I move: "That the Bill be now read a Second Time."
I am very glad, as Minister for Social Welfare in this multi-party Government, of the opportunity to introduce my first Bill in this House.
As a backbencher, I thought I new a great deal about the social welfare system, how it works and the multiplicity of schemes and services but since taking office, and having dealt with the budget and now the Social Welfare Bill, I readily admit that I have learnt more about social welfare in a short period, and the learning curve is continuing.
The primary purpose of the Bill is to give legislative effect to the improvements in social welfare schemes and services announced in last month's budget. These include: the payment six weeks earlier than usual of increases in weekly rates of payment; a 35 per cent increase in child benefit — the biggest ever; significant PRSI reliefs for both employees and employers which will help them to stimulate business, create more jobs and ensure the low paid have more take home pay; the introduction of a new adoptive benefit scheme, and the extension of the carer's allowance to those on occupational pensions. In addition, as is customary, the opportunity is being taken in this Bill to provide for a number of adjustments and amendments to the social welfare code.
The resources provided by the Government this year for social welfare improvements are the largest ever on an annual basis in the history of the State. They amount to £212 million compared to the £157 million provided last year. That is a 35 per cent increase.
That £212 million injection of extra spending breaks another barrier by pushing total social welfare spending for 1995 beyond the £4,000 million barrier for the first time since the foundation of the State. That means we will spend this year over £11 million each day of the year.
This Bill is truly a radical measure. Not only is it the largest ever annual provision for social welfare in the history of the State but, more importantly it is a targeted social welfare budget which focuses specifically on child poverty while avoiding deepening poverty and unemployment traps.
Even within the spectrum of persons in receipt of social welfare supports, there are inequalities of need and disadvantage. Therefore, it is not enough to adopt a piecemeal andad hoc approach towards the different categories of disadvantage.
It is important, first, to raise the floor of benefits and support measures for all social welfare recipients but, in addition, to focus additional supports on the categories at greatest risk of poverty, that is the long term unemployed, women and children. This is the strategy we have set in train.
I referred to the need to target additional resources on women and children as part of an anti-poverty strategy and I will deal with that in more detail later. I want now to put on record that this Government has taken the initiative to resolve the long-standing injustice concerning the non-payment of arrears due to more than 70,000 women under the 1979 Equal Treatment Directive. It is indicative of my strength of commitment and that of the Government that we will deliver substantially, 75 per cent this year and fully by 1997, on the arrears due.
The payment of these arrears will consist of increases for adult and child dependants and unemployment assistance and they will also receive the transitional payments as provide for in the recent High Court decision. In addition, compensation will be payable based on the increase in the consumer price index from the date of entitlement in December 1984 onwards to the date on which payments are made.
The total cost of these arrangements is estimated at some £260 million of which up to £200 million will be paid by the end of 1995. The remaining payments, estimated at £60 million, will be paid from January 1996 onwards over as short a period as possible and will end no later than mid 1997. All of the married women involved will receive payments on account by September next at an overall cost estimated at £110 million. Further payments on account will be made up to the end of December this year at a cost of £90 million.
A special unit is being set up in my Department to process the payments in question. All the women who have previously received payments under the European Communities (Social Welfare) Regulations, 1992 (S.I. No. 152 of 1992) will be notified of the arrangements for the payment of arrears and an extensive advertising campaign will also be undertaken over the coming weeks. In addition, a special telephone inquiry unit will be set up in the Department to deal with inquiries from the married women concerned.
It has been decided that the costs involved in making these long overdue payments should be met through the sale of part of the assets of the Local Loans Fund. The Local Loans Fund is a statutory fund under the control of the Minister for Finance. It was set up to make loans to local authorities. The money available for lending by the fund was borrowed by the Exchequer and advanced to the fund. Prior to 1987, the principal purpose for which the authorities borrowed from the fund was to enable them to provide mortgage finance to house purchasers. With the setting up of the Housing Finance Agency in 1986, the fund ceased to lend money to the authorities for this purpose; the Housing Finance Agency took over that role.
The Local Loans Fund is in effect the mechanism through which local authorities funded mortgages to householders prior to 1987. It is estimated that the fund comprises about £490 million of outstanding debt in respect of mortgages granted prior to that date. The intention is to securitise a portion of the fund by selling on the debt and using the yield to fund the equality payments this year.
