This Bill gives effect to the biggest ever increases in social welfare rates of payment and to a wide range of other improvements announced in budget 2001. It addresses commitments set out in the Government's action programme aimed at building an inclusive society and fulfils the commitments set out under the Programme for Prosperity and Fairness.
The Government has been able to deliver on its social commitments because of the strength of Irish economic performance. That performance has been exceptional both by international standards and in terms of our historical experience. Our economy has grown by a remarkable annual average of almost 8% between 1993 and 2000. This compares with the rest of Europe where growth rates of 2% per annum were recorded during the 1990s. Unemployment has fallen to below 4%, from 12% in 1996.
This year's budget is framed against the prospect of strong, but moderating economic growth. There will be continued increases in the numbers in employment. It is worth noting that GNP growth is now projected at almost 8% this year moderating to 5% by 2003; employment is projected to rise by an average of 2.5% over the same period resulting in 130,000 extra jobs over the three year period; and inflation is forecast to fall to 4.5% this year and 2.5% by 2003.
Our economy is the envy of many European countries and we are now contributing to social policy development at EU level. The Treaty of Nice, agreed last December, provided for changes to the institutions and decision-making procedures of the Union. In response to an Irish initiative, an EU treaty for the first time explicitly endorses a role for the Union in the field of social protection. The European Council at Lisbon decided that the achievement of social cohesion should be one of the main goals of the European Union, with economic development and high levels of employment.
A social protection committee has been established to assist member states' co-operation in social policy development. Two major projects are under way. One, on safe and sustainable pensions, on which Ireland has submitted a report, is due to be debated at forthcoming European Councils. The development of national action plans on social inclusion is a major feature of the second project on combating social exclusion. The plans are to be submitted by 1 June next.
Ireland very much welcomes this intensified process of co-operation among member states. We have much to learn from it, but also much to contribute, not least on our experiences of developing a national anti-poverty strategy and consensus on pensions policy and the partnership process which underpins these achievements.
I will now outline the Bill's provisions. As Senators will have considered the Bill in detail, I will focus on a number of key provisions. On pensioners, the Government's commitment to addressing the needs of the elderly both now and in the longer term is beyond question. We recognise the tremendous contribution pensioners have made to the development of the State. They have had to endure great hardships and make great sacrifices and we owe them a great deal of gratitude. The increases provided for in sections 4 and 5 of the Bill more than deliver on our commitments. During our period in office, we have given pensioners increases of £5, £6, £7 and £10 per week in successive budgets.
In addition, the Bill provides for a special increase in the rate of widow's-widower's contributory pension for those aged over 66 years. This increase of £12.90 per week will bring the new rate to £102 per week and is a first step in bringing the rate into line with the old age contributory pension. The Bill also introduces a special allowance of £10 per week for pensioners who reside on islands off the coast of Ireland.
The Government is also committed to substantial increases in other social welfare payments. The Programme for Prosperity and Fairness provides that "substantial progress will be made over the period of this programme towards a target of £100 per week for the lowest rates of social welfare". The personal rates of social welfare payments, other than those for older people, are being increased by £8 per week. This represents an increase of almost 10% and means that we are in line, not only to make substantial progress, but to fully reach the £100 target. We are fully meeting our commitments under the PPF. Increases in the weekly payments will be paid from the first week in April and coincide with the implementation of the income tax changes.
In recent years we have introduced a range of measures to make it easier for people, particularly women, who have taken time out for family reasons to qualify for an old age pension. Work is continuing towards introducing a greater degree of flexibility in the qualifying conditions to improve the position of women.
I am also introducing special improvements in this budget to assist women already at pension age and who may not benefit from these improvements. The Government has decided that the allowance for qualified adults over the age of 66 years should be increased in this and future budgets to the full old age non-contributory pension rate. As a first step towards this goal, I am providing in the Bill for special increases of £15 per week in the allowances payable to qualified adults over the age of 66 years whose spouses-partners are receiving a contributory pension with proportionate increases for those on reduced rates. In other words, a couple, each of whom is over 66 years of age in receipt of an old age contributory pension and a qualified adult allowance, will receive an extra £25 per week from April. This contrasts with the announcement made in the United Kingdom yesterday to the effect that couples in a similar position to that outlined above will receive the princely sum of £8 per week. The increases here will range from £20 to £25.
Increases ranging between £7 and £9 per week are also being provided for in the rate of qualified adult allowance payable to those under the age of 66 years as a further step in increasing these allowances to 70% of the main rate, honouring a further commitment in the PPF. The increase in the qualified adult allowance payable with old age non-contributory pension is £9 per week with proportionate increases for those on reduced rates.
Child benefit is a universal payment made directly to families. As such, it is the most efficient and effective way in which the Government can channel help to children. Before the Government took office, expenditure on child benefit was under £400 million annually. The increases announced in the recent budget, provided for in section 6, will bring investment in 2001 to £761 million – almost double the 1997 figure. The monthly rate for the first two children is being increased by £25 per month and the monthly rate for the third and subsequent child is being increased by £30 per month. To put these increases in context, they are greater overall than all the combined increases provided for in the past six budgets. Moreover, this is only the first of three annual increases which will see investment in this payment rise by £1 billion by 2003, almost a threefold increase. By the end of this period, a family with four children will be receiving £527 per month in child benefit or the equivalent of £120 per week. As a first step this year, the same family will receive £307 per month or £70 per week.
These major increases will be payable to all families; to those who choose to go out to work and who use paid child care to those with informal child care arrangements; and to those who choose to work in the home and care for children in that way. The increases will be payable from June 2001 – a full three months earlier than normal to more than half a million families with over one million children. We will work towards bringing the increases back even earlier in future years. This measure represents a substantial step on the way to meeting the child benefit commitment set out in the Programme for Prosperity and Fairness.
Section 7 increases the weekly income thresholds for family income supplement from May next which will lead to a net gain of £15 per week in the average FIS payment for some 13,500 families. Section 12 provides for the payment of four additional weeks of maternity and adoptive benefits. The extended period of maternity and adoptive leave and benefit apply to those commencing such leave with effect from today, 8 March – International Women's Day.