Vol. 735 No. 2
27 Deputy Barry Cowen asked the Minister for Social Protection if she will carry out an impact assessment on the proposals of the Department of Jobs, Enterprise and Innovation in relation to the reform of the joint labour committees system; and if she will make a statement on the matter. [15462/11]
The need for reform of the joint labour committee system was clearly signalled in the programme for Government. A very detailed report, the independent review of employment regulation orders and registered employment agreement wage-setting mechanisms, setting out a reform mechanism was finalised in April of this year and circulated to members of the Government in the usual way.
The relevant stakeholders will now participate in a consultation process on the report and the Government does not have a predetermined outcome to this process. The outcome of the consultation process will be brought to Government and any proposals in this area will be decided collectively by the Government. In that context, the Government will consider the impact of the reform proposals on workers with a view to achieving balanced reform which produces good outcomes for employment and social protection.
Poverty impact assessment is the process by which Departments, local authorities and State agencies assess policies and programmes at design, implementation and review stages for the likely impact they will have or have had on poverty and on inequalities which are likely to lead to poverty, with a view to poverty reduction.
I have asked my officials to examine the broader impact of the report on low-paid workers and the social protection system generally and how reduced pay levels could possibly lead to an increased reliance on the social welfare system. This assessment will assist the Government's deliberations on the proposed reforms with a view to achieving balanced reform for all those affected.
The Minister said that when the assessment is carried out there will be a decision made by the Government as a whole. Based on what some of her party colleagues say about these proposals, it is evident there is divergence between them and the proposals that have come from the Minister, Deputy Bruton. As I said last week I take at face value the assessment to be carried out by her officials. When is that expected to be complete? Will it be made public and will this House have the opportunity to respond to that exercise in its own right? When is the Government to set about making a decision on the matter when all members of Cabinet have carried out their own research? In that regard the Minister for Social Protection is no different from any other Minister. When will the assessment be complete? Will it be made public and available to us? When does the Government expect to make a "whole of Government" decision as it has been described?
The need for reform of the joint labour committee system was clearly signalled in the programme for Government. Mr. Kevin Duffy of the Labour Court and Mr. Walsh have produced a very detailed report setting out a reform mechanism. The relevant stakeholders, the employers and trade unions, are now participating in a consultation process on the report initiated by the Minister for Jobs, Enterprise and Innovation. The outcome of the consultation process will be brought to Government and any changes in this area will be decided collectively by the Government. In that context, the Government will consider the impact of the reform proposals on workers with a view to achieving balanced reform which produces good outcomes for employment and social protection.
In the meantime I have asked my officials to examine the broader impact of the report on low-paid workers and the social protection system generally and how reduced pay levels could possibly lead to an increased reliance on the social welfare system. This assessment will assist the Government's deliberations on the proposed reforms with a view to achieving balanced reform for everyone concerned.
The social inclusion division which was in the Ministry formerly known as "Craggy" has returned to my Department since 1 May. That division has an important Government role in promoting the implementation of poverty impact assessment as a key tool in promoting good practice and innovation in policy implementation.
The Minister's answer does not answer the specific question I asked. I accept the Minister is entitled to investigate any effect such measures would have on those receiving entitlements. Once what the Minister has requested is complete, will she make it public before the Government makes the decision? It is appropriate that those of us on this side of the House who have a duty in this area are aware of any such impact especially if that has been adjudicated on by her officials. If that is substantial we need to know it before a decision is taken.
The consultation process has not been completed yet. The Deputy will appreciate that it is not possible to complete a poverty impact assessment on the proposals because we do not yet have those proposals. When we get those proposals the social inclusion division of my Department will carry out such an assessment. I do not have a date for the Deputy and I must wait and see what proposals are forthcoming. I believe the Duffy Walsh report contains a number of extremely sensible proposals, many of which are in the course of implementation in different employments because there has been considerable employer-union interaction in certain key areas in recent time. I want to wait until I get the proposals before giving a time-based answer as the Deputy has requested.
Will the Minister make it public?
