Vol. 520 No. 1
28 Mr. J. O'Keeffe asked the Minister for Social, Community and Family Affairs his views on whether the social welfare increases in the last budget will be eroded by the current high levels of inflation of more than 5%; and if he has any proposals for compensatory payments in this regard. [15168/00]
29 Mr. Broughan asked the Minister for Social, Community and Family Affairs the plans, if any, he has to review the general increase in social welfare levels announced in the budget having regard to the fact that year on year inflation is running at 5%; and if he will make a statement on the matter. [15007/00]
I propose to take Questions Nos. 28 and 29 together.
Last December's social welfare budget package was the biggest ever social welfare budget allocation amounting to more than £428 million on a full year basis. It provided for a £7 a week increase for pensioners over 66, a special increase of £5.90 a week for invalidity pensioners aged under 65 years and a £4 increase for other recipients under 66.
The £7 increase for pensioners represents an increase ranging between 7.9% and 8.9%, while the £4 general increase represents an increase ranging between 5.2% and 5.6%. The annual average increase in the consumer price index is the benchmark against which increases in social welfare payments have been normally compared. While the latest published monthly CSO report on the CPI highlights that, in the 12 months to April 2000, inflation increased by 4.9%, it is predicted that this figure will moderate during the second half of the year. It is now expected that inflation will average about 4% for the year as a whole and this is well below the rates of payment increases.
In addition to the increases in the rates of personal payments, special increases in the rate of qualified adult allowances have been provided this year as part of our overall strategy to increase this allowance to 70% of the main rate by 2002. These increases, which range between 7.7% and 17.2%, represent real increases of between 3.6% and 12.7%. Furthermore, as part of our commitment to align the tax and social welfare changes by 2001, all these increases were paid four weeks earlier this year, from the beginning of May.
Significant increases in monthly child benefit payments are also being provided for families with children – £8 for each of the first two qualified children and £10 for each other qualified child. These increases, which range between 21.7% and 23.2%, represent real increases of 17% and 18.5%.
The Government is committed to achieving a minimum rate of £100 per week for all social welfare old age pensioners by 2002; to bringing this target forward in the case of contributory old age pensioners; and to ensuring that, over its term of office, all old age pensions will increase in line with average industrial earnings. Following the improvements we made over the past three budgets, we are well on target to implementing our priority commitments for old age pensioners.
Social welfare rates have improved significantly in real terms since the Government took office just over three years ago. Over our three budgets to date we have increased the old age contributory pension by £18 per week, a 14% real increase, compared to £7 per week, a 4% real increase, in the same payment over the three budgets introduced by the rainbow coalition.
As part of the Programme for Prosperity and Fairness, the Government has entered into a number of social inclusion commitments with the social partners. This programme provides that in the period up to 2003, all rates of social welfare will be increased in real terms and substantial progress will be made towards a target of £100 per week for the lower rates of payment. For families, substantial progress will be made towards a target child benefit rate of £100 per month for the third and subsequent child.
The significant social welfare improvements we have made amount to almost £1 billion since we came to office. Those, together with the further improvements to which we are committed over the coming years, demonstrate our guarantee that everyone will share in the benefits of social and economic developments.
Does the Minister accept that the enormous increase in inflation, which is more than one third higher than that predicted by the Government earlier this year and is continuing to increase, will largely wipe out the increases in social welfare provided for part of this year by the Government? Does he accept that inflation is the enemy of the poor? Does he also accept that while a couple in receipt of £125,000 per annum will not be unduly affected by an increase in inflation, the current rate of inflation will seriously affect the standard of living of an elderly person, a disabled person and a couple in receipt of £125 per week, and in many instances will lead to hardship? Taking that into account, will the Government announce a compensatory package for those who will be so affected?
As I pointed out at a recent meeting of the Oireachtas Select Committee on Family, Community and Social Affairs, my office has been inundated with phone calls from people complimenting the Government on the increases given in the last budget and asking—
They were not complimenting it on the rate of inflation.
Were they branch members?
—if a mistake was made as the increases were so large.
That will qualify for the joke of the week. Ring up "Bull Island" and tell them that.
When the rate of inflation was estimated to be 2% last year and it turned out be 1.6%, I did not hear calls in the House for social welfare increases to be clawed back and, thankfully, they were not. Over the lifetime of this Government social welfare increases have increased in real terms as opposed to when the Deputies opposite were in office, particularly in 1995 when they decided to maintain payment increases at 2.5% when inflation turned out to be 2.5%.
