I am pleased to introduce this Bill, which will implement the €515 million package of social welfare improvements announced in the 2009 budget. In very difficult economic circumstances, this package will bring total expenditure on social welfare in 2009 to €19.6 billion, which represents an increase of €2.6 billion, or 15.5%, over the Estimates allocation for 2008. At a time when public expenditure must be tightly controlled, this increased provision for social welfare is a clear signal of the Government's commitment to protect the vulnerable and less well-off in society.
The schemes and other supports the Department of Social and Family Affairs administers will benefit more than 1.7 million people, including 440,000 pensioners, 345,000 ill and disabled people, more than 80,000 carers, 30,000 low income families availing of family income supplement and more than 580,000 families who receive child benefit payments.
The budget includes provision for an average live register figure of 290,000 in 2009. That compares with an average of 220,700 in the 11 months to November this year. Providing for the expected increase in the live register alone accounts for €1.25 billion of the planned increase in spending for 2009.
In these extraordinary economic times, the Government has had to make some difficult decisions to secure our economic future. However, we have still provided for an increase of €2.6 billion in social welfare expenditure next year and have kept expenditure control measures in this Department to an absolute minimum.
I will outline to the House the improvements in payment rates to which the Social Welfare (Miscellaneous Provisions) Bill will give legislative effect. We are all aware that the price of fuel is an issue of major concern for many people, especially the elderly and ill. I am pleased that the budget provides for an 11% increase in the value of the fuel allowance, bringing it to €20 per week from next month. The duration of the fuel season is also being extended by another two weeks from April 2009, bringing it to 32 weeks in total. These improvements to the fuel scheme, including the extra allocation in respect of smokeless fuel, will cost almost €30 million extra in 2009 and will benefit nearly 300,000 households.
The budget also provides increases of €7 per week in the maximum personal rates of payment for the contributory State pension and the transitional State pension from the start of January 2009. This will bring the new weekly rate to €230.30. The non-contributory State pension is also being increased by €7 per week bringing the new rate to €219 per week from January 2009.
While providing for increases in the State support for today's pensioners, the Government is also conscious of the need to develop a new long-term pensions framework that will serve future generations of pensioners well. I am pleased to be able to inform Senators that we are close to the end of a very protracted policy review of issues in this whole area, which started with the publication by the Pensions Board of its national pensions review and its report on mandatory pensions, Special Savings for Retirement, just over two years ago. A Green Paper on pensions was published this time last year to broaden the debate to encompass all aspects of pensions policy in this country.
The challenge is to strike the right balance between the responsibilities of all those who can contribute, including the State, employers and employees, and to ensure that whatever system is decided on reaches the group most in need of pensions coverage: low income to middle income earners. This is the challenge we are working on at present and the aim is to announce a framework for future policy shortly.
In recognition of the current market difficulties and the difficult decisions pension schemes will face, the Government has put in place a number of short-term measures to ease the pressure on schemes. It has been agreed with the Pensions Board that an additional six months will be allowed for trustees to prepare funding proposals. This will mean that schemes will have 18 months to review the situation with sponsoring employers and to formulate proposals for recovery. These actions are being taken to alleviate the current situation.
Members of defined contribution schemes have been also exposed to investment losses. In such schemes the risk is borne in full by the member. Many of these schemes are relatively immature and for many people there will be adequate time to recoup some or all of the losses which have occurred. There are particular concerns for those who may be at, or close to, retirement. Good practice would suggest a conservative approach to investments in the last number of years before retirement but anecdotal evidence suggests this may not have been applied in some cases. Members of defined contribution schemes are required to purchase an annuity at the point of retirement. In the current environment these scheme members could realise a significant loss in the value of their pension funds. In the circumstances, the Department of Finance is currently working out the details on how such scheme members could avail of a period of up to two years to purchase an annuity. The scheme was announced on Friday by the Minister for Finance and the final details will be notified through the Pensions Board. There is, of course, the risk that those availing of the deferment option could sustain further losses and this will be clearly outlined in guidance notes.
The Government is working with the Pensions Board, representative organisations and the social partners to find ways to ease the pressure on schemes by striking a balance between the long-term nature of pension savings and the need to ensure short-term security of accrued benefits. As outlined, it has already taken some short-term measures in this area. The long-term response to the situation is being considered in the context of the overall framework for pensions, that I mentioned earlier.
Turning now to social welfare payments to people of working age, the budget provides an extra €260 million for such schemes. The maximum personal rate of payment for all working age schemes is being increased by €6.50 per week with effect from the first week of January 2009, with proportionate increases applying to people on reduced rates. This brings the lowest social welfare weekly payments above €200 for the first time to €204.30. The rates of qualified adult payments are also being increased on all schemes by €4.30 except for the invalidity pension where a €4.60 increase will apply. About 733,000 people will benefit from these increases.
