The provisions contained in previous Social Welfare Acts, combined with those contained in this Bill, have brought about a transformation of the social welfare system. The significant change in the focus and ethos of the Department is now underpinned by a solid body of legislation. This change in focus stemmed from a realisation that it was no longer sufficient for the Department to concentrate all its energies on delivering essential income support payments to the elderly, unemployed, people with disabilities, low wage workers and families, although that remains, and rightly, a central part of its work. It was also necessary for the Department to ensure that the social welfare system is able to support the aspirations of people to improve their conditions and reduce their level of dependency by facilitating them in gaining access to training, education and employment.
We do not claim the system is now perfect; it is not. There is still need for further reform but it is a more coherent and flexible system. It is responsive to the varying needs of society. This Bill represents a further stage in its transformation.
The 36 sections of the Bill comprise a comprehensive package of measures which provides for an improvement in the living standards of all who depend on social welfare through increases in weekly rates of payment which are double the projected rate of inflation for the year; continues the pro-work and pro-family policies which have been central to the work of this Government; provides a programme of improvements for old age pensioners and carers; completes the process of ensuring equal treatment of men and women in all social welfare schemes; brings about further significant reform of our social welfare system through the introduction of, for example, new pro rata pensions and a new sickness allowance; strengthens the social insurance system by enhancing the benefits available to all workers who pay social insurance; and reverses the damage caused by the infamous “dirty dozen” cuts introduced by the previous Fianna Fáil-Progressive Democrats Government.
I wish to concentrate on a number of specific measures in the Bill which are of particular significance. I am pleased to provide for the introduction of pro rata contributory pensions. The present conditions require a minimum average requirement of 20 contributions over a working lifetime in order to qualify for the minimum rate of pension. Under the new arrangements in section 12, reduced rate old age contributory pension will now be payable to persons who have a yearly average of between 10 and 19 contributions over the period from when they first became insured until the end of the contribution year before reaching the age of 66 years. The details will be contained in regulations to be made under the section.
The new arrangements will come into effect in November and will be of benefit mainly to people who have had broken or sporadic contribution records over their working lifetime. Included in that category are married women who worked for a number of years before they married, then spent a long period outside the paid workforce and who may have returned to paid employment in recent years. It will help returned emigrants whose work period abroad cannot be reckoned for pension purposes in Ireland. It will also benefit self-employed people who started on their own before 1988 when PRSI for the self-employed was introduced.
In line with the recommendations in the final report of the National Pensions Board, section 12 provides for an increase in the number of paid contributions required for entitlement to old age contributory pension from 156 or three years to 520 or ten years. This increase is being introduced in two phases with lengthy timescales which recognise the need for a long lead-in time when making fundamental changes to State pension entitlements in order to meet people's expectations and allay fears as much as possible. The timescales proposed are more generous than those envisaged by the National Pensions Board.
The second issue I wish to highlight is dealt with in section 13 which amends the conditions governing requalification for unemployment benefit and which is aimed at improving the position of workers in a typical employment. The categories of workers involved include seasonal and casual workers such as dockers, firefighters, creamery workers, hotel staff and people in the tourism industry.
By virtue of changes introduced by Deputy McCreevy as part of his notorious "dirty dozen" cuts, these workers were precluded from requalifying for unemployment benefit until they had a further 13 PRSI contributions paid after they had exhausted their entitlement to unemployment benefit. In practice, this meant that, until such time as they acquired the necessary 13 PRSI contributions, they had to have recourse to unemployment assistance which is means tested and which took account of whatever earnings they had from their casual employment in the previous tax year. The method by which those earnings were assessed gave rise to difficulties in areas where the volume of casual work available was declining and many workers found themselves on a reduced rate of unemployment assistance, or no payment at all, on the basis of past earnings which had been spent and/or projected earnings which had not yet materialised.
Under the Bill, a person can requalify for unemployment benefit by having the necessary 13 PRSI contributions paid at any time after the 156th day of unemployment, that is, six months. This means that instead of having to have recourse to unemployment assistance for 13 weeks, a claimant can, in certain circumstances, requalify for a further 15 months of unemployment benefit. At least 5,000 workers who are currently receiving reduced rate unemployment assistance will gain an average of £11 per week from this change. There is also an important non-monetary gain: the additional security which derives from knowing their benefit will generally continue at a particular level during bouts of unemployment, hitherto made worse by financial uncertainty.
