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Dáil Éireann debate -
Wednesday, 11 Dec 2002

Vol. 559 No. 2

Social Welfare Bill, 2002: Second Stage (Resumed).

Question again proposed: "That the Bill be now read a Second Time."

A Social Welfare Bill cannot be considered in an isolated context. We also have to look at the economic policies of recent years and to acknowledge that great strides have been made in job creation and tax reduction, particularly personal taxation. From the Opposition contributions, there seems to be a collective forgetfulness with regard to the Government's achievements of the last five years and a preoccupation with their short sojourn in office from 1994 to 1997. On any reasonable comparison, it has to be acknowledged that this Government has been very successful in implementing policies and addressing social problems. Undoubtedly, the most effective avenue out of poverty is through employment. This Government has created up to 400,000 extra jobs in the last five years.

One can only listen to the Labour Party's contributions to this debate with a wry smile. When that party had a Minister for Finance and a Minister for Social Welfare, pensions were increased by the paltry sum of £1.80.

(Interruptions).

It is also interesting to note what other party was in Government at that time.

Was there not a Fianna Fáil-Labour Government not too long ago?

We have been treated to lectures on social inclusiveness by the Labour Party and accused of being a right-wing Government.

(Interruptions).

Deputy Kelleher without interruption.

In the final analysis, we will be judged as a Government which has secured significant increases, in the last five years, for pension and social welfare recipients across the board. The recent budgetary package, and the Social Welfare Bill which enacts it, clearly demonstrate the approach which the Minister for Social and Family Affairs is taking and her success at the Cabinet table in securing agreement that we have to protect the income standards of those at the bottom rung of the financial ladder. At a time when difficult decisions had to be made, the social welfare sector has been protected by the increase of €6, keeping it ahead of inflation.

The Labour Party appears to judge success in terms of taxing workers to the back teeth, losing competitiveness, putting people on social welfare programmes and boasting of the amount of money it has spent on social welfare. In my view, the measure of success of any Government in relation to social welfare is to have less people on unemployment benefit and assistance. That indicates that a Government is working well, creating wealth and employment and making a positive contribution to social inclusiveness.

In parts of the country, especially in large urban areas, there have been significant social problems for many years. It was said that those areas were by-passed by the Celtic tiger.

The poor old tiger.

There is every indication that the Celtic tiger effect is still there, having regard to the strong position of our economy relative to that of our European partners.

How can the Deputy possibly say that?

Perhaps the story of the Celtic snail is another matter, from which Deputies on the other side of the House may have learned some lessons.

The snail is still alive but the tiger is rather sick.

Even a sick tiger still runs faster than a live snail.

That remains to be seen.

Improvements are clearly evident in areas where there was significant social deprivation, caused primarily by generations of massive long-term unemployment. If we are to be consistent in addressing those problems, we have to look at education in socially disadvantaged areas. Most importantly, we must ensure that when people come off social welfare, they are rewarded for a fair day's work. Recent budgets have addressed that situation at the minimum wage level. Over 90% of people on the minimum wage are now out of the tax net. Looking ahead, the new programme for Government will ensure the further evolution of that situation so that those on low pay will not be subject to any form of income tax. That is a positive move.

The minimum wage will be part of ongoing negotiations. Although we have been accused of being right wing and not caring for those in need of assistance, the fact is that it was this Government which implemented the minimum wage. Looking back over the past ten years, the evidence is there for all to see. This Government's policies of reducing taxation and responsible budgetary measures meant that, in times of plenty, we were able to spend on the public sector.

The Deputy's party colleagues in Government certainly knew how to spend.

In changing international circumstances where the economy is now in a different gear, we are still in a position to bring forward a substantial budgetary package for social welfare. The Opposition appears to lose sight of that. Reference has been made to pension funds being raided. With due respect to the Labour Party, does it take advice from anybody? It is clear from the demographic structure and age profile of our population that we are sitting on a time bomb unless we address the need to invest now in order to ensure that we are in a position to pay for pensions in future years. For far too long, pensions have been paid out of current revenue, workers were taxed to the point of being forced on to social welfare and the situation developed into a vicious circle, with generations of Irish people being driven abroad to find work.

Great strides have been made in the area of child benefit. From a level of less than €40 under the rainbow Government, we have now progressed to the present level of €125 for the first and second child. That is a major contribution towards addressing real poverty in the areas concerned.

(Interruptions).

Will the Government use credit cards to distribute the lump sums?

Deputy Kelleher without interruption.

Deputy Durkan knows perfectly well that payments were brought forward for good reasons. It is disingenuous on the part of the Opposition to suggest that the Government was trying to buy votes.

The social welfare payments were dealt with in accordance with normal practice heretofore.

The Government needs no advice with regard to buying votes.

The Minister of State at the Department of Justice, Equality and Law Reform, Deputy O'Dea, was very apt in his recent reference to the filibustering tactics of Fine Gael. Year after year in this Chamber, Governments have been accused of announcing social welfare increases at budget time but not implementing them until several months later. This Government has consistently brought back payment dates which now coincide with the calendar year in most cases. That is a very positive step to address the issue of child poverty. I welcome the large increases in child benefit in recent years. A note of caution must be sounded, however. If we are to target the areas in which child benefit is most required, we must examine whether it is sustainable to increase child benefit across the board, regardless of income level.

Tell us more.

My views are well known. I represent a constituency with a diverse socio-economic make-up. In difficult times one targets resources towards those who most need it. No Member on this side of the House would disagree.

The Deputy will be popular with Mná na hÉireann when he tells them this.

I pose the question. The question needs to be examined in the context of whether we are getting resources to children in the most efficient way.

The Deputy is making a courageous decision.

