Members should maximise the usefulness of having the delegation before us by asking questions which are relevant to the topic, as we obtain more information that way.
Combat Poverty Agency: Presentation.
We are always happy to do so.
I appreciate the Deputy's co-operation. I hope and anticipate he will show a good example.
I am pleased to welcome to Mr. Jim Walsh, head of research and policy; Dr. Jonathan Healy, research and policy analyst; and Ms Bevin Cody, head of communications and public affairs, at the Combat Poverty Agency. They are here to make a pre-budget presentation to us. Apologies have been sent by Ms Helen Johnson, director of the agency, who has visited us many times but is attending an EU social inclusion round table meeting in Finland, and Ms Fidelma Joyce who is attending the Having Your Say conference in Croke Park. Both have passed on their regrets to the committee that they are unavailable today. We would like to attend those events also but are unable to do so because of our parliamentary obligations. People are sometimes unhappy about our inability to attend but we cannot be in two places at once.
Members are reminded of the parliamentary practice that they should not comment on, criticise or make charges against a person outside the Houses, or an official, either by name or in such as way as to make him or her identifiable. Members who wish to make a declaration on any matter being discussed may do so now or at the beginning of their contribution. Members are also reminded that if there is a possibility of there being a conflict of interest, they should declare that interest either now or at the start of their contributions.
I draw attention to the fact that while members of the committee have absolute privilege, the same privilege does not apply to witnesses appearing before the committee. While it is generally accepted that witnesses would have qualified privilege, the committee is not in a position to guarantee any level of privilege to witnesses appearing before it.
That is a customary warning that I doubt will ever arise for the Combat Poverty Agency.
I thank the Chairman and the joint committee. This is a doubly significant day because it coincides with the UN day for the eradication of poverty. To mark the occasion, my colleague, Ms Bevin Cody, will play a short DVD.
Ms Bevin Cody
As Mr. Walsh said, 17 October is UN day for the eradication of poverty, change an initiative born out of a civic project in Paris in 1987 which is now celebrated around the world to express solidarity and friendship and listen to the voices of those living in poverty. It is also a date to renew our determination to act throughout the year to eradicate poverty. To reinforce the significance of this date, 30 countries have commemorative stones placed in cities which are inscribed with the words, "Whenever men and women are condemned to live in poverty, human rights are violated. It is our solemn duty to come together to ensure that these rights are respected". It is in that context that we are presenting our pre-budget submission, the theme of which is making poverty the policy priority in the budget for 2007. This short DVD was filmed last year at the commemoration ceremony at the Famine memorial on the quays on 17 October last year. It will sum up the purpose of the day more than anything I can say.
The joint committee viewed a DVD presentation.
Mr. Walsh
The focus of the presentation will be on our submission on budget 2007. The relevant document has been circulated to members and I also have a slide presentation. I will pick out a few key points, after which members may ask questions.
It is a statutory duty of the Combat Poverty Agency to advise on public policy on poverty alleviation. The budget is a key element of this policy because it determines taxation and welfare policy. The agency takes an evidence based approach to the budget and its submission draws on research findings and earlier work it has done analysing budget trends and outcomes. We also use analytical tools to inform our choices. I will show how we work out what would be the impact of the measures we recommend in reducing the levels of poverty. This is an important policy tool.
The submission takes a strategic focus, namely, to make a decisive impact on poverty by 2010 in terms of income and deprivation. In that sense, the Combat Poverty Agency is slightly different from many of the more sectional interest groups because our focus is broader and concerned with achieving this objective. The Government signed up to a commitment to make a decisive impact on poverty by 2010 as part of the European social inclusion strategy.
The Combat Poverty Agency's budgetary proposals, including its taxation and welfare components, are costed at €2.4 billion, an affordable package very much in line with last year's budget. This figure is also within the range put forward by the Economic and Social Research Institute at its conference last week as realistic and non-expansionary. The agency has borne in mind the need to take a cautious approach.
Budget 2007 is an end and a beginning. It is an end in the sense that it marks the final year of the national anti-poverty strategy, a ten-year Government strategy to tackle poverty, and a beginning in that it will be the first year of a new national action plan on poverty which forms part of the European strategies for social protection and inclusion. It is a pivotal time, marking the end of one era and the commencement of a new three-year programme to tackle poverty.
I remind people of the poverty challenge facing us. One fifth of the population is at risk of poverty, which is 30% higher than the European norm. Our welfare system is less effective in reducing income poverty. In other European countries poverty is reduced by 60% through social transfers. In ours it is reduced by only 40%. We, therefore, need to invest more in our social welfare system to increase its effectiveness. Welfare recipients are increasingly vulnerable. One in two welfare recipients, of every category, is likely to be affected by income poverty, which situation has progressively deteriorated in recent years. There is a small but emerging group of the working poor.
A particular challenge is presented by poverty persistence for children. A study the Combat Poverty Agency launched earlier this year showed that one fifth of Irish children spent between five and eight years in the income poverty trap. That is a long-term sentence and the effects are lifelong. The number living in consistent poverty is 7%, but that figure rises to 10% for children, while 31% of lone parents and their children are affected. That is a worrying statistic.
The five themes in our budget strategy submission are increasing welfare rates, maximising benefits for children, rewarding participation in employment, fostering equity in the tax system and improving the living standards of those on low incomes. I will focus on children and fuel poverty, which impacts on the living standards of people on low incomes.
Welfare payments are key to reducing income poverty. If we want to improve our performance compared to other EU countries, improving welfare payments is the recipe. Our proposals are that the basic rate should increase by €20, and other rates by slightly less. The other element is a rebalancing payment in favour of couples. A couple receives 1.66 times the personal rate. We suggest this rise to 1.7 to ensure we give a greater increase than the qualified adult rate, which we suggest should rise by €16 per week. The details are included in our presentation. The new personal rate would be €185.80 and the qualified adult allowance €126. That is important.