Budget 2009 also provides increases for families with children who are in receipt of social welfare payments. Social welfare dependent parents at present receive an extra €24 per week for each child on top of their basic social welfare payments, through what is termed the qualified child increase. This is being increased by €2 to €26 per child with effect from January 2009. Improvements are also being made to the family income supplement, FIS, which is paid to low income working families. The income limits for the FIS are being increased by €10 per week in respect of each child giving an average extra payment of €6 per child per week. It is estimated that a total of 29,000 families will benefit from FIS in 2009, and that approximately 2,000 additional families will become eligible for a FIS payment.
The income thresholds for entitlement to back to school clothing and footwear allowance are also being increased to enable 18,000 more families to benefit from the scheme. As Members will be aware, the Government decided in the budget that, with effect from January 2010, child benefit will no longer be paid in respect of children who are 18 years of age. This change is being phased in gradually and the Bill provides that a half rate payment of the appropriate rate of child benefit will be made in respect of existing and future qualifying 18 year olds from 1 January 2009 to 31 December 2009.
Special alleviating measures are being introduced in respect of children aged 18 years who are in social welfare dependent families or low income families. A compensatory payment of €15 per week will be paid to families in receipt of social welfare payments which include a payment for a qualified child in this age group and low income families in receipt of FIS, which include qualified children in this age group. This additional payment will be applicable where an 18 year old is in receipt of disability allowance in his or her own right. Families with twins, triplets and other multiple births receive higher payments than recipients of child benefit generally. In the circumstances, they will face larger reductions in their payments following the implementation of this measure. The Government has therefore, decided that the weekly compensation payment of €15 will be increased by 50% for each child in a set of qualifying twins and by 100% for each child in a set of qualifying triplets and other multiple births. These increases will mirror the rates of child benefit generally provided in the case of twins and other multiple births. Compensatory payments will be paid to the person who was receiving the child benefit for the 18 year old in question.
In addition, the back to school clothing and footwear allowance will be increased by €215 to €520 per annum for eligible 18 year olds. These compensatory payments will cease on 31 December 2010. While policy in relation to the early childcare supplement comes under the aegis of the Minister of State with responsibility for children, the Social Welfare Bill will provide the legislative basis for the change to the scheme that was announced in the budget. The cost of the early childcare supplement in 2009 is expected to be €397 million. As Senators will be aware, the primary aim of the scheme was to help parents with the cost of pre-school childcare. The payment was introduced for children to the age of six, even though most children start school well in advance of their sixth birthday and the burden of having to pay for full-time childcare ceases at that point. The approach taken in 2005 was the most generous possible, to ensure that no child would lose the payment before starting school. However, it is now considered that a more targeted approach is consistent with the current economic context.
With effect from January 2009, the eligibility period for children qualifying for the early childcare supplement will be reduced from six years to five years and six months. The supplement will be paid on a monthly basis, rather than a quarterly basis, as at present. The combined effect of these measures is expected to result in savings in the Department of Health and Children Vote of some €93 million in 2009.
I should now like to outline the changes that are being made to certain social insurance schemes. Senators will be aware that Ireland's social welfare system is based on two quite different types of entitlement — a social insurance system for people who have paid sufficient PRSI contributions and a social assistance system for people without adequate contributions who have little or no household means of their own. Social insurance is intended both to enable people to insure themselves against adverse life events such as unemployment or illness and to provide for their State pensions and other benefits, through contributions to the national social insurance fund. Social insurance benefits are not means-tested and entitlement depends on having paid the required number of PRSI contributions relevant to the particular benefit a person wishes to claim.
For the past 11 years, the social insurance fund has been in surplus, with more than sufficient income in the fund to cover the payments being made from it each year, without the State having to provide a contribution. However, that is changing. As a result of further increases in the live register, expenditure is expected to exceed income to the fund by more than €200 million this year, and about £900 million next year. Although these current deficits can be met from the accumulated surplus, it seems likely that annual Exchequer subvention to the social insurance fund will be required again within a few years. In that context, it is appropriate to look at some of the instances where people with a very limited or distant contribution record have been able to qualify for very significant benefits, regardless of their household income.
