Dáil Éireann debate -
Wednesday, 11 Nov 2009

Vol. 694 No. 2

Leaders’ Questions.

Deputy Enda Kenny

Yesterday, I asked the Taoiseach about the Government's plans regarding child benefit as part of the social welfare package and he replied that all elements of Government expenditure were being considered in the budgetary analysis with the Budget Statement less than four weeks away. I pointed out to him that 600,000 families draw child benefit on behalf of more than 1.1 million children and I recognised that adjustments and savings have to be made in the social welfare area as well as other areas, given the disastrous economic circumstances into which we have been led by the Government.

However, I also recognise it is possible to achieve the savings without having to resort to cutting child benefit. What is happening in this regard, without clarity from the Government, is that hundreds of thousands of families who have been driven into negative equity, who may have suffered one or two job losses and who are faced with increased school transport charges and third level registration fees, reduced tax allowances for medical expenses and a range of other income levies have to face planning their budget for the next year with the possibility of a child benefit cut.

While I recognise social welfare must make a contribution, I have examined this issue and I repeat that, in so far as Fine Gael is concerned, it is possible to achieve the savings without having to resort to cutting child benefit. Today's Irish Independent carries a detailed set of proposals as part of what appears to be a secret plan by Government to cut the rates of child benefit. In respect of the Taoiseach’s remark yesterday that social welfare is to be considered as part of the Government strategy for cuts, will he clarify if it is the Government’s intention to cut child benefit?

The Taoiseach

The Leader of the Opposition will be aware that the budgetary discussion is ongoing and that clarity will be provided on 9 December. We will indicate what choices the Government had to make, the reasons we made them and we will seek to do this in a way that is as fair and as equitable as possible. With regard to the social welfare budget, I have simply made the case that we have a spend of €21.5 billion under that expenditure heading and the scale of adjustment that has to be made means we have to look at areas we normally would not look at. That has to be done because if we do not make the adjustment, the prospect of a sustainable level of service provision for people dependent on social welfare would be put at greater risk and a greater adjustment would have to be considered in the future. It is a question of examining all the options carefully and the Government is conscious of this having seen increases in social welfare rates, even last year. We sought to bring forward increases of between 3% and 3.8% in the budget, even though the cost of living has fallen by 6.5% this year.

The Government is conscious this is an area for careful consideration but the Deputy knows he cannot expect me to outline any aspect of the budget, particularly when decisions have not been taken. We have been open, honest and frank in conveying to the public and to the House that all areas of expenditure, including the social welfare budget, must be examined to make the adjustment we have to make. This is against a background of a social welfare budget that is 20% higher than last year. They are the issues and the facts and we have to deal with them. I am afraid the Opposition will have to await the day of the budget when we will outline the decisions taken. No decisions have been taken but all options are being looked at.

Deputy Pádraic McCormack

Will it be a short or a long look?

Deputy Enda Kenny

When I was a young lad, the perception at election time used to be that Ernest Blythe took a shilling off the old age pension. It took 60 years to get rid of that myth that the party I lead was responsible for that disastrous cut.

Deputy Noel Dempsey

It is not gone yet.

Deputy Enda Kenny

I accept the Government has difficult choices to make. We have considered these choices and none of them is easy, but the Taoiseach is not being honest and open with the people in respect of this. He said everything is on the table, yet the Irish Independent produced a detailed plan backed up with statements by a Government spokesman. The article states the Government intends to ensure fairness across the board but it would not be fair to introduce a flat rate cut in child benefit, as that would impact unduly on lower income families, and, to achieve fairness, they would be given a higher amount under a qualified child allowance. However, the Government will have to ask the Revenue, according to its information, who are the high income earners in the country who would then have to voluntarily submit this information to Government. Whoever dreamt up this concoction in the Department of Social and Family Affairs needs to be called into the Taoiseach’s office and asked about administrative nightmares.

Hundreds of thousands of families do not believe the Government when it says it wants to be fair, open and honest about this. They believe there is a secret plan at the heart of this and the Government is moving to cut child benefit in the December budget. This follows the nightmares created by the Government over the removal of the medical card for the over 70s, income levies, job losses, negative equity, increased third level registration fees and school transport charges and a range of other measures. The one universal payment made in respect of each child in the country is child benefit and the Minister for Social and Family Affairs says she now wants to adhere to the principle of a universal payment. That does not treat all the children of the nation equally, as was set out in 1916 and many times since.

I am prepared to say that it is possible to achieve the required savings without touching child benefit. Will the Taoiseach put families at ease and at least say he is hearing the clarity of decision from the Opposition? Will he tell us he understands the anger of people and that this one area of social welfare will be left untouched by the knife of Government on 9 December?

The Taoiseach

In the next four weeks, the Leader of the Opposition can indicate to a whole series of people that there are easier ways to deal with the situation. We await the alternative budget proposals of the Opposition and we will see how credible and sustainable they are.

Deputy Pádraic McCormack

The Taoiseach is in government.

Deputy Enda Kenny

You will hear them.

Deputy Fergus O’Dowd

Then he will copy them.

Deputy Enda Kenny

None of them is easy.

