Seanad Éireann debate -
Thursday, 28 May 1992

Vol. 132 No. 16

Adjournment Matter. - Social Welfare Payments.

Dr. Upton

I thank the Minister for taking time to listen to this debate. It is the second occasion in the last 24 hours that he has been here for Adjournment Matters.

In this Adjournment debate I am referring to the report of a speech made by the Minister at the Fifth European Conference of Ministers responsible for Social Security, in Limerick. During that speech the Minister stated:

We must be prepared to have an open mind and be prepared to face the probability that in the long run our present social welfare system may not be sustainable and may have to be changed.

When you decode that for political reality, what it seems to me to be suggesting is that we may be talking in terms of cutbacks in the present levels of social welfare. That is how I interpret that, given the normal practices in relation to Ministerial announcements. The emphasis is on bringing good news, and if good news cannot be brought then we get a type of coded language which indicates that the bad news has to be worked out for oneself in terms like "not sustainable" or "may have to be changed." Usually, those terms mean that things are getting worse, or will get worse. If things are pleasant and are going to be good, then typically in the political "lingo" that is used, those positions are spelt out in explicit terms and, indeed, the good news is that nobody is left in any doubt about it.

I view the Minister's remarks with great concern. We are talking of the escalating unemployment of 20 per cent. It is in that context that the statements are very worrying. They also raise fundamental questions in relation to the Government's attitude to the social welfare system. Is the Minister suggesting that the country is going to be unable to sustain the present level of social welfare payments? If that is the case, what are the implications of that? Where are the changes going to happen or, to be more precise, where will the cutbacks come, if that is the reality? If it is not the reality, why would the Minister, given that he is a very experienced politician, put that type of a flier into the system? I would be interested in hearing what exactly he proposes. If he is talking about cutbacks in the social welfare system, then it is very important that he should spell out what those cutbacks are likely to be.

The reality of the social welfare system is that for many people it does not provide them with the most basic necessities of life. On the day after the Minister's speech was reported in the Irish Independent, and on the following day on the same page of that newspaper, there was a report of a statement from the Combat Poverty Agency and extracts from their annual report. That report stated that families on social welfare simply cannot pay for adequate clothing or everyday household goods. They are not able to decorate their homes or replace furniture. That is the reality for many people who are on social welfare. It would be extremely disturbing if we were talking of further cutbacks on those basic necessities.

In addition, the report, also says that most social welfare payments remain significantly below what the Commission for Social Welfare identified in 1986 as minimally adequate levels. Even the Programme for Economic and Social Progress recognised the need to increase social welfare levels as the resources of the economy grow.

I am asking the Minister to clarify his statements, to spell out exactly what they mean and if we are going to be faced with cutbacks in social welfare, then it is very appropriate that we hear them now rather than at some stage in the future. Are we engaging in the early part of a process by which a series of cutbacks will be made known to the public? In other words, are we trying to soften public opinion in relation to the social welfare system? How can that attitude be reconciled with the attitude the Government adopted to the report of the Commission on Social Welfare? Essentially, I am asking for clarification of precisely what the Minister was alluding in his Limerick speech.

Minister for Social Welfare (Mr. McCreevy)

I welcome the opportunity to clarify my remarks last week. Senator Upton is referring to my comments as reported in the media, during the Fifth Conference of European Ministers for Social Security which I had the honour to host in Limerick last week.

Let me say that it was a very successful conference which was held under the aegis of the Council of Europe and attracted distinguished representatives from 27 countries to our shores. The theme of the conference was Social Security and the Labour Market. It is not surprising, therefore, that the future funding of social welfare services should be raised in that context. Let me put my comments of last week into their proper perspective.

There is no doubt that a common trend in relation to social security spending is being experienced by national governments across Europe. That trend is reflected in an increasing financial burden arising from factors such as rising unemployment and the ageing of the population. We, in Ireland, are no different. Our rate of unemployment is unacceptably high and, as a result, it is a major constraining factor on the development of our economy.

That is just one example of an expanding expenditure item in the social security area. When the full range of social security expenditure is taken into account, we find that it is growing at a significant rate each year while the scope for raising additional revenue to finance that expenditure is becoming increasingly constrained.

Where does that leave us for the future? Very clearly, unless the economic and financial situation improves significantly, we will find it more and more difficult as a nation to finance the range of social welfare services currently available to most people on the basis of an automatic entitlement.

Let me hasten to add that my comments in this regard are not new. I made precisely the same point in the other House during the passage of the Social Welfare Bill, 1992, a number of weeks ago. What I said at that time was that the notion that social security in this country was self-financing was a myth. Employers and employees pay into what is called the social insurance fund but the Exchequer also makes a very large contribution to that fund which makes good the deficit between what is received by way of contributions and what is paid out in benefits and pensions. The size of the Exchequer contribution this year will be £143.6 million as shown in the published Estimates for my Department.

It follows, therefore, that with our rising number of unemployed and the high dependency rate inherent in our demographic situation, the cost of social welfare payments to the Exchequer will soon reach the stage where it will be very difficult to fund the present level of benefits. That, indeed, is the prospect that may well face a future Social Welfare Minister.

I do not think I am being alarmist in what I have said. I have always been interested in the financial aspects of social welfare expenditure. I see my views as being a realistic appraisal of the situation at the present point in time, but what can we do to protect our level of social welfare payments in the light of the problems facing us in the future?

As I see it, we need to consider whether a fundamental review of our social security systems is necessary which will address the question of targeting our scarce resources to those most in need. We have already made some progress in this regard with the introduction of earnings limits for entitlement to some benefits. As I have said, this is not an attempt to dismantle the pay-related social insurance system but rather to grapple with it for the benefit of everybody in the future. In addition, we need to deal with the problems caused by the sheer complexity, range and multiplicity of our social welfare schemes by simplifying and streamlining the system so that it can be more easily managed and understood. My Department are currently examining those issues and I hope to be in a position to bring forward proposals for consideration by Government at an early date.

Senator Upton refers to the political "lingo" as it is commonly interpreted by politicians and the media. I am a realist in politics; I have to be a realist as a Government Minister. That is the context in which I made these comments last week. It is not something I have not referred to before, both inside the Houses of the Oireachtas and in newspaper articles. It is something we have to face up to. We have a tendency in Ireland, probably more so than in most other countries, whether in politics, business or other areas of disliking to face reality some of the time. What I have just done in the past couple of weeks, since I became Minister for Social Welfare, is to put the reality of the situation on the record. That is what I did last week.

Dr. Upton

I thought there was a tradition that one was allowed one comment or one question following the Minister's reply. I do not doubt the Minister's record in relation to speaking straight from the shoulder. I acknowledged that in this House in the past. I accept that but, at the same time, I think nobody could hear those remarks without being alarmed by them and without being concerned that we are talking in terms of the possibility of real cutbacks. Will the Minister let us know if that is the case? Is the prospect of cutbacks and reductions in the present level of social welfare a real possibility?

The Seanad adjourned at 4.15 p.m. until 2.30 p.m. on Wednesday, 3 June 1992.