At present, people who have paid just 52 weekly contributions in total can qualify for jobseeker's benefit, illness benefit and health and safety benefit. This means, for example, that recent migrants or young workers who have worked here for a total of only one year are entitled to claim jobseeker's payments for 12 months. This will change from next January, when the number of required paid contributions will be doubled to 104 for new claimants. A further anomaly that exists at present is that some people, who were previously working part-time, can receive a higher rate of payment from these schemes than what they were actually earning while at work. Again, this is considered to be inappropriate — a disincentive to employment — and so, from next January, this will be addressed by increasing from €150 to €300 per week the earnings thresholds which currently apply to the reduced or graduated rates of payment.
At present, it is necessary to have made 13 paid contributions in the relevant tax year to qualify for illness benefit. However, this condition does not exist for jobseeker's benefit, with the result that people who may not have paid PRSI contributions in the past number of years can qualify. Again, it is considered that this position does not adequately reflect the contribution-based rationale for social insurance and so from next January, the Bill provides that new claimants for jobseeker's benefit will be required to satisfy the same conditions as those on illness benefit, and must have paid 13 contributions in the relevant tax year to qualify for benefit.
The other two changes being made to jobseeker's benefit relate to the duration of the payment. Under the previous arrangements, people who have 260 or more paid social insurance contributions could receive jobseeker's benefit for up to 15 months. The Bill provides that with effect from 15 October 2008, this is being limited to 12 months for current claimants with less than six months duration on the scheme as well as all new claimants. Where the claimant has less than 260 paid contributions, the maximum duration of jobseeker's benefit will be nine months, instead of 12 months, if the claimant currently has been in receipt of benefit for less than three months, and in respect of all new claimants.
In summary, the Bill provides that new claimants for jobseeker's benefit will in future have to have paid a total of at least 104 contributions to the social insurance fund, with at least 13 of these paid in the relevant tax year, and the duration of the payment will be either 12 or nine months, depending on the number of social insurance contributions they have made in the past. I should stress that the people with limited means who will be affected by these restrictions in entitlement to social insurance benefits will be able to claim jobseeker's allowance or another social assistance payment, such as the supplementary welfare allowance. The maximum rate of jobseeker's allowance is paid at the same rate as jobseeker's benefit.
The Bill also amends the Citizens Information Acts 2000 to 2007 to enhance the functions of the Citizens Information Board through the assignment to it of responsibility for the provision of the money advice and budgeting service, MABS. MABS staff provide a highly valued service for people who are over-indebted and need help and advice in coping with debt problems. However, it has been recognised for some time that the service needs a proper legislative basis and structure.
After detailed consideration, the Government decided that assignment of these responsibilities to the Citizens Information Board would best achieve that outcome. The MABS and citizens information centres complement each other as both are involved in providing information, advice and advocacy services to the public. In addition, the Citizens Information Board has a long association with MABS at both national and local level and was involved in establishing some of the original MABS pilot projects. The proposals envisage that MABS will be a separate and distinct service within the Citizens Information Board. There will be no change in the status of the 53 independent MABS companies with voluntary boards of management, or in the employment status of their 240 employees who provide the local services.
Part 5 of the Bill gives effect to the Government decision announced in the budget to integrate the Combat Poverty Agency and the office for social inclusion within the Department of Social and Family Affairs, in line with the recommendations of a review of the Combat Poverty Agency that was undertaken on foot of a Government decision on 6 June 2007. It is not my intention that the Combat Poverty Agency will simply be absorbed into the office for social inclusion in its existing form. The office for social inclusion will be dismantled and a new strengthened division will be created that will make the best use of the combined strengths of the two bodies and will seek to address the weaknesses identified by the review with regard to both. The new division will provide a stronger voice for those affected by poverty and social inclusion issues.
I will now outline the main provisions of the Bill. Sections 3 and 4, together with Schedules 1 and 2 to the Bill, provide for increases in the rates of social welfare payments. These include an increase of €7 per week for recipients of pensions and carer payments who are aged 66 years and over. The Bill also provides for an increase of €6.50 on all working age payments, including jobseeker's benefit, disability allowance, one-parent family payment and carer's benefit and allowance payable to carers aged under 66 years. It further provides for increases in the allowances payable in respect of qualified adults and qualified children. These increases will come into effect in January 2009.
Section 5 provides for increases in the weekly income limits used to determine entitlement to family income supplement. The new thresholds range from €500 in the case of a family with one child to €1,250 in the case of a family with eight or more children. These increases will take effect from January 2009.
Sections 6 and 7 provide for an increase, from €50,700 to €52,000, in the annual PRSI earnings ceiling applicable to employees and optional contributors. This amendment will come into effect on 1 January 2009.
Section 8 provides that income from dividends arising from stallion fees, stud greyhound fees and profits from the occupation of certain woodlands will be taken into account in estimating reckonable income for PRSI purposes. This amendment is necessary to disregard the provisions of section 140 of the Taxes Consolidation Act 1997 when estimating reckonable income for PRSI purposes.
