minister, inside and outside this House, has continuously attempted to mislead Deputies and the public on a very important issue affecting women's rights. I am now asking him to state the amounts paid to date and the value of claims outstanding. Will he set out clearly his attitude to the claims made by women seeking arrears of alleviation payments arising from the decision of the European Court of 13 March 1991 in the Cotter-McDermot application? Will he also set out the total number of applications and the estimated value of the claims made?

In relation to the "dirty dozen" social welfare cuts which were introduced by the then Minister for Social Welfare, Deputy McCreevy, prior to November 1992, I read with interest an article in The Sunday Tribune last Sunday under the heading “Burton rejects cutback claim”. The article went on at length to again mislead the public on the question of the “dirty dozen” cuts. When the Minister, Deputy Burton, comes here she will again ask us to forget the “dirty dozen” cuts which were introduced prior to the 1992 election and which the Labour Party solemnly promised to reverse before the election. This promise, like many others made before the election, was not followed through and the electorate's trust in the Labour Party has been seriously betrayed.

The Minister of State at the Department of Social Welfare has rejected claims made by myself and other spokespersons in the House that some of the nastiest of the original "dirty dozen" cuts are still in place. She now says the social welfare system has moved on and it is difficult to make a one to one comparison because of the changes in the system. This is a follow up to a statement she made in this House some months ago that the ghost of the "dirty dozen" cuts should be laid to rest. I reject her statement. Some of the nastier cuts are still in place and if I had the time I would outline them.

Minister of State at the Department of Social Welfare (Ms Burton)

The Deputy will not outline them because they do not exist.

Mr. Allen

Since the Minister of State has asked me I will outline them. The maternity benefit——

Ms Burton

There is a much better maternity scheme in place now.

An Leas-Cheann Comhairle

Deputy Allen, without interruption.

Mr. Allen

——has been increased to £74; injury benefits remain cut by £15 per week to the same level as disability benefit; maintenance orders for spouses and children are recoupable from lone parent payments.

Ms Burton

That has nothing to do with the list.

Mr. Allen

Under 55 year olds who become redundant and who earned £15,000 or more are disqualified from receiving unemployment benefit for nine weeks.

Ms Burton

Their tax benefit is greater.

Mr. Allen

Alleviation payments are completely abolished, the supplementary welfare rent allowance continues to require the claimant to pay a certain amount; deserted wife's benefit is now means tested; part-time workers are affected by a change in the system and the exceptional needs payments circulars were partially, but not fully, withdrawn — I dealt with that earlier in relation to loan sharks.

Ms Burton

Not adequately.

Mr. Allen

Since the Woods-Burton team came into power we have had in addition to the "dirty dozen" cuts, the taxation of unemployment and disability benefit, the abolition of pay-related benefit and more restrictions have been imposed on applicants seeking disability and unemployment benefit. One of the most unfair and savage cuts was the elimination of the entitlement to unemployment assistance to students, mainly those from working class backgrounds and from the PAYE sector.

The Fianna Fáil-Labour Coalition, particularly the Labour Party, continues to behave in a most dishonourable way on its commitments made to the electorate. The Minister, when replying to my criticisms, is likely to point out that the priority rates recommended by the Commission on Taxation are mainly achieved over long term social welfare payments. I concede that a major percentage of all social welfare recipients receive payments at a higher level than the priority rate, but the priority rates were seen by the commission as emergency targets for the lowest level referred to by the Commission on Social Welfare required to provide adequate income.

One of the key recommendations of the commission was to extend existing optional work programmes and develop new ones that would specifically encourage unemployed people to become involved in a wide range of activities which would contribute to their development and the development of the community and would eliminate the red tape and bureaucratic procedures in setting up these programmes.

