Dáil Éireann debate -
Thursday, 23 Mar 1995

Vol. 451 No. 1

Social Welfare Bill, 1995: Second Stage (Resumed).

Question again proposed: "That the Bill be now read a Second Time."

Mr. Finucane

Before concluding my speech last night I referred to the carer's allowance. Most of us appreciate the changes in carer's allowance in this year's Social Welfare Bill. The allowance has been modified taking into account the financial circumstances of applicants and this will give further encouragement to carers.

I very much welcome what the Minister has tried to achieve for people on social welfare, particularly the long term unemployed. At last we are trying to determine the skills and knowledge of those people to assess their potential opportunities for employment. Too often in the past many of these people, in order to depress the unemployment statistics were put into job schemes in which they had no interest and in many cases to which they were not suited. There is now a much more responsible approach to those schemes. FÁS schemes dovetail with the social welfare objective of trying to induce people to return to employment. They have had a great impact in this regard.

In the Limerick County Council area 100 people are employed in the Community Enterprise Development Programme to work on projects such as improving roads and their work is much appreciated. The big issue in rural Ireland at present is the condition of the roads.

There are many good elements in the Social Welfare Bill, particularly the further increases made. I am particularly pleased that Deputy Durkan is the Minister of State in the Department of Social Welfare because for many years he spearheaded the causes in social welfare. He has close affinity with the social welfare scene and fully understands it. I have no doubt he will call on his experience in running the Department efficiently.

The Department of Social Welfare has a tremendous impact on public representatives. In many cases we are thrust into the role of facilitator because many people do not understand the complex regulations and social welfare schemes. Will the Minister ensure that the social welfare system is made more user friendly? It is time to get rid of the gobbledegook particularly in assessing criteria for eligibility for schemes. On occasion I have become confused about the means testing system and I can understand the confusion of the ordinary people when seeking their rights. If the Minister makes the system more user friendly he will do much to benefit social welfare recipients.

I have great praise for the staff in the Department of Social Welfare whom I contact on a daily basis. They are concerned about the people who avail of the social welfare system. This is one Department that has been brought into the 21st century in terms of computerisation and other improvements down the years.

Significant improvements have been made to social welfare offices around the country and in many cases new premises have been built. Changes have also been made in regard to signing on. In many cases, instead of going to the social welfare office people sign on at the local post office. Quite often people have to queue in small post office premises whereas greater use could be made of the larger social welfare offices. Will the Minister consider making better use of large social welfare offices? Many of the changes that have taken place in simplifying the social welfare system are very desirable and worth while and we welcome them. The stigma once attached to drawing social welfare is long since gone and the changes made are in the interests of the consumer.

In the past I raised the question of county boundaries as it relates to this matter. People from the western half of County Limerick have to cross the border to County Kerry for health and social welfare assistance even though there is a modern social welfare office in Newcastle West. Perhaps that is due to the geography of the area, but if the Department is serious about the one stop facility which it advocates, it should consider this matter and the confusion caused when people must get advice from different offices I cannot give specifics in this regard but it is a matter I have raised with Department officials in the past. In the case of the social welfare office in Newcastle West with which I am familiar, greater use should be made of that modern building. Many people who have to go outside the county for assistance could be facilitated in those premises. Perhaps there are logistics involved and it is not feasible, but as a local politician I would like to deal with constituents inquiries within my county. In our work as politicians we have much contact with local social welfare officers. We develop a rapport with these officials and appreciate the work they do and the advice they give.

Mr. S. Kenny

It is 20 years since the late Frank Cluskey, the then Parliamentary Secretary to the Minister for Social Welfare, introduced fundamental reforms of the social welfare system. He introduced new benefits for lone parents and other categories of recipients who had been outside the system for a very long time. There are further improvements in this year's budget.

For a number of years from 1987 onwards there was a slight rowing back on improvements made during the years, for example, increases were paid at a later commencement date. For the first time since then the increases this year will take effect from early to mid-June. I welcome the reversal of this trend which affects the least well off in society. It is the Government's objective to try to synchronise the payment of social welfare benefits with tax and PRSI changes made in the budget. It is important that the two systems are in parallel so that people are compensated at the time changes are made in the system. For example, local authorities determine rents payable at the beginning of the financial year so it is important that tax, PRSI, social welfare, local authority rents and charges systems are synchronised. For that reason the changes in this year's budget are welcome.

The increase of £7 per month in child benefit, a 35 per cent increase, is welcome. The families most in need are those with children who very often may be caught in a poverty trap. This targeted increase will help them as it is not means tested or assessed for tax or local authority rents and is, therefore, a real increase for those dependent on social welfare. The objective of the increase is to ensure that it will help children in these circumstances.

The extension of the carer's allowance to carers looking after pensioners aged 66 and over who are not in receipt of a social welfare pension is very important. Somebody may have given up their career or private life to ensure an elderly relative is looked after and it is important that the carer's allowance scheme includes categories who up to now have not been covered by it.

I welcome the extension of maternity leave to all female employees provided for in the Maternity Protection Act, 1994, and the provision of a similar payment for fathers who are awarded leave in accordance with the provisions of this Act. It is important that the State recognises the role of the father as well as the mother in rearing a child during the formative years and it is important for the child's development to see the father in a caring role.

The increase from £10 to £25 in the minimum rate of unemployment assistance payable to young people living at home who do not qualify under the present means testing is welcome. Because young people living at home did not qualify under the means test for unemployment assistance the trend had been to move into accommodation and then qualify for a rent allowance from the health board as well as unemployment assistance. If young people voluntarily leave the family home, nobody should put any obstacles in their way. However, many young people may wish to live at home but are forced to leave it. The family may wish them to live at home and parents are concerned that their children have to leave home at 18 or 19 years to qualify for unemployment assistance and may go their own way in life at too early a stage.

The increase in the social welfare budget is £212 million this year compared with an increase of £157 million last year, a 35 per cent increase on that of last year. This is indicative of the Government's commitment to dealing with the inequalities of the social welfare system. There is a strategy to help the long term unemployed with the provision of job facilitators who will deal individually with each long term unemployed person, assess their needs and skills and build their confidence. This will give people an opportunity to get back into the workforce through the aid of the local employment service.

Dr. O'Hanlon

It was interesting that Deputy Kenny should refer to the late Frank Cluskey who, although he was not a member of my party, made a major contribution to the development of social services. I think it is fair to say that if he were here today he might do what he did on another occasion when he was a member of the Cabinet and walk out in protest at the treatment of widows, old age pensioners and the long term unemployed.

Minister of State at the Department of Social Welfare (Mr. Durkan)

If he had been in the previous Coalition Government he would have walked out when the lone parent's allowance was taxed.

Dr. O'Hanlon

Deputy Kenny complimented the Government's intention to pay the social welfare increases six weeks earlier. He should have stated that it was a previous Fine Gael-Labour Coalition Government who decided not to pay the increases until the end of October or early November and that Deputy Woods, in the first Fianna FáilProgressive Democrats Coalition Government of 1989, made the increase payable from 1 July.

Mr. Durkan

He could have made them payable earlier.

Dr. O'Hanlon

Deputy Durkan's party, with Deputy Seán Kenny's party, made them payable at the end of the year and there was no benefit except a few shillings at Christmas for those unfortunates dependent on social welfare for their livelihood. The Bill gives effect to what is contained in the budget. The Minister described it is a radical measure.

Mr. Durkan

Correct.

Dr. O'Hanlon

The Minister for Social Welfare's idea of what is radical has changed since he became a member of the Government. We have stated that social welfare recipients will receive a 2.5 per cent increase and it is interesting that in his speech yesterday the Minister did not mention that increase once.

Mr. Durkan

Fianna Fáil mention it all the time.

An Ceann Comhairle

The Deputy in possession without interruption.

Mr. Durkan

I apologise: I was overcome.

Dr. O'Hanlon

The Minister said he was particularly pleased with the social welfare provisions in the budget. In February he said that the 2.5 per cent increase in weekly personal and adult dependant payments guaranteed that everybody receiving a social welfare payment will keep pace with the predicted rate of inflation this year. That may have been true at the time but the rate of inflation is now projected at 3 per cent. The Minister obviously got the message about what the people think of his 2.5 per cent increase since he did not mention it yesterday.

In my constituancy when mention is made of Ernest Blythe some people say: "He was the Minister who reduced the old age pension by one shilling". The Minister is fortunate that the budget will not go down in history as the worst in the history of the State for those who depend on social welfare payments; it is the second worst budget.

The Minister spoke at length about introducing equity into the system. The household budget scheme is available to those who are long term unemployed and works very well. They are able to pay their local authority rent, electricity and gas bills through the post office at no cost to the Exchequer. That scheme should be extended to include all those who depend on social welfare for their income. Anyone who wishes to do so should be able to avail of the household budget scheme. Recently a deserted wife and mother of four children under 12 years was the subject of a court order sought by the local authority to evict her for non-payment of rent. She would have been happy to avail of such a scheme but it is not available to those receiving lone parent's allowance. The scheme should be extended to cover such people or a similar scheme should be introduced.

In reply to a recent Parliamentary Question I put to the Minister for the Environment he stated that over 82 per cent of local authority tenants depend either solely or mainly on social welfare payments. I raise this matter because it is wrong that a deserted wife with four children should be evicted from her home particularly as she is in receipt of an income from the State. There should be some method of transfer between different arms of the State where the person is agreeable. If they do not agree that is a different matter.

The Department of Social Welfare provide the money and pay officials to administer the various schemes. The money is given to the local authority tenant many of whom employ people to collect the rent. If the local authority does not receive the rent it goes to court at great expense to obtain an eviction order. The tenant is put out on the side of the road and then the health board houses the family in private accommodation at a cost which is four or five times that of the local authority rent until such time as the local authority can re-house them. It is time we moved away from that and there is scope for the Minister to extend the household budget scheme, which is very good as far as it goes, to all social welfare recipients who wish to avail of it.

As regards the carer's allowance there is a big difference between looking after someone in their 80s who may be feeble but mentally alert and able to do some things for themselves and looking after a person, for example, who may have suffered a stroke and is totally paralysed. Such a person may need to be spoon-fed three or four times a day. I welcome the decision to increase the disregarded income from £100 to £150 but the allowance should be targeted at those who care for people with a major disability or who are totally incapacitated. In such cases, unless the income is particularly high, there is a case to be made for disregarding the total income. Those dependent on social welfare payments do not benefit from disregarding any income. Anomalies are creeping into the system.

Let us consider the case of a widow whose sole income is the widow's pension, looking after a severely mentally handicapped child. None of her income is disregarded nor does she receive a carer's allowance. Her neighbour, also a widow with a handicapped child, has the same amount of income. In one case the widow is unable to leave the home. I understand the difficulties the Minister might encounter but if we increase the disregarded income for those who are working from £100 to £150 perhaps that militates against having equity in the scheme. The Minister should consider that aspect.

