Social Welfare Bill, 2001: Second Stage.

I move: "That the Bill be now read a Second Time."

In the four years since this Government came into office, Ireland has changed dramatically for the better. Unemployment has been cut to one of the lowest levels in Europe, taxes have been slashed so that our people keep much more of their hard earned money and we have put in place a framework for a lasting peace in Northern Ireland.

We have turned around our social welfare system from one that simply compensates people for economic failure to one that helps people to help themselves. The Government has massively increased spending on social welfare from £4.5 billion in 1997 to more than £6 billion in 2001 – an increase of more than one third in just four years.

Pension rates for our older people have been increased dramatically over the period. When we took up office in 1997, the old age (contributory) pension stood at £78 per week. We promised to raise it to £100 by 2002. We have more than delivered on that target as the Bill before the House provides for a pension rate of £106 today. We also promised to raise all social welfare pensions for older people to £100 per week by 2002. We are well on the way to delivering that target with the old age (non-contributory) pension rate of £95.50 provided for in this Bill.

Under the previous Government, pension rates were allowed to fall back compared to average earnings. We put at end to that. When we came into office, the old age (contributory) pension stood at only 27.5% of average industrial earnings. We have increased that in each year to 31% in 2001, which is in line to reach the National Pensions Policy Initiative target of 34%.

The level of child benefit will be more than doubled from only £30 per month in 1997, for the first two children, to £67.50 as set out in the Bill for 2001. We have promised that we will increase it further next year to more than £20 per week, which represents a threefold increase in the rate of payment over our term in office.

The number of carers in receipt of a carers' allowance or benefit has almost doubled from 9,000 in 1997 to 17, 000 today. We have extended maternity and adoptive leave so that a mother can now take up to 26 weeks leave on the birth of a child, including 18 weeks paid leave. The Bill provides for the social welfare aspects of this important move. This improvement will come into force for women going on maternity leave on or after the 8 March next, which is International Women's Day.

Because of our success in creating more than 300,000 new jobs and of getting people back to work, the live register has fallen more rapidly than anyone could have expected, with a reduction of more than 110,000 people. We now have one of the lowest unemployment rates in Europe. There is more good news to come today from the quarterly national household survey.

In 1997, we spent almost one pound in every four of total social welfare expenditure on employment and unemployment supports. Today, that is down to one pound in every seven. Whereas in 1997 most of that money was spent paying people to do nothing, more than 30% of current employment and unemployment spending goes to help people back to work and back to education.

Not alone has unemployment fallen rapidly, but the overall number of people of working age who are dependent on welfare has also declined as a result of our policies. In 1997, one in every four people of working age was dependent on welfare. Today, despite the rapid growth in our economy and our population, that figure is down to less than one in every five.

Because we have increased real spending and allowed many people of working age to be more independent of the welfare system, we have been able to increase spending significantly in key areas such as old age and retirement pensions, child support, carers and people with disabilities.

This Bill gives effect to the biggest ever increases in social welfare rates of payment and to a wide range of other improvements announced in Budget 2001. It addresses commitments set out in the Government's An Action Programme for the Millennium aimed at building an inclusive society, improves the living standards of people on social welfare and fulfils our commitments under the Programme for Prosperity and Fairness.

The £850 million package provided by the Government in Budget 2001 for social welfare improvements is more than twice the size of last year's social welfare package and four times more than that delivered by the previous Government in its last budget in 1997. With increases ranging from 10% to 18%, people dependent on social welfare will see significant real increases in their incomes this year. The historic increases in child benefit represent the most concerted effort in the history of the State to tackle child poverty.

I now wish to outline the provisions of the Bill and I will refer to a number of its key provisions. The Government's commitment to addressing the needs of the elderly both now and in the longer term is beyond question. It recognises the tremendous contribution the present generation of pensioners has made to the social and economic development of the State. In so doing they had to endure great hardship and make great sacrifices for which we owe them a great deal of gratitude. The increases provided for in sections 4 and 5 more than deliver on our commitments. In our period in government we have given pensioners increases of £5, £6, £7 and £10 per week compared to the insulting increases of between £1.50 and £3 given by the Rainbow Coalition.

The Bill provides for a special increase in the rate of widow's and widower's contributory pen sion and deserted wife's benefit for those aged over 66 years. This increase of £12.90 per week will bring the new rate to £102 per week and is a first step in bringing the rate into line with old age contributory pension. The Bill also introduces a special allowance of £10 per week for pensioners who reside on islands off the coast.

The Government is committed to substantial increases in other social welfare payments. The Programme for Prosperity and Fairness provides that "substantial progress will be made over the period of this Programme towards a target of £100 per week for the lowest rates of social welfare". The personal rates of social welfare payments, other than those for older people, are being increased by £8 per week. This represents an increase of almost 10% and means that we are in line not only to make substantial progress, but to fully reach the £100 target. We are fully meeting our commitments under the PPF. I am delighted to say that the increases in the weekly payments will be paid from the first week in April and coincide with the implementation of the income tax changes.

In recent years we have introduced a range of measures to make it easier for those, particularly women, who have taken time out for family reasons to qualify for old age pension. Work is continuing towards introducing a greater degree of flexibility in the qualifying conditions to improve the position of women. I am introducing special improvements to assist women at pension age and who may not benefit from these improvements. The Government has decided that the allowance for qualified adults over the age of 66 years should be increased in this and future budgets to the full old age non-contributory pension rate.

As a first step towards this goal, I am providing in the Bill for special increases of £15 per week in the allowances payable to qualified adults over the age of 66 years whose spouses-partners are receiving a contributory pension with proportionate increases for those on reduced rates. In other words, a couple, each of whom is over the age of 66 years, in receipt of old age contributory pension and qualified adult allowance will get an extra £25 per week from this April.

Increases ranging between £7 and £9 per week are also being provided in the rate of qualified adult allowances payable to those under the age of 66 years as a further step in increasing these allowances to 70% of the main rate. The increase in qualified adult allowance payable with old age non-contributory pension is £9 per week with proportionate increases for those on reduced rates.

Child benefit is a universal payment made directly to families. As such it is the most efficient and effective way in which the Government can channel help to children. Before we took office expenditure on child benefit was £397 million annually. The increases announced in budget 2001, provided for in section 6 of the Bill, bring investment in 2001 to £761 million, almost double the 1997 figure. The monthly rate for the first two children is being increased by £25 per month and the monthly rate for the third and subsequent child by £30 per month. These increases are greater than the sum of all increases provided in the past six budgets. The increases of £25 and £30 compare starkly with the £1 and £5 increase given by Deputy Quinn when Minister for Finance in the last Rainbow Coalition budget in 1997.

Ancient history.

The increase is £25 as opposed to £1. The facts speak for themselves.

The Minister is not a good historian.

Moreover this is only the first of three annual increases which will see an investment in the payment rise by £1 billion by 2003, almost a threefold increase. By the end of this period the higher rate of child benefit will be £146 per month and the lower rate, £117.50. In 2003, a family with four children will receive approximately £527 per month child benefit or the equivalent of £120 per week. As a first step this year, the same family will receive £307 per month or £70 per week.

These major increases will be payable to all families – those who choose to go out to work and who use paid child care, those with informal child care arrangements and those who choose to work in the home and care for the children in that way. The increases will be payable from June 2001, a full three months earlier than normal to over 500,000 families with over one million children. We will work towards bringing the increases back even earlier. This measure represents a substantial step on the way to meeting the child benefit commitment set out in the Programme for Prosperity and Fairness.

Section 7 increases the weekly income thresholds for family income supplement from May 2001 by £25 per week which will lead to a net gain of £15 per week in the average FIS payment for 15,000 families. Section 12 provides for the payment of four additional weeks of maternity and adoptive benefits. I will shortly introduce regulations to provide for an increase of £8 per week in the minimum amount and £10 in the maximum amount of benefit payable under these schemes, as well as providing for the award of credited contributions to those on maternity leave during unpaid periods of leave.

Sections 8 and 9 provide for the implementation of a package of PRSI measures as announced in the budget. These include: a reduction of 0.5%, to 4%, in the main employee rate; an increase in the earnings ceiling for employees' PRSI contributions; the abolition of the employers' ceiling; a reduction of 2%, to 3%, in the rate of social insurance applicable to the self-employed, and the abolition of the annual earnings ceiling for the self-employed.

Section 10 provides for an increase in the earnings ceiling for payment of optional contributions and section 11 provides for reductions in the rates of voluntary contributions. The abolition of the self-employed ceiling will yield £40 million in 2001 and £97 million in a full year, while the reduction of the standard rate of contribution payable from 5% to 3% will cost £37.5 million in 2001 and £87 million in a full year.

The abolition of the employers' ceiling has given rise to some debate in recent weeks. Many commentators have argued that this measure will have a detrimental effect on employment. The Minister for Finance made it clear in his Budget Statement that the initiative regarding the employers' ceiling must be seen in the context of other measures which have provided, and will continue to provide, for substantial reductions in business taxation. It should also be seen in the context of reductions in the levels of PRSI payable by employers in recent years. For example, changes in corporation tax in the recent budget will benefit employers by £214 million in a full year – substantially more than the projected yield of £159 million from the employers' PRSI change.