I would like to give more attention to child income support, particularly as we want to address the issue of child poverty. The Government's target on the adequacy of child income support is approximately 33% to 35% of the adult rate. The rates for older children fall slightly outside this. Older children on low incomes do not receive that amount and we would like to remedy this. The second approach is to balance universal and targeted measures. Ireland has a complex way of supporting children, including child benefit, early child care supplement, CDAs, clothing and footwear allowance and FIS. We suggest a balanced approach combining targeted and universal measures. As well as giving more money to households with children, we want to improve the social outcomes from that money.
We are asked whether the additional money we give will filter down to children. We have some ideas on how that might occur. Specifically we propose that child benefit be increased by €10 per month and paid fortnightly. We recommend that the early child care supplement which the Government introduced last year be doubled to €2,000 per annum for children attending pre-school education. Effectively, we are linking the payments to the child's attendance. We possess much evidence which shows that attending a pre-school is beneficial for children and improves their life chances. We suggest that a half-rate supplement be paid for six to 12 year olds to recognise the child care-related costs for such children.
On child dependant allowances, there are three rates of payment. We suggest these should be standardised at €21.60 per week and that a higher rate of €25 per week be paid in respect of older children.
The clothing and footwear allowance is a targeted measure and we suggest it be paid twice more during the year, namely, in December and the spring. This would be aimed at encouraging and supporting children participating in schools. We are also bringing forward a proposal to increase the threshold for FIS.
The slide and handout both show the specifics and gains that could be achieved in respect of the children of low income families across the various measures. There would be gains of between €11 and €30 per week. These are the equivalent of increases of between 16% and almost 76%. The package would generate a great deal of income for low income households but it would also be linked to specific social outcomes.
As Mr. Walsh stated, one of the issues on which this year's submission focuses is fuel poverty, which has generally been defined as the inability to heat or to afford to heat the home adequately. It is also sometimes defined as when households spend more than 10% of their incomes on energy. Fuel poverty has become more of a pressing issue during the past 12 months as a result of the rise in energy costs. However, it is also a product of low incomes and poor household or thermal efficiency.
Research funded by the Combat Poverty Agency has shown that approximately 17% of households are fuel poor. This represents approximately 227,000 households. Over one quarter of these households, 60,000, are severely or chronically fuel poor. The social groups which suffer most from fuel poverty are the long-term ill and the disabled, as well as lone parents. I will show members a slide that will provide full details in respect of various groups.
Another interesting and startling statistic is that in excess of 2,000 winter deaths occur in Ireland each year, a proportion of which are associated with people living in cold, damp homes. Approximately 29% of fuel-poor households have living room temperatures which fall below the temperature guidelines set by the World Health Organisation, while over half of households inhabited by older people have living room temperatures below that mark.
The next slide provides an overview of the various social groups affected by poverty. Members can see that over 40% of those who are long-term ill and disabled or lone parents are fuel poor. There are some very high levels of fuel poverty across the low income groups.
To reiterate the point relating to energy costs and before I outline our recommendations, in the past four years energy costs have risen by over one third. That is a dramatic increase which does not include the rises in gas and electricity prices which are in the process of being introduced.
The policy contexts relating to this issue are well defined. The fuel allowance is an important part of the anti-fuel poverty measures available. However, it is only a short-term solution in dealing with fuel poverty. Capital expenditure is required. Research we conducted shows that almost two fifths of households receiving the allowance remain in fuel poverty. Although it reduces the severity of experience, these households continue to suffer from it.
There is a need to increase funding for energy efficiency technologies and retrofit measures, as well as to promote alternative energy sources. One area that requires particular attention is the private rented sector because a number of issues connected with it are often not dealt with. It has a high fuel poverty rate.
I will outline our recommendations. An increase of €4 per week is required in the fuel allowance. This would be appropriate to reflect the increase in energy prices in the past year. Moreover, in tandem with the current expenditure measures, the capital side must also be considered. In other words, we must examine the housing stock and improve the subvention available through Sustainable Energy Ireland's low-income housing programme to retrofit private households with energy saving measures. In addition, there is a need to regulate minimum thermal standards in the private rented sector because of its particularly high level of fuel poverty. Moreover, there is a need to focus on alternative energy supports for low income households. While a scheme is in operation, it should be tapered more towards such households.
Mr. Walsh
The cost of the overall package we have presented would come to €2,355 million. As last year's budgetary measures cost €2,354 million, this is very similar to what was spent last year. The difference is that we wish to spend more on social welfare payments. We wish to spend approximately 48% of the budget on such payments and one quarter of the budget, or approximately 23%, on child income support measures. This comes to a figure of €546 million. On income tax, we propose the allocation of a figure of €678 million, amounting to 29% of the package. The income tax side is a significant component and we have proposed the indexing of tax allowances and bands in line with wage growth — 5.5%. The surplus resources should be spent on the welfare side and child income support measures.
On the outcome for income distribution and poverty alleviation, we use a tax benefit model called SWITCH to simulate change in welfare entitlements and tax liabilities for a representative sample of households. We can analyse this by income deciles. Effectively, we break the population down into ten income deciles, from the poorest to the richest. We can also examine the number of households falling below the various income poverty thresholds and how our proposed budget would have an impact in this regard. We have compared our proposed budget with a wage index budget that would increase welfare payments, child support measures and taxes in line with forecast wage growth — 5.5%. Under that budget, approximately €750 million would be available for redistribution out of a total package of €2.4 billion. It would constitute the excess money available for redistribution after indexation. While this would be a significant pot of money, it is worth bearing in mind that it represents one quarter of the bonanza the 33% of people who took out SSIAs will receive this year. A bigger redistribution, of which sight may have been lost, is still under way.
As for the distributive impact, the presentation's diagram shows how our budget focuses clearly on lower income groups. The average gains would come to approximately 1%, or €6.50, per week per income-sharing unit. The lower income groups comprising the bottom 40% of the population would receive gains above that figure, namely, of up to 6% for the bottom 10% and approximately 3% or 4% for the second to fourth deciles. In cash terms, this would be the equivalent of between €11 and €12 per income-sharing unit per week. Higher income groups would receive far less, while the very highest would gain nothing. Although they would still benefit from indexation, they would not receive anything in addition to this. We do not propose to penalise people on the tax side, but simply to keep them in line with wage growth. We would direct the bulk of our resources towards lower income groups.
