Compared to some other areas of social policy, social welfare is somewhat less contested. Many advances have been made and consolidated over the past 40 years and more of the commitments entered into have been adhered to. A basic support provided to our citizens has the first call on resources at budget time. This year and in many previous years since 2004 the amount devoted to welfare improvements exceeds the cost of tax relief, which has also been focused in the first instance on keeping those on low incomes out of the tax net.
Until 20 years ago, the issue would have been whether annual welfare increases would enable recipients to keep pace with inflation. Nowadays, percentage increases are more oriented towards growth in earnings, with a benchmark of roughly 30% of average earnings in mind for welfare payments. It is a measure of the advances made in recent decades that we now focus on relative poverty or risk of poverty, rather than any imagined absolute standard taken from memories of the dire way things were for the poor decades ago.
Social cohesion is a vital objective and it is not always easy in a rapidly growing economy, where fortunes can be multiplied rapidly at the top end of the scale, to keep the gap between rich and poor, and even the majority of people who are neither, from further widening. Practically all western governments, regardless of their political complexion or intentions, face this difficulty. Governments have discovered the hard way that raising the floor is a better objective on which to concentrate than attempting to lower the ceiling which, I suspect, is what a well-known commentator writing in today's The Irish Times would like us to do. Read the main headline in today’s Financial Times about the Chancellor of the Exchequer for a crash course in political reality: “Darling forced to retreat on non-doms. Chancellor says policy was misunderstood. Not enough to halt City exodus, say critics.”
If it came to it, it would not be the first time Ireland would be the beneficiary of what my father used to call the influx in reaction against the establishment of the British welfare state in the late 1940s — "the retreat from Moscow". I agree with the aforementioned columnist for The Irish Times that the subject he is preoccupied with is no longer even much debated in the House. If free to make a choice, most people needing State help would probably prefer increased benefits for themselves, irrespective of equality considerations, rather than a more egalitarian approach of lower incomes all round, as realised, for example, in the German Democratic Republic model, if one could forget the nomenklatura.
As a country, in the choices that we have made and have been able to make since the 1940s, we have not opted for the comprehensive system of social protection that characterises some Nordic countries. We are neither Boston nor Berlin, despite their respective attractions. Few advocate a dismantling of social protection for the unemployed or the unmarried parent, even where employment incentives are improved. The economic disincentive effect of the much higher tax levels now required to achieve a transition to Scandinavian levels of welfare tends to be ignored by those who advocate that model.
Proceeding from where we are means striking a balance between enhancing the existing provision that is made on a universal basis and more targeted means tested interventions.
An obvious example of practical choices with larger financial implications is the debate as to whether carer's benefit should remain means-tested, although a generous income disregard of up to €332.50 is made for a single person weekly, doubled for a couple. Other examples are whether certain medical conditions, such as cystic fibrosis, should automatically trigger the benefit of medical cards or, as suggested by the Labour Party, a free pre-school year should be provided for all.
Good cases can be made for each of these improvements in isolation. However, they are less compelling when the tax implications, in what has become a much tighter budgetary situation than 12 months ago, are taken into account. Regardless of what we may consider the people should want, most of the evidence suggests they do not want social improvements which require the payment of higher taxes.
Recent improvements in the social welfare system have focused in particular on families and older people. In the 1980s, recognition for families with children was eliminated from the tax system, while universal child support was kept at a minimal level. Where child benefit was once regarded as wasteful and ineffective because it was not means-tested, it has now been accepted as the fairest method of providing family income support. From April this year, payments for first and second qualifying children will be increased to €166 per month with €203 for subsequent children. A family of five children will receive not far short of €1,000 per month.
The early child care payment has been increased to €1,100 as a contribution to the higher costs of child care. The reform of the community child care provision, increasing the supply but making the financial assistance more targeted, does mean that some parents are likely to pay higher costs in an area which is already extremely expensive for young working couples with high mortgages. Both payments will need continued focus in future years.
The increase in the qualified child allowance recognises that, given all the changes of the past ten years, this type of targeted assistance no longer acts as a disincentive to employment. We need to recognise and continue to prioritise action against child poverty. I pay tribute to the many school principals who provide some form of breakfast to pupils who for whatever reason have not had any.
As Deputy Enright stated, the situation of carers in their late teen years should be recognised and examined. I have come across people who had to look after two families, a parent and siblings when they were young and their own children and spouse when they were a bit older.
I welcome what the Minister stated in reply to questions about getting rid of the co-habitation rule which leads to all sorts of undignified investigations.
Deputy Ring, and he was not the first on the Fine Gael side to do so, raised the issue of non-national workers' children at home being in receipt of child benefit from Ireland under EU rules, possibly even after leaving the country, and suggesting that taxpayers were being defrauded. He compared this to the investigation of participants of farm assist. At the risk of being accused by him of more professorial lectures — I am elected to this House on the same basis as he is — I deprecate none too subtle attempts to appeal to whatever anti-immigrant sentiment may be out there by focusing on hypothetical abuse of the system and pitting the interests of the indigenous population against those who have come into our midst and who contribute much to our society. I am confident the Department of Social and Family Affairs and its investigation branch has more than adequate administrative controls to check abuse arising under any heading without having to make it a political issue.
