I move: "That the Bill be now read a Second Time."
I am pleased to introduce this Bill, the first of two intended to implement the largest social welfare package in the history of the State of €1.41 billion announced last week in the budget. This substantial investment brings total expenditure on social welfare in 2007 to €15.3 billion. In simple terms that means that €1 for every €3 of Government day-to-day spending goes directly into welfare entitlements and supports. In total, week in, week out, some 1.5 million people will benefit from the significant increases and improvements in the budget that will protect and improve the living standards of social welfare recipients.
This budget is about delivering on this Government's commitments in the programme for Government by bringing the State non-contributory pension to €200 a week and realising the 2007 target for the lowest social welfare rates. With increases in the qualified adult allowances, a pensioner on a State contributory pension will be better off by almost €40 per week. In addition, the lowest rate of social welfare payments have increased by 12.1%, far in excess of the expected increase of 4.5% in private sector earnings and almost three times the forecast rate of inflation for 2007.
As well as massive income support improvements of over €970 million, another €430 million — nearly one third of the total package — is being directed to support a range of significant reform measures, including confronting and tackling remaining child poverty, increasing income supports for all pensioners, recognising and supporting carers and those with disabilities, and increasing the status and incomes of women. These are major structural reforms which, when taken with a number of other reforms and changes being implemented or progressed, particularly in the areas of lone parents and pensions, will contribute greatly to the overall policy reform agenda that I have been pursuing for the past two years. These reforms on child poverty, carer's support, women's incomes and pensions are about more than just increasing incomes. They are important and necessary structural reforms that create change, open up fresh opportunities and deliver enlightened social policy.
On many occasions I have described child poverty as totally unacceptable in the prosperous and progressive Ireland of the 21st century. Childhood deprivation can leave lasting marks on children by impeding their development and curbing their life chances. It is not just the child who suffers — society also loses, for children are its wealth and its future.
Since my first days in this portfolio I have been determined to make the changes and reforms that will make a lasting impact on child poverty. It is a complex area that overall requires an integrated, joined-up Government response such as that envisaged in Towards 2016, which lays out an ambitious programme of priority actions for the next ten years. In the meantime, I am determined that further progress must be made in tackling remaining child poverty. That is why at the core of this welfare budget is the commitment to an even stronger and more focused campaign. We have already travelled some distance towards eliminating hardship and deprivation. In recent years we have lifted more than 250,000 people, including 100,000 children, out of poverty, but there is still a distance to travel and now it behoves us all to redouble our efforts and complete the task.
I have long held the view that implementing a second tier of payment for children in low income and welfare families is the most effective method of confronting and significantly reducing remaining child poverty. While child benefit remains the main overall support for families with children, I now intend introducing in this Bill a new single high rate qualified child allowance, formerly known as child dependant allowance, targeted at families on welfare where children are most at risk of poverty. This involves combining the current three qualified child allowance rates into a single rate of €22 per week, which will now apply to all social welfare schemes and will be paid for over 340,000 children of welfare families. For those on the current lower rates of €16.80 and €19.30 per child per week, this represents a substantial improvement, particularly when taken with child benefit and other increases.
Child dependant allowances have remained unchanged since 1994 because they were viewed as a disincentive in moving people from welfare to work but, as we all know, the Ireland of 1994 is not the Ireland of 2006. The labour market has changed dramatically. The introduction of the national minimum wage, the national employment action plan and the re-focussing of the family income supplement scheme, to name but a few initiatives over the past decade or more, have all served to further reduce the impact of the loss of qualified child allowance in the decision to take up full-time employment. This message has been further reinforced by the Combat Poverty Agency and the Society of St. Vincent de Paul, and many other welfare groups, who strongly supported increasing the qualified child allowance. I view this improved and targeted allowance as representing a substantial move in the direction of a second-tier payment and that is why in this budget I have deliberately taken the decision to focus increased child supports in this area.
