Vol. 499 No. 3
67 Mr. J. O'Keeffe asked the Minister for Social, Community and Family Affairs his views on whether it is unfair and unjust to assess pensioners and other social welfare applicants with an income on the false basis that they are getting interest rates of either 7.5 per cent or 15 per cent on their bank savings when they may be getting as little as 0.2 per cent; and if he will change this system immediately to reflect the facts. [2704/99]
I indicated to the Deputy recently that, while the formula for assessing capital includes rates of 7.5 per cent and 15 per cent, it is important to note that the effective assessment rates are much lower. To determine the effective assessment rates account must be taken of the significant capital disregard of £2,000. There are other aspects of the means test which, when they interact with the assessment formula, operate to further reduce the effective assessment rates. For instance, in the case of old age, widow and widower pensioners, the first £6 of weekly assessable means does not affect entitlement to payment. In the case of a couple, means are taken to be half of the joint means. This results in a couple being able to have double the amount of means that a single pensioner can have.
The revised method of assessing capital, which was introduced for non-contributory pensions in 1997 by my predecessor, is designed to take account of all the above factors. Old age, widow and widower pensioners can have significant amounts of capital and still qualify for payment. For instance, a single old age pensioner can have capital of up to £6,160 and still qualify for the maximum rate of old age non-contributory pension. A married couple can have capital of up to £12,320 and still qualify for the maximum pension. A single pensioner can have up to £38,348 in capital – £40,428 from June – and still qualify for the minimum rate of pension, while a married couple can have up to £76,696 – £80,856 from June – before losing entitlement to the pension.
The majority of old age pensioners have no capital or insufficient capital to be assessed for means test purposes. Only a small minority have capital in excess of £20,000. In practice, therefore, the effective rate of assessment of capital is well below 7 per cent in the vast majority of cases. For example, a couple with capital of £20,000 would be assessed with means of £600, giving an effective rate of assessment of just 3 per cent.
The present arrangements are designed to ensure that those with smaller amounts of capital at their disposal receive a greater share of available support than those who have large amounts of capital available to contribute, at least partially, towards meeting their needs. I am aware the interest rates available on investments have fallen in recent times, particularly in the context of the introduction of the euro. My Department is reviewing the formula currently used for assessing the value of capital. Reducing the assessment rates of 7.5 per cent and 15 per cent to the current levels of interest available on bank deposit accounts would disproportionately benefit those who are well off. This was the rationale behind the decision by my predecessor to set the assessment rates at their current levels.
Any proposals to further ease the assessment of capital would have financial implications and would, therefore, have to be considered in a budgetary context having regard to the available resources and other commitments contained in An Action Programme for the Millennium, Partnership 2000 and the national anti-poverty strategy. The £6 per week increase for elderly pensioners announced in the budget will be of benefit to all old age and widow and widower pensioners aged 66 and over. This means that all such pensioners will receive the £6 increase in full, even where they are receiving a reduced rate of payment because of the assessment of means.
Does the Minister accept that what we are talking about amounts to highway robbery from the old; that the system over which he is presiding involves assessing them falsely with an income they do not have? Does he accept that following the introduction of the euro interest rates on bank deposits have collapsed with the result that old people with a few thousand pounds set aside, normally for funeral expenses, are being assessed at enormous rates of interest? Does he accept that this is outrageously unfair and that the system must be changed?
The Deputy referred to funeral expenses. In the last week I was delighted to gain Government approval to increase the death grant fivefold at a cost of £10 million.
It does not apply to these people.
The Deputy who used the words "highway robbery" has a short memory. This method of assessment, which he is now decrying, was introduced by my predecessor, Deputy De Rossa. On 5 March 1997 Deputy Durkan, then Minister of State at my Department, said, "To bring in more uniform, consistent and even-handed treatment of capital means, the provisions contained in section 25 mark a further step along the road by applying new and more generous rules to all means-tested pensions and the carer's allowance". On 12 March 1997 Deputy De Rossa said, "I am continuing this year with the process of improving and standardising the provisions for the assessment of capital and savings.Because of the changes the effective rate for couples with £20,000 is just 3 per cent".