While not directly related to the Social Welfare Bill, 2002, the issue of planning for child care facilities is creating insurmountable problems in urban areas. People are unable to get planning permission in housing estates for the provision of small crèches which is driving the cost of child care through the roof. Why can a person not be granted planning permission for four or five crèche places, under health board guidelines, on housing estates? I am sure the Green Party would support a measure whereby people going to work could drop their children to a crèche on their estate rather than driving long distances across the city. If we keep increasing child benefit and continue to have limited crèche places, we will drive up the cost of the child care. We must examine the issue carefully because, while one Department is providing funding for child care, other Departments and local authorities are refusing to take their responsibilities seriously to address an issue that is creating significant problems for working parents, particularly in urban areas.

There is a huge black economy which we must acknowledge if we are serious about protecting children. We must ensure child care facilities are up to the high standards the health boards demand. There should be some mechanism whereby we can bring the child care industry into the tax net to ensure everything is official, above board and that people who are paying large child care costs can avail of some sort of tax rebate.

That is just another way of fleecing the taxpayer. The Government has been talking about that for years.

While we are talking we are also doing, unlike Deputy Healy, who does a great deal of talking but no doing.

Any Government can be judged on how it cares for the elderly. This Government can be judged to have cared for the elderly fairly with the pension payments provided for in recent years. The elderly made significant sacrifices and played a major part in getting us where we are today. The generation that got through the difficult times of the 1960s and 1970s are now the people we are caring for and they deserve it. I congratulate the Government for the increases in pensions. The Government gave a commitment in the 1997 manifesto that it would bring pensions above the £100 threshold and broke that threshold by a substantial amount. Even in changed budgetary circumstances, we were able to give a €10 increase to old age pensioners and I hope the Minister will continue to argue for old age pensions that are well ahead of inflation and that we strive to meet our target of €200 by 2007. For many years, widows were left behind when it came to social welfare payments and I welcome the increased payments to them proposed in this Bill.

It is disappointing the Labour Party benches are empty because when Deputy Quinn was Minister for Finance he had budget surpluses but only managed to take 38,000 people out of the tax net in three budgets and added just £1.80 to the old age pension. It is disingenuous to say economic circumstances were different then because the same circumstances pertained up until this budget and, even in difficult times, we were able to make major increases. Overall, the next few years will tell much about how we shape ourselves as a society. If we have difficult decisions to make in the years ahead, we must still ensure that the most marginalised will be protected by social welfare packages that ensure they stay ahead of inflation. I am convinced the correct budgetary policy is being pursued because the last time we found ourselves in difficult circumstances, when Governments refused to make tough decisions, this country slid into a quagmire of financial recklessness, the population fell to a critical level and many of our young people left the country with a poor education. We have forced generations out of the country because of reckless spending and the inability of Governments to take tough decisions. I will defend any Government – even on unpopular decisions – to ensure we retain a fiscal policy that ensures prosperity on a longer term basis. No more short-sighted decisions like we had in the early 1980s, when people failed to grasp the nettle and make difficult decisions. That period of mass emigration is the legacy of previous coalition Governments.

I congratulate the Minister on her first time presenting a Bill in the Dáil. I wish her success with her new portfolio. I know she argued admirably at the Cabinet table in view of the fact there are large increases in social welfare payments across the board, particularly for the elderly. I commend this Bill to the House and hope that, when all its measures are implemented, they will ensure the standard of living of the most marginalised in our community is protected from inflationary pressures and that next year we will do the same thing.

I wish to share my time with Deputies Gogarty, Connolly and Healy. Budgets are a series of choices of what to cut and what to spend, what to tax, who to tax and how much to tax them. The choices the Government has made indicates its priorities and demonstrates which groups in society it is most likely to help. Last week's budget tells us a great deal about this Government; it tells us that it put a higher value on animals than on people. How else could it explain why the horse and greyhound racing industries cost the Exchequer almost €64 million, or why a Minister decided not to introduce a tax on bloodstock? It was not only the horse and greyhound industries that did well out of this budget, however. Another section of society, even more beloved by the Minister, also did well. Big business and the rich did very nicely as hundreds of millions of euros were thrown away on a corporation tax cut.

We have heard much from the Government benches about the increase of €10 per week for pensioners – the men and women who built this country. There is no shortage of business people, politicians and economists telling us about the economic boom and claiming credit for it. The reality, however, is that the lead up to the economic boom was created by those who are now our senior citizens. Yet, all they will get is €10 per week and a promise that by 2007 pensions will be up to €200. Over the past 12 months, we have heard many promises that have not been delivered upon. I am sure pensioners will await 2007 with bated breath.

A few nights ago, just 300 yards from here, I encountered four homeless people sleeping on the street. This is a reflection of the inequalities and wrongs in our society. It is also a reflection of the continuous neglect demonstrated in successive budgets and the attitude of successive Governments towards poor people. After every budget, old age pensioners are hit by a rise in local authority housing costs, so what they receive from one hand is taken away by the other. The cost of electricity, gas and VHI cover has risen, in addition to all the other indirect taxation that will affect the elderly. The €10 rise in pensions is just a spin doctor's attempt to create the impression the Government cares about those who suffer most.

The cut in community employment schemes is to the detriment both of those on the schemes and the communities in which they work. They have rendered a tremendous service to their communities. A number of Government Deputies referred to a major American company that has relocated to China because labour is cheaper there. Is this an indication of what the Government thinks about workers? Is it a threat to workers that if they do not accept lower wages this will be the inevitable outcome? It is an ominous sign when a Government Member of the House makes such a contribution.

It is called the free market.

This budget continues the inequalities in our society and contributes to the deprivation of the poor, the old and the marginalised.

The Bill is linked to the budget debate so I may be criss-crossing somewhat in my remarks. With the various changes in time allocations for this debate, the opportunities to contribute have been mixed. The Minister, Deputy Coughlan, has been in and out of the Chamber on various duties. I wanted to reiterate what my colleague Deputy Boyle said earlier when the Minister was absent, but unfortunately she is not here now either. It is worth pointing out to the Minister of State, Deputy McDaid, that the Government will lose more money through the special savings investment scheme than through the budgetary allocations for social welfare recipients. As Deputy Boyle pointed out, it shows the Government's priorities in these tough times. In tough times we should make tough decisions. While the increases in social welfare for pensioners, those with disabilities and for carers are laudable to an extent, they are only in line with inflation. To talk about an increase in pensions to €200 per week by 2007 is facetious because if we continue with a 6% inflation rate that sum will not be worth diddly-squat in four years time.