The budget included a number of other targeted measures to address the position of children in low income households. The back to school clothing and footwear allowance provides vital additional income support for poorer families at a particularly difficult and stressful time of the year. That is why I am increasing the allowance by €60 for children aged two to 11, and by €95 for children aged 12 to 22, bringing the rates of payment to €180 and €285, respectively, an increase of 50%. Over just two budgets this allowance has nearly doubled in value.
Another important weapon in tackling remaining child poverty is the family income supplement, FIS, which provides cash support for low earning employees with families, while at the same time maintaining incentives to enter or remain in employment. I was particularly encouraged by the impact of this year's FIS improvements, and also the response to the awareness campaign undertaken by my Department which has resulted in an increase of over 20% — to 21,400 families — in those receiving FIS. As all the evidence is that poverty is more likely to be concentrated in larger families, last year's budget re-focused the FIS weekly earnings thresholds in favour of such families and I have followed this approach again this year in this legislation. Consequently, average payments per child will increase to nearly €50. It is also anticipated that the changes in the thresholds will entitle approximately 5,600 additional families to the payment.
Everyone is entitled to a basic standard of living. All are entitled to a decent pension and security and dignity in their later years. I have repeatedly stated my conviction that this generation will be judged on how it uses the fruits of the economic miracle of recent years to help those most vulnerable in society. We have a responsibility to assist those who for reasons of age, health or other circumstances need the financial lifeline that is welfare support to help them through bad times and to offer hope and encouragement towards better times.
This Government has committed itself to delivering a number of specific and ambitious improvements in social welfare rates by 2007. At the core of this commitment was the pledge to bring the basic State pension to €200 per week. I am pleased that we are able to deliver on this promise by increasing the State non-contributory pension by €18 a week to €200 with effect from next January, and the State contributory pension to over €209 per week.
The needs of older people have been, and will remain, a priority for this Government. That has been repeatedly demonstrated by the numerous initiatives which have been taken over the past ten years or so in the areas of pensions, supports for carers and household benefits such as free electricity, gas and telephones. For instance, since 1996, and including increases granted in the current year, pensions have increased by almost 119%, or approximately 57% in real terms — faster than both price and wages growth over the period.
All the more recent indicators, including the latest EU Survey on Income and Living Conditions for 2005, show the progress which is being made in significantly improving the well-being of older people. The EU survey found that consistent poverty rates for older people were very low at 3.7%, and that was before the many benefits flowing from budget 2006, and the many and significant increases and improvements announced in last week's budget for 2007, are taken into account.
In budget 2006, for the first time in many years, I increased the basic income disregard for the purposes of the means test for the State non-contributory pension to €20 per week. At the same time, I introduced incentives for pensioners on means-tested payments who may wish to continue in employment by providing for allowed earnings of €100 per week. I am happy to be able to build on these improvements by increasing the basic means disregard to €30 per week, and at the same time building on the employment incentives provided this year by increasing the allowed earnings to €200 per week. These measures will benefit approximately 26,000 pensioners who are currently in receipt of a reduced rate of pension. They will, of course, also benefit from the general €18 per week increase in the personal rate of payment and, where relevant, the €11.90 increases in the qualified adult rate. In other words, many non-contributory pensioner couples will gain by over €46 per week from these combined measures, with effect from next January.
We all share a wish that older people have security and comfort in their later years. Meeting household heating costs, particularly through the winter months, can be a cause of concern and anxiety for older people. Increases in energy and fuel prices only add to these anxieties. That is why we have taken action to protect older people from the impact of price increases. Last year, I increased the fuel allowance by €5 a week to €14 and this year I am increasing it by a further €4 to €18 a week. Therefore, the level of the fuel allowance, which is paid to 274,000 recipients, will have doubled in the past two years.
This is not the only measure being taken to address fuel poverty and to alleviate the worries of elderly people. As the Taoiseach announced in September, from next January the number of free units of electricity and gas paid under the household benefits scheme will increase significantly by 600 units a year to 2,400 units at a cost of €50 million.