Sections 9 to 11 provide for amendments to various definitions. Sections 9 and 10 provide for the amendment of the references to a reformatory or industrial school and medical practitioner, which are contained in the Social Welfare (Consolidation) Act 2005, by replacing those terms with the definitions "children detention school" and "registered medical practitioner", as provided for in the Children Act 2001 and the Medical Practitioners Act 2007, respectively. Section 11 amends the definition of "widowed parent" to provide that the grant will be payable to a widow whose child is born within ten months of the date of death of the deceased spouse.
Section 12 provides for the deletion of a provision which applied to persons who were in receipt of pre-retirement allowance prior to April 1993. This provision is obsolete as all recipients of pre- retirement allowance would have transferred to State pension payments before or during 2004.
Section 13 clarifies that, for the purposes of the one-parent family payment scheme, a "qualified parent" must be the parent, step-parent, adoptive parent or legal guardian of the qualified child. It also provides for continued payment to existing recipients who established entitlement under the current definition of "qualified parent".
Section 14 provides for amendments to the provisions governing payment of rent and mortgage interest supplement under the supplementary welfare allowance scheme. It provides that the maximum amount of rent supplement will be specified in regulations. It also provides that the amount and duration of mortgage interest supplement will be determined by the Health Service Executive, having regard to the circumstances of the person concerned and subject to any conditions etc. that may be prescribed.
Section 15 provides for a number of amendments to the provisions governing the illness benefit scheme, with effect from 5 January 2009, as follows: the minimum number of qualifying contributions required will be increased from 52 to 104; illness benefit will be payable for two years, 624 days, in the case of a person who has more than 260 paid PRSI contributions; payment will continue where a person has been in receipt of illness benefit on a long-term basis, provided that the claim is not broken for a period exceeding three days; and existing special provision for claimants who participate in reactivation programmes will be maintained.
Section 16 provides for amendment to the provisions governing the health and safety benefit scheme, by increasing, from 52 to 104, the minimum number of PRSI contributions required to qualify for benefit and providing that the claimant must have at least 13 paid PRSI contributions in the relevant tax year.
Sections 17 and 18 provide for amendments to jobseeker's benefit. At present social welfare legislation provides for the disregard of certain periods where a jobseeker's benefit claimant participates in specified training and employment schemes. Section 17 provides for the extension of the linking period in respect of jobseeker's benefit to two years and six months in the case of a person who is participating in certain vocational training opportunities schemes.
Section 18 provides for a number of amendments to the jobseeker's benefit scheme as follows: an increase, from 52 to 104, in the number of PRSI contributions required to qualify for benefit; a requirement that the claimant must have 13 qualifying contributions in the relevant tax year; amendments to the duration of benefit — 12 months in the case of a person who has paid at least 260 PRSI contributions and nine months in the case of a person who has paid less than 260 PRSI contributions; and special provision for claimants who were in receipt of jobseeker's benefit on budget day, 14 October 2008.
Provision was made in the Social Welfare and Pensions Act 2008 for the transfer of administrative responsibility for domiciliary care allowance from the Department of Health and Children to the Department of Social and Family Affairs in 2009. While those provisions have not yet been given effect, section 19 of the Bill provides for amendments to the domiciliary care allowance scheme. These include reflecting the amendment to the definition of children detention school, as provided for in section 9 of this Bill and providing an increase, from €299.60 to €309.50, in the monthly rate of the allowance.
Section 20 contains amendments to entitlement to child benefit, by providing that the benefit will be payable in respect of a child up to his or her 18th birthday. It also provides that a special payment, of half the standard child benefit payment rate, will be payable in 2009 only in respect of qualified children who are currently aged 18. Special provision is made to provide for a compensatory payment of €15 per week to families in receipt of social welfare payments which include a payment for qualified children in this age group and low-income families in receipt of family income supplement which include qualified children in this age group. This additional payment will also be applicable to persons within this age group who are in receipt of disability allowance in their own right. This compensatory payment measure will cease to have effect on 31 December 2010.
Section 21 provides for a small increase in the rate of early child care supplement, to €92 per month, to facilitate transition from quarterly to monthly payments. It also provides that payment will be made monthly in arrears rather than on a quarterly basis, and that the supplement will be payable in respect of a child up to the age of five years and six months. These amendments will take effect from 1 January 2009.
Section 22 provides for the deduction of any contributions payable under the tax known as "income levy" in calculating weekly family income for the purposes of family income supplement. In anticipation of the transfer of administrative responsibility for blind welfare allowance, from the Department of Health and Children to the Department of Social and Family Affairs, section 23 provides for an increase in the rate of the allowance.