I welcome the decision to make the payments under the equality treatment legislation. I suppose it should have been paid in 1984 when the Fine Gael-Labour Coalition Government was in office but I am concerned at the method by which the Government intends to raise the requisite funds. Yesterday the Minister referred to the fact that the Government would raid the local loans fund consisting of £490 million and said: "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 do not know what that means. Perhaps, when replying, the Minister or his Minister of State might explain it because, as far as I am concerned, this is a three card trick. The local loans fund forms part of the Exchequer funds and it is the Minister's intention to raid that fund to the tune of £140 million. My understanding is that it will not be privatised but transferred to a semi-State organisation which, in turn, will have to borrow this money from the private sector. If they do not borrow from the private sector — which would be even worse in many ways — what will happen? It would mean that the money now available under the provisions of the Small Dwellings Act would be raided. I see the Minister of State, Deputy Durkan, shaking his head, but the money must come from somewhere. The Government has two choices only, to borrow the money — which I understand is its intention — from the private sector, which will increase public spending to in excess of 7 per cent, greater than the increase of 6 per cent in public spending the Minister for Finance told us on budget day would not be exceeded or to increase the public sector borrowing requirement. Assuming the Housing Finance Agency will provide the money. I do not know what will be the effect if it has to borrow the money at a higher rate of interest than applied to Exchequer borrowing many years ago. I understand the last occasion on which the Exchequer paid out money from the local loans fund was in 1986 but, following legislation passed in 1987, that practice ceased. I perceive it to be a circular transfer within the system which will do nothing apart from adding to the State's borrowing requirement and increasing public spending this year.

In this respect it is fair to make two points. One is the wide diversity of ideology among the three parties in Government which does not allow them to examine alternative means of funding these essential equality treatment payments. This is another example of that diversity of views on how the State should be run. We warned the Government at budget time that they had been handed the national finances with a surplus of £15 million and should have endeavoured to remain in surplus. Instead, the Government went on a spending spree, like the Fine Gael-Labour Coalition Government in the early 80s.

Mr. Durkan

The Deputy wanted us to spend more money a moment ago.

Dr. O'Hanlon

They decided they would borrow £310 million this year. The chickens are coming home to roost, leaving the Government no room to manoeuvre in many areas, not having taken our advice at the time.

Yesterday the Minister for Social Welfare said 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. That is wrong because, in most instances, the Minister is merely increasing the allowances first announced by his predecessor, Deputy Woods. He should have recognised that rather then make an issue of the fact that he was being so generous.

I welcome the increase in child benefit and the proposal for a localised employment service about which the Minister informed me yesterday. Perhaps he would inform us when it is hoped to establish that service. He might have recognised also the contribution of his predecessor and his Department on the establishment of the employment support service in 1993. We all accept the need for counselling, guidance, training and work experience for the long term unemployed.

Recently, a person on unemployment assistance inquired of me why people could not go to their local post office for payment like some other recipients of social welfare, such as those on unemployment benefit. In this respect the long term unemployed are being discrimated against, they have to go to the labour exchange whereas those on unemployment benefit can obtain payment at their local post office: at least that is the position in my town: I do not know how prevalent it is nationwide.

I also welcome the decision to transfer the disabled person's maintenance allowance to the Department of Social Welfare, something I had advocated during my term as Minister for Health. Indeed I had initiated negotiations for its transfer. Over many years while in Opposition I raised the fact that there is unemployment benefit, unemployment assistance, disability benefit but no disability assistance, leaving a wide gap. Bearing in mind all the changes effected in the social welfare system overall this vacuum led to much unnecessary administration and time wasted while people awaited their entitlements from their health boards.

I commend the Department of Social Welfare and its officials who have effected tremendous improvements in the overall administration of social welfare in recent years, they utilised information technology to put a human face on the Department, not always associated with high technology. I also compliment the Minister's predecessor, Deputy Woods, who held that office for eight years but particularly his departmental officials because, at every level, one receives nothing but the height of courtesy, efficiency and a recognition of the in-depth knowledge of those officials of their many-faceted tasks.

Mr. E. Walsh

I might lay out the background against which this Bill is being discussed. When its provisions are examined within the context of the overall economic strategy outlined in the budget, the remarks of the Minister for Finance are worthy of repetition when he said that this latest was one of three budgets this Government intend introducing before the next general election, containing three main objectives: first, reward for work, second, the promotion of enterprise and, third, strengthening social solidarity. The Minister cited work as the key to our success, saying it is through work that we create wealth for our society overall, adding that more people must be at work and appropriately rewarded. Finally, he said we must also provide the opportunity for those people without work to work.

I should like to address the third of those objectives — strengthening social solidarity — which falls within five separate headings: first, to protect the spending power of social welfare recipients; second, to take the first step towards a basic income for children; third, to reform deserted wife's benefit and lone parent's allowance scales; fourth, to considerably improve the carer's allowance scheme and, fifth, to give additional assistance to voluntary and community organisations.

A number of newspaper headlines at the time of the Minister's Budget Statement and the budget debate outline the background against which this Social Welfare Bill is set and the reaction to the social welfare and other provisions in the budget. They include "PRSI tax changes to boost jobs"; "All workers will be better off"; "16,000 houses to escape the tax net"; "Tax relief introduced on rented property"; "Guidance and placement plan for jobless to be introduced"; "£2.1 million to fund sports and cultural projects"; "Arts sector jubilant at rise in funding", which I am sure pleased many people. It is a long time since we saw such headlines regarding reactions to budgets. Other newspaper headlines include "Warm welcome in North for concessions to the elderly"; "Overseas funding now at record levels"; "£23.6 million for court and prison buildings"; "Tax incentives for resorts welcomed"; "Motor trade urged to top up Minister's £1,000"; "Step in right direction but not enough say employers"; "Services sector poised to reap the rewards of new 38 per cent tax"; "Entrepreneurs should benefit from seed capital"; "Farming organisations give a muted welcome to tax concessions for their sector"; "Adult rates should keep pace with inflation in social welfare"; "Lower and middle income earners gain most from the budget in terms of take home pay"; "Exemptions and deductions cut the individual liability to income tax" and "£8 million earmarked to reduce waiting lists in the health area". That is the background against which the Bill we are dealing with today is set.

The total expenditure on social welfare will be £90 million this year and £250 million in a full year. That represents an increase in expenditure of more than 35 per cent on the 1994 budget allocation which was also significant in respect of provisions for social welfare dependants. Government spending on social welfare for 1995 will break the £4 billion mark for the first time, a colossal sum of money. Despite many critics of the budget, particularly of social welfare provisions, the evidence is that the principles of strengthening social solidarity have been achieved in many areas.

Everybody recognises the importance of child benefit. An increase of £7 per child per month is a major contribution to the family unit. It brings child benefit payments to £27 per month for the first two children and £32 per month for subsequent children, but it does not end there. It is welcome and significant that it will be extended also to include 18 year olds in full-time education, 18 year olds with disabilities as well as those on certain FÁS courses.

By now many people will have forgotten the major increase in child benefit negotiated by the Labour Party with the Fianna Fáil Party in the formation of the previous Government. That resulted in a child benefit provision of £20 per month and the provision has been increased in subsequent budgets. It has made a major contribution to a significant method of addressing the problem of poverty and the poverty trap. It is significant also that it is paid to women who are the mainstay of households who manage finances in difficult circumstances and keep families in a state of reasonable comfort. The real benefit of this payment is that it does not relate to work and tax status and, in that way, it gets to the heart of the problem.

The Social Welfare Bill addresses major criticism of the delay in payments to social welfare recipients. That delay is being addressed for the first time by bringing the payment dates forward by six weeks. Everybody welcomes the bridging of that gap, particularly social welfare recipients.

The changes in PRSI contributions are designed to relieve those on low incomes and also people outside the income tax net. Fifty pounds of weekly wage will be disregarded in calculating PRSI contributions and that will result in a significant reduction in PRSI to those on low pay. For those paying 27 per cent income tax, the gain will be just under £2 per week. Those improvements are introduced in conjunction with other budgetary income tax reliefs and will be welcomed by all workers. It will be particularly welcomed by the Packard workforce who recently experienced difficult and worrying times when faced with the closure of their factory due to the fierce competition from low cost producers in Eastern Europe. That important employment unit in Tallaght now has a breathing space to address the difficult conditions in the markets in which it deals and has initiated measures which will assist them in their efforts to survive. This measure is not the whole answer. The future of the plant must be secured by a variety of measures. The workers have already made a major contribution and we now look to the Government to safeguard the security of that important employment sector in Tallaght.

Everybody welcomes the improvements in the carer's allowance. We are beginning to recognise the important contribution of people who care for the weaker suffering sections of our community, who do not want to go into institutions and who, in many cases, are better cared for in their home environment. The assistance given under this allowance will facilitate the care of people in their homes. I look forward to further developments and I hope the next two budgets will contain further evidence of the Government's commitment to this area.

The change in minimum unemployment assistance is welcome. The increase from £10 to £25 in the minimum rate paid to qualified young people living in the family home is an incentive for them to live at home rather than in rented accommodation. Assessments which included board and lodgings greatly irritated many young people and left them virtually penniless while seeking employment. The expenses incurred in that process meant that many had to fall back on their families who, in some cases, were not in a position to support them. The provision is not major but it is significant that this area is being recognised and dealt with. I hope it will be part of the continuing process of providing support for young people who wish to remain in the family home until they decide to leave and live on their own.

I would like to address a matter not directly associated with the Bill, the equality payments, which should have been made a long time ago. The price is now being paid for that delay and as a result a large bill must be met. There is only one way to deal with it, to pay the money to the people entitled to it. The original idea was that it would be paid over a four year period and £60 million was provided in the budget for the initial payments. I am glad the Government has succeeded in doing what I advocated, to pay it as soon as possible and in as large a sum as possible to ensure that those who waited so long will reap the benefit.

The arrangements for payment being made by the Government are largely welcomed by the women who have waited so long. Three quarters of the payment will be made before the year ends. This will be a substantial sum of money for many people who have never had the pleasure of having such a large sum at their disposal in such a short space of time. Many are waiting with bated breath for this money to finance projects which they have been unable to undertake previously.

I note comments from the Opposition benches as to whether these matters are being addressed properly. They criticise the method used to find the finance while at the same time they welcome it. There is only one way to deal with a problem such as this; you either cut expenditure or find the finance elsewhere. If you welcome the development you must find the money even if it means cutting expenditure, not something with which Members would agree. The sourcing of this money is most important, it must be found by whatever means and the people must be paid. We can deal with the position as we find it afterwards.

The Government has been criticised for embarking on a spending spree. In the same contributions we are told we are not spending enough on social welfare and that the unemployed have been let down by the Government with a meagre 2.5 per cent increase. In many cases they disregard the contribution made in the area of child benefit. Because it is paid under a separate heading, announced under a separate heading — and not included in the list of social welfare payments — it is disregarded. For many unemployed people with large families this benefit, in conjunction with the 2.5 per cent increase in social welfare payments, will make a significant contribution to the household.

I turn now to the question of the long and short term unemployed. The scheme announced by the Minister to deal with the unemployed — 100,000, 200,000, or 300,000 — does not take account of the humanity involved. In the past we have not been able to identify them as individuals who need specific attention and special help. I am pleased that the number of long term unemployed is falling. We need to examine precisely how many people of various categories are involved in the unemployment figures. We must target the people we need to address. It is no good saying we need to produce schemes and target various things at the unemployed unless we know precisely their needs.

Prior to becoming a Member I had been involved in the area of education and, in particular, in second chance education for the unemployed. When you become aware of their needs and requirements it is amazing how quickly you can focus help in the right direction. Many officials in the Department of Social Welfare do not have the time or resources to target these people, to speak to them and find out their interests and the help they need. Because we are not doing that we are not addressing the problem and I am pleased the new proposals will do so. When we become aware of their needs the resources can be targeted more effectively at those who need to get back to work as quickly as possible. This is the first and most obvious sector to deal with. The needs of the short term unemployed can be addressed with certain types of support and we can put State resources of a more appropriate kind at the disposal of the long term unemployed — those who have the greatest difficulty.

For the first time the Department of Social Welfare is beginning to address the problem of how to speak to recipients. Many young people have expressed an inability to understand precisely what they are told at points of contact, such as unemployment exchanges. If they cannot understand it why can it not be written down so that it can be taken away and considered? This would take only a few moments. However, as the staff are under pressure with larger numbers signing on they do not have the time to do that.

