I would like to warmly welcome the Minister. He has been here on an Adjournment debate but this is his first time with us for a Social Welfare Bill. It is very important legislation. I would like to welcome the Minister and, indeed, to congratulate him on his new office and wish him success.
Social Welfare Bill, 1992: Second Stage.
Thank you very much, a Chathaoirligh. I observed that you were not here on the last occasion, but I will not hold that against you. I am glad of this opportunity to introduce my first Social Welfare Bill in this House.
During the passage of the Bill in the other House, I referred to the fact that since coming to the Department of Social Welfare I had learnt a lot about the social welfare system, its schemes and how they work. I readily admit that since this Bill was introduced I have learnt a lot more about social welfare and I look forward to a constructive debate on the issues raised in the Bill in this House also. One aspect of the system that has hit home to me is the enormous amount of money we now spend on social welfare. In 1992 we will spend around £3.36 billion, which is an increase of £260 million over that for 1991.
Before dealing with the specific measures contained in the Bill, I would like to make a general comment in relation to what is and what is not included in this legislation.
The implementation of the Government decision announced before Christmas that certain benefit payments will be made liable to tax is not appropriate to this Bill. The necessary provisions are a matter for inclusion in the Finance Bill, which will be published shortly. Similarly, the arrangements for the retrospective application of the equal treatment provisions which were announced in the budget will be set out in regulations and, consequently, they do not form part of this Bill. The Government have provided £22 million in 1992 for that purpose. Also, the introduction of new conditions for entitlement to treatment benefits will be implemented by way of regulations.
The main purpose of this Bill is threefold: first, to give effect to the increases in social welfare payments and other improvements announced in this year's budget; secondly, to provide for certain changes in social welfare schemes announced on the publication of the 1992 Estimates in December last; and, thirdly, to provide for a number of other adjustments and amendments to the social welfare code.
Specifically, the Bill provides for: an increase of 4 per cent from next July in the weekly rates of social insurance and social assistance payments; a special increase of 6 per cent from next July in all short term rates of payment; amendment to and rationalisation of certain schemes arising from Government consideration last year of the 1992 Estimates for Social Welfare; greater standardisation between schemes and improved administration generally; and certain amendments to the Pensions Act, 1990 in relation to occupational pensions.
This Bill is framed within the context of the commitments agreed between the Government and the social partners in the Programme for Economic and Social Progress. The increase in rates and other improvements costing £85 million in 1992 and £162 million in a full year meet the commitment to maintain rates of payment and move towards the priority levels set by the Commission on Social Welfare.
At the same time the measures in the Bill reflect the need for restraint in all areas of public expenditure if the economic and financial targets underlying the programme are to be achieved. The public are aware and have come to accept that the effect of the present financial difficulties is that all areas of public expenditure have been and continue to be severely constrained.
Social welfare provision is no different. The vast bulk of the additional money allocated to social welfare at budget time goes towards maintaining the value of basic social welfare payments and, where possible, improving them. The reality is that the scope for any additional improvements in schemes is extremely limited, unless corresponding savings can be found within the system.
The continuing high level of unemployment is the single greatest constraint affecting the social welfare system. Dealing in an effective way with unemployment is central to our ability to maintain and improve the basic level of our social welfare services. Increasing unemployment increases expenditure and also reduces income from PRSI contributions. We will spend around £940 million this year on unemployment payments.
The choice facing the Government in the situation in which we find ourselves at the present time, is either to stick with the present system "come hell or high water" and refuse to consider changes or to look at the possibilities of redirecting some resources within the system to those who, it is accepted, need them most. I have no difficulty in saying where I stand on this. My first priority is to those who are dependent on social welfare, particularly on the lowest levels of payment. I want to ensure that they are protected and, where possible, have their living standards improved.
At the same time this Bill attempts in a modest way to achieve a degree of redistribution as between schemes. The measures involved are related to specific schemes and have, as their underlying purpose, the targeting of scarce resources to those most in need while at the same time tackling abuse of the system wherever it occurs.
There has been an amount of uninformed comment about the specific measures provided for in this legislation. I have been accused of trying to dismantle the entire social insurance system by introducing income limits for entitlements to certain benefits. This is not the case. I can see the very many reasons in favour of having a social insurance system which is earnings related and which insures against the main contingencies of sickness, unemployment, maternity, old age and widowhood. The principle of a PRSI system also encourages the notion of solidarity between those who are in a position to pay and those who are not.
However, it must not be forgotten that the State is also a major contributor to the PRSI system. The Exchequer makes good to the social insurance fund each year the deficit between what is paid out in benefits and what is received by way of contributions. The Exchequer subvention each year is a sizeable amount; this year it will amount to £148 million.
With the increasing demand on the Exchequer due to the current level of unemployment and the need to provide for annual increases in weekly payments, I have no doubt that, unless steps are taken, we will soon reach the stage where it will be very difficult to sustain the present level of payments. In addition, the situation will be exacerbated by demographic trends which will indicate that our high dependency ratio will, in fact, get worse in the years to come. Unless steps are taken, a future Minister for Social Welfare will simply not be able to fund the system.
I want to avoid that situation and I want to do it now by targeting resources to areas of greatest need. I am not attempting to dismantle the PRSI system but rather to remove the concept of automatic entitlement in certain areas. The Bill proposes to do that in relation to deserted wife's benefit by the introduction, for new claimants only, of an income limit above which benefit will not be paid. I also propose to introduce an income limit for entitlement to treatment benefits which will be done by way of regulations.
The deserted wife's benefit scheme is certainly unique in a social insurance context and I am not convinced that it should be part of our social insurance system. The notion of insuring oneself against deserting one's spouse is unusual to say the least and I do not think that too many people would disagree with me when I say that. To be perfectly honest, it is a notion I have difficulty comprehending. I also want to make the point that the present scheme applies to women only and further developments in regard to equality of treatment as between men and women in our schemes will undoubtedly require rationalisation of the present scheme.
The treatment benefit scheme, which provides dental and optical benefits, is also unusual in a social insurance system as, in most countries, such services are generally provided as part of the health services. The introduction of the modest changes affecting new claimants for deserted wife's benefit and treatment benefit amount to minor adjustments to schemes which cannot be regarded as "mainline" PRSI schemes.
I am not dismantling the social insurance system. I am and will continue to try to put the entire system on a sounder long term financial footing. As far as the social insurance system itself is concerned, I have seen in my short time as Minister that there are many anomalies within the system which need to be addressed and that conditions of entitlement to benefit or pensions can sometimes operate unfairly. It will be my objective to streamline the system and to ensure that the needs of all categories of contributors are fairly reflected in the conditions for entitlement to benefits.
The Programme for Economic and Social Progress commits the Government to protect the position of those dependent on social welfare. We are honouring that commitment in this Bill through the granting of 4 per cent and 6 per cent increases in the weekly rates of social welfare payments. The 4 per cent general increase will ensure that for the fifth successive year since 1987 increases in social welfare payments will keep ahead of inflation.
In addition, we are continuing the policy adopted in recent years of giving extra increases to those on the lowest social welfare payments. From July next, those on weekly short term payments will get an extra 2 per cent on top of the general 4 per cent increase.
This additional increase is a significant step towards achieving another commitment in the Programme for Economic and Social Progress which is to meet by 1933 the priority rates set by the Commission on Social Welfare. Since last July, all long term rates have either reached or exceeded those priority rates. The additional 2 per cent increase for short term rates provided for in this Bill leaves us well placed to achieve our target next year.
Let us look at the impact of these increases for different benefit types and family situations. As regards the unemployed, a married man with three children on short term unemployment assistance will have his weekly payment increased from £119 to £124.80, that is, £5.80 per week; a married man with five children on long term unemployment assistance will get an increase of £6 per week, from £148 to £154. As regards the sick, the personal rate of disability benefit will increase by £3 per week from £50 to £53. A married man with three children will get an increase of £5.80 per week. So far as the elderly are concerned, a married couple, one under 66, in receipt of old age (non-contributory) pension will receive an increase of £8.50, that is, from £83 to £91.50. This is because the increase of pension for a spouse under 66, which currently is 50 per cent of the personal rate, is being increased to the level of the adult dependant allowance for social assistance schemes generally, that is, £34.30. A couple getting a retirement pension or old age (contributory) pension will receive an increase of £4.40 per week.
The increases in weekly rates of payment are provided for in sections 3 and 4 of the Bill. Section 5 provides for the extension of the over 80 allowance to invalidity pensions from April 1992.
Section 6 provides for an increase in the weekly income limits for family income supplement purposes from July 1992 which are designed to improve even further the incentive to work for people at levels of earnings covered by the scheme. The new limits below which families can qualify for family income supplement will be £215 a week for a four child family and £294 a week for an eight or more child family.
Sections 7, 8 and 9 provide for increases in the ceilings for PRSI contributions and in the weekly earnings disregard for pay-related benefit.
Sections 10 and 11 provide for a modification in the contribution conditions for entitlement to retirement and contributory old age pensions through the introduction of an alternative method of satisfying the "yearly average" test. At present a yearly average of 48 contributions must be paid or credited from 1953 or from date of entry into insurance, if later than 1953, in order to qualify for a maximum rate pension.
The establishment and verification of a person's insurance record over a 40 year period can be difficult in view of changes in the social insurance system over the period. The PRSI system was introduced in 1979 and since then insured persons have been paying contributions through the income tax system on an earnings-related basis. Insurance records over this period can be readily established. It is reasonable that where a person has a full record since 1979 they should be able to qualify for a full pension. The Government have, therefore, proposed that a person should be able to qualify for a maximum rate pension if the average of 48 contributions is satisfied since 6 April 1979.
I would emphasise that the new measure is not an extra hurdle but an alternative which some people will find easier to satisfy and which will result in quicker and simpler adjudication of pensions claims.
The appropriate conditions for entitlement to pension is among the issues being addressed by the National Pensions Board. The question of further amendments to the contribution conditions will be considered when the National Pensions Board publishes its final report.
A number of other changes affecting pension schemes are provided for in sections 12 to 18 of the Bill, the details of which are set out in the explanatory memorandum.
Section 19 of the Bill concerns maternity allowance. In relation to this let me say first that there has been a considerable amount of misunderstanding of this provision in some of the comments which have been made about the Bill.
Essentially what is being provided for is the amalgamation of the two existing maternity allowance schemes into one scheme. The new scheme will cover not only women who are covered by the Maternity Protection of Employees Act which is Department of Labour legislation but others who are covered by the social insurance system but not by that Act.
Since April 1991 employees earning over £25 a week are covered by the social insurance system. This has brought a large number of part-time workers, mainly women, within the scope of the system. They will now be covered for maternity allowance, whether their conditions of employment are such that they come within the scope of the maternity protection of employees act. Maternity allowance will be payable for 14 weeks as at present at a standard rate of 70 per cent of reckonable weekly earnings subject to a minimum amount to be prescribed in regulations. This minimum will take account of the fact that women on low earnings who were not previously covered by social insurance will now be covered. I am now proposing to set this minimum at £60 which, in the context of a system which now covers persons earning as little as £25 per week, is more than reasonable.
Sections 20 to 24 provide for the standardising and streamlining of existing arrangements and powers to pursue liable relatives for the maintenance of their families.
Since 1989 provision has been made for imposing a liability on the spouse of a recipient of deserted wives payments or supplementary welfare allowance to contribute towards such payments. Recipients of such payments are liable to transfer certain maintenance payments received to the Minister for Social Welfare or to the health board, as appropriate. The new provisions will also provide for the granting of attachment of earnings orders in appropriate cases.
Sections 25 and 26 of the Bill refer to the deserted wife's benefit scheme. It was announced at the time of publication of the 1992 Estimates that the Government have decided to apply an earnings limit for entitlement to deserted wife's benefit. I would emphasise that this measure will only apply to new claimants for deserted wife's benefit and the deserted wife's allowance scheme is not affected in any way.
I have already set out the rationale behind this measure for the information of Members of the Seanad. The measure now proposed is to restrict entitlement to benefit to persons at or above average earnings of around £12,000 a year. I envisage a tapered withdrawal of benefit above and below that level. The details will be spelt out in regulations.
Section 27 is largely a consolidation measure in that it replaces the unemployment assistance chapter of the Social Welfare Acts. It also contains a number of amendments, most notably the abolition of the requirement to have a qualification certificate before being able to claim unemployment assistance. The qualification certificate is essentially a statement of a person's means. The requirement to have a qualification certificate makes the procedure for claiming unemployment assistance somewhat cumbersome and the abolition of the certificate will streamline the application process.
Section 27 also provides for the linking of claims which are separated by a period during which the claimant is attending a FÁS course, including a course the duration of which exceeds 52 weeks, and the assessment of earnings from insurable employment in determining entitlement to unemployment assistance.
In relation to this last point, under present arrangements earnings from employment are exempted in determining means for unemployment assistance purposes. This means that a person can work for a number of days in a week and qualify for unemployment assistance for the remaining days, regardless of the amount of his earnings for the days worked. On the other hand, a person on unemployment assistance who engages in self-employment has his earnings from self-employment assessed. I think we have to have a consistent approach on this. What the amendment will achieve is that broadly the arrangements which apply where a person takes up employment as an employee will be the same as those which already apply where a person engages in self-employment.
I take the point which has been made by some commentators about the need to create incentives for unemployed people to take up employment or self-employment, and I am looking at the system to see what appropriate provisions might be made in this regard. I am very much in favour of providing incentives and encouragement to people to improve their situation and reduce their dependenty on the State welfare system.
I think, however, that this is a broader issue and needs to be tackled in a more comprehensive way. Attempts have been made over the years through various special schemes to encourage the long term unemployed in this way with very limited success. For example, the part-time job incentive scheme provides a weekly payment to long term unemployed people who cease claiming unemployment assistance and take up part-time employment. The take up of the scheme since 1986 has been extremely disappointing. I will be looking at further ways in which the system can be made more responsive to the needs in this area.
Section 28 provides for certain amendments to the unemployment benefit arrangements which arise from the inclusion of part-time workers in the social insurance system from 6 April 1991. Any employee earning over £25 a week is now covered by the social insurance system and from January 1993 will be entitled to short-time benefits on foot of their contributions after April 1991.
The unemployment benefit scheme is intended to compensate for employment lost. A person who habitually works on a part-time basis and who suffers unemployment will, under the arrangements I am proposing, be eligible for unemployment benefit at a level related to the employment which he has lost. A person whose habitual pattern of work over a lengthy period is, say, three days a week and who loses his job should qualify for benefit for those three days and not for days which are not normally working days for him.
The introduction of an additional condition for unemployment benefit whereby a person must have suffered a substantial loss of employment in order to qualify for benefit is designed to address this issue. Clearly, there is great variety in the patterns of part-time working and I am taking power in regulations to specify what a substantial loss of employment will involve in particular types of situations.
Sections 29 and 31 of the Bill provide for taking account of redundancy payments in determining entitlement to unemployment assistance.
The social insurance fund, which is financed by PRSI contributions and an Exchequer subvention, is there for people who, through no fault of their own, become unemployed and are in need of income support. That is essentially the purpose of the social insurance system — to provide for contingencies such as involuntary unemployment.
It is not uncommon for redundancy packages to be negotiated on the basis of an automatic right to unemployment benefit for 15 months. As Senators are aware, severance packages can involve substantial sums of money. The question is whether the social insurance fund, which is there to provide income support in certain circumstances, should, in effect, be part of such packages.
I have no doubt that in some instances the social insurance fund is being used to top-up redundancy packages whether of a voluntary nature or otherwise. My Department are aware of situations where severance packages, which did not even qualify as redundancy, were openly advertised within companies on the basis of an automatic right to a weekly top-up payment in the form of unemployment benefit.
I am concerned about these trends. The approach provided for in the Bill is, in my view, a reasonable one, namely, that in determining entitlement to income support in post-redundancy or voluntary severance situations, some account should be taken of the amount of redundancy payment received. It is proposed that in the case of persons under the age of 55 years who receive a severance payment in excess of a fixed level, a disqualification from the receipt of unemployment benefit will apply for up to a maximum of nine weeks. The level of severance payment will be specified in regulations. I am satisfied, however, that the principle underlying this provision is reasonable.
Also, under present arrangements, people who leave employment voluntarily can also be entitled to unemployment payments but are subject to a disqualification period of up to six weeks. This Bill proposes to extend that period up to nine weeks and, as I have said, to apply it to severance situations in certain circumstances.
To summarise, the proposals provided for in these sections of the Bill are as follows: the period of disqualification for receiving unemployment benefit for up to six weeks in certain circumstances is being extended to nine weeks in order to bring it into line with the disqualification period applicable in the case of disability benefit. In addition, the claimant's overall entitlement to unemployment benefit is being reduced by the period of the disqualification; as I have already indicated, the circumstances giving rise to a period of disqualification from receiving unemployment benefit is being extended to include the situation where a person receives a payment under the Redundancy Payments Acts or by way of a separate agreement with his employer which is in excess of an amount to be prescribed in regulations, and the new arrangements will not apply in the case of those 55 years of age or over.
The purpose of section 30 is to apply the same conditions to week on/week off working as apply to short-time working within a week. The effect will be that pay-related benefit will not be payable in the week on/week off situation.
