Seanad Éireann debate -
Thursday, 28 Mar 1996

Vol. 146 No. 19

Social Welfare Bill, 1996: Second Stage (Resumed).

Question again proposed: "That the Bill be now read a Second Time."

Ms Honan

In the earlier part of this debate I referred to personal taxation and its affects on employment. There are no fewer than five sets of taxes imposed on employment in Ireland. How can this make sense in a country with one of the highest levels of unemployment in Europe?

On budget day I saw a television programme during which various people were interviewed. Recipients of social welfare payments were asked if the budget had in any way encouraged them to return to paid employment. It is a peculiar situation that anyone could be better off by not entering employment and remaining on social welfare. With current rates of payment, I do not accept that social welfare claimants have any form of luxurious lifestyle. It is ludicrous, however, that people must be asked what the Government must do to encourage them to enter employment.

I welcome the changes introduced in the budget that relate to people living in local authority houses and those with medical cards. However it is a farce that people have to consider whether or not it is worth their while to go out to work. I am not saying this is the fault of the Minister for Social Welfare. The Minister for Finance should be looking at our taxation system. I hope, when this report comes from committee, the issue of the integration of tax and social welfare will be addressed.

Yesterday morning I listened to a Mr. Niall McElwee who was on the "Gay Byrne Show". He works in the Regional Technical College Waterford and he is involved with people who are training to be child care workers, working in the social services area looking after disadvantaged children, children who have problems or children who are in care. He said that he had been working with a group of 25 young people between the ages of 11 and 18 in Cork and that only one of those 25 had any concept of getting a job to earn his living. They felt that there were many other ways of obtaining money, starting with social welfare.

This is very frightening for us as a society. It is disturbing that in many local authority housing estates, up to 80 per cent of people are dependent on social welfare and young children grow up with no role model, as they do not see people going out to work. The levels of social welfare we are paying are not high enough, yet we are paying out £4 billion per year. The only way we can tackle the grinding poverty faced by many of these communities is to increase the levels of employment, to enable people to get jobs so more people are paying into the Exchequer and fewer people are dependent on it. Only in that way can we look after as we would wish the people who are genuinely dependent on the State. We must care in a better way for the elderly, for younger people and for those who cannot look after themselves. I cannot see how to do this without improving the levels of employment.

Pensions are also the responsibility of the Department of Social Welfare. At present old age pensions cost the State almost £1 billion per year, which is very considerable. This figure will obviously increase sharply as the number of elderly in our population rises. The importance of the pension issue is highlighted by the changing demography of this country. This country is ageing and the elderly as a percentage of the total population will increase significantly over the next 20 years. This will put an increased burden on our social welfare system.

There have been huge improvements in our health services and in living standards generally and this means that people are now living much longer. It is estimated, for instance, that average life expectancy has increased by 15 years for Irish men since 1926 and by 20 years for women over the same period. This trend will continue, therefore there will be a substantial increase in the number of elderly people of pensionable age and people depending on the Department of Social Welfare for pensions. The 1991 census showed that there were 403,000 aged 65 years or over and on the basis of projections published by the Central Statistics Office this figure is set to surge upwards in the years ahead.

The Central Statistics Office has estimated that within ten years the 65+ age cohort will have increased by 43,000. That would put the total number of over 65s in Ireland at 446,000, or 12.5 per cent of the population within the next ten years. If we look forward to the next 20 years, the picture is even more dramatic. In 20 years' time it is estimated that the number of over 65s in Ireland will have risen to almost 700,000 and will account for 19 per cent of the total population. This will have a huge impact on the economy and it is vital that we plan now to lessen the impact on our social welfare system.

It is also very important, in the light of these trends, that all working people make provision for pensions for themselves. Otherwise the pressure on the State old age pension system will be almost unbearable. It is very disturbing that a very large portion of the working population is not covered by any form of occupational pension. We need to take account of the changes that are taking place, the number of people who will be over 65, the number of people looking to the State for pensions and how these pensions can be funded. We should encourage people who are self employed to contribute to their own pensions so they will not be a burden on the State. At the moment the self employed can only pay 15 per cent of their net relevant earnings into a pension every year. Whether or not this will enable them to provide for themselves in their old age should be looked at.

When pensions were introduced for everybody in April 1988 and the PRSI system was extended, people who were aged 56 or over at that stage were not eligible for a State pension and they had to make contributions. I know there was provision for refund of these contributions but some sort of pro rata pension could have been worked out for them. The number of people involved is reducing but they were not fairly treated.