Does the Minister know anything about his brief? We are talking about old age non-contributory pensioners to whom the death grant does not apply. Last week with some ceremony the Minister ushered in the International Year of Older Persons. Does he accept that his attempts to justify this bizarre and outrageously unfair system will not wash? Following the introduction of the euro on 1 January interest rates have fallen to as low as 0.2 per cent. Does the Minister accept that old age pensioners are being assessed under false pretenses at rates of 7.5 per cent or 15 per cent and that the system must be changed? Recently the parish priest on Achill spoke about the need to decommission the biscuit tin to encourage old people not to keep money in their homes. This system is encouraging a reversal of that worthy plea.
Either the Deputy does not understand what he voted for in 1997 – the assessment rates are much lower when the disregard of £2,000 is taken into account – or he is misconstruing the situation purposely.
The Minister should put his stamp on it.
A total of 75 per cent of old age pensioners have no means. Only 2 per cent have capital of £20,000 and over. The Deputy's then colleague in the rainbow coalition Government said that anyone with capital of £20,000 would be assessed at an effective rate of 3 per cent. The Deputy is misleading the public by suggesting the rates of 7.5 per cent and 15 per cent should be reduced. He is well aware that the disregards are extremely generous. They were put in purposely by the former Minister for Social Welfare, Deputy Proinsias De Rossa, and I compliment him on that, because he was treating people at the lower end of the scale more favourably than those at the upper end.
Will the Minister accept that we have a totally changed situation since the collapse of interest rates as a result of the introduction of the euro? Is he now expressing the continuing philosophy of this Government which is to rob the poor to support the rich? Does he accept that this ruling is totally unfair, that it must be changed and should be changed in the upcoming Social Welfare Bill?
The Deputy is totally, and purposely, misrepresenting the situation. It is very wrong of him to endeavour to worry old people, particularly in this year which is dedicated to older people. If we were to reduce the 7.5 per cent to a combined rate of 1 per cent with the retention of the current disregard of £2,000 we would, effectively, give the maximum pension to a person who had capital of £66,000. Interestingly, in relation to the pre-retirement allowance, if we were to reduce the rate to a combined 1 per cent, a single person with capital of £428,000 or a married couple with capital of £856,000 would qualify for an allowance.
Fairytales.
The Deputy totally misunderstands the question and, in my opinion, purposely so.
The Minister may assess the capital if he wishes but that is not a fair method of calculating income.
Some day I will give him a lesson in it.
68 Mr. Broughan asked the Minister for Social, Community and Family Affairs the steps, if any, his Department is taking to introduce equal treatment of men and women in the social welfare codes; and if he will make a statement on the matter. [2616/99]
I am satisfied that men and women are treated equally in relation to access to all social welfare schemes and services. Ireland has given full effect in legislation to the EU directives on equal treatment in both statutory and relevant occupational social security schemes. As a result, all of the social assistance and insurance schemes operated by my Department are available equally to men and women.
A new one-parent family payment was introduced in January 1997 and replaced the lone-parent's allowance and deserted wife's benefit schemes. The new payment covers both men and women equally, irrespective of whether they are married, separated, widowed or divorced and irrespective of the reason for lone parenthood. A notable feature of this measure is that the requirement to prove desertion has been removed from the social welfare code, thus eliminating a requirement which was particularly difficult and degrading for many women.
A new widower's non-contributory pension was introduced from October 1997 which is available to widowers on the same basis as applies to widows. The more restrictive conditions which apply to the benefits available under the occupational injuries benefit scheme for both widows and widowers were amended to apply on the same basis as applies to the schemes for widows and widowers generally. In short, this involved the alignment of the qualifying conditions applying to the widow's and widower's pension schemes available under the occupational injuries benefit scheme with all other social welfare schemes for widows and widowers. These changes took effect from April 1997. Arrears of equal treatment payments owing to 70,000 married women amounting to almost £300 million were paid.
The national anti-poverty strategy was launched in April 1997 with the main objective of tackling poverty and social exclusion. Several principles underlying this strategy are implicitly related to equality of access and addressing discrimination. These include ensuring equal access and encouraging participation by all and the reduction of inequalities and, in particular, addressing the gender dimensions of poverty.
