Jan O'Sullivan
Question:18 Ms O'Sullivan asked the Minister for Social, Community and Family Affairs the cost of merging the tax and social welfare changes in early April 2000; and future plans, if any, he has in this regard. [6115/00]
Other Questions. - Social Welfare Increases.
Minister for Social, Community and Family Affairs (Mr. D. Ahern): This year's package of social welfare improvements is by far the most significant ever, involving a total package of over £428 million. In addition, the Social Welfare Bill which is currently before the House provides for substantial reductions in PRSI and health contributions for low paid workers, at a cost of £103 million. This amounts to a total package of £531 million. To put this in context, the equivalent figures for my previous two budgets were £225 million in 1998 and £316 million in 1999. Among the significant improvements provided for in this package are weekly increases of £7 for pensioners, a special increase of £5.90 for invalidity pensioners under 65 years and a £4 a week increase for all other social welfare recipients. In addition, special increases in the rate of qualified adult allowances are being provided for this year, as part of an overall strategy to increase the allowance to 70% of the main rate over three budgets.
These increases in the weekly payments will take effect from the first week of May next – four weeks earlier than last year. This means that, since this Government has taken office, increases in weekly social welfare rates have been brought forward by six weeks from mid-June to the beginning of May. Next year, as we have already targeted, we intend to bring forward further the implementation date for social welfare increases to coincide with the start of the tax year in early April 2001.
The cost of bringing forward this years improvements in weekly rates by four weeks to the beginning of May is £20 million, including the consequential changes to weekly FIS limits.
The Minister is beginning to sound more and more like one of those Blairite ministers across the water. His mantra is all about the previous Government, yet he is approaching the third anniversary of his coming into office. I commend the Government on bringing forward the payment of increases to April but the complaint is still made, sometimes bitterly, that many increases are made late in the year. The Minister referred earlier to the reason the carer's benefit could not be introduced until October but given the necessity for child supports, why could child benefit not come on stream around the same time as the other major social welfare increases? Why are other relevant changes not made at that time? In that context, would it be possible to synchronise the social welfare and tax years on 5 or 6 April or certainly in the first week of April? Is it possible to use the tax credit system in a positive way to introduce major new supports for people on low pay?
I make no apology for reminding the Deputy of what was done by the previous Government because there is a lot of hypocrisy in this Chamber where people come in and castigate Members on this side of the House.
The Minister has the funds.
My comments, and those of my party, on social welfare matters were restrained during the time the Deputy's party was in office, other than when the then Minister for Social Welfare, Deputy De Rossa, gave a 2.5% increase to old age pensioners when inflation at that time was only 2.5%.
What is it now? The Minister should be ashamed to mention that.
The Minister was never restrained in office.
I accept we were not restrained when we made our comments.
What is it now?
I can tell the Deputy what it is now. An extra £7 to old age pensioners means an 8% to 9% increase when inflation is targeted at about 2% to 3%.
That is a big thing.
We are bringing forward the rates of payment by four weeks this year. That means that in the budget year these rate increases will now be paid 35 weeks of the year. The best the Deputy's Government did was 29 weeks.
In relation to the question on tax credits, there is scope for that. Obviously it is an area we will examine in terms of the family income supplement and other initiatives. It is the desire of the Government, however, to align all the social welfare payments with tax changes so that they will kick in at the same time. Since we came into Government we brought forward payments by six weeks and next year we will, in effect, align the tax and social welfare changes.
Does that promise include child benefit in which no change has been made? If my recollection is correct, the increase does not apply until September.
Is it that long since the Deputy had children that age?
Am I right in thinking that if the weekly payments were brought forward from May to April this year, it would involve a cost of £20 million? If so, does the Minister accept that would be no more than loose change in the Exchequer? It would not even be noticed by the Exchequer but it would be noticed by the recipients.
Before I call the Minister for a final reply on this question – we are running out of time – does Deputy Broughan have a further supplementary?
We did not mention that the new system for capital assessments, on which the Minister praised himself, is not being brought forward until the autumn?
May, I think.
I ask the Deputy to be brief because we are running out of time.
Allowing for the fact that the Minister might have some new initiatives, what would be the cost of synchronising all major benefits with the tax changes?
In my last reply I did not refer to child benefit. Child benefit increases have always been paid at the time children return to school. Bringing forward payments would defeat that purpose. The reality is that they will have those increases for a year following September, so there is not a huge amount involved in that respect. I reiterate that we have made a commitment to bring forward all social welfare payments to when tax changes kick in, which is 5 or 6 April. It will cost £20 million this year to bring forward the increases by four months. Deputy O'Keeffe should come into the real world – £20 million is not loose change.
What about the child benefit?
Michael Ferris
Question:19 Mr. Ferris asked the Minister for Social, Community and Family Affairs when the working group on relative income poverty will be established; and the terms of reference of this group regarding indexation and benchmarking. [6159/00]
Proinsias De Rossa
Question:39 Proinsias De Rossa asked the Minister for Social, Community and Family Affairs the steps, if any, he has taken to establish a working group to examine the adequacy of social welfare payments for both children and adults; and if he will make a statement on the matter. [6099/00]
I propose to take Questions Nos. 19 and 39 together.