A number of other improvements have been made over the past few years to the household benefits package for older people. In this budget I am introducing a number of further enhancements which, for example, take account of changing trends in society and the impact of technology. From next April, it will be possible for pensioners and others who qualify to have the free telephone allowance paid in respect of either mobile phones or fixed land-lines. This will allow older people to have more flexibility and mobiles can also be reassuring from a security point of view. More than 320,000 people will benefit from the telephone allowance this year.
I am also extending the automatic entitlement to a free travel companion pass to pensioners aged under 75 who are medically unfit to travel unaccompanied. Early 2007 will see the introduction of all-Ireland free travel which will deliver all-island free travel for all pensioners, North and South.
The Government is concerned about retirement income now and in the future. We all know the demographic pressures our pensions system will face in the future. While we are facing a pensions problem, unlike many other countries with less favourable demographics, we are not yet facing a crisis. It is critically important that we use the time we have available to find the pensions solutions for tomorrow. Everyone is entitled to adequate income, dignity and security in their older years. I am determined that we will work towards delivering adequate retirement income to all our citizens which does not place an unsustainable burden on future taxpayers.
Pensions are now high up on the national agenda. The past two years have seen considerable movement and a completely new focus. The two reports published by the Pensions Board over the past year — the national pensions review and savings for retirement — require serious debate and analysis. I was pleased to see pensions at the centre of the social partnership negotiations for Towards 2016. The agreement features a number of commitments in this area, including the publication of a Green Paper on pensions outlining the major policy choices and challenges which I intend to publish by the end of March 2007. After a consultation process, the Government will develop a framework for comprehensively addressing the pensions agenda over the long term.
Carers make a valued and valuable contribution to society by devoting their time and energy to improving the quality of life of others. I am determined that their dedication and sacrifice will be recognised and acknowledged through increased benefits and improved support measures. Since 1997, the Government has been committed to supporting care in the community to the maximum possible extent. Over that period, weekly payment rates to carers have been greatly increased, qualifying conditions for carer's allowance have been significantly eased, coverage of the scheme has been extended and new schemes — such as the respite care grant and carer's benefit — have been introduced and extended. As a result of these improvements, almost 28,500 carers are in receipt of either carer's allowance or carer's benefit.
Our commitment to carers has been further reinforced in the partnership agreement Towards 2016. We are committed to the development and publication of a national carer's strategy next year which will focus on supporting informal and family carers in the community.
I am pleased to announce further reforms, increases and improvements to the income supports available to carers which builds on the significant progress of recent years. As I have said on many occasions, the primary objective of the social welfare system is to provide income support and the rules generally specify that only one weekly welfare payment can be paid to an individual. Until now, the rule has been that those qualifying for two social welfare payments always receive the higher payment to which they are entitled. I am aware that this has been a cause of particular concern to people in receipt of one social welfare payment when they become carers. Indeed, the Joint Committee on Social and Family Affairs, chaired by Deputy Penrose, made specific recommendations in this regard which I have taken into account.
Accordingly, I am introducing fundamental structural reforms in this area. In future, people in receipt of certain social welfare payments who are also providing full-time care and attention to a person will be able to retain the main welfare payment and also receive another payment, equivalent of up to half-rate carer's allowance. The reform of the system and the abolition of the old rule that one cannot get two welfare payments means that for the first time people who are caring can have some real recognition of their caring duties. Introducing the new dual payment system means we will be starting to recognise the carer's allowance less as a welfare income payment and more as a direct support for caring duties and responsibilities. I consider this reform to be an important step forward and I am determined to press ahead with other needed reforms and improvements in the caring area.
It is estimated some 14,000 people are currently in receipt of a carer's allowance who would also have an entitlement to another welfare payment, while a further 4,000 carers are also in receipt of other welfare payments. This means that some 18,000 carers should qualify for a half-rate carer's allowance of up to €109 per week. The precise details of this arrangement are currently being examined by my Department and will be set out in the next social welfare Bill.