We must use the technology in place to ensure people are adequately informed; first, of their rights, second, how to go about acquiring those rights and, third, to ensure they have the correct amount. That is an essential part of the social welfare system. Many of the people who are dealt with in unemployment exchanges need that type of support and I am pleased that technology may help them in that regard.

I congratulate the Government on the Social Welfare Bill and remind it of the context in which it was delivered.

Éamon Ó Cuív

Creidim gurb é an Bille Leasa Shóisialaigh an Bille is tábhachtaí a thagann os comhair na Dála gach bliain. Tá tionchar ag an gcóras leasa shóisialaigh ar gach saoránach, bíodh tú ag íoc isteach sa chóras nó ag fáil airgid amach as. Cuireann sé íontas orm scaití a laghad spéise agus a chuirtear i mion sonraí an Bhille seo ó thráth go chéile ar gach taobh den Teach. Creidim go gcaithfimid athnuachain iomlán a dhéanamh ar an gcóras leasa shóisialaigh féachaint le córas a chur ar fáil atá feiliúnach don aois ina mhairimid agus nach bhfuil bunaithe ar thuairimí a bhí níos feiliúnaí don chéad seo caite ná mar atá siad don chéad ina bhfuilimíd ag maireachtáil. Mar sin fáiltím roimh an díospóireacht seo fiú munar féidir liom mórán fáilte a chuir roimh an Bille féin.

I am disappointed that the Minister for Social Welfare, having introduced his first Social Welfare Bill, is not present for the debate. I had hoped that between the introduction of the Bill and Committee Stage he would have considered some major amendments.

The Social Welfare Bill and the budget, as far as it relates to social welfare, were a big disappointment. The lack of innovation in any direction in social welfare policy is regretted. It would appear that the general feeling in Government was that social welfare recipients were doing too well compared with working people and that the best way to create incentive was to pull back on social welfare increases. I am surprised at this policy from a Minister for Social Welfare from Democratic Left, particularly in view of the statements made in previous years on social welfare increases introduced by Fianna Fáil led Governments.

I express my utter shock and dismay at the low general rise in social welfare rates this year. When compared with the general increase of 3 per cent last year, this year's increase is totally inadequate. In addition to the general increase last year, there were increases of 10 per cent in unemployment and disability benefit and a widower's, or survivor's, pension became payable for the first time. I congratulate the previous Minister for Social Welfare on the major changes he introduced to the means testing system. I will refer to this point in greater detail later.

I do not understand the excuse given by the Government for the low general increase in social welfare this year, that is, it is interested in creating an atmosphere of enterprise. When one looks at the means testing system one will see that this excuse rings very hollow, particularly for the 385,000 pensioners. I presume the Government is not proposing to put pensioners back to work in the near future. The situation is further exacerbated when one realises that there was no increase in the child dependant allowance for social welfare recipients. While there was a major increase in child benefit, this applies to everybody with dependent children. Social welfare recipients would, in the normal way, have expected an increase of 40p per week for each dependant child. The real increase in child benefit for those on social welfare is not £1.61 per week but £1.21. Everybody will receive an increase of £1.61 and one would have expected there to be something extra for those in receipt of social welfare. However, that has not happened this year.

This is particularly interesting when one considers the number of people caught in the poverty trap and about whom we heard so much when Democratic Left was in Opposition. The poverty level is arrived at by ascertaining the number of people earning less than 60 per cent of the national average income. Given the increase in the rates for child dependants, the Government has done nothing to narrow that gap. A person earning a gross salary of £100,000 has received the same increase in child benefit as a person totally dependent on social welfare. I welcome the increase in the number of women in the workforce, but they will also receive the same increase as social welfare recipients. Instead of directing resources towards the alleviation of poverty, the Government has put social welfare recipients at the bottom of the pile. The budget hit hardest the poorest and least vocal in society and gave the lie to all the fine words spoken by Democratic Left in Opposition.

I wish to refer to the payment of child dependent allowances for children in full-time education. I am disappointed that the Minister did not move to remove the anomaly in the social welfare system whereby people in receipt of short term unemployment and disability benefit are not eligible for the child dependant allowance for children between the ages of 18 and 21 years in full-time education. I thought the Minister would continue the progress made by his predecessor and extend child dependant allowances to all child dependants up to 21 years of age in full-time education. Is the Minister trying to convince us that the children of people in receipt of disability or unemployment benefit who are over 18 years of age and in full-time education do not cost their parents money? It is time this anomaly was removed from the social welfare code. I call on the Minister to put down an amendment to the Bill which will ensure that child dependant allowances are paid to all child dependants in full-time education up to 21 years of age. This is particularly important as under the present regulations people can be in receipt of disability benefit for two years, three years or longer without being granted an invalidity pension.

I wish to refer to this point in greater detail. All too frequently we meet people who have been in receipt of disability benefit for long periods. The Department seems very reluctant to grant these people an invalidity pension, even when they have been in receipt of a disability for longer than two to three years. Even if he is not willing to change the eligibility criteria for invalidity pension, the Minister should introduce a system similar to the one for short term unemployment assistance so that a person on disability for a fixed period would be put on long term disability benefit where the rates and privileges enjoyed would be exactly the same as those enjoyed by people on long term unemployment assistance. This would be a small but practical improvement in the present system. We all know people who have been on disability benefit for years and who cannot qualify for an invalidity pension.

Like most Deputies, I welcome the introduction of a PRSI free allowance. I hope this innovative measure is a first step in amalgamating the levies, PRSI and tax systems into one coherent system. However, I find it totally inexplicable as to why this allowance was pitched at £50 rather than £60 per week. It should have been set at £60 per week as there is already an exemption from PRSI for employees earning less than that amount. This anomaly in the system has been created without good reason. A person earning £59.99 per week pays no PRSI but if his income is increased to £60.01 he will have to pay 55p in PRSI, giving him a net reduction in income of 53p per week. This is another inconsistency in the system. Each year we introduce further inconsistencies into the system, yet we wonder why there is a disincentive to work.

I thought the Minister would put his money where his mouth was last year when there was severe criticism about the liability threshold for the health and employment levies. I welcome the marginal increase in the threshold but there are still faults in the system. The Government did not address the obvious problems the threshold creates. A person earning £177 per week pays no health or unemployment levy while a person earning £178 per week — £1 more — will have £4 extra taken out of his wages as he is liable for the full health and employment levies. I thought the Minister would have the courage to rationalise the system through the introduction of an employee's PRSI allowance of £60 per week and two rates so that a person pays nothing on the first £60, 6 per cent on the next £120 and 9 per cent on the balance of his income. By adjusting the upper ceiling, such a system can be made revenue neutral. The health and youth employment levies could be incorporated in those figures, thus simplifying the system. It would then be easy for the State to decide what proportion of the PRSI collected should be given to health or youth employment. In that way we would have a coherent, simple and effective system that everybody could understand. Instead we create complicated systems.

The Minister professes to be a friend of the poor. I, therefore, hoped he would have grasped the nettle and introduced radical reform in the means testing system so that people on social welfare could better their position. Instead, only marginal changes were introduced to improve their lot. The means testing system is riddled with inconsistencies, anomalies and irrational contradictions and it is time that the concept of means testing as we know it changed. It derives from a Victorian attitude towards social welfare, that such payments are something for which the recipient should be grateful and that any conditions can be imposed by the State rather than considering it a right to a basic income, as most progressive people see it. As it would take far too long to cover all the complications associated with means testing, I will highlight merely a few.

I represent a large number of small farmers, currach fishermen and people involved in small craft industry and seasonal tourism and one of their greatest difficulties is the penal system of means testing. I pay tribute to Deputy Woods who, as Minister for Social Welfare, took some small steps towards improving the lot of those on means tested payments. I compliment him, in particular, for exempting from the system the Mná Tí and seaweed gatherers and for doing away with the concept of "own produce consumed". Under the iniquitous system if, for example, a small farmer in Connemara sowed a field of potatoes, his social welfare payments were reduced by £50 or £100 per annum for his efforts. The system needs to be radically overhauled.

Out of a total population of 20,000 in Connemara, there are 5,000 herd owners. If one takes account of spouses and children, approximately 85 per cent of households in Connemara own cattle, that is typical all along the west coast. Many of those depend on means tested payment from the Department of Social Welfare. Does the Minister honestly believe that anyone in Connemara could make a viable living from agriculture? The number could be counted on one hand. The majority of herd-owners are either pensioners or people on unemployment or small farm holders' assistance and they are means tested pound for pound for their State payments. They pay the highest rate of tax in the State. For example, if a married person with three or four children in receipt of unemployment assistance earns £1,000 from farming, bed and breakfast facility, craft work or fishing his or her income will be reduced by that amount. If that person increases his or her income by, say, £500 social welfare payments will be decreased by £500. It is like being on a merry-go-round, they are caught in the ultimate poverty trap. For a Government that claims to encourage enterprise, this is a totally anti-enterprise culture.

We frequently hear city dwellers complain about the large premia payments paid to farmers. The greatest beneficiary of headage payments in the west, from Donegal to Cork, is the Department of Social Welfare. Under our system, for every £1 increase in headage payments and premia, the Department of Social Welfare claws back £1 in social welfare. In this context, the Department of Social Welfare is the ultimate beneficiary in the largesse from Europe. The system needs to be changed radically.

The Government appears to believe that the banks pay 10 per cent interest to small deposit holders. If a person on unemployment assistance has, say £2,000 on deposit in a bank, under the means testing system, the Department, with the exception of a few hundred pounds, assesses that amount at a rate of 10 per cent. Can the Minister tell me what high street bank pays 10 per cent interest on small deposits? For some reason widowers are assessed at only 5 per cent. While we talk about encouraging thrift and getting people out of the clutches of moneylenders, in reality, we penalise honest people at a rate of 10 per cent per annum. Furthermore, if a person receives a lump sum in a redundancy payment, for unemployment benefit purposes that lump sum will be means tested at 10 per cent per annum. I call on the Minister to exempt redundancy lump sum payments from means testing. This was done previously for pensioners in the case of spouses' houses. I also suggest that capital under £5,000 should be exempt from means testing and any higher amount should be assessed at 50 per cent of the bank interest earned by the recipient of social welfare. We should encourage saving.

I now want to address the anomaly in the way a dependent spouse is means tested when the husband or wife gets a job. Let us take the example of a person in receipt of unemployment assistance whose dependent spouse earns £59 a week and has £5 travelling expenses. The person in receipt of unemployment assistance would be entitled to £92 per week. Therefore, the household income would be approximately £147 per week. If the person's income increases to £150 per week — an increase of £90 per week — the household income will increase by less than £2. The Minister can check those facts for himself. That is the way the system works. That is the penalty imposed on people who better their position under the present code. I could highlight many more crazy anomalies of where the more one earns the less one gets. The system must be radically overhauled, but this Bill does nothing in that regard.

Bhéadh súil agam go mbreathnófaí arís ar an mBille seo agus go dtiocfaí isteach le leasaithe air. Muna ndéanfar é seo imbliana ag an Rialtas seo le cúnamh Dé beidh Rialtas ina mbeidh Fianna Fáil páirteach ann an bhliain seo chugainn leis na leasaithe seo a thabhairt isteach.

Mr. J. O'Keeffe

It is traditional for an Opposition to find fault with the Social Welfare Bill each year. It is traditional also for the Government to be criticised about the need for radical overhaul of the system. We have not been disappointed. We are getting a dose of that medicine from the Opposition this year. It must be pointed out that for the past seven years a Fianna Fáil-led Government had many opportunities to radically overhaul the system.

Éamon Ó Cuív

There was radical overhaul.