The Programme for Prosperity and Fairness contains a commitment to set up a working group, with an independent chairperson, to examine the issues of developing a benchmark for adequacy of adult and child social welfare payments, including the implications of adopting a specific approach to the ongoing up-rating or indexation of payments. As Deputies are aware, the programme is still to be ratified, and the social partners are engaged in this process. When the programme is ratified, it is intended to consult with the social partners on the composition of this working group, including the appointment of a chairperson.
While formal terms of reference for the working group have not yet been set out, the issues to be covered by the group are set out in the programme. These include relative income poverty, as well as the long-term economic, budgetary, PRSI, distributive and incentive issues. These are highly complex issues which will need careful study. The outcome of the work of the group will have a significant impact on future policy in this regard, and I look forward to receiving the results in due course.
Does the Minister accept many recipients of social welfare are disappointed that he did not act immediately on the benchmark of at least 50% this year? Does he accept also that many dependent claimants are bitterly disappointed that he did not move towards the 70% this year for dependent allowances, rather than over a three year period? There are several worthy objectives in the Programme for Prosperity and Fairness in terms of maintaining the real value of social welfare, individualisation, removing poverty traps and so on, but the Minister has not set out any policy on these matters. What is the Minister's preferred benchmark for an index of what people on social welfare should receive?
On coming into Government we set down clear benchmarks for what old age pensioners should receive, something which was never done before, and we are well on our way to achieving those targets. I can guarantee that next year we will pass the benchmark we set for—
The Minister broke his promise.
—old age pensioners. The old age contributory pension is now £96. We said in our programme for Government that we would increase that to £100 by 2002.
By 2000.
In our review we have gone even further by saying we will reach £100 for non-contributory pensioners. We have achieved more than what we originally promised the electorate. I remind the Deputy that during this Government's term of office the old age pension has increased by 23% while during the term of the last Government, 1995 to 1997, it increased by 9.9%. Even social assistance payments, such as short-term unemployment assistance, have increased by 16.2% during our term of office as opposed to 11% under the last Government.
The issue of benchmarking was discussed by the social partners in the Programme for Prosperity and Fairness and it will be subject to discussion at the working group.
The Minister should conclude.
I am glad of the welcome given by groups such as CORI to the significant social inclusion element of the programme. I hope Deputies will support the acceptance of such a huge social inclusion package which, as I said on Second Stage of the Social Welfare Bill, is three times the amount of spending on social inclusion that was agreed in the previous partnership agreement.
I remind the Minister and Deputies that there is one minute for the supplementary question and one minute for the reply.
The Minister is like a gramophone record when he gets into the brief. I am delighted he is taking on board the comments of CORI. Perhaps he will be as happy to quote its comments following the budget which it said was the most outrageously scandalous performance of a Government in years.
I have a great interest in child poverty. It is scandalous that there is so much child poverty in this country when there is so much money around. Is the Minister not concerned about that? Leave politics aside and look at the report of the UN committee on economic, social and cultural rights which highlighted this matter. Will the Minister agree, given the amount of money available, we have a duty to work towards eliminating child poverty from our society?
I accept that. However, it is a fact that standards in our society have increased immeasurably in recent years, regardless of who was in Government. Any public representative can see this in disadvantaged areas. Children who previously would not even get a sniff of a job because they had a particular address can now get jobs or have the potential to get jobs. Previously, as soon as they put down their address, they were told: "Sorry, we do not take people from that estate". That is the reality.
There are still hungry kids at school.
As I have seen time and again in my constituency, the problem of intergenerational poverty is, thankfully, decreasing. That is not to say there are no logjams. There are and that is one of the reasons there is the great investment in social inclusion in the Programme for Prosperity and Fairness. It is the reason the Government readily agreed to targeting 25 geographic areas of disadvantage.
The Minister is correct that standards have increased immeasurably. However, the average industrial wage, one benchmark, is approaching £400 per week but the Minister is paying people on unemployment assistance or long-term disability benefit approximately £80 per week. That is very low when compared to the average industrial wage. The problem is that the benchmarks are getting more out of kilter with the reality of the economy. The Minister will agree that with a projected inflation rate of 7% for this year, people on unemployment payments will find it as hard to live as somebody on the average industrial wage. What does the Minister believe the benchmark should be?
I will not second guess the discussions that will take place—
Why not? You are the Minister.
I will not second guess the level of benchmarking in relation to income adequacy and social welfare. However, it is an incontrovertible fact that since this Government took office, 90,000 people have been taken off the live register. That is one third of the live register. Long-term unemployment has decreased dramatically. The number of people who were on the live register for more than three months has reduced dramatically. The best way out of poverty is to give people jobs. In the early 1990s there were one million people working, the number is now 1.7 million. One can talk academically about relative poverty and so forth—
It is not academic.
—but those people are now working and producing, earning wages and paying taxes.