The effect of the measures I have outlined is to complete a programme of equal treatment which ensures that all of the social assistance and insurance schemes operated by my Department are available equally to men and women.
Is it true that what the Minister has just said is not the case? Consider the rises announced in the budget and shortly to be introduced. The adult dependant's allowance for people on unemployment assistance will rise from £41.20 to £43.20 and for people on non-contributory pensions from £41.20 to £44.20. The adult dependant's allowance for people on invalidity benefit will rise to £49.50 and so on. Does the Minister consider it possible, in early 1999, for the adult dependant of a social welfare claimant in one of these wide categories to live on £43.20 per week? How much does the Minister think an Irish man or woman would need to live in modern conditions, bearing in mind the average industrial wage and the average level of social welfare payments?
The Deputy is referring to the issue of equalisation. A working group has been set up, chaired by my Department, to examine and compare the treatment of one and two parent households under the tax and social welfare codes. Part of that examination is of the issue of income support and the individualisation of it. That group is to report in the first half of 1999. The Commission on Social Welfare has recommended that adult dependant rates should be approximately 60 per cent of the maximum rate. That was one of my aims in both recent budgets in relation to social welfare. We will endeavour to keep adult dependant rates as close as possible to the recommended 60 per cent.
Given that we are living through a massive economic boom with 10 per cent growth last year and economists predicting 10 per cent this year, given the Minister's acknowledgment of the need to move towards individualised payments and given the commission's recommendation of a minimum of 60 per cent, should the Minister not use the remaining time of this Government, whether that is a matter of weeks or months or of three years, to initiate a process of equalising payments to dependants over a period of perhaps five years? The Minister has not answered my question. Does he think the princely sum of £2,300 is enough for an adult Irish citizen to live on in 1999? The Minister presides over this situation. He is in charge of the biggest spending Department of Government and he has the power to change this situation, once and for all.
If I am presiding over this situation, I am presiding over something which the Deputy's party helped to maintain in recent years. His party was in Government for much more time during the last 15 to 20 years than mine.
I was not on these benches.
He supported that Government. It is easy to call for equalisation. We can equalise payments but that would mean dividing the payment by two. I would hazard a guess that such a measure would cause a revolution in most households.
Why not adjust upward?
A working group is looking at this issue. The Commission on Social Welfare also looked at it as have numerous other groups which have examined this issue in the recent past. They all came to the conclusion that adult dependant's allowance should be kept as close to 60 per cent of the full rate as possible.
Would the Minister accept that very often in the most deprived households women are the managers of the household? The rates of pay are therefore appalling. Did the Minister not grossly mislead pensioners in relation to increases for dependants? The Mini ster still has not answered the question regarding the appropriate rate of payment for an adult dependant. Does he think it appropriate, under the provisions of the Constitution, that dependants are paid so badly?
I am happy to be part of the Government which was the first to bring social welfare payments up to and over 100 per cent of the recommendations of the Commission on Social Welfare. This is particularly true of old age pensions. The job does not stop there. I assure the Deputy the Government will endeavour to increase, as much as possible, payments to old age pensions and their spouses, an area it pinpointed in its two budgets.
The Minister upset pensioners last June.
I did not mislead anybody about the increases we gave.
The Minister upset pensioners.
It was stated explicitly at the time that those on the maximum rate would get £5 and those on the reduced rate, approximately 50,000, would not get the £5 increase based on their reduced pension entitlement.
I congratulate the Deputy on being appointed party spokesperson on this area. I also congratulate his predecessor on his elevation, if that is what it is. I was gratified the Deputy's party Leader decided to shadow me with not one, two, but three spokespersons.
There are two Ministers of State at the Department.
That goes to show I have broad shoulders in the Department. Perhaps I should ask the Taoiseach to appoint another junior Minister.
As the time allocated for priority questions has expired, under Standing Orders Question No. 69 cannot be taken. We will now proceed to Question No. 70 which will be taken in ordinary Question Time.
Is there any way Question No. 69, which concerns the needs of our poor farmers, can be taken?
I have no discretion to amend Standing Orders.
I would like to be able to answer it.
I may raise this matter, which concerns a need among farmers, on the Adjournment at a later date.
The Deputy has that option.
