On a point of order, I wish to state in protest against the way this is being rammed through-----
Social Welfare and Pensions Bill 2013: Second Stage
That is not a point of order.
-----and in protest against the charade that is taking place tomorrow-----
No, sorry. Resume your seat. Thank you.
We wish to oppose the taking of Second Stage now.
Minister, will you move that the Bill be now read a second time?
I move: "That the Bill be now read a Second Time."
We object to that.
The order for the taking of Second Stage has already been agreed. It is only a formal matter.
The Minister has to move it.
We will have to wait until the end of the Bill.
The Minister moved the motion and we are objecting to it.
It is already agreed.
The order for taking Second Stage has been agreed and the motion is now before the House for debate. I call on the Minister to proceed.
We are objecting to it.
Can you just explain where? The order is No. 11a, No. 11b and No. 3a. Is that correct?
Yes. Please proceed, Minister.
Ireland is, thankfully, emerging from the catastrophic fiscal crisis that we inherited upon taking office in 2011. We are about to exit the bailout programme and stand on our own two feet again as a country. The Department of Social Protection is making a significant contribution to that recovery. We have reformed the way the Department engages with jobseekers to help them back to work and firmly maintained the welfare safety net for those most in need. All of this has been done while reducing overall welfare expenditure to assist with the necessary task of repairing the public finances.
I have said many times before that the most effective way of reducing welfare expenditure is to get people back to work. The proof of this is now being witnessed. When negotiations on the budget began, the Department was initially requested to make new expenditure reductions of €440 million. However, we were able to limit expenditure reductions to €226 million, as part of an overall €290 million adjustment, largely because of the performance of the live register.
At the height of the crisis there was a real risk that the live register would exceed 500,000. Instead, thanks to the recovery initiated by the Government, the live register is, thankfully, falling. More than 20,000 people have left the live register over the past year. Further, given the trend in the figures over recent months I can state with confidence that the live register at the end of October will fall below 400,000 for the first time since May 2009. Naturally, that is still far too high but we are making progress, slowly but surely.
For every 10,000 people we help off the live register we save approximately €95 million in yearly welfare expenditure. That is why since coming to office I have focused on transforming the Department from the passive benefits provider of old to an active, engaged and focused organisation that provides employment services for jobseekers and employers alike. This is why I place such emphasis on our Intreo one-stop-shop offices, where jobseekers can get their income and employment supports in the same place for the first time. The first day of signing on for jobseekers is also the first day that we help them back to education, training and employment. I have secured additional capital funding next year which will allow us to complete the full roll-out of Intreo offices to all of the Department's offices nationwide. The process will be managed by the Office of Public Works.
The numbers in work increased by 33,800 in the past year and the private sector is creating 3,000 new jobs every month. While not wishing to overstate it, as the recovery picks up some pace, there will be a steady flow of additional jobs created in the economy next year. It is chiefly as a result of this progress that I have been able to lower the expenditure reductions required of my Department in 2014. I am keenly aware that reductions of €226 million will have an impact on and cause difficulties for people who rely on social welfare for their principal income. None the less, the lower adjustment means I have protected the State pension, carer’s allowance, disability allowance and all other core weekly payments upon which people depend. I also have protected crucial supplementary supports for pensioners, carers and people with disabilities such as the fuel allowance, the electricity and gas allowances, free travel, the half-rate carer’s allowance, the respite care grant and the television licence payment. Child benefit also has been protected in this budget and will remain a vital universal support for all families and all children. Despite the overall budgetary pressures, the Government is finding the room to invest further in crucial initiatives such as the roll-out of many more breakfast clubs to ensure schoolchildren in disadvantaged areas get the right start in the morning and the right start in life. This shows the Government has protected the welfare safety net despite inheriting a state of economic emergency that required urgent and drastic action to address.
The Department has maintained the safety net and reformed services for jobseekers while at the same time playing its full part in the deficit reduction programme necessary to exit the bailout. Overall welfare expenditure will fall below €20 billion in 2014 despite demographic pressures in the shape of the increasing number of pensioners. This year the Department is spending approximately €190 million in additional funding on pensioners while next year it will spend at least an additional €100 million because of the increase in the number of pensioners in the population. Despite these pressures, the Government has abided by its commitment to protect core weekly social welfare rates, including the State pension. As I stated, next year my Department will provide more than €190 million extra in funding for State contributory pensioners and widow and widower contributory pensioners. The fact that this is being done in the context of a reduced overall spend demonstrates the degree to which the Department is prudently managing its budget and protecting against poverty in what are exceptionally difficult times. In a wider sense, as I have stated many times, strong and responsive welfare provision for those who need it does more than simply provide a key safety net for the individuals, families and communities concerned. Welfare is spent at local level in shops and businesses in every community and continues to represent a vital demand stabiliser even as economic activity and employment grows.