Higher earners, including TDs, have come out of the budget with more than they had before. We can deal with the VAT issue and the increase in the cost of living because we have money to burn but people who are scraping a living at the other end of the scale do not. I was not being facetious when I sent an e-mail to Senators and TDs asking them to consider foregoing their recent 4% pay increase and to make a contribution towards education or the first time buyer's grant.

The Deputy should do it himself.

It is interesting that the Deputy has pointed that out. I used to do something that was cynical and naive in one sense: I used to go around with £20 notes with a little note tied to them. I gave them to people begging on the streets and people in cars. I threw it in through their car windows with a little note saying "Give half this away and keep the other half. Spread it around and give good fortune". It was a little bit naive in the sense that I scared the hell out of some drivers.

TDs are called upon in their constituencies to donate to various charities and no doubt the majority of them do so generously, but why do we have tax if not to ensure that we gain a certain amount of revenue? TDs will obviously pay more in tax than they would ever donate of their own goodwill.

I was shocked to read in the paper recently that we are due for another pay rise that was decided before I was elected. To be honest, having gone from earning around the average industrial wage to a TD's salary, I know we can afford to do without this pay rise in a time of fiscal rectitude, if it means allowing something more for those who are less well off. I call on the Minister for Finance to do this, although I doubt if it will happen.

There are cars parked around the plinth and on the Merrion Street side of Leinster House, which represent a practical tax benefit. Do TDs pay a benefit in kind tax on the free use of these car parks? They do not. Do TDs get subsidised meals in the Dáil restaurant? They do.

We do not.

They do. Deputies can have a three-course meal for €10 in the posh Dáil restaurant.

This is not really related to the debate.

It is related.

The Chair would prefer the Deputy to focus his attention on the Bill before the House.

In terms of the Government's priorities, we could take a bit of the pay increase back off the TDs.

The Deputy should give up his increase now and show an example.

We could tax the equine industry and put a bit more towards the less well off. I asked Senators and TDs to consider foregoing their pay increase voluntarily but not one Member of the Oireachtas replied. Maybe they thought I was "taking the mick", but I was totally sincere about it. I will make my own donations out of my increased income.

The Deputy should give up his wage increase now instead of lecturing us.

Let us all be seen to make a gesture. How can we talk about how great a pension increase is in these hard times when TDs are getting a huge pay rise? We can afford to forego that in order to allow others to get a bit more.

Is this Green Party policy? Will the Green Party do this? Do I take it the Deputy will suggest this to his colleagues?

My colleagues would do it voluntarily. I decided to raise this matter because in the general budget debate I will make a contribution.

The Deputy did not answer my questions.

I call on the Minister for Finance to consider taxing TDs and the benefit-in-kind they have with free car parking in Leinster House. He should put the money towards the less well off rather than the privileged blueshirts who claim to be in Opposition but have exactly the same ideological views as the Fianna Fáil-PD-IBEC people on the other side of the House.

I will not listen to the greenshirt behind me, who has no tie.

The Social Welfare Bill gives effect to the social welfare changes in the budget. The Government has again missed an opportunity to reduce the level of poverty by narrowing the gap between the rich and the poor. For a number of years we have been spending a lower percentage of our wealth on social welfare than any other country in the EU or any of the applicant countries. The proportion of GDP spent on social welfare continued to shrink during the tiger years of the 1990s, and we rank in the lower echelons of the industrialised nations.

The €6 per week increase in unemployment benefit is only one instance of the Government's failure to reach its PPF target of €127 – it rose from €118.80 to only €124.60. Child care has once again suffered, with a token €8 monthly increase in child benefit for the first two children and €10 for subsequent children. A sum of €125.60 monthly for each of the first two children is significantly short of the aspirations expressed in the programme for Government where the Government expressed its intention to raise this to €149. Similarly, the allowance for the third and subsequent children will be pitched at €149, which is considerably short of the expressed aim of €185 per month. In families where both parents are required to work outside the home, childminding costs are crippling. The €25 to €30 a week which these payments represent are a mere pittance if a family has to shell out €200 weekly on childminding.

By his own admission, the Minister for Finance, Deputy McCreevy, succeeded in allocating merely 25% of the promised €414 million to child benefit, which is only one of the false figures with which the general election was fraudulently purchased. Old age pensioners will have to make do with an extra €10 weekly, or approximately €1.43 per day, which would not get anyone far in McDonalds. With spiralling costs for heating, food and services generally, pensioners have only a bleak mid-winter to look forward to, and the 1% VAT increase will mop up any remaining cash they manage to scratch together.

The Minister exhibited his contempt for the disabled who are among the most vulnerable in society. While appropriate lip service is paid to the Special Olympics with generous people in towns throughout the country making a major contribution to the hosting of the various nations' special sports people, the Government throws token crumbs in the direction of people on disability benefit or the blind pension in the form of a weekly increase of €6. How can parents be expected to feed, clothe, shoe, pay bus fares, buy school books and stationery for each child on an extra €2 per week or 30 cent per day and an annual back-to-school clothing and footwear allowance of €30, or 58 cent per week? Social welfare recipients have not been safeguarded as the Minister suggested. Let him exchange places with someone in receipt of social welfare for one week. I doubt if he would dare to do it. He would be singing from a different hymn sheet afterwards.

The 8.8% increase in the social welfare budget may appear impressive, but to pensioners and other recipients, 8% of very little is still very little and still very inadequate. Any gains made in the past years have been eroded by a combination of higher inflation and euro-triggered price increases. Purchasing power or spending power have steadily diminished in many households. The almost universal condemnation of social welfare proposals outlined in the budget by the many organisations catering for families in need merely serves to underline the Government's betrayal of the weakest in society.