Short-time working as generally understood usually takes the form of a short working week, that is, a two or three day working week on a systematic basis for a certain period of time. Workers in that situation are entitled to sign on and receive unemployment benefit for the days of the week on which they are not working. Entitlement to unemployment benefit is, however, subject to certain restrictions; the amount of unemployment benefit payable for each day of unemployment is calculated at one-fifth of the weekly rate, instead of one-sixth, and pay-related benefit is not payable.
In recent years some industries faced with reduced demand have operated a week on/week off or similar pattern of work. Indeed, there have been instances of firms switching from a short working week to a week on/week off situation. The restrictions on the amount of unemployment benefit and pay-related benefit payable in the case of short-time workers do not at present apply to those working week on/week off. As the two patterns of working are for practical purposes identical, there is an obvious anomaly here which needs to be addressed.
Section 32 of the Bill provides for a change in the contribution conditions for disability benefit. At present to qualify for disability benefit a person must have a minimum number of paid contributions at any time since entry into insurance — 39 for short term disability benefit or 260 for long term disability benefit — and a minimum of 39 contributions paid or credited in the governing contribution year. It is now proposed that, with certain exceptions to be specified in regulations, at least 13 of the 39 contributions in the governing contribution year will have to be paid rather than credited.
The basis for this proposal is that the disability benefit scheme is essentially for people who have recently been at work and paying PRSI contributions and who then fall sick. The requirement to have a minimum number of paid contributions in the governing contribution year is designed to establish a recent attachment to the workforce for people applying for disability benefit. Under present arrangements, it is possible for a person to qualify for disability benefit on the basis of credited contributions even though he or she has not been in employment for a very long time, has effectively lost any attachment to the workforce and perhaps has no intention to seek paid employment. The revised condition will have the effect of directing the scheme more effectively at those for whom it was intended.
The section provides that the new condition will not apply to certain circumstances to be specified in regulations. The new condition will apply at the initial stage of qualification for disability benefit. Once a person qualifies and continues to be sick they will remain on disability benefit as they do at present. Similarly, persons on unemployment benefit will have a recent record of paid contributions and will be able to qualify for disability benefit should they fall ill.
After a certain point, however, it should not be possible to qualify for what is a short term insurance payment on the basis essentially of a record of credited contributions. The regulations to be made under this section will ensure that any person with a genuine recent record of paid contributions, who is still effectively within the social insurance system, will not be affected by the new condition.
Section 34 provides for the discontinuance of pay-related benefit payable with disability benefit for new claimants from a date to be appointed. Pay-related benefit under present arrangements is paid in addition to flat-rate disability benefit after the third week of illness. The value of pay-related benefit has been greatly reduced over recent years.
Furthermore, as announced at the publication of the 1992 Estimates in December last, the Government have decided that responsibility for short term sickness payments should be transferred to employers through a scheme of statutory sick pay. In order for employers to participate in this type of arrangement, the rates of benefit require to be simplified and streamlined. The continuation of pay-related benefit would not be possible in the context of a statutory sick pay scheme.
Section 35 of the Bill provides that the personal rate of injury benefit under the occupational injury benefit scheme, currently £65 a week, will be aligned to the personal rate of disability benefit, i.e. £50 rising to £53 in July. This will apply to new claimants only. Injury benefit is paid for the first six months of illness following an accident at work. The person, if still incapable of work, then goes on to disability benefit. In my view there is little justification for having a higher rate of short term benefit for incapacity for work simply because the incapacity arises from an accident or occupational disease. This measure is also part of the overall streamlining of short term sickness payments in the context of statutory sick pay.
Part IX of the Bill provides for a number of miscellaneous amendments to existing legislation, some of which I will now mention briefly. Section 36 provides for the extension of carer's allowance to cover persons caring for recipients of retirement pension who are aged between 65 and 66 years and who have transferred from invalidity pension at 65.
Section 37 provides for the integration of single woman's allowance with pre-retirement allowance. This scheme was introduced in 1974 to cater for elderly single women who had never been in wage earning employment and who could not qualify for unemployment assistance under the conditions which then applied. The need for the separate scheme has effectively disappeared in the light of changes in the conditions for unemployment assistance in the meantime. This section proposed to discontinue the scheme for new claimants after a day to be appointed. Existing recipients of single woman's allowance will be transferred to pre-retirement allowance at the same rate of payment.
Section 41 gives power to make regulations delegating certain administrative functions of the Department of Social Welfare to other organisations. At present certain functions are carried out by other organisations such as the encashment of pension orders by post offices. The relationship between my Department and An Post is being placed on a more formal footing in the context of current plans for the development of post office services. While there are no immediate plans to devolve further functions, developments in technology and otherwise will open up considerable possibilities in this area in the future and the provision in section 41 is designed to enable me to take advantage of any such possibilities for the benefit of social welfare clients.
Part X of the Bill contains a number of amendments to the Pensions Act, 1990, which are proposed following consultation with the Pensions Board and the details of which are outlined in the explanatory memorandum.
This Bill is a substantial piece of legislation, the main features of which I have just outlined. I have also outlined the rationale behind the modest restrictive measures included in the Bill which I hope will be helpful to Members of the House in understanding why they are necessary at this time.
The increases in payments provided for in the Bill will protect the position of those dependent on social welfare and, at the same time, move nearer the achievement for all payments of the Commission on Social Welfare's priority rates.
I commend the Bill to the House and look forward to a constructive and, for my part, an educational debate on the Bill.
Ar dtús is mian liom fíorchaoin fáilte a chur roimh an Aire Leasa Shóisialaigh go dtí an Teach seo agus tá súil agam go n-éireoidh go geal leis in a phortfolio nua.
In a submission to the Minister for Social Welfare on the 1992 budget entitled Making Social Rights a Reality, the Combat Poverty Agency, which has the statutory function to advise the Minister for Social Welfare on all aspects of economic and social planning in relation to poverty, state “The principle of citizenship involving civil, political and social rights is the cornerstone in building a fairer and more united society.” That concept of citizenship brings into focus our entire society. The essence of this concept of citizenship suggests not only that everyone should be the same but that there is some common floor or package of rights to which people are entitled and with respect to which they are equal because they are members of the one society.
My party, the Fine Gael Party, support and subscribe to this policy and to this philosophy as enunciated in the wide ranging recommendations made by the Combat Poverty Agency and, indeed, by the justice commission of the Conference of Major Religious Superiors. My party, the Fine Gael Party, are, however, strongly opposed to many of the inequitable restrictive and indeed dangerous provisions contained in this Bill and also in the 1992 budget.
This is a Bill which fails fundamentally to reform our social welfare system, which fails to tackle the reality of deep poverty in our society and which fails to tackle and to eliminate the poverty traps and the vicious cycle of unemployment, which leaves the bulk of low paid in the PRSI net, which retains substantial anomalies and multiple means testing based on gross rather than net incomes, which totally fails to develop adequate educational opportunities and voluntary work options for the unemployed and their dependants and which totally fails to make adequate provision in respect of mothers and families with children.
This is a Bill which proposes to stop paying pay related benefits to those working short-time, on a week-on week-off basis, thus forcing a choice between short term working and redundancy and thereby adding to the unemployment total. This is a Bill which plans to axe dental and optical benefits from those earning over £25,000 per year and to withdraw deserted wife's benefit from women earning £12,000 per year. It is estimated that more than 40,000 earners, most of them PAYE workers, will lose these benefits from early this month in spite of paying full PRSI contributions.
If this Minister for Social Welfare and this Government believes that a gross salary of £25,000 enables a family to pay without hurt for optical and dental benefits, then this Minister and Government are surely out of touch with reality. That kind of thinking ignores deductions of tax, PRSI and other deductions, which must be made from salaries. Again, a deserted wife who is earning £12,000 per year is not enjoying a luxury salary when all these deductions are allowed for. Her circumstances — perhaps left with children to be looked after while she is out working — are extremely difficult and her situation, I believe, demands more understanding than this Bill and this Minister seems to be according it.
As was stated in the Irish Independent editorial of 20 March 1992 and I quote: “It is perfectly understood that the Government is trying to make the best use of all resources available to it, but in doing so justice should not be overlooked”. This is a Bill which has been criticised by Hugh Frazer, director of the Combat Poverty Agency because of the Government's decision not to increase child benefit which he said is one of the best ways to tackle and to eliminate family poverty.
In summary, therefore, this is a Bill which is short on proposals to beat the poverty trap. It contains a rebuff to mothers who will get no increase under the child benefit scheme, it ignores all rational suggestions for a single means test and has little or no clarification about who will get paid out of the £22 million provided for in the EC equal treatment directive. This is a Bill which can only be seen as a blatant attempt to dismantle important elements in the PRSI system. It is surely one of the most serious assaults yet made in the history of the State on the principle of an insurance based social welfare system.
Social welfare recipients are among the most vulnerable sections of our society and for that reason our overriding objective at all times must be to safeguard and promote the position of those who are dependent on the State's support system. The report of the Commission on Social Welfare sets out the principles on which a modern social welfare system should be founded. That report states:
The social welfare system should have explicit underlying principles. These have not been clearly enunciated in the Irish context. We, therefore, consider that the guiding principles should be adequacy, redistribution, comprehensiveness, consistency and simplicity. This Bill fails to give effect to these essential and fundamental principles, and it retains substantial anomalies and multiple means-testing based on gross rather than on net incomes.
With regard to the question of the basic payment structure, the report of the Commission on Social Welfare emphasises that the important issue dealt with in the report is the specification of a minimum adequate income. That report states:
Social welfare payments should be set at a level that ensures minimum adequate standard of income relative to incomes and to living standards in society generally. While some social welfare recipients have additional sources of income, or are living in households with additional sources of income, we believe that in establishing an adequate minimum income and an adequate basic level for social welfare payments, our primary concern should be to ensure that social welfare payments offer an adequate standard of living to social welfare recipients, whatever their household circumstances, and independent of income sources accruing to individual households. That report adds:
We recognise that for about half the households with a social welfare recipient, there is no income source other than social welfare, and for many more, individuals and families are dependent on social welfare. The minimum income from social welfare must, therefore, be set at a sufficiently high level to provide for total income needs.
With regard to the question of administration and the delivery process, the report states that in general the quality of the service is in marked contrast to the standards which the claimants are entitled to expect. This is evident from the delays in processing claims, the lack of access to information and indeed the general appearance of buildings throughout the country. That report stresses that a sense of entitlement should prevail in relation to social insurance and social assistance and that arrangements for means testing should not be socially stigmatising. That report summarises its conclusions with regard to the delivery process in the following terms.
The system should be administered in a manner which enables it to respond quickly and efficiently to the needs of the applicant, and which responds to their individual rights and dignity. The present high level of dependence on social welfare, with over one-third of the population dependent on these payments for all or part of their income gives added impetus to the need to maximise efficiency within the system.
This Bill makes totally inadequate provision in respect of families with children. Forty per cent of Ireland's children live in households below the minimum income level identified by the Commission on Social Welfare. Large numbers of children are experiencing serious deprivation. The Conference of Major Religious Superiors calls this one of the major scandals of modern Ireland and yet the Programme for Economic and Social Progress plans to tackle this problem over a period of ten years.
Report after report has highlighted the fact that families with children are bearing the brunt of the recession and the vast problem of unemployment. Huge numbers of children are growing up in dire poverty. Older children make adult demands on family budgets. The cost of clothing, food and education needs are at an all time high. The need for additional payments in respect of teenage children has been identified by the ESRI, Conference of Major Religious Superiors and the Combat Poverty Agency, yet this Government have a very poor record in relation to child benefit.
Childbirth and the preceding pregnancy is, of course, another stage when additional costs are imposed on families. Nolan and Farrell in their work entitled Child Poverty in Ireland in 1990 highlight the fact that over time the position of families with children relative to those without them has deteriorated substantially. Kennedy in his work entitled Family, Economy and Government in Ireland (1989) published by the ESRI details how, at all levels of income, the ratio of disposable to direct income for families has declined. All this, of course runs counter to the recommendations of the Commission on Social Welfare and will do very little to end the poverty trap of those families.
Income support for women needs to be examined and revamped especially in three situations: marital separation; adult dependency on social welfare payments, including "split payments"; and carers of elderly or ill relatives. Despite many changes occurring in our society, the family continues to be the strongest and the most reliable source of care for the elderly and incapacitated in our country. Yet, there is no obvious commitment by this Government to helping people who are engaged and who are charged with the responsibility of looking after elderly and incapacitated people thus relieving the State of the huge financial obligations which would otherwise have to be incurred.
The carer's scheme was introduced by the previous Minister for Social Welfare with much hype and fanfare and expectations were built up to such a level that people are now bitterly disappointed when the true facts of this scheme are pointed out. There are few schemes in the social welfare code which have such an enormous potential to do good as has the carer's allowance scheme but it needs to be revamped in a more generous way and to be properly funded.
The crucial matter in all of this is that Ireland's poverty rate is one of the worst in the EC. The final report of the Second European Poverty Programme 1985-1989 and the recent studies of the Combat Poverty Agency show that substantial numbers of Irish people still live in poverty. The justice commission of the Conference of Major Religious Superiors in their submission to the Houses of the Oireachtas on aspects of the 1992 budget point out that there are about one million people in this country who do not have sufficient income to live life with any basic dignity.
I do not believe that there has ever been an occasion in modern Irish history when the Social Welfare Bill and its contents have been of such importance to people than at present. This is particularly so because we are continuing into a period where unemployment, and particularly long term unemployment, is an endemic feature of our society. Thus, for many people the quality of their life will of necessity be shaped by the social welfare system and the social welfare code. That is why this Bill and this debate are important.
The Bill deserves the closest scrutiny and attention from Members of both Houses of the Oireachtas. That is why it is regrettable that the Taoiseach and the Government have rejected the long standing proposal from the Fine Gael Party for the setting up of a jobs forum which involves not only the Members of the Houses of the Oireachtas but also the social partners. The priority recommendation of the Combat Poverty Agency was that the social partners would be engaged in this work too.
The social welfare system is now more central to people than at any time in our history. For that reason, it is vitally important that we get the system working properly and that it provides people with an opportunity to live with some dignity until such time as our society is organised in such a way that we can offer them full participation in gainful employment. I do not believe that this Bill will contribute substantially to that end.
I realise that we have two days to discuss this Bill and, therefore, I do not intend to go into the details of it. I look forward to the opportunity to discuss the details on Committee Stage.
Cuirim fáilte roimh an Aire ar a chéad chuairt go dtí an Teach ó ceapadh mar Aire é. Is ábhar an-tábhachtach atá á phlé againn inniu.
I welcome the Minister. I would also like to say a word about the work done by Deputy Michael Woods, who was Minister in this Department for a long time. He did a lot for the social welfare code by rationalising, updating and improving it. We must continue to build on the foundation he and Deputy Daly laid when he was Minister for Social Welfare. We all agree there is need for a total overhaul of the system.
I thought I had a good layman's knowledge of the system but the more I think I know the less I actually know. Just when I think I could explain something and telephone the Department to check, I am told it is not quite like that and that more regulations, conditions and criteria have been introduced. Sometimes I find that people are entitled to things I did not think they were entitled to and sometimes the opposite is the case. There is need for a total overhaul of the system. I welcome the Minister's announcement that a consolidation Bill is in the course of preparation.
I recognise the difficulties in rationalising the system. In any change there are winners and losers but, at the end of the day, everybody would be a winner if the system was logical and simple. It would be seen by people to be accessible to them.
We need to examine our attitude to social welfare and ensure it does not become a trap that inhibits people from improving their lives. Any of us involved in daily politics knows the cost of people being afraid to help themselves. Instead of reducing the burden on the State, anything in our social welfare system that inhibits people's development increases in the long term their dependency on the State.
We need to co-ordinate both the tax and social welfare codes. Three huge tasks face us. I would like to dwell for a few minutes on the specifics within those general tasks. It is easy to lay down general principles but it is very important to state specifically what one means. The first problem that has arisen as a result of lack of co-ordination over the years is that the tax and social welfare codes are enmeshed. As social welfare rates increased, tax free allowances, and particularly exemption limits, did not keep pace. One of the big problems we face is that the rate of long term unemployment assistance is £55 and one enters the contributory social insurance payment system at £60, contributing at the rate of 5.5 per cent if one has a medical card and 7.5 per cent if one does not. In terms of net take home pay, one is talking about a difference of less than £2. A single person on unemployment assistance gets £55 into their hand — and, in many cases, £60 when fuel vouchers are taken into account — and they start paying income tax, even allowing for exemptions, if they have an income just under £70 a week. This must be addressed because it has not been given adequate attention.
The situation can be worse in the case of the widow's pension. A problem arises there which I come across very often. Take, for example, a farmer in receipt of unemployment assistance. His unemployment assistance payments do not count for tax purposes, so if he earns £40 and has a small farm, he is in no danger of being enmeshed in the tax system. We will take the classic case of a widow in receipt of £55 pension. If, for example, she has an income from keeping Gaeltacht students, which is non-assessable under the social welfare code, she could be very soon paying tax on that income even though she was earning only a small amount more than is provided in the social welfare code. The margins are so small that this is a very big problem.