The budget delivered an investment of more than €107 million in a comprehensive carers package. This included an annual respite care grant increase of €300 to €1,500 which will benefit almost 40,000 carers; increases of €18 and €20 in the rate of carer's allowance and carer's benefit which will directly benefit 28,500 carers; the means test for carer's allowance was eased with income disregard increased by €30 to €320 per week for a single person and by €60 to €640 for a couple, meaning that a couple with two children can earn up to €36,240 and still receive the maximum rate of carer's allowance as well as the free travel and household benefits. The easing of the means test will allow an additional 1,200 carers to qualify for payment and 2,500 existing carers to receive increases in weekly payments. The earning threshold for carer's benefit increased by €30 to €320 per week. Grants of €500,000 were made available for carers' organisations.
These improvements, together with the improvements in home care and related services announced by the Minister for Health and Children, represent a further advancement of our vision of a co-ordinated approach to services and supports for carers in the community.
I am pleased that with this Bill I will be achieving one of the principal commitments in my Department's disability sectoral plan. As a result of their residency, people in residential care prior to August 1999, or those who entered residential care after that date without an entitlement to disability allowance, are disqualified from receipt of the allowance. This was partially addressed in budget 2005 when I introduced a new disability allowance personal expenses rate, currently payable at €35 per week to 2,700 people in residential care. This payment replaced, at a standardised and higher rate, the so-called pocket money spending allowances which had previously been paid to some of these residents.
I am particularly pleased to now provide for the eligibility in their own right to disability allowance to all persons resident in institutions, subject only to the same conditions as apply to others. This will ensure that all persons with disability in residential care have an entitlement to an income maintenance payment and are treated in the same way as other social welfare recipients.
In further advances in the area of disability, the Citizens Information Bill 2006, which is currently being debated by this House, lays the statutory foundation for the provision of a personal advocacy service to people with disabilities. I am providing for a further €1.9 million to Comhairle, soon to be renamed the Citizens Information Board, to continue the development of this and related services next year.
In delivering on the commitment to greater gender equality in the welfare system and in making the welfare code fairer to women, the Bill includes important reforms that will lead to more enlightened social policies in the pensions area. Increasing the rate of qualified adult allowance for the spouses and partners of contributory pensioners by €23.70 per week will directly benefit 35,500 couples. It will bring the rate of qualified adult allowance payments for those aged 66 and over to 86.5% of the target rate contained in the Government commitment of bringing the rate up to the rate of the non-contributory State pension. There is now a €60 million commitment to reaching that target in the next three years.
In the next social welfare Bill, to be presented to the House in February, I intend to provide for the qualified adult's entitlement to the qualified adult allowance for the duration of the entitlement of a State pensioner. As most qualified adults are women, this decision will be of particular benefit to them as it will, in most cases, transform the payment into what is in effect a woman's pension in her own right as distinct from being a dependant allowance. I also intend to provide for this payment to be made directly to the qualified adult. It will remain open to any qualified adult to continue to have his or her portion of the pension paid jointly with that of the State pensioner if that is what they wish.
I am also proposing to significantly reform the manner in which spouses and partners are assessed as qualified adults across a range of social assistance schemes and, in particular, the treatment of part-time and low-paid work done by qualified adults. The proposed reform involves assessing both members of a couple in a similar manner, with common disregards and assessments applying to both. I will also remove the poverty traps that are present in the current method of assessment. For example, at certain income levels if a woman increases her income from part-time employment to over €100 per week, her spouse or partner can lose €1.20 from his jobseeker's allowance for every €1 she earns in excess of the disregard. Clearly this situation has no place in a modern system of employment supports.
Under the reforms proposed, increases in labour market participation will instead be rewarded and this will facilitate women in moving beyond the occupational cul-de-sac of indefinite part-time employment with earnings kept below €100 per week. Both partners will now be able to claim jobseeker's allowance in their own right. This will also facilitate women in particular to access the range of employment supports and training opportunities that go with receipt of jobseeker's allowance. I am confident that these proposals will significantly reduce the complexity in the present system, while recognising and rewarding increased labour market participation by all, particularly by women.