In a situation where unemployment is on a rising trend more people may rely in the short term on what is now called jobseeker's benefit. The minimum wage in Ireland has given far more people a real incentive to work. I disapprove of attempts by the Irish Hotels Federation to dispute JLC awards just above this level. To the credit of hoteliers, it must be stated that good accommodation, like the cost of air travel, has become far more affordable instead of being the near-luxury product it was in the past. As against that, anecdotal evidence exists of employees not being paid the minimum wage or being rotated rapidly as "trainees" who do not have to be paid the minimum wage. A loophole is being abused and it should be more closely scrutinized.
I am aware ferries find it difficult to compete with cheap airfares, but how many more people will be reluctant to use a service when they know the crew is not being paid even half the minimum wage? Ruthless new management-style employers should realise that the bad publicity they generate by their antics costs more goodwill and custom than they realise. Irish firms which relocate production to cheaper locations abroad, leaving a loyal workforce in the lurch need not be surprised if their home sales diminish considerably, and they should bear this in mind before making such decisions.
The Government has kept faith with older people. Credible targets for pension increases over a five-year term have been set and more than met, as will the target of €300 per week by 2012. The process of having the qualified adult up to par, or what is sometimes called social welfare individualisation, is almost complete. A welcome innovation of recent years has been to allow even those on non-contributory pensions to supplement them by up to €100 a week, enabling those who wish to work part-time to do so and usefully contribute to the community. An anomaly worth examining is the different treatment of increases for those in receipt of contributory and non-contributory payments.
One of the more disappointing aspects of the social welfare system is the realisation of many applicants that they left paid employment too early when rules were different or that they were not well-advised in terms of the amount of contributions, voluntary or otherwise, they needed to make and they are left with only a partial State payment. It is difficult to deal with these anomalies without creating precedents or upsetting a sense of equity vis-à-vis fully paid-up contributors. Properly, the situation of farmers’ wives was raised by Deputy Bannon. Whatever margin of manoeuvre or discretion the Minister and the Department have in such cases should be used in favour of applicants who find themselves unexpectedly disadvantaged.
Perhaps these issues could be examined in the context of the review of pensions. We all know that even with good increases the standard of living provided by the State pension will always be limited and that every encouragement should be given to people to enhance their pensions, as has been done. I have two comments or caveats. The State should not subsidise beyond a certain point private Rolls Royce-style pensions and limits were introduced in last year's Finance Bill. Further compulsion should be avoided which would in effect cause a rise in PRSI contributions and the cost of employment. Everything short of compulsion by way of encouragement should be used.
Support for older citizens has been supplemented by a number of free schemes, most of them originally at the initiative of Charles Haughey, when he was Minister for Finance and later Minister for Social Welfare. The present Minister has extended the national fuel scheme to 30 weeks recognising, as reluctantly do all householders, that heating is required in our climate, notwithstanding global warming, for rather more than half the year. Health and quality of life, particularly for older people, depend on staying warm. Given the increase in energy prices, some of which may be induced by environmental policy considerations, much attention will need to be paid to ensure these payments hold their value in real terms and ideally increase somewhat. I agree with my Tipperary colleague, Deputy Tom Hayes, that fuel poverty is a real problem, particularly in older damp and cold houses. Last December, the Public Health Policy Centre published a good all-Ireland policy paper on fuel poverty and health.
As a regular user of the bus when in Dublin for sittings of the Dáil, I can observe that the comfort and value of the free travel pass for older people is inestimable. The Minister for Social and Family Affairs, Deputy Cullen, was Minister for Transport and he was right to put the emphasis on public service rather than private competition, about which a lot of ideological nonsense is talked by economists and others who rarely, if ever, avail of the services in question.
However, in large parts of the country, including substantial towns, the only services available are the school bus and longer distance, mainly Bus Éireann, services, which cater for a different age and income group. In some areas, pilot local links services are ably championed by, among others, my constituency colleague, Deputy Mattie McGrath. Many towns could do with a bus service, particularly for the benefit of older people, who would use their pass if they got the opportunity.
I am glad that time-use restrictions have been lifted, as most older people will avoid rush hour, if they are free to do so. Getting out and about is very important to the health and quality of life of older people. The system of housing aids for the elderly, as Deputy Tom Hayes has said, is also a valuable scheme.
All public representatives in south Tipperary recognise the value of the FÁS community employment and related schemes, whatever Department administers them. They are valuable not only to older individuals and those who need employment, but community organisations would not survive without them. I and my colleagues have been working for several years to avoid disruption either at a personal or organisational level with the help of the Minister for Social and Family Affairs. We are doing so again, so as to avoid artificial restrictions, caps and limits that unintentionally work in an anti-social way, thereby causing such disruption.
I welcome the €900 million package presented in the Social Welfare and Pensions Bill 2008. I congratulate the Minister and the Government on the continuing priority given to an area of social policy that is functioning well but will always be capable of further improvement.