I welcome the Minister.
Social Welfare and Pensions (No. 2) Bill 2009: Second Stage.
The Bill will give legislative effect to the relevant measures announced in the 2010 Budget Statement. As Minister for Social and Family Affairs, I am very conscious of the needs of the more than 400,000 people on the live register. I also fully understand a wide range of other groups such as people with disabilities, carers and pensioners depend on the welfare budget for vital support. The Government, in a very tough budgetary environment, has done its utmost to protect the most vulnerable in Irish society.
Next year €21.1 billion will be spent on social welfare, which is €676 million or 3.3% more than the expected final expenditure figure of €20.4 billion for 2009. I appreciate that the cuts being made in the welfare area will not be easy for people, but I genuinely believe that if the Government does not take steps now to reduce overall public expenditure and avoid excessive borrowing, we risk making the economic position far worse for everyone, including welfare recipients, in the long term. The Government has avoided making cuts in the State pension and we have also fully protected more than 420,000 children in welfare dependent and low income families from cuts in child benefit. We have ensured cuts in weekly rates for those aged under 66 years are lower than the decreases in prices in the past year; therefore, their income has been protected in real terms.
Before I detail the areas where changes are being made, I would like to outline the supports being maintained at their current levels so as to provide reassurance for those who had been concerned that they might be cut. As I mentioned, pensions and other payments to people aged over 66 years, including payments for pensioners' dependent spouses who are aged under 66 years, are not being cut. This means that more than 474,000 people aged over 66 years are being fully protected in the budget. Extra allowances paid to pensioners who live alone and those aged over 80 years will continue at their current rates.
The household benefits package which includes the free television licence and the electricity, gas and telephone allowance is also being fully maintained, as are the fuel allowances and the free travel scheme. The half-rate carer's allowance scheme is staying in place. The half-rate illness benefit and jobseeker's benefit payments for widows or lone parents will also remain. The additional payments for lone parents and people with a disability who participate in community employment schemes are also being retained. The domiciliary care allowance, paid to parents and guardians of severely disabled or ill children under 16 years of age, is not being cut. The value of the respite care grant is being maintained at €1,700 per annum, as is funding for the 107 family resource centres, with grants for counselling and mediation programmes.
The main areas where reductions are being made are as follows. Child benefit is being cut by €16 per child per month for all children, with full compensation being provided for families dependent on welfare payments or receiving the family income supplement. The weekly rates of payment to those aged under 66 years are being reduced by approximately 4.1%, or an average of €8.30 per week. Reduced rates of payments will apply to new jobseeker's allowance claimants 24 years and under not in training or education. Reduced rates will also apply to jobseekers of any age who unreasonably refuse offers of training, education or a job. The treatment benefit scheme is also being limited in 2010 to free dental and optical examinations and the medical and surgical appliances scheme only. Additional fraud and control savings of €33.3 million or a total of €533 million are being targeted for 2010 through enhanced targeting of particular schemes and the introduction of the new anti-fraud powers provided for in the Bill. In addition, savings of €20 million are expected to result from reductions in the maximum rent levels for new or renewed rent supplement tenancies, while savings of €2 million are being made through a restructuring of the regional support agencies which work with the family resource centres.
I will now outline the details of these measures, starting with the changes being made to child benefit. As Senators will be aware, between 2000 and 2009 the monthly rates of payment for child benefit increased from just €53.96 for the first child and €71.11 for the third and subsequent children to €166 and €203, respectively. In the same period overall expenditure on child benefit grew from just €638 million to approximately €2.5 billion per year. As a result, approximately 12% of gross social welfare spending in 2009 is on child benefit. Currently, almost 600,000 households receive child benefit in respect of 1.1 million children. A family with four children currently receives €738 per month, or €8,856 per year, in child benefit, regardless of how high the parents' earnings from employment are. The Government is proud to have been able to deliver such significant increases in payments to families when the resources were available. However, in the current economic environment we simply cannot afford to keep spending at the same level as we did when tax revenue was much higher. In that context, we decided to reduce overall expenditure on child benefit.
In considering the various options for making savings in this area we were conscious that the payment could be an important source of income for all families for different reasons. Some families rely on it to buy basics such as food and clothes. For many women, it makes it possible for them to work outside the home by helping with child care costs. Even for women in high income families, it may be the only money paid directly to them. The Government, therefore, decided against withdrawing child benefit completely from any family and we also decided against taxing the payment. Apart from the significant administrative complexities taxing child benefit would involve, it also has the major drawback that it would lead to a cut of up to 20% in the child benefit payment for tax units on the standard tax rate and up to 41% in the payment for tax units on the higher tax rate. A 10% cut across the board is a fairer way to achieve the required savings while protecting families dependent on welfare or in low income employment.
To this end, the lower rate of child benefit, paid in respect of the first and second child, is being reduced by €16 to €150 per child per month. The higher rate of child benefit, paid in respect of the third and subsequent children, is also being reduced by €16 to €187 per child per month.
Notice taken that 12 Members were not present; House counted and 12 Members being present,
Families with children who are dependent on social welfare will be fully compensated for the reduction in child benefit by getting an extra €3.80 per child per week in the qualified child increase paid with their main welfare payment. Approximately 363,300 children are expected to benefit from this. Families who currently receive a half rate qualified child increase because they have other household income and, therefore, are not totally dependent on welfare will receive an extra €1.90 per child per week in welfare payments. Approximately 128,600 children are expected to benefit from this.
The family income supplement income, FIS, thresholds are also being increased by €6 per child per week to compensate low-income working families for the cuts in child benefit. This will translate into a weekly increase in FIS payments of €4 per child. Approximately 57,380 children are expected to benefit from this. I appreciate cuts in child benefit will be difficult for families but it should be recognised that the payment will still be generous compared with other countries and that the Government will also make a substantial contribution towards child care provision, including the introduction of a free pre-school year from January 2010.
The next cut is in the weekly rates of payments to people aged under 66, which are being reduced by 4.1% or an average of €8.30 per week. Proportionate decreases are also being made in payments for the qualified adult — dependent spouse — of the main welfare recipient but where a claimant is 66 or over and he or she has a qualified adult aged under 66, there will be no reduction in the rate of payment for the qualified adult. In the past 12 years Governments have delivered unprecedented increases in welfare rates. The jobseeker's allowance has increased by 130%; the disability allowance by 130%; the carer's allowance for those aged under 66 by almost 150%; the one-parent family payment by 130%; while over the same period the cost of living increased by 40%.
Even throughout the economic difficulties of the past two years, the Government has done its best to prioritise social welfare. The October 2008 budget provided for increases of between 3% and 3.8% in the basic payment rates at a time when inflation for 2009 was expected to be 2.5%. However, prices have reduced considerably this year. By October 2009, prices, as measured by the consumer price index, CPI, had fallen by 6.5% and are now forecast to drop by an average of 4.4% over 2009 as a whole. I appreciate it is important to consider not just the overall change in the CPI but also the impact that this may have on different groups. A technical analysis carried out by the Department of Finance suggests that between October 2008 and October 2009 the CPI fell by approximately 3.25% for retired households, 5.75% for unemployed households, and 7.5% for working households. Prices are falling by approximately 7.5% for the highest income decile and 4% for the lowest. Year on year, the price of food is down 6%, energy, 11%, and all clothing and footwear, 13%.
They are not.
The Minister to continue, without interruption.
Consumer prices are back to February 2007 levels, yet after the 2010 budget, the lowest weekly rate of payment for those aged between 25 and 66 will be €10 higher than in 2007. Even after the budget changes, therefore, we will achieve the commitment in the national action plan against poverty to maintain the real value of the lowest social welfare rate in 2007 terms.
We have also been conscious of the need to avoid disincentives for people to move from welfare to work. Currently, when basic welfare rates and secondary benefits such as the rent and mortgage interest supplements are taken into account, some families are financially better off on welfare than in low income employment. Long-term dependency on welfare is not good for these parents or their children. The changes in welfare rates will address these disincentives. There will also be a reduction to €150 per week in the rate of jobseeker's allowance and supplementary welfare allowance payable to people who have unreasonably refused offers of training or education.
I understand the particular challenges that people with disabilities face in their daily lives and the sacrifices that family carers make to look after their loved ones and I appreciate that reductions in payments will be difficult for them.
Why did the Minister do that?
However, the changes in last week's budget should be seen in the context of the huge progress made by recent Governments in supports for people with disabilities and carers. Between 1997 and 2009, the increases in the weekly rates of payment to people with disabilities and carers were more than three times greater than the increase in the cost of living over that period. We have also greatly increased eligibility for these payments as a result of significant easing of the means tests, with much higher income disregards. In 2007, we introduced the half rate carer's allowance, which provides significant additional support for carers in receipt of social welfare payments.
The value of the respite care grant has been increased from €254 in 1997 to €1,700 in 2009 and it is paid to people who are not in receipt of carer's allowance or carer's benefit. In addition, improvements have been made in the additional supports that many people with disabilities and their carers receive, including the household benefits package of free television licence, electricity and telephone units, as well as free travel. As a result of these and other improvements, there has been a fivefold increase in expenditure on the disability allowance since 1997. Expenditure by the Department on supports for carers has increased fourteenfold in the same period. While it has been necessary to reduce the value of the weekly income support payments to carers aged under 66 in this budget, the weekly rate of payment for the disability allowance and carer's allowance in 2010 will still be almost 20% higher than in 2006. The rate of carer's allowance paid to people aged over 66 was not cut at all in the budget and neither was the respite care grant.
The Government was afraid to do that.
When I met groups representing carers in the run-up to the budget, their main priority was the retention of the half rate carer's allowance and this payment was maintained in the budget. They also stressed the need for improved supports from the Department of Health and Children and I am glad that, even in a context of much tighter resources, increased funding will be provided next year for home care packages. The Government absolutely appreciates the difficulties that people with disabilities and their carers face and we have done our utmost to preserve supports for them as much as possible in this budget.
In order to incentivise young jobseekers to avail of education and training opportunities and try to avoid them becoming welfare dependent from a young age, changes are being made to the jobseeker's allowance. For new entrants, the rate of jobseeker's allowance is being reduced to €100 per week for 20 to 21 year olds and €150 per week for those aged 22 to 24, inclusive, who are not in training or education. The basic rate of supplementary welfare allowance payable to new claimants aged 24 and under is also being reduced to ensure that jobseeker's allowance claimants affected by the above measure do not have recourse to a basic supplementary welfare allowance top-up, the net effect of which would be to negate the jobseeker's allowance measure. The qualified adult rate for a spouse payable where the main claimant is aged 20 to 21 is also being reduced to €100 per week.
It is important to note that the following people will not be affected by this measure: existing claimants; young people with dependent children; those who have paid sufficient PRSI contributions to qualify for jobseeker's benefit; and people transferring to jobseeker's allowance immediately after exhausting their entitlement to jobseeker's benefit or those transferring from the disability allowance directly to jobseeker's allowance.
Where existing jobseeker's allowance claimants aged 24 or under being paid the full adult rate get a job and leave jobseeker's allowance but lose that job and end up back on jobseeker's allowance within 12 months, they will be entitled to the full rate of up to €196 again, rather than €100 or €150 a week. If this was not done, there would be little incentive for those currently on jobseeker's allowance to take up offers of work.
The full adult rate of jobseeker's allowance will also be paid to the following: those who participate in a full-time Youthreach course for young early school leavers or a full-time course in a senior Traveller training centre; qualify for the back to education allowance for pursuing a full-time second level course or post-leaving certificate or VTOS course; participate in a full-time FÁS training course; or take part in the Government's work placement programme. A person in this category will be selected for the employment action plan after 53 days on the live register, and directed to FÁS for appropriate training, education and jobseeking interventions.
In the education sphere alone, opportunities are available at all levels. Young people who did not finish school can avail of the Youthreach programme to get a leaving certificate qualification. Those who already have second level qualifications can avail of the thousands of extra places made available in recent years in PLC colleges and third level institutions. Those who have already completed third level can do a masters or participate in the new work placement programme. On top of the opportunities in the education sector, the Department of Enterprise, Trade and Employment will provide an additional 16,000 training places for 2010, bringing the total number available to more than 145,000.
The differentiation in the rates between those aged 20 and 21 and those aged 22, 23 and 24 recognises the fact that the older group would include graduates. The rationale for this change is straightforward. Receiving the full adult rate of a jobseeker's payment at a young age, without a strong financial incentive to engage in education or training, can lead to welfare dependency. It is considered particularly necessary to provide 20 and 21 year old jobseekers with a strong financial incentive to engage in education or training. It could also be argued that people aged 24 or under without child dependants do not need an income of €196 per week and that the current income differential between young jobseekers and third level students, or young job seekers and those who have been working all their lives, is not justifiable.
The new reduced jobseeker's allowance rate for 20 and 21 year olds amounts to €5,200 per annum, more than twice the amount of third level grant payable to young people from the poorest families whose family home is near their college. The reduced rate for 22 to 24 year olds amounts to €7,800 per annum, more than is payable to such young people if they attend college away from home. It is worth noting that the UK pays a reduced rate of just £50.95 per week to jobseekers aged 24 and under. Similar provisions relating to 18 and 19 year olds, introduced here earlier this year, have been effective.
The Government has also decided to limit the treatment benefit scheme from next January to the medical appliances scheme and the free examination elements of dental and optical benefits. The position will be reviewed annually after that. As Senators will be aware, treatment benefits are paid to insured persons from the social insurance fund. Although the social insurance fund has operated a surplus since 1996, this position began to change last year when expenditure had to be partially funded from the accumulated surplus. Expenditure continued to exceed PRSI and investment income to the fund this year and it is expected that the accumulated surplus will be completely exhausted in the first half of 2010. It is estimated that the Exchequer will be required to subvent the fund by approximately €1.2 billion next year. The changes to the treatment benefit scheme will be approximately €54 million next year. The effect of the limitation of the scheme provided for in the Bill is that the treatments previously available under the scheme will be limited to dental and optical examinations. The hearing aid scheme will be retained as is. However, almost 2 million insured persons will continue to be covered for the annual free examination and hearing aids, and more than 400,000 people are still likely to claim a dental examination and 200,000 an optical examination in 2010.
Turning now to the rent supplement scheme, the Government is determined to ensure that reductions in rents generally in the year to date result in savings for the taxpayer. To this end, the maximum level of rent supplement payable by the State will be reviewed early in 2010 on the basis of the latest data available on general trends in rental prices. The maximum rent limits payable will then be adjusted and new limits will apply in respect of new tenancies or renewals of tenancies from April 2010. Based on current information available about decreases in rent levels since April, the Department expects the rent review to lead to savings of €20 million in 2010. With rent prices falling in general, it is vital that taxpayers money is not used to pay inflated prices to landlords.
The budget also provides for an increase in the target for control and fraud savings next year to €533 million across all of the Department's 50 schemes. This is €33.3 million more than the level of control savings planned for 2010 in the pre-budget outlook. The additional savings are being targeted on the non-contributory State pension, illness benefit and one-parent family payments. The increased target also takes account of new anti-fraud powers included in this Bill which I will detail later.
Welfare fraud is theft. It is a serious crime and the Department of Social and Family Affairs is doing everything that it can to crack down on people who abuse the system. I want to put on the record again that there is no evidence whatsoever that 10% of all social welfare customers are engaged in fraud, or that fraud costs the State €2 billion a year. The Comptroller and Auditor General and a multi-party Oireachtas committee have conducted detailed examinations of welfare fraud and neither claimed that fraud rates were this high, as was indicated on a television programme.