Mr. J. O'Keeffe

We are taking up from where Fianna Fáil left off.

Éamon Ó Cuív

This Social Welfare Bill is the worst in seven years.

Mr. J. O'Keeffe

It would be simple to say that no improvements were effected over the past seven years, but I will not. That is not correct, some improvements were effected by the Fianna Fáil-led Government in the past seven years, but we still have a long way to go. I am sure my namesake will not mind being reminded that one of the legacies left by the Fianna Fáil-led Government of the past seven years was the "dirty dozen". Has that been forgotten? There can be convenient lapses of memory when discussing, apparently objectively, major matters of State when such matters are overlooked. I do not intend criticising what has happened in the past seven years — there were some improvements. This year there were considerable further improvements. I am not saying that all the problems have been resolved. It will take at least the next seven years in Government to achieve that but this year's measures are a major advance.

Let us look at the overall cost. Of the £350 million a year the new Government will devote to improvements, £200 million is for social welfare improvements, and a further £150 million represents the tax foregone in respect of the PRSI improvements. This is not bad to begin with. It represents some effort to direct resources particularly at those in low paid employment who are often much worse of, when fringe benefits are taken into account, than those on social welfare. In the interests of justice and equity, it is right to ensure that the lot of those in low paid employment is improved, and I am delighted that our new Government had directed resources towards that area.

This is a major Bill because social welfare is paid to virtually every home in the country. Up to 40 per cent of households are totally or partially dependent on social welfare payments. The annual bill will henceforth exceed £4,000 million so it is of major import to every citizen. Let us try to be objective. The general overall increase of 2.5 per cent could not be classified as exceptionally generous. However, the available funds were directed towards specific areas of high priority, for example, children, the low paid and people in receipt of the carer's allowance. The 2.5 per cent increase keeps pace with inflation and, in the case of those who have children or who will gain otherwise, the increase is much more substantial.

The cornerstone of the Bill is the 35 per cent increase in child benefit. That is a major leap forward and, it is worth mentioning, it goes to every home in the country where there are children, irrespective of income.

Éamon Ó Cuív

It goes to rich and poor alike.

Mr. J. O'Keeffe

I am glad my namesake mentioned that because that is part of the policy — child benefit is universally paid.

Mr. Durkan

And correctly so.

Mr. J. O'Keeffe

That is not the only payment in respect of children because there are child dependant allowances for those in receipt of social welfare benefits, and the family income supplement which is available to those in low paid employment.

Éamon Ó Cuív

There are no increases in those payments.

Mr. J. O'Keeffe

I will argue about the universality of child benefit with anybody and will comment on it in a moment. As to other supports for children, I approve fully the proposal to set up a committee to examine all the other payments because I am not particularly satified that there is such a low uptake of family income supplement. Neither am I completely happy that the best course is not to have tax allowances for children in our tax code. In the context of child support both the social welfare and tax systems must be examined.

On the question of the universality of child benefit, Fianna Fáil proposed a few years ago the introduction of a means test for child benefit. Deputy Ó Cuív does not remember that — he was not a Member of the House then. As Opposition spokeman on Social Welfare at the time I opposed the proposal on the basis of justice and equity, strange as that may seem. What is even stranger is that my case was accepted and the proposal was dropped because it is clear that in relation to child benefit we must not create poverty traps. We must also examine the demographic trend of similar families. This problem has existed on the Continent for some time where there are now huge child allowances. I am not saying we should pay people to have children but families who have children, whether in employment or otherwise, should be given reasonable support by the State. The role of child benefit is to redistribute income from childless individuals to families with children. The objective is to achieve horizontal equity which is very important in the absence of tax allowances. Child benefit is not a policy instrument for vertical redisdribution across income groups, and that is the way it should be. I am glad to have agreement from the Opposition on that. We must not have worsening of poverty traps. The approach being adoptd by the Government is the correct one and I make no apology for it because I think that, on reflection, Deputy Ó Cuív will agree with it.

Éamon Ó Cuív

There should have been a child dependant allowance increase at the same time to maintain vertical equity as well as horizontal equity.

Mr. J. O'Keeffe

Child dependant tax allowances, family income supplements etc. must be tackled next. I do not want to forecast next year's budget, but I am quite sure that Deputy Ó Cuív will have the opportunity to congratulate the Government again on improvements in that area.

I welcome the improvements in regard to PRSI because it is important to encourage employment, particularly low paid employment. The £150 million package will be of benefit not alone to the individual concerned but to the country as a whole. The employee will be exempt from PRSI on the first £50 of income. Furthermore there is a raising of the income threshold for the lower rate of PRSI for employers. I have some employees in my own legal office who strayed over the limit of £173 as a result of receiving an increase and would, prior to the change that has now taken place, have ended up with less take home pay than they had before receiving the increase, having been catapulted from the lower rate of PRSI to the higher rate on all their income. The new lower rate will apply to incomes of up to £231 per week. This is a major improvement and I fully suport the change.

While I welcome the improvement in the carer's allowance in which I have a particular interest more remains to be done. When I was my party's spokes-person on Social Welfare I tabled an amendment to the 1989 Social Welfare Bill to introduce a separate allowance. While the improvements are significant I hope further improvements will be made. Of approximately 60,000 carers, half of which are full-time, only 10 per cent — 6,000 — receive the allowance. As a result of the changes made in this Bill a further 1,500 will receive support. I applaud this as a step in the right direction and I will be encouraging my colleagues to ensure further progress is made. We do not pay enough attention to those who provide a selfless service to the old and disabled in many households throughout the country.

While the Bill marks an improvement on what has gone before I wish to concentrate on a number of areas where changes could be made. It is important to continue to strive to ensure equity and justice. Many of the complaints I receive relate to the anomalies, real or perceived, in the system. We must continually try to rectify these and improve the complex system. Someone said that for every complex problem there is a simple solution which does not work. The problems in society are complex and we have developed a social welfare system which is equally complex to cope with them. We must continually try to improve it and rectify the anomalies.

It is wrong that in assessing the income of pensioners in particular for pension purposes, from savings and capital, a rate of 10 per cent is used. However, in the bad old days under the previous Government interest rates were of the order of 15 per cent but now they are at historically low levels despite the recent changes. It is unfair that in assessing their income from a nest egg — sometimes this is just burial money — a rate of 10 per cent is used. It should be changed although this may be awkward and difficult. We could do this by using their actual income — in many instances this may be no more than 2 or 3 per cent, sometimes less — or by reducing the figure of 10 per cent to 5 per cent.

There is a further anomaly in that those who paid contributions under the self-employed pension system four to five years ago will never qualify for a pension. I know of people in my own area who are well off and paid contributions for nine years but on reaching the age of 66 did not receive any pension. This is unfair. Some way has to be found to rectify this anomaly. We could do this, possibly, by introducing a pro rata pension whereby if a person has paid contributions for eight years they would receive an eight-tenths pension.

The question of the multiplicity of means tests may be more difficult to tackle. This matter has been considered but no satisfactory solution has been found. It is ridiculous — I speak from experience having dealt with constituents' problems — when a person in receipt of unemployment assistance or small farmer's assistance applies for a medical card a different method of assessment is used. During this assessment the farm income is further considered with the result, when small farmer's assistance is added, the person concerned may not qualify for the medical card. There should be one uniform means test to determine whether an individual qualifies for social welfare, a medical card, other health benefits, third level grants for their children, civil legal aid and so on.

Because of the lack of flexibility in the system the unemployed — in common parlance, those on the dole — either do not take up part-time or temporary work or operate in the black economy. We should focus on this issue to encourage those on the dole to take up part-time or temporary work by ensuring there will be no loss of income. That is what happens at present and in a society with such a major unemployment problem this is crazy. It should not be beyond the ingenuity of man to provide for flexibility in the system to encourage those who find themselves in this position to take up work. The system will continue to be a failure until we can provide for this exit route for those who want to return to work but cannot obtain full-time employment. This is probably the greatest challenge facing us.

In this Bill considerable improvements have been made and these must be applauded. Despite this, much remains to be done. I am glad the Government is committed to tackling this work and I look forward to further major improvements being made.

Miss Quill

I am grateful for this opportunity to make a contribution to the debate on this important legislation which will affect large numbers of people in society. We should view it as much more than an opportunity to provide additional allowances; we should take the opportunity to discuss the philosophy behind the social welfare system and lay down clear public policy guidelines as to how best social welare issues can be dealt with in the future.

It is a sad feature of the times in which we live that 1.3 million people are dependent on social welfare payments of one kind or another. That is almost 40 per cent of the population and is a reflection of certain highly unacceptable features of our society. The total cost of meeting those social welfare demands this year is £4,000 million. That is an enormous sum by any standards and it raises a number of questions. To what extent will that expenditure improve the lives of many social welfare recipients, particularly young, able bodied people who are now sadly dependent on social welfare? To what extent is it helping to eliminate poverty or is it merely helping to entrench poverty? We must demand answers to these questions.

Is our social welfare system, in some of its elements, helping to cultivate a culture of dependence or is it helping people to break away from that dependence? To what extent is it fair and equitable between the needs of the old and the demands of the young? Is the taxpayer — a shrinking specimen in Irish life due to unemployment, ageing and other factors — getting good value from the expenditure of that £4,000 million?

There are some features of the Bill that I believe are praiseworthy and I welcome those. In particular, I welcome the increased provision for child benefit. The most harrowing poverty in this country is being experienced by families where there is a large number of children — four or more — and where that coincides with long term unemployment. There is a sufficiency of statistical evidence to prove that this is the area where the greatest poverty exists and where we must target most resources, not by giving handouts but by providing educational and recreational resources. This problem is acknowledged in the Social Welfare Bill and I commend the Minister for the increase in child benefit which is the most positive element of the Bill. I hope it will have the desired effect and will help children in poverty.

It is very sad to see children in our constituencies living in poor housing and with poor educational prospects. In such cases the mothers suffer also because they are the ones who must stretch the inadequate family budget. They put their own needs — and sometimes their own health needs — to one side. That is a sad feature of Irish life which must be tackled in a much broader way than it is being done in the context of this Bill. It is an area which I hope will be addressed over a series of budgets.

There are other key aspects of the Bill which I welcome but I will deal with those later. I wish to refer now to a feature of our social welfare system that is working to the detriment of young people, namely, the manner in which household incomes are used to preclude young people from drawing unemployment assistance. There are many young people who would ordinarily have resided at home but who, because the total income of the household being taken into consideration in assessing their eligibility for social welfare entitlements, have been precluded from claiming assistance. Consequently, they are forced into renting private accommodation, particularly in our cities. Their parents cannot continue to look after them; they are adults and their demands for food and clothing are considerable.

The cost to the taxpayer last year in regard to the people in the situations I have described was approximately £30 million. In Cork city, approximately £3 million was paid out by the health boards last year in providing rent subsidies for young people in that position. I consider that to be the worst possible value for money because if the social welfare regulations were re-cast and if these people were allowed to live in their own homes, 99 per cent of them would do so. That £3 million would be better spent in building new houses for people who cannot provide for themselves. If it had been given to Cork Corporation last year we could have built 60 new houses thereby taking 60 families off the housing list on which there are now more than 1,300 eligible applicant families. That regulation must be changed and I ask the Minister to ensure that it is changed in the context of this Bill. My party will be tabling an amendment to that effect.

Another effect of the Bill — probably unintended — is that these young people are living in sub-standard accommodation and the State is inadvertently subsidising the slum landlords involved. I ask the Minister to examine that issue and bring in the kind of regulation that will enable young people to live at home with their families. There is a number of social reasons they would be much better off living at home but the economic reason is the one I choose to highlight today.