28 Deputy Aengus Ó Snodaigh asked the Minister for Social Protection if she is concerned that many older persons will be refused fuel allowance as a consequence of the raising of the pension age in view of the high number of avoidable deaths caused by the cold each year. [15458/11]
The challenges facing the Irish pension system are significant. The population share of those aged 65 and over is expected to more than double between now and 2050, from 11% to 26%. People are living longer and healthier lives with average life expectancy set to rise even further in the future, up to 88 years for women and 83.9 for men. In contrast, the share of the working age population is projected to decline gradually from 68% to 58%. There are currently six people of working age for every pensioner and this ratio is expected to decrease to less than two to one by 2050. Therefore, the task of financing increasing pension spending will fall to a diminishing share of the population who are at work. Spending on public pensions, that is social welfare pensions and public service occupational pensions, is projected to increase from approximately 5.5% of GDP in 2008, to almost 15% by 2050. For these reasons, State pension age will be increased gradually to 68 years. This will begin in 2014 with the standardisation of State pension age at 66. The State pension age will be increased to 67 years in 2021 and to 68 in 2028. It is worth noting that until the early 1970s, the qualifying age for the State pension was 70 years. The legislative changes being included in the Social Welfare and Pensions Bill 2011 also fulfil one of the commitments in the EU-IMF programme of financial support for Ireland.
Additional information not given on the floor of the House.
The risk of fuel poverty is based on a combination of fuel price, income and efficiency of housing. My Department assists low-income households with heating costs through their basic payments and through the means-tested fuel allowance scheme. This scheme has been improved significantly in recent years, including through an extension in the number of weeks paid and increases in the rate. Fuel allowance is paid to people who are dependent on long-term social welfare and unable to provide for their own heating needs.
People affected by the increase in pension age who are not in employment may still qualify for the fuel allowance if they are in receipt of another qualifying social welfare payment, such as disability allowance. Under the supplementary welfare allowance scheme, a special heating supplement may be paid to assist people in certain circumstances who have special heating needs because of ill health or infirmity. In addition, exceptional needs payments may be made to help meet an essential, once-off cost that an applicant is unable to meet out of his or her own resources.
The Government is also committed to protecting vulnerable households from the impact of fuel poverty through investment in programmes to improve the energy efficiency of the housing stock and energy efficiency awareness initiatives such as the Keep Well and Warm booklet and accompanying associated website. Some 150,000 copies of the booklet have been distributed in recent years. The warmer homes scheme administered by the Sustainable Energy Authority of Ireland, SEAI, under the aegis of the Department of Communications, Energy and Natural Resources is the primary mechanism for alleviating the key underlying cause of energy poverty, namely, the thermal inefficiency of houses. Over 19,000 low-income houses were retrofitted in 2009 and a further 24,291 in 2010.
The Department of Communications, Energy and Natural Resources has overarching responsibility for the energy portfolio and it convened an inter-departmental-agency group on affordable energy to co-ordinate and drive Government policy in this area. My Department is represented on this group which was tasked with devising an energy-affordability strategy. I understand this is to be published shortly and it will set out existing and future approaches to addressing energy affordability.
Growing numbers of people want to work, or may need to work beyond State pension age. Increasing the State pension age is one of the ways in which we can sustain the pensions system, maintain the value of the State pension and support people to remain in the workforce.
My question concerns the fuel allowance and the consequences of the change. Given the changes signalled in the social welfare legislation before the House, a certain category of individuals will be affected from 2014 onwards. I am concerned that people whose contracts will finish when they are 65 will not be entitled to a fuel allowance. Is there any intention to ensure that those who finish at the age of 65 will be able to qualify for the fuel allowance as it currently exists? If their contracts finish when they are 65, they might be entitled to jobseeker's benefit or jobseeker's allowance but not to the fuel allowance because they will not have been on a jobseeker's allowance for a long-term basis at that stage, especially bearing in mind that the State pension age will be increased from 67 to 68 in 2028.
The most important objective pertaining to older people and fuel property is to provide a much better standard of insulation for homes, both to reduce and prevent heat loss and to improve the comfort and standard of housing. As we know, many older people live in older properties. The inter-departmental-agency group has been asked to draw up an energy-affordability strategy. This strategy will set out existing and future approaches to addressing energy affordability and will have regard to both the impact of the carbon tax on low-income households and a range of supports in making its recommendations.
The group has been asked to make recommendations as to the precise package of measures, including the area of income support, that should be put in place to assist those at risk of fuel poverty. These recommendations will be considered as part of the overall strategy to deal with energy affordability, which will include supports for low-income households. As the Deputy knows, the fuel allowance is not the sole income support mechanism through which assistance is provided to people with special heating needs.