The level of fraud on most schemes is very low. As reported by the Comptroller and Auditor General, the percentage of expenditure resulting from fraud identified in the Department's fraud and error surveys ranged from 0% for pensioners, to 0.1% for illness benefit, 0.8% for the family income supplement, 1.8% for child benefit, 2.3% for the disability allowance and 6.4% for the one-parent family payment.
Nonetheless, the Department is conscious that in a small number of schemes, some groups of claimants present a higher risk than others and we have made changes to address this. For example, a number of individual surveys have highlighted a high level of risk that non-Irish nationals could claim welfare payments to which they are no longer entitled after they have left the State. Having identified this risk, the Department has sought to minimise it by removing the option to receive payments by electronic fund transfer for new claimants of jobseeker payments. They must attend in person at the post office each week thus confirming their continued residency in the country. Their claim is automatically suspended where two consecutive payments are not collected. Targeted control measures have also been put in place for child benefit claims from non-Irish nationals and for other customer segments in schemes where any form of high risk has been identified. Since the Department started the cross-Border operations, the percentage year-on-year increase in people signing on for jobseeker's payments in virtually all of the Border offices had reduced.
Fraud detection systems have also been improved through data matches with organisations such as the Revenue Commissioners on commencement of employment data, the General Register Office on marriages and deaths information, and many other organisations including Departments and other State bodies. In addition, a data matching programme is now in place to ensure that relevant information available in one area of the Department is applied to all schemes.
Anonymous reports from members of the public are of increasing value to the Department in tackling fraud. For example, of 144 reports investigated this year in the north-west region, 48 cases, or 33%, generated savings of just under €600,000. In the north-east region, 65 reports, or 31%, of the 216 cases investigated resulted in savings of €880,000 and in south Dublin, 38 cases generated savings of more than €500,000. Despite the various pressures on the Department due to the increased volume of claims received this year, over 600,000 cases were reviewed between January and October, resulting in savings of almost €407 million. This will obviously rise by the end of the year to €500 million.
Last week's budget also included funding of €7 million to allow the roll out of the new public service card. The front of the card will contain a photograph and signature, and other identifying information may be electronically encoded on the card. This will help public service officers, such as those working in social welfare local offices, authenticate people's identity and reduce the potential for fraud. The Department continues to use every available means to crack down on welfare fraud.
I wish to outline briefly the main provisions of the Bill. Sections 3 and 4 and Schedules 1 and 2 to the Bill provide for reductions ranging from €7.50 to €8.50 in the weekly personal rates of payments, excluding payments to recipients aged 66 or over and recipients of the invalidity pension who are aged 65. They also deal with the reductions for qualified adults and with the increases for children. Section 5 provides for an increase of €6 per week in all family income supplement weekly earnings thresholds, effective from 1 January 2010.
Section 6 provides for a reduced personal rate of jobseeker's allowance of €100 per week for persons aged 20 and 21 years and €150 per week for persons aged 22 to 24. It also deals with the consequent effects for qualified adults. Section 7 provides for a reduction of €16 per month in the lower and higher rates of child benefit from 1 January 2010, bringing the rates to €150 and €187, respectively, per month. Section 8 provides for the introduction of a four year time limit for claiming refunds of PRSI contributions. Section 9 provides that where a self-employment contribution record is being used to establish entitlement to a State pension and unpaid PRSI contributions are paid subsequent to the date of claim, the pension will only be payable from the date on which the contributions are paid. Section 10 provides for similar arrangements in respect of claims for a widow's or widower's contributory pension.
Section 11 limits the treatment benefit scheme. Section 12 provides that in determining entitlement to mortgage interest supplement under the supplementary welfare allowance scheme, the amount of mortgage interest relief received by a person and any mortgage allowance or mortgage interest subsidy payable by a local authority under a shared purchase scheme will be deducted from the gross interest payable. This section also provides for a definition of "institution" for supplementary welfare allowance required for the purposes of section 14.
Section 13 provides for a reduced personal rate of supplementary welfare allowance of €100 per week for persons aged 20 and 21 years and €150 per week for persons aged 22 to 24. It also provides for the qualified adult reduction. Section 14 incorporates into primary legislation an existing requirement in the regulations that to be entitled to rent supplement, the applicant must be in a position to demonstrate that he or she could reasonably have afforded the rent at the beginning of the tenancy. In order to qualify for rent supplement, a person must have been a tenant or living in homeless accommodation for a period of at least six months. Section 14 extends this provision to include periods of residence in an institution, as defined in section 12 of the Bill. Section 15 provides that a person who does not have a right to reside in the State cannot be habitually resident here and also provides that asylum seekers cannot be habitually resident in the State.
Under existing provisions, a social welfare inspector may, if accompanied by a member of the Garda Síochána in uniform, stop a vehicle and question anyone in the vehicle where the inspector reasonably suspects that it is being used for employment or self-employment. Section 16 extends these provisions to provide for similar checkpoints operated by social welfare inspectors and customs officers without the need for a Garda presence. It also provides that an inspector may question any occupants for the purposes of the control of any social welfare payment.
Section 17 contains another fraud measure. It provides that an officer of the Minister, authorised by the Minister for this purpose, may serve notice on a financial institution requiring it to make records available for inspection which may contain information about possible welfare fraud. Section 18 provides for the transfer of bulk information relating to recipients of social welfare payments to the competent authority of another member state or international organisation, or other country with which a reciprocal agreement has been made.
Section 19 provides that payments made under the scheme known as the special Civil Service incentive career break scheme will not be regarded as earnings for the purposes of the various earnings disregards applied in determining entitlement to social assistance payments, and will therefore be fully assessable as means. Section 20 provides for the inclusion of the Health and Social Care Professionals Council and the Road Safety Authority in the list of specified bodies authorised by legislation to use the PPS number as a public service identifier.
Part 3 is an amendment to the Pensions Act 1990. Under the provisions of that Act, an application to the Circuit Court for an order to enforce a determination of the Pensions Ombudsman must be made by the Minister. Section 21 provides that such applications will be taken by the Pensions Ombudsman.
Even with the changes provided for in this Bill, €21.1 billion will be spent on social welfare in 2010, which is €676 million or 3.3% more than the expected final expenditure figure of €20.4 billion for 2009. The Government appreciates that the cuts we are making in the welfare area will not be easy for people, but we also genuinely believe that if we do not take steps now to reduce overall public expenditure and restore stability to the public finances, we risk making the economic situation far worse for everyone in the long term, including welfare recipients. We were faced with the scenario of having to make savings in each of the three major areas of expenditure of the Government, namely, public pay, social welfare and services. Not to take from any one of those three elements would have placed a burden on the other two, which would have been equally unfair.
We have avoided making any cuts in the State pension. We have also fully protected more than 420,000 children in welfare-dependent and low-income families from cuts in child benefit. We have ensured that cuts in weekly rates for those aged under 66 are lower than the decreases in prices over the past year. I appreciate that the changes in this Bill are difficult, but they are also necessary and I look forward to a constructive debate about them in the next two days in this House.
I welcome the Minister. This budget is anti-family, anti-poor and anti-children. In our budget plan last Friday, we in Fine Gael specifically excluded those who could not work, namely, children, pensioners, carers, the disabled and the blind. However, Fianna Fáil and the Minister have failed to protect the most vulnerable. In the words of Fr. Seán Healy, the wonderful campaigner for CORI, this budget is "breathtakingly unjust". He tried to influence the Government. It is not long since he and Cabinet Ministers were walking arm in arm and barefoot across Inchydoney Beach——
Not with Fr. Seán Healy.
——hanging on to his every word. Fianna Fáil and the Green Party now seem to have disregarded completely CORI's campaigning. The Society of St. Vincent de Paul and One Parent are all singing from the same hymn sheet. It is the most socially damaging budget the country has ever seen. The budget has failed our people. It is discriminatory and wholly unfair. The Government is asking the lowest paid and most dependent on the State to contribute in a manner that is totally disproportionate.
Last week the Bill was rushed through the Dáil and it is being rushed through here again this week. This is a disgrace because the Government is afraid of retaliation from the people. It is afraid of what ordinary people are saying on the street and in our constituencies. It knows that its days are numbered, but it is afraid to meet the electorate.
The people most affected by this dishonest budget are carers, those on social welfare and people who are blind. The most callous and inhumane thing is to take €8.20 from people who are blind. Others facing cuts are lone parents, widows and widowers, while €16 is being taken in child benefit from those who do not use the money for skiing trips, fashion or anything else, but for necessities like food and heat.
Reading through the small print, we can see that rent supplement is being affected, as are optical and dental benefits. The alteration of the PRSI dental insurance scheme will affect 2 million people. The Minister stated this is because the cumulative surplus is now gone. Of course, it has gone, because it has been wasted on foreign travel by Ministers, on paying off the likes of Mr. Rody Molloy, and on getting a car for the new CEO of FÁS. It is a slap in the face for those who are being put to the pin of their collar as to they try to put food on the table.
Studies have shown that in excess of 30,000 people are living with significant sight loss due to uncorrected refractive error. These people will be a danger to themselves and others as a result of the decision to no longer provide free glasses. Sight is a necessity and this benefit asset should not be touched.
Collectively, the plain people of Ireland stand to lose most from the budget. Those who are paid salaries of €30,000 per annum and those having their benefits cut did not squander the boom. They have been betrayed and have lost trust and confidence in the Government.
The Minister for Finance argued that the budget would be fair and everyone would contribute in accordance with their means. Have senior executives in the Health Service Executive or the chief executive officers in State and semi-State bodies made a proportionate contribution? They have not done so because the Government is afraid to touch them. It is also afraid to touch old age pensioners because the grey army revolted outside Leinster House last year.
The Minister's statement that she avoided cuts to payments for those aged over 66 years is disingenuous and a lie. This group has lost the Christmas bonus and the carbon tax will result in a €2.40 increase in the price of a bag of coal and a 50 cent increase in the cost of a bale of briquettes.
The Bill proposes a 4.1% cut in social welfare payments to people under 66 years, a measure which is expected to deliver a saving of €760 million. Jobseeker's allowance will be reduced by €8.30 to €196 and similar reductions will be applied to illness and injury benefits, farm assist, pre-retirement payments and the supplementary welfare allowance. A reduction in income of €13.90 per week for one couple is substantial.
The Irish Times reported on Saturday that the Minister was introducing the measures with a heavy heart. On the other hand, she stated she was proud of the Government's track record. It is extraordinary that the Minister has chosen to speak out of both sides of her mouth.
The Minister stated that the cost of living has declined. It costs an extraordinary amount to put food on the table. Why are so many people travelling across the Border to shop if the cost of living has fallen? The high cost of living here has cost 11,000 retail jobs. While certain costs may have declined, high costs mean people continue to shop and buy groceries in the North. It would have been better for the Government to reduce VAT rates rather than social welfare payments.
The Minister referred to social welfare fraud. I stand over the figure that this shameful practice costs the Exchequer €2 billion per annum. The Government's target for savings through anti-fraud measures in 2010 was €533 million. Last year, the target was €616 million. Combined, these targets suggest fraud costs as least €1 billion. I believe it cost a further billion last year. I fail to understand the reason the Government did not introduce identity cards or a requirement to produce photographic identification to enable us to stamp out welfare fraud once and for all.
There is no doubt that there are winners and losers from the budget. Some people have not been affected by its measures. As I pointed out, the Government promised to spread the pain and argued that the measures would impact least on those who could least afford it. The budget is an affront to every family in the country, especially those with children where one or both parents work in the public sector.
It is indisputable that cuts in child benefit will have a detrimental impact on many families who routinely rely on the monthly payment. Child benefit will be reduced by €16 per month to save the Exchequer €221 million per annum. How will families be able to afford child care? They cannot do so without child benefit. In families where both parents are working, one parent will have to give up work. Parents with two children who work every hour possible to provide a decent life for them will bear the brunt of the budget. Child benefit is a crucial part of family income and cutting it is a direct attack on the rights of families.
Single parents, who will be deeply affected by the cut in child benefit, will no longer be able to work if they cannot recover their child care costs. The Minister has repeatedly referred to the importance of incentivising people to return to the workplace. The budget measures have directly hit people in the poverty trap and many are anxious about how they will survive. While I welcome the decision to increase the payment for qualified children, which provides some assistance to those in the poverty trap, it does not affect the new poor, that is, those on middle incomes who will be hit hardest by the budget measures.
While I also welcome the decision not to interfere with the half rate payment for carers, the dramatic cut in the carer's allowance is an affront to our values. Time and again, we express our appreciation of the work done by approximately 161,000 family carers who provide more than 3.7 million hours of unpaid care each week and contribute more than €2.5 billion to the economy. The Government has decided, however, to cut their payments by €8.80 per week or €340 per annum, a substantial amount of money for those trying to survive. Carers, a selfless group of people who have essentially sacrificed their livelihoods and careers to stay at home to look after sick relatives, have also lost the Christmas bonus. Rather than engaging in self-congratulation and expressing pride in increases in the carer's allowance in previous budgets, the Minister should hang her head in shame for introducing outrageous cuts in the payment.
Why are widows and widowers treated differently from old age pensioners?
There are many young widows.
The decision to cut their weekly payment from €209 to €201.50 as we approach Christmas, an especially difficult time for those who have been bereaved, is a kick in the teeth to widows.
The decision to cut the payment to blind and visually impaired people is equally callous. Those affected must modify their homes and try to adapt their lives to cope with their disability. They need various expensive aids and equipment such as modified televisions and computers.
The national disability strategy is an excellent document. It was an agreed programme with the Government and proposed to end discrimination and exclusion for blind people in order that they could play a full part in society. This cut represents a downright reversal of that pledge and it is shameful.
Regarding rent supplement, we agree that people should not become dependent on social welfare. However, how can they pay their bills? The Minister says that rents are reducing but that is not the case in my area. Rents have come down somewhat but not to a significant extent. The rental accommodation scheme is very good. People must be on rental allowance for 18 months before they can avail of the rental accommodation scheme but the point must be further emphasised.
I already referred to the carbon tax, which is a case of the Green Party doing its green, huggy-huggy thing. The honest to goodness poor old pensioner must pay extra because old people feel the cold more.
I refer to section 15, the habitual residence clause. This has come up time and again at meetings of the Joint Committee on Social and Family Affairs. I welcome this section but I must pose a number of questions to the Minister. The appeals officer has said that some people had applied for asylum and were eligible under the five criteria for entitlement to child benefit, of which the Minister is aware. How many of these cases are in the system and how many have yet to be decided on? Do they refer to those who initially applied and how many are in the appeals system? Will the legislation be retrospective? What is the potential for schemes apart from child benefit? Does this amendment only apply to new applications for social welfare from asylum seekers?
I must comment on the delays in processing applications for asylum and leave to remain. Each person is entitled to €19.10 while waiting for an asylum application to be processed. Some people have been waiting for years and they are living in desperate situations. The centre in Athlone is appalling, as is the fact that some are living in a mobile home waiting with uncertainty for so long before the claim is processed. This is costing the State an extraordinary amount of money. In 2009, the Department spent €50,000 per day keeping these people. The original projection was €40,000 per day.
I am completely disappointed by this budget. To quote Fr. Seán Healy it is "breathtakingly unjust". He is a measured man, a decent person with good values and he cares about people. I thought I was part of an Oireachtas that cared about people but I wish to disassociate myself completely and utterly from the callous, cold budget.
I welcome the Minister to the House and thank her for her fine presentation of the budget. This ensures the less well-off in our society have been protected to the best of her ability. Fianna Fáil has a fine record in terms of social welfare and working for people who cannot help themselves.
All one has to do is examine the figures presented in the budget. We are borrowing €530 million per week. We care about people but the problem is that we have run out of money.
The Government squandered it.