There is a difference between falling back on welfare when it is needed and becoming dependent on it in the long term or across the generations. Long-term welfare dependency is something we must prevent as the recovery picks up pace and more opportunities become available. In particular, signing on for jobseeker’s allowance on a person’s 18th birthday is not the start to adult life any parent would want for his or her child. We must be more ambitious for our young people. I am making the changes relating to jobseeker’s allowance for young people to place a greater emphasis on work, training and education supports rather than on income supports. This will ensure young people always are better off in education, employment or training than claiming. To facilitate this, the Department will enhance the range of opportunities currently on offer in the form of internships, participation on employment schemes, subsidised private sector recruitment and supports for self-employment. The full range of youth employment initiatives will be set out in the Government's plan for the implementation of the EU youth guarantee, which will be finalised and submitted to the EU by the end of the year. Such submissions will be made by Ireland and all the other member states. As part of this, the Government will seek to maximise the share of EU funding allocated to Ireland. Even before any EU funding is agreed, the Department is committed to spending €1.08 billion next year on work, training and education places and related supports for jobseekers generally. This is an increase of almost €85 million on the projected spend for this year.
In addition to the need to ensure more opportunities for young people, I am conscious of the need to protect and support those who have worked and paid their taxes and PRSI contributions over a long period. Many workers continue to face compulsory retirement in their early 60s, while other workers of the same age have lost their jobs in recent years, that is, well before they reach State pension age and can claim their State pension. A balance must be struck between the pressures of population and demographic changes and the needs of those who have made a substantial contribution to society over the years. In recent Social Welfare Acts, I introduced provisions compelling unemployed people to engage with activation processes. It is only right and proper that in return for the Department doing its best for jobseekers in respect of assistance and support, jobseekers must do their best to engage with the Department.
In recognition of the difficult position facing some older workers, as well as their long-standing contribution to the State, I have instructed my departmental staff that from 1 January 2014, such compulsory conditions no longer will be applied to older people who seek the support of the jobseeker schemes in advance of pension age. In addition, arrangements will be made in order that such older people will be obliged to register with their local office only once a year and will have their jobseeker payments paid directly into their bank accounts if they so wish. This instruction means that people who are on the jobseeker schemes aged 62 or over will not be subjected to the activation related sanctions that are provided for in legislation such as payment rate reductions and temporary withdrawal of benefit. Where a person aged over 62 wants support to reskill, retrain or take up any options offered by the Department, he or she may voluntarily seek to avail of an array of such supports. I am trying to balance the desire of some people to work for a lot longer with the fact that for others, it is not something in which they particularly wish to be involved. In this way, we will continue to support longer working while acknowledging the contribution of those who are in transition to retirement.
This initiative should be viewed in tandem with other arrangements in place for jobseekers aged between 65 and 66 and set out in law. These arrangements provide that jobseeker’s benefit re-qualification provisions do not apply in the case of a person aged between 65 and 66 years, meaning that if a person qualifies for benefit at age 65 or their benefit is due to expire at age 65, benefits will be paid until that person's 66th birthday. In the case of a jobseeker’s benefit recipient under 65 whose claim spans from one benefit year into another, a new relevant tax year requirement is not applied in the case of entitlement relating to the second benefit year. Separate to the provisions above, I am coming to the end of my deliberations on the current issues on defined benefit pensions and I expect to bring provisions on these matters to the House soon.
I will outline the main provisions of the Bill. Section 1 provides for the Short Title, construction and collective citations, as well as for the commencement of sections by way of commencement order. Section 2 provides for the definition of certain common terms used throughout the Bill.
Section 3 provides for the second element of the budget 2013 decision to broaden the base on which PRSI contributions are charged so as to provide that the exemption from PRSI that applies to employed contributors and occupational pensioners aged under 66 years whose only additional income is unearned income will be abolished with effect from 1 January 2014. The additional unearned income will now become liable to PRSI at 4% provided the person is a chargeable person for Revenue purposes. Essentially, a chargeable person means a person with unearned income in excess of €3,174. This will not apply to PAYE taxpayers with no other income, or additional income less than €3,174. In addition, people who have reached State pension age of 66 are not liable to pay PRSI and therefore will not be affected.
Sections 4 and 7 increase the number of waiting days for entitlement to illness benefit and injury benefit respectively from three days to six days. This change takes effect from 6 January 2014.
Section 5 provides for the alignment of the minimum and maximum rates of maternity benefit to a standard rate of €230 per week. This change only applies to new claimants and comes into effect for new claimants from 6 January 2014.