Clearly, this would be a redistributive budget. Our starting point is that we want to make a decisive impact on income poverty and deprivation. Income poverty will fall at the three thresholds of 50%, 60% and 70% of the median. At the 50% point the fall in income poverty is up to 15%. At 60% and 70% the fall is around 5%, though this is still significant.
The impact for older people is in line with the average, while the impact for children is greater. At 50% of the median our budget will reduce child poverty in Ireland by 25%. The policy priority is to end child poverty and we are delivering on this priority. At 60% and 70% of the median the gains in terms of child poverty are still significant at around 10%. We are achieving what we set out to achieve. The figures given do not display impacts such as a reduction in the levels of fuel poverty and food poverty. Ultimately these achievements will lead to a better health status in low income households and this is our overall aim.
We argue that the budget should redistribute resources available from economic growth to reduce income poverty and address the structural issues causing poverty. In this way we can meet national and EU targets on tackling poverty. We have set out our stall regarding the poverty impact of our budget and suggest there should be similar scrutiny applied to the poverty impact of alternative budget proposals made by other interest groups. What will their impact on poverty be, given it is a national priority? A similar approach could be taken to the impact on poverty of other Government expenditure.
I welcome Mr. Walsh, Dr. Healy and Ms Cody and thank them for the professional presentation and well-researched work. The opening slides outlining the current situation made me quite angry in some ways. We do not appear to be making an impact on poverty. After ten years of economic boom there is more money in Ireland than ever before and it is one of the richest countries in the world, yet one fifth of the population is at risk of poverty. It was stated that 7% of the population is income poor and that 10% of children and 31% of parents are in consistent poverty, not relative income poverty. The statistic acknowledged by the Minister for Social and Family Affairs is the one relating to consistent poverty.
It is unbelievable that we are still at this level and that so many children are experiencing such consistent poverty. We must grapple with this issue and the Combat Poverty Agency goes some way towards doing this in its proposals.
It appears that the cost of housing is missing from the statistics provided. I have come across many people, especially lone parents, who are under great pressure regarding housing. They rent houses, pay over €800 per month, and some of the dwellings are appalling. Local authorities seem to be powerless. In Cork there are two housing officers covering the entire county and it could be 18 months before they make an assessment. There are houses lying idle because they take so long. People ask why certain houses are boarded up and not available for use and the local authority responds that the housing officers will make an assessment in around six months. In the meantime, people are paying exorbitant rents under terrible conditions. As was pointed out, very many of these houses are without insulation and electricity, which is extraordinarily expensive, since it is the only heating being provided. That is the reality I find on the ground and the situation is getting worse. I am not sure what my colleagues' experience is in this regard.
People attend my clinics and I sometimes feel like giving them money, because they have nowhere else to go and no one to turn to. They have small children, no money and in some cases they are being told that they are to be evicted. When we approach the local authority or the health boards we are told they can go to the city shelter. The reality is they do not have money to buy food and while the community welfare officers are doing their best, they are constrained. I blame the cost of housing and rental costs, especially for lone parents, as well as the fact that fuel costs are beginning to impact. I should like to hear the Combat Poverty Agency's comments on that and whether this is the norm around the country. Perhaps it is only in my area.
The qualified adult allowance, QAA, is currently at 66% of the personal welfare rate. I believe the Combat Poverty Agency said the Government had agreed to increase it to 70% in 2002. However, this would be less than its commitment to pensioner spouses in An Agreed Programme for Government in June 2002, when it stated: "We have introduced a personal pension entitlement for pensioner spouses currently in receipt of the qualified adult allowance, set at the level of a full non-contributory pension". Does the Combat Poverty Agency believe the 70% rate is sufficient?
In each budget the non-contributory rate has been increased by a greater amount than the contributory pension, which leads to complaints from people in receipt of the contributory pension. Does the Combat Poverty Agency have an opinion on that matter? These people tell me that it is unfair they are getting a smaller percentage increase. How do we answer that issue? Is there a comparison between poverty rates for non-contributory pensioners? Are they higher than those for contributory pensioners — or has any research been done on that issue?
The Combat Poverty Agency has also suggested paying the child benefit and early child care supplement fortnightly. Perhaps the agency could give its reasons for this. Is it to help with money management? Is there an increase in the administrative costs?
The agency refers to paying the back to school, and clothing and footwear allowances automatically to all recipients of means-tested payments. Again, does this include recipients of this allowance, assuming they come under the income limits for the payments? It talks about increases in the basic rate of CDA. This allowance has not been increased, I believe, since 1994. What are the agency's views on the proposed second tier payment currently being considered by the NESC? Initially it was proposed to amalgamate the back to school and clothing and footwear allowances and the CDA. Again, we are still waiting. Perhaps the Combat Poverty Agency has an input into that issue.
Concern has been voiced as regards the parental allowance by some lone parents' groups and others in relation to the age limits for payment. They feel the Minister's strong encouragement for parents to work once a child has reached the age of eight is too early. Has the agency a view on this issue? Does it feel that eight is too young and that the introduction of a new parental allowance to replace the one-parent family payment and the QAA will help combat poverty in low-income families?
What are the agency's views on the age-related poverty traps which the new payment is expected to foment, according to some of the one-parent family groups, with which I am sure the agency is familiar? The agency talks of the introduction of a vouched child care disregard of up to €100 per week, with €50 per week for each additional child. There are no costings, so how would this actually work? I would be interested to hear the details about vouched child care. What changes would this involve for the means-tested procedures and who would operate the scheme? Would it be the Department of Social and Family Affairs?
The idea of reducing the expenditure threshold on the drugs refund scheme for people with the GP-only cards to €50 is a good one. How much would this cost? Fuel poverty is a huge and growing issue. Mr. Walsh mentioned that capital expenditure is required and I would like him to give more detail. If he cannot do it today, he could send the information to the committee.