The Minister, in his budget speech, announced another variation on the present range of programmes. He introduced a pilot scheme based on the proposals of the Conference of Major Religious Superiors' which are similar to those put forward by my party last autumn. However, the Minister gave me an assurance that people taking part in these programmes would not be denied secondary benefits. Persons who have been involved in those work programmes have been denied payments under the supplementary welfare Act for exceptional needs and there is definite evidence of this. One of the Minister's party colleagues in Cork recently added his voice to those who protested at the erosion of secondary benefits through work schemes.

I would ask the Minister to investigate cases where health boards are either refusing or reducing substantially applications for exceptional payments because the applicants are involved in optional work programmes. Surely this is contrary to the assurances given by the Minister in this House. It demands an urgent and conclusive investigation because if the situation is allowed to continue, it will defeat the whole purpose of work programmes. This new problem again indicates the lack of understanding of what life is like for people who are unemployed through no fault of their own.

In my contribution last year I told the Minister I would support any moves made to rationalise and simplify the social welfare code because there are very few people who understand even a part of our social welfare system. This whole area requires an enormous amount of administration and bureaucracy. There is much wastage on administration costs nationally and locally.

The Social Welfare (Consolidation) Bill introduced in the past year has helped. Nonetheless, the time has come to tidy up the whole social welfare system, rendering it more user friendly because, very often, the system is antipeople, and attempts to block people from obtaining information rather than giving them such information openly. The system largely remains complicated and confusing, creating many barriers to work, and communication between the general public and the Department needs to be harmonised and rendered more user friendly.

In the past year I encountered many examples of people who lost entitlements because of the limitations of the system and the petty regulations in place regarding the time limit imposed on retrospective claims. People continue to lose substantially because they have not been informed of their entitlements as a matter of right. For example, I know of people who have been in receipt of one entitlement and were allowed continue to draw that entitlement even though they were eligible for a different benefit at a higher rate of payment, but when the shortfall was discovered the Department failed to live up to its responsibilities by backdating to the date of eligibility. This practice is totally unacceptable. I will be considering, as should the Minister, the introduction of regulations to eliminate this injustice — I am referring to the six months regulation of which the Minister will be aware.

I should like to have referred to the whole jungle involved in means-testing but I do not have the time and I want to refer to other matters. However, I would ask the Minister to endeavour to do something about that. I would ask him also to address what is happening in the special committee on the closer integration of the tax and social welfare systems. I consider this Bill another example of bad planning, its victims being those already victimised through illness or economic failure.

I should like to deal with one or two issues which have arisen. The first affects people going to Great Britain — this issue has been raised by the London Irish Centre charity and social advice workers who have been in touch with me to express their extreme concern at the proposed amendments to the British Department of Social Services legislation which has extremely damaging implications for Irish people emigrating to Great Britain and those already settled there. The proposals will greatly limit entitlement to benefits for all Irish people who have lived in Britain for less than three years. In addition, the proposed amendments to the British homeless legislation will mean that many Irish people will no longer be considered for housing under the priority need rules. It is likely that most new immigrants will be sent back to Ireland under these new rules. If he has not done so already I would ask the Minister to direct his immediate attention to these issues, to raise these subjects with the British Government as a matter of the utmost urgency given the fact that their Department of Social Services plans to introduce these amendments to benefit entitlements by next summer. In my view the British Government is acting contrary to European law by enforcing these amendments. Some of these provisions smack of the most basic racist legislation imaginable.

Another matter I want to raise also affects emigrants that is, the requirement that one insurance contribution be paid in this country in order to qualify for unemployment benefit. One of the major difficulties people experience returning here, especially from the United Kingdom — those who will have been in insurable employment for many years — is that, when they apply for unemployment benefit here, they need at least one insurance contribution paid here before qualifying. It is highly unlikely that such people will qualify because of the difficulty in obtaining work here. In addition, they will be refused unemployment assistance if they have accumulated savings while working in Britain. This is totally unacceptable. Obviously, this affects a large number of emigrants not only from the United Kingdom but from other parts of Europe. It is ludicrous to demand from an unemployed person returning from a European country an insurance contribution in order to qualify for unemployment benefit because in the first place a person signs on for unemployment because he or she cannot obtain employment. I can understand the reason for such a rule on mainland Europe where there is greater mobility of workers between member states but, in this country it is punitive illustrating a certain lack of welcome for returning emigrants.