I disagree totally with the idea that the Government squandered money. It has a good record and the infrastructure that has been built in this country in the past ten years is exemplary. No Government would be ashamed of the way the money was spent. The evidence is in the budget.
It is important to bear in mind that those on social welfare have a difficult life. They do not take many holidays and they do not enjoy many nights out during the week. They live on the minimum. I appreciate that the Minister had a difficult budget. With a budget of €21 million for those on social welfare it is important that she did what she did to ensure old people and those on fixed incomes and pensions were not affected. I refer to the facilities these people still have.
I was invited to the turning on of the lights at Graiguenamanagh, with 500 to 600 people in attendance, and I reject what Senator McFadden said. Very few people really objected to the budget. They thought it was quite fair. I also attended a dinner for 300 senior citizens in Kilkenny. I spoke at that function and spoke to people at the tables after the meal. I got a good reception and people felt they were making some contribution, whatever little they could. These people have gone through bad times and recessions during their lifetimes. It was right that when the Minister had a difficult budget to introduce, these people were protected.
It is important to get our young people out of the social welfare system. In the 1980s, particularly in parts of Dublin, families never saw their father or mother working. This created a terrible situation for young people. I employed one young man who told me that the family was laughing at him going to work. I could not believe it. He told me he had never seen anyone in his house working. He was the first man in his house to work. I applaud the Minister for trying to get people working. It should not be the case that those on social welfare are better off than those working. We are sending the wrong message if we do that, although we must support those who are not working.
The Joint Committee on Social and Family Affairs, particularly Deputies Thomas Byrne and Enright and I, produced a report. We were asked to examine mortgages. Many people will be in difficulty with mortgages. The six-month moratorium was extended to 12 months but this does not extend across the banking sector. There is an opportunity for us to introduce amendments to the Bill to take certain steps. A moratorium of two years without penalties is important where two people in the household have lost their jobs and cannot make repayments at this stage. This will give them an opportunity to get back into training or employment. An insurance scheme to protect mortgages should be a three-way situation whereby the mortgage holder pays a sum, the lender pays a sum and the Government makes a contribution. We are contributing approximately €60 million under the mortgage interest supplement scheme. The insurance system I have advocated would work much better than this. If a small amount of approximately €15 was paid in insurance in the first year, with €5 being paid by the householder, the lender and the Government, it would bring in a sum of between €75 million and €100 million in a full year. If the amount was a little more than this, a fund of between €300 million and €400 million could be collected over two or three years. It would be important to use such a fund to assist those who drop out of work and whose mortgages are affected by unemployment. We should also introduce a rental scheme to cater for people who cannot afford to repay their mortgages. Similarly, banks should be able to acquire equity of between 25% and 30% in certain houses.
The three or four important measures I have mentioned are elaborated on in a report that I asked Mr. Fergus Murphy of the EBS to compile. This is not some pie in the sky idea I came up with. It has been well researched by the EBS which believes the system in question would be very bankable. I ask the Minister to consider what we can do to help the vulnerable people concerned. Whereas the rents of those living in public housing will decrease, the people about whom I speak have no protection. Some of the lenders not covered by the bank guarantee scheme are creating major problems for those who are in difficulty. It is important for us to take the action I have recommended.
I do not want to be negative. I honestly believe my party has a fine record of protecting people on low incomes, social welfare and pensions. The Minister for Social and Family Affairs, Deputy Hanafin, has done an excellent job in difficult circumstances. One would want to be Solomon to get a result better than she has achieved.
If the Senator is such an enthusiast, why does he not join Fianna Fáil?
No interruptions, please. One speaker only.
I am being helpful.
I would like to make a couple of points about carer's allowance which is probably one of the payments for which we are getting real value for money. In recent years we have been very generous to carers who do a fantastic job by keeping people out of hospitals and nursing homes. When things get better, we should look after them by providing for an increase in the allowance once more.
We are in difficult economic times. Social welfare is very important, but somebody has to pay for it. It is clear that we cannot continue to borrow as we have been doing. Tax receipts have decreased and we have to shrink the economy to 2003 levels. We must consider this budget in the context of the last three, rather than in isolation. The Minister for Finance, Deputy Brian Lenihan, has said "the worst is over". I think he is right. I believe there will be a small upturn in the middle of next year. We will automatically pick up as soon as the US, UK and various European economies pick up. As an exporting country, that will help us. The more we can export, the better. We have to be export-led from here on. We have to drive down costs in an economical manner. Although they are being driven down, it is important for the Minister to bring the message back to the Cabinet that certain sectors of the community are not playing their part. Many doctors and dentists are continuing to charge high rates. The various charges imposed on businesses by local authorities also need to be examined. I refer, in particular, to rates and water charges, etc. Such matters will have to be addressed if the economy is to get moving again and if we are to be economically viable and able to compete. I thank the Minister and the Cathaoirleach.
I would like to share time with Senator Quinn.
Is that agreed? Agreed.
As I have a personal fondness for and appreciation of the Minister for Social and Family Affairs, Deputy Hanafin, I usually welcome her to the House. However, I cannot give this Bill an enthusiastic or wholehearted welcome. I would like to pick up on an interesting remark made by Senator Butler who bravely attempted to welcome it. I made an important point in another part of the building during a discussion on compensation tribunals, with specific reference to the Magdalen laundry victims. When people talk about the liability of the State in this context, I usually argue that there is really no such thing as the State in this sense. It is a question of taking money from taxpayers to compensate for the combined misdoings of the church and the State. This is not some abstract resource that belongs to a curious institution in the sky. This is our money — the money of the people. While the Minister is right to mention that it is limited, I do not find myself in sympathy with some aspects of the Government's approach. I will speak about its approach to disability, for example. I am not convinced by the argument that people have been massaged, protected, buffered and cushioned by decreases in the consumer price index, etc.
When the House discussed the budget last week, I said child benefit should be taxed or means-tested. The Minister for Finance, Deputy Brian Lenihan, had said this could not be done for legal and logistical reasons. I asked last week what those reasons were, but I was not told. The Minister for Social and Family Affairs made an effort to explain the matter today. I listened to an interesting debate on the radio the other evening. Dr. Garret FitzGerald and others made the point that information on means testing was stored in various Departments and was particularly concentrated in a couple of Departments. It is already available as a central resource — it is a question of linking it. It does not stack up as one of the reasons. I suggest the real reason is political, rather than economic.
The Minister referred on two occasions to the reduced rates that would apply to "jobseekers of any age who unreasonably refuse offers of training, education or a job." I remind her that the word "unreasonable" does not appear in this legislation. I do not believe it is used in the principal Act either. I would like her to explain to the House — perhaps she can get her advisers to examine the matter — her use of words such as "unreasonable" and "unsuitable". Why should people take jobs that are neither reasonable nor suitable? The Minister accepted a principle that is not set out in the Bill by referring to it twice. I would like to ask her a direct question. If my suspicion is right and it is not included in the Bill, will she accept an amendment along the lines of what she has said to the House? She is morally bound to accept such an amendment. She then referred to welfare fraud, which is an interesting and serious problem. I also saw the programme and, while I have no doubt it was touched up or sexed up — whatever they call it — I believe there were significant losses in that regard.
To consider child benefit in detail, the Minister rightly stated:
Some families rely on it to buy basics like food and clothes. For many women, it makes it possible for them to work outside the home by helping with child care costs.
Hello. Was this what it was intended for? I do not think so. That is a justification for cutting it, not for supporting it. This is a moment when we should look very rationally at these issues. Perhaps arguments can be produced to support the view that we want to give money, not for the children, but in order that women can go out and work. However, it is not for the children. There is a crisis in logic in this regard. The Minister continued: "even for women in high income families, it may be the only money that is paid directly to them." Well, break my heart. I am not bothered about people in high income families. It is up to the families to sort out those matters, not the taxpayer. While I am talking about taxes, I come back to my original argument that this is old age pensioners' money paid into taxes. To hell with the high income families. I am not the slightest bit concerned about them.
The Minister stated: "In the past 12 years the Government has delivered unprecedented increases in welfare rates," and she goes on to list various categories. I agree that the Government did this. Why would it not? The country was booming. However, the cruellest thing is to give these advances to people and then parade and laud them — the Minister should have heard her colleague, Senator Cassidy, on this point day after day in the House, praising the Government. That makes it even more cruel to whip it away from them when they become used to it. If they had never got it, they would be better off now.
The Minister then stated:
I appreciate that it is important to consider not just the overall change in the consumer price index but also the impact that this may have on different groups. A technical analysis carried out by the Department of Finance...
Again, I say "Hello". Why not an independent analysis? This is why the Government so mischievously, nastily and dangerously dismantled all those organisations that spoke out on behalf of the vulnerable and disadvantaged. I would have believed these figures if they had come from an independent Combat Poverty Agency. I do not believe them from the Department of Finance. Apart from anything else, the Department of Finance has got practically nothing right in the past few years, including its own estimates.
The Minister also referred to "unreasonable refusal". I would like her to take that point on board.
I welcome that existing claimants and young people with dependent children are excluded from the cuts. I wonder, however, what is the real justification for cutting the payments of 20 to 21 year old jobseekers. I am not convinced these people are irresponsible or need to be herded by the State. It is important the Minister would have clear evidence in this regard, including in regard to the consumer price index. It would be helpful if the Minister was able to state that the price of, for example, kitchen towels, bread or milk had dropped by so much. These are the products that people buy. A bland statement that nobody believes from the Department of Finance is of no earthly use.
The Senator's time is almost up.
I have a couple of issues to deal with quickly. With regard to welfare fraud, the Minister will remember that I raised in the House a year ago the issue of whether there was photographic identification. The Minister said she honestly did not know but she would find out, and she found that there was not. Is there yet such identification? I do not believe there is.
It is being introduced but it is not actually being applied yet.
It will be next year.
Well done. Perhaps the Minister will give this House credit for revealing that because it was done in a spirit of goodwill and co-operation.
The Senator is taking from Senator Quinn's time.
I am just finishing a sentence. Rehab has made very clear claims about what is happening. Dentists are in great difficulty and they claim there will be a catastrophic fall both in their incomes and in the quality of dental health.
I will end on the following point, although I am sure the Chair could be flexible. I know a person whom I saved a number of years ago. His blind pension was subtracted from a county council scholarship, which was real mean-mindedness. Now he has written to me to explain that the non-contributory means-tested blind pension payment has been cut in the budget whereas the old age pension, which he always considered linked to the blind pension, was left untouched.
That is more than one sentence.
His letter states he must now pay a prescription charge for the medication he receives to lessen the effects of his MS. He writes: "It is as if some cowardly mugger went through my pockets as I sat in my wheelchair and then stood on the other side of the street boasting of his courage."
Let us get the immigration and asylum Bill into the House. We already have habitual residence to cover the difficulties the Minister is talking about. I want the Bill in this House because it is another piece of really disgraceful legislation.
I thank Senator Norris for sharing time. The Minister is very welcome, as is her speech and the details it contained. The challenges facing the Minister certainly entail many difficult decisions. It will never be easy to make social welfare cuts of any sort. The headline in this week's The Economist read: “Ireland shows the rest of Europe what austerity really means”. The article also goes on to state that without that austerity, we will lose control of our own budget and will have to hand it over to somebody else. The ability to get the budget balanced and to make sure we handle social welfare in a correct manner is not an easy challenge.
I spoke to Colm McCarthy at the Joint Committee on Finance and the Public Service a couple of weeks ago. When I asked him what would happen if all of his cuts had been introduced, he reckoned it would put our standard of living back to the position that applied in 2003. My memory of 2003 is that we were not all that badly off and were doing quite well. Some suggest it is outrageous that social welfare incomes are being cut. However, if we are only going back to 2008 levels, which I gather is the Minister's main aim, then this is something we have to defend on that basis.
The Bill has generated much debate in the other House but some of it can be put down to political posturing. The fact is that we do not have the money any longer to pay the high contributions which we were once able to pay. It is a horrible situation to have to cut welfare of any kind but we need drastic action everywhere to avoid our country going bankrupt.
We have to remember that social welfare recipients will now return to the financial position which existed in October 2008, which was just before a rise in benefits, which was probably not the right thing to do given the state of our finances. I am certain that many people in the private sector would love to have their income similarly only reduced to the level of October last year. We all have to stand up, and everyone must suffer some of the pain, instead of asking someone else to take the challenge instead of us. To say "Not me, please" is a bad habit, left over from the boom times. At the end of the 1980s, our recovery was in large part due to a form of patriotism and pulling together to aim for better times. We achieved a great deal after that. Everybody has been affected by our situation and we have to avoid being a selfish nation.
The majority of social welfare recipients will face a cut of around 4.1% if they are under the age of 66. When one takes into account the cuts in the public and private sectors, such a cut is not unreasonable. We cannot fail to remind ourselves that social welfare payments have increased 130% in the past 12 years. While I accept the Christmas bonus has been cut, the cost of living has fallen by approximately 2.8% in the past 12 months.
Take the situation in one of our EU neighbours, Italy, where new claimants receive just 28% of their previous earnings. Spain is facing a similar problem to Ireland after its construction boom. Approximately €1 in every €2 spent next year by the Spanish Government will go on pensions, welfare payments or unemployment benefits. We in Ireland have to remember that we are not the only ones who are reconsidering the welfare system. The Economist argues that the shocking state of public finances may at last drive through big structural reforms in Europe, especially in labour markets and welfare states, which might mean more means-testing to exclude the middle classes who so often capture the system. It states such drastic axe wielding would be painful but would not cause the depressionary spiral that such a policy would trigger in a country such as Britain. This is a necessary part of Ireland’s progress back to its old model: attracting foreign investors to employ a well educated workforce. It has worked for us before and while it will not be as easy, it will work again.
There has been an argument that the reduction in the jobseeker's allowance is forcing young people to emigrate but the fact is they can avoid this by going on training courses or into education, which is hard to argue against in a recession. We all have to face up to our stark situation and this includes social welfare recipients.
I was in the Minister's home town to address the Thurles Chamber of Commerce recently and I have been talking to businesspeople up and down the country on the same topic. It is not politically acceptable to say it but the Government must reconsider the minimum wage now that social welfare has been reduced. The message business people are giving me is that they want to take on people and could even expand their businesses if it were not for the high minimum wage rate. This a particular problem for the retail industry which employs nearly 300,000 people in this country. It is not easy to say this, however. I have mentioned before that the state of Colorado in the United States, for the first time ever, has reduced its minimum wage. This was not a decision of the state government; the minimum wage is linked with the inflation rate and thus will come down in a time of deflation. I am not saying we need to slash the minimum wage, but surely the rate must be reconsidered in a time of deflation for us to become more competitive. On that point of competitiveness, we should also be looking at a reduction in employer's PRSI. We need to encourage the creation of new jobs and I did not hear enough encouragement of this in the budget.
I have been in business close to the Border and know something of the clash between Newry and Dundalk. I mentioned recently a conversation with an unemployed person in Dundalk who, when he was asked if he would work in Newry, replied that they only paid one third of the rate in the North. The same applies to the jobseeker's payment north of the Border. If we are to be competitive, we face a major problem in that taking up work is often less attractive than staying on social welfare.
There was a recent report in Britain by the Centre for Social Justice which suggested a malfunctioning benefits system lay at the root of many social problems. In Britain no adult works in 16.9% of working age households. The report argued that there was a benefits trap where if someone took a low paying job, most of the earnings would be offset by the quick withdrawal of benefits and the imposition of income tax and national insurance contributions. It found that there was an underlying message that "progression into work simply is not worth the hassle". We face a similar problem here. We must look at the system to make sure someone on the minimum wage is better off than on social welfare. Perhaps if jobs were incentivised in that way, we would have more people employed and get the economy moving again. Some jobs are not available at a certain rate. While it is not attractive to say so, if the minimum wage continues at the current rate, we are depriving people of work because we are not making it attractive enough to go out to work.