The Minister may try to blame current budgetary circumstances for the Government's failure to fulfil its commitments. However, he must accept that the Government is the author of its own fall from grace, having embarked on a pre-election splurge from which the country will take a long time to recover.

This is the sixth budget that continues the policies of this Government which are policies of making the rich richer and handing some crumbs to those who are on social welfare or low pay. The priority of the Government is clearly evident in two provisions in this Bill and in the Estimates that preceded it. The fact that the Government was prepared to continue the promised reduction in corporation profit tax from 16% to 12.5% while at the same time refusing to continue the promised increases in child benefit, is an indication of where this Government stands. It is, as Deputy Ned O'Keeffe said, the most right-wing Government in the history of this State. The priority should have been children and people on social welfare and low pay. Instead, the priority is people who are already super rich, already wealthy and who do not need the money.

The budget submissions of various organisations, including the Society of St. Vincent de Paul, CORI and the Irish National Organisation of the Unemployed indicated that there should be an increase of at least €11.20 in the basic rate of social welfare. That was not a figure that was pulled out of the air. It is based on 30% of gross average industrial earnings. It is in line with the report of the Social Welfare Benchmarking and Indexation Working Group set up under the PPF. It is also linked to the Government's commitment to raise the minimum rate of social welfare to €150 in 2002 terms by 2007. That the Government has only been prepared to increase the basic rate by €6 is a clear indication of another broken promise.

The Minister stated at the beginning of his Budget Statement that his priority was to protect the weaker sections of society. An increase of €6 for social welfare recipients is hardly protecting the weaker sections of society. That payment breaks another promise. Unemployment assistance is now gone from €118.80 to €124.80 and that falls way short of another Government commitment that it would, during the life of the PPF, bring the lowest social welfare rates to €127. Again the priority for the Government was not social welfare recipients.

This is the first of five budgets.

Another promise, like all the promises made during the general election, like all the lies told during the general election, was that the qualified adult rate would be raised to 70%. The Government did not do that either. It was left at an increase of a mere €4 for a qualified adult, less than £3. One could not buy a pint with it.

There are four more budgets to come.

The qualified adult rate is 66%. The Government made a commitment, which it has not fulfilled, to bring that to 70%.

The real nastiness in this budget relates to how children were treated. The Government has refused to fulfil the commitment it made in relation to child benefit but is prepared to forego €350 million to people who are already super rich. The fact that the child dependant allowance has not been increased since 1996 is an utter disgrace and it is totally unacceptable. I would have thought Fianna Fáil backbenchers would have been up in arms about that as well. However, few of them seem to be saying anything about it.

Let me correct the Deputy.

The child dependant allowance is now €13.80. The Society of St. Vincent de Paul asked that it be increased to €21.80 but the Government did not do that. It expects a child to be looked after for €13.80 per week. That cannot be done, as anybody who has children knows. To add insult to injury, the Minister has been talking about child care costs for years but there is nothing in this budget on child care.

We increased child benefit five-fold.

The treatment of carers in the budget is a disgrace. Carers receive €122.90 for a 24 hour, seven day week. I would have thought the Minister might have acted on the many suggestions made to him by Members last year that the carer's allowance be paid in addition to a social welfare payment.

I propose to share my time with Deputy Ellis.

I am delighted to have been given the opportunity to contribute to this debate on the social welfare provisions and resolutions in relation to the budget day announcement. I say this advisedly and with great pride. This budget is the product of hard times and we are facing into harder times, when we cannot be sure we will see a global or US recovery. I speak of the US because we are dependent, in trade and investment, on the United States. The potential for the United States economy to improve or go into recovery is integral to whether our boat lifts or not.

Mindful of these hard realities I was delighted that the Minister for Finance, in conjunction with the Minister for Social and Family Affairs, decided to actively discriminate in the budget in favour of the less well off and those receiving social welfare payments.

Some €6 a week.

That was a courageous and necessary decision for a party like Fianna Fáil, although in coalition, to make.

Some €6 a week.

It was the view of my colleagues on the Fianna Fáil backbenches that if there was to be discrimination it should be in favour of the less well off.

Some €6 a week. That is less than a fiver.

The word discrimination is often given a bad connotation. However, every budget is based on the principle of discrimination. It must discriminate in favour of one group over another. We must actively, in some cases pro-actively, encourage one group to go ahead and to move forward. This budget discriminated in favour of the less well off. In a downturn the people most exposed to rising prices are those who are dependent on social welfare payments.

The marvellous achievement of this budget, and of Deputy Coughlan who is a new entrant to the Cabinet, is that despite these hard times and the undeniable need for corrective action in relation to the public finances and to adjust the planning and forecasting of financial and social services to the harsh reality of lower growth in the world economy—

The Government has a budget surplus.

Despite these undeniable realities the Ministers concerned guaranteed that social welfare payments across all the headings of the social welfare budget would increase in line with inflation, and in the case of pensioners, widows and widowers ahead of the rate of inflation. That is a fabulous achievement.

Before Deputies opposite mischievously try to present this as a right of centre Government they should look at that fact.

What about Deputy Ó Cuív?

They should look at the clear record of this Government, stretching back to 1997, of consistent, clear, principled improvement in the rate of social welfare payments, year on year and budget after budget.

Things were as bad then as they are now.

Government measures have improved the lot of pensioners, widows and widowers. In 1997 we found a situation which the Deputy from Tipperary may conveniently forget. When I campaigned prior to the 1997 election it was an undeniable fact that a great many people would not go out to work because—

Because there was no work.

—some categories of social welfare recipients were better off staying on the dole and receiving a social welfare payment than going out to work.

And there is still no work in south Tipperary.

Do not tell me our taxes are too low, as Father Seán Healy of CORI has suggested. They are not too low. We had to address taxation in order to get people out to work. There was no incentive for them to go out to work because they were in a poverty/income trap which meant they were better off on social welfare than going out to work

There are still people on the minimum wage in the tax net.