I want to make it absolutely clear because a number of politicians have tried, perhaps out of ignorance, to mislead the public on the way this will operate, that the proposed sale of the debt will not affect the mortgage contracts between mortgagees and their local authority. Mortgage payments will continue to be made in the usual way without change to the local authority for the duration of the mortgage.
Before discussing the main provisions, I would like to address the greatest social challenge facing this Government — unemployment, in particular, long term unemployment. This is timely in the context of the publication two weeks ago of the Interim Report of the Task Force on Long-Term Unemployment which was established following the NESF report entitled "Ending Long-Term Unemployment".
I welcome the task force report and its emphasis on the setting up of a new localised employment service to assist the long term unemployed and other target groups to return to the active labour market. We still have a very serious long term unemployment problem with more than 135,000 of our people without a job for over 12 months — a substantial number of them have been out of work for much longer than 12 months. Setting up a localised employment service is one of the Government's responses to this very pressing problem. It is essential that the long term unemployed and other marginalised groups can gain access to sustainable employment on a par with other job seekers and that they are afforded the opportunity to compete on equal terms for job vacancies.
The reality is that many of the long term unemployed are simply not ready to return to work without a series of interventions in areas such as counselling, guidance, training and work experience. They also fail to hear about job vacancies as most have drifted out of the circles where such information is available, as confirmed by the INOU study launched earlier this week by my colleague, Deputy Bernard Durkan, Minister of State.
The new Local Employment Service is designed to address these types of problems. It is based on the fact that each individual on the live register has his or her own specific needs and requirements and his or her own skills and experience to offer an employer. We have to identify the problems and needs and find a way of addressing them so that the individual recovers the enthusiasm and confidence to return to work and at the same time build on a replenish skills and experience that may be dormant so that the person's skills fit the needs of the labour market. This is not an easy task, but the system we are now putting in place will result in more job vacancies being filled by the long term unemployed.
In developing the Local Employment Service, my Department will utilise the experience we have gained since we introduced our Employment Support Service in July 1993. This service grew out of a recognition that passive income maintenance support on its own was simply not enough. It needed to be supported by a strong, flexible, pro-active approach which would increase the number of job outlets and enterprise opportunities available to the unemployed; increase the number of options for training and further education; and facilitate the unemployed to make the most of the new opportunities available to them to regain a foothold in the labour market.
My Department has now in place a range of options and programmes designed to achieve these objectives and at the same time be more flexible and more responsible to the individual's needs and circumstances. Among the options we have to offer are: second chance education schemes for people at second and third level in which more than 6,500 people are participating, flexible arrangements to allow unemployed people to take up voluntary community work or a part-time job, a PRSI exemption scheme for employers who take on new employees from the live register with more than 2,500 people currently receiving exemption, and finally, the back to work allowance. Since it was introduced in September 1993, 5,600 people most of whom were long term unemployed have left the live register and returned to work. The majority of recipients are engaged in self-employment projects in a wide, diverse and innovative range of measures. The success of this programme proves that significant numbers of the long term unemployed still have a strong motivation to return to work given the right type of support and advice.
We are, therefore, building on the Department's strong regional and local structure to deliver the range of services to the unemployed. We have established a special team of officials, called jobs facilitators, for this purpose. These officials have already built up valuable contracts with the unemployed, employers, voluntary and community groups and other statutory agencies at local level as they explore the full range of options available to the unemployed.
My Department will co-operate to the fullest extent with the proposed new Local Employment Service. We are in a unique position to do so for two reasons. First, we have a strong regional and local organisational structure with a network of more than 200 offices nationwide all of which have ongoing and regular contacts with the unemployed, employers, voluntary and community groups. Second, our experience to date of the operation of our Employment Support Service has given us a unique and valuable insight into the problems faced by the unemployed and their families.
The essence of the new service is that it will bring existing services together in an integrated, focused and more effective manner which will greatly benefit the unemployed and others. No longer will it be necessary for an unemployed person to approach a number of different agencies for assistance. With the new service, there will be a single source of information and support in one place where people can get access to the service they need to tackle their problems. My Department will play an active and full part in its implementation.