Irish social insurance levels are low when compared with our European partners. This will continue to be the case following the recently announced changes. For example, the combined employer and employee contribution payable in Ireland is lower at all income levels above £136 per week than its UK equivalent when compared on a pound for pound basis. It should be noted that there has been no employers' ceiling in the United Kingdom for many years and all benefits-in-kind are liable for an employer contribution.

The valuable role of carers in society is irreplaceable. No other Government has been as committed to supporting carers as this one. We have delivered on a wide range of measures in terms of income support and services provided. However, we accept that we need to do more. In addition to the substantial rate increases, the budget provided for a number of measures to support carers. In particular, it made provision for a substantial increase from April 2001 in the income disregards in the carer's allowance means test from £75 to £125 for a single person and from £150 to £250 for a couple. This will enable more than 5,000 new carers to qualify for the carer's allowance and almost 3,000 existing carers to receive an increased payment.

This measure will be implemented by way of regulations. The effect of this increase will ensure that a couple with two children who earn a joint income in the region of £15,100 will qualify for the maximum rate of carer's allowance, while a couple in receipt of £25,100 will qualify for the minimum carer's allowance, plus the free schemes, the respite care grant and the additional benefits. The income disregards I have introduced already exceed the income limits for the minimum wage rate for joint income households and ensure that carers receive a maximum allow ance. As I announced at budget time, I envisage moving towards what I see as the optimum situation whereby all carers, whose joint family income is at average industrial earnings, will qualify for carer's allowance at the maximum rate.

One of the many measures I introduced in 1999 was a new annual respite care grant payable to all carers in receipt of carer's allowance and to carers who are caring for recipients of a constant attendance or prescribed relative's allowance. The budget provided for a further enhancement of this payment by an increase in the amount of the grant from £300 to £400. In addition, carers who are caring for more than one care recipient will be entitled to a double respite care grant of £800. These increases will become effective in June 2001 when the grant is next due.

The carer's benefit scheme was introduced on 26 October last year and is specifically aimed at supporting people who must leave the workforce temporarily to care for someone who is in need of full-time care and attention. My colleague, the Minister of State at the Department of Enterprise, Trade and Employment, Deputy Tom Kitt, who has special responsibility for labour affairs, recently introduced the Carer's Leave Bill before the House to protect the employment rights of the carer. Section 25 of the Bill provides an easement of the qualifying conditions for the benefit to deal with situations where a carer is on leave from their employment in the three month period immediately prior to claiming the benefit. It is estimated that there could eventually be in the region of 6,800 people on carer's benefit, but it must be recognised that it will take some years before this scheme reaches maturity.

Section 16 provides for the removal of the limitation on income support payable to a couple on disability allowance, as announced in the budget. At present, the overall amount paid, where both of a married couple claim certain payments, may not exceed the personal rate plus the increase for the qualified adult. This measure will abolish the limitation of disability allowance with any other social welfare income support scheme. Some 1,000 people will benefit from this measure by between £17.30 and £31.50 per week this year.

Section 17 provides for the extension of the £6 living alone allowance to recipients of disability allowance, invalidity pension, unemployability supplement and blind person's pension, irrespective of age, with effect from April 2001. It is estimated that 10,000 recipients will qualify for the additional supplement. The overall increase for this group when account is taken of the general increase of £8 per week will be £14 per week.

Section 13 introduces a number of improvements in the means test for social assistance payments: the disregard for the purposes of means assessment under any social assistance scheme of income received by a claimant by way of an allowance for the boarding out by a health board of frail elderly persons; the exemption of grants payable from the European Social Fund or under VEC scholarship schemes; the extension of the sale of residence arrangements to recipients of disability allowance and blind pension and the disregard of meal and travelling allowances paid to unemployed persons and lone parents while participating in FÁS approved training courses in assessing their entitlement to unemployment assistance or one parent family payment.

Section 20 provides for a change in the assessment of maintenance payments under the one parent family payment scheme. A disregard of up to £75 per week in respect of housing costs is currently applied to maintenance payments received by the lone parent and the balance is assessed as means. This section improves the position by providing that the balance of any maintenance payments over and above that allowed for housing costs will be assessed at 50%. The proposal is one of many recommendations contained in a review of the scheme which I published last September. It provided a valuable insight into the operation of the scheme and will form the basis for consideration of its future direction. This proposal has many advantages. It means that lone parents will make clear gains from any maintenance they receive. It is hoped that this change will also act as an incentive for the other parent to pay maintenance as their children will benefit directly from any support offered.

I am also implementing a further recommendation of the review relating to the payment of the special transitional payment which is currently payable if the lone parent's income or earnings from employment exceeds £230.76 per week. The review recommended that lone parents should be in receipt of payment for 12 months to qualify for a transitional payment. This is provided for in section 20 and will ensure that the measure benefits those for whom it was intended, namely, long-term recipients moving to employment.

Section 21 provides for the recovery from a financial institution of amounts of pension or benefit paid by way of electronic fund transfer to the recipient's account for any period after his or her death. At present 40,000 pensioners choose to receive their pension by the EFT method of payment. This involves payment of their weekly pension directly into their bank or building society account. However, in many cases the Department and the financial institution may not become aware of the pensioner's death for some time and payments can continue to be lodged to his or her account after the date of death. While such moneys are recoverable, difficulties arise in recovering the overpaid amount. This proposal allows the Department to recoup such amounts directly from the recipient's accounts in the financial institutions involved.

Last year the Government decided that the time was opportune to align the income tax year with the calendar year with effect from 1 January 2002. This will pay dividends in future years in a more rational tax and PRSI system which is in line with the tax systems in most EU and OECD countries. I am pleased that the Government agreed that the weekly social welfare rates would also be increased in 2002, with effect from the first week in January. This is being done at a substantial extra cost of £85 million. When this Government came to office, the increases in social welfare were delivered in the last week in June and the first week in July. As of the next budget at the end of this year, we will bring back the dates of payment of the increases from the first week in July to the first week in January.

The Minister's party pushed them out to the end of the year.

I suggest to Deputy Broughan that his party did likewise on all the occasions it was in Government.

To facilitate the introduction of the calendar basis tax year, the next tax year will be a short tax year running from 6 April to 31 December 2001. I am providing in Part 5 of the Bill for transitional measures to ensure that PRSI based social insurance entitlements earned during the short tax year are fully protected. This will mean that every person who has paid PRSI contributions in this period will have 14 additional paid contributions added to their PRSI record. This will ensure that no one will be disadvantaged as a consequence of the once-off transitional year. Equally, no one will pay more PRSI than they normally do in a calendar year.

Part 6 of the Bill deals with the implementation of the Government's plans for the changeover to the euro within the social welfare code. Members will be familiar with the background to these measures.

The Government is committed to ensuring that the changeover to the euro is carried out fairly and with no advantage being sought from the changeover. Accordingly, in changing the rates of social welfare payments to convenient euro amounts, they will in all cases be rounded up to the nearest ten cents. Equally, PRSI rates have been rounded to the nearest euro in such a way as to favour the citizen. The Bill also provides for other convenient money amounts in the structure of weekly payments, such as means banding, in order to ensure rounded amounts. I assure the House that my Department will be undertaking an extensive information campaign aimed at ensuring that all social welfare recipients are fully aware of the general effects of the changeover to the euro and also the effects for their own payment. The increases will take effect from 1 January 2002.

In just over a decade, Fianna Fáil in Government has turned around the economy. We have gone from high tax, high unemployment and low growth to a nation with low taxes, sustained economic growth and effectively full employment. That is our record.

In four short years, we have turned around our social welfare system from one that simply compensates people for economic failure to one that helps people to help themselves. It is a system that helps people who can work to get work and which supports our older people, our children, carers and people with disabilities. Equally, over the past four years we have endeavoured to streamline the taxation system. I would wager a bet that after the next budget people will see that the marrying of the social welfare and tax systems will have been done in such a way that both systems will be more clearly understood and easily accessed by the general public.

It is one of the reasons the Government will not be re-elected.

No interruptions please, Deputy.

The changes that have been made by the Minister for Finance, and equally the changes that have been made in the social welfare system by me and the Department of Social, Community and Family Affairs, will ensure that the system is much more easily understood and accessible. When people look at the way in which we have done away with many of the rate bands, and have rationalised many of the complexities of the social welfare code, they will say the Government has done some service to the people.

The Bill is a clear demonstration of the Government's commitment to looking after the needs of our children, older people, carers and others who are dependent on our social welfare system. It will ensure that the resources of this unprecedented social welfare package of £850 million in a full year will be directed at those who are most in need.

When I came into office the social welfare budget package was just over £200 million. This year it is more than four times that at £850 million.

The percentage is falling all the time, Minister.

Acting Chairman

You will have 30 minutes on your own shortly, Deputy.

