Dáil Éireann debate -
Wednesday, 6 Oct 1999

Vol. 508 No. 4

Written Answers. - Anti-Poverty Strategy.

Emmet Stagg

Question:

61 Mr. Stagg asked the Minister for Social, Community and Family Affairs the plans, if any, he has to link social welfare payments with average incomes in view of the ESRI report, Monitoring Poverty Trends; his views on creating this linkage; and if he will make a statement on the matter. [18864/99]

Minister for Social, Community and Family Affairs (Mr. D. Ahern)

While the ESRI report, Monitoring Poverty Trends, indicated that there was some increase in the numbers falling below relative income poverty lines between 1994 and 1997, a central finding was that there was a sharp reduction in consistent poverty, as targeted by the national anti-poverty strategy, over the period. In fact, the number of households experiencing consistent poverty fell from 9 per cent – 15 per cent of the population in 1994 to 7 per cent – 10 per cent in 1997.

This welcome fall is the direct result of sustained real increases in social welfare rates which have increased the buying power of all households leading to a sharp reduction in deprivation. For example, between 1995 and 1998, social welfare payments increased by some 13 per cent to 14 per cent compared to a total rise in the Consumer Price Index of less than 6 per cent over the same period. This policy has been continued under the present Government with all social welfare payments having been increased so that they are now at or above the minimum rates recommended by the commission on social welfare, meeting a key objective of both the NAPS and Partnership 2000. This is complemented by the success of the Government's employment strategy which has led to unemployment standing at a record low, a key contributor to reductions in poverty in recent years, including falls in child poverty. Since this Government has come into office the live register has dropped by 70,000, 27 per cent, and an estimated 160,000 net new jobs have been created since 1997.

The future direction of social welfare rates generally is a matter which is under continuing consideration within my Department, particularly now that the minimum rates as recommended by the Commission on Social Welfare have been achieved. The research presented in Monitoring Poverty Trends, as well as other research including the ESRI's Review of the Commission on Social Welfare's Minimum Adequate Income, the National Pension Policy Initiative's Securing Retirement Income, various publications from the Combat Poverty Agency and a forthcoming strategy document from the National Economic and Social Council will all have an important role to play in the formulation of a future policy direction in this regard. Such consideration will include examination of the implications of social welfare indexation.

It is important to bear in mind that there is a very real difference between earnings and income, with average household income levels also being influenced by employment levels, social welfare payment levels, numbers of two-earner households, etc. in addition to wages. In circumstances where average household incomes increase faster than average earnings, there is a possibility that social welfare increases of this magnitude might result in problems regarding incentives to employment in the future. As such, it is essential that the full implications, including employment and budgetary considerations, of all the options would be teased out before any final decisions can be made.

It may also be that there are some methodological issues which have to be addressed in this context. Specifically there is no readily available index of average household incomes as there is, for example, for inflation and average industrial earnings. At present, information on average household incomes is only available following analysis of the living in Ireland surveys and is subject to, at least, a two year time lag. While the ESRI have produced forecasts of average incomes using the SWITCH model, the question of producing regular, timely and accurate data relating to average household incomes would have to be addressed before this could be used as a base measurement for any payments.