It is even a greater problem if the person has a contributory widow's pension and has a family. Whereas the social welfare exemption allowance for the first two children is £500 a year, the weekly payment for a child is £12 a week. Fifty two multiplied by £12 exceeds £500. If she has four children the gap is narrower and means that effectively her pension is coming to the margin of being taxable.
The family income supplement scheme is excellent and it is a pity there is not a bigger take up. There is one great flaw in the scheme and again it relates to the tax system. Let us take the example of a husband, wife and five children. According to the Social Welfare Bill they are entitled to payment of family income supplement up to an income limit of £240. However, the tax exemption they are entitled to is £175. Thus, over a wide band of income they wind up being in receipt of family income supplement and paying tax at the same time. To those who are familiar with the tax exemption system, when one is just above the threshold one winds up paying tax at the marginal rate which will now be 48 per cent. This is where the problem arises. It seems illogical to give with one hand and take with the other in the same week.
There is an even bigger problem and that is if the employee is given a rise of £10 a week. Sooner or later, his family income supplement payment is readjusted to take account of the rise. When that happens, he automatically loses £6 family income supplement; he pays £4.80 extra tax and 75p extra social insurance. That amounts to £11.55 and he ends up £1.55 worse off than if he had not got a rise. There is an anomoly that needs to be examined.
We need to rationalise the rate of payment. The previous Minister, Deputy Woods, did a superb job in tackling this problem but there is still a lot to be done. When he came to the Department there was an enormous range of child dependant payments. These have now been reduced to a handful. A person said to me lately that they cannot understand why it is more expensive for a pensioner to maintain a child than it is for somebody in receipt of long term unemployment assistance. It is a fair question and needs to be addressed. Child dependant rates should be uniform because the cost of keeping a child is the same.
The number of RSI rates, which at my last count was either 27 or 36, seems to be excessive. Effectively, we have three rates of RSI under each band; in other words, A1, A2 and A3. My guess is that many people entitled to be on A3 are on A1 because they do not know that A3 exists. For those who are not aware of the difference, the criterion is that if one has a medical card one goes on A3 but many employees have never made the authorities aware of the fact that they have a medical card and are automatically put on A1.
When things become too complicated people miss out on their rights. When we try to give more rights to people but further cloud and complicate the system, the end result is that people throw up their hands in horror and do not even check on their entitlements. By continually adding to the system, in a vain attempt to improve it, we have not done people a great service.
The same situation applies to regulations. I would say that the public are, as I was years ago, totally mystified by the reference to credits and contributions. They need so much for this scheme and so much for the other scheme. It seems to go on ad infinitum. We talk about governing years. We know what that means but the public do not. Obviously, there must be such things as governing years but let us operate all the schemes on uniform basis so that when one gets the hang of the matter one will be able to make a reasonable guess as to one's entitlement under any scheme.
The question of people who were employed for 30 years and then become self-employed should be looked at. They would not have paid social welfare contributions because they would have left the system and would not qualify for a full pension. We are always telling people to take their courage in both hands to get into the workforce or become self-employed. It is ironic then to cut the ground from under them when they reach the age of 66.
Of all sectors in society widows and widowers are one group of people whose rights are not spoken about enough. Entitlement under schemes is a matter of bewilderment. It often happens that a pensioner is entitled to free electricity and even to free telephone rental. Yet when the husband dies, because the widow is under 66 years of age the free telephone rental, electricity or television licence is withdrawn. That might seem reasonable and logical if the widow is in the whole of her health but where the problem really arises is if the widow is in bad health. If she were employed and her health deteriorated she would be entitled to an invalidity pension and, as a consequence, to free electricity and telephone rental.
If she were single and unemployed she would be in receipt of a disabled person's maintenance allowance and would qualify. She is specifically disqualified, irrespective of her physical health, due to the fact that she is a widow. That is surely an anomaly in the system which we should address.
As regards the free telephone scheme I have a specific case in mind. The husband qualified for a free telephone because his wife was considered medically unfit to get aid if he became ill, but when he died, she got a widow's pension and was no longer entitled to the free telephone. Widows, who in certain circumstances would be entitled to DPMA or invalidity pension etc. should be as entitled to these free schemes as anybody else. Where a couple have had the benefit of these free schemes and the widow is over 60 years of age, the Minister should look at the possibility of not taking these benefits from her. Small things mean so much to people in that situation. I appreciate that there is a shortage of money but such a scheme would not be very expensive and it would mean so much to one of the most vulnerable sections of society.
Anybody who has ever heard me talk about social welfare knows I have a hang up about means testing. Means testing greatly inhibits self-development and is one of the greatest social curses. Rural Ireland particularly is bedevilled by the problem of means testing. The consequence has been to discourage small farmers from farming and small fishermen from fishing. If they want to make a profit from their labour they do it on the quiet. That is an obnoxious and unacceptable system.
The argument is that if you change the means testing system, you will take money from the most needy to give it to people who are slightly above the minimum threshold. That is not a logical argument. It divides society into two groups, those who are working and those who are not, and says we recognise the need to leave some of the fruits of their labour with those who are working but we will nail those who are not working and keep them down.
Quite rightly, people on high incomes complained about the income tax burden of 56 per cent, and through lobbying and applying pressure, they made the point that if we reduce pesonal taxation, incentives would be created.
However, there is a more forceful argument; if we relaxed the means test applied to the self-employed — at present 100 per cent penalty on small farmers and fishermen — extra income would be generated for the State but if all social costs were taken into account, in the long term, nothing would be gained. What happens is that when you nail people at the bottom of the ladder, social problems arise from this inactivity. With unemployment, people not only have no income, or low income, but they also suffer from the no work syndrome. Most people want to work and are very anxious to find work agus cur ar a son féin. I know this from long experience and from creating jobs. When people are at the bottom of the system there are increased costs for the State — housing, school transport, medical cards and so on because they then become totally dependent on the State. The minute you get off that rung of the ladder all the supports are pulled from under you and as a result people are prepared to stay as they were because they believe they are better off there.
Speaking at a seminar some time ago, I tried to illustrate the hidden costs to the State of under-development that nobody ever wants to know about or analyse. I picked two rural communities equi-distant from Galway and I compared them from a peculiar angle. I explained that one does not have an inherent advantage over the other but one has been developed economically and the other has not. I compared two State services in that area and came up with very interesting results. In the area that was developed the demand for social housing was negligible but in the area that was not developed, people lived in bad housing conditions. They looked for repairs to their houses, new houses, etc. in an unending queue. I have the figures here and the difference is startling. Leaving out the human misery suffered by the people in the undeveloped community, the cost to the State is phenomenal.
I then turned my attention to Telecom Éireann and I want to make it quite clear that I am not talking about free telephone rentals but about income from call charges. The annual revenue to Telecom Éireann in the developed area per 100 telephones would be £60,000 greater than in the under-developed area. That is a lot of money and since we own Telecom Éireann it is a lot of money to the State. Therefore, there is a huge hidden cost in a system that will not allow people get off the bottom rung of the ladder if they cannot get paid employment.
This brings me to the question of small farmers and fishermen in the west. At the moment for every pound they earn the Department of Social Welfare deduct a pound from their benefit. This system that obliges social welfare officers to deduct the value of headage payments or the value of a reclaimed field from welfare recipients, is wrong. Many people in the face of these regulations give up saying they are caught in a fáinne fiáin or a vicious circle. Fishermen are among this number.
It is about time we recognised that these people are not unemployed in the sense that they have no work to do; there is plenty they can do on their small farms. Their problem is lack of income. Rather than setting up small schemes that are so restrictive as to be inoperable — and the Minister mentioned the part-time employment scheme — they should be transferred to a system of income supplement where if they improve their incomes they would keep part of the profits as intended under the family income supplement.
An improved income supplement system could not be confined to families only but would have to include single people also. If we did that, we would see a transformation in our countryside, with people once again working; we would see a change in social attitudes and witness the revival of communities that are now dying. I assure the Minister that the communities I deal with are not reviving because of the problems I have outlined.
Another problem with means testing is experienced by self-employed people involved in guest houses, etc. where gross income is means tested. If a guest house owner takes in £10 per person per night, they may not claim any allowance for the cost of keeping the guest house. This is ridiculous and I am fighting a case at the moment on this issue. Even the Revenue Commisioners will allow one to claim for legitimate costs and the idea of penalising somebody in excess of their net income for any activity extends the situation from 100 per cent taxation to 130 per cent.
Finally, I address myself to the question of penalty for capital, which for some schemes is 5 per cent and for others 10 per cent; that should be rationalised. Very few people with a few pounds to invest put it anywhere other than in a building society or a high street bank. After taking DIRT into account a person on the dole would be unlikely to get anywhere near 5 per cent net income from a bank deposit. There are various levels of exemption but most of them are around £300 or £400 depending on what scheme one is on and all capital after that is assessed at either 5 per cent or 10 per cent. This means that somebody who has been thrifty, and saves money in the bank finds that not only inflation but the Department of Social Welfare are eroding the value of that money.
I know people on social welfare who through great thriftness have set aside a surprising amount of money. They are people who have lived and worked totally within the letter of the law. They accumulate money by thriftiness and when that thriftiness is penalised people's morale is destroyed. When we look for money for development in small rural communities of the west we find the money is there if it could be freed up in the right circumstances. I will explain this more fully.
Many pensioners and others throughout their lives have put £5 or £10 per week aside and over 30 or 40 years that deposit mounts up. We should free that money for development of communities. My suggestion has been that the Department of Social Welfare, in conjunction with other Government Departments, exempt £3,000 for instance in the case of a single person and £6,000 in the case of a married couple from means testing on capital on condition that that money is invested in certain approved funds which would be used exclusively for rural development, or if it was put into, for example, post office savings which would be to the advantage of the Exchequer. Then we would see the hidden money coming out from under mattresses. There is money available but older people are afraid to admit it and younger people have given up saving as a bad job because they have seen the fear and worry of their parents about our savings. If I had access to even a fraction of the money in the area in which I live I could rapidly increase our rate of development which is extraordinary good in these hard times. With it I could decline State agency assistance and development would proceed more efficiently than under the present system. In other words, let us use the social welfare system not to inhibit development at every turn but to encourage development and to devise solutions other than paying out money to people who have no income.
Over £3 billion is spent on social welfare payments in this country. It is important that we reduce this amount by comparing the cost of maintaining people on social welfare and maintaining them in employment. The cost of employing people, including PRSI which is 20 per cent between employer and employee, liabilities insurance, etc., has become too expensive. The overlap between the social welfare and taxation systems has created part of the problem. Many jobs have been lost when it would have been cheaper to subsidise them than to put people on social welfare, and that is without taking the social consequences into account.
I reckon that the difference in State cost of a person working on low income or fully on social welfare is £10,000 per person per annum. Therefore, if 30 people are transferred from work to social welfare, the minimum cost — excluding the cost of housing, etc. — is £300,000 per annum. We all know of companies which closed, where redundancies were created, and the cost of maintaining the jobs would have been only one-tenth the social welfare payments.
There are 260,000 people on the dole; a very serious problem. There is talk of a jobs forum for which Fine Gael have been calling for a considerable time. After 20 years of development work, I am cynical about this idea. I am afraid that somebody may be dreaming up little schemes to add to the complications already there instead of looking at the fundamental problem. I would like to see an effort being made to connect problems and to see that co-ordinated efforts often help to solve problems. For example, rural roads are a problem and in many of these areas there are many unemployed people. I mentioned the problem of small farmers and it should not be beyond our capability — it was done in previous generations — to devise a system where people in receipt of social assistance, would be employed for, say, 13 or 14 weeks a year to maintain local country roads. This is not innovative but happened in the forties and fifties but for some reason it was discontinued.
I can testify to the success of social employment schemes in the west in getting work done and to the desire of people in rural areas to take part in these schemes to get work and be free from means testing. These schemes have been of huge benefit to various communities.
In section 41 of the Bill the Minister spoke about the possible transfer of functions to other agencies and he specifically mentioned An Post. I welcome this section and I suggest that in 1992 the effectiveness of gardaí signing dole forms should be looked at. I understand that when that system was introduced the gardaí acted as surrogate social welfare officers before the social welfare code was developed. That is now a hang-over from other times and if weekly signing is necessary — and I welcome the changes in that and the pre-retirement pension, etc. — it would be much more rational and sensible to do so at the local post office. Having a garda lose half a day per week looking after dole forms and thereby tying up a squad car in rural Ireland, is inefficient. The function they originally filled no longer exists.
The transfer from disability benefit to invalidity pension should be looked at. I know of people on disability benefit, waiting for hip replacements, etc., who find it difficult to be transferred to invalidity pension. We should stop thinking of invalidity pension as being a "forever scheme" because it is anomalous that somebody with a medical condition that cannot be addressed for one, two or three years because of delays, should receive a lower payment than somebody who went on unemployment benefit and was automatically transferred to unemployment assistance. After a fixed period, particularly where one has retired and given up any right to go back to one's job because of illness, people who are ill should be considered favourably for invalidity pension. It is not as if we are short of people to take up places in the workforce that we need to get people who are ill back to work. If they go back to work somebody else will have to bow out again. People on disability benefit for over a year or 15 months, after proper medical examination, should be automatically transfered to invalidity pension. I ask the Minister to look at this because the difference in payment between the two schemes is quite considerable and long term rates of benefit apply to invalidity and not to disability benefit.
Regarding sections 29 to 31 on the post-redundancy and voluntary severence system, I understand what the Minister is getting at but I feel that the level of payment would have to be pitched fairly high. After 18 years work on a fairly good salary, if I had been made redundant it would have cost the State £2,000 or £3,000. Somebody made redundant in the normal way should not be penalised like this. To my surprise and worry, I have come across another syndrome in this redundancy package area in the last year. People have come to me who received between £12,000 and £20,000 redundancy money up to a year ago and who within that time have managed to spend the money. When I asked them why, it transpired that their total misunderstanding of the means testing that would take place when they went on unemployment assistance led them to believe it would be futile to hold on to the money because it would be cancelled out by the unemployment assistance code of means testing. That issue should be redressed because there is nothing more distressing than to see somebody who obtained a good lump sum feel there is no point in trying to use it wisely and to see them without any lump sum after such a short period.
I cannot agree with Senator Howard with regard to the £25,000 income limit on dental and optical benefit. If we are going to direct resources, they have to be directed to the bottom of the pile. It might be easy for me to say this because I have never had a salary of £25,000 per annum and, therefore, I do not know the difficulties of living on that salary. I genuinely recognise the family crosses and so on, of people on good salaries with mortgages but I hope that they, in turn, acknowledge that if they sometimes find it difficult after tax and insurance, to live on £25,000 a year, how much more difficult must it be for a married couple to live on £88 a week or for a married couple with one child to live on £100 per week. Consequently high earners should recognise that all our efforts have to be directed towards the people at the bottom of the scale.
There have been massive improvements in the social insurance system. In many ways, compared to our neighbouring island, our system is light years ahead and our payments are much better, but I would like to see us building on the excellent work carried out by the Minister's predecessor to reform the social welfare code. We should try to move ahead of all other European countries in our attitude towards social welfare. Creative possibilities exist if we could get ourselves out of the Victorian straitjacket thinking that sometimes bedevils social welfare debates, and release the creative energy in most people to do things for themselves if the system would allow them.
Molaim an Bille. Cuireann sé leis an méid a bhí ar bun ag an Teachta Woods nuair a bhí sé ina Aire, agus tá súil agam go nglacfaidh an Teach leis.
I have read the Minister's speeches in the Dáil and Seanad and I am disappointed that a man of vision and imagination should have been constrained to express himself in what can only be described as ideologically laced language because of the insertion into his scripts of all the stock phrases of what is now a devalued and almost totally discredited view of recipients of social welfare benefit. Thatcherism is the only appropriate word for the Bill's obsession with what is called the incentive to work, with talk about targeting certain categories of need, and for the lack of any vision. I did not detect the word "poverty" anywhere in the Minister's script, I may have missed it, but it clearly does not occupy a prominent place. I found it once in his script in the Dáil where he referred to "the poverty trap". I did not detect anywhere in his script the word "inequality", not a word about it. What is the Minister at?
There was little of what Senator Ó Cuív said that one could disagree with and I am glad to be back on the same wavelength as him after a certain wobble in the last 24 hours on another issue where he seemed to lose——
I am more liberal than that.
One of the problems the Minister has to deal with is the reality of what has been done in the Department of Social Welfare over the last number of years. What has been happening progressively in the social welfare system has been the penalising of the less poor in order to give, admittedly, a bit more to the extremely poor. I am quoting from the Conference of Major Religious Superiors who are familiar to the Department of Social Welfare. The conference published a booklet before the budget called A Question of Choices. On page 27, they make three points: first, that the social welfare budget as a proportion of the overall budget has been declining; second, that expenditure on social welfare as a percentage of gross domestic product has been declining and third, that the Exchequer contribution as distinct from the social insurance contribution to social welfare has been declining.