I have had to listen to a great deal of nonsense from the heckler on my left. Despite the fact that he thinks he is on the left politically, and physically is on the left of me in this House, I can assure him that actions speak louder than words. In my time as Minister for Social, Community and Family Affairs over the past four years, the facts speak for themselves. Anyone conducting an objective examination of the social welfare or taxation systems from the time when Deputy Broughan's party was in Government to the present, would see that we gave £5 to old age pensioners in our first budget, followed by increases of £6, £7 and £10 in the succeeding budgets. In the budgets introduced by the previous Government, increases of £1.50, £1.80 and £3 were given to old age pensioners. The facts speak for themselves and I rest my case.

Look at the economy.

When one looks at child benefit, in the previous Government's last budget—

It is a sad legacy.

Actions speak louder than words. When one is on this side of the House it is what one does that counts, not what one says in Opposition.

We have not had a chance yet.

Taking child benefit, for example, in this budget we are giving £25 per month each for the first two children, and £30 for the third. In the previous Government's last budget, the corresponding sums were £1 and £5. The facts speak for themselves. Everything that I have had to do with the social welfare code says enough. One only has to take the issue of marriage counselling where for three years, from 1994-97, voluntary groups received only £900,000, whereas that sum has risen by 500% in the past four years. Before taking office we committed ourselves to providing a nation-wide family mediation service. In 1997 there were only two mediation centres, one in Limerick and the other in Dublin. There are now 11 such centres and the service is to be placed on a statutory basis. The financial resources for that service have risen by 400%.

The budget for the National Social Services Board, which is under the aegis of my Department, has increased by approximately 150%. Across the board there have been huge improvements. The public should look objectively at the facts and figures, comparing our record in Government to that of the previous Administration. Any objective analysis will show that we have done a good job.

Mr. Hayes

This is my first opportunity to speak in the House as our party's new spokesperson on social and community affairs.

I welcome the Deputy and I wish him the best. I am sorry, I should have done so earlier. My officials will be available to talk to the Deputy at any time.

Mr. Hayes

I thank the Minister very much and I know it was not a deliberate omission. I am grateful to our former spokesperson in this area, Deputy Fitzgerald, who has now moved on to greater things, for her briefings and discussions with me since I was appointed last Thursday. The Minister is obviously in election mode.

Mr. Hayes

It is quite clear from his contribution that he is gearing up for an election. He seems to lay virtue on the fact that this year, as a consequence of this Bill, he will spend about £850 million compared to the sum of £200 million that was spent by my party and Deputy Broughan's party when last we were in office in 1997. While that is true, it is only telling part of the story. The Minister has not mentioned the exceptional cash surpluses that exist in our economy today, compared to the 1997 surplus. Let us put them on the record, as the Minister has challenged both Deputy Broughan and myself in respect of our records. In 1997, the budget surplus was £374 million. Five years later, as a consequence of the exceptional management of the economy from 1994-97, which his party—

Why did the previous Government not give it to them?

Mr. Hayes

The Minister tends to have a jack-in-the-box reaction every so often, but I did not interrupt him so he should listen to some of the facts before replying in due course. Today's budget surplus is somewhat different to that of 1997, and the Minister well knows that. Let us put the figures on the record so that the public will know how much we are awash with cash at the moment. Some £3.9 billion exists as a result of the exceptional management of the economy by a number of Governments. Nearly £4 billion is within the remit of the Government this year to make clear priority choices in respect of spending. One does not have to be a mathematical genius to work out that if one compares the sums of £200 million and £850 million with the 1997 and current budget surpluses, the percentage spend is going down. The Government does not like to hear much about that, however, because it underlines the gross inequalities that exist within our society.

Since 1997, the Government and the Minister have tinkered with the system but have not produced the kind of sustained increases and structural reform in social welfare about which I will speak on another occasion. In 1997, we had £374 million, but four years later the Minister has £3,900 million. The provisions of the Bill should be seen against the fantastic management of the economy by a number of Governments. I would be the first to concede that.

Few can disagree that Ireland is one of the wealthiest countries in the European Union. Our position, relative to other countries, has changed dramatically over the past ten years and we now have an unprecedented opportunity to genuinely share the wealth that has been produced in this economy. All parties which have served in government in recent times should be justifiably proud of their record in helping to transform the economy.

The undeniable success of recent years should not blind us to the fact that poverty is still a reality for hundreds of thousands. Those who have put forward the fatalistic notion that the poor will always be with us must be challenged by policies that can effect real income distribution. In the budgets presented by the Minister for Finance, Deputy McCreevy it is undeniable that we have seen the gap widen between those on high and low incomes.

Despite the cynicism about the political process, we can all point to many successful policies established by politicians in recent years. The advances made in Northern Ireland since the passage of the Anglo-Irish Agreement in 1985 have their origins in politics. The recent transformation of the economy and the increased availability of resources also have their origins in politics. There is a need to set a new national objective to completely eradicate poverty in the next five years. It is possible to do this, given the resources available. All that is needed is the political will to make it happen, but this is lacking as a consequence of the Government's actions.

With our new found wealth, can it be said that a concerted effort has been made to tackle deprivation and genuinely alleviate social inequality? The answer is no. Those who live on small incomes do not register on the Government's priority list. It is clear that under the Fianna Fáil-Progressive Democrats Government – this Bill is no different from the preceding three – the gap between rich and poor is widening. There are too many cases of poverty in the community. This can be set against a political backdrop where the principle of greed is good rules the policy agenda.

When one considers the attack made on single parents by the Tánaiste, Deputy Harney, in 1997 and the frequent disparaging remarks made by the Minister for Finance who has referred to "the poverty industry", one recognises the prejudice against those on low incomes at the highest level of Government. It is not surprising, therefore, that the Government has produced budgets and social welfare provisions that are unable to deliver genuine improvements to low income families. One should not be mistaken, this a deliberate political objective of the Government. Such bias against those on low incomes can be resolved only by a change of Government.

Fine Gael is opposed to the paltry increases proposed in the Bill. We will, therefore, vote against the Bill on Second Stage because, as constituted, it will further marginalise those on low incomes. It also runs against the spirit of the national anti-poverty strategy.

Taken together, the provisions of the Bill cannot change the fact that more than 20% of the population are living below the 50% poverty line outlined in the national anti-poverty strategy. The Bill will do nothing to improve Ireland's standing internationally as a country which has one of the highest rates of poverty in the western world. The United Nations development programme index rates Ireland seventeenth out of 18 countries in respect of income inequality. The situation will worsen this year as the proposed payments set out in the Bill do not meet GNP growth rates within the wider economy.

Having regard to the successful management of the economy by the rainbow Government, since it took office in 1997 the Government has failed to tackle evident income disparities despite the fact that remarkable income returns afford the Ministers for Finance and Social, Community and Family Affairs an unprecedented opportunity to make a radical shift in income distribution.

In speaking to the financial resolution in December, the Minister for Social, Community and Family Affairs spoke of his cherished republican principles, which he believed were the touch stones of the budget. That brand of republicanism expressed by the Fianna Fáil Party since it ditched its former leader, the late Jack Lynch, in 1979, has little to do with the principles of fairness and justice in respect of income distribution. The Minister boasted recently about the £214 million he has managed to claw back from fraudulent claims on the social welfare system. Fianna Fáil knows an awful lot about fraud given the number of politicians from that party who have attempted to avoid paying their fair share of tax in the past 20 years, since the lamented departure of the late Mr. Lynch. Last December's lecture on his party's new found interest in the republican ideal is difficult to stomach given the scandals being exposed in another place.

Acting Chairman

The Deputy must stay within the area of social welfare.

Mr. Hayes

I am.

Acting Chairman

The Deputy is straying from it.

Mr. Hayes

With respect, the Minister made that comment in response to a financial resolution in December which provided for the implementation of the Bill.

The measures outlined in the Bill will do nothing to lift families out of poverty. They are more of the same. Given the Minister's difficulty, the tiny improvements in social welfare payments when set against a budget surplus of £3,900 million highlight the mean spirited and fundamentally conservative approach of the Government. Those at the top of the income scale received a windfall following changes in capital and personal taxation while those at the bottom have to be content with a miserable increase of £8 per week in their basic welfare payment. It is the case that all the children of the nation are not being treated equally.

The PPF contains a clear commitment that over the lifetime of the programme the £100 target in respect of the basic social welfare payment will be achieved. Fine Gael considers that the £8 increase set out in the Bill does not meet this target. Provision was made in the PPF for an acceleration of progress towards the £100 target in the event that economic growth generated additional resources. Additional resources have been generated. I, therefore, put it to the Minister and other Members that the £100 target is no longer realistic given our new found wealth since the signing of the PPF. What is the reason for the distinction in the Bill between the £8 increase for non-elderly recipients and the £10 increase in old age pension? It seems the Minister is trying to make a distinction between the deserving and undeserving poor. The House should receive an explanation for this distinction before Committee Stage.

Fine Gael will oppose the Bill as it does not meet the objectives set in our pre-budget social welfare proposals last November. The provisions in social welfare announcements that stemmed from the financial statement by the Minister for Finance last December will not adequately compensate social welfare recipients for the effects of inflation in the latter part of 2000. While the increase in child benefit is welcome, it will in no way meet the substantial costs associated with child welfare. Given the considerable number of carers in society, it is disgraceful that the minor changes proposed will affect only a tiny proportion of the total number. There seems to be no consideration of the effects of poverty on women, specifically single parents who are struggling to make ends meet. Despite the much publicised £10 increase in old age pension, the position of the elderly in society has not advanced given the astonishing level of resources at the disposal of the Government.