I welcome the opportunity to speak on the Bill. It is not easy to discuss cuts that must be introduced through financial necessity, especially given that some of the increases were only introduced two years earlier. Having said that, I congratulate the Minister on the way she has balanced the portfolio in a fair way. When one considers there are 400,000 on the live register, 1.1 million children in receipt of child benefit and 470,000 senior citizens in receipt of the State pension, to divide it up in a fair way is not easy, but she has done a remarkable job.
The social welfare budget of €21.1 billion for 2010 compares to a figure of €20.4 in 2009. This is a huge budget, two thirds of the entire tax take for last year and probably the same for next year. It represents 35% of the entire Government spend. It is not easy, therefore, for any Minister to bring forward a balanced portfolio of cuts. We must recognise that the overall position of the public finances demands that we take action because if we do not, we will be in the unfortunate situation where others may do it for us. The priority of the budget and the Government is first and foremost to stabilise the public finances. Anyone who ignores this fact is not living in the real world. We are aware from discussions throughout the year with those such as the ECB and the IMF that they expect us to take this corrective action or they will do it for us.
We must remember that it is important to strike a balance between low earning workers and those on the dole to ensure there is an incentive to work. We are dangerously close to that position. Someone on social welfare said to me today that he was actively looking for a job but that he needed to reach a certain level because if he did not receive €20,000 at least, it would not be worth his while to come off the dole. That is a nightmare problem to sort out but we must move now. Some of the amendments the Minister has made since taking office point in that direction, another reason to commend her.
Leaving the pension unchanged was important. It is important that those who built Ireland through their blood, sweat and tears, as well as their taxes, are protected. As a society, we should recognise that they deserve special treatment for what they have done for the country. They have always recognised the benefit of their free television licence, bus pass, fuel allowance, telephone allowance and ESB and gas allowances. These are very important and I have no doubt from the discussions I have had with senior citizens that they are delighted they have not been touched.
The fact the half-rate carer's allowance scheme is staying in place must also be welcomed. As Senator Butler said, when we are position to do it, there are commitments to try to improve the lot of carers, with widows and lone parents. It is important that lone parents and those with a disability participating in a community employment scheme will retain their benefits. The domiciliary care allowance paid to parents and guardians of severely disabled or ill children under 16 years has also been retained and amounts to more than €1,700 a year. The Minister also highlighted the increase in home care packages.
There was a great deal of lobbying by family resource centres which play a vital role. The counselling and mediation services they provide are fantastic. Maintaining them has been a challenge, but we met that challenge. I am sure the 170 bodies throughout the country welcome this measure. The people involved do great work.
The social welfare budget, at €21.1 billion, accounts two thirds of Government spending. Some have suggested there should not have been any cuts. Fine Gael, however, called for a cut of 3% cut. Therefore, the Opposition parties are not resonating with each other. Deriding the Government for making a cut of 4.1% while at the same time calling for a cut of 3% does not make sense. While castigating the Minister for changing benefits, Fine Gael recognises there had to be serious financial retraction. Considering the choices the Minister could have made, she has acted in a balanced way.
Parents will not welcome a €16 reduction in child benefit, but Senators should recognise the value of this benefit has increased by over 300% in ten years. When we consider that for the past year there has been deflation of 7%, the purchasing power of that payment has increased. To suggest the cut was not reasonable is unreasonable. Through increases in family income support and the qualified child payment, those at the lower end of the income bracket will not be affected by the cut. It is very important that they are not affected by this cut. This has not been highlighted and some people are a little confused. In my view the receipt of child benefit by those with high incomes is wrong. This benefit should be means-tested or taxed. It is like a business person borrowing from his or her self in order to gain an increase in salary and this is not a sensible option. It will need to come to a stage where child benefit will be means-tested or taxed. This may be a difficult process in terms of logistics but we must consider these options in the future and move to that position.
In terms of the country as a whole, the programme before us is balanced, reasonable and probably progressive. With regard to jobseeker's allowance I commend the Minister for making people under 24 go on educational and training courses. I have heard many of my constituents commenting on this issue over the years. Quite a number of young people never seem to do anything further in order to educate themselves and they are not interested. Their first action on becoming 18 is to go down to the dole office with their father. This is a mindset and a culture which must be changed. The Minister's proposal will incentivise young people to upskill for their own good especially if they realise they will be financially disadvantaged otherwise. We cannot ignore the fact that this proposal may become an issue to be dealt with. We should not leave people sitting at home doing nothing. There must be an incentive for young people to upskill themselves otherwise they may continue drawing the dole for their whole lifetime. We need to consider the broader issue of young people on the dole, such as young women who have had children out of wedlock and those aged 23 or 24 who return to education. There are issues to do with living independently away from the family home, leaving home when a child is born or living independently when applying for back to education grants as mature students. This proposal is disincentivising people and creating a poverty trap. It would be preferable to allow young people stay at home rather than applying for a rent allowance or applying for a council house for themselves. It would be an improvement in their quality of life if they could stay at home and give younger women in particular a chance to return to education as they would have family support.
I recently met two young girls who are aged 18 or 19 and who have both had a child. They are not moving out of the family home and they are being supported by their parents. This is a new culture which is to be welcomed. I suggest the social welfare system should encourage and support this arrangement but this is not the case at present and it should be changed.
I question the statistics for social welfare fraud in the report of the Comptroller and Auditor General. In my view these statistics do not correspond with what is known in society generally. I refer to illness benefit and the fact that doctors are in a position to say that a person is suffering from depression. This may need to be examined as it is all too easy to say a person is depressed and if a person is depressed he or she needs to be treated by a specialist rather than by a GP.
I commend the Minister for the employer PRSI incentive which allows employers to take on a person who has been unemployed for six months and this is a welcome measure. It is good for the person who is employed and it is good for business in these hard times and it will help sustain that person by allowing him or her to upskill in difficult times. We need to do something for the self-employed as they do not have social welfare entitlements if they did not pay for stamps. We need to look at the employer's subsidy scheme and apply it to small businesses. We need to help business by making it easier to employ people. The creation of employment is the big challenge and to ensure that people are not better off on the dole than in lower paid work. We need to retain the culture of work. I commend the Bill as it is a start. It has been very difficult for the Minister in her efforts to make these cuts but they have been carried out in a fair and balanced manner.
I wonder if we are all talking about the same Bill. I welcome the Minister but I do not think she will like everything I have to say. This Bill is not just another piece of legislation; it is an affront to parenting, to the public service and to national solidarity. It is appropriate that this Bill is being guillotined because it is the blade that will slash through the fabric of society. It is a malevolent and merciless assault on social welfare recipients, especially young people, the disabled, the ill and the elderly. It exposes the outrageous hypocrisy of the Minister for Finance's call to patriotic duty. The wealthy feel no pain in this budget but young people do. The full jobseeker's benefit rate will now only be paid to those under 25 if they participate in an approved training or education course and in all cases, it will be slashed to €150 per week where job offers or new training measures have been refused. On the face of it, that seems reasonable until one looks at what is on offer. Anyone who has ever taken the time to look at some of the jobs on the FÁS work placement scheme will quickly see this scheme is more about providing free labour to employers than it is about providing worthwhile training and experience. It is no wonder that only about 6% of the 2,000 places offered have been taken up. This Bill provides that if an offer, no matter how ridiculous, is refused a person will be penalised to the tune of over €2,500 a year. If an offer is accepted the person will pay all transport and subsistence costs because the employer will not be paying a cent. It would not be unreasonable to assume that taking up unpaid work will therefore cost a person about €50 a week. This is a ridiculous scenario. One way or the other, not only will all young jobseekers be hit by a loss of over €400 a year, they will be losing out on around €2,500 a year unless they dodge a job or training offer. This will cause untold misery for many young people, particularly those from deprived backgrounds.
The Minister for Finance has a solution which is to force these people out of the country or to pour liquor down their throats because he reduced the price of beer, spirits and wine in the budget. There is an indisputable connection between crime and deprivation. The social cohort at the highest risk of criminal behaviour and drug use is young men. The recent "Prime Time" programme did not do anything to change my mind in this regard. This budget will increase street violence, domestic violence, assaults, thefts, robbery and burglary. In other words, this budget will have the same effect as flooding the market with ten tonnes of free cocaine such will be the frustration and rage on the streets of this country caused by these measures.
Children are also disadvantaged by this Bill, despite the creative spin being put on the benefit cuts by the Minister and her Cabinet colleagues. Children account for 40% of those in consistent poverty, at least 76,000 young people. Their parents are on low incomes or are welfare dependants. Even though the child benefit cut is not affecting them, the reduced means of their parents through other welfare cuts means there could be 100,000 children living in poverty by this time next year. It seems the bankers and builders were naughty but they got their presents in the budget, but for the nice children it is a case of orange peel and a piece of coal. That is happy Christmas from Santa Claus, the Minister for Finance.
Senator McDonald referred to mindset and culture. The mindset and the culture is within her own party. The Minister spoke repeatedly of the Government having been in power for 12 years, but it has only been in power for two years. It seems the Minister's party is ignoring its Green Party compatriots.
Another example of the cant coming from the Minister, Deputy Brian Lenihan, on budget day was his justification for the cuts in this Bill by referring to the fall in the cost of living which he claimed is 6.5%. He is wrong. Senator McDonald said it was 7%, but it is 5.7%. However, the Minister is using the consumer price index which includes interest rates and some big ticket items. These are not relevant to low income earners and welfare dependents.
The harmonised index of consumer prices, HICP, is a more accurate measure of the cost of living and it is used by the EU and is preferred by Colm McCarthy. The HICP is 2.8% year on year. The Minister has cut 1.8% from welfare payments by abolishing the Christmas bonus. The reduced rental allowances of €15 to €20 euro per week, increased fuel costs and new medicine charges will more than wipe out this 1% differential. Rather than tax the wealthy, the Minister chose to push more children into poverty and worsen the situation for those who are already impoverished.
The Minister said that the cuts will save the Department of Social and Family Affairs €760 million next year. Around the same amount would be raised by abolishing property reliefs and reforming pension relief schemes. It is well worth noting that the annex to the budget shows a single person in the private sector earning over €250,000 will experience no change in his or her income as a result of the budget. I find that amazing. Compare that with a 21 year old who is unemployed who will lose more than €5,000 a year. Such a person will take a 50% cut while Ministers will take a 5% cut.
The Ministers, Deputies Hanafin and Brian Lenihan, argued that deflation meant the welfare cuts were, in the words of the Minister, Deputy Hanafin, "not severe". If so, why did this logic not apply to high earners? I would like the Minister to answer that question. A cut in high earners' salaries means a cut in money invested on the stock market and not in the economy.
The budget is bad for business, as it provides for taking money out of shop tills with the knock-on effect on manufacturers, suppliers, distributors, service providers and I could continue. That makes stocks and shares an even more lucrative option because there will not be any attractive investment opportunities in Irish business with there being €4 billion less in circulation. This will also lead to more unemployment and, therefore, more misery, poverty, suicide — I go so far as to say that and of which we have had an indication — ill health and general social unrest, of which we had a demonstration, including as late as this evening. That does not matter to the Government because this Bill is part of a broader strategy to deflate the economy at the expense of ordinary and vulnerable people while benefiting the wealthy friends and benefactors.
I believe this is what really led to Deputy Gogarty's intemperate outburst in the Dáil last week. It is the fact that he knows full well that this budget in unconscionable, immoral and unprecedented in its cynicism. This is only a personal view, but having regard to the Deputy's outburst, it struck me that his fury was not really motivated by anything my colleague, Deputy Stagg, had said. It looked as if he was hating himself for being part of this. I cannot shake the impression that Deputy Gogarty is so uncomfortable with the budget that what we saw was an overspill of the struggle he was having with his conscience. I believe that to be the case. I hope that at least he and every Oireachtas Member is struggling with his or her conscience at present.
Blind people, disabled people, ill pensioners and young people — with whom Deputy Gogarty might be assumed to have an affinity — are all victimised in this Bill. One might ask the reason for that. It is because senior Ministers want to protect the donors that finance Fianna Fáil election campaigns. The money that pays for the market research and the focus groups helps Fianna Fáil return Deputies to the Dáil and it distorts our democracy. The Green Party members know this. They have been speaking in outraged tones about it for years, but now they are supporting a budget that is designed entirely around their coalition partner's greed for power, and it will not be the first if the Government lasts for the next 12 months. This Bill is the budget boot boy.
The finance Bill is a Fianna Fáil love letter to the wealthy interests who finance the party. It is the letter of assurance from Ministers to the influential people from whom they expect to get jobs when they leave politics, and they all seem to get very good jobs.
I want to call a quorum.
Notice taken that 12 Members were not present; House counted and 12 Members being present,
This Bill is the means by which society is being divided not just into the haves and have-nots but into potential Fianna Fáil voters and those who have already decided they will punish the party at the next election. These are the people at whom Deputy Gogarty and his fellow travellers are really directing the big "f you". Having regard to the provisions of the Bill, it is parents, children, the disabled, the sick, the sick elderly, the young and the vulnerable in society who would have every right to use foul and abusive language about what is going on here, not Deputy Gogarty. He is supporting this chronic injustice. He has no entitlement to lose the rag. I call from the floor of this House for Deputy Gogarty to resign his party's Whip and to vote against the budget.
It a bit late for the Senator to call for someone's resignation after the Bill has gone through the other House. I will respond to some of the points made by previous speakers. This is difficult legislation. There is no joy or satisfaction for any Government in proposing a reduction in a number of categories of social welfare payments, but this is being done in the context of the state of our finances and it being done in a deflationary environment. People might debate the headline figure of inflation, they might talk about the harmonised index, but for the material things that matter in people's lives such as food, clothing and heat, there is no doubt that the rate of deflation has been 4% and beyond.
There was a 2 cent increase in the price of a pound of butter today.
This is the reality. In making the difficult decisions that have had to be made, the Government has had to be conscious of the fact that to continue the level of public expenditure in which it was engaged would mean increased levels of borrowing, which would send signals to those from whom we are borrowing that due to the repayments on those borrowings and the increasing cost of interest we would have less money to provide for social protection in the future. In terms of morality and conscience, people need to talk about sustainability, because if the immediate future is one in which less resources are available, then we are talking about not a 4% decrease but a manifold decrease in the money available for social protection in this country. That is what we need to debate. If we keep going down the road we have been going down, there will not be resources to provide what the State should provide. That is where my conscience lies, and where the conscience and morality of my party and my party colleagues lie on those issues.
Every effort has been made to avoid many of the difficult decisions. Pensioners have been exempted. Pensioners who are in receipt of carer's payment have been exempted. The respite care grant payments and half-rate payments have been protected.
They have been cut.
The Senator will get an opportunity to speak.
If we are to save in terms of direct payments, the difficult decision is how such savings can be made. One could get into a league hierarchy as to whether people who are blind are more important than people with another disability or whether lone parents are more important than people who are unemployed. However, I do not wish to play that game.
The Government cut everyone.
The reality is that we have so much to provide and we will provide it to the same extent that the payments that had been determined would be paid to those people.
The real problem is not direct payments. In the context of welfare traps the real problem is in terms of secondary benefits. Let us focus on people in a certain category of social welfare. Individuals with an adult dependant and a number of children find themselves relying on social welfare and secondary benefits. They are not able to go into paid employment because of the loss of income that would result. That is not the purpose of social protection or a social welfare payment. We need to ask ourselves hard questions about that.