It is one of the great feats of deception of both this Government and their immediate predecessor to have managed to give the impression that they were being kind to the poor when all they were doing was reshuffling the pack to transfer some of the resources from the relatively poor to the extremely poor. There is a classic example of that trick in this Bill. The Conference of Major Religious Superiors, in the same report, on page 26, categorise benefits and various levels of payment in three categories. The top category are a few groups who receive payment which the Commission on Social Welfare would consider adequate and the Minister has now abolished one of those payments. The categories that the Commission on Social Welfare, the Conference of Major Religious Superiors, I and others recogise as incomes that meet the minimum adequacy criteria under the terms of the Commission on Social Welfare, were people on contributory old age and retirement pensions and a small number of people who receive injury benefit. They were the only people in receipt of payments in excess of what would now be required to meet the targets of the Commission on Social Welfare. The Minister has now decided to reduce payments of injury benefits, thus putting that category of people below the minimum requirement specified by the Commission on Social Welfare.
The Minister, in his speech to the Dáil on 24 March 1992, made the astonishing assertion that most benefits were now equal to or exceeded the target figures of the Commission on Social Welfare. They are according to 1985 figures, but not if one takes the minimum level of inflation over the last number of years into consideration. In that script he said:
Since last July all long term rates have either reached or exceeded those priority rates specified by the Commission on Social Welfare.
I found it astonishing that this statement would go into the script of the Minister for Social Welfare because, categorically, it is not true. It is disappointing that he would even contemplate it. I do not know if he said it when he delivered his speech but I would like to draw his attention to the fact that it is not true nor will it be this year. I am not disputing that certain payments are closer to the priority figures but it is undoubtedly true that, with the exception of a couple of categories, they are not. The Minister has now reduced payments in one area where they reached or exceeded the targets laid down by the Commission on Social Welfare. That is not the product of any vision of equality but the result of the continuing reshuffling of a budget on social welfare which for a number of years was declining in absolute terms and is still smaller in relative terms mainly due to the concept of pay-related benefit being almost abolished. Nobody has yet explained to me why that is supposed to be good; the numbers and eligibility can be rewritten but the loss in benefits is not immediately visible.
It is only when people become unemployed they discover the degree to which they have lost out on eligibility for pay-related benefit. By virtue of the witchhunt of Governments and other politicians we have created a mood in which social welfare recipients feel grateful for getting anything. They are inclined to keep their head down for fear they may yet again be targeted by the "heavy gang" tactics that some sections of the Department of Social Welfare — with the encouragement of various Ministers — practise against the poor.
It is worth putting the facts about poverty on the record again. The process by which figures in relation to poverty are calculated is as follows. The Commission on Social Welfare first identify what is regarded as target minimum income figures that people should earn. A major study is then carried out by the Economic and Social Research Institute per capita income in the country. If one compares the distribution of income in our society with the target figures proposed by the Commission on Social Welfare, approximately one-third of the population is in a category where their income per head is less than that specified by the commission.
We can argue about the margins but I would counsel the Minister not to be influenced by certain ideologically driven economists into believing that this problem can be got rid of. One economist who is highly respected, particularly by the Minister's minority partner in Govenment, has produced the most dishonest figures I have seen compiled by anyone who masquerades as a scientist. He compared the ownership of consumer goods by people on unemployment benefit with the ownership of consumer goods by the nation as a whole and attempted to use that comparison to prove that unemployed people are better off than people at work. I know, and I hope the Minister knows, how he did that because it is worth elaborating on.
First, people on unemployment benefit, by an large, have worked. Second, because they are on unemployment benefit we do not know if there are other income earners in the family as unemployment benefit is not means tested. Third, the population as a whole includes people who do not have consumer goods, for example, children, old people and various other people who are, by definition, in low income categories. This economist who has been highly criticised by many other academic commentators is, unfortunately, still taken seriously by Governments and is regarded as an expert in many areas of economic activity. He is, as is a number of other eminent economists, ideologically not empirically driven. By that I mean he does not use evidence or facts, but his own dominating view of how society should be.
It is regrettable that the Minister, in his first opportunity to deal with this issue, did not mention the concept of inequality. He is charged with the responsibility of looking after those who are squeezed out of our society. This inequality is the result of income redistribution but many other areas need to be addressed and could be addressed peripherally if the Minister was prepared to do so.
There are many items in the Bill which suggest that the Minister, and indeed the Government and their immediate predecessors, do not believe in dealing with inequality, for example, the inequality which exists in relation to the distribution of the health services. The perinatal mortality rate is higher in low income group; the rate among the wives of salaried employees is less than one quarter of that among the wives of unemployed men. That, of itself, suggests that instead of trying to play tricks with figures to redistribute from the marginally poor to the extremely poor, a visionary Minister or Government should address the inequality which exists in the health services.
The Government and their predecessors have created profound inequality in the housing area by abolishing, to all intents and purposes, local authority housing other than for extreme cases. As a result, the Minister will soon discover that the whole area of supplementary welfare rent allowance will become a major area of expenditure which will have to be dealt with and no doubt he will also find some way of reducing that. This is a major concern because at present there are no local authority houses available and people are forced to move into the private rented sector. Is it not more appropriate to house people in subsidised local authority housing which is a decent standard and provides some sense of security than to pay £30 or £40 per week in supplementary rent allowance to a landlord who does not have to meet any standards? Those landlords probably do not pay tax on the rent they charge, they do not give people the feeling of security and, by and large, they are hostile to children. As I have said, this is in conformity with the ideology to reduce public expenditure in terms of benefits that are visible and places a heavier burden on low income groups. This has been the case for a number of years.
I will not delay the House by going into the whole area of inequality in education. People dealing with income support, particularly the Minister should examine the relationship between the appallingly low rates of child income support, the problems of inequality in educational participation and the whole question of inequality in terms of social progress.
One could devote an entire speech to the stigmatisation of women under the social welfare system. I will quote briefly from Mary Daly's book entitled Women in Poverty published by Attic Press and written with the support of the Combat Povery Agency. It states that women living on low incomes have the following in common: shorter life span, higher risk of depression, more health hazards in the home and at work, higher risk of violence, greater risk of illness, more likely to smoke, less informed about preventive health, less access to and choice of contraception, more of their babies die as infants, larger numbers of children, less choice of health service. That list alone should make a Minister very wary about dealing with any area of the social welfare code which relates to women. I have heard it said that if people on the dole learned how to manage their money they would survive better but Mary Daly demonstrates, from British experience, that a woman feeding a family on a low income will buy more protein per pound spent on food than a person on a middle or higher income. Not only do they manage their money as well, but they manage it better. Yet all through the social welfare system we have the stigmatisation of women.
Mary Daly in her book asks what makes women ill? In the first two lines she says "Marriage is the flippant answer — marriage seems to protect men from mental illness while increasing the risk for women". That is a fact; single women tend to be healthier than married women. Her book categories the inequality that exists in regard to women. A visionary Minister, which this Minister could be, would not simply deal with adjustments of minutiae in that regard, even if he is coerced by external budgetary restraints from doing what he would like in the area of expenditure, but I am not sure what he really wants to do. He talked about incentives to work, etc., which suggest he might not be too keen to increase benefits. He should address the issue of equality, not just in terms of pounds and pence, but in terms of people's lifestyles.
After women had fought through the courts for equality under the social welfare system they were treated to an equalising downward procedure. Where women became entitled in their own right to equality, we now redefine a couple who are cohabiting. I will come back to that because this is full of anomalies, some of which I am convinced are unconstitutional. They decided to give them the benefits of one person plus a dependant spouse and divide them by two; and that is equality. That is what is called equalising downwards.
In regard to deserted wives, the Minister incorrectly stated in the Dáil that the average wage is £12,000 a year. The average male manufacturing wage is £12,000 but women are paid a great deal less. The Minister opted for £12,000 as the figure and today he stated it would somehow be anomalous for a man to insure himself against deserting his wife. A man has to insure himself against dying, against retirement and against becoming unemployed and leaving his wife dependent. Therefore, why should he not have the legal obligation to make provision for his wife who will be left to take care of the children and pay his mortgage? That is an extraordinarily unperceptive statement which grossly underestimates the degree of equality for women in society today and is unworthy of a man who has the vision, imagination and the record of an ability to make up his own mind.
Finally, as regards the categorisation of women, where a woman is living apart from her husband and applies for and gets split payments, what is it worth? Where does the equality arise there? In such circumstances he — and it is almost inevitably he — will get the single person's allowance and she will get the dependent spouse's part of the allowance. Why does the wondrous enthusiasm for equality that applies elsewhere not apply there? Why not add the two people's allowances and divide by two when they are living apart and a woman applies for split payments? Women do not understand this, what they understand is that they are left out and they do not count.
I will move on in this ideologically riddled exercise, to unemployment assistance. Tragically, the Minister has repeated here all the grossly meaningless language about the unemployed that he and I discussed briefly here not so long ago. The myth about the fact that the unemployed must be available for work and genuinely seeking work sounds great. That regulation was consolidated in 1981, but originated in the 1960s. I will be tabling an amendment on Committee Stage asking that the unemployed at least know the rules under which they are being adjudicated. In other words, if the Minister sends guidelines to his officials about what being available for work or actively seeking employment means, those on the receiving end of those regulations or guidelines should know what is being done. I can understand why specific fraud prevention measures cannot be made public, but unless the Minister wants to make a broad sweep and say everything is a fraud prevention measure he is really telling the unemployed that they do not deserve to see the information because they are different from us.
The list of tactics used to frighten people off the dole is endless. The classic one — which the Minister will deny but which the evidence will confirm — is that women, in particular, are singled out. They are always the ones who are asked about children and are always the ones who are squeezed out because of children. I note the Bill makes legal what the Department have always done which is, if you are offered a FÁS training scheme and turn it down without good reason you will lose your unemployment assistance. That was never legal; the Department of Labour always said they were not compulsory.
If a woman with children in receipt of unemployment assistance says she cannot go on a FÁS scheme which pays £36 or £56 a week because she could not afford to pay somebody to take care of her children and pay travelling expenses to and from work, but could afford to be at home or to work in a reasonable job, will she be told that, because she will not leave her children inadequately minded, she is no longer eligible for unemployment assistance? Is the Minister yet again targeting women?
I discussed here with the Minister one afternoon the tendency to penalise people who go to live in rural areas. I believe that whatever happened was not a generalised intent but reflects a tendency on the part on the Department of Social Welfare to single out unpopular groups and put the squeeze on them as happens with the travellers who have to sign on at 11.30 a.m. on Thursday. This is a good way to frighten a few more people off the dole. That deals with the provision of being available for work.
We could spend the entire day talking about the extraordinary requirement that people have to prove they are looking for work. The Department do not have to prove there is work available, or that they turn down jobs, the only people who have to prove anything are the unemployed. They have to prove they are looking for work. If there is a long list of reasonably paid vacancies in the local FÁS office and if the Department of Social Welfare know those jobs are available, people should be pressurised into taking those jobs. That is not a problem; we do not disagree about that. I have no time for the person who will not work when work is available, but I have even less time for a system which tells people they must prove they are looking for something that does not exist. What do you do to an unemployed electrician in a small town where there are no jobs available? What do you do with an unemployed building worker in the middle of a major recession in the building industry? What do you do with an unemployed farm labourer in a society where farm labourers are almost a thing of the past? There are a host of others in this category. Many women tend to be concentrated in the low skilled areas of work. That is the reality of Irish life. The unemployed are being asked to knocks on the doors of harassed personnel managers in order to get letters to prove they are looking for work.
This is all contained in the Bill, unqualified and unaffected by the fact that we are now heading for a figure of 300,000 unemployed and that this was written into legislation when there were only 50,000 people unemployed and when work was available and some people on the dole would not avail of it. We must not forget that during the 1960s Fianna Fáil abolished the dole for a period during one summer because they believed there was sufficient work available for people on the dole. The Minister must have been talking to his friends in Australia because my socialist comrades in the Australian Government did the same about 12 months ago but there has been no reduction in the level of unemployment in Australia as a result. Australia is in the middle of a major economic recession and there are no jobs available. If the intention is to take as many people as possible off the dole in order to reduce expenditure, then it might be honest and straightforward to say that.
This Minister has the reputation of being direct and blunt and of not beating about the bush. If he wants to squeeze people off the dole we can argue about that but let us not put people through the systematic humiliation of trying to get work which is not available. Will the Minister tell me in simple English what that means in a small or large town where no work is available? Do they know what they mean or does it vary depending on the mood, the humour and the cyclical way in which this ripples through? There is a sword of Damocles hanging over every unemployed person, liable to drop at any time if they misbehave.
Many unemployed people are frightened of getting involved in any campaigns about the rights of the unemployed because they might lose their benefit. There are cases of people who simply turned up at a demonstration about the rights of the unemployed and discovered the following week they were cut off the dole because it was deemed that since they were busy agitating they were neither seeking work nor available for work. That is the way the system works. It is regrettable that the necessary vision is missing. There are many plausible aspects in the Minister's speech. He is a very plausible man, and therefore, what needs to be dealt with most carefully is his plausibility. He is very logical about many things.
In regard to cohabiting couples, the Bill contains a definition which states essentially that a spouse is either one half of a married couple or a common law couple who are cohabiting. Under this Bill a homosexual couple will get a higher level of social welfare payment from the State than a heterosexual couple. I believe this will come before the courts and the Minister will be told he is devaluing Irish marriage by giving more money to a couple who practise a form of sexual activity which is not regarded as the norm in Irish society. That is what the Minister is doing. Homosexual couples are far more plentiful than anybody wants to admit. The Minister's predecessor was somewhat prissy when sexual matters arose. On one occasion he managed to leave the word "sex" out of his definition of co-habitation, until the end of a page and a half of his speech. This Minister is not given to that sort of prissiness. I invite him to explain why co-habiting couples of the same sex and who are sexually active are omitted from the provisions of social welfare legislation? Is that logical or correct? Is it not inherently discriminatory against the family? I will be asking a couple of my colleagues, Senators Hanafin and Lydon, to explain why they are voting in favour of discrimination in favour of gay couples — when this Bill goes through this House. That is what is happening. I am in favour of gay rights. They are such an oppressed minority that I am quite happy to agree with the Minister that he wants to give preference to gay couples. Gay couples do exist. What we are saying now is that as long as you are not heterosexual you can do what you like and you will get the full benefit of a single person's allowance but if you are heterosexual you are being penalised. That is the first argument.
The second argument is the attempt to define in law an equivalence between a couple who are married and who constitute a family under the Constitution and a couple who are co-habiting and who do not constitute a family under the Constitution. I am not responsible for what is written in the Constitution. If I had my way those definitions would be got rid of because a couple could be defined as two people who are married and if people want to get the benefits of a married couple they could sort out their problems and remarry. In this legislation we attempt to pretend they are the same.
There is a huge volume of case law in Irish life which says that the courts recognise a family as a couple who are in a marriage union and are not prepared to accept any other definition of the family. I disagree with the courts. That is a classic, prissy Irish judicial narrowmindedness about the realities of life. However, that is what they have done and the Minister will not get away with it in this legislation. It will be challenged in the courts and will be thrown out as being unconstitutional because it attempts to redefine a spouse, for example, as one half of a marriage, in terms other than as stated in the Constitution.
Has the Minister been specifically advised by the Attorney General that these clauses are constitutional? I have not got an excessively high opinion of the Attorney General following some of his recent exercises but, nevertheless, he is the chief legal adviser of the Government. I will quote from a judgment by Mr. Justice Murnaghan in Irish Law Reports, 1966, the State (Nicolaou) v. An Bord Uchtála, which states that the Constitution recognises only “the family” founded on the institution of marriage. Mr. Justice Kenny, in a judgment in the case of Murphy v. the Attorney General, states that the pledge given in Article 41.3.1º to guard with special care the institution of marriage is a guarantee that this institution in all its constitutional connotations as to the position of the mother in the home will be given special protection. The Department of Social Welfare are attempting to abolish that because they do not want to recognise couples as being equal and, therefore, entitled to equal payments. In other words, in order to save what I know is a substantial amount of money all couples will be hypothesised by them into being the same category. There is a provision in the Bill wherby a bigamous individual cannot claim for two people at the same time. The Department of Social Welfare's capacity to come up with the most extraordinary possibilities is amazing.
There are also other interesting provisions in the Bill. A man cannot claim a maternity allowance for a woman who dies during a pregnancy. I am intrigued but that is the job of the Department and I am not complaining about it. Nevertheless, the family is redefined in the Bill in a manner which is contrary to the Constitution, and particularly to the Constitution as interpreted by the High Court and Superme Court. That definition is inserted to justify paying a couple a lower level of benefit than two single people. I am saying to the Minister that because of the fact that it ignores couples who are not heterosexual, becuse it attempts to run in the face of all the case law on the definition of the family. It is in big trouble. In a recent attempt to challenge SI 200 of 1991, which attempted to implement such a provision for couples in receipt of certain health board payments, the Department of Social Welfare did not contest the case and the SI 200 provision was not put into operation last year. I believe this is now an attempt to do that by way of legislation. The Minister, from my evidence, will be in trouble on that too. It is anomalous and discriminatory.
Before I deal with specific provisions of the Bill in the light of the concept I talked about earlier, I wish to say something about the alleged incentive to work. I accept there are problems. I wish the nation would accept that the highest marginal tax rate in our society applies to unemployed people. In other words, if they go above a certain level of income the amount of the income that is taken off them is 100 per cent. In some cases it may be 110 per cent, because they may lose some other means tested benefits. There is a genuine problem there. The level of exempted earnings that used to apply is about ten or 20 years out of date. The exempted earnings level is still £6 a week and it should be perhaps £30, £40 or £50 a week. If, of course, the first £50 of earnings in a week were exempted there would be a reasonable sliding scale which would not produce these dreadful anomalies.