I wish to talk about women and the social welfare system. The Commission on the Status of Women, of which I was a member, made recommendations that we should get away from the term "dependant" and change it to "qualified partner". Many men get social welfare benefits and they also get payment for their spouse or partner. It is not acceptable that these people should be looked on as dependants. The impression is given to these women that they are dependent on their husbands or partners. Changes that were recommended by the commission to change this term to "qualified partner" should be considered. A splitting of the social welfare payments could be made between the two people.

Women are not treated equally to men when it comes to signing on the live register. Many women who are available and looking for work do not sign on the live register because they are not entitled to any payment. The number of women who are looking for work is underestimated because of this. I welcome the improvements in child dependant payments, particularly for women who are working in the home. This is the way forward. I will not say that I am happy with them because I am sure nobody in this House is happy with what we have at the moment, but I appreciate the difficulties the Minister has in raising more than the £4 billion his Department already spends. Increasing child dependant allowance as much as possible is the way to pay women who remain in the home and who devote much of their lives to looking after children.

I also agree with other Senators that child care expenses and expenses for care of the elderly could be made tax allowable. I know we should be lobbying the Minister for Finance on this important issue. Women tend to be the carers, and it is the women who usually give up work to look after an elderly relative or else decide to stay at home to look after younger children. If they go out to work, we should look at tax allowances for elder care or for child care. By taking on care of an elderly relative, many woman remove this burden from the State.

Social Welfare is one of the biggest Departments in the public service, employing some 4,500 people. Reform of the Department and the administrative system was talked about some years ago. To this end, a social welfare services office was mooted. This office would be separate from the core secretariat of the Department and would be responsible for delivering payments and services to the public — 90 per cent of the staff of the Department of Social Welfare are involved in such activities. Several years later, however, the social welfare services office does not exist as an independent executive agency with its own management structure. Would not effectiveness and efficiency in the public service be improved by moving in this direction?

I welcome the proposed improvements. All of us would like to see those who are genuinely dependent on social welfare receiving more. We want to reduce the number of people dependent on social welfare, as 1.5 million people is a very substantial number. If we could increase the number in employment, who would contribute to the State's tax income, we would be in a position to better care for those who are dependent on the State. Reducing taxes and increasing employment is the way forward.

Mr. Sherlock

I welcome the Bill, aptly described as reforming legislation. It is the first time since I became a public representative there has been any real focus on the issues. Heretofore, there were changes here and there but nothing of any significance. This legislation will have great impact, not immediately but in the future.

There has been a general increase in the rates of payment. In 1995 the increase granted in social welfare was equivalent to that granted the previous year — it was a lesser amount but because payment was brought forward it had the same effect. The Opposition engaged in huge negative propaganda about it which we had to contend with every day. Provision has been made for a further substantial increase in the monthly rate of child benefit which will amount to £29 for the first two children and £34 for third and subsequent children.

It is sad that the rates of pay for so many people in employment are so low that they have to depend on family income supplement; the amount paid is in excess of £20 million. It is a good scheme which is being strengthened. I applaud that because people must be given every encouragement to return to work. The provision for continued payment of increases for dependent children for up to 13 weeks to people who return to work, having been unemployed for 12 months is very commendable and gives people an incentive to return to work.

Section 9 refers to the means of assessing self employed people for unemployment assistance. Carpenters, masons and so on cannot go on to building sites without a C2 certificate. If they have a C2 certificate and earn £15,000, for example, and apply for unemployment assistance the next year, that income is held against them. That is wrong and needs to be radically changed. One has to convince the social welfare community officer that person must be provided for.

The Minister stated that "section 13 sets out the eligibility criteria for receipt of disability allowance, outlines the basis on which means will be assessed, provides for the weekly rate of the allowance and for increases". I take it that refers to what was previously known as the disabled person's maintenance allowance being transferred to social welfare. There was a major anomaly in the social welfare code, which I presume was changed as the result of a High Court judgment, where both spouses deemed to be disabled persons were not paid the equal rates.

One parent families are a new phenomenon. We encounter them every other day when looking after the interests of people seeking to be rehoused. In my town and other towns in the north Cork area we have had to emphasise that all housing schemes must have a fair percentage of small housing to cater for such families. I need to further study the section on deserted wife's benefit. I know it will be made easier for a deserted wife to qualify as it will not be so difficult to prove desertion.

It is proposed to improve the appeals system for people dependent on SWA. The current situation is appalling. The standard letter people receive indicates a name to whom a person can appeal. People in the north Cork area — which is as big as County Limerick — are told to appeal to a person in Cork city and that is unreasonable. Will the new system be implemented as quickly as possible? People should be informed about how it system works. It is only just for any applicant for SWA or any other benefit to have easier access. It is easier for people in the cities to appeal than it is for those in rural areas. People with such needs have to be dealt with sympathetically.