I raised an issue on the Order of Business today with Senator O'Toole about the avoidance of debate on pensions and their future in this country. I was shocked when medical cards for people over 70 was raised in the budget of October 2008. While the intention of that was to get around the overpayment to doctors for people over 70, there were obvious victims in what was originally proposed because of the lack of specific information on people over 70 benefiting from medical cards. What shocked me was the revelation in the statistics that the average income of people over 70 was €270 a week, little more than the State pension. That is the context in which we are dealing with large sections of society. The Government was dependent on making a decision and protecting pensioners in the first instance. It is a growing sector of society and one that needs most protection.
The other elements of the Bill that are causing controversy relate to young people and the payment of jobseeker's allowance. Again, that is a debate we are avoiding. My preference would be not to have age restrictions for such payments. We should not allocate payments for 18 year olds to 19 year olds or for 21 year olds to 24 year olds. We should say it is a first-time jobseeker's payment that applies to people who enter the job market after the junior certificate, the leaving certificate, post-leaving certificate college, or university. The idea that someone's first income when he or she makes himself or herself available for the job market is a full-scale welfare payment is a wrong approach. There should be a scaling up of those payments. Younger people do not have the same outgoings as older people with dependants.
The Government reduced it by half.
That is why such decisions have to be made. It is easy to make cheap political points. In the past we have given out those kinds of signals. Senator Buttimer might be aware of the system that applied previously as we are of a generation that lived through the recession of the 1980s. At least then there was the option of getting onto a job scheme to allow oneself to put something on one's CV that could help to give one an opportunity of a job in the future. When I was given that opportunity in the early 1980s from the then national Manpower scheme, before FÁS came into existence, that job placement scheme paid £30 a week when the dole payment for someone of my age was £40. Our social welfare system and our job training schemes are riddled with such inconsistencies. What we need to offer people are educational and training opportunities and the ability to reach their potential through the many billions of euro the State provides in the form of education.
What is particularly mealy-mouthed of the Opposition is that no consideration has been given to recent Government agreements, especially the review of the programme for Government in terms of the protection that has been given to education. I refer, for example, to the protection of the pupil-teacher ratio and the provision of additional teachers.
It has gone up.
All Senators will have an opportunity to speak.
I do not hear that.
No interruptions, please. All Senators will have an opportunity to speak.
Do not worry, a Chathaoirligh. I will give it to him when I get an opportunity.
Additional psychologists have been provided for the National Educational Psychological Service. If one wants to work one's way out of a recession, the ability to access education and reach one's potential is a key component for each citizen. It is the responsibility of Government to give that potential. The recent decisions are helping in that regard.
Certain difficult decisions will be revisited in the context of future budgets. I hear a great deal of cant and hypocrisy about high income earners. Measures were introduced in the budget that affect high income earners. The minimum tax rate increase was from 20% to 30% on incomes over €125,000. The Minister put down a marker on additional taxation measures that will be introduced in next year's budget. One cannot do everything in one budget.
The Minister hit the public sector twice in a row.
Please, Members, no interruptions.
A total of 25% of expenditure was on social welfare and that is increasing despite the controls we are introducing in the Bill. We are spending more on social welfare next year than we did in the previous year, despite reducing payments. A total of 30% of all Government expenditure goes on public sector wages. The two areas in which we have tried to control public expenditure in the budget account for 55% of public expenditure. If we did not send out that signal then those from whom we borrow money would be less inclined to lend to us. Not only that, but if they were inclined to lend to us at all they would do so at higher rates of interest. If we continued to match the levels of public expenditure in which we engaged we would not have been able to borrow or we would pay exorbitant fees for doing so.
An interesting statistic was released in recent EUROSTAT figures. In the past ten years Irish households spent twice as much as the European average household. That is a sure sign of an economy gone out of control. What we had, we spent, and what we did not have, we borrowed. We are now paying a price for that.
We were encouraged to do so.
How we distribute that price is a measure of society; whether we distribute it across the board or proportionately is the challenge for the Government. The Bill is an honest attempt to do that. Appropriate balances will be made in the context of last year's budget and next year's budget. It will be a difficult time for the country but if we take the right decisions for the right reasons we will be a better country and a stronger economy as a result.
In the pantheon of Governments this one will go down in history and the Green Party and Fianna Fáil with it, for having taxed people, taken money off the poor, the blind, the disabled and those in most need. The Minister and Senators opposite should look into their hearts and ask themselves whether they really want to penalise people who need help most. If that is the case, then they have more than questions about social welfare to answer; their political philosophy and ideology needs to be examined. The task of Government is to lead by example. Sadly this Government has not led by example. It has led by a different set of rules for many years, not only this year. Some 38 social welfare payments have been cut and there has been an attack on public sector workers. The attack on those on social welfare means they must pay for the sins of Fianna Fáil and the bankers and for the errors of those friends of Fianna Fáil in the tent at the Galway races. The Government can huff and puff but it is hitting the most vulnerable in society — decent people and honourable public servants who are being put to the pin of their collar. Will those opposite vote for this Bill or will they vote for the people who put them into office 12 years ago and on whom they have turned their backs? Is that the reward they are given? If so, shame on the Government.
The young, the carers, the disabled and the blind, who, in the gospel message, were looked after, have been told by Fianna Fáil that it will bail out the private developers and their friends in the banks but that they must pay. As I said on the Order of Business, the Government has created a new permanent divide in society. It has set the public sector against the private sector and it is almost creating civil war in communities and in families. Do the Minister and her colleagues have a clear conscience about attacking the most needy in our society? They have taken €8 per week from the carer, the blind person and the disabled person. I listened to the Minister say that the Government appreciates and understands.
I refer to some e-mails I received. Someone asked me if I could get their €8 back because the disability allowance is all they have, it gives them independence and it is important to them. Another says €196 is very little to live on and asks if the Minster and her colleagues would live on this? Another asks if the €8 will be given back next year and why are the two Brians and Mary Hanafin taking it from them because they did nothing to them but live and that it is not their fault they are poor.
We hear mealy-mouthed words about tackling the semi-State companies. As Senator McFadden said, the chief executive officers of semi-State companies have not had a red cent taken from them. The Government said it may look into it.
Fianna Fáil has again attacked the poor in the budget. The public sector has been hit in two budgets in a row and the Government has decided to cherry-pick the most vulnerable. The Government is so cowardly that it could not go after the elderly because of what happened last year. That is a bigger failure. It did not have the moral courage to lead.
What is more important is that the cuts to disability payments undermine the plans people have to create person-centred living and services and independent living. This means there will be no new residential day places. It is a lost opportunity for social welfare reform. Listening to Senator Boyle and others, it is ideology gone daft. They are trying to defend and preserve themselves.
The Government has attacked the most vulnerable. There is no justification for and no way one should allow social welfare cuts. Inclusion Ireland, in its response to the budget, stated that the disability allowance now stands at €106 per week, that this cutback is compounded by other cuts to child benefit, the prescription levy and cuts to dental treatment and that this does not tie in with rhetoric about protecting the most vulnerable, nor do cuts to the health budget, and that it is also at variance with the national disability strategy which is often spoken about by Government as evidence of its commitment to people with disabilities.
The Government has one commitment only and that is to hang on to the seats in the Government jet, to hang on to power at all costs, to get to 2012 and to take its chances. It has no interest in people, in putting together a policy with a stimulus plan for jobs, in tackling unemployment and in creating new jobs.
It is the life of two Brians. How did we allow ourselves to get to the eleventh hour with the public sector pay talks and then for them to suddenly collapse? No explanation was given. It was a Cabinet divided; it could not agree. This Bill compounds and accentuates the divide in society.
Senator McFadden quoted Fr. Seán Healy of CORI. Other social commentators such as Fergus Finlay have spoken eloquently about this in the past two weeks. We are not dealing with mythical people. We are dealing with people who are living on the edge, who are struggling, who have no hope, who have no optimism and who have been betrayed by a group of people.
Will Fianna Fáil and Green Party Senators, in all conscience, vote in favour of this Bill? Will they betray and divide the people more? That is what they will do if they vote for this Bill. This is about people. I can afford to take a 5% pay cut because I am a single person living on my own and being paid relatively well. However, there are people in Cork South-Central, Dublin and Westmeath who cannot afford to take this cut and they are struggling.
The Government is swanning about the country and the world and does not care. To quote the former Taoiseach, the late Mr. Haughey, this budget is a cold computer printout. It is a bureaucrats' budget compiled by faceless people and people at the Cabinet table who, because they did not care, did not have the moral courage to stand up and protect the people who most need to be protected. That is the bottom line.
This is not about picking a pocket or two. This is a full attack on the most vulnerable people in society. Listening to the Minister, she is living in a utopian world or in an ivory tower. This is extraordinary legislation which will not create jobs but which will drive people into poverty and will take away independent living and the self-respect and pride of people. These cuts will hurt the poor, the young, the carer, the blind person and the disabled person.
People should remember the slogan of 1987. It will be in every front door for the next five years to remind Fianna Fáil that it has taken money from the people. It has taken a minimum of €8 from people. It can never talk about Ernest Blythe again because it has done much worse. It has driven people to a point where they have no hope and are pessimistic. It has dismantled social welfare and created a new type of poverty.
The most vulnerable do not matter to the Government but they matter to us. For as long as we are on this side of the House, we will put forward a different mechanism and proposition, as we did in our alternative budget.
I appeal to Members who are decent, honourable and people-conscious not to vote for this Bill and to have political and moral courage. Senator Boyle spoke about morality and ethics in politics and life. His party has done a complete U-turn since it got into government. This cut to payments to carers and people who do the most valuable work in society is unjust and unfair.
Young people are being forced to think about emigration. This budget has nothing for the ordinary person. It is about preserving the bankers, the friends of Fianna Fáil and keeping Fianna Fáil in government. The people will not forget, not because they are cynical and want to vote for somebody else but because they have had money taken from them, and unnecessarily so. I appeal to Members to vote against this Bill.
I welcome the Minister of State, Deputy Haughey. As other speakers said, nobody likes cutting payments. Senator Buttimer made one point with which I must agree with regard to the astronomical salaries that heads of semi-State bodies are being paid. It is anything from €200,000 to €500,000 but nobody is worth any more than €250,000 irrespective of the responsibilities they have. If a person cannot survive on that, he or she must be doing something wrong.
Senator Quinn put it very well earlier when he said that one cannot give out what one does not have. If money is not brought in at the till, it cannot be given out. There are many anomalies in the social welfare system that I will discuss in general, one of which relates to jobseekers. Jobseekers are asked to go around to potential employers and get a letter indicating that they applied for a job. To my mind that is farcical as they are getting letters from people in shops, etc. where no job would be available in any case. It would be far more convenient for jobseekers to get a signed affidavit proving that they cannot get a job.
There are cases where young people are living with parents and are not entitled to anything if the parents do not satisfy a means test. If these young people leave the home and rent an apartment or house, they would be much better off because they would get rent supplement and jobseeker's allowance, etc. If they live at home, such people would not be entitled to anything if the parents exceed the means test. Child benefit was spoken about earlier. I cannot understand why multimillionaires get this benefit. The Minister mentioned that means testing of this benefit would be very difficult but I would like her to explain this.
Senator Quinn made another very important point on a PRSI reduction for employers, which would keep businesses afloat and enable people to start new businesses. The trick is to get people off jobseeker's allowance or dole and get them working. We have circumstances where it is more profitable for people to stay at home than go to work, which is a real problem. It is not worth some people's while working because the benefits are greater when they are drawing jobseeker's allowance. That is a bad position not just from a financial perspective but for the people involved; it can eventually put a drain on health services if people get depressed staying at home or hanging around. It is not a good position.
The minimum wage was also alluded to by Senator Quinn. I am not one to advocate a cut in wages but we had a meeting last week with restaurant owners. They claim that many restaurants will have to close due to the minimum wage being too high. The rules of the National Employment Rights Authority apply on weekends and treble time must be paid on some days. It may not be worthwhile opening the doors on such days.
We must consider these anomalies. Only two weeks ago a person in the plumbing business came to me who employed six people. He is afflicted with multiple sclerosis and is not entitled to any benefits whatever. I put him in touch with people in the social welfare office and he got a couple of hundred euro per week for a period. That payment has ceased.
There is a significant problem where I am from in Kilbarrack as it is impossible for clients to get through to people in the social welfare offices, although I am sure the staff are very diligent and work hard. I am sure the Minister of State, Deputy Haughey, is aware of the problem where nobody can be got on the other end of the telephone. Clients are queuing for three or four hours a day and something must be done about this. People should be redeployed from areas where they are not engaged to the same extent in order to give people a proper service. It is bad enough to be unemployed but to have to queue in the rain outside a social welfare office is no way to treat our citizens. I ask the Minister to look at the problem very quickly because it is not a good scenario.
There are many resource and other types of centres funded by the Department of Social and Family Affairs. Most of these do a good job, which I have said before to the Minister, but there is much duplication. I do not have any hard evidence but I am told that they are never checked and no accountants are ever sent in. There is little checking of any description, even to see if they give value for money or are necessary. The number of people put through the centres on a daily, weekly or monthly basis is not verified.
The people in these centres probably do the best they can but we must examine the sector. There is no point in throwing out money if we are not getting value for it or the people who are supposed to be availing of a service are not getting it. Some of the centres have notices on the window indicating they are open from 9 a.m. to 12 p.m. I have evidence of that and it is not good enough.
Senator Buttimer made an emotional speech. He is gone now but I would have liked to ask what alternatives or suggestions he has. What would he do about this? As Senator Quinn indicated, we cannot give out what we do not have. It is the same as a person doing a household budget. I do not think the Minister enjoys doing this; it has been very difficult for her and she has done a fairly good job with the cuts she had to make. Every Department must make cuts or else we will become bankrupt some day.
Ba bhreá liom fáilte a chur roimh an Aire go dtí an Teach. Tá sé deacair d'éinne a ghlacadh cé chomh deacair is atá rudaí sa tír gan cháineadh a dhéanamh ag an am seo. Is léir go raibh rudaí deacra le déanamh sa cháinaisnéis. Ag an am céanna, ní féidir a shéanadh go bhfuil daoine maithe gonta toisc na cinnithe atá tógtha ag an Rialtas. Tá ceisteanna le chur faoi na roghanna a rinne an Rialtas.
Anybody who is serious about politics knows we must be responsible at a time like this and I have striven to be responsible in any communications I have made about the economic crisis and actions to be taken. I have discouraged and opposed any decisions by people, for example, to go on strike or on days of protest, which only entrench us in the difficulties we find ourselves. Such actions militate against the necessary solidarity to help us deal properly as a country with the challenges that face us. I strongly believe that.
That does not mean every and any measure which the Government takes at this time in the name of putting the economy right can be justified. Those of us who are either Independent or on the Opposition benches perhaps have greater freedom to exercise our critical faculties and take a hard look at the various proposals and decisions made by the Government. It is necessary to criticise.
It is also necessary to state that there is enormous hurt out there among different categories of people in our society. There are people who have worked hard and feel that their future security has been undermined. For example, I have heard from teachers today who are extremely concerned about implications for them into the future with what is proposed on how their pension will be calculated along the mean of their earnings over a lifetime working as distinct from final salary at exit from employment.
It would be unfair if we had a well resourced section of the community, having completed a life's work, in receipt of a large income from the State with an under-resourced working populous struggling to make ends meet at a critical time in their life and when rearing families. However, at the same time, we cannot ignore the fact that good people feel that their security could be snatched from them as they approach the end of years of dedicated service in employment.
