I am glad to have the opportunity to contribute to the debate on the Social Welfare Bill and welcome a number of the initiatives contained therein. The rates of increase proposed in the Bill, varying from 4 per cent to 7 per cent, are welcome. We can have many philosophical debates about the social welfare system and its impact on the economy and the labour force, having regard also to the Report of the Commission on Social Welfare, but the bottom line for the people dependent on social welfare payments is the additional money they will have in their pockets. Rates of increase close to three times the level of inflation are particularly welcome.
The hallmark of the Minister's stewardship has been the focusing of resources on eliminating poverty traps, particularly for families. In that respect the increases in child benefit are welcome. Members of this House are familiar with the dilemma faced by many families in our constituencies in terms of taking up job opportunities or remaining on social welfare. The significant increases in child benefit, coupled with the improvements in family income supplement, go a long way towards making participation in the working economy more attractive, thereby opening the door to social inclusion.
Over the years people who found themselves, through no fault of their own, entirely dependent on social welfare for their incomes were largely excluded from participation in society, but by virtue of a range of initiatives, including the back to work allowance scheme, family income supplement and the significant increases in child benefit, their quality of life has been significantly enhanced.
Opposition speakers referred to paltry increases proposed in the Bill. None of us, on becoming old age pensioners, would like to be dependent on £78 per week. There will never be enough resources. We have never had a Social Welfare Bill that was not criticised by the Opposition because of its meagre increases and championed on this side of the House by front and backbenchers. Such an adversarial system ensures the social welfare agenda is not forgotten in this House and that the Minister for Social Welfare responds to our concerns in that regard on an annual basis. All things being equal, the Bill makes progress in an area where considerable ground remains to be made.
The reduction in the numbers of people signing on represents significant progress which is due to a number of initiatives, including our buoyant economy. There are now 30,000 fewer people signing on, with an additional 100,000 at work compared to the figure three years ago. That progress is due also to the deliberate steps taken by the Department of Social Welfare in the closing months of 1996, and which continue to be taken, to eliminate fraud in the social welfare system. Prior to that we had an annual debate on whether the live register or the labour force survey gave a truer indication of the levels of unemployment.
The measures taken following the study by the Central Statistics Office at the end of last year clearly indicate that there was a significant level of abuse. Many of us in this House have met people in our constituency clinics who, when confronted by a social welfare officer, knew that the game was up in terms of claiming unemployment benefit. That effort must continue. Not a week goes by that somebody does not come to one's clinic who has received a letter from the Department of Social Welfare asking them to outline what efforts they have made to obtain work, whether they wish to avail of the services of the social welfare jobs facilitator, and whether they are registered with FÁS. This constant contact — I would not call it harassment — by the Department of Social Welfare in an effort to help people to find their way off the social welfare register in a structured manner is positive, and it has had the desired effect of bringing abuses of the social welfare system to light, with the result that many people have voluntarily signed off.
Although a significant number of jobs have been created, unemployment remains stubbornly high. One reason is the significant increase in participation of women in the workforce which is a relatively new phenomenon here, although we are still at the bottom of the European league table in that regard. We have to face the reality that that will continue to increase. Returned emigrants are also taking up many job opportunities that arise. There is also a problem with the hard core of persons who have a low level of education and poor skills and who remain unattractive to employers. A debate is raging currently between the Irish National Organisation for the Unemployed and a representative of the business community on foot of a recently published report in which such people were unfairly and unjustly referred to as social misfits. For ISME, the representative group concerned, this was an attempt to get a headline which went one step too far. It was regrettable, but if it serves to focus attention on the problem of long-term unemployment, it is welcome.
We have to question the effectiveness of the role played by the State training agency, FÁS, in trying to construct a meaningful route back into employment for in excess of 100,000 people who have been unemployed for over three years. It raises the question whether FÁS should have its role clearly defined and whether two distinct agencies should be established, one to deal with employers' need of ongoing training and retraining for their employees and another to deal specifically with long-term unemployed people and construct meaningful courses for them. Community employment schemes involve people in working for local authorities and voluntary organisations, but there is little meaningful training built into those schemes, and there is continuous recycling of the same people on the schemes. There is a need for innovation in the types of schemes being constructed by FÁS for the long-term unemployed.