When the tax relief for installation of security systems for old people was first announced there was a great deal of scepticism about it. It was said that such pensioners do not have a tax liability. However, a relative can claim relief for installing such systems and that is good. A sum of £2 million is being made available in grants to voluntary groups for the installation of security equipment. There have been great initiatives by voluntary groups in latter years but they lack co-ordination. Community welfare officers should better co-ordinate such efforts.

This Bill will provide a better standard of living, with the emphasis on getting people out of the poverty trap. FÁS is to be involved in encouraging the development of special schemes to enhance security for the elderly. I must admit my experience with FÁS over the years has not been great but it seems the organisation needs to be reorganised.

The Bill is commendable and will have a great effect on the standard of living of people who depend on social welfare.

Ms Kelly

This year's budget is the latest in a series of family friendly budgets. It would be remiss of me not to acknowledge that the increase in child benefit is welcome. The recognition that a family with twins has greater expenses than families with single children is also welcome. Implicit in the recognition of the high costs incurred by families with twins is a recognition that there are times when a family comes under greater financial stress than usual. Perhaps in future budgets the Minister will take that into account in the context of families who do not have twins. When a child is four years old and about to start school the family incurs expense. That is also the case when a child reaches the age for First Communion and when the child is entering second level education. These times can cause crises in families. However, there is no doubt that child benefit benefits more families and more women than is recognised.

The increase in family income supplement is welcome. Perhaps next year the Minister will implement one of the recommendations of the Oireachtas Joint Committee on the Family that family income supplement be made available to the families of small farmers and business and self employed people with limited means. The family income supplement encourages people to go to work rather than depend on social welfare. It is of great benefit to many families but could be extended to the farming and small business community.

I welcome the decision to transfer the disabled person's maintenance allowance, which will be known as the disability allowance, to the Department of Social Welfare. It was idiotic to have one payment made by the Department of Social Welfare while a comparative payment was made by the health boards. I hope the Minister will take account of the special needs of carers who are looking after more than one person. Somebody who takes care of one elderly relative has a grave responsibility but greater recognition should be given to somebody taking care of two and, in some cases, three elderly people. Another matter of concern is where there is more than one handicapped child in a family and the situation of the parents in such cases should be looked at sympathetically.

This is a good Social Welfare Bill and it follows a number of good Social Welfare Bills which have improved the social welfare situation each year. I do not believe that 1.5 million people are dependent on social welfare. There might be 1.5 million people in receipt of social welfare but not all of them are dependent on it. That statistic is false. I compliment the Government on demonstrating a caring attitude towards those who cannot provide for themselves.

Minister of State at the Department of Social Welfare (Mr. Durkan)

I thank the Senators for their contributions and welcome for the Bill. People often talk about the complexity of the social welfare system but public representatives are in a better position than most to have first hand knowledge of the workings of the system. The contributions on this Bill have been indicative of a wealth of knowledge as a result of dealing with social welfare queries. It is always interesting to listen to people who have dealt directly with the system and know it intimately. I will deal with as many queries as possible during the debate but some might have to be referred for written replies.

Senator Kelleher said that not enough is being done for the elderly within the community. I support the view that we should give special attention to the elderly and this Bill and other measures announced in the budget do exactly that. The general increase in rates provided for in the Bill represents an increase in real terms. The contributory pension is being increased to 110 per cent of the main rate recommended by the Commission on Social Welfare. Pensions were discussed on a number of occasions during the debate and, while everybody would like to see more being paid, we should acknowledge the increase that has been achieved. It is indicative of the work being done by the Department.

In addition, the living alone allowance is being increased from £4.80 to £6 per week. Entitlement to free telephone rental allowance is being extended by increasing the age limits that apply to dependent children from 15 years to 18 years. We also recently announced the implementation of a series of measures following the report of the task force on security for the elderly but these measures cost money. We readily recognise the need to make extra provisions but must also bear in mind the cost of such provisions. The extension of tax relief measures for relatives who install security systems in the homes of the elderly living alone will cost £5 million. There will also be grants from the Department, amounting to £2 million, to voluntary groups to support the installation of security equipment.

Senator Kelleher welcomed the changes in PRSI but criticised them on the basis that they did not go far enough. He might be interested to know that the cost of these changes in the current year is £121 million which, taken with the changes introduced last year, gives rise to an overall cost of £270 million. In contrast, the costs provided for by the previous Government in 1994 were just £63 million.