Sections 1 and 2 of the Bill contain the usual provisions relating to short title, construction and definitions. The general increase, six weeks earlier than usual, in the weekly personal and adult dependant rates of social insurance and social assistance payments from early to mid June 1995 is provided for in sections 3 and 4. Section 3 also provides for a further additional increase of £1.80 in the weekly adult dependant rate payable where the dependant is under age 66 in the case of old age — contributory — pension and retirement pension. In addition, the age at which the higher personal rate of invalidity pension is payable will be reduced from 66 to 65.
The substantial increase in child benefit announced in the budget is given legislative effect in section 5 which provides for an increase of £7 in the monthly rate of child benefit with effect from next September. From that date, the monthly rate of child benefit will be £27 for each of the first two children and £32 for each subsequent child. In addition, child benefit will be extended to 18 year olds who are in full-time education or are physically or mentally disabled and to 18 year olds on FÁS courses who do not receive training allowances.
The opportunity is also being taken in this section to extend existing provisions whereby child benefit is payable to a qualified parent while serving abroad as a member of the Defence Forces or Civil Service to enable payment to be made to a qualified parent outside of the State while his or her spouse or partner is serving abroad as a member of the Defence Forces or the Civil Service.
I have already spoken at length in this House about the philosophy behind this unprecedented increase in child benefit, the cornerstone of the social welfare budget provisions. By focusing on child benefit, we are doing two things. First, child benefit is recognised as one of the most effective ways of targeting proverty because those most at risk tend to be large families. Second, given the nature of child benefit as a universal payment which is not taxed or withdrawn if employment is taken up, it does not act as a poverty trap, an unemployment trap or a disincentive to work. This is why it makes eminent sense to channel as much income support for families as possible through the child benefit system.
I would remind Deputies that this improvement in child benefit is just the first step in the Government's plans for major restructuring of the child income support system for the future. Having got the basic child benefit payment structure right, the foundation is laid for the development of the child benefit supplement which is the essential element in our plans for a basic income for children. The child benefit supplement will be payable in addition to child benefit to all families whose income is below a certain level irrespective of the source of the income for example social welfare, employment or a combination of the two. The new supplement will incorporate both the child dependant allowances paid to people on social welfare and the family income supplement paid to people at work on low pay.
The implications of the new child benefit supplement are under consideration in my Department. At the same time, as announced by the Minister for Finance in his Budget Statement, the Expert Working Group on the Integration of Tax and Social Welfare is also being asked to consider this proposal and to advise on the best overall strategy. It is best placed to do this given the important work it has already done in this area. I look forward to getting its views in due course.
The shift of income and resources towards those most in need is only one of the priorties of this Government. We are also committed to the stimulation of enterprise and job creation and to rewarding work in all its various forms. The social welfare system cannot be seen in isolation from that task. It has an increasingly pro-active role to play in facilitating employment, experiments with employment and enterprise of all kinds. It must have regard to the labour market as it is today and how it will develop in the future.
The overall tax reforms announced in this year's budget are the most significant to have been introduced in many years. The PRSI changes are innovative and will, for the first time in a number of years, ease the burden on low paid workers in particular. The necessary legislative changes affecting PRSI are contained in sections 6 — 10 and will come into effect on 6 April 1995.
Section 6 provides for a number of significant changes to the PRSI system affecting both employees and employers, as follows: the introduction of a new "PRSI free allowance" whereby employees insured at Class A will not be liable for PRSI in respect of the first £50 of weekly earnings; an increase in the ceiling up to which PRSI contributions are payable by employees from £20,900 to £21,500 per annum, and an increase from £173 to £231 in the amount of weekly earnings below which the reduced rate employer's contribution of 9 per cent applies.
Section 7 deals with self-employed people. It provides for an increase in the income ceiling up to which PRSI contributions are payable from £20,900 to £21,500 per annum. It also provides for an exemption from payment of PRSI contributions in respect of the first £520 of self-employed income and for a reduction from £250 to £230 in the minimum social insurance contribution payable by the self-employed.
Section 8 provides for an exemption from payment of optional contributions in respect of the first £520 of annual reckonable income under the scheme of optional social insurance for share fishermen.
Section 9 provides for a reduction from £250 to £230 in the annual rate of voluntary contributions payable by voluntary contributors who were formerly self-employed contributors.
Provision for regulatory powers to cater for an on-going employers' PRSI exemption scheme is contained in section 10. Employers who take on additional employees who constitute a net increase in their workforce above that applying on a specified date will not have to pay the employer element of PRSI contributions in respect of such employees for a full two year period.
