I propose to share time with Deputy Morgan. It is appalling that the Government has not provided speakers for the slot allocated to it. I mean no disrespect to the Minister of State, Deputy Curran, for whom I have the greatest respect and whose presence I welcome. It is a terrible indication of a lack of concern. Even as many Government Deputies will be whipped into coming into the Chamber and voting for Second and Subsequent Stages of this Bill, they will hear from the people affected by the proposals at their constituency clinics.
I have a particular view on social welfare, which I wish to address first in order to be consistent. The background to this Bill is the crisis in the public finances, the collapse of a revenue base that was excessively reliant on transactions in the property market, which in turn had been grossly exaggerated by bad regulation and irresponsible lending by the banks. One gets an idea of this in respect of the property base of the economy. In 1981 it was €39 billion, by 2006 it was approximately €553 billion. Without creating any real wealth in the social sense, the property base of the economy had been revalued, driven on a speculative engine. This has created an entire distortion of the banking sector.
I quibble with some of the figures in this morning's report and observations by international bodies such as the IMF but they speak of an extraordinary proportion of Irish GDP being allocated to stabilising the banking system. They suggest that before we are out of the wars in respect of banking stability it will have cost us €24 billion, some 13.9% of €171 billion of GDP. That is important as background context. If we were not facing this appalling failure in the public finances at so many levels we would not be turning to those dependent on transfers such as social welfare for reductions.
The term transfer is incredibly important. I have been in the Dáil for over 20 years and usually when people speak about transfer payments, they concentrate on social welfare recipients. They are far more reluctant to examine the transfers that take place every year in the Finance Bill to those taking advantage of tax breaks. They are of a particular kind. I refer to tax breaks associated with car parks and spas. In that category, 86% of them apply to people earning more than €200,000 a year. The figure for the subsidy of interest relief to landlords is some €400 million in a half year. There is a long list of these transfers, which were driven on by the Commissioner, Mr. McCreevy, who liked introducing them and followed the poisonous policy, that infected the Government from the Progressive Democrats, that there was something backward about paying tax. Therefore, we had to be a low tax economy and one was encouraged to say the money was one's own and one should be entitled to decide how to spend it. The grandmother of all that, Mrs. Thatcher, said there is no such thing as society. Transfers went on all the time.
Those on the left made mistakes and assumed the right was anti-State. It was not that, it was that they were in favour of the State regularly transferring benefit after benefit as they went on, so that one gets to a point where one could socialise all the costs of existence and privatise all of the income. That model has wreaked havoc in terms of poverty across the world. Ideology flows from this. It would like to prop up a low wage economy.
With respect, there are assumptions in the Minister's speech. I want to be polite about this but I was a sociologist for 20 years and challenge her to produce the evidence behind some of the statements in her speech. An example is the assumption made about young jobseekers. Where is the published research or evidence to suggest that young jobseekers are deliberately choosing social welfare payments over work? I assert that the research is not there at all.
There is a cock and bull story about a pilot scheme in Letterkenny, the reports back from which the Minister refers to in her speech. She says that some "candidates did not wish to participate" and became unmanageable. Another phrase used is "difficult to manage". Some years ago we would be regaled by Fianna Fáil speakers and Ministers or former Ministers would speak about what they called "our beautiful youth". Suddenly, these young people are very problematic.
Earlier, the Minister outlined her reasons for reducing benefit for people under 20. She stated:
The rate of jobseeker's allowance that will be paid to new claimants under the age of 20 is being reduced from €204.30 per week to €100 per week, with effect from the first week of May 2009. When a person on the reduced rate of jobseeker's allowance reaches the age of 20, if he or she still qualifies for the allowance, he or she will be entitled to the full adult rate.
She went on to detail the full adult rate of the relevant schemes in certain categories. The assumptions in all of this in many cases is the following rationale. The Minister stated:
The rationale for this change is straightforward. Receiving the full adult rate of a jobseeker's payment at 18 years of age without a strong financial incentive to engage in education or training can lead to welfare dependency from an early age.
