Ba mhaith liom mo bhuíochas a ghabháil ar dtús leis na Teachtaí go léir a ghlac páirt sa díospóireacht. Deireann an Fhreasúra nach bhfuil an Bille seo ró-mhaith. B'fhéidir go mbeadh sé níos fearr dá mbeadh athstructúr á dhéanamh ar an gcóras uilig.
Sílim áfach nach gcreideann éinne sa Teach seo — fiú amháin sa bhFreasúra — gur féidir an córas ath-structúriú go luath. Is structúr an-chasta agus anmhór é. Tá sé ann le fada agus d'fhás sé thar leath-chéad bhliain anuas. Ní féidir an athstructúriú a dhéanamh in aon Bhille amháin.
The system is large and complex. It has developed on an ad hoc basis over many years and it will take time to reform and streamline it and to integrate it with other social services. All social services need to be integrated and co-ordinated and this will take time.
I look forward to debating the policies on which I understand Deputy Ivor Callelly is working with the Fianna Fáil spokesperson on social welfare. Since I became Minister for Social Welfare, there has been an absence of any serious critique of the social welfare system by that party. I received much criticism about various elements and rates, but there was no serious critique as to what might be done to improve the system. I look forward to that debate.
Apart from the reforms in this year's Bill I introduced a range of reforms last year. In addition, a major national anti poverty strategy is being prepared involving a range of Govenment Departments. A commission on the family has been established and is examining how families can be supported to a greater and better extent and how we can ensure that our tax and social welfare system supports families given their important role in society.
A range of other measures are also under way. A discussion document on social insurance and the PRSI system will be published soon. The task force report on the elderly will also be published soon. We expect that the integration group on tax and social welfare, established by the last Administration under the care of the Minister of State, Deputy Burton, and for which the Minister of State, Deputy Durkan, is currently responsible, will publish its findings by the middle of this year. This will be a major step in terms of examining how the tax and social welfare systems can be restructured. In addition, we have initiated a review of the basic minimum rates which the Commission on Social Welfare recommended ten years ago. The ESRI is currently looking at those rates to determine an updated version of a minimum adequate income level for the 1990s.
This reforming work is going ahead and cannot all be encapsulated in the annual Social Welfare Bill. However, I would argue strongly that this is a very good Bill. It is the product not only of my thinking but that of the Government as a whole. It had the input of Labour and Fine Gael in addition to that of Democratic Left.
The Bill is not perfect and choices had to be made in relation to the spending of resources. Nevertheless, we introduced a one parent family payment; we reformed dramatically the assessment of unemployment assistance for part-time workers; we are continuing with the back to work allowance scheme, which is currently availed of by in excess of 10,000 people; we improved the family income supplement; we provided for the retention of medical cards for three years by people who take up work and we are enabling people to retain child dependant allowances for 13 weeks when they take up work. We are also continuing to provide the third level allowance schemes and are providing for the retention of child dependent allowances for certain categories of social welfare recipients with children in college. We extended the age limit for that to 22 years last year and this year we extended it to 23 years or the end of the academic year, whichever comes later, in order to assist people to remain in education.
All of these measures are important and it is wrong of the Opposition simply to ignore their existence. They are indicative of a very specific direction in reforming the social welfare system, which is to make it more work and worker friendly and to help people to take up and make work. We have also made improvements in the last two budgets in child benefit — it is clearly also a family friendly Bill and system.
I was struck by the fact that a number of Fianna Fáil Deputies called for fairly extensive expenditure increases, despite the fact that late last year, when the Government was preparing the Estimates, we had calls from the leader of the Fianna Fáil Party, Deputy Bertie Ahern, for a reduction in social welfare expenditure. Fianna Fáil Deputies said today that not enough is spent on social welfare. In case there is any question about whether I am misleading the House in relation to this matter, I draw the House's attention to an article by Tom MacEneany in The Irish Times, dated 8 December 1995, which stated:
Ireland should be spending less on social welfare, according to the Fianna Fáil leader, Mr. Bertie Ahern. "At a time when the economy and jobs are growing strongly [It is nice to see him praising the growth in jobs] social welfare expenditure ought to be in decline", he said. Speaking to the Institute of Directors yesterday, Mr. Ahern said he was mystified as to why, given the current economic conditions, there should be any question of exceeding agreed budget guidelines on social welfare.
That is a matter of record and I would expect some consistency on the part of Fianna Fáil speakers who come into this House to declaim that not enough money is being spent on social welfare. More money than ever is being spent on social welfare, but it is being spent in an effective way, not as a result of cutting back on some schemes but as a result of a general increase in the available resources.
I want to deal with a number of queries raised by Deputies during the debate. I do not expect to be able to deal with them all, but we can deal with any I do not reach on Committee Stage.
Deputy Walsh and Deputy Quill welcomed the changes in PRSI provided for in the Bill but suggested they did not go far enough. The cost of the improvements I am introducing this year is £121 million which, together with the changes made last year, gives rise to an overall cost of £270 million. In contrast, the cost of improvements introduced in 1994, when Fianna Fáil was in Government, was just £63 million.