When young people move out of their homes they are entitled to maximum benefits and a number of them, between the rent subsidy — which goes directly into the pocket of the landlords — and other benefits get a minimum of £110 per week from the State. That policy is wrong and is disturbing. Will the Minister ensure it is changed? If the system is to be maintained and it is a matter of public policy, let us say so, but do not let the position continue whereby health boards are expected to provide the money under these regulations and housing authorities, who could usefully use that money, are left badly off.

I feel very strongly — this may more properly relate to the Finance Bill — about the adverse effect of the taxation of social welfare benefit, particularly on workers taking part in community employment schemes. In my experience the majority of those workers are women in the home, some of whom have never worked and most of whom have never worked since they got married. With the introduction of the community employment schemes, for the first time in a long time these people have an opportunity for training and to do part-time work. The psychological boost that gives to women is tremendous. This is a major step in breaking the cycle of dependency. Not alone does it give a great boost to men and increase the family income but children see their parents going out to work, and we should not under-estimate the importance of that in forming attitudes of young people and breaking the culture of dependence.

As a result of the taxation of social welfare benefits many workers on community schemes are taking home very little pay. I have cited a number of cases to the Minister for Social Welfare of women working a 20 hour week who take home only an additional £8. This is a very poor return for a 20 hour working week. If it is Government policy to break the cycle of dependency that is a key area that must be considered in the context of the Social Welfare Bill and the Finance Bill. I ask the Minister to take on board that point.

Since its inception the Progressive Democrats has always argued that the best weapon against poverty is a job. Even if it is only a part-time job it means a great deal to the people I describe, most of whom are women. Schemes that are beginning to radically change the prospects of women who in many cases have never earned income should not be cut off by ill thought-out taxation measures. The Minister should consider this matter.

I appreciate the improvements in carer's allowance but there is great scope for further improvement in that area. We should, by our taxation, social welfare and education policies, encourage and enable as many young people as possible to earn a living and become net contributors to our overall benefit. Our policies should not discourage people.

We must make proper provision for the old, sick and disabled. The one great fault of the budget is that provision for pensioners is absolutely derisory. It is the lowest increase in any year in my recollection. My colleague. Deputy Clohessy, said that the increase given to pensioners this year would not cover the cost of a razor blade per day.

Mr. Durkan

The Deputy is becoming very negative. She is becoming like Fianna Fáil Deputies.

Miss Quill

I am merely pointing out the facts. The increase would not make up half the price of an Evening Echo. Our thinking in regard to pensioners must be changed. In the year 2020 the ratio of people aged 66 and older to those in the working age may increase by about 50 per cent. We cannot ignore that. I have every reason to believe that with improved health care this figure will be realised. Now is the time to begin to make better provision at every level. I fault this budget on a number of fronts but mostly for the poor provision it made for our senior citizens. That matter will have to be addressed and a greater increase given next year, ma bhíonn sibh ann an bhliain seo chugainn.

I am not satisfied that the adjustments in PRSI are sufficient to encourage people to walk away from the social welfare system and look for jobs. They are certainly not sufficient to encourage employers to create more employment. It makes better economic sense for many employers to buy machinery than to employ more people because of our PRSI and taxation system. That is major weakness that has not been addressed to the extent it ought to have been. A great deal of work needs to be done and my party will frame amendments in the hope of making this a better Bill. I hope our amendments, all of which are based on common sense, will be taken on board by the Government.

Mr. Crawford

I wish to share my time with Deputy Ring.

Acting Chairman (Mr. Leonard)

Is that agreed? Agreed.

Mr. Crawford

The staff at the Department of Social Welfare at county and national level must be complimented for their efforts in recent years to make the system more user friendly. Problems are dealt with quickly and I look forward to farm payments being dealt with as speedily in the future.

I understand there are 70,000 cases outstanding where women are due payment as a result of equal treatment legislation. One would think, having heard the main Opposition party speakers discuss the financial issues that have gone through the House in the past number of weeks, that they had not been in Government up until a few short weeks ago. They now can see so many things wrong with the present system. Women will appreciate the fact that they will be paid most of the outstanding money due to them this year. In this context, however, I hope the Minister for the Environment will be able to find much needed resources for repairs to the potholes in my constituency of Cavan-Monaghan. The Government has shown ingenuity in finding the extra £140 million for these payments.

Mr. O'Dea

The Government borrowed it.

Mr. Crawford

I hope it will find the extra money needed for the county roads. The Government inherited the problem and is trying to deal with it.

This Government also inherited the situation where 135,000 people have been on unemployed benefit for 12 months or more. The first steps of a three year programme to improve that situation are being taken in this Bill. Under the changes in PRSI, employees will not be liable for PRSI in respect of the first £50 of weekly earnings and the bands have been widened. Deputy O'Keeffe said that when the law clerks received a salary increase of £3, they were worse off because they had moved out of the lower tax band. It does not go as far as we would like but at least it is a step in the right direction and I hope it will improve the situation for low paid workers. The anomaly where the number of children are taken into account in social welfare payments — but not for tax purposes — must be rectified so that there are no obstacles to people taking up employment when the opportunity arises.

Members from the main Opposition benches have dwelt on the 2.5 per cent increase in social welfare payments. I would also like to have seen a higher rate of increase paid. Generally social welfare increases are promised in January and February but are not paid until August of that year and we have brought forward the payment date by six weeks. I look forward to further improvements in the next two budgets. This Government will be judged on its record on how it looked after the aged who need help most.

The increases in child benefit and the carer's allowance are welcome. The carer's allowance was improved by the previous Minister and I pay tribute to him. One of the first cases brought to my notice after my election to Dáil Éireann two years ago was the case of a wife whose husband was on a social employment scheme. She was delighted when she found out she was eligible for the carer's allowance but the following week she found out she was only £6 better off because her husband was no longer entitled to claim benefits for her. The means test for the carer's allowance is being eased and the first £150 of household income a week is being disregarded. Even more important is that the carers of those in receipt of an occupational pension will now be eligible for the carer's allowance. The Minister is to be congratulated for recognising the part these people play in society and improving their situation.

The Opposition has made much of the 2.5 per cent across the board increase but families are delighted with a 35 per cent increase in child benefit. This is the single biggest increase ever. The Minister has assured us that this is only part of his programme to ensure that this group is properly looked after.

An unemployed son or daughter living at home was assessed for assistance on their parents' income and eligible only for the minimum payment of £10 a week if their parents' income was over a certain level. I do not know how a young adult would live on £10 per week. In this budget it is being increased to £25 per week and I hope this is only a start. As previous speakers rightly said, when these young people were driven out of their homes they went to live in flats, which the health board subsidised by paying a rent allowance. This had the effect of breaking up the family unit. This measure, with the introduction of a tax regime on flats, may improve the situation dramatically.

Measures to bring about a new structure so that people are encouraged to work rather than sign on must be developed. I am aware of a case where a young man wanted to take a job of driving a school bus two hours each day. If he worked for two or three days each week he could sign on for the remainder of the week but because he was working every day, but only for two hours, he was not allowed to sign on for social welfare.

The Minister must ensure that anyone who wishes to work is facilitated. Deputy O'Keeffe raised a number of other issues with which I agree. The self-employed pay PRSI and some have been paying it for nine years. However, they do not receive any benefit. They must be allowed to pay for the remaining year even if they have reached the age of 65 years. This anomaly cannot be allowed to continue.

People are assessed for income tax, social welfare, medical card and third level grant purposes but all the assessments are made differently. We must streamline such assessments. I welcome the improvements in child benefit, carer's allowance and the changes in PRSI. One of the issues we campaigned on was lowering the tax wedge. We said people needed to be given an opportunity to work and a young person working should be better off financially by at least £25 than a person signing on the dole. This Bill will begin that process. I hope it will be improved in the next two budgets so that somebody who wants to work will be better off financially.

We pay out £4 billion a year in social welfare payments, over £11 million per day. This is a big drain on the economy. One of the most important roles the Government can play is to bring down that high cost by providing job opportunities for all.

Mr. Ring

I was elected to the House last June when my party was in Opposition. I listened to Deputies De Rossa, Durkan and McManus fight for the poor during that time. During the budget debate I heard Members say this was the 14th budget for which they had been present and in one case the 26th budget.

I make no apology for what the Government did in the budget to look after the less well off in the community who must be protected. I compliment those Ministers on their efforts in the budget to help the weaker sections in society. However, it is still not enough and much more is required. Those in business are well able to lobby and put their case for whatever grants are available but people on social welfare have no-one to speak for them.

I compliment the Minister for his good work, particularly for the provision to pay benefit six weeks earlier. The £7 increase per month in child benefit is to be welcomed. It is great that the Government recognised that families need help and has given them a decent increase. Our biggest problem is unemployment. There are insufficient jobs to go around and we must look after those who cannot get employment. I welcome the change in PRSI as it will help small employers who have been penalised over the years by income tax charges, water charges, service charges, rates and so on. They are visited by health inspectors, egg inspectors, etc. and soon there will not be enough Government offices to house the paper work which small business people must furnish. The pressure should be taken off the small business person. I hope the changes in PRSI will encourage small business people to take people off the live register.

I was glad the Adoptive Leave Bill was introduced. I raised this matter as a county councillor before being elected to the Dáil. Even though adopting women pay the same levies to the State they were not entitled to paid maternity leave. I am glad that is being rectified.

It should be made easier for people to qualify for the carer's allowance as it is cheaper for the State to have carers look after the elderly at home. I welcome the new developments in this area. When it was introduced many people did not apply for it as there was too much red tape involved.

I compliment the Government for finding the money to pay those entitled to equality payments. This matter has been ongoing for years and at last we will have action. I hope those entitled to the payments will receive their money this year. I welcome the fact that the Minister has set up a telephone line but he must go further and place advertisements in the media so that those entitled to the money know how to go about applying for it. Many people come to my clinic inquiring if they are entitled to the payments.

I welcome this Bill and the increases provided this year. It is only a start for the Government and I know it will look after the underprivileged. I make no apology for that. I had intended speaking about mothers who remain at home to look after their children and I hope the Minister will give something to them in the next budget. There are mothers who would like to remain at home were they given some incentive, many do not work outside the house through choice but of necessity to pay house mortgages and other expenses.

Mr. O'Dea

I should like to share my time with Deputy Batt O'Keeffe.

I am sorry Deputy Ring did not have an opportunity to say all he wanted; perhaps he could fax the remainder of his speech to RTE.

Like the Finance Bill, it is necessary to introduce a Social Welfare Bill annually to give legal effect to the social welfare changes announced in the budget. This is the thirteenth Social Welfare Bill I have seen introduced in this House, each containing some improvements.

I searched this Bill closely and found it almost impossible to give an unqualified welcome to any provision. While the Bill represents what the Minister for Finance announced on budget day it consists largely of a combination of tinkering and tokenism. I suppose I can give an unqualified welcome to one or two provisions, such as the adoptive benefits scheme and the extension of the maternity benefit scheme.

Deputy Crawford referred to the increase to £25 per week that a person living at home can receive by way of unemployment assistance. That is designed to save money for the State rather than being an unwarranted outburst of altruism on the part of the rainbow Coalition. It may be barely sufficient to keep many people at home who would otherwise have gone to live in flats and been dependent on their health board. The £50 per week exemption from PRSI contributions is a step in the right direction. However, my enthusiasm for it is tempered by the fact that it is considerably clawed back by the reduction from £286 per annum to £140 per annum in the tax allowance for PRSI purposes. The latter will reduce the benefit of that exemption to a taxpayer on the 27 per cent band by 30 per cent and that to a taxpayer on the 48 per cent band by 60 per cent.