As announced in the budget, the regulatory powers contained in section 10 will allow me to extend exemption under the scheme to employers who take on a young person under the age of 23 into a new job where this job is the person's first employment. This will be a real incentive for employers to recruit young people into newly created jobs. It should also benefit our many small to medium size enterprises.
For the first time ever, a new adoptive benefit is being introduced in the social welfare code for people who qualify for adoptive leave under the provisions of the Adoptive Leave Act. The qualifying contribution conditions and the rates of payment will be the same as those currently applying in the case of maternity benefit. From next June, a recipient will get between £75.70 and £162.80 a week depending on earnings. The new adoptive benefit will last for a period of ten weeks in the case of persons who qualify for adoptive leave. Section 11 makes regulatory provision for the introduction of the new adoptive benefit scheme and it was my intention to use those powers as soon as the Adoptive Leave Bill was enacted. However, as that legislation has now passed all Stages in both Houses of the Oireachtas and has only very recently been signed into law by the President, I will take the opportunity by way of an amendment on Committee Stage to provide for the details of the new scheme in this Bill.
I announced at budget time that I was pleased to be able to continue the trend of previous years in progressively improving the carer's allowance. This year's improvements have two distinct elements which are provided for in section 12. First, the scheme is being extended to include carers of incapacitated pensioners over 66 who are not in receipt of a social welfare pension, for example, those getting an occupational pension. It is only fair that those on social welfare pensions and those on occupational pensions should be treated equally as regards access to the carer's allowance. Many of those who will benefit will be public service pensioners on relatively low pensions. Second, the means test for the carer's allowance is being significantly eased through an increase from £100 to £150 a week in the amount to be disregarded in respect of working spouses and the application of the disregard to income from all sources. Regulatory power is being taken in this section to provide for those changes.
Section 13 amends the provisions relating to maternity benefit arising from the changes introduced by way of the Maternity Protection Act, 1994. The net effect is to link entitlement to maternity benefit to entitlement to leave. This section also provides for the payment of a benefit to fathers who are awarded leave following the death of the mother within 14 weeks of the child's birth in accordance with the provisions of the Maternity Protection Act, 1994. This benefit is equivalent to maternity benefit, having the same contribution conditions and weekly rates of payment.
Section 14 provides for an amendment of the definition of qualified child under which increases for dependent children will be payable to recipients of long term social welfare payments up to age 22, as compared with age 21 at present, for those in full-time education.
Deputies will be aware of the rules governing the payment of the adult dependant allowance where the adult dependant has earnings in excess of £60 a week. These rules have been criticised in recent years because the full allowance is lost as soon as weekly earnings exceed the £60 limit. This has given rise to distortions in certain industries where extra working or overtime is not availed of — and in some cases, pay increases are foregone — because of the impact on the spouse's adult dependant allowance. With a view to resolving these difficulties, I propose to bring in new arrangements early next year in which I will provide a rate of adult dependant allowance related to earnings. It may be necessary for administrative reasons to introduce the new arrangements on a phased basis for different schemes.
Section 15 provides for giving regulatory powers to the Minister to enable an adult dependant allowance to be paid in respect of a spouse or partner who has weekly income in excess of a prescribed amount. It is my intention that the adult dependant allowance payable in these circumstances will be tapered by reference to the level of the spouse's or partner's income. In addition, child dependant allowances in respect of qualified children will continue to be payable at half rate.
The details of the new arrangements are being worked out and I propose to make the necessary regulations later this year with a view to implementing them from early next year. My objective is to ensure a higher level of earnings before the full adult dependant allowance is withdrawn from the spouse — a significant contribution to removing one of the poverty traps which currently keep people out of employment or on very low pay.
Section 16 contains a number of provisions on the rates and calculation of means of unemployment assistance. They include an increase from £10 to £25 in the minimum weekly rate of unemployment assistance payable to single people with means assessed solely on the basis of parental income; the payment of unemployment assistance at the long term rate in the case of a claimant who was previously in receipt of lone parent's allowance, and standardising the provisions applied to married and cohabiting couples on the halving of means where the spouse or partner is not an adult dependant.
Sections 17 to 23 inclusive contain a number of miscellaneous amendments to the existing legislation affecting a number of schemes, as follows. Section 17 provides that a person cannot requalify for unemployment benefit on the basis of optional contributions. Under the optional scheme of social insurance for share-fishermen, optional contributions provide entitlement to unemployment benefit for 13 weeks in any one calendar year.