Food poverty is another difficult issue. Are school meals available in rural schools as well as urban ones? I have raised the issue of rural poverty before. Much of the focus seems to be on urban poverty, and rightly so. However, there are also people living in isolated rural areas with falling incomes. As a result of living in isolated areas, they often have fewer services and have problems with transport, etc. Has the Combat Poverty Agency, or any other agency, looked at the problem of rural poverty? If so, what were the findings?
Mr. Walsh seemed to imply that he had a strategy to ensure that payments made under child income support filter down to children. What is the strategy?
I do not know how Mr. Walsh intends to farm out those questions. I will leave it to him.
Mr. Walsh
Deputy Stanton has clearly read our submission. I will deal with some of the questions and Dr. Healy will deal with the issues of fuel poverty and housing ranking costs.
Consistent poverty — the official measure of poverty — has clearly fallen over the past number of years. The fall reflects the fact that the living standards of people on social welfare have risen — payments have risen ahead of inflation and even ahead of wage growth. However, there remains a substantial and worsening gap between those who are on fixed social welfare incomes and the rest of society.
While welfare payments have been important, employment has been the engine for reducing poverty in recent years. However, more needs to be done to reduce relative income poverty. As I have already said, this form of poverty is higher in Ireland than in other European countries. Across almost all welfare categories, the risk of income poverty is now around 50%. Some ten or 15 years ago this would have been the case primarily for the unemployed, but all social welfare groups are now to be found experiencing income poverty. This clearly points to a structural problem. We need to do something to bridge the gap between those in receipt of social welfare and those on other sources of income.
If we did not have a welfare state, we would have poverty rates of approximately 40%. The poverty rate stands at approximately 20%. Through welfare transfers, other European countries reduce their poverty rates by 60%. Some work has been carried out by the ESRI to determine the magic recipe, so to speak, and what must be done to get Ireland up with other well performing countries such as Denmark and some of the other Scandinavian countries. The key is not demographics or employment participation; it is the level of welfare payments in those countries.
Much more needs to be done in terms of income poverty. Important progress has been made but more radical action must be taken to close the structural gap that seems to be emerging. In the past few years, with the significant increases in welfare, it has been moving in that direction but we want to continue and even strengthen that movement.
On the QAA for pensions, and the same applies for the welfare rate, we are looking at the groups on the lowest welfare payments and we want to give those the biggest boost. That is the reason we want the lowest welfare payments to get a boost of €20, the non-contributory pensions to get a boost of €18 and the contributory pensions, which are the highest welfare groups, to get an increase of €15. We will prioritise those in the lower-income groups. The rationale for that is that we want to push everyone up from the bottom but we must first identify them. Some years ago the policy was to give more to pensioners. We are rebalancing some of that, although a significant gap remains. We are suggesting the lowest welfare payment should be €185.80. The rate for a non-contributory State pension will be €200, an extra €15, and the contributory State pension will be €208. There is still a gap of over €23.
On the QAAs, I am aware there is a Government commitment on pensions but our view is to prioritise those on the lowest rates, currently 66%, and to bring them up to at least 70%. I am not saying 70% is an adequate figure but it is better than the current rate. Seventy per cent was a commitment made by the former Minister, Charlie McCreevy, in budget 2000. He set that target. It was also based on the findings of a review group under the Department of Social and Family Affairs. There is a good rationale, therefore, for bringing those on the lowest rates up to a higher level.
On the fortnightly payment of child income support and the rationale for some of the other income supports, with the welcome increase in child income support there has also been a shift to paying it through child benefit, which is a payment of effectively €150 per month, equivalent to €34.50 per week. That accounts for, say, 70% of the child income package for a low-income household. The other 30% is the weekly child dependant allowance.
We know people on low incomes budget on a weekly basis and giving them so many resources in a monthly lump sum or even the new early child care supplement, which we pay on a quarterly basis, does not make sense from a budgeting point of view. That might suit a middle-class approach to budgeting in that one is paid on a monthly basis and therefore one pays one's bills on a monthly basis but that is not the reality for those on low incomes. Administrative costs would arise but it would improve cashflow for people on low incomes. It would also be beneficial in that there would be more expenditure on children which, apart from some lump sums, is on a weekly or fortnightly basis. That is our aim. In the United Kingdom, child benefit is paid on a fortnightly basis. That is what we are replicating, although it might be a longer period. This is an option. Not everyone would have to be paid on a fortnightly basis but at least people would have the option.
On the clothing and footwear allowance, an administrative reform, we would argue that all means-tested payments, including family income supplement, should be automatic. It seems nonsensical that we have one welfare system, the mainline system, and then a shadow welfare system in the community welfare service yet frequently it is the same group of people being means-tested. Linking the two would result in administrative savings rather than costs.
Reform of the second tier of child income support remains aspirational. It appears to be somewhat bogged down in terms of the way the child dependant allowance and family income supplement will be linked in a streamlined system. Whatever system is used, the goal is to give more money to people. We can do that now and work out details of streamlining the two payments later. Reforms can be made now and an obvious one is addressing the three rates of child dependant allowance. There should be one. We should not seek to discriminate against some children — it is wrong in principle. One also seeks to give more money for older children — where costs are higher — and child dependant allowance facilitates this. These reforms are not counter to an integrated payment structure and could continue in such a system. The main beneficiaries of an integrated payment structure are those with higher incomes. There are means to provide benefits to people at present.
The family income supplement vouched child care disregard can operate in the same way as the means test for the GP-only medical card. A certain amount, up to €100, can be disregarded for child care costs. This should be vouched, with a receipt showing that this cost was paid.
Is Mr. Walsh referring to a registered child care provider who could provide such a receipt?
Mr. Walsh
That would be the ideal scenario. Someone in the home may be minding children but, in view of the direction in which child care policy is moving, the person should be registered. We seek to ensure high quality child care in the legitimate market rather than the black market.