Taken together, the measures outlined in the Bill tinker with the problem of income distribution and offer only crumbs from the table of the Celtic tiger. If this is all the Government can offer in good days, I would hate to see it having to make social welfare choices in bad days. Those of us with long memories will recall the McCreevy dirty dozen and their penetrating affect on the poor only ten years ago. Ensuring that social welfare payments are higher than the annual rate of inflation is only one way to effectively ensure that there has been an increase in real income. A much more sensible way to deliver real increases for people who require social welfare payments would be to set the rate of increase to exceed the estimated GNP growth within the economy. Such a provision is part of the PPF. When growth increases, targets should increase too. The £100 target, which the Minister lectured us about, is no longer realistic given the new wealth and exceptional GNP growth since the PPF was first negotiated and signed.

Last November Fine Gael proposed an across the board increase of between £10 and £14 per week for all basic social insurance and social assistance payments. We regarded these figures as the bare minimum if we are to reverse the damage in the Social Welfare Act, 2000. That legislation, allied to the Finance Act, 2000, saw real cuts in monetary terms for the poorest and most vulnerable. The proposals in the Bill under discussion to improve social welfare payments are unacceptable given the surplus which exists.

The problem of child poverty here has been highlighted for a considerable period of time. It is estimated that Irish children have the highest income poverty level of any EU country. Recent research shows that 25% of children live in households earning less than half the average income. Children are 1.24 times more likely to be in poverty than adults. As part of our submission last November, we encouraged the Government to develop a range of anti-poverty measures to be included in this year's Social Welfare Bill.

It is therefore hugely disappointing that despite the provisions of Sections 6 and 7, there are very few initiatives in this Bill which could genuinely be described as addressing the issue of child poverty. After three years of refusing to significantly improve child benefit, the Minister has finally decided to move in the direction that Fine Gael first proposed in 1998. This movement is welcome, although late, but should be more substantial and should have reached the £100 per month per child target in the recent budget. I agree with the Minister that the most effective way to help children and families in poverty is to dramatically increase child benefit. This approach will provide families with real child care alternatives and allow them to take up additional employment opportunities. The Government's halfway house approach stems from its failure to recognise the importance of child benefit over the past three years.

Will the Deputy give way? I want to clarify the fact that the Deputy's party did not propose the Government's idea. Fine Gael proposed an increase in child benefit for children under five. When I subsequently pointed out that there would be a huge cut off at five, Fine Gael said it would give a transitional payment between five and twelve. We decided to give it to all children.

Mr. Hayes

I understand perfectly what our party said when we announced a policy of substantially increasing child benefit in 1998. The Deputy's party did not decide for two years in what direction it would move. The Minister is aware that our policies differed as regards whether it was to involve a child under five or under one.

We disagreed vehemently on such child-related matters.

Mr. Hayes

The Government has moved in the direction of the principle we announced in 1998 at a much-lamented Árd Fheis.

I disagree.

Mr. Hayes

I put it to the Minister that the two year delay brought about an appalling income difference which needs to be made up. While we differ on the age up to which the child should be paid and the transitional arrangements afterwards, the principle of grossly increasing child benefit has been conceded by the Government. I welcome this policy shift.

The Deputy's proposal shows a lack of understanding of what it means to raise children.

Acting Chairman

The Deputy should be allowed to speak without interruption.

Mr. Hayes

I put it to the Minister that this substantial announcement is welcome, but should have been made two years ago. I am delighted to take all the questions the Minister can ask—

They will continue.

Mr. Hayes

—because they can be answered and thereby expose the inadequacies of the Government in this area. Fine Gael has called for additional resources to be granted to health boards for the back to school clothing and footwear allowance. The number of children benefiting from this allowance has fallen in the past year. The allowance was paid to 183,708 children in 1999.

We also believe that an improved free school meal scheme should be extended. The increase in funding provided by the Minister is welcome but the existing scheme is insufficient given the need that currently exists. In this day and age, to boast that only 2,000 children can avail of this scheme out of a total school population of 824,000 children is pathetic in the extreme. Ireland is one of the last EU countries to put in place a free school meal scheme, particularly for disadvantaged children, and the Minister is responsible for that.

There are some welcome improvements in the limits for family income supplements. Child care costs, however, should have been disregarded in the full assessment of FIS. Fine Gael proposed the introduction of a £10 per week capitation payment for child care.

Once again the Government has reneged on its commitments to substantially improve the conditions for carers. Of the estimated 50,000 carers in Ireland, figures supplied by the Department itself, a few more than 14,000 are eligible to receive the carer's allowance.

The correct figure is 17,000.

Mr. Hayes

Has the figure increased today?

No, the figure was already 17,000.

Mr. Hayes

An increase of 3,000 is not very significant given that the carers association believes the total figure to be 120,000.

The figure regarding recipients—

Mr. Hayes

The Minister will have his chance to respond. I did not interrupt him, yet we have had three interruptions from him already.

Acting Chairman

Will the Minister allow the Deputy continue?

Mr. Hayes

Simply tinkering with the existing allowances for carers, as the Minister has done, will not improve the position of a group who are providing care and assistance for thousands of people. Unfortunately, we have not seen any measures in this Bill to radically help their position. In November we proposed a £100 per month care payment for qualified carers to offset the additional costs of caring for a person in the home. We did not see any movement in relaxing the means test to allow additional people claim the carers allowance. Fine Gael has publicly called for doubling of the respite grant to £600, as against the Minister's proposal of £400 in this Bill. Equally, recipients of the carers allowance should keep other allowances to which they would be entitled if they were not in receipt of the carers allowance.

We need to improve the position of pensioners. Ireland will witness a 50% increase in the population over retirement age from 400,000 in 1994 to 700,000 in 2020. It is estimated that 80% of elderly people living alone in Ireland are reliant on social welfare payments. Not only should we dramatically improve the direct level of income support, but we should develop community based support programmes so that older people can remain independent in the community. The vast majority of people cannot understand how older people can survive on such small incomes.

An effort was not made in this budget to bring the non-contributory pension up to the level of the contributory pension. It is ludicrous that a monetary distinction should exist between both pensions schemes. I am also critical of the minor changes to the living alone allowance which will help recipients of disability allowance, invalidity pension, unemployment supplement and the blind person's pension, but will exclude widows and widowers and other groups who live alone and need support. Will the living at home allowance be extended to persons who take advantage of the new scheme in the Finance Bill and take in a tenant at a rent of up to £6,000 per annum before declaring for tax? Will the living alone allowance for elderly people still be available to them if they take in a student or a single person? That is an innovative proposal in the Finance Bill. Will those who take in tenants still receive the living alone allowance?

There needs to be a radical rethink about the pensions policy. Given the need to retain people in the workforce, a more flexible approach is needed. There should be no financial barriers to people over 66 remaining in the workforce. Where people have been contributing to a pension scheme for years, they should be entitled to the pension even if they work outside the home after the official retirement age. There is a need to provide high support facilities within the community for the elderly. There are excellent examples of local authorities developing senior citizens' complexes with imagination and skill. These should be the norm.

The Minister is proposing to abolish the ceiling on employers' PRSI. This was outlined first in December 2000. This measure will create additional difficulty in recruiting high skilled people. The Government ought to rethink this proposal. Removing the existing £36,600 ceiling means employers will have to foot the bill at the 12% rate for all salaries. This will increase the cost of high salaried, value added employment which, in turn, will have an adverse effect on employment investment. There are dangers threatening the US manufacturing base and consequent dangers for employment here. It would be prudent to tread carefully now. There are too many recent examples of job losses in the high-tech sector. It is becoming more difficult to employ high skilled people in the current labour situation. The removal of the PRSI ceiling is bad for business, future employment and competition. This was a sudden proposal and should be reconsidered.

We oppose the Bill because it is inadequate given our economic resources. It does not address income inequalities which have been highlighted yearly by the Government's taxation policies, obsessed with cutting rates rather than increasing allowances or introducing genuine tax reform. Our party wants to eradicate poverty and we now have an opportunity to do that. This Bill will make no difference to low income families in a cycle of long-term unemployment.

Last year the Minister tried to introduce anti-inflationary measures to protect low income families, but he was shot down by his Cabinet colleagues. He was told to wait and still there is no compensation for people on low income suffering because of inflation since last August. The proposals in this Bill will not outstrip inflation, which they must do—

The Deputy should not believe all he reads in the newspapers.

Mr. Hayes

—because we lost so much last year through the overheating in the economy caused by the previous budget. We have a lot of catching up to do and a lot of unfinished business. The ideologically conservative Fianna Fáil and Progressive Democrats will not complete this business.

I congratulate Deputy Hayes on his appointment to the social, community and family affairs portfolio.