Part 3 of the Bill provides for miscellaneous amendments to other Acts.
Section 24 clarifies requirements for the submission of an actuarial funding certificate for new schemes commencing on or after the date of transposition of Directive 2003/41/EC of 23 September 2005. The amendments also confirm that eight named schemes shall have an effective date for the submission of an actuarial funding certificate of I January 2009.
Section 25 removes the requirement for an tArd-Chláraitheoir to consult the Minister for Health and Children when giving information to certain specified others. This change is necessitated in the context of the transfer of functions to the General Register Office from the Minister for Health and Children to the Minister for Social and Family Affairs.
Part 4 of the Bill, covering sections 26 to 29, provides for the extension of the functions of the Citizens Information Board to include responsibility for the provision of the money advice and budgeting service. The purpose of the measure is to ensure that the board will support the provision of the MABS. It will promote, develop and disseminate information and education about debt, money management and related matters. It will compile and publish data. It will undertake research and it will provide the Minister with information and advice on matters related to its functions. Part 4 also amends the relevant sections of the Citizens Information Act in respect of the provision of financial assistance to voluntary bodies to include the MABS companies.
Part 5, sections 30 to 38, is necessary to give effect to the Government decision to integrate the Combat Poverty Agency and the office for social inclusion within the Department of Social and Family Affairs, in line with the recommendations of the review. This part provides for the dissolution of the agency, the transfer of its permanent employees who are to become civil servants, the transfer of its property and assets, any pending legal proceedings and any rights and liabilities to the Minister for Social and Family Affairs. Pension and superannuation liabilities are to be transferred to the Minister for Finance. Provision is made for the final accounts of the agency to be drawn up, for any expenses incurred as a result of the integration to be met and for the repeal of the Combat Poverty Agency Act 1986.
The dissolution of the Combat Poverty Agency, as provided for in Part 5, is a prerequisite to the integration arrangements and the creation of the new division. Sections 32, 33 and 35 are standard provisions providing for the transfer of property and all rights and liabilities of the agency to the Minister for Social and Family Affairs upon the commencement of the Part. Section 34 provides for the agency's final accounts to be drawn up, audited by the Comptroller and Auditor General, presented to the Minister and laid before each House of the Oireachtas. Section 36 contains the legal basis for the appointment of the staff of the Combat Poverty Agency to the Civil Service as unestablished civil servants. The section provides that the remuneration and superannuation terms of the Combat Poverty Agency staff will be no less beneficial on transfer into the Civil Service. They will retain their employment law rights, continuity of service and their tenure entitlements. Provision is also made in section 36 for the contracts of persons who are fixed-term employees in the Combat Poverty Agency to be transferred to the Minister for Social and Family Affairs for the remainder of the contract term. Section 37 provides for any expenses arising in implementing the legislation to be paid out of moneys provided by the Oireachtas and section 38 provides for the repeal of the Combat Poverty Agency Act 1986.
I will conclude by outlining how the payment increases provided for in the Bill will be made. Pensioners who are paid by electronic methods will receive their increase in full from January 2009. Increases for recipients of jobseeker's benefit or allowance, illness or maternity benefit, one-parent family payment, family income supplement, farm assist and supplementary welfare allowance will be paid in full from January 2009. As has been the case previously, because of the lead-in time involved in the production of personal payable orders, recipients of certain long-term payments, such as widow's or widower's pension, carer's allowance and invalidity pension, will receive their increase in mid-February, backdated to January, together with their new payable order books. Increases for certain other long-term payments, such as State pensions and disability allowance, will be paid by a special once-off payment in mid-February to cover 12 weeks' payment to the end of March, when new payable order books will be issued.
The Social Welfare (Miscellaneous Provisions) Bill will provide the legislative basis for a range of improvements next year. These include €7 extra per week for State pensioners; €6.50 extra per week for welfare recipients of working age, such as jobseekers and those on illness benefit; an extra €2 per week in fuel allowance with payment also being made for an additional two weeks; increases in child related payments to those dependent on social welfare and improvements in the family income supplement for low income working families; and 18,000 more families becoming eligible for the back to school clothing and footwear allowance. As I detailed earlier, to fund these improvements, together with making payments to increasing numbers of people on the live register, it has been necessary to make savings in some areas. However, we have kept these expenditure control measures to an absolute minimum. At a time when public expenditure must be tightly controlled, the additional €2.6 billion being provided for social welfare in 2009 is a clear signal of the Government's commitment to protect the vulnerable and less well-off in society. I commend the Bill to the House and look forward to a constructive debate.