The Taoiseach

Meanwhile, the Government will continue to prepare for the budget, taking all options into account. It is right that we look at all options. In last April's supplementary budget, the Minister for Finance indicated that child benefit would be examined. The McCarthy report also made reference to it. When there are limited resources one must assist those who are most vulnerable and, perhaps, make adjustments for others who are on higher incomes. These options are being looked at.

Given the size of the adjustment which must be made, social welfare cannot be immune. We must be careful in coming to decisions in this area. We will use the time available for further discussion, we will come to our conclusions and bring those decisions to the House.

Deputy Eamon Gilmore

I wish to raise an issue which cannot wait until 9 December. A Christmas bonus has been paid to pensioners and others every year since 1980. In the emergency budget of last April, the Government announced that it would abolish the Christmas bonus and that this year, for the first time in almost 30 years, pensioners and others would not receive the relatively small payment which helps them to buy gifts for their grandchildren, and so on. The Government also voted down a Labour Party motion calling for the restoration of the bonus and identifying the way in which the restoration could be paid for.

Since then, many pensioners have hoped the Government would have a change of heart on this matter. Many pensioners have been encouraged in that by Government backbenchers, who have been telling them there would be a change of heart on this issue before Christmas. If there is to be a change of heart it cannot wait until 9 December because administrative arrangements for payment would have to be put in place before that.

Will the Government have a change of heart on the Christmas bonus? Will it be paid to the country's pensioners this Christmas?

Deputy Pádraic McCormack

It might abolish Christmas.

The Taoiseach

Unfortunately, we have made the decision. It was a very difficult one and had to be considered in the context of the last budget. We decided we would not be in a position to make that supplementary payment this year. The total cost of the Christmas bonus payment in 2009 was approximately €223 million. The estimated cost for 2010 is €245 million.

In recent years, there have been significant increases in social welfare rates. The Christmas bonus payment was made against a background, in other Administrations, when increases in social welfare payments were very small. When resources were available to the Government, social welfare and pension rates improved significantly, and quite rightly. Those increases were in excess of inflation and were the correct choices at the time.

We are now in a different situation and we must deal with the gap between spending and revenue. The total Exchequer revenue for this year to the end of October is €26 billion and the total social welfare bill is more than €21 billion. That sets the background of what the Government must contend with, apart from public service pay and pensions and the provision of services. In other times we have been able to increase rates and provide for further supplementary payments. It is clear that the availability of another €223 million is not possible in present circumstances.

Deputy Eamon Gilmore

That is a very mean reply from the Taoiseach. This payment has been made to pensioners every year for 30 years, even in some of the country's most difficult economic years. It is a measure of the mess Fianna Fáil has made of our economy and public finances that for the first time in 30 years pensioners will not get the small bonus which has been paid to them in years past. It adds insult to injury to tell them to live in the past. These people have worked all their lives and this is a relatively small payment.

The Taoiseach's reply contrasts sharply with his more sympathetic approach to the golden ten yesterday. For years into the future, those people will be able to write off the losses on their strange arrangements for buying bank shares by setting them against tax. They get all the comfort from the Government but pensioners, who worked hard to make the country what it was before Fianna Fáil made a hames of it, are told they will not receive the small payment which made Christmas worthwhile for many of them. This is mean and shameful.

The Taoiseach

Deputy Gilmore was a member of a Government which gave an increase of £1.50 to pensioners, and said it was plenty.

Deputy Noel Dempsey

Over two years.

Deputy Eamon Gilmore

We never cut their benefit.

The Taoiseach

They never had to consider cuts because their payments were so meagre.

Deputy Eamon Gilmore

We never took money off them.

The Taoiseach

The point I make is that when resources were available we, quite rightly, improved welfare and pension rates well beyond inflation.

Deputy Joan Burton

That was then. This is now.

The Taoiseach

Even this year, we provided for an increase, despite the difficult financial situation. I accept that people on pensions and welfare have low incomes. However, the cost of living dropped by 6.5% this year——

Deputy Róisín Shortall

Not for pensioners.

The Taoiseach

——and this means the purchasing power of those increases was 10%.

Deputy Róisín Shortall

That is not true. The 6.5% includes mortgages.

The Taoiseach

In real terms, the increase in social welfare payments was 10%. If payment increases by between 3% and 3.8% and the cost of living drops by 6.5%, the real increase is 10%, in a very difficult year.

(Interruptions).

The Taoiseach

The Government's record with regard to increases in pension and welfare rates is better than that of any of its predecessors.

Deputy Eamon Gilmore

He is living in the past.

The Taoiseach

However, the current situation is this. How do we sustain levels of payment, given the country's finances, now and in the years ahead?

(Interruptions).

The Taoiseach

It is not correct to suggest that 35% of the country's total spend can be immune from the situation we face.

Deputy Joan Burton

We are not saying that.

The Taoiseach

I would rather it were otherwise but that is not the case, and everyone in the House knows it.

With regard to my treatment of anyone else, I hold no brief for anyone who is involved in wrongdoing, whether in banking or elsewhere.

Deputy Róisín Shortall

The Taoiseach has always protected them.

The Taoiseach

The Minister for Finance will take advice from the Revenue Commissioners in respect of any issue where an avoidance matter is raised with him and deal with it appropriately in the Finance Bill.

Deputy Emmet Stagg

There is a write-off of €18 million.

The Taoiseach

That is what every Minister for Finance has done and this Minister will do no less in that regard.