I do not want to be too severe on Cork men, but Senator Cregan also raised the issue of PRSI and he appeared to suggest it should be abolished. The State has financial commitments to the social insurance fund arising from the acquired rights built up by contributors over the years. These commitments will have to be met in the future.

Contributors have legitimate expectations based on their having made the compulsory contributions required of them. This requires a commitment from the Government to maintain and develop the social insurance system and build up the fund rather than allow social insurance income to be reduced. The social insurance system is fundamentally different from the taxation system because it provides prescribed benefits to individuals and their families based on the contributions they have paid under the rules of the system. The taxation system, on the other hand, is a general revenue raising mechanism which exists to make funds available to the Government for application to all the purposes determined by society through the democratic process. That is a roundabout way of saying that, regardless of the amount paid, income tax does not entitle one to anything afterwards, but prescribed payments to the social insurance fund provide for one's entitlements currently and at a later stage.

There is a broad range of entitlements to which people become entitled by virtue of being a voluntary contributor or a PAYE contributor. The investment made at any age by employees is colossal in terms of providing for their future. They do not provide for their future in terms of taxation. However, another Minister has responsibility for that area and I do not wish to make his job any more difficult than it is.

Mr. Cregan

That is the problem.

Mr. Durkan

Because the social insurance system provides a mechanism for making social welfare provisions which are separate from the general taxation system, it gives an assurance and comfort to workers which could not be matched by an alternative which was integrated in a general taxation system. Senator Henry mentioned this during her contribution. In addition, the entitlements provided by such an alternative system would be influenced by wider Exchequer considerations.

Senator Kelleher also suggested that the new grant for twins was nothing but a PR exercise. I believe it is more than that; I am sorry that such pessimism exists in Cork and that this allowance is regarded this way. I hope this pessimism does not extend outside the boundaries of Cork.

Mr. Cregan

It is not relevant to Cork.

Mr. Kelleher

On a point of information, I welcome the grant for twins. I only said it was launched in a blaze of publicity.

Mr. Durkan

What better way to make any announcement?

Mr. Cregan

The Minister is about to do it again.

Mr. Durkan

Approximately 1,900 children will benefit from this proposal each year. I assure Senator Kelleher that their parents will not regard this as a PR exercise.

Senator Cregan referred to the fact that the incentive for people on unemployment assistance to take up employment decreases as the level of earnings from employment increases. The Senator misunderstood the examples I gave to illustrate the benefits of the improvements we are introducing. As unemployment assistance is a means tested payment, it is inevitable that when income goes beyond a certain level the rate of payment must reduce. The Senator's point suggests that the less work people do the more money they will be paid. However, one must look at this from the point of view of the individual who is dependent on social welfare payments. As work increases, the support will decrease and there is nothing wrong with that. If this is viewed with other measures, such as FIS, there is little support for the argument that it is more profitable to stay out of the workforce than to go back into it. Provisions in last and this year's budgets prove that the reverse is happening at present.

I gave the example that a person earning £60 over three days would be better off by £27 per week compared with the present arrangements and that a person earning £90 over three days would be better off by £9.50 per week compared with the present arrangements.

Mr. Cregan

That is £3 per day.

Mr. Durkan

These are not the amounts of unemployment assistance they will receive, but the increases in unemployment assistance they will receive under the Bill. The following examples will illustrate the benefits arising from the proposed arrangements. A married person with two dependent children who earns £25 for one day's work will receive £111.40 a week compared with £105.40 at present. This represents an increase of £6 per week. If he or she earns £25 a day for two days' work, they will receive £94.60 under the new arrangements compared with £84.30 at present. This represents an increase of £12.10 per week. If they earn £25 a day for three days' work, they will receive £81.40 a week compared with £63.20 at present. This represents an increase of £18.20 per week.

A further positive feature of the new arrangements is that they address the main criticisms of the unemployment assistance scheme — the situation under the present arrangements whereby a person who gets work for one hour a day loses entitlement to unemployment assistance for that day. This will no longer be the case under the new arrangements as a person will have an underlying entitlement to the full week's unemployment assistance if they have not been employed for four days or more in that week. This may sound a little complicated but when it is applied it will become clearer. There have always been gaps in the system and this measure proposes to plug one of them.

I am almost reluctant to respond to comments by Senator Henry because my reply is so positive she may consider it necessary to set an even higher target for me next year. Despite what Senator Kelleher said earlier, I hope the Government will still be in office this time next year and that I will be able to come to the House. I am sure the people will be reassured to hear that.

Mr. Neville

Perhaps Senator Kelleher could get a nomination.