A third notable feature of the Bill — to which sections 15 to 18 refer — involves the introduction of a new social assistance scheme to be known as sickness allowance. Under the existing arrangements, people who are incapable of work due to illness but who do not satisfy the contribution conditions for disability benefit or the qualifying conditions for receipt of disability allowance must have recourse to the supplementary welfare allowance in order to secure income support.
During 1995 supplementary welfare allowance was paid to more than 12,000 people who were unable to work due to illness but had no entitlement to either disability allowance or disability benefit. Supplementary welfare allowance was never intended as a sickness payment and, consequently, provision is being made for the introduction of the new sickness allowance which will complete the cover available under the social welfare system for those who are unable to work due to illness or injury.
Sickness allowance will be payable at the same rate as unemployment assistance i.e. at the short-term rate of assistance for the first 15 months and at the long-term rate thereafter. To qualify for the allowance a person must be aged 18 years or over and under age 66, be incapable of work and satisfy a means test. The provisions as to the assessment of means will be specified in regulations. It is envisaged that sickness allowance will provide for an estimated 13,500 people per year who are incapable of working due to illness and are currently forced to seek supplementary welfare allowance.
A further important reform of the social welfare system is provided for in sections 19 to 21 which introduce a new scheme to be known as the widower's (non-contributory) pension scheme. The introduction of this new payment represents the final step in the implementation of equal treatment for men and women throughout the social welfare code. The new payment is designed to meet the needs of widowers who are not rearing children — those who are will continue to receive the one-parent family payment — and will be available to widowers on the same basis as the existing widow's (non-contributory) pension. This Part of the Bill also extends entitlement to the new widower's pension to divorced men, on the death of their former spouse, provided they have not remarried and continue to satisfy the other conditions of entitlement. Similar provisions have already been put in place for widows in the Social Welfare (No. 2) Act, 1995.
Partnership 2000 contains an important commitment in relation to continuing the reform and development of the social insurance system over the period of the new programme. The programme for Government contains a similar commitment. This is important because of the crucial role social insurance plays within the overall social welfare system. PRSI contributions are paid by approximately 1.35 million workers and amount to £1.81 billion each year, which is sufficient to pay for almost half of all social welfare expenditure. Most importantly, the social insurance system reflects inter-generational solidarity as well as solidarity between the different income groups. Those who are active in the economy support those who are no longer active, while those at work who are best off support those who are unable to work and are least well off.
The PRSI provisions in the Bill reflect the changes announced in the budget last January. Section 8 provides for a reduction of 1 per cent, from 5.5 per cent to 4.5 per cent, in the standard employee contribution rate. This section also increases from £22,300 to £23,200 the annual earnings ceiling up to which social insurance contributions are payable by employees and increases from £26,800 to £27,900 the earnings ceiling up to which contributions are payable by employers.
The weekly earnings limit for the lower, 8.5 per cent, rate of employer's contribution is being increased from £250 per week to £260 per week. Section 9 increases from £22,300 to £23,200 the income ceiling up to which social insurance contributions are payable by the self-employed. All of these changes will come into effect on 6 April next.
The Minister recently met a delegation from the Small Firms Association to discuss the ways in which the social welfare system supports the needs of small business and whether and how this can be improved further. It was agreed that the black economy was a major check on bona fide employment growth, it puts honest employers at a disadvantage and defrauds all taxpayers. The Minister outlined the improvements which have been put in place over the past six months by my Department to tackle black economy fraud.
The Small Firms Association welcomed the range of supports for employers in recruiting extra staff, particularly from the long-term unemployed, but pointed out that there was a problem in getting the information to employers. Small employers, in particular, did not have the resources or expertise to avail of schemes which were very complex to implement or which required a big administrative input from the employer.
The back-to-work allowance scheme and the employers' PRSI exemption scheme were cited as positive examples of schemes that are easy to understand and apply and consequently work well. In response, the Minister undertook to arrange for the Department, through its regional network, to work with the Small Firms Association in a systematic and focused way to inform small business of the supports available to them through the social welfare system. In this context, the Small Firms Association will work with the Department in preparing a guide for employers on how they and their employees can avail legitimately of support from the social welfare system.
I wish to outline the provisions of the various sections. Sections 1 and 2 contain the usual provisions relating to short title, construction and definitions used throughout the Bill. The increases in the weekly personal and adult dependant rates of social insurance and social assistance payments announced in the budget are provided for in sections 3 and 4. All personal rates are being increased by £3 a week, while all adult dependant allowances are being increased by £1.50 a week. This gives substantial increases of between 4 per cent and 4.8 per cent, which is approximately twice the expected rate of inflation for this year.