It is ironic that this criticism can be made at a time when we are facing a serious skills and graduate shortage, with the Government actively considering inviting tenders from colleges outside the State to meet demands in the telecommunications, electronics and language skills areas. Much as we need to capitalise on the desire of employers to come here by providing the types of graduates they need, we must not lose sight of that core of long-term unemployed people, and this is one of the areas in which the Department of Social Welfare has been most disappointing over the past few years. I hope we can redouble our efforts to make meaningful progress in that area.
I want to deal with the improvements in the budget for pensioners. The previous speaker referred to the very significant concessions in the budget introducing pro rata pensions for self-employed people who made PRSI contributions. I would like an assurance from the Minister that the Department will adopt a proactive approach to this concession because a significant number of people have reached retirement age over the past four, five or six years since the introduction of PRSI for the self-employed in 1988. They have been told that because they have not paid sufficient contributions they are not entitled to anything in return, but there is now a possibility of an entitlement to a pro rata pension based on an amalgamation of contributions made earlier in their working life and their PRSI contributions. Some of these people have been through the system and refused pensions while others, by virtue of their own investigations, came to the conclusion that they did not have an entitlement under the regime that existed up to now. It would be appropriate for the Department to take a proactive stance by informing every applicant who has an entitlement that such is the case.
I welcome also the commitment to refunding the pension element of their contributions to persons who made contributions over a ten year period and who have reached retirement without making sufficient contributions to qualify for a pension. That is particularly welcome because it must have been galling in the extreme to find that one was entitled to nothing from a scheme into which one had paid and to find also that a commitment made by Deputy Woods when he was Minister for Social Welfare that the pension element would be refunded was not honoured until now.
The commitment to reviewing the means test for social welfare pensions and other payments signals good intentions, but I am not sure it will work. There is no Member of the House who is not aware of the "broad brush" approach of the Department of Social Welfare to assessing income from capital under the existing arrangements. A rough rule of thumb would be 10 per cent income from money on deposit, but no financial institution is paying that kind of interest on money on deposit. It is only a matter of time before that "broad brush" is challenged in the courts, and any court in the land would find in favour of the plaintiff if such a case were taken because it is clearly the case that there is no such return for money on deposit. The Minister's speech reads well in terms of intention but I am not sure that the small print of the Bill meets the objectives set out. It is stated in section 25 of the Bill that the first £2,000 of the capital value of property shall be excluded. It proposes that the yearly value of the next £20,000 of the capital value of the property shall be assessed at 7.5 per cent, a figure that bears no resemblance to the yield from capital on deposit. It also proposes that the yearly value of so much of the capital value of the property as exceeds £22,000 shall be assessed at 15 per cent. It seems these figures were pulled out of the sky. Money on deposit does not make that much dividend.
We should adopt a transparent approach in terms of assessment, taking the yield for money on deposit as that earned in the previous 12-month period. That would be the fairest system. To say that money on deposit will earn 7.5 or 15 per cent when at present it is earning 3.5 or 4 per cent is unacceptable and does not meet the objective outlined in the Minister's contribution. That would further aggravate the position in terms of assessment, with which people are already extremely annoyed. It is, therefore, a case of going back to the drawing board.
There is much debate about pension entitlements and early retirement. A concession was made in regard to early retirement for teachers and the matter arose again recently with the nurses' dispute. There is need to consider pension provisions in the public and private sectors. PRSI contributions at various classes meet less than 50 per cent of the entire social welfare budget in any given year. While we clap ourselves on the back for reducing PRSI and income tax rates, a close look at the demographic structure in the future indicates that a significantly greater number of people will be dependent on the Exchequer. At the other end of the scale, a significant number of people will enter the workforce and we should consider mandatory or voluntary provision for increased payments of PRSI to enable persons to assess their pension provisions under the PRSI system and take early retirement at little cost to the State. That is socially desirable in that it would help solve the unemployment problem.
We must consider tax concessions for people who make arrangements through private pension plans. I have one criticism of the Department of Social Welfare in this regard. Where a person who makes provision for a private pension plan covering a ten or 15-year period reaches retirement age in the meantime and applies for noncontributory pension, that person is assessed on the capital value of the pension plan, its value at maturity rather than its immediate value. It is most unfair to people who try to provide in a responsible manner for their retirement to base their assessment on a pension that will not mature for a few years. I am aware of an interesting case which is on appeal to the Department.
I particularly welcome the introduction of the sickness allowance which recognises the plight of self-employed people who may have paid PRSI contributions which apply only for pension purposes. I share the views expressed by the previous speaker about widows. I regret I do not have more time to elaborate on those points. I broadly welcome the Bill and am grateful for the opportunity to contribute to the debate.