Regarding expenditure thresholds for drugs costs, the Government introduced the GP-only scheme for those who are not eligible for the medical card but still require assistance. This scheme only provides assistance for costs of visits to the doctor. People must pay the full price for medical costs up to a threshold of €90. We propose reducing that figure to €50 if one is on the GP-only scheme. This provides some assistance with medical costs. We have not calculated the costs of that scheme and it requires further investigation.
Attendance at pre-school could be linked with a double early child care supplement. That is not a radical idea. Child benefit ceases at the age of 16 unless the child remains in school. We suggest paying double if the child is attending pre-school. We picked up this idea from the Commission on the Family ten years ago. It involves providing more resources but the child would receive a clear benefit from it.
There are two school meals schemes, one run through the local authorities and the school food programme which is available to all groups in rural and urban areas. At present, 6,000 children receive a hot dinner, a figure we wish to see increased to 200,000. A further 40,000 children receive a substantial snack at lunchtime but the standard should be a hot dinner. It is recommended that children receive one third of daily nutritional intake at lunch time. This gap must be filled but it is not occurring in low income households. By intervening directly, one improves the health status of children and their concentration levels. They would also be more keen to attend school and the financial burden on low-income households would be reduced. Children, teachers and parents gain in this way. The cost of a hot lunch for a child is estimated to be approximately €2 per child per day. However, there are also capital costs involved.
In respect of rural poverty and access to services, all the recommendations we are making apply to people in rural and urban areas. We are not talking about spatially targeted interventions. We recognise that poverty exists in all areas. We are carrying out some work on access to services, particularly financial services. A study into this area is currently under way which will examine some blockages to accessing financial services such as bank, savings, credit union and bill-pay accounts for people on low incomes. This study might be of interest to the committee and we hope to finish it in the next month or so. Dr. Healy will address some of the questions concerning housing.
In terms of the capital expenditure on the fuel poverty measures, Sustainable Energy Ireland, SEI, the national energy authority, has produced the warmer home scheme, which is part of its low-income housing programme. A total of €7.6 million has been allocated to this scheme over the period covered by the national development plan, which is quite a small amount of money, to retrofit low-income houses with energy saving measures. The scheme does not cover central heating but deals with fairly basic energy measures such as draught stripping and insulation. We would say that the figure of €7.6 million is not sufficient and that we would like to see far more money being pumped into this scheme to make a real impact on fuel poverty in private households.
Social housing is being dealt with through the local authority remedial works schemes. Depending on which local authority one is referring to, such work is quite effective. In general, these programmes are being rolled out quite effectively. Another area we are examining in terms of increased capital expenditure for fuel poverty measures is an expansion of the greener homes scheme, another SEI programme that attempts to bring about fuel switching. It attempts to persuade people to invest in such measures as wood pellet boilers. This is very much a long-term strategy, rather than simply pumping money into the fuel allowance as a short-term strategy.
There are a number of issues related to the costs of housing. The first is connected with the private rental sector. I understand the committee was referring mainly to people like lone parents who live primarily in the private rental sector, which has the highest poverty risk of all tenures. They would most likely receive a rent supplement. The issue at stake here is the adequacy of this payment.
The Department of the Environment, Heritage and Local Government has moved towards the rental accommodation scheme. Under this scheme, certain long-term tenants will be transferred to social housing stock tenure, which is, generally speaking, of higher standard that many of the residualised housing in the private rental sector. We do not have any work on the adequacy of the rent allowance to draw on. The Department of the Environment, Heritage and Local Government would probably monitor this. There has certainly been a very dramatic increase in expenditure by the Department of Social and Family Affairs on rent supplement over the last ten years. However, much of this has been driven by other factors, such as the very large increase in the number of immigrants, who have pushed up rent expenditure. It has not increased the levels of rent supplement per claimant.
I am grateful for the responses. I know the agency has also taken the opportunity to give individual briefings. I will again concentrate on how the definition of poverty is measured. I noticed that the second last slide dealt with the impact on income poverty. I also noticed that, in respect of the reduction for 50% level, the slide concerned itself with relative income poverty as a reduction comparison rather than the national anti-poverty strategy comparative poverty figure. Was there a reason for doing this?
Mr. Walsh
Income poverty is one of two components of consistent poverty and so effectively one partly measures that.
Is Mr. Walsh discussing relative income poverty?
Mr. Walsh
Yes, but it is a component of consistent poverty as well. It is not possible to measure other aspects such as the impact on deprivation indicators. They cannot be modelled in the same way as the income indicator.
Income poverty itself is an important issue for the reasons I outlined previously. One can see a two-tier society developing with those on low incomes and those in receipt of means-tested social welfare payments grouped in income poverty or at risk of it and then becoming detached from the rest of society. The long-term effect of that would be of concern.
I want to be clear on that because I want to ask about the other comparative factors in consistent poverty. I attended the CORI social policy conference this morning, where a person who presented a paper stated, somewhat facetiously, that because of the way we measure consistent poverty it would be possible to claim poverty in Ireland could be eliminated for €50 million. This would be done by passing legislation to close second-hand stores and produce €50 million from the budget of the Department of Agriculture and Food to provide one roast meal per week for the families in question. As that is how we measure consistent poverty we could state at a stroke that poverty no longer existed. That is the reason we have a consistent argument about consistent poverty.
I do not know whether the Combat Poverty Agency or the ESRI came up with the definition of persistent poverty, whereby people live in poverty for three years out of four. It is a real indicator of people being maintained in low income circumstances. Is this a more effective judgment of poverty?
I am aware the Combat Poverty Agency has completed an analysis of budgets since 1997. It indicated the first six budgets of the former Minister for Finance, Mr. McCreevy, had a negative impact on low-income households and a positive impact on those better-off in society. His final budget was neutral and the two budgets produced by the current Minister, Deputy Cowen, were weighted towards lower-income people. For how long has that exercise been done? Did it begin in 1997?
Do we know the cumulative effect as we approach the last budget before the next election? The Combat Poverty Agency's budget submission raises many of the issues which must be addressed. The headline on the submission, which suggests making poverty the policy priority in budget 2007 is extremely optimistic. The political system tends to view poverty issues and those affected by them as not being as important as they should be during an election. It is not only the Government parties which are guilty of this — all political parties do so. It would be surprising if it were emphasised in the budget. We will wait and see.