The Minister is saying no account is taken at this stage of the effects of the change to the fuel allowance provided for in the social welfare legislation being taken today. As of 2014, those who are 65 will not be entitled to a fuel allowance until they are 66. After 2021, the age of entitlement will be 67. Am I correct in stating one cannot qualify for a fuel allowance until one is on long-term jobseeker's allowance?
I said we need to examine this holistically. The critical issue for many who are dependent on the fuel allowance is to improve heat retention in their houses. I refer to problems such as dampness. The inter-departmental-agency group is drawing up an energy-affordability strategy. The heating allowance, while incredibly important to people, is not the only provision we should be examining. We should also be seeking to really improve the quality of insulation in houses.
As the Deputy is aware in respect of the jobs initiative, my colleague, the Minister for Communications, Energy and Natural Resources, Deputy Pat Rabbitte, has introduced a scheme that will provide for insulation. I and many Deputies in the House would like to see emphasis on reducing energy loss and heat loss and on improving insulation. This is probably more important than the issue of the heating allowance.
29 Deputy Mick Wallace asked the Minister for Social Protection the way she will ensure participants in the community work placement initiative Tús have relevant training or previous experience before engaging in work such as the social care of all age groups and persons with a disability or with limited mobility. [15461/11]
Tús is a community work placement initiative which will provide up to 5,000 short-term, quality work opportunities for those who are unemployed for more than a year. Some €30 million has been provided in the Department's Estimates in 2011 to fund the roll-out of the initiative. This initiative is being delivered through the network of local development companies and Údarás na Gaeltachta in Gaeltacht areas. The purpose of Tús is to focus on those people who are long-term unemployed. For this reason, eligibility is at present confined to those on the live register for 12 months and in receipt of jobseeker's allowance. These provisions are to ensure a targeted approach to those currently affected by long-term unemployment. People already in employment are not eligible for these positions.
Participants will, in the first instance, be identified by the Department of Social Protection. Once selected, participants will be referred to the appropriate local development company operating in their area where their skills set, background, experience and suitability will be assessed. Local development companies will then attempt to match each participant with work placements that have been identified and evaluated as being suitable, taking account of the job profile and the participant's profile. In all work placements, some element of task related induction or training will be required. This will be provided by the staff of the local development company and the community organisation. In the particular circumstances identified by the Deputy, additional work-related training may be required. The provision of such specialist training is primarily a matter for the service provider, who is best placed to identify and provide access to the necessary training opportunities.
As I implied in my question, I am a little concerned that people working in care provision experience many problems at present. Given the many unsavoury reports issued over recent years by various institutions, perhaps there is a lack of training and regulation in the area. It seems that people unemployed for more than a year may be forced off the welfare scheme if they do not agree to what is proposed for them. I would have thought the Minister would have regarded this as a little draconian. Does she believe people may be forced to do something they may not want to do? If we are to put them in a position where they are responsible for looking after vulnerable people in social care, this is hardly a positive approach.
I appreciate the Deputy's concern that people working in care need to be trained. People working in care generally or community organisations that deal with children or vulnerable adults must be vetted by the Garda.
The Tús scheme was designed by the former Minister for Social Protection as a kind of urban copy of the rural social scheme. Many Deputies will be aware of the latter, which has been quite successful in a targeted way in respect of activities in rural communities. The opportunity afforded in these communities should also be available in urban areas.
When I became Minister, I found that none of the 5,000 places available had been activated. In terms of the number of people looking for opportunities to be actively involved in some kind of community development or work it is important that we operate the scheme and offer those opportunities. The scheme is carefully supervised. In many areas the advertisements for supervisors have been published, supervisors have been taken on and the scheme is proceeding to take on applicants who will be engaged in the work. I will bear in mind what the Deputy said about concern but as the local development companies will be the managers of the schemes it will be their responsibility to design the work programme for people taking part in the scheme in a way that does not give rise to the concerns the Deputy has expressed.
If there are more than 440,000 people unemployed, 300,000 of them would love to have a job. They are not avoiding work. I suspect that in terms of this scheme the view might be that there are some people who do not want to work and that if they refuse work they should be taken off the social welfare scheme. Will the Minister agree that the resources of the country are meant to be shared by all the citizens of the State and that it would be a retrograde step to cut people off welfare? With so many people looking for work surely we can work with the people who would volunteer. There are many people who would like to do this work. We could probably get many people to do it without having to force people who might not be in the right frame of work to do it.