Arising from the integration last year of the former social employment scheme and Teamwork into the new scheme of community employment, it is necessary to replace references in the legislation which are now obsolete. Section 18 is designed to achieve that.
Section 19 provides that the insurance record of a self-employed contributor can only be used for the purposes of qualifying for old age (contributory) pension or survivor's pension where self-employment contributions for which the person was liable have been paid in respect of at least one contribution year before the date of death or reaching age 66.
Section 20 contains a number of amendments in relation to orphans pensions. The definition of orphan is amended to include a child where one of the parents has abandoned or failed or refused to provide for him/her and the other parent is unknown or has effectively abandoned him/her. This section also increases from £2 to £6 the initial means disregard applied in the case of orphan's (non-contributory) pension.
Section 21 provides that supplementary welfare allowance paid to a person while awaiting determination of a claim for a social security payment from another member state may be recovered from the amount payable by the other State.
Section 22 gives the Minister for Social Welfare power to make regulations designed to standardise the provisions governing payment of benefit or assistance to people who are absent from the State or are undergoing penal servitude, imprisonment or detention in legal custody.
Section 23 provides for a number of minor changes to the provisions for means assessment in the case of social assistance payments. They include disregarding, in certain circumstances, the capital value of property where the property is not used for a limited period, for example, through illness; deleting absolete references to weekly redundancy payments and extending to carer's allowance existing provisions whereby an increase in a non-social welfare pension which has already been assessed as means cannot result in a reduction in the social welfare payment which would be greater than the increase in the non-social welfare payment.
Sections 24 and 25 provide for technical amendments to the Health Contributions Act, 1979 and to the Youth Employment Agency Act, 1981 respectively. Those Acts govern the administration of the two levies involved — the health contribution and the employment and training levy.
The effects of the changes provided for in those sections are an increase from £173 to £178 in the weekly earnings threshold below which employees are exempt from payment of the two levies involved; an increase in the corresponding income level for the self-employed from £9,000 to £9,250; payments made to a spouse under maintenance agreements to be exempt from liability for the two levies, and all recipients of survivor's pension and lone parent's allowance to be exempt from liability for the two levies. That is an outline of what the Bill contains.
At the United Nations World Summit on Poverty held in Copenhagen recently, the Irish Government agreed a programme of action which is geared not only to eliminating abject poverty in the developing world but to the substantial reduction of overall poverty and inequalities everywhere.
This new commitment requires us to develop in Ireland a coherent and targeted anti-poverty strategy by placing poverty and inequality issues firmly at the heart of national policy-making with the aim of developing a more inclusive and just society.
This means that, as a Government and society, we must have as objectives four freedoms:— freedom from want based on an adequate income for all our citizens; freedom from unemployment with as a priority the elimination of long term unemployment; freedom from ignorance with emphasis on the ending of educational disadvantage, and freedom from ghettoisation by emphasising the regeneration of disadvantaged communities.
I propose to bring forward proposals, following consultations with my colleagues in Government, to mainstream anti-poverty policy so that all Government Departments and agencies target poverty and social inclusion in their policy-making and include the people affected in that policy-making and its implementation. I am currently in the process of forming a co-ordinating group to do some preliminary planning in this regard. This group will include representatives from the Combat Poverty Agency, officials from my Department and my special adviser.
The various components of this first social welfare budget brought in by the new Government clearly set out to address that commitment through a strategy not only of tackling poverty and employment traps but of treating those individual citizens who may be in receipt of social welfare payments with dignity and respect. Above all, it seeks to empower those individuals and their children who may be on the cutting edge of poverty.
The social welfare budget is firmly focused on developing equity in both senses of that word — giving people equality of treatment and of opportunity but also giving them a stake in our society. It is essential to remember that society is composed of all its citizens, not just those who are well off.
The Social Welfare Bill before the House is set in the overall context of a determined attack on child poverty. It is the first of three Bills which I will bring before the House before the summer recess. The other two Bills will deal with modifications necessary to the social welfare code in advance of the holding of the referendum on divorce and the introduction of a uniform lone parent's allowance scheme which will, primarily, abolish the humiliating obligation of proving desertion by a spouse in order to qualify for State support for the family.
I commend the Bill to the House and look forward to a constructive debate from Members on the measures.