While I am pleased with the increases in child benefit I do not welcome the fact that, generous though they be, they are being used as an alibi for the insult to the disadvantaged forming the core of this Bill. It appears that resources are being deliberately targeted at those most likely to vote in a general election, which includes the wealthiest at the expense of the poorest. Apparently some programme managers have calculated that the electoral turn-out among the poorest is lower among certain other classes. This Bill, and the budget on which it is based, is designed to target that sector of the electorate.

Mr. Dukes

That is a nonsensical criticism, absolute nonsense.

Mr. O'Dea

This is cynicism on a hitherto undreamt of scale. Deputy Dukes and the Government of which he was a member had a chance and doubled the national debt; he should hang his head in shame. Even the child benefit increases are being clawed back to the extent that the child dependency allowance on social welfare has not been increased but rather reduced in real terms.

The core of the Bill is the 2.5 per cent overall increase. This allocation to the weakest and poorest in our society is irrefutable evidence that the left's rhetoric in Opposition was a cruel, cynical deception, nothing short of a fraud of the electorate. In 1989, despite the best efforts of Deputy Dukes, when the overall economic position was less benign, the general increase in social welfare — I am talking also about the increase in the child dependency aspect of social welfare — was 3 per cent and the long term unemployed received an increase of 9 per cent. At that time, the present Minister for Social Welfare, Deputy De Rossa, then in Opposition, described that level of increase as "particularly cruel". That same Deputy now has his opportunity. What has he done?

Minister of State at the Department of the Environment (Ms McManus)

He has done very well for the poor.

Mr. O'Dea

He has reduced social welfare benefits for the poorest and weakest in our society in real terms; there can be no evidence adduced to contradict that. He has increased social welfare benefits for the poorest and weakest in our society by less than the rate of inflation and has not increased the child dependency element of social welfare. Therefore, he has reduced social welfare in real terms for the weakest and most disdvantaged. The alibi being presented by Democratic Left is the increase in the child benefit which will be paid to everybody in society, including the wealthiest. Apparently, it is to be funded exclusively by targeting the poorest, who are already targeted by a social welfare increase of less than the prevailing rate of inflation, thus representing a real reduction accompanied by no increase in the child dependency aspect of their payments.

Ms McManus

Is the Deputy opposed to increasing child benefit?

Mr. O'Dea

Is this the targeting about which Democratic Left spoke when in Opposition, the poor being targeted to benefit the better off? I do not know how many pensioners will not benefit from the child benefit allowance because they do not have children. I understand there are 250,000 pensioners and it has been represented to me that there may be more. Countless thousands of others are in receipt of unemployment assistance, unemployment benefit, invalidity pension, disability benefit and disabled person's maintenance allowance. The champions of the dispossessed — here I target in particular Democratic Left — have awarded old age pensioners living alone an increase of 22 pence per day—

Mr. Dukes

The same people will be eligible for child benefit.

Mr. O'Dea

The unemployed will receive an increase of 21 pence per day, as will those in receipt of disabled person's maintenance allowance, who are ill as well as poor. Is that big money?

Deputy Quill spoke about razor blades. There is a chance this increase might enable somebody to purchase a packet of peanuts, although I would not be over optimistic if they endeavoured to do so in a fashionable establishment in Dublin frequented by left wing ideologues who exchange theories on how to raise the level of the disadvantaged in our society.

The important thing is that these miserly increases appear to be sufficient to satisfy the keepers of the nation's conscience.

Ms McManus

Great imagination but a warped mind.

Mr. O'Dea

They must be examined within the overall budgetary context, standing as they do, cheek by jowl, with the abolition of third-level fees which I welcome in principle. Nevertheless it serves to put the level of these increases to the poorest into sharp focus. The abolition of third-level fees will mean that, per child, people who can satisfy the means test, the better off, will be the only people who will benefit to the tune of £40 per week.

According to the Bill, an old age pensioner living alone will benefit by £1.60 per week and £40 per week per child in the case of people who can satisfy the means test for third-level grant purposes. According to my calculation the daughter of one Tribunal of Inquiry into the Beef Processing Industry lawyer is worth 27 old age pensioners on the Democratic Left scale of values. The moral would appear to be that the more loudly a party trumpets its left wing ideology in Opposition the quicker it abandons it in power; action is in inverse proportion to rhetoric, that is the new law. Democratic Left and Labour are the ultimate political acrobats, maintaining their balance by doing the opposite from what they say.

The buzz word used by Democratic Left in Opposition was "targeting". All sides of the House accept that resources are not inexhaustible. At least they have kept part of their promise in that respect — they have targeted the better off, have framed a budget and its accompanying Social Welfare Bill to target resources at the more affluent at the expense of the weakest, the latter being targeted only in as much as it will be they who will pay.

This Bill and the budget on which it is based will stand as a monument to the deception profligcy and of ideological bankruptcy of the left. It will stand side by side with Ernest Blythe's famous budget of the 1920s as a damning indictment of the rainbow warriors.

Mr. McManus

The Deputy really had to dredge that up.

Mr. Dukes

He is very literary.

Mr. B. O'Keeffe

I congratulate the Minister of State——

Ms McManus

The Deputy should have read the Bill before he stood up to speak.

Mr. B. O'Keeffe

I congratulate the Minister of State and I hope she will do a good job, but the accolades end there. Given the involvement of Democratic Left in Government, the less well off in our society thought they would benefit greatly. They thought there would be a crock of gold when the rainbow coalition took up office. Unfortunately, their great expectations, particularly of the Minister for Social Welfare, who was their friend, their champion and their succour, did not materialise. The crock of gold they anticipated came in the form of a 2.5 per cent increase for the single unemployed, widows and old age pensioners. It could be said that the Democratic Left, like a banana, went in green, turned yellow and came out shop-soiled or perhaps the order should be reversed. It must be accepted that the 2.5 per cent increase for the social welfare category will not keep pace with the rate of inflation, particularly having regard to changes in recent weeks. Everybody is amazed that they were let down by the Government. The Tánaiste, Deputy Spring and the Minister for Finance, Deputy Quinn had an opportunity not to give Democratic Left an inch, ensure on this occasion that they would give it as little as possible, so that the poor in the electorate would note that the necessary resources would not be given to the Minister for Social Welfare with responsibility for this Bill to provide adequate increases in social welfare——

Ms McManus

This was the most popular budget in years.

Mr. O'Dea

We will find out about that.

Mr. B. O'Keeffe

I wish to refer to the supplementary benefit allowance paid by health boards, an area in which I have a particular interest. The Minister of State will recall that in 1989 the amount of money paid in supplementary welfare allowances was in the order of £7 million and I understand that figure will increase to £57 million, an extraordinary increase. The Minister of State will also recall that the supplementary welfare allowance was introduced to deal with emergencies, but effectively it is dealing with the housing crisis because not enough local authority houses are being built. That problem existed when we were in office and still exists today.

Ms McManus

We are providing for building 1,000 more houses than the Deputy's party provided for last year.

Mr. B. O'Keeffe

Regarding the supplementary welfare allowance, £57 million will be paid directly into the pockets of private landlords. The health boards do not have the opportunity to cross reference information with the Revenue Commissioners and, therefore, we are not getting any return on this money by way of taxation. That area is worth examining. The value for money being derived from such health board payments should be closely scrutinised. In a study I carried out of the total amount paid in rent supplement I established that 69 per cent of recipients of rent supplement were single with no dependants, an astronomical figure. A further breakdown of figures reveal that the married sector received 12 per cent of that payment and cohabiting couples received 3 per cent. The age profile for that allowance is significant, 5 per cent of those who receive rent allowance are under 20 years of age, 28 per cent are between the ages of 20 and 25 and 23 per cent are between the ages of 26 and 30. It is time that scheme was examined to ascertain if the problems in that area are being addressed. A young person in receipt of social welfare benefit living at home is means tested and up to now has received as little as £19 or less. I admit the minimum payment has been increased to £25 in the budget, but that still does not resolve the problem. Effectively, the Minister for Social Welfare and the Minister of State will have to ascertain whether, as part of an economic policy, we are deliberately splitting families. Young people who live at home would be better off financially renting accommodation, receiving a full social welfare unemployment assistance payment and a substantial sum towards the payment of private rented accommodation. The present policy is one of economic madness. This issue should be addressed immediately as it has major consequences for families in terms of the break-up of homes and the structured environment within which people live is being broken down for economic reasons. The present policy does not make good sense and the Minister should address it.

I wish to refer to the back-to-work scheme and the employment scheme operated by the Department of Social Welfare. I am aware that 70 people were called to participate in a community enterprise programme. Of that figure only 50 turned up and five were willing to take up places. Why did the rest of those people not turn up and why did they not have an interest in it? Is the Minister interested in establishing the reasons? The back-to-work scheme and the enterprise scheme operated by the Department of Social Welfare are not enjoying the same success as the predecessor of those schemes, the enterprise allowance scheme run by FÁS. The Minister of State should consider an anomaly in the enterprise scheme whereby applicants must be over 23 years of age and unemployed for 12 months to qualify and benefit from that scheme.

Cork FÁS office figures for the enterprise allowance scheme which operated in 1992-93 reveal that 300 people in Cork created employment for themselves under that scheme. On a national level the figure could be even below 300 and therein lies the difficulty. The Minister of State and her ministerial colleague in the Department of Enterprise and Employment should consider the possibilty of re-establishing the enterprise allowance scheme. The present scheme does not cater for 18 to 23 year olds in receipt of social welfare benefit and that anomaly has serious consequences in terms of what we wish to achieve, the creation of as many sustainable jobs as possible. It has been fairly well proved that the previous scheme worked well as a high percentage of the jobs created under that programme were viable, sustainable, long term and provided an opportunity for people to come off the dole and become involved in the real business of creating jobs.

There were 25,000 people on the live register in Cork in January 1991. In January 1995, 30,000 people were signing on despite the fact that the number of people on community-social employment schemes had doubled. This indicates that we are not making the inroads we would all wish. What is the point in people signing on with FÁS if there is no co-ordination, no take-up of jobs presented and if other people are not matching the number of jobs created under the enterprise allowance scheme?

Mr. Dukes

A point being missed to some extent in this debate is why the Department of Social Welfare spend so much. The total Estimate for this year is over £2 billion, of which £801 million is allocated to unemployment assistance. That is a slight reduction on last year, which I hope will be justified, but it constitutes 37 per cent of total expenditure under this Estimate. The reason is that so far we have been remarkably unsuccessful in expanding total employment. Any debate on social welfare that does not at least refer to that and draw some lessons from it is a little unreal.

If 37 per cent of social welfare expenditure is on unemployment, it behoves us to look at some of the things that prevent us from increasing employment or some of the things that produce unemployment here. There have been a few cases recently and we will hear more of it in this period of currency turbulence which is less than helpful. For example, last year we had a long running debate about what was going on in TEAM Aer Lingus. That came to a conclusion with the production of a rescue plan. More recently we find that the so-called rescue plan was posited on the expectation that TEAM Aer Lingus could charge somewhere in the region of £45 an hour for the work it was doing. Now we find that its competitors are doing the work for £30 an hour. The rescue plan was doomed to run into difficulties very quickly and it has with potentially serious consequences for the workers in TEAM Aer Lingus.

We had a continuing dispute and difficulty about the financial position in Packard. This company suffered competition from two sides: in some cases from other companies who had lower wage rates and perhaps lower productivity than Packard and in others from companies with higher wage rates and much higher productivity.