I shall deal with other issues on Committee Stage.

Ms Keogh

Social welfare is a major achievement of modern societies in that usually it has strong support through public opinion, as was shown recently in a Euro barometer survey that highlighted the almost unanimous support for a high level of social protection. The Progressive Democrats believe that social welfare recipients should be given the best protection society can afford. Social welfare is a major component also of social cohesion and solidarity. However, social welfare and social protection systems are faced with growing pressures resulting from a number of factors, the first being the evolution of the labour market and rising unemployment, followed by demographic trends, in particular the aging of the population, changes in family structures, the growing instances of poverty and social exclusions resulting from these trends, together with a massive increased demand for a whole range of social services including a comprehensive welfare service and health care.

Unfortunately, to date we have focused on granting increases across a wide range of social welfare schemes to keep pace with, or to be slightly ahead of, inflation. Recently there have been some endeavours to introduce incentives to attract people back into the workforce. In Ireland we have reached a paralysis of analysis of poverty and its effects on people. Social exclusion does not mean only insufficient income, it goes even beyond participation in working life and is manifested in a number of areas, such as housing, education, health and access to services. It affects not only individuals who have suffered serious setbacks but social groups, particularly in urban and rural areas, who are subject to discrimination, segregation or the weakening of traditional forms of social relations.

There is very little in this Bill which will do anything to alleviate or remove those causes of exclusion experienced by over one million of our people dependent on social welfare, such as persistent unemployment, especially long term unemployment, the impact of industrial change on poorly skilled workers, the evolution of family structures and the decline of traditional forms of solidarity. All these phenomena are sometimes coupled with traditional forms of poverty concentrated in declining urban areas or in rural areas lagging behind general progress in society. Growing resentment at being excluded from sharing wealth and opportunities heightens the risk of people being driven to desperation and disruptive behaviour, such as violence or drug abuse. Insecurity generates fear of the future, in turn often leading to introversion or susceptibility even to racist ideologies of which I hope we will not see too much here, although it is a possibility.

This Bill is introduced at a time when unemployment is high, even rising, when direct and indirect taxation are held to be severe and expenditure burdensome affecting the lives of 1.3 million, two out of every five, households. A reform approach is needed rather than the ad hoc relief approach of merely adding on percentages.

The Commission on Social Welfare several years ago set out to examine the overall area of poverty in policy terms. There has been much lip service paid to its recommendations. All that was necessary to ensure substantially greater progress was made in combating poverty and increasing social welfare payments was the maintenance of percentages of national income being spent on social welfare at levels pertaining in 1986. In this year's budget many payments are being increased to the priority rates recommended by the Commission on Social Welfare, the impression being given that that goal had been reached. That is a gross misrepresentation because the priority rates were emergency rates the commission recommended be paid in 1986.

The overall package of social welfare measures is to cost £72 million in 1994. It is interesting to compare these with other choices made in the budget, for example, £100 million to finance the bad management debts of the various health boards. What is needed in the area of social welfare is a clear statement of policy on the part of the Government. To this end we need an all-party committee on social welfare to examine the entire social welfare code. The Progressive Democrats see the Economic and Social Research Institute, the Combat Poverty Agency the Conference of Major Religious Superiors and other interested groups working with such a committee on a consultative basis in a real partnership so that the many varied and complex social welfare issues could be dealt with and the recommendations of the Commission on Social Welfare implemented within a specified time.