The Minister likes to hark back to 1994, 1995 and 1996, but this is 2000 and a different economic era. The Minister's colleague, the Taoiseach, was in Poland last week. Its rate of inflation is 10% and countries such as Mexico and Hungary have a similar rate of inflation. Does the Minister accept we are heading towards that rate of inflation and that he has lost the battle in this respect? Is it not the case that the Minister's soubriquet will be that he is the most skinflint Minister for Social, Community and Family Affairs in modern Irish history? He need not smile.
The increases he gave this year have been wiped out by the increase in inflation and it appears social welfare recipients will be in a negative position financially. What is the value of the £4 per week increase for recipients of unemployment assistance and the £4 per week increase for carers in light of the massively escalating price of groceries and petrol? Will the Minister admit he has failed social welfare recipients? Will he also admit that the rate of inflation does matter? Some economists claim it does not matter anymore as the rate of economic growth here can be compared to the rate of economic growth in California some years ago. I am sure my Fine Gael colleagues will agree that the rate of inflation matters to the poorest 1.5 million in our society for whom the Minister is responsible. He has not given them any real increase this year and it appears they will fare less well during the term of office of this skinflint Minister for Social, Community and Family Affairs.
I question the Deputy's right to castigate me as being skinflint. He often refers to the serious deprivation in his territory and would paint a picture of it being as deprived as when his party was in Government, yet he did not refer recently to the fact that, according to Northside Partnership, unemployment there has fallen by 51% during the three years this Government has been in office. I must repeat what I said, for the first time in a long time my office has been inundated with phone calls, particularly from old age pensioners complimenting the Government on the substantial increases given. I am sure those sentiments will be acknowledged by public representatives throughout the country. In response to the Deputy's claim that I am a skinflint, I wish to quote the rate of increases in pension payments. During the three years I have been in office the rate of pension payment increased by £18 compared to an increase of £7 during the three years the Deputy's party was in Government. On that basis, I rest my case.
The Minister is so amusing at this stage that he could look for a slot in "Bull Island". He even referred to 1994 in slighting terms. Does he not recollect that the Fianna Fáil Party came to office in December 1994?
I referred to the 1995, 1996 and 1997 budgets. The Deputy should get his facts right.
Inflation is out of control, the poor are suffering and the Minister does not give a hoot.
It would be better if Deputies made fewer statements and asked more questions as this is Question Time.
Does the Minister accept that the Government is responsible for the current situation, that its budget increases, which affected the CPI, contributed to it, and given that it has the necessary funds available, it has a responsibility to compensate the poor for the hardship it is inflicting on them?
It is often the case that Deputies in Opposition talk up inflation. I accused Deputy De Rossa of doing that when he was in Opposition. Deputies in Opposition should be careful about the way in which they address the issue of inflation. It can be considered only over an extended period of at least 12 months, if not more, given that last year social welfare recipients were given an increase over and above that originally targeted, as inflation which was estimated to be 2% turned out to be 1.6%.
In the Programme for Prosperity and Fairness, which will run over the next three budgets, we have given an undertaken, in conjunction with the social partners, to move towards a minimum payment of £100 per week for social welfare recipients. That will entail significant increases in social welfare payments over the next three budgets.
Returning to the issue of whether I am a skinflint, I point out that old age pensioners in the UK got a weekly increase in benefit of 75p compared to a £7 per week increase for their counterparts in the Republic. We are the envy of our colleagues not only in the UK but five miles from where I live across the Border. During our period in office there has been a real increase in social welfare of 14% while in the period of office of the Opposition it was 4%.
I am pleased the Minister at least does not agree with the views of those economists who say inflation does not matter. Mr. McLoughlin was quoted in the press as saying it did not matter. It certainly does matter to people on social welfare. In the Programme for Prosperity and Fairness there is a review mechanism for general wages. Clearly, when wages fall behind the Irish Congress of Trades Union has some means of coming back to renegotiate. Social welfare recipients have no such mechanism. They have to wait for the December budget and, in effect, until mid-April before getting an increase as inflation spirals ahead. Is this not a fundamental problem that there is not a review mechanism for social welfare? Is that not the Minister's responsibility?
The time has been exceeded. I have to call Question No. 30.
In relation to benchmarking, is this not an urgent responsibility for the Minister? Is April too late?
The Minister has no notion of doing anything. He does not care.
The Minister must deal with Question No. 30. We have exceeded the time limit on those questions.
Since this Government came to office 102,000 people are off the live register. I rest my case. The truth is bitter and the Deputy knows it.
The guillotine will be a warning. The Minister will face the music.
Question No. 30 please.
The live register reduced by one-third as a result of our economic policies.