This Bill also introduces two beneficial measures which will assist widows and widowers at a particularly difficult time in their lives, namely, in the immediate aftermath of the death of their spouse. Financial worries add to the stresses experienced at such times. Not only do widows and widowers have to cover the cost of a funeral but often they also have to cope with the sudden loss of an income. The six weeks after death payment paid to the survivors of social welfare recipients are intended to ease this financial strain. In addition, my Department makes once-off payments to assist with immediate costs. To help ease the financial strains at this sensitive time, the widowed parent grant is being increased by €1,300 to €4,000 while the bereavement grant will be increased by €215 to €850.
I will now outline the main provisions of the Bill. Sections 2 and 3, together with Schedules 1 and 2, provide for an increase of €16 for contributory State pensioners, widow's and widower's contributory pensioners, those in receipt of deserted wife's benefit aged 66 and over and people on State pension transition and invalidity pensions aged 65 and over. An increase of €18 per week is provided for those in receipt of non-contributory State pension and carer's allowance. Recipients of invalidity and widow's and widower's non-contributory pensions, as well as those in receipt of deserted wife's benefit and carer's benefit, will receive an increase of €20 per week. Payments such as jobseeker's benefit and allowance, illness benefit, one-parent family payment, disability allowance, supplementary welfare allowance, carer's allowance, farm assist and guardian's payment are all increased by €20 per week.
These increases will bring the elderly pension rates to €209.30 and €200, with carer's allowance recipients aged over 66 receiving €218 per week. The lowest payments, such as illness benefit, jobseeker's allowance and supplementary welfare allowance will reach €185.80 per week, with those on carer's allowance aged under 66 receiving €200 per week.
Weekly increases in respect of qualified adults, ranging from €23.70 in the case of contributory and transition State pensions where the qualified adult is over 66 years of age to €10.70 if under 66, will ensure that the existing proportional relationship between all personal rates of payment and that of their associated qualified adult allowances, is either significantly increased to almost 83% in the case of the former or maintained at over 66% in the case of the latter.
These sections of the Bill also provide for increases in the qualified child allowance rates to bring the existing three rates up to a single standard rate of €22 per week. Where reduced rates of payment apply, proportionate increases apply. All personal, qualified adult and qualified child increases take effect from the first week in January 2007.
Increases for recipients of jobseeker's benefit and allowance, illness and maternity benefit, one-parent family payment, family income supplement, farm assist and supplementary welfare payments will be paid from the first payday in January 2007. Due to the lead-in times involved in the production of personal payable orders for certain long-term payments such as pensions, it will not be possible for budgetary increases to be paid immediately, in such cases, from January next. Some 142,000 recipients of, for example, widow's and widower's, carer's and invalidity payments, will receive their new order books in mid-February. This group will receive six weeks' arrears of its budget increase, which will be included in the first order of the new book, and the weekly increase will be incorporated in their normal weekly payment thereafter.
Certain other long-term recipients, such as State pensioners and those in receipt of disability allowance — some 276,000 customers — will receive new pension order books at the end of March. This group will receive a special once-off payment in mid-February representing 12 weeks of their budgetary increase. This will cover retrospection of the increase to January plus an advance payment of the increase to the end of March. From the book renewal date at end of March, the increase will be incorporated in the normal weekly payment.
As already mentioned, section 4 provides for increases in the weekly income thresholds applied in determining entitlement to family income supplement. The new thresholds will range from €480 for a family with one child to €1,090 for a family of eight or more children. For example, a family with three children on €500, or about two thirds of gross average industrial weekly earnings, will receive €75 in 2007 compared with €39 currently — an increase of €36 per week.