I want to ask specific questions on the proposals put forward, particularly on fuel poverty which Dr. Healy briefly covered. I would like to see more substantial capital expenditure. An allocation of €31 million was proposed to increase the fuel allowance. Only €5 million is proposed for the sustainable Ireland warmer homes scheme and no funding allocation is proposed for alternative energy proposals. To tackle real fuel poverty, which is where people on low incomes in low grade housing use non-efficient and cost-ineffective fuels, we must first tackle capital issues. We must ensure their houses do not leak the fuel being used. I would like to see a substantial capital allocation to do so.
I will ask a question on the only other area not covered by Deputy Stanton. It is hard to believe he left a gap.
We heard a statistic recently that 79,000 families had applied for the back to school footwear and clothing allowance, the highest number ever recorded. That is an indication of the increasing incidence of poverty. Does the agency have a comment on this?
Mr. Walsh
The key point about the deprivation indicators is that they suggest a deeper problem. The CPA does not subscribe to targeting the ventures suggested because the income side must be addressed first.
On the deprivation side, some of our measures have been directed. There are three food-related indicators clearly suggesting people are struggling to put together substantial and healthy meals. We have made that a focus. There is also the issue of adequately heating a home. Eight measures are open to revision. The ESRI has proposed a new set of 11 measures, dropping some of the originals and introducing some new ones, which suggests these are relative indicators of prevailing living standards that evolve over time and need to be reconstituted to identify groups which suffer a more severe form of poverty.
I talked about persistent poverty for children. The statistic from our study of child poverty, that 17% of Irish children spend between five and eight years in the income poverty trap in an eight year period, has enormous implications. Effectively, this group carries the burden of poverty. We know from other work that the longer a child remains living in poverty, the worse the social outcomes will be in terms of life opportunities. We must get into these specific groups. Some of our interventions are targeted at the use of mechanisms such as CDAs and encouraging attendance at pre-school. Poverty is transmitted from one generation to the next. A way to tackle this is through educational opportunity in childhood, particularly at pre-school level.
For adults, the EU-SILC figures will show us patterns but it is only the second year of the cycle. After four years we will be able to see more clearly because the official definition of persistent poverty is three years living in poverty. This study was able to use the previous Living in Ireland study to draw findings for children but it is a key issue.
The cumulative effect of budgets could be looked at but similar work has been done by Mr. Tim Callan in the ESRI. He presented a paper at the Budget Perspectives conference two or three years ago which went back to the 1970s to look at Government and social partnership cycles to see differences. Some material goes back even further.
Clothing and footwear allowances highlight the issue of take-up. This is a secondary payment operated through the community welfare service and there is still a veil of discretion about it. It is an administrative scheme, not a legal entitlement, and people must apply for it separately. That is why we have argued for a passport for automatic entitlements if a person is claiming a CDA payment. Payment is already automatic in the case of persons in receipt of a means-tested CDA or FIS payment. Implementation of our proposal would further increase the level of take-up.
Is Mr. Walsh suggesting the iceberg effect is at work?
Mr. Walsh
Yes. There has always been a problem with take-up in means-tested payments, for example, family income supplement. When one compounds this with a scheme delivered by a secondary welfare system, a complete welfare service with a different operating mechanism and a discretionary dimension, the outcome is a problem with take-up. That being said, the clothing and footwear scheme is of value in that it is a targeted lump sum payment for households. This is the reason the Combat Poverty Agency has proposed that it be paid two more times per annum. If it were operated on an automatic basis, the number of children benefiting from it would increase to almost 150,000.
On the question of making poverty alleviation a policy priority, the Combat Poverty Agency argues that it is possible to do this while also ensuring taxpayers receive some relief by raising tax credits and bands by 5.5%. This is a significant increase that would match wage growth but one which was not delivered in previous years. If some of the proposals on children were implemented — a number of the relevant payments are universal — there would still be scope to give an additional boost to people on low incomes without breaking the bank. The alternative we propose is feasible and fundable and would deliver certain desired outcomes without taking anything from others. What, therefore, is the problem?
I do not disagree. Will the delegation respond to the questions on cost?
We are slightly reticent about dwelling in detail on the costings in the absence of the evaluation of the current warmer homes scheme. With this in mind, the Combat Poverty Agency is undertaking an evaluation of the scheme with Sustainable Energy Ireland and hopes to have results in the next 12 months. The evaluation is detailed and will examine the health benefits of retrofitting measures and so forth.
The increase of €5 million in funding we have proposed would constitute a significant increase on the current funding allocation of approximately €7.6 million. The problem with the scheme and in some senses one of its main bonuses is that it is delivered through the community employment programme. This raises the issue of whether there is sufficient capacity to deliver a dramatic increase in funding. Failing this, the other option which reflects the Combat Poverty Agency's support of capital subvention would be to provide direct grants for householders to undertake energy saving measures. Any such new scheme would operate in a similar manner to a scheme in the 1980s which successfully promoted attic insulation which almost 85% of houses now have. Two approaches are possible. If a capacity constraint is found, we should examine the possibility of providing direct payments for householders. It is a matter for SEI and its parent Department to determine if there is such a capacity constraint.
The other significant area is the Greener Homes scheme which takes a long-term approach. The Combat Poverty Agency is keen to ensure this scheme continues to receive funding. Given the substantial amount of money available under the Greener Homes schemes, we propose that it be tapered slightly towards low income households. Evidence suggests these tend to be the most under-insulated and energy inefficient households.
All the good questions have been asked but the failure of both my colleagues to mention Tallaght leaves me with one issue to talk about. I want to be associated with the welcome extended to the group. It is important that we have such meetings because they give us an opportunity to share information and hear what is being said. I am looking at the slide about making poverty alleviation the policy priority. That is the challenge. Everybody in the media is commenting about what the Minister for Finance, Deputy Cowen, should do and suggesting how he might spend the next 50 days making his decisions. This is a competing interest.