As a result of these substantial increases more recipients than ever are now at, or very close to, the minimum rates recommended by the Commission on Social Welfare. Some recipients, such as contributory pensioners, are currently at 113 per cent which is well ahead of those target rates while others, such as invalidity pensioners, will now reach 100 per cent for the first time. Those previously at 95 per cent of the target rate will now move up to 98 per cent while those on supplementary welfare allowance and short-term unemployment assistance will move from 92 per cent to 95 per cent of the target rate. The significant progress made over the past three years in reaching those minimum target rates is the clearest indication possible of the Government's commitment to achieve the rates recommended by the commission.
Section 5 provides for increases in child benefit which is the best mechanism we have for supporting families and tackling poverty. In line with the policy direction established in the past two budgets, child benefit is being increased as part of a planned strategy of reforming income support for children, removing disincentives and working towards putting in place a system of basic income for children.
The increase of £1 in the lower rate and £5 in the higher rate of child benefit with effect from 1 September next will bring the rates to £30 per month for each of the first two children and to £39 per month for each subsequent child. A family with three children will now receive £99 a month while a family with six children will receive £216 a month. During the past three years child benefit has increased by 52 per cent for a three child family and by 54 per cent for a five child family. In 1991 a four child family received approximately £70 a month, while this year it will receive £138, which is approximately double.
An increase of £10 at each point in the weekly income thresholds used to determine entitlement to family income supplement is provided for in section 6. As a result of this threshold increase virtually all current recipients will get an extra £6 in their weekly payments from mid-June next. The new weekly thresholds range from £205 for a one child family to £344 for a family with eight children or more. This section also provides that from 12 June next the rate of FIS payable will be calculated on the basis of gross earnings less any superannuation, PRSI and levies which may be payable. This revised calculation method is an important first step towards meeting the commitment in Partnership 2000 to base FIS entitlement on net rather than gross income: it only leaves income tax deductions to be removed from the calculation.
Last year Social Welfare Act provided for the continued payment of child dependant allowances for up to 13 weeks to people unemployed for a minimum of 12 months who take up employment which is expected to last for at least four weeks. This measure has greatly helped to overcome the disincentives facing unemployed people with families who are trying to get back to work. Section 7 extends these provisions to other groups, namely, people on community employment immediately before taking up employment and people on the live register or on community employment who take up employment under the Jobs initiatives announced last year.
Sections 8 and 9 are concerned with new rates of PRSI contributions and increases in the earnings ceilings.
Sections 10 and 11 provide for a further enhancement of the social insurance system through the extension of maternity benefit and adoptive benefit to women in insurable self-employment along the same lines as currently available to women in insurable employment. These sections also provide for a consequential amendment to section 18(1) of the Social Welfare (Consolidation) Act, 1993 which extends the benefits covered by self-employment contributions to include maternity benefit and adoptive benefit.
I described earlier the introduction of reduced rate old age contributory pensions, and section 12 gives legislative effect to this measure. I also referred earlier to the reform of the arrangements for requalifying for unemployment benefit. The relevant legislative changes are provided for in section 13.
Section 14 relates to the occupational injuries benefit scheme and provides for two improvements in this area. First, it removes the more restrictive conditions applying to widowers in the scheme, thus ensuring that widows and widowers are treated equally. It also abolishes the requirement that the claimant must be living with, or have wholly or mainly maintained by, the decease. This brings the conditions of entitlement into line with those applying to widow's and widower's contributory pension.
Second, this section extends the scope of the scheme to provide for payment of pensions to widows and widowers to the surviving spouse of a recipient of disablement benefit whose degree of disablement is assed at 50 per cent or more, irrespective of the cause of death. This provision is designed to overcome a problem which arises with the existing arrangements when the cause of death cannot be attributed directly to the occupational disease or injury.
I spoke earlier about the introduction of a new social assistance payment, to be known as sickness allowance. The relevant legislation provisions are contained in sections 15 to 18. I should mention also that section 17 provides for disability benefit to be renamed sickness benefit and invalidity pension to be renamed disability pension to more accurately reflect the contingencies these payments are designed to meet.
I have spoken already about the introduction of the new widower's non-contributory pension scheme, the legislative basis for which is contained in sections 19 to 21.