In the context of the currency situation I heard a comment on a television news programme one evening recently which illustrated how a company was having difficulties with what is happening to the punt. I will not name the company because it should not be singled out for analysis. This company makes food products which it sells to British supermarket chains for retail under their own labels. It was pointed out that this company bears transport costs that are about three times the level of those borne by its competitors in the UK. It was also pointed out that the wage rates in the company here are 10 per cent higher than those of its competitors in the UK. That was presented to us as an explanation for the fact that the company has some difficulties and that the Government here should take some action to remove those difficulties.

It is fashionable to talk about our transport disadvantage but the plain fact is that we are further away from the main markets for our products than are a great many other people. That should encourage us to be more competitive and more productive than they are in order to be able to compete with them. It takes the biscuit when we find that wage rates here for a similar operation are higher than elsewhere. I will not say that is due to one reason only. It is due in part, I think, to the kind of consensus being built up here over a series of agreements that posits agreement on a level of wage increases as being more important than the absolute level. That is an unwise policy to follow and one which tends, on the whole, to divorce wage rates from productivity. It is due also in part to the fact — this is well documented and much spoken about in the House — that we take a huge bite from gross pay in taxation and that inevitably creates competition problems. It is because we take such a huge bite in taxation that 37 per cent of our social welfare budget is taken up by unemployment assistance. As long as we refuse to do anything substantial about the tax wedge in our payments system and about the deficiencies in the "consensus" approach to wage bargaining in recent years we will continue to have difficulties on the employment front.

The scene on the social welfare side and the background to the Bill reflects something of an imbalance in this year's budget. The budget, just as did the four I introduced, tries to do too many things. The result is that although it tries to do the right thing, it is done on a scale that does not have a huge effect. If we look at the balance in the expenditure changes in the budget we find that the budget allocated £90 million to social welfare and gave back the equivalent of £177.6 million in taxation and PRSI. About twice as much was given out in tax reliefs and PRSI changes as was given out in social welfare. I am not criticising the tax reliefs — far from it — but there is an imbalance, given our position, which should be pointed out.

The figure of £90.2 million provided for social welfare does not include the action the Government has commendably taken on the back payments due for equal treatment. The budget provided a gross figure of £60 million for this year, £50 million of which was funded by balances in the social insurance fund. The Government has since — again wisely and commendably — made a provision of £140 million so that all the arrears can be paid this year by selling off mortgages. The antics of the Opposition in the House during the past eight days would make a cat laugh. They have been sitting there claiming they do not understand how the Government got it hands on this £140 million. I would be the last person to claim that I have more wisdom on these matters than the assembled intellectual might of the Fianna Fáil Party but I find no difficulty in understanding the Government's statement on this issue. I find it totally unmysterious that the Government has adopted this standard practice and put it to an unstandard, unusual and utterly commendable use. Yet the assembled geniuses in the Fianna Fáil Party have put down a priority question today asking how this can be done. This morning the Leader of the Fianna Fáil Party complained that he had been asking for eight days how this was being done when the whole world and his mother outside the House and most of us on this side of the House have no difficulty in understanding the Government's statement. I have never seen a more slack brained contribution to a debate on anything. Fianna Fáil Deputies in sack cloth and ashes should be beating their breasts and asking why they did not think of doing this.

Mr. Durkan

That is the problem.

Mr. Dukes

It took the Government only a few weeks in office to come up with the answer. I was amused to see Deputy O'Dea sitting on the Opposition benches while his party was parading its collective conscience before us and wondering about this. During the recent by-election campaign in Cork North Central — happily Deputy Lynch was elected — I met decent Cork women who were entitled to arrears and who had been told personally by Deputy Willie O'Dea that their payments would be made by the end of last year. He did not have the slightest clue how this would be done, and now that it has been done his party is still trying to understand the astuteness the Government has brought to bear on the matter. This is a very simple, straightforward, direct and commendable measure and Fianna Fáil should be congratulating the Government for doing what it did not have the wit to do when it was in office.

I wish to make another point which is small enough in terms of the entire social welfare scene and which I have raised with successive Ministers for Social Welfare. I am referring to a widow under the pension age whose deceased husband was of pension age and was entitled to a certain number of the free schemes and where she not only has to deal with the trauma of losing her husband but very often finds that her level of income is substantially reduced very quickly. I gladly acknowledge that in 1994 the then Minister for Social Welfare moved on this issue and extended the scope of the free schemes to cover surviving spouses of old age pensioners between 60-65 years of age. That was an excellent move and many surviving spouses, most of whom are widows, had their situation alleviated by it. The Minister for Social Welfare kindly pointed this out to me in reply to a question on 21 February.

I had also asked him if he could generalise the system and what it would cost to extend the continuation of those benefits to all surviving spouses of people who had been entitled to the free schemes. On 21 February he told me he would send me the information as soon as it was available. I have not yet received it and I ask the Minister of State to jog the memory of his ministerial colleague and inform him that I would still like an answer. This small step would not cost much and would substantially alleviate not only the financial problems but also the psychological trauma for a number of surviving spouses. I fully recognise that hard cases make bad law. However, I always follow up that statement by saying that bad law makes hard cases. In some cases there may be a large age gap between a husband and a wife and the woman may be widowed at a relatively young age. I know a woman in her 40s who was recently widowed and who has been left with a number of children, some of whom have disabilities. Her level of income has been reduced and her access to certain benefits has been cut off under the system. Substantial progress was made in the area in 1994 and I am very glad to acknowledge that. However, we have another bit to go and it would not disrupt any year's budget if this was done.

I am glad some progress has been made in regard to the rate of unemployment assistance paid to young people still living at home. This year the minimum rate has been increased from £10 to £25. I ask the Government to think again about the rationale behind this set of rules. Children cease to be regarded as dependants from the age of 18 if they are not in full-time education. I welcome the provision in the Bill which extends support for children in full-time education up to the age of 21. While this is a very good idea, children who are not in full-time education cease to be regarded as dependants and if they are unemployed, drawing unemployment assistance and still living at home they are regarded as beneficiaries of the family income even though the other provisions of the social welfare system specifically does not regard them as dependants. Deputy Quill referred to young people who feel compelled to resort to the stratagem of moving out of home and getting a flat and rent subsidy in order to qualify for the full personal rate of unemployment assistance. I am sure the Minister of State and Deputy Browne know as well as I do that in some cases a good deal of ingenuity is deployed in order to make it appear that that is the situation and there is bad feeling all around. I suggest to the Government that once we no longer regard children as dependants for the purposes of any part of our social welfare system we should apply that logic across the social welfare system, treat them as adults in their own right and give them the entitlements to which they are entitled.

I commend the Government on the improvements in the carer's allowance scheme, which is very worthwhile both socially and psychologically in terms of morale for many people in the community. However, the income disregard of £100 per week for the caring spouse is still rather low, especially when one considers that it is set at that level for somebody who is caring for an incapacitated spouse who does not have any social welfare entitlement. People in that situation are still living on what we used to call very short commons and further consideration should be given to providing additional assistance for them.

While improvements have been made in recent years there are still too many different approaches to means testing for various purposes. For example, we have different approaches to third level education grants, social welfare etc. A greater effort should be made to bring more coherence and unity of approach into the system. My constituency colleague, the Minister of State, has a particular brief in respect of the integration of the taxation and social welfare systems and as part of that brief could, perhaps, examine the way means tests are constructed.

I would also like more attention to be given to the way we assess the value of capital for means testing purposes. Section 23 provides for disregarding, in certain circumstances, the capital value of property where the property is not personally used for a limited period, for example, because of illness. When we reach the point of asking people seeking State assistance if they are using their property or if it has been unused for some time because of illness, and assess their assistance in that light, we are down to the fine details of rather excessive and almost mischievous and pointless intrusion into people's lives. Like other Members, I am aware of cases where the method used for assessing the value of capital produces an answer that gives a notional return on the capital that is larger than the stream of income earned by the owner of the capital. In that context we are oppressing people rather than helping them. I would like the Minister of State and his Department to pay more attention to rationalising the system.

Progress is being made, albeit slowly, in a number of areas, but I hope in the next budget the Government will resist the temptation to cover so many areas and instead concentrate its efforts on a few. A programmed approach to a number of the difficulties in the social welfare area could yield better results in terms of satisfaction of the beneficiaries and a contribution to employment expansion.

Mr. Browne

(Wexford): I welcome the opportunity to speak on this Bill. As the Minister said yesterday, total social welfare spending for 1995 will pass the £4 billion barrier for the first time, working out at approximately £11 million per day being spent on social welfare. That spells out clearly the dependency of people on social welfare payments, the need for the Government and the Department of Social Welfare to get value for money, to ensure that social welfare payments are spread evenly and reach those who require them. Our serious unemployment problem — probably our greatest social evil — goes hand in hand with social welfare payments. There are approximately 135,000 people long term unemployed, that is unemployed for a year or more. Many are unemployed for much longer.

As was the case at the end of 1994, 1993 and 1992, at the end of this year the long term unemployed will remain long term unemployed, despite the plethora of schemes that have been introduced. I often wonder what value we are receiving from such schemes which are supposed to help solve our unemployment problem. We have set up Leader programmes, county enterprise boards, partnership programmes, county development offices, job facilitators, FÁS, the new localised employment service announced by the Minister a few weeks ago and centres for the unemployed. Yet the long term unemployed remain long term unemployed. I am not blaming this Government, when we were in Government the same applied. New boards and structures are set up annually, sometimes two or three per annum, but if I take a number of unemployed people to Wexford tomorrow morning they cannot walk into one office and receive all the advice or information they need. In Wexford County Council, the county development team operates from one office and the county enterprise board from another, even though they are both located in the County Hall. The Leader programme operates from an office a mile out the road and other offices are located in Enniscorthy. I fail to understand why we cannot have one-stop-shops in every county to help those who want to go back to work or create jobs.

There is far too much bureaucracy and red tape attached to the system. Chief executives will be appointed to the county enterprise boards and the Leader programme and county development officers and other staff will also be appointed. Much of the money which should be used to provide jobs for the unemployed is being used to create five or six bureaucratic systems in each county. It is time for some Government to seriously examine if all those bodies could operate from one office, under the one staff and chief executive. We should stop the wasteful expenditure on all those boards. In most cases those new posts are merely copperfastening jobs for people who are already in well paid jobs. Staff from county councils and health boards frequently take up the posts of chief executive in these new structures. I have yet to see a long term unemployed person, even though he or she might be a graduate, securing the post of secretary or chief executive in any of those boards. If we are serious about tackling the unemployment problem and reducing the amount of social welfare payments, we must examine the structures we have set up for job creation purposes in recent years. With more than 135,000 people long term unemployed we are failing in our duty to create jobs.

The social welfare benefits paid out by the Government are miserly and an insult to those who will receive them. Old age non-contributory pensioners will receive an increase of £1.50 per week, deserted wives will receive an increase of £1.50 per week and the lowest rate of adult dependant payment will increase by 90p per week. Those on supplementary welfare allowance and the lone parents allowance, with one child, will receive a miserable increase of £1.50 per week while the long term and short term unemployed will receive an increase of £1.50 per week. The Government appears to be stuck on an increase of £1.50 per week. This is at a time when we are told our finances are in the best position for 25 years. A current budget surplus was recorded in 1994, the first in 27 years. The 1995 budget returns to the policy of planned current deficits of £310 million and plans for a total Exchequer borrowing for the year of £813 million. As the Government had plenty of money to allocate to the various sectors, one would have expected a greater allocation to people on social welfare payments. The people who made the sacrifices in the late 1980s and early 1990s, the low income earners and the people on social welfare, should be rewarded and have their pay returned to parity now that the country is in a good financial position.