Not only have we addressed that issue but we have kept a principled position of maintaining and improving the rates of social welfare above and beyond the rate of inflation.

Would Deputy Lenihan like a €6 increase himself?

These are undeniable facts. No matter how much the Deputy from Tipperary wishes to throw dinosaur-like socialist realism into the discussion he cannot avoid these facts.

No one would wish it on anyone to be in receipt of a social welfare payment. Deputy Healy does not have a monopoly of socialism, social democracy or pure noble thought. We too believe that people should not be in this situation and we want to improve it. To suggest that Deputy Healy has a monopoly of care and concern for the less well off is nonsense.

Some €6 a week is hardly care.

Deputy Healy has the luxury of standing in opposition and not having to make hard decisions.

No responsibility.

He does not have to come up with a measurable improvement which can be enacted in a practical way. That is the challenge we faced when we came into Government in 1997 and which we have taken up with this and our previous budgets. We have taken a practical challenge to address the huge anomalies in our taxation system and social welfare provisions and in the way they worked themselves out for the ordinary citizen. We have addressed both of those.

I accept that the children's allowance increases are not as good this year as previously and are not in line with what we promised. We have made a modest contribution this year whereas in previous years we made extraordinary improvements in the children's allowance. This is reflective of the hard times we are facing.

What about the child dependant's allowance?

There is a solid commitment from the Ministers for Finance and Social and Family Affairs to continue to improve the children's allowance payment over a three year period up to the level promised for this year if circumstances had been right. That is a record of which we can be proud.

I take this opportunity to knock some of the canards and blatant untruths perpetrated on the record of the last Government and this one. One of the greatest canards perpetrated by the likes of Deputy Healy is that the gap between rich and poor has widened. This is not true.

Some €250 a week.

Professor Nolan of the Economic and Social Research Institute is one of the country's leading experts in the area of income distribution. In a recent statement to a conference on this issue he said it is not the case that the gap between rich and poor has widened.

It is the case. Deputy Lenihan knows it is the case and so does Ned O'Keeffe. The rich got €250 a week. That is over €10,000 a year.

According to Professor Nolan the gap has narrowed in the last few years.

Nonsense.

The Minister for Finance has tried to bring this fact out but the media and the so-called lobbyists on behalf of the disadvantaged do not take cognisance of it. They would rather perpetrate the myth that the gap is widening rather than narrowing.

The Deputy should be an actor down in the Gaiety or somewhere.

There are fewer poor people in Ireland since 1994 than there ever were before in our history. That is an 800 year long history as an independent State and as a State oppressed by our island neighbour. We have never had such good times as we have had in the past five or six years.

I give credit to the Opposition parties, Fine Gael included, who helped in that regard.

Well done, Conor.

From 1994 to the present the numbers in consistent poverty have been halved. That is a proud record in which every Member of this House can take pride, particularly those who served in Government instead of shouting from the sidelines, constantly criticising and carping and playing out an old fashioned socialist fantasy.

Well done.

We are a party that practically implements the dreams and hopes of the people and we have done this in this budget and we will continue to do it.

They are looking for the Deputy in the Gaiety.

We will not do a disservice to the people by spending money we do not have.

The Government has a budget surplus.

We will not engage in a cruel and crude attempt to spend money where there is none and to depress people's expectations even further when it finally turns out there is no money at all. We must cut our cloth to suit our measure in the old fashioned way. We can only deliver what the coffers can bear.

The coffers have a surplus.

It is sad to have to say that the coffers cannot sustain what we have been delivering for the last five years.

The Government has a surplus.

We are the first to say this.

Why will the Deputy not tell the truth?

Another big lie being perpetrated by the Members opposite, including Deputy Healy, and the Fine Gael Party—

There is a budget surplus.

I use the word "lie" advisedly. The big lie being perpetrated by Opposition parties, aided and abetted—

The big lie being perpetrated by the Government is that it does not have a surplus.

—by some of their friends in the national and local media, is that Fianna Fáil told untruths to the electorate in the run-up to the general election. Nothing could be further from the truth. One of the major reasons why people voted for Fianna Fáil and the Progressive Democrats in the last general election—

They told a load of lies.

—was that they were aware that hard times were coming.

They were confused.

Just as in the financial markets in years gone by, there is a flight to certainty at times of economic instability.

The Government confused the public.

They told a load of lies.

The certainty in the equation in this country, whether Deputy Healy likes it or not, is Fianna Fáil, aided by its partners, the Progressive Democrats. Our historic mission and role—

Now we will hear the mission statement.

—is to defend the underprivileged and the social democratic values that made my party and this country great.

This is the party that gave an increase of €6 to social welfare recipients in the budget

We also have to defend the less well-off against the incompetence of the so-called "left" in Ireland—

Fianna Fáil refused to impose a tax on the stallion industry.

—and against the mismanagement of the so-called "right" in Fine Gael. The parties opposite have mismanaged our economic fortunes over the years. When given the opportunity in their marvellous rainbow coalition, they gave social welfare recipients absolutely no increases, as the derisory amount they were given was less than inflation.

Will the Deputy give way?

In real terms, a derisory amount was given to pensioners.

There is too much disorder in the House.

When the so-called great socialists of yesteryear, including Proinsias De Rossa, were given an opportunity to redistribute income, they did not redistribute a single penny to the less well-off.

Will the Deputy give way, in the interests of clarity?

Deputy Lenihan should be allowed to conclude.

I will take the point of information.

Can I ask Deputy Lenihan whether it is intended to deliver child benefit increases by way of a lump sum in May 2003, in accordance with the practice established in May 2002?

It is quite clear that child benefit increases are being spun out over three years. We have apologised for it, but we have to do it as times are hard. We will deliver the increases. One of the great things that people say about Fianna Fáil is that at least it delivers on its promises, which is exactly what the Minister, Deputy Coughlan, is doing. On a personal note, may I pay tribute to the Minister, with whom I attended college?

The poor Minister.

I inducted her into the Kevin Barry Cumann in UCD.

Oh my God.