Two months ago when the Minister, Deputy Ahern, concluded his speech on budget 2001, he said, "The budget is about empowerment. This budget is about social inclusion. This budget is about spreading the wealth and supporting the weak. This budget is about republicanism". Almost the direct opposite is the case. The Bill, and the budget on which it is based, are not about empowering our most deprived citizens and communities. They strengthened the social exclusion of tens of thousands of our most vulnerable citizens, especially those with disabilities, carers, pensioners and their dependants, young working parents and the long-term unemployed. Neither the budget nor the Bill is about republicanism, unless it was of the George W. Bush variety. Republicanism in early America and France stressed equality above all political virtues. With liberty and fraternity, it was a philosophic cornerstone of the French Revolution which continues to inspire political thought after more than two centuries. By this republican measure, this Minister is a hopeless failure and the Government is a right-wing greedy cabal. After almost four years of existence, the key impact of this Fianna Fáil-PD Government has been the widening of the gap between the rich and poor. Every time the Minister, Deputy McCreevy, and the Taoiseach had to choose between improving conditions for the most disadvantaged in our society and expanding the income and opportunities of the richest, they chose their rich friends. The judgment of the CORI Justice Commission on this Government is devastating. It states:

The poorest people in Irish Society have been betrayed by Budget 2001. With sufficient resources available to enable it to eliminate income poverty among both adults and children, Government chose instead to give these resources in superabundance to those who were already better off. As a result, this Government's legacy after four budgets is to have substantially widened the rich/poor gap – which was already the worst in the E.U.

CORI concluded that "when political leadership was required so that everyone would benefit from the country's new-found prosperity and be treated with fairness, this government chose, instead, to refuse to hear the cry of the poor."

The cold statistics bear out this grim analysis. Total State expenditure on social welfare as a percentage of gross national product has declined from 9.9% in 1997, to 9.1 % in 1998, to 8.4% in 1999, to 7.9% in 2000 and finally to perhaps 7.5% this year.

Mr. Hayes

That is a shame.

The Economist estimates Ireland's per capita income for 2001 at $29,000—

How many more people are working?

—significantly ahead of theper capita incomes of the UK, France, Germany, Austria and even Finland. In national income per capita, we are sitting at Sweden's shoulder, on $30,000 per capita—

The Deputy would have everyone on social welfare.

—and are not far behind Denmark.

We are the envy of the world.

We now earn more than three quarters of theper capita national incomes of Norway, Japan and the United States. Many of the countries we have apparently surpassed in national income would be deeply ashamed of the social welfare budget represented by the Social Welfare Bill, 2001. These democracies would regard it as outrageous that more than—

We are the envy of the world.

—25% of their most vulnerable citizens mainly or partly dependent on social welfare would be left to exist on only 7.5% of national output. The conclusion reached by the Irish National Organisation of the Unemployed was widely shared when, commenting on Budget 2001, it stated that ". . . this budget's social inclusion package betrays the fact that while McCreevy can talk the talk on social inclusion, he is not prepared to introduce realistic social inclusion measures".

This time last year I pleaded with the Minister, Deputy Ahern—

We are the envy of the world, particularly the Deputy's former colleagues in the eastern bloc.

—to permit me, on behalf of the Labour Party, to insert a mechanism in the Social Welfare Bill, 2000, to keep the effects of inflation under review. In relation to sections 3 and 4 and Schedules A and B of the 2001 Bill before us today, I repeat this request. Last year, the 3% inflation projected at budget time turned into 6.8% at year's end.

(Interruptions.)

The 5.2% to 5.5% average increase in social welfare rates from May 2000 was eroded by inflation. For many recipients, the benefits of budget 2000 were eroded.

Mr. Hayes

That is right.

No, it was 5.25%.

The 5.2% to 5.25% average increase in social welfare rates given from May 2000 was seriously eroded by the explosion in inflation and, for many categories of recipients, any benefits from budget 2000 were easily wiped out.

Will the Deputy give way? He is wrong. The figure was 5.25%.

The Minister should listen. As inflation gathered speed last September, I raised the alarm on behalf of social welfare recipients at the Committee on Family, Community and Social Affairs. The Minister belatedly came to the committee and gave us a litany of vague and, as it transpired, worthless assurances. The Labour Party asked that budget 2001 increases be introduced from 1 January this year as a basic gesture of compensation for the ravages of inflation. The Minister steadfastly refused and hence the dates in sections 4 and 5.

The Minister, Deputy Ahern, was well aware of the failure of the Social Welfare Act, 2000, to improve the living standards of our poorest people. This was clearly shown in the extraordinary saga, or perhaps farce, of the £74 million inflation compensation package which the Minister's friends in the media published just before the budget. Apparently the Minister asked the Cabinet for this £74 million, but he was shot down as the Minister for Finance, Deputy McCreevy, and the Tánaiste and Minister for Enterprise, Trade and Employment, Deputy Harney, waved him away with disdain.

Mr. Hayes

That is right.

That sorry tale clearly indicates that the Minister, Deputy Ahern, fully realised that inflation had wrecked his 2000-01 social welfare budget. Why did he not at least threaten to resign, given this humiliation and the abandonment of the most vulnerable people in our society whom his Department is pledged to protect?

Mr. Hayes

Power is a terrible thing.

A Minister who took serious responsibility for families on social welfare would have told the Cabinet to produce more money or else. However, sadly, the Minister, Deputy Ahern, is not such a Minister.

Inflation continues to increase to 5.2% at present, although the Minister, Deputy McCreevy, estimates it will average 4.5% for 2001. However, after last year, who can believe him? The Minister for Finance's own figures show net current spending increasing to 6.6% for the coming year and this suggests a higher inflation rate than his budget estimate. Once again, in the final roller coaster year of entry to the euro, social welfare incomes may be seriously eroded or even wiped out as during 2000. Therefore, in a similar attempt to last year, the Labour Party will try to amend Part 2 of the Social Welfare Bill to allow monitoring of the effects of inflation on the rates of periodical benefits and social assistance.

If the Minister had heeded the advice of the Labour Party and many representative bodies for citizens on social welfare benefits, the Social Wel fare Bill, 2001, would have been passed last autumn and the increases would have come into effect from 1 January this year. As he failed to introduce this inflation compensatory measure, the Minister is now faced with a double whammy for January 2002, assuming he is still the Minister. As Part 6 of the 2001 Bill outlines, the increases for 2002 in social insurance and assistance will have to be introduced between 27 December 2001 and 4 January 2002. According to a memorandum released under the Freedom of Information Act, the Minister's senior staff think this timetable may be impossible unless budget 2002 is early.

A total of £1 for old age pensioners. Shame on the Deputy's party.

Mr. Hayes

That was when people were still in short trousers.

It is not that long ago – only five years.

Will the Minister, Deputy Dermot Ahern, give a commitment to the House that social welfare increases will be paid on time in euros next January? It would be very unfair to social welfare recipients if, during the undoubtedly confusing early weeks of the euro currency, they above all our citizens were faced with increases being paid very late and in arrears.

No doubt the Deputy will help to confuse them even more.

Throughout the consultation period before this year's budget, the Government was strongly urged to aim at a general rise in social welfare rates of £14 per week by a variety of representative groups, such as the Society of St. Vincent de Paul and the Irish National Organisation of the Unemployed. It was felt that such a rise would help to compensate for rising inflation. Contributors to the pre-budget debate believed that under no circumstances should the general rise be less than £10 per week. Since the Programme for Prosperity and Fairness set a target of £100 per week for the lowest social welfare payments, there was a strong effort by the voluntary and community pillar of national partnership to persuade the Government to achieve the £14 per week increase as a major step to the £100 benchmark. Regrettably, the Minister, Deputy Ahern, and his colleagues disregarded these pleas and the resulting basic increase is only £8 a week under Schedules A and B.

In the overall context of the economic performance to which I referred, the rate of increases from April 2001 remain woefully disappointing. We should reflect on a sample of these rates. For recipients of unemployment assistance, pre-retirement allowance, disability allowance, farm assist, blind pension, widow's and widower's non-contributory pension and the one parent family payment, the weekly rate is £85.50. This represents 25% of average industrial earnings at 1999 levels. The carer's allowance weekly rate of £88.50 is dismal. For the fourth year running, the Government has failed to achieve its modest £100 target for senior citizens since non-contributory old age pension reaches a weekly rate of only £95.50 in April next.

This is the ninth year I have voiced similar misgivings about the abysmal levels of social welfare income. That is why, although belatedly and towards the end of his administration, I welcome the fact that the Minister has at last appointed a committee under Professor Kieran Kennedy to study the benchmarking of social welfare incomes. The issue of the levels of weekly rates is the most crucial challenge facing a society which aspires to equality or, in the terms in which I began my contribution, to being a true Republic. In the coming weeks, the Labour Party will bring forward its proposals with regard to basic social welfare income which will be related to income in the general economy rather than to inflation or to some spurious benchmark plucked, like the Minister's pensioners' benchmark, from thin air.

The blanket refusal of the Government to individualise social welfare benefits contrasts starkly with the Minister, Deputy McCreevy's grim determination to introduce full tax individualisation. Last year's budget made a commitment to increase the qualified adult payment rate to 70% of the personal rate over three years. Given our economic progress, this extended implementation period was unnecessary and the target could have been achieved this year. The decision to gradually bring the qualified adult rate for the old age pension up to the level of the non-contributory rate is welcome. However, across the other social welfare rates, the £7 qualified adult increase is inadequate and continues to treat women in poverty as second class citizens. The qualified adult rate of £54 for dependants of claimants on social assistance and for a wide range of social insurance payments, including disability and unemployment benefits, is an appalling and insulting allowance on which to expect an adult citizen to live. By my calculations, the Minister should have moved to a minimum 70% rate or about £60 a week with the intention to introduce full individualisation as soon as possible. Section 26 flies in the face of any move towards individualisation.