Notwithstanding that, I wish to remind the House of a couple of things. No empirical evidence of any substance exists to justify the assumption that the level of welfare payments is a disincentive to work. Everybody thinks so. We, in this House, would be most offended — and politicians generally are most offended — if somebody said we are only in it for the money. If I said to the Minister that he is now working harder, or he will be from the 6 April next, because his top tax rate is going to go down from 52p to 48p in the pound, he would be very insulted. If I said the Progressive Democrats — the party most given to talking about the incentive to work — were only in politics for the money they would be most offended. In my view anybody who is in politics for the money would not only be grossly offended, they would be certifiable, but that is a separate issue.
The suggestion that this money is an incentive goes back to an insistence by a certain school of economics in seeing work as what they call a negative utility. In other words, it is something that people will not do unless they have to. That defies most of human experience. People do not like to be idle. Paddy Geary — I will not quote the reference as I do not have the quote — in an edition of the Economic and Social Review published in this country a few years ago, did a major study of all the material. He said there was at best very little evidence that replacement ratios of welfare to net income had a significant effect on people's inclination to work.
There is further evidence about taxation of low incomes. I will not go into it but on page 67 of Efficiency and Effectiveness in the Public Domain, edited by T.P. Hardiman and Michael Mulreany and published by the Institute of Public Administration, there is a study of incentives at both ends of the income distribution — of low incomes and high incomes and particularly of taxation — but the two things interact together. The interesting thing is that there is some suggestion that, perhaps, there is a work elasticity for women, but there is no evidence that reducing taxation on low incomes introduces a willingness to work harder.
It is extremely important that decisions should be made on evidence and not on opinions. It is the engineering training I had over a number of years that has pushed me very much in that direction. The answer may not suit one, but one should not deny the answer simply because it does not suit one; one should address the evidence and the information. Therefore, the whole question of incentive to work which is used with appalling frequency by economists, and which this Minister has used on more than one occasion, is not sustained by the evidence.
Secondly, if the reason for high-scale unemployment in this country is because of the disincentive effect of the interaction of tax and welfare, then one would expect that we would have large numbers of empty jobs. I am not an economist, but I am competent in the area of numbers and I would like to know where are all the jobs that would be filled if all the unemployed lost the disincentive to work? I will not dispute that there are extreme manifestations. If we abolished all forms of welfare, there is no doubt that many people would end up doing something, but it would be something that would pay them extremely badly. We would serve ourselves better by not addressing the wrong end of the equation, which is the surplus supply of labour, instead of addressing the question of the scarcity or the inadequate supply of jobs. It is not the unemployed who create the scarce number of jobs. There may well be problems and I would happily address the question some time of the need to create incentives to employ. We could talk at length about it.
There is an overwhelming case for the abolition of capital grants and most capital allowances to employers and their replacement by employment allowances. Off the top of my head, perhaps we could give people one and a half times the gross cost of employing somebody against the profits of the company they are running. A situation would be created where people not only employed other people but had an incentive to do so. Employers' social insurance contributions in this country are low by European standards. Therefore, they have no objective basis for it. We have a problem with the scale of unemployment and we have to deal with it. We will do this by abolishing both capital grants and most capital allowances and by creating instead a generous incentive to employ.
I take exception to this incentive to work idea because I do not like things being asserted as fact which have no evidence to sustain them. Secondly, it involves a "them and us" categorisation of Irish society. Everybody who talks about the incentive to work is, first of all, at work and, secondly, is well off by the standards we are talking about here. If £12,000 is a generous income to allow a deserted wife before she becomes ineligible for a deserted wife's benefit, then everybody is very well off. Senator Ó Cuív's figure of £25,000 means that many people are relatively or moderately well off in the bracket between £12,000 and £25,000. All of those people are at work but they are all being fed a line that all of the people who are not at work are worse than they are. We work even though we pay taxes that are perceived to be high taxes. Most of us in the public sector do not take six months sick leave every four years or every two years, such as I am entitled to, but we assume that those on the bottom of the heap are different and that they will rip off the system left, right and centre. I could spend six months of every two or four years certifiably sick and nobody could do anything about it, but most people in the public sector do not do that. Ministers and politicians do not do that. The whole question of incentive to work is a phrase that should not be used.
There are worse phrases, such as the classic one of the OECD economist, who talked about the increased utility of leisure that went with unemployment. That is a way of saying they are all lazy and are having a great time on the dole. Whatever way you say it, it is equally untrue. Being unemployed is a humiliating, destructive experience. To talk about the extra leisure time associated with it and to relate that to the income they get is wrong, because of what it does to the people at the receiving end. It is also wrong because it distracts us from real solutions to our real problems.
I would now like to deal with the question of disability benefit. The Minister is proposing to discontinue pay-related benefit, and that is bad enough. He is also proposing to insist that only contributions, as distinct from credits, would be counted when deeming people to be eligible for disability benefit. As I understand it — and I am sure the Minister will be first to admit it is difficult to understand the social welfare code — that will mean somebody, for instance, on long term unemployment is quite likely not to be eligible in the future for disability benefit. What would happen them if they are not eligible for disability benefit? What are they eligible for? As far as I can see, all that they are eligible for is supplemnentary welfare. If they are ill, they are not available for work and therefore, they lose unemployment assistance. Disabled persons maintenance allowances are for people who are long term disabled and, therefore, they cannot be eligible for disability benefit. What are they eligible for? The only thing it appears to me that they are eligible for is supplementary welfare. What does a single person do who is sick in order to qualify for supplementary welfare? Is the community welfare officer going to visit them in their sick beds? What is going to happen to them? Are they going to have to apply for supplementary welfare, even though they are sick? I do not understand it. There is the "plausibility factor" of the Minister running through this speech, but there are questions like this that deserve to be addressed. What happens to the people in question?
The other big question is to do with the changes in the means test for unemployment assistance. Again, there is a superficial logic to this because of the "anomaly" identified by the Minister between self-employed people and who have their full means as generated by self-employment assessed for the means test, by contrast with people who work part-time and who only have a daily part of the unemployment assistance deducted. The truth is that most of the people who identify themselves as being part-time self-employed do not have to produce a regular statement of means. It is much more flexible than that, and is generally taken in terms of a proportionality of a full week's earnings. It operates fairly flexibly and generously in their direction presumably because of the complications of approving all this for people who are self employed in a part-time way. What we are actually doing is penalising further the unemployed.
Some people have given me a lecture about the need to create incentives to work. Members of the Government, including the Minister for Finance, have lectured us about the fact that permanent, pensionable employment for many people is a thing of the past and it is going to have to be a much more flexible kind of work for many people. Why we are doing things which push people in the opposite direction and push them away from participation in the labour market? We push them away and make it difficult. It is not necessarily the income effect. It is the paperwork. It is the bureaucracy. It is the humiliation and all of that which people find difficult. It is the labour exchange process, not necessarily the pound for pound exchange, but that also adds to it. I do not understand the logic of all of this, other than it is an area where you can save a few pounds.
There is a provision in the Bill to make the proceeds of the sale of a house of a pensioner not reckonable for the means test. That is fine except there is a subsection that the provisions for exclusion shall not apply to any sums arising from the investment or profitable use of the gross proceeds derived from the sale of the pensioner's residence. What we are saying is that an implied income from that capital, which is the way it used to be, will not be regarded as reckonable. Instead, if old people put the money in a bank or a building society or somewhere else the interest they derive from it will be reckonable. Am I unreasonable in suggesting that what this will do to old people is encourage them not to put their money into banks or building societies or anywhere else? Will it encourage them to keep it somewhere else? Will we have this frightful spate of robberies of terrified old people? I would like to know what is the real change here. What is the real change between the old system and the new system?
I already mentioned the deserted wife's benefit and the extraordinary language the Minister used. With regard to the figure of £25,000 per annum which was suggested as a means test for certain treatment benefits, will the Minister say how much it will cost to operate that means test and how much the cost of that means test will be in relation to the savings? It appears everybody will have to be means tested. That means the processing of thousands of applications for means tests, together with all the related paperwork. That will not be cost free. We will only save a small amount. This is something that will penalise PAYE taxpayers much more harshly than the self-employed.
The recent report of the Revenue Commissioners had the audacity to tell the nation that there were only 4,000 self-employed people earning in excess of £25,000 a year. According to my calculations, that leaves about 150 people in the whole of Cork city who are self-employed and who are earning in excess of £25,000 a year. I could walk down the South Mall and pick out that number of self-employed people on that street alone. What this means is that the self-employed who can hide their income will get privileges that the PAYE workers, who cannot hide their incomes, will not get. I do not have any problems in principle with a £25,000 a year means test. One cannot argue with it but one can argue it is a meaningless means test because of the relatively small numbers who will be excluded and the cost of administering it. One can only conclude it is the first step to reducing it. The Minister estimates that £12,000 per annum is a reasonable figure on which to operate a means test for a deserted wife's benefit. One can assume he will identify another anomaly, that is, the anomaly between £12,000 for one person and £25,000 for another. The record of this Minister and his predecessor is that where anomalies such as this occur they will be adjusted downwards. One can assume that the £25,000 will be adjusted downwards. What we are doing here is giving the Minister the right to set up the mechanism to start means testing at this level and then the means will gradually be adjusted downwards.
May I remind the House of the analysis of Riada Stockbrokers? I am a great believer in always quoting what I would regard as the opposition as a source of my information. Then I cannot be accused of putting a left-wing colour on the figures. Riada Stockbrokers have estimated that if the State paid a private employer £15,000 per annum per extra employee, the State would be a net beneficiary to the tune of £1,000 per annum. I do not know if they are right, but it is about time the power and knowledge of Government were devoted to looking at that figure. I am not talking about work share or any of these appalling notions that Ronald Reagan imposed on the American people over a period of ten years. I am talking about the possibility of using the same sums of money to allow people the free choice to work, or to give people work at a reasonable wage in order to do a job that is related to their skills and talents. What that figure suggests is that it is all right to spend large amounts of public money on keeping people idle because that is ideologically acceptable. It is a consequence of cutting back on public expenditure.
One of the parts that is ideologically necessary is reducing the size of the public sector. The fact that you might pay people as much for doing nothing as you would to have to pay them to work in the public sector is omitted from the equation. The Government should address the question as to what the net cost to the State would be, after tax and PRSI deductions, in order to employ in the public sector a large number of those who are unemployed.
We have heard about the gross cost of public sector pay. We need to know the cost. The Minister for Finance has said that he could not estimate the net cost of public sector pay and I was intrigued by that. He has a certain ideological tunnel vision about many things, but he is also a man of imagination. The most imaginative thing he could do would be to look at whether we have the resources to put people to work, with decent wages and in decent jobs, or whether we do not want to use the resources, and we believe we will get away with it in terms of the perceptions of outside groups of what we can otherwise do. There are increasing arguments in favour of using the same enormous resources to give people work instead of using the resources to keep them in what is, effectively, enforced idleness.
If the cost of large-scale employment cannot be paid out of existing resources, then I for one — and I make no apology for this — believe that because of the scale of the crisis the solution lies in higher taxation. I have no problems with that. I have said this consistently. It was a daft idea, as a consequence of the recent budget to have left myself and my spouse £250 a month better off. That is slightly less than the State will give an unemployed couple to live on. That was wrong. It will not make either of us work harder. Perhaps it will have the opposite effect. We will probably need to work less because of it. There is no doubt we are an exceptionally well off couple. No doubt Senator O'Donovan will ring The Cork Examiner and tell them of my confessions, but it has already been frequently identified in that paper that my wife and myself are well off. I do not think this provision in the budget was right. I do not think it created one extra job. I can quote from Hardiman and Mulreany to show that such a provision produced no response from higher income people elsewhere.
It seems to me that the argument that we must reduce taxation in order to increase incentives for enterprise is backed up by nothing other than the ideological perceptions of a certain school of economics. There is no evidence of this fact. For instance, low paid workers in Germany pay more of their incomes towards tax and social security than low paid workers in Ireland. In Germany, workers on £10,000 a year have more deducted from their salaries than workers on the same salary in this country. Can anybody suggest that German workers are less productive? Irish workers increased productivity dramatically between 1985 and 1987, even though the level of taxation paid by ordinary working people has not been dramatically adjusted. There is no evidence that the entrepreneurs and managerial classes have been nearly as effective.
I suspect the net cost of giving most, if not all, of the unemployed people work — I mean real work and not Mickey Mouse training — would be far less than people imagine. If it is a little more than the total cost of what we are spending at present, then so be it. Let us raise the extra taxes to pay for it. Taxes may make people feel aggrieved. People like myself may feel well off because taxes are dramatically reduced. We have reduced the top rate of tax from 65p in the £ to 48p in the £ in the past five years while unemployment has increased. The solution to the problem of people who are poor and unemployed, and who are humiliated in the way we treat them through the labour exchange system, may well be to increase taxes. I would be happy to support that.
I would like to welcome the Minister to the House. I congratulate him on his appointment and wish him a very happy and successful term of office in this very important Department.
I am pleased to have the opportunity to make a brief contribution to the debate on the Social Welfare Bill, 1992. For people on social welfare benefits, this is a very important Bill. It gives effect to the increases in social welfare payments which were announced in this year's budget. These increases will ensure that such people will have their living standards protected and, in many cases, slightly improved. This is in line with the commitment on social welfare in the Programme for Economic and Social Progress. I am pleased that this commitment is being honoured by the Government. In fact, this is the fifth year in succession in which a Fianna Fáil Minister for Social Welfare has brought in a Social Welfare Bill which provides for increases which are above the level of inflation. Each year since 1987 substantial extra resources have been targeted to social welfare recipients and to people on low pay.
Indeed, at this stage, I would like to pay a tribute to Deputy Michael Woods who, as Minister for Social Welfare, between 1987 and 1991, did so much to improve the living standards of people who depend on social welfare and of families on low pay. He worked unceasingly to make our social welfare system more responsive to the real needs of those who could be described as the most vulnerable in our society.
I am pleased that his policies are being continued by the Minister. This is evident from the social welfare improvements which are provided for in this year's Social Welfare Bill and which will cost £85 million in 1992 and £162 million in a full year. In fact, total social welfare expenditure in the current year will amount to the massive figure of £3.36 billion, an increase of £265 million over 1991.
A further measure of the progress that has been made since 1987 is the fact that all long term rates of social welfare have now reached or exceeded the priority rates set by the Commission on Social Welfare. The special increases of 6 per cent this year in the short term payments will enable the priority rates set for these payments to be reached next year. In addition to the increases in the rates of payments since 1987, many anomalies in the system have been eliminated and some new schemes, such as the carer's allowance scheme, have been introduced.
At the same time, abuse of the system has been tackled and the incentives to work have been increased, mainly through the changes and improvements which have been implemented in the family income supplement scheme. Indeed, I am very pleased to note that once, again in this Social Welfare Bill, there are substantial increases in the income limits below which families can qualify for family income supplement. I would like, however, to suggest that one of the conditions which must be satisfied in order to qualify for family income supplement should be amended.
This is the condition, that the applicant or, in the case of a couple, one or other of the spouses must be working for an employer. This means that as a general rule a small farm family or families of other self-employed persons on low pay cannot qualify for family income supplement. This would appear to be very discriminatory. Due to the present difficult income situation in farming, many small farmers in the west, in particular, are on the poverty line. I believe that family income supplement should be extended to include these families. It seems very unfair that they are excluded at present, particularly in view of the very uncertain future.
I appeal to the Minister to have this matter examined. I know he will say that these small farmers are entitled to unemployment assistance if they satisfy the means test. This is so and should continue to be the case for single persons, but I believe the small farm families on low incomes should not be discriminated against vis-á-vis other families within the State.
In relation to means testing for unemployment assistance where small farmers are concerned, I am satisifed that some social welfare officers are continuing to assess means on the basis of notional profit figures, particularly in the case of small dry stock enterprises. They simply ascertain the numbers of stock which these small farmers have and verify these figures by reference to the district veterinary office records or the headage payments records. They proceed to calculate the farmer's means on the basis of a notional profit on each animal. In many cases, the figure arrived at bears no relationship to reality. I realise that means testing has always been a thorny issue and I know it would be the wish of the Minister that the system should be fair and impartial but, unfortunately, I have to say that in some cases it is not and this is something the Minister should look at.
I refer now to the carer's allowance. I welcome the increase in the rate of allowance and the extension of the scheme to persons caring for recipients of retirement pension who are between the ages of 65 and 66 and who were previously in receipt of invalidity pension. This is an excellent scheme and will have the effect of keeping many of our older people out of institutions and in the community. However, I ask the Minister to consider relaxing the means test for this scheme. If this were done, I believe that, in addition to its primary objective, this scheme could become an important instrument for job creation.
There are many elderly people in the community in need of full-time care and attention but who are not receiving it because the people who should be and who wish to be providing it are either in low paid or part-time employment. The reason for this is that under the present means test they do not qualify for a carer's allowance. If the means test were relaxed sufficiently to enable these people to qualify, they could afford to give up their employment to become full time carers, thereby creating vacancies in the workforce.