Sections 5 and 6 of the Bill provide for changes in PRSI. In budget 2006 the threshold for liability to the employee element of PRSI was set at €300 per week. This was equivalent to the entry point to taxation. The measure ensured that an employee earning up to this threshold amount, which was slightly higher than the annualised equivalent of the minimum wage rate for 2006, would not be subject to tax or PRSI. With a view to maintaining this position in 2007, the weekly threshold is set, in section 5 of this Bill, at €339, which is, at €17,628 per annum, slightly above the threshold of €17,600 for payment of income tax for employees under 65.
Sections 5 and 6 provide that the earnings ceiling for employee's social insurance contributions and the income ceiling for optional contributors are increased by €2,200 from €46,600 to €48,800 per annum with effect from 1 January 2007. This is an increase of approximately 4.8% and is in line with projected earnings increases. The increase was contained in the Abridged Estimates Volume, published earlier this year.
Section 7 of the Bill provides for an increase of four weeks, from 22 weeks to 26 weeks, in the duration of maternity benefit. Section 8 provides for an increase of four weeks, from 20 to 24, in the duration of adoptive benefit. These improvements take effect from 1 March 2007.
As already mentioned, section 9 and Schedule 1 to the Bill provide for an increase of €1,300 to €4,000 in the widowed parent grant and €215 to €850 in the bereavement and death benefit grants. All these increases take effect from budget day.
Section 10 provides for an increase of €10, from €20 to €30, in the weekly means disregard for non-contributory State pension means testing purposes from January 5, the same day the budget increase of €18 per week comes into effect. This means, for example, that a pensioner with weekly means of €30 per week will receive a pension in 2007 of €200 per week instead of a pension of €172 per week in December 2006, a net gain of €28 per week, €18 arising from the rate increase and €10 from the increase in the means disregard.
Likewise, a pensioner with means of €100 per week and a pension of €102 per week in December 2006, will get €130 per week from January, also a gain of €28 per week. Nearly 26,000 pensioners will gain from the increase in the disregard.
Section 11 makes provision, as outlined earlier, for the payment of full-rate disability allowance to those in residential institutions. The legislation providing for the introduction of self-employed or class S contributions in 1988 excluded from liability self-employed workers whose total income was below a threshold of £2,500, equivalent to €3,174 per annum. This threshold correlated approximately with the rate of non-contributory old age pension for a single person. The level at which a self-employed person becomes eligible for class S contributions has remained unchanged over the past 18 years.
At the time, those who engaged in self-employment but were entitled to unemployment assistance were excluded from liability for PRSI in view of their low income levels. This principle carried over to the introduction of farm assist in 1999, when it was again accepted that a person should not have a PRSI liability where he or she was on sufficiently low income to warrant entitlement to a means-tested payment.
Over the years, the threshold for class S liability has remained unchanged while there have also been significant improvements in disregards for means-tested schemes, notably relating to farm assist. Therefore, a self-employed worker who is in receipt of farm assist or jobseeker's allowance may only maintain his or her contribution record by opting into the voluntary contribution scheme. In this context, it is desirable to improve access to social insurance coverage and enable continuing social insurance protection, specifically the accrual of contributions towards a contributory State pension, by removing the exemption from PRSI liability for those in receipt of farm assist and jobseeker's allowance. I am providing for this in section 12 of this Bill.
To ensure that the position of those on lower incomes is protected, the health contribution levy threshold is being increased by €40, from €440 to €480 per week, with the corresponding annual threshold being increased from €22,880 to €24,960. Furthermore, an additional 0.5% is being introduced in respect of income to the extent that it exceeds €100,100 per year or is equivalent to €1,925 per week. This increase, which is expected to affect only the top 10% of earners, is effective from 1 January 2007.
The Social Welfare Bill 2006, the first of two instalments, builds further on the considerable progress that has been made in recent years. It safeguards the living standards of those who rely on social welfare income and other supports and prioritises the allocation of resources to those most in need. The Bill is also about solid and fundamental structural reforms of welfare policies — reforms that will modernise, will make the welfare system fairer to all and will deliver more enlightened social policies.
I commend the Bill to the House and look forward to a constructive debate.