Section 16 removes the limitation on couples in receipt of disability allowance. The limitation means that when both individuals in a couple satisfy the eligibility conditions for a payment, they do not receive two full rates of payment. In the welcome development to which I referred, the Bill signifies the first phase of increases which will raise qualified adult pensions to the level of the personal rate for the old age non-contributory pension. However, the obvious omission from these improvements is unemployed people. Most qualified adults are women. A mother whose partner is unemployed, is genuinely and actively seeking work, passes the means test and makes appropriate child minding arrangements is still denied the same rate of unemployment compensation as her partner. The Labour Party intends to table an amendment to this section.

The much vaunted mantra of the Government to provide pensions of £100 a week is at last contained in the Bill after four budgets. However, as I noted, the non-contributory pension has still reached only £95.50. The long-standing demand of the Irish Congress of Trade Unions' Retired Workers Group and the Irish Senior Citizens Parliament was for State pensions equal to 34% of average industrial earnings. There is widespread evidence throughout our society of the serious poverty endured by many senior citizens and other pensioners. Last week, the Dáil received a disturbing report about the dreadfully poor housing conditions of senior citizens from the Comptroller and Auditor General. However, as usual from this smug and careless Administration, the Minister for Social, Community and Family Affairs has made no effort to find out the real extent of poverty among our senior population.

Even with the limited resources available to us in Opposition, the Labour Party has long held the view that the issue of poverty among the elderly and others on fixed incomes should be addressed. This is why we said before Christmas that we would increase all long-term pensions by £24 a week if we were returned to Government after the next general election, bringing the old age contributory pension up to £120 per week. As a fundamental gesture to the people who created the economic boom that we are currently enjoying and who paid their high taxes in bad times, the Labour Party is committed to backdating the rise to £120 a week from 1 January 2001 whenever the party gets an opportunity to implement it. This will be asine qua non of any Labour Party participation in Government. There are distinct differences between the Labour Party and the two major parties in the House. The Labour Party strongly supports the lifting of the ceiling on employers' contributions and we support the Government in that regard.

Mr. Hayes

There is a difference.

The difference is that the Opposition talks and we do.

The £25 and £30 increases in child benefit are welcome and mean that the objective of £100 per month for child benefit, to which the Government signed up in the Programme for Prosperity and Fairness, will be met within the lifetime of the programme. The Labour Party agrees with the PPF that child benefit is a key mechanism to reduce levels of child poverty and to provide child income support. However, we fundamentally reject the Government's approach in pretending to address the issue of child care through child benefit alone, which is an anti-poverty income tool in a nation with one of the worst rates of child poverty in the EU and OECD.

On the issue of child care, apart from investment in provision, the Labour Party supported an additional parental child care payment with a £20 weekly rate for the under fives. Section 6 which moves forward the payment date for the increases in child benefit to 1 June this year is welcome, though many constituents will ask why the increases in child benefit could not have been aligned this year with all other increases.

Before the introduction of Budget 2001, many commentators on poverty directed their attention to the level of child dependant allowances. Agencies such as the Combat Poverty Agency felt the national priority should be to target additional resources at households most in need and advocated an increase in child dependant allowances to £16 a week for children under 12 and £19 a week for children over that age. The Society of St. Vincent de Paul also urged that child dependant allowances be increased to £18 per week per child at a cost of £41 million. Schedules A and B in this Bill ignore these constructive proposals and the child dependant rate remains at £13.20 per week for most categories of social assistance and social insurance recipients.

The improvement, in section 20, which deals with one parent family payment – transitional arrangements and assessment of maintenance payments – is an important step forward. The assessment of the 50% over £75 per week will be a valuable extra resource for lone parents and an encouragement for separated fathers to discharge their responsibilities.

Section 12 will allow for a major improvement in family life in the extension of maternity benefit from 14 to 18 weeks and of benefit for adoptive parents, from 10 to 14 weeks. Regulations have already been laid before the House by the Minister for Justice, Equality and Law Reform, Deputy O'Donoghue, under the Maternity Protection Act, 1994 and the Adoptive Leave Act, 1995. I understand that under the provisions of both sets of regulations the extended period of maternity and adoptive leave will only apply to people who give their employers four weeks notice of their intention to take the extended leave following the approval of the new regulations. We are now operating within the four week period leading to 8 March to coincide with the extension of maternity benefit and adoptive benefit. Many women who will be on maternity benefit and on leave before 8 March however, will lose out on these extensions. Will the Minister examine section 12(2), (3) and (4) to see if there is any way in which we can facilitate mothers and adoptive mothers and parents already in the leave period?

The increase in the respite care grant from £300 to £400 a year in section 14 is disappointing, given the expectation among carers that the grant might be doubled. The Labour Party is committed to a respite care grant of £1,000 a year and I will seek to amend this section on Committee Stage. In the recent debate on Second Stage of the Carers Leave Bill, 2000, I outlined the total disillusionment of carers with the Government and the Minister. In our Constitution and our legislation there is no recognition of the invaluable role of carers. For tens of thousands of our fellow citizens, caring for a child or adult with a disability, as carers rightly say, is a seven day a week, 24 hours a day responsibility. Yet there is no sign of the Government showing any interest in the development of a long-term policy on caring in the community.

The review of the carer's allowance, published in 1998, estimated the number of full-time carers at around 50,000 people, covering carers of older people and adults and children with disabilities. The leading national advocate of carers, the Carers Association, estimated in its October 2000 pre-budget submission that there were at least 120,000 family carers in the State, as Deputy Hayes noted earlier. At the end of 2000, however, there were only 16,302 recipients of carer's allowance. I am glad the Minister now tells us it has reached 17,000.

It was then calculated by the Department of Social, Community and Family Affairs that the budget 2001 increases in the income disregards for carers, to £150 for a single carer and £250 for a joint income couple, would result in up to 5,000 additional carers qualifying for payment and 2,800 existing carers receiving an increased payment. Even with the introduction of carer's leave and carer's benefit, it is obvious that well more than half of carers, in the most narrow departmental definition of the term, are still excluded from State financial support.

The continuous struggle of carers is visible throughout our society and the Government and the Minister have given scant regard to the reforms which are now urgently necessary. Most of all, carers are deeply resentful of the means test which excludes many thousands of carers from receipt of the carer's allowance. The Labour Party strongly supports the fundamental reform of carer's allowance into a continual care payment which will not be paid on the basis of financial means of relatives but on the basis of the caring needs of those being cared for. This was the correct conclusion of the 1996 Oireachtas report, A Long-Term Support Framework For Female Carers, prepared by Mel Cousins, which advocated awarding the allowance to carers of all persons requiring full-time care. As I said in this House two weeks ago during the debate on the Carers Leave Bill, 2000, it is past time that we abandoned the current Government's poor law approach to carers and abolished this rotten and inhumane means test.

The reference to carer's benefit in section 18 reminds us of the unbelievable lethargy of the Minister for Social, Community and Family Affairs, Deputy Ahern, and the Tánaiste and Minister for Enterprise, Trade and Employment, Deputy Harney, in introducing carer's leave and carer's benefit. Throughout last year, Deputy Ahern trumpeted the start of carer's benefit although he knew that few citizens could afford to avail of the new benefit since the carer's leave legislation was not introduced and only appeared before the Dáil two weeks ago.

Is it any wonder that only 11 people had been approved for carer's benefit by mid-December 2000 and that there were only just over 200 applications up to a few weeks ago when we discussed the Carer's Leave Bill, 2000?

In recent months I have been contacted by a number of carers who took caring leave at their own expense in recent years to look after sick relatives and who are now denied the opportunity to participate in official carer's leave with the consequent carer's benefit. I hope to amend section 25 to cover those citizens and I ask the Minister today to bring forward proposals for a retrospective award of carer's benefit.

Fuel poverty is a constant harsh reality of life for tens of thousands of our most deprived citizens. The extension of the heating system by three weeks – would it were by three months – from early October to late April is welcome, but many of our elderly constituents want to know why the £5 and £8 rates have remained unchanged for more than a decade, since 1985.

The Minister told me in November last that the cost of doubling the standard allowance from £5 to £10 a week would cost an extra £37.25 million per fuel season. The review of the national smokeless fuel schemes by the Department of Social, Community and Family Affairs in 1998 concluded that the present rates of payment should remain unchanged if improvements in primary weekly payments fully compensated recipients for all price inflation including the cost of fuel. Yet nobody doubts that social welfare increases barely kept pace with inflation last year or that there has been a significant rise in fuel costs since the mid-1980s when the free fuel scheme began. The Senior Citizens' Parliament estimates the basic rise, despite falls in oil prices and so on, has been of the order of 30%.