I believe this would be a very beneficial result of what I am suggesting and it is just one beneficial result; the other beneficial result would be that the demand for institutional care and geriatric beds would be reduced, thereby saving the State a considerable amount of money in this area of the health service. There is one other suggestion I would like to make in connection with the carer's allowance. The level of payment to persons caring for more than one incapacitated pensioner or invalid should be substantially increased.
There is one aspect of the free travel scheme I want to bring to the Minister's attention and ask him to have a look at. A person in receipt of disabled person's maintenance allowance is entitled to free travel but if that person is unable to travel alone, he or she can qualify for free companion travel. This means that a companion may travel with the disabled person free of charge.
I am asking the Minister to extend the free companion travel scheme to two other categories of disabled persons. First, I would ask him to extend this scheme to blind persons in receipt of the blind pension and who are unable to travel alone. The second category to which I would ask him to extend the scheme are seriously disabled or handicapped people, people who may be confined to wheelchairs but who are in receipt of social welfare payments other than disabled person's maintenance allowance. Some years ago a very high powered campaign was mounted to encourage disabled and seriously physically handicapped persons to seek and take up employment. Indeed, employers were encouraged to reserve a certain number of places in the workplace for such persons. As a result of this campaign, many disabled persons became part of the workforce. Unfortunately, for some of them, their condition deteriorated after some years and they were unable to continue in employment.
I would ask the Minister to consider the case of a person who is seriously disabled and confined to a wheelchair. This person was in receipt of disabled person's maintenance allowance prior to starting work. After working for some years, this person had to give up work because of deteriorating health. He or she then qualified for disability benefit and subsequently for invalidity pension. The person in question will, of course, be entitled to a personal free travel pass, but because that person is unable to travel alone that free travel pass is of no use to him. When they apply for free companion travel he or she is refused on the grounds that the only qualifying allowance is disabled persons maintenance allowance. Here is a serious anomaly in the free travel scheme and I ask the Minister to examine it with a view to enabling these people to qualify for the free companion travel. I know the Minister will give this request sympathetic consideration.
I believe the changes I am seeking in the free travel scheme could be funded by corresponding savings in the system. The Minister said in his Second Stage speech that where changes such as this are seen to be desirable and if they can be funded from savings within the system, he is prepared to look sympathetically at these changes.
I conclude by welcoming the increases, improvements and changes which are provided for in the Bill. I welcome the Minister's commitment that he is very much in favour of providing incentives and encouragement to people to improve their situation and to reduce their dependency on social welfare. This is something with which we could all agree.
I welcome the Minister to the House. This is my first opportunity to speaking before him. I know he has an extemely complex Department to look after but I believe his commitment is such that it is a good appointment and, hopefully, he will do well.
Going through such a Bill — even with the explanatory memorandum — we can see the complexities of the social welfare system. They are such that I would need an induction course to unravel the mysteries of the system. We have been told many times about fiscal rectitude and the fact that education, health and social welfare are the big spenders. The figure of £3.36 billion for social welfare in 1992 is an extraordinarly large amount, an increase of £265 million over 1991. These figures are mind boggling.
It has been the aim of all Governments to move towards priority levels that have been set, and which have been spoken about many times by the Commission on Social Welfare. The Minister refers to the need for restraint, in all areas of public expenditure if the economic and financial targets underlying Programme for Economic and Social Progress are to be achieved. He states that:
The public are aware and have come to accept that the effect of the present financial difficulties is that all areas of public expenditure have been and continue to be severely constrained.
We see the logic and the aspirational aspect of such words, but what is the reality for the 300,000 on the dole queues, who are quietly desperate, who can look forward to living out their lives out of work. In blackspot areas like Southhill or Moycross in Limerick there are families in which three generations are unemployed. They are caught in the bleak knowledge thay they cannot offer their children a better quality of life, despite the fact that their children have had access to education. It is very hard for them to look at the logic and aspirations in what the Minister said. It is a cold harsh financial statement but it is poor consolation for the people on the dole queues. To them, social welfare is survival, it is not an option. The Minister refers to the single greatest constraint on the social welfare system, the level of unemployment. He shows the balance between the increase in social welfare and a corresponding reduction in income from PRSI contributions and we can see the logic in that. He says our ability to come to grips with the problem of unemployment is central to our ability to maintain and improve the level of our social welfare services.
I was disappointed to hear the rather cynical comment of Senator Ó Cuív in relation to Fine Gael and the jobs forum. What we are debating today is of enormous importance to the unemployed. Everybody agrees that Fine Gael are not playing politics with the forum but they know there have been 93 reports on unemployment and they want a worthwhile committee with ministerial involvement. They are not looking for too much. They want a realistic action plan not just another talk shop. It was not in the spirit of Senator Ó Cuív's usual contributions to use the word "cynicism".
The Minister refers to the possibility of redirecting resources within the system to people on the lowest income levels — that is very laudable — and he talks about targeting scarce resources in the most effective way towards people in greatest need — I agree totally with him. Many speakers have mentioned that one way of ensuring that resources are used most effectively is to acknowledge that the children's allowance has been stretched by the women of Ireland who hold and manage the purse strings. It is not just me who says this. Reports from the Combat Poverty Agency, NESC and the Conference of Major Religious Superiors have stated that it is well know that that money is well spent. I was very disappointed that it is one of the few areas where there has been no increase. We live in a country where the "family"— of whichever type extended, nuclear — is supposed to be protected and lauded but support for the family, does not go beyond the lip service by the church in many cases and the lip service by politicians in others. When it comes to finance, support for the family is just an aspiration. Like many other women I was very disappointed more was not done in this area. I do not know how the Minister was advised on that issue because any increase would have been accepted and very much appreciated by women. The children's allowance helps women provide the basic necessities of life for their children. It helps provide food, clothing and the education for children. Even though they are technically in receipt of free education, in reality, the demands of school children at primary and postprimary levels are such that families are no longer able to meet them.
Another woman who depends on child benefit is the co-called well heeled woman who gives the appearance of affluence. She may be married to a very thrifty and in many cases mean spouse who does not give his wife any personal income and she is dependent on what she can scrape and save from children's allowance. This is referred to as the "locked telephone" syndrome or the unfuelled second car. The car is there and the trappings of affluence are there, but the reality behind closed doors is that the woman is living in poverty. It is the new type of genteel poverty. These are not elderly women living in old estates. I am talking about the suburban woman, the spouse of the successful businessman. For those women the child benefit is used to provide for basic necessities.
There was another major disappointment to women, and again I have to take issue with Senator Ó Cuív. He referred to £25,000 as an extremely good salary. I know that this year he has only his Seanad salary but when he was in employment outside Seanad Éireann I think his salary plus his Seanad salary would have been over the £25,000 mark. I do not see that as a princely sum. I wonder why he did not refer——
We should be entitled to that in the Seanad.
I would ask Senator Jackman to refrain from mentioning a Member of the House who is not here to defend himself and I would ask her to stay with the Bill.
Seeing that we are not in receipt of £25,000 as Senators, it is interesting that if the separate incomes for a husband and wife are £24,900 each will be in benefit for optical and dental treatment. If anomalies are to be removed it should be done right across the board. I see £25,000 for an average single income; when tax is paid and there are child dependants — as a minimal salary. I know it is better than people on the dole get but women have been looking forward to this for some time.
The 18,000 people who will not be in receipt of these benefits as a result of the £25,000 ceiling of £25,000 will again be very disappointed. There is a feeling, and I hope the Minister will clarify this, that perhaps the ongoing difficulties between dentists and the Department might be resolved on a trade basis. It looks as if there was some sort of X equals Y situation with women losing out.
The orthodontic lists are growing. One child may get dental treatment and the other child gets his parents to pay £1,000 to have his teeth looked after. At the same time the mother, who is probably post-childbearing or in the process of having children is in need of dental treatment. With the 18,000 women who have been affected, I too am disappointed with this decision.
I want to speak about the carer's allowance. I was glad Senator Mullooly emphasised this point. I do not want to say that the Minister does not have an understanding of the concept of caring but it is not just a question of financial support. It would help if the Minister liaised with the Soroptomists International clubs who, as far back as the 1989 election, drew up a charter for carers and outlined the needs of carers. That is going back some time. Running for the election in 1989 I was circulated by the soroptomists on whether I would support their charter for carers.
It is interesting that Europe has taken the charter for carers to their hearts. This week the recipient of the laureate from the Council of the European Movement, Judith Ironside, a member of the Ennis soroptomists branch, is in Europe speaking on the concept of caring for the carers. It is a blueprint for European countries because, unlike ourselves, care for the elderly and handicapped there has been provided in institutions particularly in Nordic countries. I am not saying that other countries do not have the same respect for the elderly, we know they have but there is a great sense of caring in Irish families. They wish to keep their elderly at home; they wish to keep their mentally handicapped, retarded, or autistic children, and children suffering from long term illnesses at home. They are happy to keep them in the family unit. It is not a question of not being able to afford to place them in institutions. In many cases the places are not there for them. They set out to keep the family unit intact. The carers have never been appreciated or acknowledged as a group. Many of them are financially independent but it is a question of appreciating and acknowledging their commitment because they are the hidden and forgotten people.
I know the Minister has granted them an increase of 6 per cent but I hoped he would have extended and increased it further. Tomorrow, we will be arguing that where carers are caring for two pensioners they should be allowed twice the normal weekly means for the purpose of assessing their entitlement. This is an amendment I hope will be accepted and my second amendment purposes to give respite care so that carers can take time off from their annual caring duties.
If the Minister were to show initiative in this area, it would go a long way towards acknowledging the work being done and perhaps next year, increasing and extending the scheme to other carers. The facts are staggering, of the 8,900 who applied, half were deemed ineligible and only half of the remainder received the full benefit, approximately 2,000 carers got the allowance out of a total of around 8,000.
We are not talking about a minority group; these people live in urban and rural areas, north, south, east and west. The biggest worry and the greatest fear of mothers particularly is, who will look after the handicapped child on their death. As we know, women live longer than men so it is usually the woman who is left with the dependent child.
Nobody seemed to realise that in 20 years many of these carers never got a break. That is horrific in a country of caring people. I am not saying they want to be told they are marvellous; they love what they are doing but they made the sacrifice and they are not acknowledged. It is a shame that only the Soroptomists saw this as a burning issue. While listening to a BBC programme one of the Soroptomists who was travelling throughout the country got this idea and now it is a concept that will be adopted by European states. The few precious moments carers have had away from home, whether it was a few days in Tralbolgan or Lahinch it was an Ennis initiative and very much appreciated. A particular couple had not been alone for any length of time in 20 years. It is extraordinary that appreciation of these people is only now coming to the fore here because a Soroptomist by chance, heard a BBC programme.
It is important that the Minister would think clearly and look at the area of caring for carers. We have a tremendous number of elderly dependent on an ever shrinking working population. It is not an issue that will disappear overnight; it is going to continue. It is better to move on the initiative now because at the end of the day these people, who do not mind the commitment they have to make will be satisfied with the Government's recognition of their commitment, and extra financial support would go a long way to making their lives more pleasant.
There are many other areas I could speak on. I did not get an opportunity to go into the detail of the maternity benefits, the deserted wife's benefits or the taxing of the disability benefits which was inherited by the Minister, but the children's allowance and caring for the carers should be give number one priority in next year's budget. Before this Bill is passed, the Minister might be able to do something to improve the lot of a very dependent, silent, long suffering section of the population.
I congratulate the Minister on his appointment and wish him every success in the Department of Social Welfare. I know from experience it is a very satisfying Department to work in. He will be providing for the less well off in the community. From his work as a Deputy over the years he understands the problems of the poor and the less well off in our society and I look forward to great things from him.
Over the years we have seen many changes in that Department. Many new and innovative schemes were introduced. I thank Deputy Woods for the work he did there over many years and the many changes he made. I know that the Minister, Deputy McCreevy, will carry on the good work commenced by Deputy Woods.
This Bill gives effect to the social welfare increases and other improvements announced in the budget. The improvements will cost £85 million in 1992 and £162 million in a full year and will bring total social welfare spending this year to almost £3.6 million. I am glad to note the Government are committed to maintaining and improving the basic provisions for people dependent on social welfare. The amount of money provided in this Bill is proof of that. It is also necessary to ensure that the resources available are directed towards those in greatest need and that taxpayers get the best value for money provided for social welfare.
The improvements provided for in this Bill include a general increase of 4 per cent in all weekly social welfare payments with a special increase of 6 per cent in short term rates effective from the end of July; further improvements in the family income supplement through increases in the weekly income limits for families; the introduction of an over-80 allowance for recipients of invalidity pension; the introduction of a new average test condition for entitlement to full rate contributory old age and retirement pensions based on contributions since 1979: the streamlining of the maternity allowance provisions; streamlining and strengthening of existing powers to pursue liable relatives for maintenance of their families; rationalisation of legislation in relation to unemployment assistance including the removal of the need for qualification certifices.
Other measures provided in the Bill include the introduction for new claimants of an income limit for entitlement to deserted wife's benefit at a level to be prescribed in regulations; changes in unemployment benefit provisions arising from the inclusion of part-time workers in the social insurance system; restriction of entitlement to unemployment benefit for a claimant under the age of 55 years who received a redundancy or similar type benefit which is in excess of the amount to be prescribed in regulations; modification of the contribution conditions for entitlement to disability benefit to require at least 13 paid contributions in the governing contribution year in certain cases; the alignment for new claimants of the personal rate of injury benefit under the occupational injuries benefit scheme with the rate of disability benefit and the discontinuance of pay-related benefit payable with disability benefit in the light of the decisions already announced to make disability benefit liable to taxation through a combination of statutory sick pay and other measures. Some of those measures will be put into effect immediately and others will come into effect at the end of July.
One criticism of social welfare benefits is, why they are not put into operation immediately? Other workers get increases, so why do social welfare recipients have to wait so long for theirs? We know there are genuine reasons for that but it is very hard to explain those reasons to people who are in receipt of such benefits. One of the reasons is that the books have to be changed and this takes a while. It is not something that can be done overnight. Very often, people have to wait for six months for their increase in benefits.
In recent times the bishops have held meetings to try to highlight the problems affecting people in the west. As we know, at those meetings people generally operate in workshops and put forward ideas on how the problems might be tackled. One of the things that has come forward from those meetings is the fact that our social welfare system acts as a disincentive to employment. Those of us who know the system will realise that is so. A man with three children will qualify for £119 per week, increased to £124 after this Bill has been passed, in unemployment assistance he will also qualify for a medical card, free transport for his children to school and so on. If he had to travel 20 or 30 miles to work and has to run a car or pay for transport, after all the deductions are made he would probably end up worse off than the man who stays at home drawing the dole. That is the unfortunate situation at present.
The Government have taken the right approach in looking at the possibility of redirecting some of the resources in the system to those who need them most. That is only reasonable. Those on the lowest level of social welfare payment should be protected and, where possible, have their living standards increased.
We know that there has been quite an amount of abuse of the social welfare system. This abuse should be rooted out. I am happy to note that considerable progress has been made in that area in recent years and I hope that will continue. With the high level of unemployment, it will be increasingly difficult to sustain the present levels of payments. Any savings made by way of switching resources within the different schemes is justified.
We have heard criticism of the deserted wifes allowance. I agree with the changes the Minister proposes in relation to this scheme. An income limit above which benefit will not be paid is justified. I understand there is considerable abuse of this scheme, particularly in cities where it is not as easy to track down abusers of the scheme. The present scheme applies only to women and I agree there should be equal treatment for men and women in the schemes. There are many cases where men have been deserted by their wives and where hardship is being caused to the husband and children. This should be corrected.
The carer's allowance is another scheme that was mentioned by most speakers today. This is an excellent scheme. It helps people to maintain their elderly relatives in their homes. It is much cheaper to do that than to have those people committed to institutions. The means test for this scheme is too rigid. Many people have come to me to fill out the application form, people whom I genuinely thought were entitled to the benefit but who, unfortunately, did not qualify. It is very difficult for farmers, particularly those in receipt of what they call small farmer's dole, to qualify for this scheme. I would like to see some easement in the means test for those people.
The same applies to people in receipt of unemployment assistance, or the small farmer's dole. I do not know how social welfare officers assess the means for those people but it seems to be very rigid when one considers the difficulties farmers have been having in recent years. We all know that farmers' incomes have dropped in recent years. Yet, social welfare officers come up with figures that are really staggering to anybody who knows the real situation on the ground. I would like the Minister to look at that scheme to see if any relaxation could be made there.
There are many other schemes in operation but I have no intention of dwelling on them because at this stage of the debate all there will be is repetition. I hope we will continue to see the many schemes that have been introduced over the years being improved. There are many very worthwhile schemes that have benefited the poor and the less well off in society. They are the people we should be concerned about because the workers have trade unions to look after them but the elderly and the weak depend on the Government of the day. That is why I would like to see all those benefits increased as resources become available to the Department. It is increasingly difficult for any Government to increase the benefits each year given the huge number of people who are unemployed. I hope that in the near future we will see some impovement in the unemployment figure and that more people will go back to work. Those in employment contribute to the Exchequer coffers and to the social welfare system through the amount of tax and PRSI the Government take from them.
I wish the Minister every success in his new Department. I hope we will continue to see some improvements as time goes on and that at all times those in receipt of social benefits will be looked after.