I am happy that she has done well, although I am unhappy that someone younger than me has passed me out. Perhaps I will not have to wait too long for a promotion.

I welcome the opportunity to say a few words on the Social Welfare Bill, 2002. I have seen quite a few such Bills in good and bad times since I was elected to this House. This is probably a harder time than we have seen for four or five years. It is right that we should look back on the progress that has been made since 1997. An additional 400,000 people are at work compared to 1997, which makes a total of 1.8 million workers in Ireland at present. The rate of unemployment has fallen dramatically from 10.3% in 1997 to 4.6% now. The number of long-term unemployed has dropped from 90,000 people to 22,000 people. Social welfare expenditure increased by €3.5 billion between 1997 and 2002, far in excess of the rate of inflation and way beyond the expectations of those who were trapped in the welfare system in the mid-1990s. Major progress has been seen in relation to the number of benefits available and the equalisation of such benefits.

When we look at the various areas covered in the Social Welfare Bill, 2002, we can see the progress that has been made. A considerable amount of new schemes have been introduced since the Government came to power. Although not all of them have been funded to the extent that certain Deputies would like, there has certainly been progress. It is a shame that Deputy Healy is no longer here, as I am sure he would be interested in the fact that the level of consistent poverty dropped from 15.1% in 1994 to 6% in 2000. I admit that 6% is too high and I do not think we will have succeeded until poverty can be described as non-existent in Ireland. A certain amount of the poverty we find can be self-inflicted as a result of social problems within families. I have to be fair to social workers and others involved with those who encounter such problems, as they make enormous efforts.

Pensioners are extremely well looked after in this Bill and in the budget as a whole. The increase in the old age pension of €10 is no more than pensioners deserve, as they have made a contribution to the welfare of this country by building it. In their retirement years, they are entitled to receive a decent income. I do not doubt that the Government will meet its commitment to a pension of €200 per week by 2007. The Fianna Fáil-Progressive Democrats Government made promises in relation to social welfare when it came into office in 1997 and the pensions promises were fulfilled in its first term. Many Opposition speakers have spoken about child benefit in the course of this debate and they should accept that the Government has made enormous progress in that area. The increases in child benefit in the last three years are sometimes not taken into consideration.

When I recall some of the budgetary increases I have seen in my time as a Deputy, it strikes me that many younger Deputies would be shocked to compare them with the enormous increases of the last three years. I remember that the former Minister, Proinsias De Rossa, made a big song and dance in 1997 when he gave pensioners an extra £1.75, which is the equivalent of about €2. It makes one wonder why there have been so many complaints from the other side about this year's €10 increase for pensioners.

The increase of €11 for widows is also to be welcomed, as I have always felt that they should receive the same pension levels as others and they are now within €1.50 of that rate. The increases in social welfare, including the much maligned €6 increase, are in line with inflation. I do not doubt that we will see progress regarding the budgetary situation in the years ahead. It would have been foolish of the Government to have decided to introduce an unbalanced budget, as people in years to come would have had to suffer as a result of our over-spending.

I was in this House in 1987, when supplementary budgets had to be introduced and when Fianna Fáil was accused of introducing a hairshirt budget that would mean a return to the days of sackcloth and ashes. If we had not introduced such a budget, however, the IMF would have come in to run the show for us. I do not doubt that our European colleagues would not have given us any bouquets if we had stepped out of line as regards budgetary policy. The budget introduced last week by the Minister for Finance will help to stabilise the social welfare system and will help people to cope with the hard times we face in the short-term. A little pain at this time may be much more beneficial than avoiding it and having to take twice the pain at some future date.

I also welcome the timing of the increases. When budgets were passed at the end of January and Social Welfare Bills were passed in February, people would receive their increases the following August in some cases, without retrospection. All social welfare recipients will receive their increased payments from 1 January 2003, just as the tax year now begins at the start of the year. This is of considerable assistance to those in receipt of social welfare, who appreciate the fact that they now have the same status as those in employment in so far as they receive their benefits from 1 January.

Social welfare recipients will also benefit from changes to schemes I have not yet mentioned. The thresholds for the family income supplement scheme will increase by €17 from 1 January, leading to a net gain of €10.20 per week in the average FIS payment. This is to be welcomed as it will encourage people to go back to work. The changes with regard to PRSI are minimal, but the standard rate of contribution has been reduced from 5% to 4% and the minimum flat contribution has been reduced from €253 per annum to €200 in certain sections.

This, the Minister's first Social Welfare Bill, is prudent. I compliment her on her appointment in her absence. She has done an enormous job for social welfare recipients. She fought her corner at Cabinet to make sure that social welfare received its fair share. In times when money is not as plentiful as in previous years she did some service to social welfare recipients in ensuring that a level of benefit which would keep them ahead of inflation was brought in. Everyone gets their payments from the beginning of January which means that some lump sums will not arrive until February. However, they will appreciate that they are being paid retrospectively. I commend the Bill to the House.

I wish to share time with Deputy Durkan. We saw the rip-off which took place during the euro changeover and how the consumer was affected. Everyone was affected by the changeover in the currency.

Before the general election there was the famous slogan, "A lot done, more to do". Many people were done and many will be done again over the next few years. This emerged again when the Minister for Finance made a speech on national radio stating that we will have similar budgets for the next two to three years.

Over the last number of years there was great prosperity. We have just come through one of the most prosperous periods in the nation's history. We should have been able to say to the weakest or most needy in society that we had done them proud. Unfortunately we have not. Shame to the Government because the budget has done nothing to redress this. There are more people homeless seven days a week in Dublin than in London. The budget and the Estimates provided nothing for carers or the sick or to cherish our children. One just has to look at the disabled person's grants. People are coming into my office in Ennis every day with problems. Local authorities are facing terrible problems with lack of funding and there was nothing in the budget for disabled persons grants. Local authorities are using this year's money to pay last year's applicants. People come into my office about leaking roofs and applications for showers and replacement windows. It is a shame that we are unable to look after the vulnerable in our society. The elderly got €10 per week from the budget. To offset that there were VAT increases of 1% while diesel increased by 3 cent per litre. This will affect all of the basic essentials which the elderly use and the €10 per week will not make much difference to them, the most vulnerable people in society.