Prior to the budget, I spoke sincerely and seriously about the issue of child benefit. I acknowledge that the Government has shielded low income families and those on social welfare from the worst of the cuts to child benefit but I also heard the excuses about it being too complicated to means test or tax the payment. I have great respect for Senator Brady but, contrary to what he said, the reason high earners should receive child benefit is because it is the State's way of supporting those who do the most important work of all in our society, which is that of bringing up the next generation, the people who will pay for our pensions and care for us in future years.
There has been a failure at the highest level of our society for years to recognise the importance of family life. People then wonder why there are so many latchkey kids, why many children do not have the access they should to father figures, in particular, in their lives and why parents sometimes feel they must over-compensate and feel guilty because they are forced into lifestyles that diminish their access to their children in order that they can care for them and provide them with the nurturing they need. The poison in this can be traced back to a Fianna Fáil Government and Charlie McCreevy, in particular, and the introduction of tax individualisation, a heartless form of social engineering which essentially decreed that it was more important to have people in the workplace than with their families. With that ruthless policy, the valuable contribution made by parents who chose to stay at home was completely underestimated and disregarded by the State. We have a continuation of this policy with the cut to child benefit. As someone who hopes in the future to be blessed with children, I have often stated people such as myself should pay more in tax to support what parents do in our society as they bring up the next generation.
I received a letter from Dr. Luke Raeside, a colleague in academic life, and his wife over recent days in which they express better than I can their deep concerns about this budget. They regard it as an assault on no, low and middle income families. They state:
We are hard-working, well-educated, parents of six young children between the ages of 2 and 12 years. We are single income family and have been getting by (just about) with a single income since the 1996. We have both worked in the private sector over the years, however, in the last ten years we have relied on one income from the public sector. We have been in receipt of the Family Income Supplement and the medical card for the past few years. We are not well-off and we are never comfortable but we have always strove to get-on-with-it and continue to rare our children in a stable and happy home.
In recent years (the so-called Celtic Tiger years) we have witnessed the introduction of the under-6 payments and the increases in children's allowance which have had the effect of making our lives and the lives of our children more sustainable and less of a struggle. We have become accustomed to these payments and we have built our lives and the lives of our children based on the incomes we have come accustomed too. Slowly but surely we stabilized our situation albeit with massive debts to manage in terms of mortgage and the general cost of living. Now Fianna Fail and the Greens have in a very short time (the last 18 months) removed or reduced the payments which our family were accustomed to and relied on for our everyday living. These reductions and removals have damaged our family's financial stability. Worse still the introduction of a pension levy (a pay-cut) earlier this year cost our family approximately €320 a month and was a severe financial shock as a result of which we have had to make serious adjustments to our lives. Of course we also had to endure many of the tax increases which were introduced in the 2009 budget. Now, Fianna Fail and the Greens have decided to kick us when we are down and only just beginning to adjust to the earlier pay-cut with a further pay-cut of approximately 7%. We acknowledge that the changes in children's allowance will not take effect on us at this time while we are in receipt of the FIS, however, the increase in the threshold levels of the FIS of €6 a month will result in a real reduction in FIS payments should we qualify for this again in the new year. We would estimate that our monthly income has been hit with approximately €1000 in reductions while families on very large incomes, and no children, have faired much better. Fianna Fail and the Greens have openly attacked families on no-, low-, and middle incomes and all this with a prelude to an economic recovery in the eurozone and an inevitable increase in mortgage interest rates. In fact, our mortgage company have already increased our mortgage payments by €400 in the last six months as they implemented a review clause in our tracker contract. . . THE 4 BILLION IN CUTS DID NOT HAVE TO BE ACHIEVED THIS WAY AND THIS WAY ONLY, THERE WERE ALTERNATIVES, AN INDISPUTABLE FACT! Even those families on social welfare have not been spared from the most capitalist budget we have ever witnessed, Fianna Fail and the Greens have implemented the IBEC agenda without any regard for our constitution to protect the family, this is a republic not a business.
I do not blame the Minister for this because she is committed to doing the right thing but Governments in recent years have made no attempt to honour what the Constitution says about marriage and the family. This is an indisputable fact. I have had discussions with the Minister and she is open to suggestions in this area. I referred to tax individualisation but the proposed civil partnership legislation will provide for the spending of taxpayers' money in a discriminatory way by giving tax funded rights to certain groups of people while ignoring mutually dependent scenarios, for example, carers and siblings.
The letter continues in that vein and I endorse strongly what they say. However, these people are not cranks. They represent the ordinary, decent people of Ireland, cosmhuintir na hÉireann. I understand the Government has hard choices to make but, with many others in recent weeks, I said the most vulnerable in our society should not be targeted. I lament the failure to get back on track with the overseas development aid budget. That should not be viewed as a naive and idealistic comment because people in our world suffer in ways we cannot imagine and our contribution makes a major difference. In welcoming the Minister and acknowledging her sincere bona fides, I also lament the fact that the Government has not had a serious strategy to cherish marriage and family life in Ireland and what has happened with child benefit exemplifies this like no other issue.
I welcome the Minister to the House. She moved from one active Department to another. Perhaps it is the place to be, given that is where all the action is with such a large welfare budget. My overarching position is I do not favour a welfare state but social justice is important and that is why I am a member of Fine Gael and why I live and work under this mantle. I am a member of the party because, on the one hand, we promote enterprise and entrepreneurship and, on the other, we recognise some people will always be vulnerable and needy and they will need the support of the State. The challenge the Minister faces is how to meet the massive social welfare bill, given 420,000 people are out of work, some of whom will always depend on welfare payments. This will always be a massive drain on resources unless entrepreneurship and job creation are promoted, and that is my criticism of the budget. The negative cost of social welfare has not been offset by a stimulus package to get people back to work.
Fine Gael accepted cutbacks amounting to €4 billion were needed but we presented a costed alternative to achieve these savings without affecting the low paid, for example, those earning less than €30,000, carers, the blind and the disabled. I wonder whether the cessation of the free glasses scheme for older and retired persons was thought out because it places people at increased risk of car accidents and falls. A statement I received on this says, "Almost every person over 50 years of age needs visual assistance due to the ageing process and other factors". While I am not over 50, I have had to invest in glasses and I am reluctant to wear them because it is such a life-changing experience, even though I just need them for reading. The Minister sports hers very well.
Recently, I dealt with a couple on social welfare with a young baby. The man had recently lost his job. The baby is now three years old but was born so prematurely that her eyesight was affected and she needs special lenses. Prior to the budget, and after six months of toing and froing with the Department of Social and Family Affairs and the HSE, I was delighted to have got the family approved for those lenses. The subsidy for the lenses was €375, and that was for a family on welfare who could not afford them but the little child could not be independent without them. Older people are equally vulnerable and the Minister should consider this.
I have a number of questions on the social welfare system. Perhaps we do not understand it properly and I seek an answer from the Minister. I and a number of others have established a job creation initiative in Oranmore and a number of great young people with entrepreneurial spirit are coming to us with business ideas. We have all of the expertise to help them get started in business with a panel of free knowledge. We have IT people to help them set up websites, marketing people, business planners and coaches, and all of these people are giving voluntarily.
Recently a young girl in her late twenties or early thirties had the idea of establishing a designer swap-shop in Galway. This is a great idea as we do not already have one. All of the expertise was available to advise her and we know there is an interest in the field. However, the girl has only been on welfare since she lost her job in August. If she begins to establish this business and registers a business name she will lose her entitlement to welfare. She explained to me that if she waits until next August, when she has been in receipt of welfare for a year, she will obtain another support. Will the Minister explain this to me? The last thing we need is to kill the entrepreneurial spirit. This girl wants to get off welfare but needs the crutch until she gets established, even for six to eight months. She has €5,000 in savings and is prepared to put it into rent, insurance and other costs. This type of anomaly puzzles me and it is not a good one to have in the system. It is proving to be a disincentive to business which will pay the taxes to fund the services we need.
I am also puzzled by the level of fairness and equity in our society. The Government is entrusted with responsibility to run the country. All taxes go to the Exchequer. The Government made a decision to support Anglo Irish Bank. All of the soundings suggest that it will seek another €4 billion to €6 billion. I do not know whether the Minister read the report in the health supplement of The Irish Times today about a woman who for years has been minding her mother, who has dementia. She spoke about what the prisoners in Mountjoy cannot do and the freedom they do not have. She stated that as a carer she is like a prisoner, as is her mother to dementia.
The real reason people care for others in their own home is love. Her carer's allowance has been cut by €8.50 a week. According to the Carers Association, Ireland has 161,000 family carers providing more than 3.7 million hours of unpaid care each week, contributing more than €2.5 billion to the economy each year. Seriously, what would the State do if every family decided to hell with it, let the State mind all of these people? The 40,883 family carers providing full-time care amount to more than the 39,000 nurses employed by the HSE. They contribute €1.6 billion to the economy. This means the average full-time carer in Ireland saves the State more than €40,000 each year. However, they have to face a bleak winter and 2010 due to the cut of €430 per annum.
I remember meeting a mother approximately six months ago whose child had become disabled. She had to give up her job to keep that child, who was 13 years of age, in a mainstream classroom at school. The amount of care he needed was huge. I remember her stating that she would shoot somebody if her carer's allowance was taken from her. It struck me forcibly. It showed the extent to which she needed to be recognised and how much she needed the allowance having given up her job to care for her young son.
I am genuinely puzzled and would love if the Minister addressed in her summing up why Anglo Irish Bank, a toxic good-for-nothing bank, is not being allowed to wind down. Having said that, I hear that it will be wound down. The Government will hurt the blind, carers, the disabled and the low paid — although I know we are not discussing them today — to save Anglo Irish Bank. I do not know how the Minister can justify this.
The PRSI dental scheme is a preventative medicine scheme which helps 2 million workers on the appropriate levels of PRSI. I worked in health promotion for a number of years and I do not know why this is being done. One check-up will be kept but wiping out the scheme apart from that check-up will build up problems for the future in dental hygiene and dental health, such as oral cancers. Eventually, the State will have to deal with those problems. One could state the problems are being built up like plaque itself. Good regular dental practice prevents major problems in the future. The scheme benefitted 2 million workers and a combination of increasing unemployment and cuts to the lower paid will drive many of these to medical cards anyway at a cost to the State in the long run.
As Senator Healy Eames's time has concluded, I call Senator Doherty.
I wish to make a concluding comment.
The Senator's time has concluded. My hands are tied; it is a ten minute slot.
I will sum up on this point.
I see some dentists have gone from a stipend of €52,000 a year to €11,000 a year, which is a massive decrease. I am keen to hear the Minister speak on this.
Cuirim fáilte roimh an Aire, cé go bhfuil mé go huile is go hiomlán in éadan na reachtaíochta seo. Sílim gurb é ceann de na Billí is scannalaí a tháinig os comhair an Teach ón t-am gur thoghadh mé. Níl aon dabht faoi ná go raibh ar an Rialtas cinntí contúirteacha a dhéanamh an tseachtain seo caite. Ní thuigim cén fáth gur shocraigh an Rialtas ar laghdú a thabhairt dóibh siúd atá ar an ngannchuid. Mar sin, cuirfidh mé leasuithe os comhair an tSeanaid oíche amárach, ag iarraidh a chinntiú nach dtiocfaidh na ciorruithe seo i bhfeidhm orthu siúd a bhraitheann ar íocaíochtaí leasú shóisialaigh.
I oppose this Bill and all that it proposes. It is disgusting legislation which will see the most vulnerable people in our society plunged further into poverty while those at the top who, with their friends the bankers, the speculators, the Rody Molloys and the Seanie Fitzpatricks have brought the economy to the brink of collapse, remain happy and comfortable in the knowledge that this despicable Government has their best interests at heart.
The Minister tells us that this is for the good of the country, that the cuts are minimal and that with the decrease in the cost of living those on social welfare will not really feel the effects of these cuts. I say this is complete and utter nonsense. Perhaps the Minister should say this to the 23 year old university graduate out of a job and now living on €150 a week. Perhaps she should say this to the single mother who has to tell her kids that Christmas is cancelled this year. Perhaps she should say this to the disabled, the unemployed, the carers, the low paid workers in both public and private sectors, the families and the young couples struggling with massive mortgages to pay. My guess is that the Minister is too afraid to talk to these people as she knows what kind of response she will get.
Token gestures of cuts to the salaries of Ministers and the Taoiseach are laughable when put into the context of how such cuts would affect the most vulnerable. A cut of €10 for many people will mean the difference between having a meal or not. That is the reality. I am sure the Taoiseach will not have too many sleepless nights wondering how to pay the bills on his annual salary of €200,000.
There was no need to touch social welfare. There were many measures the Government could have taken to reduce the deficit, such as introducing a third tax rate, abolishing the PRSI ceiling, abolishing the tax breaks abused by high earners, establishing a wealth tax and stopping the spend of public money on private health care. The Government took the option that offered the least electoral pain. It pays no heed to the fact that people are still waiting months on end before they even get their social welfare. It is cutting a payment that some people have to wait months to get after they lose their jobs, jobs this Government is doing nothing to save.
The option the Government took is self-defeating. It will have the impact of deflating the economy because it takes money out of spenders' pockets. People on social welfare return every penny back into the economy via services and goods. They do not save like the well-off. They do not have thousands of euro stashed away in bank accounts. As well as causing poverty, the Government's cuts will impact on local shops and services, hitting the real economy. Cutting social welfare is short sighted and detrimental to the economy, as well as being a callous and cruel action.
The Minister for Finance spoke of how we need to regain optimism. However, as the reality of this budget sinks in, many families, parents and young people are plunged into despair. They see no future, no choices and no way out. The blight of emigration looms once more over many communities, especially in my county of Donegal and in other parts of the west. The Government is trying to replace the dole queues for our young people with emigration queues. Instead of exporting goods, it is exporting a future generation of young Irish men and women.
Young working class people will suffer most from this budget. That is a certainty and this Bill cements that. More and more young people will be alienated from the political system and from society. The social costs of this will be felt for years into the future. With this budget, the Minister for Social and Family Affairs will have created a new lost generation. She will have created a generation that will leave the country and whose skills, enthusiasm and ability will be lost. They could be rebuilding the economy of this country rather than leaving it.
The Government should have invested in a stimulus package for this budget. Social welfare and the pay of the low-to-middle earners should have remained untouched. This budget will just perpetrate the recession cycle. The problem is the economy, not the deficit. The Government has treated the deficit, but has not dealt with the problems of the economy. My party came up with alternative strategies to the Minister for Finance, but he and the Government ignored them. Instead, they have attacked the most vulnerable in our society. An old saying goes that the measure of a society is how it treats its most vulnerable citizens. In this case, the society created by the Minister and her Government is rotten to the core. It is a society of which they should be ashamed, and I will fight tooth and nail to try to create a society based on fairness and equality. That means protecting those on social welfare payments, protecting the low and middle income earners, and it means making sure that those who have the ability to pay their fair share do so, in order to get this country back on track.
The decisions being introduced in this Bill are disastrous. I have been speaking to young people in my constituency in the past few days. Some 32% of young people under the age of 25 are unemployed, 14,000 of whom are married. With this Bill, the Minister has decided to cut their social welfare payments, some by €50 and others by more than €100. It is disgraceful that the Minister feels she can attack young people the same way she did in previous Bills when she attacked 18 and 19 year olds. It is shameful that this is the way the Government is treating young people.
People are leaving this country. The Minister knows this from the statistics being presented to her and she knows she is exporting the problem created by her and her Government. She is encouraging people to leave these shores, which is one of the most despicable acts any Government has tried to do with any type of Bill.