Between 1987 and 1994 business was booming, employers made huge profits and the majority of the farming community did well, but they did not give a good return. The number of jobs created was not commensurate with the benefits businesses gained from low interest rates and inflation and the generally good economic climate. The people who could have created jobs held on to their profits instead of ploughing them back into their companies. They did not respond to the efforts of the Government to create the climate in which the number of jobs could have been increased. That has to be criticised particularly as most of those people will again benefit under this Government while people on social welfare will have nothing to shout about.

There were some good features in the budget. I welcome the fact that the carers' allowance can be more easily paid to people who deserve it. The means testing of the carers' allowance was too tight in the past and the many people looking after the elderly received little in return. For the sake of a couple of pounds over the limit they were denied any allowance. We are told that it costs between £600 and £700 a week to keep an old person in hospital, but by paying the carers' allowance, those people can be looked after at home at a great saving to the taxpayer.

I welcome the changes made by the Minister in regard to unemployment assistance for young people living at home. The Minister should have gone further. The means testing of young people who live at home is a false economy. These young people get anything from £15 to £25 a week yet if they move out of their family home to a flat they automatically get full unemployment assistance and, in addition, between £35 and £40 in rent assistance from the local community welfare officer. I am baffled by the idea that that makes sound economic sense. The Minister has made an effort to change it — previous Ministers did not.

Giving the full rate of unemployment assistance to young people living at home would result in major savings to taxpayers and the Departments of Social Welfare and Health. In most cases they are dependent on unemployment assistance because their parents are in the middle income bracket, pay the highest rate of tax and PRSI, have a mortgage and do not have a medical card. Their weekly outgoings are very big but because their total income is taken into account their son or daughter receives only the reduced rate of unemployment assistance. I would be the first to compliment the Minister if he were to pay these young people the full rate of unemployment assistance instead of forcing them out of their family homes, where they could be of some benefit.

I understand that the payment of disabled person's maintenance allowance will be taken over by the Department of Social Welfare. In the South Eastern Health Board region a cheque is sent every Thursday or Friday to Kilkenny and, if the post is delayed, the cheque might not arrive until the following Monday or Tuesday. It is ridiculous that the health boards cannot see their way to issuing disabled persons with a book similar to that given to an old age pensioner. I ask the Minister of State, Deputy Durkan, to issue books to people in receipt of diabled person maintenance allowance as soon as the change-over takes place so that they are not treated as second class citizens. Instead of waiting and hoping that their cheque will arrive on time they should be able to go to the post office with their book and claim their benefit when it is due.

I welcome the equality payments to women. It seems the Minister will avail of the local loans fund to pay this money. There are many views about this and the legality of the Minister's decision has been questioned. I am sure the Government, with the best legal advice available to it, will not do anything unlawful. I am no economic genius, but I read in one of the Sunday papers that if the Minister were to sell off the local loans fund to a building society or a bank he would be able to pay the equality payments and have money left over. Local authorities have been sympathetic to people with council loans who get into difficulties, and councils have been known to extend loans for a year or to freeze the arrears for a year or two and allow people to continue making current payments.

I hope that what the Minister intends to do will not affect that because that would be disastrous for the thousands of low income families who, from time to time, have to make representations to their politicians to get the local loans officer to make certain adjustments in hardship cases to the conditions of their loans. For one reason or another they may seek to have the loan frozen for a certain period. In general the county councils adopt a flexible and compassionate approach to such requests and in most cases the family concerned will eventually pay off the arrears. If the Minister transfers responsibility for the local loans fund to an independent body which is only interested in making big profits it may not adopt such a flexible or compassionate approach. The banks and building societies do not adopt such an approach to any of their customers when loan payments are in arrears. No matter what happens I ask the Minister to ensure that the local authorities will continue to be in a position to recommend to whoever takes over responsibility for the local loans fund that they should allow house owners some breathing space and time to pay off the arrears.

When the Minister of State, Deputy Durkan, was on this side of the House he heavily criticised the Fianna Fáil-Progressive Democrats Coalition Government and the Fianna Fáil-Labour Coalition Government for failing to provide sufficient increases in social welfare despite the fact that the increases ranged from 3 to 6 per cent. Now that he is in the hot seat in the Department of Social Welfare he should consider encouraging the Minister to increase the figure of 2.5 per cent to 3.5 or 4 per cent. Are we saying to the poor that although the national finances are in the best state for 27 years they do not count and are not in the thoughts of the Government? The Government has no interest in the less well off, the poor and old age pensioners. The Minister of State should make a name for himself by stating this is unacceptable and that changes will be made before this Bill is passed by the Dáil to ensure that these people are looked after. While the Bill contains a number of positive measures which will be of benefit, the increases in social welfare payments to the less well off and the most vulnerable sections of society are inadequate.

Minister of State at the Department of Social Welfare (Mr. Durkan)

I compliment Deputy Browne on what was for the most part an enlightening and positive speech. It is a pity he deviated from this approach and went down the road followed by his colleagues during the past four to five weeks. Since the budget the only thing the Fianna Fáil Party has been able to do is make derogatory remarks about the increase of 2.5 per cent. My colleague, the Minister for Social Welfare, Deputy De Rossa, will deal with this matter at some considerable length when he replies to the debate.

Deputy Browne referred to the disabled person's maintenance allowance which may be paid by way of a payable order book issued by the health boards. This is a more reliable system which makes for fewer mistakes. A person will find it much easier to travel to a post office than wait for the post to arrive. That is not intended as a criticism of An Post.

It is sad that members of the Opposition have adopted a negative attitude. One of the reasons for this is that they want to cloak the negative measures they introduced when they held the reins of power. Let me remind them of some of the consequences of their actions.

On the question of the taxation of social welfare benefit, the subject of an ongoing debate, the previous Government decided to tackle this problem but only succeeded in exacerbating it by punishing those who decided to return to work. I have spent the past five to six weeks trying to unravel the atrocious difficulties which have been created and which I hope, with my colleague, the Minister for Social Welfare, we will be able to resolve.

Let me give a classic example. If a deserted wife in receipt of a lone parent's allowance of up to £64 per week decides in mid year to return to work for which she will receive an income of £80 per week, as a result of the decision made by the previous Government the social welfare payments she received in the first part of the year will be added to the income she will receive from employment and she will be taxed on the combined income. She will receive a tax free allowance of £15 per week approximately. Such a system militates against the rights of the individual and fails to provide any incentive to return to work.

The two Members sitting opposite are well aware that this anomaly exists. I took the liberty of speaking to the former Minister for Social Welfare to inquire if he has any secrets which would be of help in resolving the difficulties created by the introduction of this system. In addition, the projected savings to the Exchequer are highly questionable for the simple reason that at the end of the tax year the individual concerned will be entitled to apply to the Revenue Commissioners for a tax refund. The system is, therefore, unworkable and I fail to understand why it was introduced. There is no question that it cannot continue although I do not know to what extent we will be able to address the problem in the short term.

Let us take another example. A person who has had to leave the workforce for a certain period due to a serious illness and is in receipt of sick benefit, as in the case of the deserted wife, will be penalised on their return to work. Their tax free allowances will be slashed because of the decision of the previous Government to tax social welfare benefit. What annoys me intensely is that not a word was mentioned about those atrocities in the past few weeks by the people on the opposite side of the House. Surely somebody must have brought it to their attention in the period since last April, when these measures became operable for the first time. By the middle of last year it must have been patently obvious to the then Minister for Social Welfare that serious anomalies existed and that people would be seriously disadvantaged as a result of the operation of that system.

There has been ongoing debate about taxation of social welfare benefits but at every meeting I have attended recently with trade unionists, employers and public representatives this issue has arisen. The reality is that the scheme, as set out by the previous Minister for Social Welfare, is inoperable. It cannot and will not work. It militates seriously against people who wish to work and it also penalises, in a most outrageous way, people who, through no fault of their own, become ill and may require hospitalisation in the course of a particular year. Some alleviating measures already have been introduced in the budget. I cannot predict to what extent we will be able to address all of these problems in the short term but the Government is patently aware of their existence and dealing with them is its high priority.

I wish to refer now to the criticisms made about the 2.5 per cent general increase in social welfare payments. Those people who criticise it forget to mention the 35 per cent total increase. When they say that old age pensioners will receive only £1.50 or £1.80 extra per week they should remember the other improvements made to the carer's allowance, the free television licence scheme and so on. Of course, the Opposition do not make any attempt to refer to those improvements.

During the budget debate the Leader of the main Opposition party suggested an across-the-board 3 per cent increase. That was a fair and reasonable suggestion but the irony is that by virtue of bringing forward the initial payment dates for the increases to the earlier date now proposed, the recipients will actually get more than 3 per cent. I realise that will only apply to this year but that is the reality. If members of the Opposition want to refer to the present year — they certainly have not referred too often to their own responsibilities in previous years — they should at least identify the positive aspects of the budget.

The other issue which has taken up some considerable time and energy on the Opposition benches is that of equality payments to women, an issue which has been contentious for some time. The Government has made the correct decision in that regard. Notwithstanding decisions of the courts, it could have decided to postpone dealing with this matter for a further four or five years. What began originally as quite a small problem involving a cost of perhaps £20 million to £50 million could have progressed to a stage where the cost of dealing with it would have been £500 million or perhaps £1 billion in ten or 12 years time. The Government has decided to take the bull by the horns and deal with this issue once and for all in the course of this year and next year. It should be congratulated for that because if it had postponed dealing with it, like many other issues, it would have become greater and more expensive to address.

Some Deputies — perhaps with tongue in cheek — raised the question of where the necessary money will come from and made references to the local loans fund. I accept the point made by Deputy Browne earlier in relation to the manner and method of the operation of local loans through the local authorities. The proposed system will not change in any way the manner and method of collection; it will be equally amenable from the point of view of the general public, as it was previously. Nobody would suggest that we should devise a system which would militate against the people currently dependent on the resources of the local loans fund.

Fianna Fáil was amazed at the suggestion that the local loans fund be privatised but it did that during the time of the last local authority tenant purchase scheme. At that time, applicants for the scheme had to refer, first, to the banks and building societies where previously this was dealt with by the local loans fund. For the benefit of those on the opposite side of the House who should know more about these matters, since 1987 the Housing Finance Agency has become a dominant player in that particular area. In fact, the particular sell-off in this instance could be underaken by the Housing Finance Agency, the National Treasury Management Agency or by somebody else if they were willing to pay more. Obviously, the highest bidder is the one that must be entertained in these sort of circumstances.

I could mention other positive aspects of the budget but I would need more time than what is available to us for debate on this Bill. One area that has caused confusion and created poverty traps and obstacles to employment is the discrepancy between the taxation and social welfare codes. This matter is receiving direct and positive attention by the Government. It is an area that is part of my responsibility through the work of the expert group currently examining the possible integration of the social welfare and taxation codes. That will have the effect of setting out a framework within which it will be possible to devise a system that will be fair to those employed and eliminate the multiplicity of swings and balances that have existed over the years in the social welfare and taxation systems. Instead of working independently, the two systems will be married so as to eliminate any possibility of conflict in those areas.

A measure that has been welcomed, belatedly, by some Opposition speakers is the improvement in child benefit. This is regarded by the Government as an area of priority and it is hoped that the maximum impact will be made on the finances of the family by its being specifically targeted. It will ensure that the maximum amount of money is made available to those who need it most. Deputy Ó Cuív seemed to put forward the suggestion that these increases should have gone only to some families and should have been means tested. That is an indication of the thinking on the opposite side of the House in relation to what should be done in this area. It is obvious, because it would have been means tested, that only some women would have received an increase in child benefit if Fianna Fáil had been in power. Surely if benefit is to be paid, women are equally entitled to it. Fianna Fáil should qualify what Deputy Ó Cuív said and indicate what it has in mind as to who should qualify in future.

Debate adjourned.