I often say I bring my background to my politics. I was reared in a bygone Dublin which we survived well and which instilled in me my views on poverty. I do not mean to be virtuous. I am strongly committed to the concept of social inclusion and it is important we achieve it. The Taoiseach has often said that at a time when all boats are rising we must remember the little ones. That thought came into my head when I listened to Mr. Walsh speak. That is what this is about. I hope everybody understands the Minister for Finance should do something about these issues. It is no longer right that people are living in poverty and that children are not eating properly. It is time we dealt with that matter. Even my Opposition colleagues admit the economy is flying and that there is lots of money in the system. Tackling fuel poverty is important. Perhaps my question is how we should get that message across. Energy costs are an issue for everybody. It is important we help those who are caught in poverty traps.
The other point that struck me was on voting. I am no more paranoid about elections than anybody else, although I am counting the approximately 220 days until the next general election on which I am focused. People often talk about disadvantaged areas. Although Tallaght is no worse than anywhere, it has communities in which there has been a struggle to get people to vote. They ask why things should be done for those who do not vote. It is important that we dismiss this. My friend and constituency colleague Deputy Rabbitte and I recently involved ourselves in a project in An Cosán in Tallaght west, where we helped create a situation where funding was provided to educate communities about voting. The Chairman had better not tell him I revealed this. I think other colleagues will also help. Who the people vote for is another day's work, in which we will all have to compete. There is a definite relationship between poverty and educating people on the franchise. I bring many groups here from communities and always try to get that message across. Young people in particular are entitled to be cynical about politics. We must all keep working at this, as one will never get a vote if people do not vote. It is important we promote the idea of people voting.
I want to ask about the concept of poverty alleviation. Sometimes it refers to bread on the table. When I was in school, I did some work in which I visited houses where, while there was no bread, there were new televisions. Nowadays they would have new DVD players. It happens everywhere. It is about educating people on how they should deal with these issues. I strongly believe that if the economy is doing so well and if there is so much money in the system, people should not be poor. Someone once said the poor would always be with us but our aim should be to eradicate poverty and move on. I say "well done" to our guests on their work.
Our guests spoke about making poverty alleviation the priority for 2007 and indicated that the programme they had set out would cost €2.36 billion. Last year the Government spent €2.34 billion in this area. Is the €2.36 billion to which our guests refer in real or nominal terms? If it is in nominal terms, it would be less than what was spent last year when one takes inflation into account. I support a great deal of the work they have done and the suggestions made in respect of particular children.
I acknowledge that much of it comes down to resources. Our guests seem to be the only ones who highlight the school food programme. Not only is that programme important to schoolchildren, it is also important at pre-school level. I have seen it working at the latter level. I compliment those involved with the equal opportunities childcare programme, particularly in areas in which there is disadvantage, because they have devoted significant amounts of money to encouraging the establisment of pre-school and child care facilities. The Department of Social and Family Affairs has provided some funding for breakfast programmes, hot meal and milk programmes, but it is time the Government focused on ensuring children are also provided with fruit which, particularly early in the morning, is an important part of their diet.
We have focused on urban poverty but there is also rural poverty. I asked our guests last year about the massive level of poverty among carers. This is accentuated and exacerbated by the restrictive nature of the Department's interpretation of the rules and the fact that people are not allowed to avail of two pensions or two payments from the same source. If one is a widow or widower who is caring for another person and one is eligible for the €200 carer's allowance, the policy is to pay €300 to €500 to put the latter individual into institutional care rather than paying carer's allowance and continuing payment of the widow's or widower's pension. This means that a person cannot claim carer's allowance and must remain on his or her existing pension and try to care for someone with an illness. People with illnesses often cost much more to maintain because they are often the subject of specialised diets, etc.
There is hidden poverty which, with respect, researchers such as our guests cannot uncover. Our guests have done excellent work and we rely upon them but there is a huge level of poverty in rural areas. Deputy O'Connor and others can attest to the position in urban areas. I am concerned that the poverty to which I refer is not being dealt with and that it gets lost in the barrage of figures. I would welcome it if our guests could carry out some research in this regard. As they are seen to be independent, their recommendations would be taken on board.
I have harped on about fuel poverty. While we have had a mild October to date, we had a tough September. Do the witnesses not think the fuel allowance should be extended over a longer period? The beginning of April can be as tough as any other time, especially now with global warming and what almost appears to be a reversal of seasons. I have never seen so many people cutting grass for silage at this time of year and, as I have an agricultural background, I know a good deal about this issue. Moreover, people are not cutting grass in May, as they should.
Fuel poverty is one of the biggest problems and I commend the Combat Poverty Agency for highlighting it. Undoubtedly, a number of people have died because they were not in a position to provide adequate heating or similar comforts for themselves. At least the witnesses have identified the issue again today and I commend them for so doing because this is almost a hidden statistic. Fuel poverty is becoming a major problem nationwide. Obviously, increases in the price of oil and all other sources of energy eat into the budgets of those on fixed incomes at a greater rate than those who have the opportunity to supplement their incomes.
Has the agency ever evaluated the impact of poverty as far as widows and widowers are concerned? In many cases, the person who has been generating the income dies, leaving the surviving spouse with two or three children. Has the Combat Poverty Agency conducted any studies on the benefits of the household benefits package to the average household that is in receipt of it?
I refer to widows and widowers who have lost their spouse in their mid-40s, whose income base has been decimated and who may be reliant on the widow's or widower's pension, the spouse's or survivor's pension, or whatever. Has the agency considered whether this cohort of people should benefit from the household benefits package? I add these questions to those of Deputy O'Connor. Again, I compliment the agency, which brings all these issues together for members. However, hidden poverty exists which is difficult for the agency or researchers to access. It may be locked away behind some of the doors of rural Ireland.
I support the Chairman's comments. While I am not being parochial, I should have noted that in many urban centres, including Tallaght, the Early Start programmes in schools are now very successful. I have visited many such schools and they operate successfully. Recently, I visited a school in Tallaght in which the fruit option is now being taken. It is important for members to promote such initiatives. While there may be a view that my base is very urban, I have a few rural fields in my constituency, up the hill. I understand and support the Chairman's comments.