There are very few Senators from the Government side here today, as I believe they are at a parliamentary meeting. However, I call on my fellow Donegal colleagues, Senator Ó Domhnaill and Senator Keaveney, not to support their party and to support their county. People need to realise that when they vote for this Bill tonight they are voting to take money from more than 20,000 people in Donegal who are dependent on social welfare payments and over 41,000 people who are dependent on child benefit. It is absolutely scandalous that the high earners have gone untouched and that this is the decision taken by the Government. Shame on the Minister for bringing such a Bill before this House.
A number of questions must be asked of any budget. Was the budget fair? Did it deal with competitiveness issues? Was there a job stimulus? Did it protect vulnerable and families? Did it protect children? That is surely one of the first goals of any budget. When we examine this budget and all of these criteria, we must, unfortunately, conclude that the budget was not fair, did not provide a strong enough job stimulus, did not deal with the competitiveness issues so critical to taking people off the dole queues and did not protect the vulnerable and families. I agree with previous speakers who said it dealt a blow to social solidarity and social justice in this country.
The Government got a lot of cover from the political parties and the social partners in respect of the scale of the cuts that were necessary. However, there were choices to be made within that agreement to make cuts of €4 billion. Senator Brady asked whether people were suggesting alternatives. Other parties were suggesting alternatives, even though they accepted the need for the size of the adjustment in the public finances. We in Fine Gael were saying that within that adjustment choices could be made. We can make choices about protecting child benefit, families and those who earn less than €30,000, yet we can still meet the overall borrowing requirement and adjustment necessary to get the country's finances back on track.
I would like to make a point about child benefit and how we support families with benefits. The practice of means testing as many benefits and payments as possible makes Ireland an exception in the European Union. According to the National Economic and Social Council, Ireland means tests approximately 25% of benefits and benefits in kind as a proportion of social protection expenditure. Data from EUROSTAT indicate that this is the highest proportion among 14 European Union countries. For example, the United Kingdom only means tests 15% of its benefits, while in Austria and Italy, the figures are 5% and 4%, respectively. Ireland is, therefore, exceptional in Europe in terms of the proportion of benefits subject to a means test. Other countries, for example, the Nordic countries, find a universalist approach more consistent with their values or more effective in delivering benefits. This is an important point on which I ask the Minister to comment.
The Minister chose not to means test child benefit. The assumption in the means test is that the benefit will meet its targets and reach its intended recipients precisely. In truth, however, this assumption is rarely met because in means testing there is constant leakage away from the target group and individuals are thrown onto temporary payments such as supplementary welfare allowance.
A second aspect of the debate on child benefit has been the question about whether the payment has increased significantly in value during the years. Increases in child benefit were partially funded by not increasing other child payments such as weekly child dependant allowances paid to social welfare recipients. As I am sure the Minister will agree, the focus of all child income policies switched to child benefit in recent years. The benefit was also regarded as a means of paying for child care.
I note the Minister acknowledged the role of child benefit when she stated:
Some families rely on it to buy basics such as food and clothes. For many women, it makes it possible for them to work outside the home by helping with child care costs. Even for women in high income families, it may be the only money paid directly to them.
A number of speakers asked whether universal child benefit was a waste of money in an economic downturn. While this is an important question, we have for a long time recognised the value of universal systems and acknowledged that certain benefits are required for the public good and solidarity between groups. For example, social insurance contributions are obligatory, all children are vaccinated, education for all primary and second level pupils is free, all pregnant women are entitled to a minimum of services and insured workers are entitled to sickness payments, regardless of income. There was a choice to be made on whether to attack child benefit in the budget and the Government chose to attack it rather than avail of the alternatives. Child benefit is a critical payment for children, families, women and men who want to work outside the home. I regret the Government chose to cut the payment as it will affect families throughout the county.
Some of the arrangements, including top-up payments, being introduced to protect low income families create a new poverty trap. Poverty traps are a widely recognised problem and the reason the Government in recent years focused on child benefit rather than other allowances is that it recognised that focusing on other allowances would create a poverty trap. The reduction in child benefit is a policy reversal. Creating a poverty trap is the last thing we should be doing at this point.
On protecting the vulnerable, the choice available to the Government was whether to take €8 a week from recipients of a range of social welfare benefits or, as proposed by the Fine Gael Party, protect those in receipt of allowances. The Minister opted for the former approach. My party would have protected carers and recipients of the blind person's pension because these groups are finding it difficult to survive in the current circumstances. This was not the time to make such cutbacks. Instead, the Minister could have taken action in the area of rent supplement by moving recipients of the benefit to the rental accommodation scheme. Will she examine this matter? Rather than cutting social welfare payments, she could have undertaken a comprehensive reform of the rent supplement which costs large sums of money.
The budget did not protect families, the vulnerable or recipients of social welfare payments. The option of protecting these groups was available to the Government. In choosing not to do so it has dealt a heavy blow to social solidarity.
I thank Senator Fitzgerald for sharing time and welcome the opportunity to contribute to the debate. In the short time available I will try to be a voice for those who are not heard, namely, the most vulnerable who are the targets of the callous cuts contained in the budget. I am especially opposed to the unnecessary cut in the blind person's pension. Given the small number who receive it, I am sure the minimal savings made from the measure could easily have been found elsewhere.
The cut in carer's allowance is a major setback for those who care for members of their families and loved ones in their own homes and save the State a substantial amount of money. I concur with previous speakers on the budget's impact on young people. The cuts do not give them hope or send a message that they have the support and solidarity of the Government as they try to survive the recession.
I propose to focus on the issue of mortgage arrears and house repossessions. Yesterday we learned about a high profile case involving a couple from Ferrybank in Waterford which is in my constituency, both of whom lost their jobs in Waterford Crystal last year. They invested almost €70,000 of their savings in purchasing a house and took out a mortgage with a vulture finance house, Stepstone Mortgages. The first line of the company's remortgage application states: "Stepstone mortgages offers a broad range of products developed specifically to address the needs of those who might otherwise have difficulty gaining a mortgage". It is obvious from this statement that the company is preying on the vulnerable and those who aspire to owning a property. It obviously works in the subprime market.
Stepstone Mortgages purports to be a caring company. A document setting out the company's complaints procedures states: "We aim to provide a friendly and efficient service to our customers and it is our policy to ensure that all your concerns are dealt with fairly and promptly". The couple who took out a loan with the company lost their jobs and fell on hard times. They have a son with special needs and their only income is a carer's allowance and jobseeker's allowance. When they found themselves in difficulty last year, they immediately wrote to Stepstone Mortgages but did not even receive a reply. What regulation is in place to stop these vultures preying on families and driving them out of their homes?
We learned of this despicable case yesterday. The family in question have been given a six month stay before they must leave their home. This is not good enough in this day and age. The owner of Stepstone Mortgages is Lehman Brothers. Company documents state: "Stepstone Mortgage Funding Limited is a company registered with the Companies Registration office under Registration number 428955 and is a wholly owned subsidiary of Lehman Brothers International (Europe)". Lehman Brothers, one of the world's largest banking institutions, declared bankruptcy in 2008. We now see the knock-on effect on ordinary people.
The Government bailed out the banks under the National Asset Management Agency but is failing to help those who are most vulnerable, including those who are losing their homes. Will it help people under serious financial pressure? Will the Minister assist those who are being brought before the courts by banks and driven out of family homes? The high profile case to which I have referred is only the tip of the iceberg. Thousands of other families and couples with young children are under similar pressure and their voices are not being heard. The Government thought outside the box in establishing the National Asset Management Agency and must do so again with regard to young families in financial difficulty. It should find an alternative mechanism to help these vulnerable families remain in the family home. This family tried to mediate with the bank, offering €800 per month to remain in the family home, which most would consider a reasonable offer. However, the bank refused, although we should not refer to it as such, as those involved do not deserve the term; they are vultures who would not mediate or accept an offer to allow the family to remain in their home.
There will be many more cases like this. We must find a mechanism to allow people to survive the recession. We must give them time to deal with the huge arrears they face. We must engage with these institutions. If this cannot be done in retrospect, we must introduce strong regulations to ensure these vultures cannot come into the country, put people to the pin of their collar, take their money and then drive them out of their homes. As these homes cannot be sold, I do not know what the bank, Stepstone Mortgages, is gaining by putting the family out. They have offered to rent it from the agency but this has not been entertained. We have a serious problem that is causing serious social unrest in communities. It must be addressed.
I thank the Cathaoirleach for giving me time to speak on the Bill. I also thank the Minister and the Government for providing a new decentralised social welfare office in Buncrana. Unfortunately, the Garda station has only been open for about ten days and the first major event is the loss of one of its members. I again extend my sympathy to the family of Garda Gary McLoughlin, his girlfriend and the extended community who were very distraught when we were in Buncrana yesterday. I also extend best wishes to Garda Bernard McLoughlin who is out of hospital and doing well. The Garda station is located right beside the social welfare office. The development cost €27 million and provides a strong boost for the community, which is welcome. When we proposed having a social welfare office decentralised to my area, people thought it would be a white elephant. I assure anyone who is listening or who will read the Official Report that it is far from a white elephant. While we were carrying out difficult work and displaying empathy, in the social welfare office staff were engaged in the work they were tasked to do. Those living in the area appreciate the office. As there are three social welfare officers in County Donegal, those working in the Civil Service can be promoted within the county. That is important for those who want to pursue a career in the service.
None of us wants to stand over cuts in any payment. We can use statistics and point to different benefits following the 4.1% reduction provided for in the Bill. The Minister stated: "While it has been necessary to reduce the value of the weekly income support payments to carers aged under 66 in this budget, the weekly rate of payment for the disability allowance and carer's allowance in 2010 will still be almost 20% higher than in 2006." That is my argument but we must acknowledge that when people receive something, it becomes part of their budget, what they have in their pockets and what they perceive they will have in the future. No matter what reduction is made, even if it is less than the reduction in the cost of living, people will feel aggrieved.
I must consider the other end of the scale also. We must consider those who could be in employment, even though it is difficult to find it. That there is a difference between being on social welfare and being in a low paid job is very important. It is one of the messages I receive from home. Those who are offering jobs cannot get people to work. If people lose permanent employment or are put on a three-day week, the reality or the perception is that being on the dole with a medical card and all the associated benefits means they are better off than in work. That is why unemployment assistance and jobseeker's allowance scheme must ensure there is an incentive to work. I have anecdotal evidence that people are looking for workers but candidates have the problem that if they come off the dole for two weeks work, it will take them 11 weeks to get through the system again. If we are to continue this trend of encouraging people to return to work where it is available, we must find a way of fast-tracking those who were in the system to get back into it. If they are placed in an 11 week queue, they will not take up the offer of two weeks' work. Anecdotally, I hear they suggest payment in cash. They do not need the hassle of coming off the dole just to go back on it again. It is not a lack of interest in working legitimately but the system is set up in such a way that it does not pay them to come off and go back on it again.
We must advocate the use of family income supplement which has been increased in the budget, which is welcome. I was pleasantly surprised when I considered the facts and figures. One can earn a substantial amount of money, relatively speaking, particularly if one has three or four children, and still qualify. If one has more than four children, family income supplement is absolutely ideal. Through local media, I have asked people to visit the departmental website and use the ready reckoner provides, which indicates whether one qualifies. I was at the dentist recently and the person beside me referred to earning €480 and how he would be better off on the dole. I could not understand this. He should have been in receipt of family income supplement. There must be greater advocacy of the system, as I am not confident all of those entitled to receive it avail of it. I remember the Minister, Deputy Dermot Ahern asking us to promote the pharmacy scheme more. There is help available, of which people are not aware. Perhaps they believe they will not be able to avail of it because they earn €500 a week. The Department should take the opportunity to highlight the scheme at every opportunity. Perhaps notices could be placed in GP clinics or where two or three people gather. Leaflets could be placed in churches. The Minister has stated 57,380 children are expected to benefit. I would like to think all children benefit.
We have encouraged people because if they do not seek training or retraining, dole payments will be cut. It may be politically incorrect to say this is important. The Minister stated:
The new reduced jobseeker's allowance rate for 20 and 21 year olds amounts to €5,200 per annum, more than twice the amount of third level grant payable to young people from the poorest families whose family home is near their college. The reduced rate for 22 to 24 year olds amounts to €7,800 per annum, more than is payable to such young people if they attend college away from home.
It is a worthy goal to have people who are better educated and more employable. We must know the skills for which we are looking and must try to direct people towards the skills that will help them to find employment rather than having many qualified for a career that will take them nowhere. I wonder what work takes place between the Department of Social and Family Affairs, the Department of Education and Science and Forfás to ensure training is linked with the needs identified in some Forfás reports. People in my area have asked me whether a FÁS centre for training and retraining could be located on the Inishowen Peninsula, which has a population of 32,000. I will not refer to it as a "FÁS training college", as that makes it sound like we want buildings. Perhaps it could be based in Carndonagh, with a smaller outlet in Moville. Many people who want to get involved in courses are unable to avail of suitable public transport facilities. Single parents and people with dependent families face problems as they try to juggle their lives. If the Bill before the House is saying that people will lose much of their incomes if they do not get involved in training or retraining, we must make sure the retraining and training programmes are physically accessible and that the type of courses being offered will actually lead on to something. A great deal of retraining has been offered in County Donegal since the closure of Fruit of the Loom, but not many factories have been opened. There are many good news stories of entrepreneurship and innovation in the Donegal area. Many people have started their own businesses from the ashes of their former careers.
I do not believe in creating buildings for the sake of it. There are plenty of buildings in County Donegal. We should focus our training clearly and concisely on identified needs. The many schools in the area should be used to provide after-hours opportunities to parents. As some of them have spare capacity as a result of declining numbers in certain areas, it may be possible to offer adult classes during school time. Carndonagh community school, for example, was built to cater for between 1,500 and 1,700 pupils, but it has lost 500 pupils since the opening of the school in Moville. A little rejigging is needed to make use of the opportunities afforded by spare capacity in individual situations. I am not asking for training to be provided in a new purpose-built building in Carndonagh. I do not want that. I would be totally opposed to it.
I congratulate and commend those who have saved the Exchequer tens of millions of euro through their work against cross-Border fraud. I listened to a discussion on a certain radio programme yesterday about the killing of a stag at a deer hunt. It was mentioned that two inspectors and a vet are paid to be on site and ensure each hunt is in order. That is happening at a time when there continues to be a great deal of fraud, as well as a large number of people in great need, in this country. Social welfare needs to be targeted at those in greatest need, rather than those who want to cheat the system.
I conclude by reiterating my first point. If it takes 11 weeks for those who leave the system to get back into it, we should put as much effort as we can into speeding up the system, reducing waiting times and minimising fraud. That will ensure the funds that are available are targeted at those who need them and, hopefully, the €4.1 billion reduction in this budget will not have to be repeated next year. While this budget has been difficult, I hope people will come to appreciate that it was necessary.
I welcome the Minister for Social and Family Affairs, Deputy Hanafin, and her hard-working staff of civil servants. It is worth recognising that all these changes will be implemented by public and civil servants who will have taken a pay cut by the end of the week. When they lift their newspapers each day, including yesterday, they find themselves being treated like dirt. I would like the Government to support the public sector, including the Civil Service, and to recognise the huge contribution it makes. As I have represented teachers all my life, I appreciate that it is easier to sell what teachers, nurses and gardaí do than it is to sell what civil servants do. Those of us who work closely with civil servants would like to record our appreciation of the complex and difficult jobs they do. Given that they will not get that from the media, they deserve to get it from their employers. I ask the Minister to bring that message back to the Government.