In the absence of a regular and healthy debate on social welfare a number of myths has evolved. The first is that the social welfare budget is out of control and unsustainable. Over the six years 1986-93 GNP increased substantially. However, the percentage of GNP spent by Governments on social services, health, housing, education and social welfare has declined over the same period. It is useful to look at and compare the public service budget which has increased more in absolute terms than the social welfare budget. The rise in income for public service employees has been six times that of the social welfare recipient. Fewer than 200,000 people receive social welfare pensions; 190,000 people receive unemployment assistance and 77,000 receive unemployment benefit. Even with the National Development Plan, unemployment figures are set to rise so that by the year 2000 there could be almost 400,000 people unemployed. The number of pensioners is likely to rise given increased life expectancy and the social insurance fund will not be sufficient to meet increased demands. We need more people to pay into the system. Can the Minister confirm if public servants will be brought into the social welfare system? If that happened the Minister would have an extra £400 million available to him.

One of the main areas the budget failed to tackle was exclusion. One-third of the people are in a triangle of exclusion and we ignore them at our peril. The side effects of exclusion — suicide, depression, alcohol abuse, unhappiness and the destruction of families — flow from a flawed policy of dealing with exclusion in society. It is time for an imaginative way forward, for an integrated holistic approach to deal not only with income for the unemployed but with the improvement of their quality of life and participation in society.

Part II of the Bill provides for increases in rates of social welfare payments from July. I welcome these increases but given the resources available to the Minister the allocation to social welfare is disappointing. All adults depending on social welfare are as deeply immersed in poverty after this budget as they were before it. The priority given to children is unconvincing with no increase for the first two children, just £5 for the third and £2 for the fourth and subsequent child. The increase in child dependency was negligible.

The Progressive Democrats have always argued that adequacy in relation to need should be the cornerstone of the payments system and we regard child benefit as an effective and necessary mechanism to achieve this. Further increases in child benefit for older children are warranted. There is a case for a unified, simplified system of child income support as is the case in most European countries. Any new system of child support should eliminate the need for family income supplement. It is time adult and child dependency was looked at to avoid poverty traps.

The reduction in PRSI for lower wage workers appears to be a step in the right direction but there is an absence of a coherent strategy in this. The employers' PRSI and employees 2.25 per cent levy break up to £9,000 means that a new welfare and poverty trap is created at that level. If workers earn £1 above this threshold will they pay the full levy? Will their wage attract the full employers' PRSI on all their income and not simply on the earnings above £9,000? To pay an extra £500 may cost employers a lot in payroll taxes. If an employee in the hard pressed clothing industry is offered overtime next year the cost for the employer could be enormous. A new ceiling has been imposed on those at the bottom of the ladder. In view of that the Progressive Democrats' proposal to exclude the first £3,000 of everyone's earnings from PRSI would be more equitable.

I fear we will face the same dead-end as sectors in the retail trade in the UK and the lower paid elements in the US. If we allow tax breaks to lower paid workers they will continue in employment while highly skilled workers will not receive the compensation they deserve. Real reform of PRSI would transfer it into the general tax system. If applied to everyone, including the public sector, at the same rate it would generate an extra £400 million, introducing genuine reform to exempt low incomes but there has been no hint of that.

The Progressive Democrats are committed to the elimination of fraud in the social welfare system. There appears to be considerable concern at the extent of real or perceived fraud in the system. In 1985 a special investigation unit of the Department of Social Welfare interviewed 8,000 people claiming unemployment assistance and benefit. As a result 15 per cent of people ceased to claim. In the 1987-89 period the present Minister for Social Welfare requested Craig Gardner to report on the extent of social welfare fraud. To this day the Minister has consistently refused to publish their findings. Discussions I have had with field staff indicate there is general concern within the Department at the high incidence of fraud, yet it does not appear to have been tackled on a large scale.

There are minor amendments in the Bill but no overall formula to integrate people who feel they are living on the edge of the economy, those who suffer social injustice and inequality. The budget and this Bill do little to move their agenda to centre stage.

Dáil Éireann debate - Tuesday, 1 Mar 1994

Social Welfare Bill, 1994: Second Stage.

Acting Chairman

Acting Chairman

Dáil Éireann debate -
Tuesday, 1 Mar 1994