There is the additional problem that many elderly people need assistance with heating costs throughout the whole year, as they need to keep warm. The new 29 week heating scheme is, therefore, welcome, but it does not meet the needs of many senior citizens and invalids. Perhaps we could examine that again in the context of this Bill.

Nobody will deny that some progress has been made under the national anti-poverty strategy and against the background of our remarkable economic growth, halving the numbers of people in consistent poverty is a welcome development. However, the ESRI report, Monitoring Poverty Trends, showed that, in 1998, relative poverty was increasing under the socially divisive fiscal and social policies of the Government. The 1998 survey showed that the percentage of persons below the 50% relative income poverty line was higher than a year previously with approximately one in five people falling below this line. The rate of income poverty remains a challenge which the Government has failed to address in any coherent way and certainly not in the Social Welfare Bill, 2001.

One key aspect of poverty and social exclusion which should be central to the NAPS and to the work of the Combat Poverty Agency is the spatial dimension. The spatial aspect of rural and urban poverty is striking and profound yet none of our policy makers seem to be interested in constructing maps of disadvantage based on obvious research. Where, for example, is the equivalent of the spatial health and mortality statistics which the Government of the United Kingdom has at its disposal? Where are the spatial maps of crime and anti-social behaviour? Where are the maps of low educational attainment? Where are the concentrations of homeless individuals and families? Where are the greatest numbers of long-term unemployed? Where are the biggest concentrations of disadvantaged groups such as the Traveller community, unemployed people with disabilities, ex-offenders and people with addiction problems?

The failure by the Government and its agencies to compile and present a clear national report on spatial disadvantage provides an easy excuse to do next to nothing and year after year the same urban and rural communities continue to suffer. It is against this background that I view the introduction of the island allowance in section 15, which gives an additional allowance of £10 per week for certain pensioners. I welcome the initiative but wonder why it could not be extended to pensioners in other disadvantaged areas both urban and rural.

Many Deputies have received a bitter complaint from the Irish Wheelchair Association and disabled constituents regarding the mobility allowance. The allowance is set to double to £90 per month in April and compensates people who are disabled for the lack of accessible public transport. We are informed that, from April next, people receiving tax concessions towards the purchase of an adapted private vehicle will not be entitled to mobility allowance. Is this the case and, if so, is it another example of one Minister giving something and another Minister taking it away? The criteria for mobility allowance are stringently applied and because of this, there are only about 2,600 beneficiaries.

Last week the Government launched an initiative aimed at disadvantaged areas. Like its earlier efforts, there seemed to be a lack of vision and coherence in the manner in which the RAPID programme was introduced by the Minister of State at the Department of Tourism, Sport and Recreation, Deputy Ryan. RAPID stands for revitalising areas by planning, investment and development. It marks the belated appearance of the targeted investment programme promised under the PPF about which I have repeatedly asked the Minister for Social, Community and Family Affairs, Deputy Ahern, at Question Time. Deprived areas of my constituency in north Coolock form one of 25 districts chosen for targeted investment. It seems, however, that there are no targets or mission statement for this new programme and that the Government has chosen to create yet another layer of bureaucracy to run the programme rather than utilise the existing tier of district government, the partnership companies. On the crucial issue of funding, the position is vague, to say the least, although we have just been informed that there will be £200 million available for social inclusion measures under the national development plan. I hope this does not include money which Commissioner Pedro Solbes, who recently visited the Minister's part of the country, wishes to claw back from the Minister for Finance, Deputy McCreevy.

This is the fourth and, perhaps, final Social Welfare Bill to be introduced by the Minister. His period in office offered an unparalleled opportunity to implement a programme of social inclusion measures to embrace all the people. Instead the division between rich and poor is widening as the proportion of national income allocated to social welfare recipients falls steadily. Eurostat figures for 1998 show that, at 16%, the GDP spend in Ireland on social protection was by far the lowest in the European Union.

Mr. Hayes

Correct.

Spain has the next lowest percentage, 22%. The EU average is between 25% and 30%. We fare badly in that regard.

The Bill introduces welcome reforms such as the improvement in the assessment of means provided for in section 13. The 2001 social assistance and social insurance payment rates provided for in the Bill, however, reflect the harsh economic outlook of the Government. For that reason, the Labour Party must oppose the Bill. The failure to compensate social welfare claimants and their families for the ravages of inflation is a further indictment of the Government's lack national vision, particularly on social issues. It has failed in its responsibilities to key groups of citizens dependent on social welfare. Despite the smug boasting of the Minister, pensioners, parents of young children, carers, qualified adult dependants, widows and widowers with young children and many other social welfare claimants remain dissatisfied with the Government and continue to feel hard done by. Those living in disadvantaged areas are of the view that the economic boom has passed them by. Although the Labour Party will try to amend it, where possible, on Committee Stage, the Bill is another sad monument to the failure of the Minister. The electorate will have a chance to pass judgment, perhaps sooner than he thinks.

I wish to share my time with Deputy Conor Lenihan.

I wish to refer to some of the major improvements provided for in the Bill which demonstrates the commitment of my party and that of the Government to look after the less well-off in society, to meet the needs of children, older people, carers and all those dependent on the social welfare system.

In the past three and a half years the structure of society has changed significantly. The unemployment rate has fallen to around 4% and over 300,000 new jobs have been created, freeing resources and reducing the percentage of Government expenditure on social welfare. In spite of this, there has been an increase in spending in key areas such as old age and retirement pensions, child support, carers and people with disabilities.

The biggest ever increase in social welfare payments was provided for in the budget. In 1997, a sum of £214.5 million was provided for in the budget; in 1998, £225 million; in 1999, £16.5 million; in 2000, £403.38 million; and in 2001, £850 million, a fourfold increase on the 1997 figure. This gives lie to the statement by Opposition spokespersons that the Minister for Social, Community and Family Affairs, Deputy Ahern, has been failing in his duty to provide for those dependent on the social welfare system.

The increase in old age pension will be £10, bringing the rate to £106 per week. Where both members of a couple are over 66 years of age, the increase in contributory old age pension will be £25, bringing the rate to £185.60 per week. The increase in non-contributory old age pension will be £19 per week. Fianna Fáil granted an increase of £5 per week to old age pensioners in 1998; £6 in 1999; £7 in 2000; and £10 this year. In comparison, the rainbow Government provided for increases of between £1.50 and £3.

Opposition spokespersons have decried the increases and stated what they would do in our position. Why did they not do what they have continually preached in opposition? The credence one can give their utterances is diminished when one looks at their performance in government.

The child benefit scheme has been targeted by the Government and all political parties as the most efficient and effective way to channel help to children. The increases announced in budget 2000, provided for in section 66 of the Bill, will bring investment in this area in 2001 to £761 million, a significant increase on the figure for 1997 of £397 million. Fianna Fáil has increased child benefit by £25 for the first two children and £30 for the third and subsequent children. The rainbow Government provided for increases of £1 and £5, respectively. Deputy Hayes berated the Minister for granting what he described as miserly increases. Having met parents in my constituency, I cannot subscribe to what he said. The Fine Gael spokesperson is in denial if all he can do is decry such a positive policy.

Other family supports have been significantly increased. The net increase in family income sup plement, of tremendous importance to 15,000 persons in society, will be £15 per week due to the increase in thresholds of £25 per week. The payment of four additional weeks of maternity and adoptive leave will be of tremendous assistance to young parents.

Significant changes have been made to the PRSI system. In sections 8 and 9 there are reductions in charges, an increase in the earnings ceilings, abolition of employers' liability and a reduction in the rate of social insurance for the self-employed. All these changes are aimed towards bringing the tax and social welfare systems together. Most of the people who have contacted me about the abolition of the employers' PRSI ceiling are in the pharmaceutical and information technology industries where earnings are very high. The Minister, Deputy McCreevy, has explained many times, including yesterday, that many of these people calculate their increased costs on a full year basis. As the Minister stated, the 2001 financial year will be a short one at roughly three quarters the length of a normal financial year and the impact of the abolition will not kick in for the majority of people, even those on high salaries of up to £50,000, in the next year. He stated he has new plans to be unveiled in his next budget in October which he claims will be widely welcomed. Knowing the Minister, I am sure he has innovative plans to improve the PRSI and taxation systems and to bring them together.

Carers have also gained significantly from this budget. The carer system was introduced by the Minister, Deputy Woods, in a Fianna Fáil Administration a number of years ago. It has been of tremendous assistance since it was introduced and the system has been refined and improved since its introduction. The changes this year – the means test threshold increased from £75 to £125 and from £150 to £250 – will mean a further 5,000 people will benefit. The effective increase will ensure a couple with two children earning a joint income in the region of £15,100 will qualify for the maximum rate of carer's allowance while a couple in receipt of £25,100 will qualify for the minimum carer's allowance. In addition to qualifying for those allowances, the free schemes and the respite care grant will become available to those people. It is another step forward in providing help and aid to people who stay at home to care for their parents or any member of their family who is ill. This scheme should be improved further.

The carer's benefit scheme was introduced in legislation published last week or the week before by the Minister of State, Deputy Kitt. That is another step forward which will benefit people who must stay at home and it will also benefit their families. People will now be able to take temporary leave from their jobs.