As far as the rates of PRSI and employment creation are concerned, studies conducted by the EU and OECD have concluded the cost of employers' social insurance is passed on to employees because it is taken into account when wage rates are settled. Irish employers' PRSI rates are not high by international standards. For example, only four EU states have lower rates of employer social insurance contributions — the UK, the Netherlands, Denmark and Finland.
While it is natural that attention should focus on the rate of employers' PRSI contributions, other aspects are also important when comparing the social insurance systems in operation in different countries. For example, there is no earnings ceiling for employers' social insurance contributions in the UK, where the rate of employees' social insurance is 10 per cent. Taking employee and employer PRSI together, the total rate of PRSI is lower than the UK equivalent where wages are higher than £110 per week, when the measures provided for in this Social Welfare Bill are enacted.
There is no clear evidence that reductions in employer PRSI lead to additional employment creation or job maintenance. Any assessment of possible positive employment effects must take account of the effect of the tax increases necessary to pay for such reductions in PRSI. PRSI pays for social insurance benefits and pensions. The current rates of PRSI cover most, but not all, of these costs. It is important to be clear that calls for reductions in PRSI contributions mean either higher taxes or reductions in social welfare rates of payment. There can be no question of reducing the rates of social welfare payments and there is no support in this House or the country for such a policy.
When Deputy Quill raised the question of the one parent family payment, she asked why I was doing away with a social insurance benefit, that is, the deserted wife's benefit. She made out that she was a defender of the social welfare system. I find this rather odd because the Progressive Democrats launched a policy document just before the budget which proposed the abolition of the social insurance system. They did not tell the public at that time that if they were to proceed with that, assuming they would want to maintain old age pensions, unemployment assistance and so on at their current levels, the net effect would be that the 27 per cent rate of income tax would have to rise to 33 per cent and the 48 per cent rate to 62 per cent. I wonder if the Progressive Democrats will present that in their election manifesto at the end of next year when they propose to end the social insurance system.
I will publish in the near future a discussion document on the social insurance system. I look forward to a debate on it in the House, or the Select Committee on Social Affairs, at some point in the not too distant future.
Deputy Quill raised a number of issues with regard to the one parent family payment. Contrary to what she suggested about savings, the combined effect of the changes I am introducing will cost an additional £10 million in a full year. These changes will mean that about 4,200 lone parents currently on a reduced rate of lone parent's allowance will qualify for the maximum rate of payment and a further 900 lone parents will receive a higher rate of payment under the new one parent family payment. In addition, a further 2,000 one parent families will qualify for this payment.
Deputy Quill also suggested that the one parent family payment represented an attack on the social insurance system. If she looks closely at the detail of my proposals, she will realise that they represent a considerable improvement in the income supports for one parent families. What has often been seen as a degrading requirement on women to prove desertion will be removed from the code and men and women will be entitled to the payment on the same basis.
An initial disregard of £6,000 per year will be applied. The first £2,000 of capital will also be disregarded and a proportion of maintenance payments may be retained towards housing costs.
As far as the Deputy's comments on the insurance system are concerned, it is interesting to note the views of the Commission on Social Welfare on this issue. It stated that in the event of marital breakdown or desertion by her husband, a woman is likely to experience long-term income needs. The question arises as to the most appropriate way in which these needs should be met. While the case for income support may be clear-cut, it is not clear that this support should be provided by an insurance scheme. The assessment of maintenance being paid in assessing eligibility for deserted wife's benefit, which was introduced by the Finna Fáil-Progressive Democrats Government, dilutes the insurance concept itself. While we are not convinced that desertion can be regarded as an insurable contingency, we recognise that any attempt to make alternative income maintenance provision must take account of the acquired rights and entitlements of those currently in receipt of deserted wife's benefit. My proposals for a new one parent family payment not only address fully the issues raised by the commission in this area but provide for a comprehensive, unified payment for all one parent families which contains significant incentives for parents to return to the labour force.
There has been an allegation that I made an incorrect and misleading statement last year on the one parent family payment. Fianna Fáil spokespeople quote selectively, as usual, from a statement of mine on this payment when they allege I said there would be no means test. What I said was that the new payment, instead of being means tested, will be earnings related. It may be difficult for them to comprehend the difference. When I have more time I will explain it to them.
Deputy Joe Walsh criticised the notional rates used for the assessment of capital for social assistance purposes, in particular, the 10 per cent rate applied in certain payments. I have already made known in the House that I intend to standardise the provisions used for assessment across the different payments and I have taken the opportunity of the introduction of the one parent family payment and disability allowance to begin this process. The provisions to be applied for these payments are that the first £2,000 of capital will be disregarded. The next £20,000 will be assessed at 7.5 per cent and capital in excess of £22,000 will be assessed at 15 per cent. The substantially improved disregard of £2,000 significantly reduces the effect of interest rates for most recipients. There is a difference between the practical reality that most lone parents do not have capital stashed away and the theory that if one has in excess of £22,000 one will receive a reduced one parent family payment.
I thank Deputies for their contributions and I look forward to Committee Stage.