I challenge that assumption and I challenge the Minister to produce a jot of published refereed evidence for it. The Minister continued:
While many young people with low levels of education and training were able to get work in construction and other areas when the economy was doing well, they are likely to find it much harder to get work over the next few years. If they do not improve their skills, they are at risk of becoming long-term unemployed from a young age.
I agree with that but where in this Bill is the facility for a speedy return to education? Why should such people have to be unemployed for two years? If the Minister and Government are so concerned about young people, why are they requiring them to be unemployed for two years?
The Minister continued:
They are considered to be at greater risk of having difficulty securing a job than older jobseekers who might have low skills but who at least have some work experience. Therefore, it is considered necessary to provide 18 and 19 year old jobseekers with a strong financial incentive to engage in education or training or to take up employment that pays more than €100 per week.
This is the evidence of a low-wage economy. I could go on quoting the Minister's speech but she would have had support from the Labour Party if there had been specific measures for changing the administration of all of these young people who are really casualties of the economy rather than people who are choosing to be idle. What runs through the speech is the old deadly ideology that unless we make young people do something, they would prefer to be idle. I challenge the Minister to again provide evidence on this point. The Combat Poverty Agency used to be separate and independent in doing studies but it has been absorbed lest it give any jot of independent criticism. I presume there is a research facility that would be able to address this issue and I would be delighted to be proven wrong.
The Bill also makes proposals relating to lower income families. I have a fairly conservative view of family life. My own wife as an actress chose to spend her time at home helping me in my career and in the education of our children. It is an important choice to have for a male or female parent. The former Deputy and Minister, Mr. McCreevy, set his face totally against that and thus such choice was made impossible even for different kinds of couples and so forth. The idea was that there would be a form of equalisation that would make such a choice difficult.
Equally, there are other anomalies which I do not have time to go into. For example, from the Revenue Commissioners' perspective two people in a household are regarded as not being able to share their tax credits, although they can share the capacity for disqualification with regard to benefits. None of that need bother Commissioner McCreevy, who gave us the advice as we entered this crisis that we should keep on partying. That was the inspired advice of the Progressive Democrat convert, who should be ashamed to show his face in this country again.
Considering the families that will pay it, the increase in the health levy in section 12 combined with the abolition of the early child care supplement in section 8 will mean a single income family with two children under five years of age with a salary of €40,000 — which is normal enough — will lose €230 per month from net income. The income levy can be added to this, together with the abolition of mortgage interest relief if the people are in a home and more than seven years into its mortgage. Perhaps these people did not choose to live in one of those counties outside Dublin beyond Kildare. If they choose to travel to work, there are additional costs. What is proposed in this legislation will involve a cost of over €3,000 a year to the family household.
There is no attempt in the long, ideological harangue that is in the Minister's speech to assess net household impact with regard to budgeted income on the basics. These could relate to groceries, travel, electricity, gas and so forth used by model families. We used to get that from "Priscilla" and other models in the back of Finance Bill speeches relating to the budget. There is nothing in this budget which takes any cognisance of the difficulties being created for family budgets of the lower paid. Neither is there any sensitive treatment on the question of how jobs are threatened and how, in a way, this complicated and heavy administrative structure of taking from the poorest could have been avoided by looking at other more direct forms of revenue raising.
The Minister has given a very large proportion of her speech to what she calls the imaginative introduction of the pre-school year, with so many hours per week being provided. One must judge the pre-school year in terms of what people are losing in child benefit. One must also consider the people who will contract for the pre-school year in terms of their costs for insurance, lighting, heating and other things. In addition, there is the ability to control costs for the families.
Occasionally, I meet families who make representations whose child care costs exceed mortgage payments. Once again we come back to the impact on net budgets of low income families. The cost of child care has been increasing all the time, an area I could deal with at length.
There is a statistical generalisation in the Minister's speech that suggests rents have been so generally reduced that one can speak about significant reductions in rent supplement. I have seen no evidence that rents have reduced in the low end of the market. It is true that some of the sources given in the Minister's speech for the reduction in rents come from the middle to high end of the Dublin market. There is no evidence that the low end of the market in provincial cities has come down by anything, yet the reduction in the rent supplement and the increasing proportion which the person must pay has been imposed generally on the basis of an unquantified and unsupported generalisation.