I have outlined many of the positive elements in the Bill. I commend the legislation to the House because it addresses the commitments set out in the Government's programme aimed at building an inclusive society which improves the living standards of everyone on social welfare, and because it fulfils our commitments under the Programme for Prosperity and Fairness.

Listening to Deputies Broughan and Hayes, one is increasingly reminded that they have a great deal in common. Both have a habit of overstating their case. They have both fallen victim and are prone to overstatement as a style in debates in the House and elsewhere.

The Deputy would not suffer from that.

I find it disturbing that, while Deputy Broughan clearly does not take that overstatement too seriously, it appears the Fine Gael spokesman on this subject, and on a range of portfolios he has held, takes his overstatement too seriously. It is always a concern when people begin to believe their propaganda. Deputy Hayes has moved slickly from portfolio to portfolio employing overstatement as his chief technique for criticising the Government. Whether it was the housing crisis and hyping the nature of the crisis and the response to it or, when it came to Northern Ireland, whether it was deploying the neo-Unionist language and line once deployed by the former Fine Gael leader, Deputy John Bruton, Deputy Hayes has always excelled himself in overstatement. He overstated the pro-Unionist case Fine Gael made until relatively recently. We on this side of the House are now delighted that it has finally decided to join the great pan-Nationalist consensus. This is an amazing turnaround and we are delighted to witness it.

I hope that, given time, when Fine Gael members look back on the Bill, they will have a change of heart and mind. When historians come to write about this period and this legislation, they will probably say this was the finest moment in social engineering, when we changed a gear within society and moved away from a society where we were highly taxed and had no money to spend on social intervention. They will probably say this was the turning point when the Government decided to mark its purposeful intention to improve the circumstances of those less well off in society. This legislation will stand the test of time because the increases are phenomenal, whether they relate to carers, people on lower incomes or pensioners seeking an increase. All categories of people who can claim to be disadvantaged or downtrodden or who have not gained from recent economic success gain from this legislation.

The Bill is exceptional and a turning point in terms of the large amounts of money involved, but it is not just exceptional. It is also well thought out. It comes as part of a long line of budget announcements on the social welfare code which show a remarkable consistency on this side of the House. We as a party and a Government have always cared for disadvantaged people and we deliver year in year out in this regard. The criticism, more often made by Labour than Fine Gael, that we concentrate too much on tax reduction rather than on social inclusion and social improvement is utterly wrong. One of the major lies perpetrated by the Labour Party is that we focus on tax reductions and do nothing when it comes to the social engineering through the social welfare code to ensure people on low incomes or no incomes have an opportunity to play a real role in society.

It is important we not only commend the Bill but also the Minister, Deputy Dermot Ahern, because he has been remarkably consistent not only in his role as Minister but also as a leading light in our political party advocating the social democratic and republican ethos of our party through newspaper articles, speeches and profound contributions of one form or another. He is a remarkable man who is perhaps overseeing a remarkable transformation in the lot of the people. He deserves full credit for that.

It has been odd to see the Labour Party and Fine Gael cosying up to each other in recent weeks in the hope of forming a Government. Fine Gael dropped its policies on corporate donations and its members will possibly raise the white flag on all the old traditional Fine Gael policies and surrender to the Labour Party in their hunger not only to devour their former leaders but to get into Government and drive off in the Mercedes. That is their attitude and it will not work.

The first thing we will do is change the oil in the engines.

What is remarkable is that, not only is the unionism gone to be replaced by a new, shiny green nationalism but so also is all semblance of Fine Gael's old, robust, right wing policies. The reality is that the parties opposite, Fine Gael and Labour, are the more conservative parties in the House. The real radicalism and commitment to social justice is to be found and heard on the Government benches. Our party is the one forging the big changes in modern Ireland. Deputy Flanagan's party was in Government several years ago and had the opportunity to bring about big changes but all the pensioners and social welfare recipients got was small change, literally, from Deputy De Rossa when he was Minister. They got small increases that nobody would bother to notice. Deputy Michael Ahern is to be commended for making that point.

The Government has been repeatedly and wrongly criticised by the Labour Party for what that party sees as an obsession with reducing tax rates and a related failure to spend money on people and services. That is hopelessly incorrect. We are continuing to reduce the tax burden to improve the funding position of the Exchequer when it comes to spending on social policies, so much so that Members opposite have joined with the europhiles in criticising us in recent days. The Opposition parties have been to the forefront in trying to embarrass the Government by quoting the European Commission's adverse views on our economy and our spending levels in social and other areas. However, they cannot have it both ways. They cannot agree with Brussels criticising us for spending too much and then say that we are not spending enough on social welfare. There is an elemental contradiction in the Opposition's approach. Either we are spending too much or too little but it seems to change from day to day and week to week, depending on whether one is listening to Deputy Noonan or Deputy Quinn.

There are strong reasons we should continue with our policy of tax reductions. It is not fashionable to point it out in left wing circles, and I am as left wing as anyone else on these benches, but the Reagan administration reduced the top rate of tax in America from 70% to 28% in the face of many ill-conceived left wing prophecies of doom. What happened? Personal tax revenues tripled and the foundation was laid for the long boom the American economy enjoyed until recently. That is the reality of cutting top and middle tax rates as well as those tax rates which bear down on the disadvantaged and unemployed.

That is the reality of what the Government is trying to do and it is right to focus on the tax mission. That was a formal promise we made to the electorate. We made a formal pact with our partners, the Progressive Democrats, but we also made one with the electorate not just at the beginning of the election, but ten days before the polling day when we made a formal pact to continue to cut rates. I hope Deputy Flanagan and his friends in Brussels take that message back: we will continue to cut the taxes when we introduce our next budget towards the end of the year. We will continue with the formal promise we made to the public not just in the area of social inclusion, but more importantly in tax reduction. The high burden of tax reduction has borne down heavily on those on low pay and the unemployed.

The Government's tax reduction policy is the centre of social inclusion. Our party contains perhaps the only people in the House who have the vision to promote social inclusion as a concept. We have seen 1 million pensioners and qualified adults secure unprecedented increases in this budget and we have also seen an estimated 531,000 families benefiting from the massive increases in child benefit. We have also seen in this budget how 17,500 families on low incomes will benefit from the increased income threshold for family income supplement. One of the most enlightened aspects of the Minister's policies is the increase in the maternity and adoptive benefits, which are central to women's participation in the work force. If there is one cause this Government can be associated with, it is that we have forcefully pursued the interests of women and equality both in and outside the work force, whether that relates to increased maternity and adoptive leave or increased pay and child benefit terms. We are the people who are delivering for women, who demand the right, as they should, to participate equally in the work force and every aspect of our national life.

I wish to share my time with Deputy Kenny.

Is that agreed? Agreed.

Deputy Lenihan never ceases to lighten a debate and to take away its seriousness, whether it is about Northern Ireland, economic issues or social welfare matters. One can always be sure his contribution will be colourful and light. He can start a sentence by lauding a model of European social democracy from one corner of his mouth and by the end of the same sentence, from the other corner of his mouth, he can talk admiringly about Ronald Reagan. Such is the spectrum available to Deputy Lenihan's political philosophy. He never ceases lightening a debate with a certain colour that makes consistency seem totally irrelevant.

Deputy Lenihan spoke about what the caring Government had done to ease the plight of those in the poverty trap but nothing could be further from the truth. In spite of the increased funding to which Deputy Lenihan refers, if one looks at the Social Welfare Bill in the cold light of day and in the context of the budget, is this the best we can do to bridge the gap between the haves and have-nots in society? If the Government will leave any legacy when it is removed from office later this year, it will be that it has attempted to impose on the people a nakedly American capitalist-style system, a system which the people are not buying.

I refer to those who have been on low incomes for the past few years.

That sounds like the Labour Party.

In spite of our economic success they remain on low incomes. Those relying on social welfare for their weekly entitlements see miserly income increases that will do little good in an economy whose inflation borders on the highest in the EU.

I received a letter from the Irish Wheelchair Association regarding recent budgetary changes announced by the Minister for Finance and backed up by the Minister for Social, Community and Family Affairs in this Bill. Members of that association, perhaps the most vulnerable group in society, are upset and anxious because of negative budget changes announced in December's budget. I refer particularly to the mobility allowance. For years that allowance ensured that £45 per month paid by the health board acted as some form of inducement to those who were not mobile to get out of their houses, if only for a short period. The payment was designed to compensate people permanently unable to walk for the lack of accessible public transport and applied particularly in rural areas to people such as those in my constituency. However, we now see an increase in that allowance from 1 April 2001 from £45 to £90 will only be available to a small few who qualified for that allowance to date. I do not know how many hundreds of people will be adversely affected by this cut in the mobility allowance but I urge the Minister for Social, Community and Family Affairs and the Minister for Finance to rethink this callous and insensitive attack on the most vulnerable people in our society.

The Minister for Social, Community and Family Affairs missed an opportunity to pull tens of thousands of people out of the poverty trap with this Bill. He has refused to do so. He and the Minister for Finance are presiding over a regime where thousands of people are losing their entitlement to a medical card.

Debate adjourned.
Sitting suspended at 1.30 p.m and resumed at 2.30 p.m.