The important strategy is to provide people with options and opportunities. I would be distressed to find a younger person in their early 20s drifting onto social welfare as a permanent condition of their life. I am aware, as is everybody, of the huge drop in employment opportunities recently and most people are looking for work but if somebody on social welfare is drifting into long-term unemployment it is important that they be given positive options in education, training and work experience. People are offered positive opportunities through the initiatives announced in the jobs programme, the various educational initiatives and initiatives such as the back to work schemes and the Tús initiative, like the rural social scheme. In terms of people refusing positive options and opportunities to engage, and those opportunities and options must be realistic for people, people who are working in low paid conditions and paying PRSI should be entitled to be reassured that those who are long-term unemployed and whom the State is assisting to get back into employment take up those options. If they refuse to engage, there are now provisions whereby somebody's social welfare payment should be cut, but that is a last resort. It is important that people engage in positive options for work training, education and work experience.
30 Deputy Barry Cowen asked the Minister for Social Protection if she remains committed to maintaining social welfare rates as set out in the programme for Government. [15463/11]
As I have just told the House in answer to the previous question, the Government is committed to tackling Ireland's economic crisis in a way that is fair, balanced and which recognises the need for social solidarity. The appropriate level of overall expenditure by my Department will be considered in the context of budget 2012 and subsequent budgets. This consideration will be informed by the commitment in the programme for Government to maintain social welfare rates. There will be an ongoing necessity to curtail overall expenditure in 2012 and in later years. The comprehensive review of expenditure currently under way in all Government Departments and agencies will form the basis for achieving this objective. Draft reviews will be submitted to the steering committee in July and they will be finalised over the summer.
The objectives of the review are to inform the best use of resources and to guide us in achieving the Government's public service reform objectives. Better use of resources will enable us to meet overall fiscal consolidation targets, realign spending with programme for Government priorities, target resources at the most effective programmes and set new objectives so that we can continue to make social welfare payments at appropriate levels, sustaining social cohesion and treating people with dignity. All Departments are covered by the review, with each Department preparing a comprehensive assessment and review of programme savings and the identification of efficiencies and reforms.
Cross-cutting issues which relate to a number of Departments are also being examined. The new expenditure review process is crucial to the success of our Government programme. The outcome of the review will be considered by the Government in September. Any changes to the wide range of schemes and services provided by my Department, including the levels of welfare payments, will be informed by the overall Government-wide options identified in the review to better and more efficiently targeted scarce resources.
I asked this question in the context of the commitment in the programme for Government that the Government will maintain social welfare rates. Is that commitment in respect of all social welfare programmes and all rates? Is it for this year, next year and every year? The Minister for Finance, Deputy Noonan, spoke last week about the finances being on track and the commitment in last year's budget being adhered to, in order words, so far so good in respect of the public finances. Does that now afford the Minister the opportunity to commit more specifically than she has done heretofore, reaffirm the commitment in the programme for Government and state now that existing social welfare rates will remain?
I worry when I hear the Minister say "in the context of the budget", "the most effective programmes" and so forth because that may mean she is beginning to make choices in regard to rates. The Minister's commitment is in regard to all welfare rates. Can the Minister reaffirm that considering what the Minister for Finance said last week?
The commitment in the programme for Government is in regard to welfare rates but the commitment is also to reform and to a comprehensive expenditure review. We had a discussion earlier on Tús and other programmes and options that are available to get people back to education, training and work experience. Part of the reforms I hope to see in the Department is to ensure that younger people do not drift into being on long-term social welfare. It is not good for them, their families or their children. The reform of the social welfare system is to provide options, opportunities and encouragement for people to become active and engaged.
Social welfare involves paying pensions to older people who have retired. We want to ensure that money is spent in a way that is targeted and effective but that also provides options and opportunities that ensure people become active and activated.
Can the Minister commit to the existing social welfare rates, notwithstanding the authorisations, changes and overhaul of various systems she spoke about in grandiose terms? I take at face value the Minister's commitment in that regard but I ask her to confirm the commitment in respect of the existing rates, especially in the context of what the Minister for Finance said last week.