Mr. Walsh
I will ask Ms Cody to comment on the agency's work in schools.
Ms Cody
Deputy O'Connor's point regarding voter participation is important and disadvantaged groups in particular are under-represented as voters. Obviously, education plays an important role in ensuring that people can see the opportunities for participation through voting or other channels. Some years ago, the Combat Poverty Agency undertook a major programme with schools pertaining to school-community partnerships and how citizenship education could be furthered in that way. That study showed that schools should be more democratic in their processes and should engage more with all students to recognise opportunities and the potential to influence. This is an important area, especially given the development of the leaving certificate cycle and the new academic subject of civic, social and political education, CSPE.
Last year there was a significant extension regarding fuel, from 26 weeks to 29 weeks. Whether this is adequate must be constantly reviewed, especially given the changing seasons and cold spells that can last long into the spring. There were increases in this area in the budget of 2005.
Mr. Walsh
The school food programme can deliver a great deal with limited investment. The fruit component should be developed and Bord Bia has a programme called "the fruit dudes" that could be expanded and developed further throughout schools.
The issue of obesity must be taken into account in this regard and the health implications for society are enormous. There is a connection between obesity and low income, so there would also be gains from this perspective.
In terms of the studies suggested we have tended to try to focus on the bigger picture. We would then work with sectoral groups including carers, widows and older people. We are currently conducting a study on older people in association with the National Council on Ageing and Older People. We are about to begin a study of carers with Care Alliance Ireland which will take a sample of those in receipt of the carer's allowance. This will be a postal survey examining some of the health issues facing carers. We also have a study in University College Cork of young carers. We try to enable other groups. We conducted a study of rural poverty some years ago but this may be something we return to in the context of our next strategic plan which will be drawn up next year.
Deputy O'Connor mentioned the pre-school issue, which is a case of positive intervention that we support. We recognise there is an early child care supplement and ask how something that already exists can be tweaked to move it forward, along with something on the supply side. We are conscious that there are concentrations of poverty and many children in other areas. This would help to foster that idea. Pre-school intervention is very important.
On consumption priorities in households, people make choices all the time and we try to focus on the essentials, which are food and fuel. Our goal is to identify what can be done to strengthen this side of low-income consumption. We are examining measures to help people maintain warmer homes. On average, people on low incomes spend 30% of their money on food. However, a healthy diet costs a little more than that, so we are trying to construct mechanisms that will give more money, while examining possible roles for direct provision and cheaper outlets in low-income areas.
The committee will be familiar with so-called food deserts in urban areas, and to some extent even in rural areas as well, where people find it hard to purchase good quality food. Either they have to travel a long distance or it is not available to them. We are looking at this area. If one wants to make food more affordable, competition needs to be driven in this regard.
West Tallaght is leading the way as regards the "fresh" project, where efforts are being made to promote good food and make it more available through a community-based initiative. We are supportive of that and suggest the Government should allocate €10 million to promote initiatives such as food co-operatives and even low income farmers' markets. Some of these may be seen in Northern Ireland. In America one can find a model of low income farmers' markets. Community cafés are also an option. We are trying to focus on consumption issues that are priorities from a policy viewpoint. People will always make choices beyond that, but the ones we see as most important are those we will home in on in the budget in our proposed intervention.
I asked about the €2.6 billion.
I asked about that also. Could Mr. Walsh please clarify his remarks about the food deserts and how the so-called joined-up thinking with the local authorities is to be achieved as regards neighbourhood shops and all that?
Mr. Walsh
Much of this has to do with the planning system, ensuring that areas have neighbourhood centres, which might include discount retailers as well. The need for incentives might be looked at in terms of rate rebates, perhaps, or some such mechanisms. Is it possible to develop a package with the big multiples so that they might agree to locate some of their shops in disadvantaged areas? There might be some type of rebate in that regard. There is also the issue of community-based provision. Food poverty is an emerging issue and a great deal more needs to be done. As a group, the Combat Poverty Agency is involved in the "health food for all" initiative, whose key focus is promoting health foods for everyone. It is looking at all the different dimensions and I believe this is the way forward.
In terms of the budget package and how the current submission compares to last year's, we are trying to do two things. We wanted to put a package together which delivered what we wanted to achieve while at the same time considering whether it was affordable. People say the figure we have suggested is realistic. Others have advised against an inflationary budget, so we want to put forward proposals that may be vindicated from an economic as well as a social viewpoint. In real and nominal terms inflation will erode some of the value of our budget package. However, within the available resources, after tax and welfare rates have been indexed in line with wage growth, there is still a package of €750 million to play around with. Unlike last year's budget, where about 40% of total provisions related to tax, we are confining that to 29% and using that money in a different way. Much of the money allocated for child income support last year was associated with the new early child care supplement. We are spending that money in a different way. Small amounts of it are being spent on the child care supplement, but it is linked to pre-school provision. We are spending more on the child dependant and clothing and footwear allowances. A similar amount of money is a good idea because we can show how it can be spent in different ways.
I thank Mr. Jim Walsh, Dr. Jonathan Healy and Ms Bevin Cody for meeting us today. We have had a useful exchange and gained a deeper insight into how policy decisions and targeting can be achieved. The UN has designated today as the International Day for the Eradication of Poverty and it is appropriate that the agency should have made its presentation to the committee today. I hope the powers that be listen carefully, not to any political exhortations but to the independent analysis offered by the Combat Poverty Agency in its advisory role. We will be interested in reading its analysis of the forthcoming budget. Given the agency's independence, the Government will not be able to claim that it is Opposition politicians making these points.
I will be happy for the agency to do this.
Deputy O'Connor is always happy. He has the sunny disposition we all wish to have.
I thank the agency for sharing its insights with us. I have my pet issues and I am delighted to hear that the agency is working with carers. That is extremely important work and I hope the agency carries out a beneficial study with them in the not too distant future.
The joint committee adjourned at 4.50 p.m. sine die.