Mr. Durkan

I gave an undertaking to Senator Henry during the debate on the Social Welfare (No. 2) Bill, 1995, that I would examine the possibility of extending family income supplement to job sharers. I am glad to tell the Senator that this examination has been completed and that FIS will be extended to job sharers from early June. It is not provided for in the Bill but it will be provided for later on.

Senator Henry also referred to elderly people who have an occupational pension above the limit for qualifying for a social welfare pension. She proposed that such people should be entitled to some free schemes, such as free telephone rental or free electricity allowance. I am sure the Senator will be pleased to hear that from July next occupational pensioners with a weekly means up to the rates of old age contributory pension plus £30 will be entitled to all free schemes. I do not suggest that Senators should add to the shopping list when the Social Welfare Bill is published. However, it is reassuring to know that Members, the Minister for Social Welfare and myself are at one on these issues. We might not always be able to make the progress we would like to, but our objective is to go as far as possible to meet legitimate requests.

A number of Members said that it does not pay an unemployed person to take up employment. We are introducing a series of measures this year to address the problems in this area. These include the payment of child dependant allowance up to 13 weeks where the person takes up employment which is expected to last at least four weeks; the increase of £10 in the earning thresholds for FIS, which means an increase of £6 per week; a reduction from six to three months in the minimum period for which the employment is expected to last to qualify for FIS; and the retention of the medical card on taking up employment.

Other positive aspects of the Social Welfare Bill are the pro-employer and pro-employee measures. It is not true that there are no incentives in this area. Distinct and specifically targeted incentives are included to encourage the unemployed into the workforce, while at the same time allowing them to decide for themselves if it is safe to make the transition from an unemployed status to an employed one.

Senator Finneran questioned the constitutionality of section 12. The Bill was referred to the Attorney General for his advice and the provision has been included according to the recommendations received.

Senator Kelly raised the point that a carer could care for one or more people. This issue has been raised on a number of occasions. It is more severe on one carer who must care for two, three or four disabled or elderly people in the household. There is provision under the supplementary welfare code for the health boards to provide exceptional means payments in such cases. Individual health boards may apply different rules but if they wish to operate within the guidelines they should not make anybody feel excluded or marginalised as a result of caring for more than one person.

Senator Honan mentioned the Social Welfare Services Office, set up in 1986. It has an efficient management structure and is headed by an efficient director general. The Senator inquired when the integration group is likely to report. I have specific responsibility for this group. It was hoped to have its report available earlier this year but this was not possible as the work involved is intricate and tedious. The group is to be congratulated for sticking to the job with dedication and enthusiasm for so long and I thank it for its work. It is expected the report will be available later in the year but it depends on matters outside our control.

Senators Henry and Honan referred to pension funds. This subject is close to my heart. With regard to the worry about the provision of resources to pay pensions, when I was 15 years old I was told by the time I would be the age I am now, there would not be money to pay pensions. However, the soothsayers were wrong. There is still plenty of resources to meet pension requirements and there will be in future. Ongoing provision is being made. However, there is a need to monitor the situation carefully to ensure there is no diminution in the availability of resources, given demographic trends.

I am not sure it is a great idea to rely entirely on private pension funds. Some European states favour this, but a more caring society would opt for a balance between private and public pensions. I would like more co-operation between the private and public sectors in this area and greater benefit would be achieved by this.

Senator Sherlock asked about qualification for unemployment assistance of people on C2s who have been unemployed in the previous year. This is an awkward issue. It has been raised time and again and there is no simple solution to it. I am sure all public representative on occasions have had to run the gauntlet of the system, particularly where it involves spouses with families who had been in reasonably lucrative employment in the year ended the previous 5 April and now find themselves out of work through no fault of their own. Such people can find themselves in dire circumstances. They are assessed on their incomes at the end of the previous tax year. We all know that such incomes are of no benefit to people in the current year because they are already spent. I fought this on several occasions, sometimes successfully and sometimes not. There is now a general recognition in the appeals system of the need to address this problem.

Other points were raised but I do not have time to deal with them because I do not want to further delay the House. I will do my best to refer to them on Committee Stage. I compliment Members for their constructive submissions and suggestions and for their knowledge of the social welfare code, which is an essential ingredient for a discussion on this Bill.

Question put and agreed to.

An Leas-Chathaoirleach

When is it proposed to take Committee Stage?

Mr. Cregan

Next Tuesday at 2.30 p.m.

Committee Stage ordered for Tuesday, 2 April 1996.

An Leas-Chathaoirleach

When is it proposed to sit again?

Mr. Cregan

Next Tuesday at 2.30 p.m.