I, too, welcome the Minister and congratulate him on his appointment. The Social Welfare Bill is very important legislation because it deals with the quality of life of tens of thousands of people.
The quality and the character of a nation is very much determined by its willingness to ensure that sufficient resources are made available to support the most vulnerable in society, those who are unable to support themselves for one reason or another, whether they are young, old, disabled or unemployed. It is an enormous burden on any State which has such a high unemployment level to provide sufficient resources to ensure that people live in dignity and that those who, for one reason or another, have fallen into the poverty trap have some way of escaping from it.
To what extent does the £3.56 billion of taxpayers' money that is put aside for social welfare purposes meet the needs of our society? The Minister put it in fine terms in the original press release he issued in the context of this Bill. He stated:
The Government are committed to maintaining and improving the basic provisions for people dependent on the social welfare system. The additional resources being directed to social welfare recipients in this Bill is proof of that. It is also necessary to ensure that the resources available are directed towards those in the greatest need and that taxpayers get the best value for the money being provided for social welfare. The pressures on the system arising from the continuing high levels of unemployment make it more important than ever to ensure that spending is directed effectively so that the basic system can be maintained and improved.
That is the objective and the Minister has asserted that is what he has achieved. When one goes carefully through the Bill, however, it becomes obvious that it is seriously flawed and that it does not achieve those targets. The yardstick by which we judge the Bill is, does it improve the lot of the most vulnerable in our society? That is not the case. There is very little in this legislation for the vast numbers of unemployed, for those who are about to become redundant, for those who are disabled, for children or for those who are to become mothers. All of these areas have been hit by this Bill. A lesser service will be provided in the future. There will be a deterioration in the service from July.
While there have been increases in certain areas from 4 per cent to 6 per cent, other increases are below the level of inflation which is now 3.9 per cent. When we talk about a percentage increase based on a very low rate we are not talking about very much. Three pounds added to £50 does not make a living wage in any sense of the word. It is a pittance and falls far short of what was recommended by the Commission on Social Welfare many years ago. It is a million miles away from a decent, basic, minimum wage.
The purpose of the Bill should be to remove the poverty trap and create a climate that will allow people to get out of the cycle of unemployment. There seems to be more emphasis on the negative — eliminating abuses, possible fraud and so on — than there is in the positive, of creating dignified livelihoods and conditions for people to get back on their feet through some form of substantial unemployment. My worry is that the Minister has advertently or inadvertently caused a major obstacle to be placed in this area.
Unemployment is the critical issue. Obviously if people were employed productively in sustainable jobs poverty traps would not exist. At the root of the social welfare system is the absence of a firm job creation policy and a sustainable level of employment. We had the ludicrous situation of the Minister for Finance at the end of January stating that unemployment levels, as far as he could see, would reach something like 275,000 by the end of 1992 and he budgeted for those levels. About a week later, the figures for the month of January were issued and showed that we had already exceeded those levels and that the number on the live register was almost 2,000 in excess of the Minister's target for the entire 12 months period. The Minister's target was so far out that one wonders what level of understanding and care is taken in examining the material available to the Department. What basis or criterion was used for this? Can the Minister be accused of slight-of-hand in not wishing to present the situation in the drastic form it has reached at that point?
We have seen in the past number of weeks, day in, day out, people lose their jobs. We saw the disputed figures in relation to United Meat Packers, whether it was 600 or 900 unemployed in an industry based on an indigenous resource, where one would imagine there could be no possibility of such a business going to the wall given that we have a fertile country, and European and international markets for the product. Added to that, 135 jobs were lost in Express Couriers in the same week. In Dublin Cargo Handling another 220 jobs are likely to go in the coming week. Last week there was a loss of 109 jobs in the Lullymore briquette plant. Again, this seemed like sustainable employment and a whole community was built up around it but now there is nothing left to sustain them. Some 200 jobs were lost in the Arigna Coalmines in 1990 and the last 50 jobs in the ESB station are due to go. About 100,000 people from been suspended in the banks dispute and we do not know the outcome of this protracted dispute.
Those are the pessimistic figures we are getting at present in relation to unemployment. Instead of decreasing, the figure is obviously increasing. Statistics for long term unemployment have now exceeded the statistics for the entire level of unemployment in 1980. At that time, 8.2 per cent of our entire workforce was unemployed, now we have 8.8 per cent on the long term register of unemployed. That is a frightening statistic considering the European total average is just over 9 per cent. It will be very difficult to provide the long term unemployed with jobs in the future.
What support is given in the Social Welfare Bill for those people? What type of comfort is given in the Bill to the almost 300,000 people who now depend on social welfare? There is not much support, comfort or hope given to them. It seems as though the Bill has accepted the inevitability of long term unemployment with a high percentage of the workforce being unemployed for the foreseeable future. It seems the Minister has accepted that the poor will always be with us and will be unemployed and that we should, so far as is possible, limit the burden they place on the State. That is my reading of the provisions in the Social Welfare Bill.
What leads me to that conclusion? One of the major factors is the provision in Part VII which spells out rather grimly, that where people on unemployment assistance find part-time work or some sort of temporary employment, their earnings will be deducted from the unemployment assistance. In other words, they will lose out, pound for pound, on a means tested basis. That must be the greatest possible disincentive that could be put into legislation. It effectively means that people have no reason to go up a rung on the ladder out of the morass of unemployment. There is no incentive for them to take that step forward because immediately they do they are penalised. For the life of me I cannot understand why such a provision was inserted in the Bill.
We know from various Communitybased employment agencies as distinct from the major State agencies like the IDA, that people getting back into employment do so very often on a phased and gradual basis through occasional, temporary and part-time employment. If we put a barrier before them and penalise them financially if they attempt to follow that course of action then we are putting a circle around the 20.8 per cent of the workforce on the live register and ensuring that the figure never falls below that. The only way it will go is up. We are also ensuring that the so-called black economy will not just continue to proliferate but will become enshrined in the system. People will see they are expected to settle into a lifetime of unemployment and will try to assist themselves by some form of self-employment which they will not declare in any form because they would be penalised for doing so. Nobody could afford to admit that they were in gainful employment.
How will we police this? Our social welfare services already impinge sufficiently in a negative fashion on those who are recipients. People are subjected to very undignified procedures and questioned in a most suspicious manner in relation to their lives, and indeed in relation to very private aspects of their lives. Now we are literally going to have to establish an anti-work police force to prevent the abuse envisaged here and to deter people from ever going back to work. This is the most contradictory and negative aspect of this set of provisions. Whatever about the short term unemployed being able to get out of the unemployment situation quickly, there is no doubt now that the long term unemployed are going to be maintained in it and that there will be no possibility of anybody in that category being able to get a step on the ladder of progress to sustainable permanent occupation.
Section 28 specifies a new condition for the receipt of unemployment benefit on which I would like the Minister to comment, namely, that the person has substantial loss of employment in any period of six consecutive days. The Minister has to specify in regulations what constitutes substantial employment. Why the provision for substantial employment? What are the criteria for defining substantial loss of employment? How does the Minister envisage that will operate because the term is not defined in the legislation? In many ways we are buying a pig in a poke here because "substantial" may mean one thing to a Member of the Oireachtas or to a member of the legal teaching or medical profession but something else to a person employed as a general operative, on the work floor of a factory or on a non-permanent basis? How do we distinguish and define substantial loss of employment? Has the Minister any idea how he would specify the regulations he would seek to implement in this respect?
In the area of unemployment, I am concerned about the area referred to in section 27 (5) (d) where somebody has failed or neglected to avail himself of any reasonable opportunity of obtaining suitable employment. In recent times we have seen the manner in which the Minister has referred to various categories of people who are or are not available for employment; he casts a very cold eye on certain categories of people who may have left their former residences and gone to try an alternative lifestyle, and he has many reservations as whether they should be entitled to social welfare services. He has made some rather incredible statements in this respect, particularly about people leaving Dublin and going to live in the west and, in the context of foreign migrants, living off the dole in remote areas of this country. The intention seems to be and the word has gone out, that a rigid interpretation of the social welfare provisions would deprive those categories, both own citizens who have chosen an alternative life style and citizens of other countries who have come here for an alternative life style of social welfare payments. That reflects the type of narrow mentality that seeks to limit the burden of the State at all costs — and we are talking about £3.36 billion here.
We have the ensure that the Social Welfare service is provided to all categories of citizens in need of it and that should be the basic principle. We should not seek to discriminate against any category, irrespective of our personal views of their behaviour or lifestyle. The Minister's attitude is hypocritical when we consider the number of Irish citizens who have gone to far flung countries and to our immediate neighbour who might be living on the streets of London, Birmingham or Liverpool and totally dependent on the British social welfare provisions, or those of any other country. We can ill consider removing protection or support from foreign citizens who come to us in much smaller numbers.
To get an idea of the number of Irish in Britain, there are almost as many Irish people in the British penal system as there are people in the Irish penal system. When we listen to our immigrant organisations and to the fine people who have established centres in London and elsewhere, we get an idea of the extent of homelessness and social problems among our citizens abroad who and are dependent on British social services. We should look into our own hearts and not cast a stone against foreign citizens who come here even if we are critical at times of their behaviour or activities.
The effect of looking negatively in terms of welfare benefits at those who might relocate within Ireland is to convey the message that they may emigrate but not migrate. In other words, we do not want you in this country, you can go abroad and we will be quite happy to see you do this. That harsh approach might be explicable in terms of reducing the State financial burden, but it is a narrow rigid view.
In the area of unemployment I would like to mention the question of redundancy where redundant workers are wrongly being singled out for attack. Payments will now depend on the amount of redundancy available and regulations will determine criteria which will no doubt vary in terms of Government policy from time to time. It is being proposed now that people be disqualified from disability benefit for nine weeks so that somebody would lose in the region of £450 at the present rate or £477 under the new form, approximately 14 per cent loss of annual earnings. It will have the opposite effect to that intended because people will now receive only statutory or minimum redundancy and where a strong union has been able to elicit substantial redundancy payments on the basis of the number of years worked and on the strength of the employer, now there will be no advantage in doing so because benefits will not be passed on. Benefits will be reclaimed by the system. This provision is contrary to Government policy in relation to voluntary redundancy; people have been encouraged in the past to accept voluntary redundancy, but now they will have very little incentive to do that once there is an in-built impediment or penalty in the welfare system.
Taking all of this in terms of unemployment, it seems to me that this Bill is in breach of the Programme for Economic and Social Progress in relation to the principle and the intention of that programme and to provisions spelled out in relation to training, services and education to deal with unemployment. This is going along the same lines we have seen already when the pay element of the Programme for Economic and Social Progress was reneged on; we hear now the Minister for Education is going to eliminate the provision in the Programme for Economic and Social Progress to produce a Green Paper. Issues in relation to vocational and training opportunities and to the area-based response to long term unemployment are being put at risk by the provisions here.
If we look at the important and desirable intention of providing an area-based structure to deal with the problem of long term unemployment, this Bill introduces a provision which makes it more difficult for community and interest groups, whether employers, trade unions, unemployment centres or training agencies to do their work; a disincentive has now been put in their way. The Minister should have a look again at the provisions of the Programme for Economic and Social Progress and at what informed that programme.
The Taoiseach has been discussing the creation of a jobs forum in the past few weeks, seeking to get politicians to come together and expanding the forum to include the unemployed and their representatives, trade unions and all of the social partners. A jobs forum should have the positive backing of the social welfare system so that the full force should not be a negative one but directed towards job creation. I am critical of the legislation before us which contains a major disincentive to what was agreed upon in the Programme for Economic and Social Progress in relation to job creation and to the Government and Taoiseach's stated intention of achieving a consensus approach to the provision of a jobs forum. I would like to hear the Minister explain why these disincentives have been included in the legislation.
I would like to say a few words about provision for the disabled, the ill, the injured in our society. While we know the former Minister, Deputy Daly, spoke about taxing disability benefits, the new Minister has adopted a more direct and drastic approach to reducing the incomes of those who are sick and disabled. People who suffer from occupational injuries will have their incomes slashed by up to 23 per cent under the new provisions which must be one of the greatest attacks on social welfare levels in the history of the State. It seems that pay-related benefits will be removed altogether from this group and from others on disability benefit. This will mean the loss of a maximum of £17.40 per week for people who are ill or injured and the qualifying conditions for disability benefit will be tightened up very considerably. People who are ill, unemployed or on maternity leave and who are credited with PRSI contributions during that time will find that if they are ill or injured in the following year they may not qualify for benefit because they have not paid their contributions. I would like to hear the Minister respond on that.
The value of pay-related benefits has been steadily decreasing over the years, though the ceiling for pay-related contributions has been steadily increasing, so we lose out at both ends. This year's proposal will reduce the maximum amount of pay-related benefit from £17.40 per week to £17.4 for somebody earning £220 per week and will eliminate it entirely for anyone who is ill or injured or on systematic short term work. This will mean that in future only half the number of people who now receive pay-related benefit will qualify for it. The pay-related section is important and I would like to hear what the Minister has to say on this matter.
I am most concerned at the Bill's failure to maintain the level of child benefit at least on a par with the level of inflation. Child benefit is the most important area of social welfare for someone trying to get out of the poverty trap of dependence allowance and it should be boosted significantly.
In relation to maternity benefit, the effect of rationalising the two existing maternity schemes will remove the entitlements from certain women and make it harder for others to qualify. At present most women in regular employment qualify for maternity benefit as long as they follow prescribed procedures and have a job to return to after maternity leave. However, women who have perhaps lost their jobs not long before pregnancy but still satisfy the PRSI contribution conditions, because they worked and paid PRSI for the requisite number of weeks in the previous tax year, have up to now been able to receive maternity allowance for 12 weeks. Under the old scheme women in receipt of other payments such as deserted wife's benefit, lone parent benefits, prisoners wives' payments, were entitled to allowance at half the normal rate. These categories will no longer qualify unless they are in employment, which is not the case, except in an occasional situation.
Maternity benefit is a serious matter for many women. This is one of the areas in which the social services should be at a sustainable level but it is an area that has been neglected in the legislation.
I would like to refer to what the Minister may do by regulation, a procedure which has been creeping into legislation in recent years. Many measures are not enacted by way of legislation but come into force by way of regulations. In other words, the Minister takes to himself or herself the authority to operate, ultra vires almost, outside the terms of what was presented to the Oireachtas. That has serious implications because one never knows to a precise degree what regulations may contain. A Minister, therefore, has power under a number of the regulations to vary from time to time, as he or she thinks fit, depending on circumstances, matters that should properly come before the House.
One matter I referred to earlier was the definition of a "considerable loss of employment." There is no such definition and the Minister may make regulations to define it form time to time. What is left in a discretionary fashion outside of legislation must always be treated with suspicion. I ask the Minister to explain why so much regulation making has been included in this Bill. In many cases, the regulations will have to be laid before the House but, nevertheless, that is a negative way of introducing provisions and leads to matters not being dealt with by the House in a substantial fashion.
With regard to the PRSI system in relation to means testing of certain insured benefits, we are coming close to a dismantling of the social insurance system. Means testing for insured benefits undermines the entire social insurance system. It is like saying that social insurance payments of what ever category are so adequate that we can means test them and deduct from them. Social insurance payments have never reached a level where we could contemplate means testing them; we are taking from people who have an inadequate amount to exist on in the first place. A system which demands compulsory pay-related contributions, with the benefits becoming increasingly discretionary as they are means tested starting with a flat rate, is bound to suffer a decline in popular support with many adverse implications for the future.
In this legislation there are many provisions which will have negative implications for those in receipt of social welfare payments. There is no consideration of the context of people's lives; bad housing, homelessness and unemployment are increasing all the time and these are the circumstances of many people's lives. We are considering legislation here which will introduce further negative elements into that system, so that people queueing for the dole and for welfare payments will feel at every step that there is a barrier to their progress out of the situation and that somebody is constantly looking over their shoulder to check if they are defrauding the system. That is not the type of Christian or generous social welfare approach we should have to those who are weakest and most vulnerable in our community.
I welcome the new Minister for Social Welfare to the House. He has been a very good friend over many years and is in a difficult area as he well knows by this stage and I am sure before tomorrow evening is over, it will seem more difficult. However, he is a person with tremendous imagination which is required in this area and I wish him well in his portfolio.
I am sure every public representative feels as I do, that social welfare is the subject that comes up most often at clinics. There might be an occasion when housing or other issues raise themselves about it, but, generally speaking social welfare is the most difficult problem facing the ordinary punter.
Coming from the Wexford constituency which is regarded as prosperous, I would like to remind the Minister that County Wexford has the second highest unemployment rate in the country. That is difficult to accept in a county that was proudly known as the model county and believed to be a wealthy county. I would like to establish that fact again because after saying it last week, people said to me that that cannot be the case; Wexford is a wealthy county and we cannot have that number of people unemployed. It is the case. The Minister's office and many Government Departments have not taken account of that. The Wexford social welfare office was built some 25 years ago; nine people were employed there and there was then a clientele of 500 people. Today, in that same building, 33 people are employed and 4,500 people attend the office while facilities have changed very little.