Section 22 introduces a number of improvements to the disability allowance. It provides for regulatory powers to extend entitlement to disability allowance to persons who reside in an institution on a part-time basis and otherwise reside at home. The allowance will be payable to such people at half of the standard rate, subject to means. This measure is in line with the views contained in the recent report of the Commission on the Status of People with Disabilities. Section 22 also provides that where one of a couple is in receipt of disability allowance and the other is in receipt of old age non-contributory pension or invalidity pension, each of the couple may receive the full personal rate of payment. This section also provides that the cost of medical certificates issued for the purpose of claiming disability allowance and the new sickness allowance scheme will be met by the Department.
Section 23 provides for two important improvements to the carer's allowance. First, provision is being made for the payment of an additional amount, equivalent to 50 per cent of the existing personal rate, to caters providing full-time care and attention to more than one person. This measure goes some way towards recognising the particular difficulties faced by those caring for more than one person. It is estimated that up to 2,000 carers will benefit from this improvement. Second, this section provides regulatory powers to relax the conditions requiring full-time care and attention so as to entitle to the allowance carers of incapacitated persons attending rehabilitation training or day care centres on a limited basis. This measure has been sought for a long time.
Section 24 provides that people who cease to be entitled to the one parent family payment or the carer's allowance may qualify for pre-retirement allowance without first having to have been in receipt of unemployment payments for 15 months.
It has been one of our objectives to bring about a more uniform, consistent and even-handed treatment of capital for means test purposes across all social assistance schemes. The provisions contained in section 25 mark a further step along that mail by applying new and more generous rules to all means tested pensions and to carer's allowance.
Section 26 consolidates the provisions relating to amounts disregarded in the assessment of means for social assistance payments. It also makes provision for disregarding rental income from the assessment of means for old age non-contributory pension where the income is in respect of a person who lives with and pays rent to the pensioner. Section 27 simply provides that the measures contained in sections 22 to 26 will be brought into effect by way of commencement order.
The House will recall that the Minister announced in the budget an important reform of the way the earnings of low paid workers are treated in relation to social welfare. The measure announced was designed to deal with the poverty and unemployment trap created by the withdrawal of the adult dependant allowance and half of the child dependant allowance once the earnings of the spouse of a claimant exceeds £60 per week. It involves the introduction of a tapered withdrawal of the adult dependant allowance in the case of recipients of a number of social welfare payments. The provisions of section 28 are being introduced as a direct consequence of that reform.
Under existing provisions, where the spouse of a claimant to a social assistance payment is not his or her dependant, the claimant is assessed with the joint means of the couple. Section 28 amends these provisions so as to provide that on the introduction of the tapered rates of adult dependant allowance, a person in receipt of reduced rate adult dependant allowance will only be assessed with half the joint means of the couple.
Section 28, together with Schedule F, also replaces the term "adult dependant" used for the purposes of paying an increase of benefit or assistance in respect of a spouse or partner with the term "qualified adult". This change in terminology is in line with a commitment the Minister gave during the passage of last year's Social Welfare Bill. It reflects his wish to completely remove the concept of dependency from the social welfare code and is a small but significant step towards that goal.
Section 29 provides for a significant change to the existing provisions governing decisions relating to what are known as "liable relatives". Under the existing provisions, where one parent family payment or supplementary welfare allowance is paid to a person, any other person who is liable to maintain the beneficiary, and any child in respect of whom an increase is payable, is liable to contribute such amount as may be determined by the Department, or the health boards in the case of SWA, towards the benefit or assistance payment in question.
These decisions are made on an administrative basis in that they are not formal decisions made by deciding officers appointed under the social welfare Acts. As a result, the person concerned currently does not have the right to appeal. Section 29 provides that such decisions will now become a deciding officer function and will thus afford the person concerned the right of appeal to the independent social welfare appeals office.
In addition, it provides for regulatory powers to specify the basis on which the contribution a person is required to pay is to be calculated. Section 29 also provides that a divorced person will remain liable to contribute towards the cost of the benefit or assistance paid to their former spouse and extends the definition of "order of the court" to include maintenance, lump sum, variation and interim orders in respect of maintenance made by any court. These provisions will be brought into effect by way of commencement order.
Section 30 contains a number of provisions relating to unemployment payments. First, it provides that the provisions under which a person is not paid for the first three days of a claim for unemployment benefit, known as waiting days, will not apply in the case of a claim for benefit made following a claim for disability benefit in the same period of interruption of employment. Second, it provides for regulatory powers which will be used to eliminate the requirement to serve waiting days for unemployment assistance purposes, in certain circumstances. Third, it enables the Minister for Social Welfare to make regulations specifying the circumstances under which an unemployed person will be regarded as being available for and genuinely seeking employment for the purposes of entitlement to unemployment benefit and unemployment assistance. Finally, Section 30 provides that people who, prior to their participation in the European voluntary service pilot action programme, were in receipt of unemployment benefit or unemployment assistance can resume such entitlement on completion of the programme. This programme, which was recently launched by the Commission of the European Union, is open to young people between the ages of 18 and 25 and is administered on behalf of the Department of Education by Léargas.