Suggesting to people that we will reform the social welfare system in a way that ensures people get options and opportunities is not in any way grandiose. I would have thought that was common sense because if we look at any community in any village or town throughout the country we see a wealth of resources available and a community spirit that is anxious to work with the local community and give people opportunities to develop and prosper.
The social welfare system, particularly for those in their active working years, has to be geared to give the maximum encouragement to people who have lost their jobs or were never able to get a job in the first place, so that they can avail of opportunities in education to improve their employability. That is an absolutely critical reform.
The programme for Government commits to maintaining social welfare and to a comprehensive expenditure review. The expenditure review requirements are very onerous. The country is in an IMF structural adjustment programme. That is something to which the previous Government signed up and bequeathed to this Government. We hope to be able to exit that programme and return the country to full financial independence and sovereignty. In the meantime, everything must be reviewed.
31 Deputy Aengus Ó Snodaigh asked the Minister for Social Protection the reason she will not conduct and publish a cost-benefit analysis of using the PRSI system not only to collect the auto-enrolment pension contributions that are proposed by the national pensions framework but also to manage that money and make payments rather than handing those responsibilities over to the private pension industry. [15459/11]
Increasing pensions coverage, particular among the lower paid and those with gaps in their employment, is a priority for the Government. The introduction of an auto-enrolment system is one of the best ways in which we can do this. An inter-departmental group, chaired by the Department of Social Protection, is developing the legislative, regulatory and administrative infrastructure required to introduce a number of pension reforms in the national pensions framework, including auto-enrolment.
It is envisaged at this stage that contributions for an auto-enrolment system will be collected through the PRSI system. In developing the various aspects of the system, we will consider the costs and benefits associated with the options available.
There will be a limited number and limited types of funds available under the scheme. The Government will decide how these participating investment funds will be selected and managed. It is expected that a competitive process will be run by the State which will also ensure that charges are kept to a minimum. The competitive process will not necessarily be confined to the private sector. It could include State organisations such as the NTMA. No decision has been made as yet.
It is intended that the auto-enrolment scheme will be introduced in 2014, but only if it would be prudent given the economic conditions prevailing at that time.
I thank the Minister for her answer, which goes beyond the answer I received to a written question I tabled recently. I welcome the fact that she said part of the State mechanism may be able to tender for this work. I do not think it should be limited to the NTMA, and the State itself should be involved to a greater degree.
Does the Minister agree that before the crash, and in spite of huge tax breaks, the private pensions industry failed completely to deliver an adequate income for the vast majority of the people who were reaching retirement age? Does she agree that the PRSI system has proved to be an effective and straightforward system in which the public can have confidence? Does she agree that it should be the system to deliver private pensions, beyond just collecting contributions?
The evidence from other countries is that auto-enrolment is a very effective way of getting more workers to start providing for retirement pensions at an earlier age. There is very considerable merit in this system, but its introduction in 2014 will very much depend on the economic conditions at that stage.
Younger people are often focused on acquiring a house and other commitments, such as settling down in relationships and having children. However, time slips by for many workers who fail to become involved in pension provision and as they become older, they are seriously underprovided for. This is an issue for Irish society and the purpose of the auto-enrolment scheme is to assist that.
When the Deputy mentioned other institutions, I presume he was referring to An Post.
There are good models available and one of the best schemes that ever existed was the simple savings scheme with An Post. A person could basically save relatively small amounts of money for five years and get a return. This was dealt with in a very effective and comprehensive way. I acknowledge that An Post potentially would have a role to play in this, along with the NTMA. However, there would also be strong interest from private providers. At the end of the day, the advisory group currently working on this will provide the advice.
Can the Minister confirm that there is no preferred option at this stage? Without substantial changes to the private pensions industry, it should not be considered suitable, given that there is a need for greater transparency on costs. Up to 30% of a pensioner's lump sum is often swallowed up in charges. The return on private pension assets was recently only 1%, whereas the return from the An Post scheme is 3%. That would be a better model to follow when providing a second tier pension.
The pensions industry is an important industry and employer in this country. It is a very important route for many people, providing for pensions through defined benefit and defined contribution schemes. The industry will continue to play an important role. That does not in any way prevent the existence of schemes being offered through State mechanisms such as the NTMA and An Post. We want schemes that will afford the maximum take up at the most reasonable cost to the highest amount of workers from as early in their working life as they are willing to start thinking about providing for a pension. That would leave us all in a happier position.