Poverty is something which we look at everyday of the week. The budget should have been about people but unfortunately it has been about what people have, not what they need. In a just and caring society progress for people with disabilities would not be linked to the current economic climate. The budget has proved that we do not live in a just and caring society. Along with the poor rises in social welfare, which are negated by inflation and rises in charges, you could mention that, as the NESC report which has been ignored by the Government stated:

There is substantial international evidence that relatively generous rates of social welfare payments are incompatible with high employment rates and good economic performances. There is a disincentive. Effects on social welfare more usually flow from the aspect of programme design and delivery rather than payment.

It states about child poverty that:

There is mounting international evidence that a dynamic, knowledge-based society is putting a growing premium on the quality of childhood. A society which does not accord a high priority to tackling child poverty is, by omission, perpetuating major social inequality. In the light of the evidence the council recommends that this Government should pursue with even greater vigour its goal in eliminating child poverty from Irish society. Ireland may still have found the best package of income support for low income households. In the year 2000 more than 8% of children were below the 60% income threshold and experiencing basic deprivation. Child benefit has been raised substantially in recent years, we note that, but some 28% of the increase is estimated to have gone to the top 30% in the income distribution, as against 21% to the bottom 30%.

The Government should not have cut the back to work allowance. It has helped 30,000 long-term unemployed people back to work. The three member independent Estimates review committee, which examined all existing public spending, recommended last week that no new people should be taken on the scheme next year. In the 2003 Estimates the Department of Finance cut the budget for employment support services by 31%, down from €198 million in 2002 to €137.3 million.

The Government is actively encouraging women back to the workforce but cuts in the scheme blatantly contradict this. The numbers on the scheme have been steadily falling in recent years. In December 2000 there were 39,000 participants. This fell to 32,000 a year later and by last October 25,000 people were taking part. The scheme helped 28,483 people to take up jobs in 2001, while 3,708 more were allowed to keep most of the benefits for up to four weeks to encourage them to start their own business.

There is a huge housing waiting list which has not been tackled in the budget. Between March 1999 and March 2002 the numbers assessed as in need of social housing rose by 24%, to more than 48,000 households. I notice the amount of people on housing lists in the Ennis area who are coming in on a daily basis to me looking for houses and about which the town councillors can do nothing. This was not a good budget for the poor. It concentrated more on roads and taxation and there were no increases to help the poor.

I asked Deputy Conor Lenihan whether child benefits would be paid in a lump sum like last year. It was a genuine question. We all know that much was made about the payment of the lump sum in child benefit. This year it is a different story. We have heard from Government backbenchers, among whom the Government commands considerable support, whatever about among the general public, who are openly talking about limiting child benefit. They were not talking about that last year. There was no mention in the envelope with the cheque last year that their could be a possibility that Government backbenchers might decide to limit the number of people to whom child benefit could be paid in the future but, alack and alas, that was before the general election.

It would have been terrible if an unsuspecting public got wind of what was in store for it before the general election. There is a difficulty with this payment. The increase works out at 3 cent per day. We must wait to hear from the Government backbenches how it will be paid, but if it was paid in a lump sum, it would require special packaging that would carry coins of a small denomination.

Much has been said about nothing. Much has been said about the various social welfare increases, but the fact is each payment has been eroded by the increases in taxation and VAT. Every item purchased in a household will be hit by VAT. A great deal has been said about the old age pension. Take old age pensioners who smoke. They will be in a different position after the budget and this Bill because their increase has gone up in smoke. If they have a little tipple, a drink of spirits, they are in trouble. What a Social Welfare Bill. What an awful thing to deprive people who are retired and gave their life's labour to the country. What a mean scoundrel type of act at this time of year when it is supposed to be a time for giving. In this case it is a time for taking away.

There was a headline in one of the national newspapers a few years ago which stated it was pay back time. I did not know precisely what was meant by that phrase at the time, but I know now. This is pay back time because all the unfortunate people who voted for the Government parties are being paid back. Let there be no doubt about this and all the huffing and puffing from the Government backbenches about what they were going to do, when and how often is to no avail. The budget has come and gone and now we have the Social Welfare Bill which gives effect to the changes in the budget, but, unfortunately, they are not for the better. They are a retrograde step.

As regards capping the rent subsidy which is administered jointly through the health boards and the Department of Social and Family Affairs, I do not know from where the notion came to apply a cap at this time. The theory is that rents are becoming too expensive. If it is not paid in the scarce housing position that exists, the unfortunate people concerned will have no home. This has been the trend for the past five or six years. Year on year, instead of building local authority houses the Departments of Health and Children and Social and Family Affairs operate the rent allowance scheme. We have come to the end of the tunnel. It is not that there is light there but a brick wall. The people cannot go any further. What will happen in the next few months when landlords want a rent increase and people are told by the health boards, as agents for the Department of Social and Family Affairs, they cannot get an increase in the rent allowance and to leave their present accommodation? They will be left on the side of the road. It is easy for me to say that here, but in the near future the reality will dawn on those who are directly affected.

The unfortunate officials are being conditioned through the health boards and the advice given by the Department is to take no nonsense from public representatives, that they have no hand, act or part to play in these matters and that they should not come to them for advice or to make representations. I have tabled a matter on the Adjournment tonight to deal with the issue in greater detail. My advice to whoever is saying this to those unfortunate officials is that there has been enough colonialism, leave the officials alone, they were able to do their job without getting political advice. Any attempt by anyone in Government from either party to exclude the public from access to their public representatives would be a very dangerous precedent. If I find public officials are telling constituents to avoid members of the Opposition, there are ways to resolve the matter. I have no doubt but that advice is being given and in such a way as to indicate that it has the full political imprimatur. I do not propose to speak about it further at this point other than to say it is unfair to the officials concerned to expect them to behave in this fashion. It is wrong of Departments to attempt to colonise officialdom in this fashion and totally alien to the public service.