The provisions of section 31 state that, where a person who receives a social welfare payment by way of personation is subsequently convicted of the criminal offence of larceny, the amount of the payment to which the offence applies may be recovered from any social welfare payments to which the person is or becomes entitled.
Section 32 provides for the collection of PRSI by the Department of Social Welfare from certain categories of self-employed contributors. The House will be aware that, for purposes of administrative ease, PRSI is normally collected by the Revenue Commissioners on behalf of the Department. These new powers will enable PRSI to be collected from people, such as certain artists, who are exempt from tax liability.
Section 32 also provides that a person who became insured as a self-employed contributor after reaching age 56, and who was previously insured as an employee, will be entitled to a refund in respect of the old age contributory pension element of their self-employment contribution in cases where they do not qualify for old age contributory or non-contributory pension.
This section also provides for regulatory powers to refund part of the employer's portion of contributions paid in respect of seafarers.
The primary purpose of section 33 is to allow for the amendment of a number of references to regulatory provisions contained in the Social Welfare (Consolidation) Act, 1993. These regulatory provisions relate to employment contributions and the need for the amendments arises from the consolidation in 1996 of regulatory provisions relating to contributions and insurability.
This section also provides for the deletion of subsection 212(7) of the Social Welfare (Consolidation) Act, 1993, which provides that a person shall not be required to give any evidence or answer questions tending to incriminate himself. This provision is regarded as unnecessary in that there is a recognised common law right against self-incrimination and it would be more appropriate for a court to decide whether the right may be relied upon in the circumstances of a case.
Section 34 provides for the amendment of the functions of the National Social Service Board which were bestowed on the board when it was originally established under the aegis of the Department of Health in 1984. In 1995, responsibility for the board transferred to the Department of Social Welfare and, consequently, it is appropriate that its functions should be reviewed in the light of that transfer of responsibility.
In broad terms, the revised functions reflect more accurately the important role of the National Social Service Board in promoting and supporting independent information, advice and advocacy services throughout the country to ensure that all citizens have access to accurate, comprehensive and clear information on the full range of social services. Specifically, the revised functions reflect the reality of activities undertaken by the National Social Service Board in recent years, such as its role in providing impartial social policy feedback on issues of concern to social services users and also its role in providing information, training and development services to the independent voluntary social services sector. The opportunity is also being taken in this section to substitute the Minister for Social Welfare for the Minister for Health in the original legislation — regulations made in 1995 already provided for that — and also to revoke a number of former functions which are no longer relevant in the context of the transfer of responsibility to the Department of Social Welfare.
We are glad to have this opportunity to review the functions of the National Social Service Board and, in that context, to reiterate our support for the continued development of high quality independent information services so that all our citizens can exercise choice in relation to information provision.
Sections 35 and 36 serve three related purposes. First, they provide for an increase from £188 to £197 in the weekly earnings limit below which employees are exempt from liability for health contributions and the employment and training levy. Second, they provide for an increase from £9,750 to £10,250 in the annual income limit below which self-employed people are exempt from these levies. Finally, they exempt from liability for the levies a distribution from an Irish resident company received by a person who is not an Irish resident. These changes will come into force from 6 April 1997.
This Bill should be viewed in the context of a strategy designed to make the social welfare system more equitable, more innovative, more reforming and more responsive to the diverse needs of Irish society today. It has all of these attributes and it will serve to further enhance the Social Welfare system. This is a substantial Bill which will have the effect of protecting and enhancing the living standards of people who, for one reason or another, are outside the active labour force; further enhancing the pro work and pro worker focus of the socila welfare system; completing the process of bringing about full equality between men and women under the social welfare system; continuing the pro family policy direction which has been central to the reforms that have been introduced in the past few years; and reversing the damage done by the Fianna Fáil-Progressive Democrats dirty dozen social welfare cuts.
This Bill is a carefully sculpted social and economic document designed to encourage participation in the workforce, assist those who are not in the workforce to meet their payment requirements, and to chart the course in the next 12 months in a way that is positive, progressive and supportive. I commend the Bill to the House.