Section 6 provides for the alignment of the minimum and maximum rates of adoptive benefit to a standard rate of €230 per week. This change again only applies to new claimants and comes into effect from 6 January 2014.
Section 8 provides for the discontinuation of the payment of a bereavement grant in the case of deaths occurring on or after 1 January 2014 but the very wide range of supports in regard to spouses and dependent children who have suffered a bereavement continue and they are far more extensive and valuable than the actual bereavement grant.
Section 9 provides for the amendment of the rates of jobseeker’s allowance payable to certain claimants aged under 26 years. A reduced weekly rate of €100 currently applies to 18 to 21-year-olds and a reduced rate of €144 applies to 22 to 24-year-olds in both cases where the claimant does not have children. This section provides that the reduced weekly rate of €100 will continue to apply to existing claimants aged between 18 and 21 years until they reach 25 years, and will also apply to new claimants aged between 22 and 24 years.
Section 9 also provides that the reduced weekly rate of €144 will continue to apply to existing claimants aged between 22 and 24 years when they reach 25 years and will apply to new claimants who are aged 25 years. In addition, these lower rates of jobseeker’s allowance will apply to claimants aged 25 and under who have exhausted their entitlement to jobseeker’s benefit. Claimants who have children will be unaffected by these measures. These changes will apply from 15 January 2014.
Section 10 provides for amendment of the rates of supplementary welfare allowance payable to persons under 26 years on the same basis as the changes to the jobseeker's allowance that I have set out.
Section 11 provides for the discontinuation of the mortgage interest supplement scheme for new applicants with effect from 1 January 2014 and allows for a winding-down of the scheme for existing claimants over a four-year period, that is, by 1 January 2018, as people enter the mortgage arrears resolution process and, if appropriate for them, the insolvency services, following the passage of that legislation.
Section 12 provides for the discontinuation of the higher personal weekly rate of invalidity pension of €230.30 payable where the pensioner attains 65 years of age on or after 2 January 2014, and the higher weekly rate of increase for a qualified adult of €206.30 payable where the qualified adult attains 66 years of age on or after 2 January 2014. That is in line with the State retirement pension.
Section 13 provides that where a specified illness or disability payment is paid by the Department of Social Protection to a person who is unable to work as a result of an accident, injury or disease, and that social welfare recipient has been compensated for that accident, injury or disease, whether by way of court settlement or otherwise, the amount of such illness-related social welfare payments that have also been paid as a consequence of that personal injury is to be repaid to the Minister by the person liable to pay compensation, which in most cases will be insurance companies. Depending on the circumstances, this amount can be partially or fully offset by the compensator against any compensation for loss of earnings or profits.
Part 3 and section 14 provide for amendment to section 38 of the Personal Injuries Assessment Board Act 2003 consequential to section 13. We are seeking to recover compensation payments, the Department's share, as happens, I understand, in pretty much every other country.
Section 15 provides for the definition of the "Principal Act" to mean the "Pensions Act 1990". Section 16 provides for the inclusion of a reference to the "Surviving Civil Partner (Contributory) Pension" in section 59B of the Pensions Act. Section 17 provides for the inclusion of a reference to the "Surviving Civil Partner (Contributory) Pension" in section 59C of the Pensions Act.
Section 18 inserts a new section 59H into the Pensions Act and provides the trustees of a pension scheme with the power to amend the scheme rules to ensure that the correct occupational pension is paid at age 65. This amendment arises from the change in the qualifying age for State pension from 65 to 66 from January 2014. It provides for the cessation of a bridging pension which may be payable in the period before the State pension becomes payable and for determining the correct rate of occupational pension payable in the case of an integrated pension. That completes the main provisions of the Bill.
Balancing the needs of people who are dependent on social welfare against the money which is available is extremely difficult but I assure the House that the Government has done and is doing its utmost to protect the most vulnerable people in our society. I welcome the fact that the level of the adjustment to the social welfare budget is less than that originally requested, and that we have protected core weekly rates and the crucial secondary schemes and supports mentioned earlier. That is the reason the State pension and the other benefits which go to older people will continue to ensure that older people in Ireland enjoy a significantly less degree of being at-risk of poverty than almost every other European country. Those provisions in many ways are a reflection of the value of older people to Irish society. That has been reflected in our social welfare legislation down the years and despite an unprecedented period of fiscal austerity arising from the collapse of the banks and the construction industry.
In 2014, my Department will continue to help more people back to work, reduce the overall welfare spend as part of the sustained effort to repair the public finances, and ensure the safety net remains absolutely firmly in place for those who need it most. I commend the Bill to the House.
Debate adjourned.
Before I call Deputy O'Dea I wish to advise the House of the messages from committees.