This is a time for giving, a time of goodwill. Some time ago a number of FÁS schemes imploded. That is not the direct responsibility of this Department, but it will impact on its expenditure. A number of people were on FÁS training and retraining schemes where the agencies which employed them found them very beneficial. It was found that it was beneficial in terms of retraining and education. The job the people concerned were doing was environmentally enhancing. It is very sad that there should be a curtailment in the operation of these schemes, particularly at a time when there is a general restriction in funding to various Departments. The knock on effect will be that more people will be pushed on to the live register. There are already signs that this is happening. I did not hear anyone on the Government benches mention an increase in unemployment levels. The trend in unemployment is upward and alarming.

We have heard a great deal about the fact that economies throughout the world are going badly, but there was nothing wrong with this economy until the Government started tinkering with it. It fiddled with it to such an extent that it lost control and everyone has to pay back. That is the real meaning of the pay back. In its efforts and zeal to achieve the ultimate objective, that of an overall majority, prior to the last general election the Government decided to put the pedal to the floor and go for it for all it was worth. That request went out to all Departments. Suddenly the hand brake was pulled. The whole thing was spun around. There was a screeching of tyres, a smell of burning rubber. In all such situations the price is paid by the most vulnerable in society. I have never in my life had more people at my clinic requesting help from the Society of St. Vincent de Paul and other agencies. The reason they need more help than ever before is that instructions have been applied through the various Government agencies to the health boards in relation to supplementary welfare because of the so-called reviews, or cutbacks. That is sad, because supplementary welfare is there to ensure that there is a safety net for those who are in need, when they are in need. There now appears to be a concerted effort to ensure that each applicant for social welfare payments will have to wait. The latest thing is a waiting list for the processing of applications: this is also a saving device.

I am sorry my time has expired because there is so much I would like to say, very little of it complimentary to the Bill. I bear no malice to the Minister in the House or the Minister for Social and Family Affairs, but it is a sad reality that after five years of unprecedented wealth generation in this so-called tiger economy, we have heaved a sigh at the end of it and produced so little, in view of the expectations created before the general election.

I wish to share my time with Deputy Callanan.

I welcome the opportunity of speaking on this legislation. Listening to this debate for the past hour or so I have been struck by one thing: the genuine lack of interest on the part of Opposition speakers in this Bill. Their hearts are not in it. After the verdict of the public last May, it is easy to see why. The public saw the commitment of the last Government to the less well-off in our society and they saw what the Government and the former Minister for Social, Community and Family Affairs had done for those people. This year's budget increases, totalling over €1 billion, are evidence of the commitment of this new Administration to the less well-off. The problems identified by some of the speakers are not ones to be dealt with solely by the Department of Social and Family Affairs. They are social problems extending far wider than the simple payment of allowances.

The result of the Government's increases in pension rates will be to maintain its commitment to older people and its strong record of putting older people first so that they can continue to live in dignity and the immense contribution made by them to the development of the country may be acknowledged.

One issue which struck me over the years, particularly during my membership of a local authority, is that aspects of the work of local government, county councils and town councils would be better administered by the Department of Social and Family Affairs. I am talking about such things as higher education grants, disabled person's grants, housing allocations and house loans. The Department of Health and Children has officers in the various health boards who do means tests and carry out various investigations of the eligibility of people for entitlements. This system would be appropriate for the Department of Social and Family Affairs.

For such things as higher education grants and disabled person's grants we should co-ordinate the work of the Departments. Much criticism has been made of the role and the lack of functionality of the Department of Health and Children and its staff. It is unfair to say that they should be working towards providing a better health service when their work is being diluted by functions outside their areas which they are obliged to carry out. I would like to see the Minister address this problem. A lot of work is being done in the area of means testing at the moment. We should direct our attention to this system.

Some of the previous speakers mentioned the rate of unemployment. It is only fair to point out that 400,000 people are working now who were not working in 1997. A total of 1.8 million people are working now. The Minister for Finance is to be commended for reducing the direct income tax rates to 20% and 42%. At the same time as reducing the percentage tax take from workers, he is taking more income tax from the workforce. If this is not an indication of the positive results of the Government's policies, I do not know what is. It is also important to note that €3.5 billion more is being spent on social welfare now than was being spent in 1997, even though the rate of unemployment has fallen to its lowest level in a long time. Tax receipts have increased so we can now pay greater increases to our social welfare recipients. A total of 55,000 new houses are being built this year, 5,000 of them by local authorities for people who are unfortunately not in a position to pay for the construction of their own houses.

This Government is mindful of what is going on out there. It is unfortunate that in the area of child care and child benefit we were not able to make the increases we had hoped for this year but it was confirmed in the Budget Statement of the Minister for Finance that the Minister for Social and Family Affairs wants this rectified over the next two years. In commending this Bill to the House I remind us to be mindful of what we have achieved. It is to be hoped that we can continue to improve the rate of payments to the less well-off in our society.

I congratulate the Minister on her appointment and on securing an extra €530 million in social welfare payments this year. This brings the total cost of social welfare to €10.2 billion, which is an increase of 80% or €4.5 billion since 1997. That is no small money. I welcome the increases of €10 for pensioners, €11 in the widow's contributory pension and €8 in child benefit for the first two children and €10 after that. That increase comes on top of the high increases of the last few years. The main development to be welcomed, however, is the increase in the carer's allowance of €10 per week. There has been a change in the means test which allows a couple to earn €429 before they are means tested. A few years ago, if people came to me and asked whether they qualified for carer's allowance I would almost tell them to go home and not waste their time. Now, however, things are much improved. I have pursued Minister after Minister on this because I feel very strongly about it. Instead of talking about keeping people in their own homes we should do something about it. We must give every possible financial aid to carers. This budget and this Minister have done so.

Debate adjourned.
Sitting suspended at 6.30 p.m. and resumed at 7 p.m.
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