People who have the misfortune to be unemployed and dependent on the State, who in 99 per cent of cases would prefer to be working, are entitled to a dignity not afforded them in the Wexford office and I am confident that the case is similar throughout the country. I wonder if the Department of Social Welfare and successive Governments have treated these people as second class citizens? It is difficult to attend a counter with five people in front of you and a queue of God knows how many behind you, all within earshot, and bare your soul. Under no circumstances should people have to answer personal questions under those circumstances.
In New Ross, closer to my home, where unfortunately the level of unemployment is 33 per cent, the situation is worse because there are five people working in the social welfare office of 15 feet by 10 feet, with toilet facilities provided in the last century. I visited the area recently and saw it for myself; it is an absolute disgrace. If people see that this is the way people working for the Department of Social Welfare are treated, they believe they are not going to get a reasonable crack of the whip either.
I believe the Minister knows the situation in the social welfare system and that changes will have to be made. There are so many vacant premises in both New Ross and in Wexford that the Social Welfare accommodation situation is shameful. We must treat the people the Minister is dealing with every day with dignity. I am pleading with the Minister, to take that issue on board. I welcome the Bill but the fact that £3.36 billion will be spent on social welfare payments this year is frightening because taxpayers know they will have to make up this amount. In general, taxpayers feel they should help those who are less fortunate but a balance must be struck and I am not sure if that has been done in this Bill.
Although I am a supporter of the Fianna Fáil Party, there are elements of the Social Welfare Bill I regard as penal but I know it is not the Minister's intention that anyone should be penalised. I will point out some matters which are not addressed in the Bill. For example, I live in a constituency where some of the people work in Fishguard and Pembroke and return to Rosslare because of changes in ferries and so on. It takes at least four months to get their records from the British Department of Health and Social Security. What is a person or a family to do during those four months? They can apply to their health office for supplementary welfare allowance but that allowance is much less than they would receive on unemployment benefit or unemployment assistance. It may be suggested that this is not the case but I am aware of this from my clinics. The Minister knows I am not exaggerating. In this age of technology, it is incredible that there should be such a long delay.
I know of another very interesting case of a person who lived with his mother-in-law on a small holding and applied for unemployment assistance. The usual procedures followed immediately and a social welfare officer visited the person in question. In many cases, mothers-in-law and sons-in-law are not on great terms but in this case it was worse than most. The mother-in-law owned the farm but would not tell the son-in-law her means or give him any information.
For the past two and a half years I have taken that person to meet the Minister for Social Welfare, social welfare officers, and I attended an appeal on his behalf — something I do not usually do; I attended two in my 17 years in politics — and today he still is not getting unemployment assistance or any benefit from the health board. He is now living off his daughter. That is an absolute disgrace. Over the past two years nobody in the Department would accept that this man has a problem which must be solved. Any compassionate person would know this man is telling the truth, yet he has not received any assistance to date. I felt so ashamed the last day I attended the appeal when he told the appeals office he could not give him the information he requested because he had not got it. The appeals officer told him there was nothing he could do and asked him to leave. The Minister must ease the system to take account of these anomalies. When the social welfare officer visited the mother-in-law she was told where to go in language I would not like to repeat here. That case is probably not the only one of its kind, and the Minister should do something about it.
Section 28 deals with part-time workers. As Senators are aware, the mushroom industry has grown considerably. It is one of the more successful alternative enterprises and as a Government, we have been promoting alternative enterprises. The mushroom industry employs about 3,000 part-time workers, mainly women on family income supplement, widows on non-contributory pensions and married women whose husbands are working and paying PAYE. There is no incentive for those people to work under this Bill because they will have less money at the end of the week. The Minister knows that people who engage in mushroom picking do so for a purpose. It is not a hobby as anyone who has been in a mushroom tunnel at picking time will know. It is hard work and they only do it because they need extra money to put food on the table, to buy shoes, and school uniforms for their children, and so on. The amount they earn a week is minimal and it is seasonal work. If this legislation is enacted it will mean a whole new ball game for the mushroom industry, which, incidentally, employs 1,000 people full-time. It has been so successful that 90 per cent of the mushrooms produced are exported. On the one hand, the small-minded attitude of the Department will kill off that industry while, on the other, the Minister for Agriculture and Food, Deputy Walsh, is trying to promote it. What the Minister proposes to do is nonsense.
The growing of strawberries is another alternative enterprise in the sunny southeast. I know a labourer who lives in a cottage on one acre of land who, because he was industrious, though unemployed, reckoned he would tidy up his garden and grow strawberries. What happened? A social welfare officer called and the money he earned from the strawberries was deducted from his weekly income. That man decided he would be better off letting the weeds grow in his garden, not to worry about the environment and collect his full entitlement each week. Those anomalies affect many people who are employed in industries which make a sizeable contribution to the State.
In regard to the carer's allowance the Minister's predecessor, Deputy Woods, met a deputation of carers from Wexford some time ago. We all agree that carers are a special group of people who give service 24 hours a day, be it to their loved ones, neighbours or family and one must have a tremendous amount of care and love to do that. Because those people cannot leave the house at any time during the day or night unless they got somebody in to mind the person they are taking care of they should be entitled to free telephone rental and other such benefits. The carer's allowance is, undoubtedly, a most welcome departure from the prescribed relative's allowance, but because those people are special they should be given all the help and assistance they require. A carer could get easily fed up with their 24 hour day job with little assistance from the Government, and have the person they are taking care of admitted to a hospital. It would cost a great deal more money to keep that person in hospital than to provide the carer some extra benefits.
As the Department of Social Welfare is located in the west with some of their offices in Dublin, a freephone service should be made available to the ordinary punter who is forced to make a trunk call every time he or she has a query. One can be left hanging on for half an hour before being dealt with. It may cost a fortune to get the information required. One can ring their local office but they may not have the necessary information. A freephone service would be a tremendous benefit, to social welfare recipients. The Minister may say this is not necessary and that all queries can be dealt with through local offices but a freephone service will not cost much; if it is as good as we are led to believe it is, it will not have to be used. However, I know that not to be the case and, therefore, I ask the Minister to consider the introduction of a free telephone service.
Finally, none of us would be here this evening if we did not have an unemployment problem. I hope the Minister will note the points made by many Senators in regard to the disincentives to work and the incentives to stay at home. I recall telling a story at a parliamentary party meeting some years ago of two handymen who were putting slates on the roof of a Garda station. On Tuesday at about 11 a.m. they took off the station roof, came down the ladder, went inside the station, signed on and went up on the roof again. Unfortunately, the incentive still exists for people to do that. I have said this many times, there is plenty of work but no jobs. Therefore, we must create incentives for people to look for work, which exists particularly in rural areas. We must also find out why employers are reluctant to take on more employees.
Finally, I wish the Minister well in his new portfolio and I have no doubt he will be successful. In doing so, I ask him to be careful with the people with whom he is dealing. He should treat them with dignity and I know he will because he treats all people equally.
I would like to be associated with the words of congratulations expressed to the Minister on his popular appointment as Minister for Social Welfare.
Thank you. This is my second occasion in this House. I have read over the years, and it has been the general comment from a variety of commentators, that the standard and quality of debate in this House is, perhaps, higher here than in the lower House. That has been the general perception for a number of years and it is probably true because of the more intimate atmosphere. I am not very poetic but one of my former colleagues. Deputy Power, who was a great man, was able to compose poems at the drop of a hat. It was so cold here this morning that it reminded me of Mohammed Ali being interviewed by Harry Carpenter and he finished off the interview by saying "I like your studio, I like your style, but your fees are so bad I will not be here for a while." I was given to poetic licence this morning; I like your Chamber, I like its style but the heating is so bad I am going to be ill for a while.
This has been an instructive debate and I have learned a great deal about the social welfare system. Having been through the Dáil debate on this matter, many of the points raised by Senators will be more easily dealt with on Committee Stage. I dealt with many of them in the other House but I will deal with some of them again here.
A number of Senators spoke about the PRSI system and asked what I intend to do about it. The case has been made by commentators, inside and outside the Oireachtas, that this is the first attempt to try and dismantle the social insurance system. I said on Second Stage that that is not my intention but I would be dishonest if I did not say it is my intention to streamline the system and to target certain areas. Regardless of who is Minister for Social Welfare, it must be accepted that the cost to the State in this area and in other areas of public expenditure is becoming so great that unless we put some restraints on the system and curtail the automatic entitlement provisions, in years to come we will not have enough resources to pay those in need, for example, the old, the sick and people on pensions. The small adjustments made on this Social Welfare Bill will not save the State much money but I am putting down a marker for the future — whether I am in this office or not — we will have to target more and more the automatic entitlement area. The State contributes a great deal of money to the social insurance fund and State welfare expenditure is so high one must take corrective measures. I will only deal with some points today because, as I said, I am sure we will have a lively debate tomorrow.
Senator Jackman and others spoke about the carer's allowance. I am already on record, both in and outside the Oireachtas, as saying that the principle of a carer's allowance is excellent. The scheme was one of the best introduced by the Department. It was basically introduced to replace what was known as the prescribed relative's allowance but in its first few years of operation very few people qualified for the allowance. The number of people in need of care in future years will be far greater than is the case at present and this would mean building more hospitals and institutions to care for them. Therefore, it is evident that it would be better for the State, through a combination of not alone the Department of Social Welfare but the Department of Health and other Departments to give some recognition to people caring for relatives rather than put a further drain on State resources.
At present there are 25,000 full-time and 55,000 part-time carers in the country. During the Fianna Fáil Ard-Fheis and on occasions in the Dáil I said it was my intention to examine this scheme in consultation with my colleague, the Minister for Health. When the scheme was announced everyone in the Dáil, including myself, anticipated it would affect all those caring for people. Once you disappoint people you get no political credit and you create an atmosphere in which people react adversely to the whole idea. In that context I have given an undertaking to examine the carer's allowance scheme. It will mean pooling resources from a number of Departments because this scheme causes the most hassle to public representatives from all sides. It has been improved over the years. The idea of a respite allowance was mentioned in the other House. That is something in which I am interested and will talk about on Committee Stage.
A number of Senators mentioned taxation and jobs. The biggest strain on the Department of Social Welfare is rising unemployment. Senator Costello stated that the figures on which the total welfare budget is compiled are based on a certain figure, yet on the first day of the year the average live register figure was much higher than that. Last year that was also a problem. It is too early in the year to make any judgment as to what the out-turn will be but the provision for the Department of Social Welfare will not be less than that published in the 1992 Estimates.
Senator Brendan Ryan and others stated that I talk a great deal about incentives and disincentives and that is true because I know the majority of people on social welfare benefit are not abusing or defrauding the system and are not living in the lap of luxury. There is a problem but it is not due to the policy of the Department of Social Welfare or the level of social welfare rates. I have never said that social welfare benefit rates are too high but it is obvious that the difference between net take-home pay and social welfare rates is too small. There are no incentives for people to work part-time. They are afraid they will lose their medical cards, rent allowances and so on. Senator Hugh Byrne told us about the social welfare officer investigating the quantity of strawberries produced by the man in Wexford and I accept that but the Department of Social Welfare alone cannot tackle the problem.
Senator Brendan Ryan mentioned vision but I used another analogy in the Dáil that I will not repeat here. If the social welfare system was being introduced now there would not be as many rules and regulations. It is very akin to the income tax system. I am sure if we were starting from a greenfields position in the tax or social welfare system there would not be as many allowances or reliefs in the income tax code nor would the social welfare code be so complex. Every time we eliminate one anomaly in the system, we create further anomalies.
The income tax and capital gains tax code is undoubtedly complex and complicated but it is only in the ha'penny place compared to the social welfare code. Most people do not believe that but I have been dealing with taxation matters for a long time and this Bill is certainly more complicated and difficult. Any Deputy or Senator would need to be a genius to understand its phraseology and that is because of the myriad of legislation over the years. In the other House I promised that we will have another consolidation Act by the end of the year. My officials are working hard on this and hope to publish it by the end of 1992. At least then there will be a reference book from which people can work but it will still be a very complex area.
During my term of office in the Department of Social Welfare I would like to introduce some streamlining measures. One could become so immersed in the details of the social welfare code that one could spend one's entire time dealing with it. I hope to set broad objectives in a number of specific areas, some of which have been raised today. I understand there is a Professor of Social Welfare in Trinity College. This area has become so complicated that I could visual some mastermind taking the Irish social welfare system as a subject for a thesis and finding it difficult to get a 100 per cent mark in it. The most brilliant official in the Department of Social Welfare would not be able to rattle off every scheme, never mind a Deputy, the Minister or anyone else. We have so many means tests, even in the Department of Social Welfare, that we will endeavour this year to try to streamline many of them. We will try to simplify the system so that people can understand them and that there will be one particular form of testing rather than having different means testing systems. Perhaps we could do that, whatever about other Departments who operate other schemes like the Department of Health which has the responsibility for medical cards. I will endeavour to organise a simple system.
Many Senators spoke about child benefit and child dependancy rates. Before I became Minister for Social Welfare I had no doubt but that the most effective way to ensure that the money of the State is used to the best possible purpose is that it should be given to the mother in the home. That will ensure that it will be maximum benefit and there will not be waste. It will go where it is needed and be used properly. We will have to accept this. Senator B. Ryan raised this point also.
In the insurance and social assistance schemes we have the child dependency rates also. We now only have three different rates. There is a cost element in trying to bring those together. Perhaps over years we can bring them closer together given the resources we have. I would like to deal with the child benefit area. Some studies reveal that people on unemployment benefit assistance with large numbers of children need a colossal amount of money. On the other hand, it would be better to target resources into the children's allowance scheme, as it was always called.
Would you tax that?
I will come to that. That is one area where I agree with Senator Ryan. I can see we could have days of debates about the points Senator Brendan Ryan raised. People have to recognise that if we are going to target resources and deal with child benefit directly we would have to accept that some restraints would have to be put on it, maybe regarding taxation. Regarding child benefit, I am convinced that no great strides in taxation have been made over the years. Whether it is the woman who lives in Southhill, the woman who lives in Ballsbridge, the person who is on basic social welfare income or the woman whose husband or herself is earning £200,000 a year, every woman regards the children's allowance as her money. The person on £100,000 a year may say she should not be really getting that money but, on the other hand, I know, in my hearts of hearts, that if you took it from them there would be very strong reactions.
I have come to the conclusion — and I have said so in the other House — that as long as the woman of the house can be sure of getting the money, whether she is in the two-income category or otherwise, I do not think she would be too concerned what area was affected as long as she got her child benefit allowance. I recognise that the politics of a situation come into it also. We could target resources better to the child benefit area if we were prepared to accept other ideas which have not been too popular in the past.
There is one area where I agree with Senator Ryan but I am not going to speak about all these points. We will do so tommorrow. Every section will be discused tomorrow. I would be regarded as taking the opposite view from Senator Ryan even though we are fellow Kildare men but he has been exiled in Cork for some time. Senator Honan said Senator Ryan comes from a political family bred in the purple.
People coming from my political sphere always hope that people have their faith. Having said that, we are at the opposite ends of the political spectrum. I have no hesitation in saying that. I am a free marketeer in the other area. I have said that it is nonsensical, irrespective of resources and everything else, to be heading down the road of lower taxation rates with every budget. I do not think it is morally right. When resources are scarce, finances tight and people are on poor incomes, whether they be in Limerick, Wexford, Clare or Kildare, I do not honestly feel you have to always head down the road towards lower taxation. I have stood for that for the past couple of years, as someone who takes a totally different view of the economy from that of Senator B. Ryan. My idea of taxation and public expenditure would be totally different than his. I look at it from a totally different angle. That is one area where I can concur with the Senator.
I have always been susceptible to my colleagues of another political party who are in Government who have that particular idea. I have not been convinced. I do not think I will be convinced that we must commit ourselves to that particular idea. Whether that is done by way of agreements between political parties or the trade union movement, I do not think Senator Ryan will agree with some of the——
I do not think you can say that.
Many people on the Left would say it is also part of different programmes for Government between the social partners. Senator B. Ryan and I agree on the taxation point even though we come to the same conclusion from a totally different perspective.
I will deal with the individual points raised on the Committee Stage tomorrow. There are a myriad of questions regarding the various sections of the Bill and what is going to happen in various areas and we will have it all out on the Committee Stage tomorrow. I have gone through all these points in the other House and I will go through them all again. There may be some areas of the Bill where there is some discussion against the principle of what the Minister has said in another area. In general, I am satisfied with the small restrictions that have been imposed in this Bill. I have no hesitation in saying that whether we like it or not. As I said on the Second Stage if we decide to go down the social insurance system road, we will keep the automatic entitlement ratio come hell or high water. That would be a recipe for disaster because by the end of the decade, whoever is the Minister for Social Welfare, will not be able to pay the old and sick.
Look at recurrent demographic trends. Even though the savings are so small in this Bill, I am prepared to stand for the principle of saying that we must target resources and make sure that the people who are at the lower end of the scale — the old, the very sick, those who are totally dependent — are going to get whatever is available from the State.
I thank Senators for their contributions and look forward to the Committee and Report Stages tomorrow.
The question is, "That the Bill be now read a Second Time". On that question a division has been challenged. Will the Senators calling for a division please stand in their places?
Senators B. Ryan, J. Ryan, Upton and Costello stood.
As fewer than five Senators stood in their places I declare the question carried.
The names of the Senators who stood will be recorded in the Journal of the Proceedings of the Seanad.