It is sickening to see the way the public service has been treated in the public media over the last year. Where is it all leading? Like many members of the trade union leadership, I have been saying this is part of the Government's agenda. It is not just about having a go at the Civil Service and the public service. My colleague, Senator Quinn, clearly articulated where it is all going when he said earlier this evening that we need to reconsider the minimum wage. Everyone who thinks strategically recognises that one of the reasons the Government has reduced social welfare is to have a level on which to start reducing the minimum wage. That is the way it is. It is interesting to examine the argument that the minimum wage should be reduced because the cost of living has gone down. I was present when the minimum wage was negotiated in 2000 or 2002. The idea of linking the minimum wage to the consumer price index was on the table at that time. The trade union movement was always prepared to discuss it, but it was opposed by management and the Government. It is interesting to observe how views change and people shift their positions to suit themselves. I am still prepared to consider the possibility of cementing the relationship between the minimum wage and the cost of living index, as it goes up and down. That would be a fair way of proceeding. One could not argue against it. It must go up as well as down.
Many of those who have looked to history to compare this budget to previous budgets have suggested that Fianna Fáil took similarly hard decisions in 1987. While the hard decisions that were taken then caused hurt in all sorts of directions, one felt there was a certain fairness about the approach to this country's difficulties. By contrast, the Bill that the Minister is bringing through the House is hopeless, ruthless, callous and grossly unfair. It is strange for an Independent politician like me to assess the positions being taken by the various parties. When I examine what the Government is doing now, I am not reminded of 1987. I am reminded of 1946 and 1947, when a Fianna Fáil Government started to hit the public sector, which led to strikes and all sorts. That Government was absolutely destroyed in the 1948 election, after 16 years in power. New parties emerged as huge opposition to the Government developed. That is what is happening now. When I hear Fine Gael correctly saying it will reverse the salary cuts being proposed by the Government if it gets the savings it wants from the public sector budget through the transformation of the public sector, which would be welcome, it is clear that these are strange times indeed. That would be a fair and correct thing to do. Over the years, I have felt that most public servants are Fianna Fáil voters. I may be wrong about that, but I cannot prove it one way or the other. I predict that there will be a significant change in that regard at the next election. I do not think public servants will vote for politicians who have taken money out of their pockets.
Every day, as I walk down the street, I am reminded that I was involved in the benchmarking deal in 2002. I was the main negotiator for most of that process. In all the discussions on this matter, I have not heard one commentator make the point that the 8% taken from public servants in last April's budget was exactly the same as the cost of benchmarking. As I recall it, from the top of my head, benchmarking involved an increase of approximately 8% in the public service payroll. That was all taken back earlier this year. I do not mind being hit with these cuts. I think people like me should be hit. I have no difficulty in dealing with that. However, I cannot explain — I have not heard anyone else explain it — the decision in the budget to reduce social welfare and cut the salaries of people who earn less than €30,000 per annum, at a time when nothing is being done to make life more difficult for people outside the public sector who earn €150,000 or €200,000 per annum. How can we justify that? That is the only question I will ask. It is a total impossibility. There is no fair way of explaining that. I was on Molesworth Street half an hour ago talking to these people and I know this is what really annoys them. I spoke to teachers who said to me: "If they are going to cut us, cut us. That is fine. We can do that. But why is it being done in this way?" Why is the Government not touching anybody who is earning big money in safe, secure jobs in the private sector? There are many of them, although there are also those in the private sector who are suffering badly.
This is a classic example of robbing the poor to save the rich. The Minister cannot explain to those people why we have to put huge amounts of money into the banks. I will defend that. I spoke to a group of them a while ago and I tried to explain the importance of the economy and the banks, how we need to support them and so on. They might grudgingly support that, but they cannot understand how we can take from the blind, social welfare recipients and public servants while, in the middle of all that, we do not ask the rich in the private sector to pay a shilling extra. Surely, there is something utterly wrong about that. I use the word "rich" loosely in this context. Let us say I mean somebody on my salary.
Another issue which has been raised is that of PRSI. Fine Gael clearly proposed to raise the PRSI limit. Who could argue against that? Fine Gael has argued we should put in place systems of support for people in employment rather than letting them go on the dole where we get nothing back from it, because the money would be better spent in this way. That is a view which is widely shared and one that is being put in place in Germany and various other countries in Europe where it is seen as a better use of money.
I listened on Sunday to Padraic White who has been involved in this area at all sorts of levels for years. He said that this is a most disappointing Government which is strategically weak. He could not see the strategy to put incentives into the economy. It is an interesting point. I would look at this issue without a party political hat. I hear what is going on and look at every part of it. I talk to teachers, and the Minister of State will know teaching every bit as well as I know it. To take the school she came from, tomorrow morning it will still be an established and growing school but it will have no structure of promoted posts. How will it operate? These are the issues that are being hit.
A definite issue is how the Bill has hit dental treatment, which is counterproductive, whatever way we look at it. As a schoolteacher, I remember people came to the schools to talk to the teachers, so the teachers would talk to the class, so that everybody would understand the importance of oral hygiene and how it is a saving for the State. Now, the support for dentures, extractions and fillings is to be abolished, among other issues, for people of a certain income who were supported previously. How can that be right? It is also taking money out of the pockets of the dental profession. In a small town, taking that money is to take it from the town's economy. If it is not being spent, it is not going anywhere.
There is no strategy. I do not believe Fianna Fáil knows where it is going on this issue. I do not believe there is a long-term strategy. It is closer to 1946 and 1947 than to 1987 because the position was different in 1987. The Government has managed in the past year to completely destroy the morale of public servants at all levels, particularly in the Civil Service, which people are leaving in droves. At the start of last year, the question being asked in the media and elsewhere was why we do not have any economists in the Department of Finance. I wonder has anybody figured out the answer. We did not have them because we did not pay them enough. That is the reality.
We should certainly put in a place a benchmarking process that goes up and down. I have always been in favour of that, because it is the way it should be. The minimum wage is the same in that it should go up and down. However, once one buys into it, one buys into it and cannot just change it every year. We will pay the price for this. One thing about the public service is that we always got quality people into it. The whole idea was that the strategy of the State was to recruit, reward and retain the best quality people in the public service. The Government walked away from a deal with the unions. I do not understand why it did so, but that is its own business. That is the Government governing. However, I had to listen to the Minister for Finance on television on Sunday night saying: "If they do not like it, we will give them more of it next year, and we will cut more from them." I thought I would never hear a Minister in charge of the public sector, which is one of his responsibilities, say that to his diligent, loyal, superb, supportive workforce. I believe we are going down a slippery slope to the bottom. This will become ungovernable very shortly.
To continue where Senator O'Toole finished in regard to the Minister's comments on Sunday night, as in reality the Minister has no plan or strategy, this is replaced with hubris, with big man talk from Ministers, with each one sending out a different message depending on which part of the country they are interviewed in and which Minister is being interviewed. Nobody has a clue what is going on.
The Minister for Social and Family Affairs said the Government would pay according to its resources. Therefore, as we know the public finances are in a complete mess at present and the Government is down €25 billion for 2009 and will be down €20 billion for each of the following two years, this would seem to indicate that this is the start of the process of cutting social welfare in the next couple of years.
Some of the proposals in the Bill dealing with fraud are very weak. There has not been a great commitment to dealing with social welfare fraud in recent years. Where reports have come in, however, there has been a huge return. Nothing innovative has come from Government to deal with fraud, even though the anecdotal evidence we get is that people are travelling from other jurisdictions, and are even flying into this jurisdiction, to claim social welfare payments. However, there is nothing in the Bill or the Government strategy to deal with the issue.
In regard to the issue of dental treatment, which was raised by Senator O'Toole, the children and young adults who will be deprived of access to dental treatment will totter along and the problem of bad teeth will build up over time. What will happen then? What will we do with those children and young adults? It is not just this year that the dental treatment will be suspended. It will obviously be suspended for two to three years if what the Minister said earlier is true. If that is the case, this means that many dental hygienists, dental nurses and dentists will be put on protective notice. The Government has probably just instigated a huge public health disaster on top of messing up the public finances.
This method of dealing with the issue lacks all vision and is unbelievable. It shows that the Bill was a case of somebody taking 3% here and 5% there. When the Ministers sat around the Cabinet table talking about this, there was only one thing on their minds, namely, not to have the elderly out on the streets again this week and, other than that, cut away. There was no concern about attitude or long-term strategy. There is no strategy with regard to the cuts or how they could be made more equitable across the system, which is the major disappointment.
I was taken aback by the €8 taken from widows. What was the thinking behind this? My mother became a widow just over a year ago. Prior to that, the only income my parents had was social welfare — the social welfare payment to my father plus a qualifying adult payment to my mother. When my father passed away, this halved immediately, although the costs of running a house remained much the same. My mother's situation is different because we can help her but that is not the case for every widow. The Minister is saying that people in that situation can take another hit. It is pretty pathetic if that is the type of thinking going on around the Cabinet table when it was dealing with social welfare payments.
No matter which aspect of this Bill one looks at money is being taken from people on social welfare and the Minister justifies it by saying we have given so much over the last 12 years that we are entitled to do this. That is the most frightening aspect of this. The Minister is marking everyone's card that this is only the beginning of what she is going to do.
I had not considered contributing to this debate because much of what I had to say had been said, but I was listening in my office and I heard a Member from my county refer to this as progressive legislation. When I heard that I felt I had to contribute. There is nothing progressive about this legislation, it is an absolute disgrace. It hits the vulnerable disproportionately and there is no thinking behind it. The Minister will be coming back to the same well for the coming years, hitting the poorest and most vulnerable. If I was an elderly person I would be concerned that this Government is going to hit me at some stage.
The Government has failed to deal with the core problem in the economy — the need to keep people working. Although it is not part of this legislation, it is how we will get out of this mess. If we create jobs and keep people working, we can work our way out of our difficulties. Unfortunately we see none of that strategic thinking from the Government and I regret to say things will get worse before they get better under the Fianna Fáil-Green Party Administration. I feel sympathy for the Green Party; it should have left Fianna Fáil to take this on its own because it is the master of its own downfall.
The Bill before us is a tax on the poor, a charter for young people to emigrate and lacks fairness, imposing harsh measures on those who need our support.
Looking at a court case yesterday, I ask where are the Government's and the banks' pledges to protect mortgage holders. A couple from Waterford with a special needs son lost their home, even after promising to pay €800 per month. These two people worked in Waterford Glass, both of them lost their jobs and they find they will be on the side of the road within a couple of months. When we were discussing NAMA, these are the people the Government and the banks said they would protect. The Government has let people like that down while protecting the bankers, the bond holders and those who supported them down the years. That is wrong.
I listened to Senator Boyle saying that if we continued down the road we were going, the country faced a bleak future. I agree with him, but who led us down this road to ruin? Was it the blind person, who is having €8.80 per week taken from him? Was it carers? Was it young graduates? No, it was none of those. It was this Government and, in particular, its predecessors that imposed policies that resulted in these attacks on the most vulnerable in our community in this Bill.
I have listened to the Government say there was no alternative. That is simply not true. There is a better way. There is an alternative. Fine Gael, in its budget proposals specifically excluded those who could not work — children, pensioners, carers, the disabled and the blind. The best way to address the spiralling social welfare bill is not to take money from the vulnerable but to get people back to work. The Government's failure to tackle unemployment and put in place a job strategy penalises the most vulnerable, as we see in the Bill before us.
To exclude the blind, carers and those on various disability and invalidity payments from the 4% cut would reduce the savings to the Exchequer by €108 million. I suggest that if the Government tackled social welfare fraud, it would secure well in excess of €108 million and save the vulnerable who are being attacked in the Social Welfare and Pensions (No. 2) Bill.
Why has the Government failed in its target for fraud detection and prevention? Last year the target was €616 million and the Government failed to reach it. As we saw on "Prime Time", social welfare fraud is rife throughout the length and breadth of the country. Had the Government met its own target, it would have saved €123 million, more than enough to protect the payments to the most vulnerable, carers, people with disabilities and the visually impaired.
The Government goes soft on those who robbed the State while hitting carers, the disabled, the blind and jobseekers. According to the Carers Association, Ireland's 161,000 family carers provide more than 3.7 million hours of unpaid care each week, contributing more than €2.5 billion to the economy each year. There are 40,883 family carers providing full-time care, more than the 39,000 nurses in the HSE. They contributed €1.6 billion to the economy. The average full-time carer saves the State more than €40,000 each per year, and they face a bleak winter and 2010 with the cuts implemented by the Government in this Bill. Carers are the only social welfare recipients who must work for their payment by providing full-time care in the home for the elderly, the sick and the disabled. The Government is proposing to cut their weekly wage by €8.80 per week. Shame on it for introducing such reductions in payments. In recent years people have been shouting in this House that Fine Gael — it was in fact Cumann na nGaedheal back in the 1920s — took one shilling off old-age pensioners. We see what the Government is taking from the blind and carers——
It was a lot more than €8 at that time. The Fine Gael record is not good. The Senator cannot talk.
Please allow the Senator to continue, without interruption.
——and then they try to compound it by suggesting they are not including people over 65. The Government is taking it from them by not giving them their Christmas bonus. It is an untruth to say that the Government is not hitting people over 65 as well as all the people I have mentioned. The Government is taking the Christmas bonus from them and hitting those people as well.
This is a savage social welfare Bill. I have been a Member of this House for seven years and we have never seen anything like what we are seeing here today. I challenge the Fianna Fáil Members who are trying to make the best out of a bad lot to vote against the carers who are helping their people to try to stay out of hospital and out of the nursing homes, which is supposed to be the policy of the other side of the House. I challenge them to vote against those people, the carers and the people who cannot see what is going on here. This is what the Government is doing and they could have done it so much better. They could have taxed the rich, taxed people earning above €30,000 a year and even those in the public service. Fine Gael proposed that anyone earning under €30,000 a year would not face a cut.
The Government has attacked the most vulnerable in the community. It is a shame that people are prepared to troop through the lobbies to attack the carers, the elderly and the most vulnerable people in our community, when they allowed the rich people to get away. The Government is protecting people who are bondholders and shareholders in banks but are putting people who are unemployed out on the road. That is the legacy of the Government and when the people come to vote at the next election, that is what they will remember. They will remember those who put them out on the road, the people who taxed the blind and the elderly. This is the legacy of the Government and it will be a shame if we see the people concerned trooping through the lobbies to support this lame Government thinking it is the right thing to do. I refer to the likes of Deputy Paul Gogarty who says he does not agree with the Government but that he will vote with it. People are fed up with that hypocritical attitude but yet again I am sure we will see it tonight.
Before I call Senator Ó Brolcháin I congratulate him on his election to the House and wish him a very successful stint here.
I have not indicated that I wish to speak.
I congratulate Senator Ó Brolcháin. As I was not in the Chamber for the Order of Business, I missed his introduction to the House. I wish him well.
I will continue on from where Senator Cummins concluded his remarks. He spoke about the legacy of Fianna Fáil and the Green Party and their friends in government. It is a shameful indictment of what has happened in this country in the past 12 years. We have gone through a period of unprecedented economic success and for the first time a generation of people had the money and the leaders of the country had the money to rectify so many of our social difficulties and ensure a situation like what has arisen would not happen, but those opportunities were not availed of. We are now dealing with the most savage social welfare Bill I have seen in my seven years in the House. It is all the more galling because in last year's budget the Government, despite obvious indications from the economy that things were under severe pressure, to say the least, decided to increase social welfare payments by 2.5%. Numerous commentators and people on this side of the House warned this would be unsustainable. Despite this, 12 months later, having increased payments last year, those moneys and more besides have been hauled back in the Minister's Budget Statement last week and in this social welfare Bill.
I wish to deal with some aspects of the proposals in the Bill. I had not planned on saying much until I heard a previous speaker on the Government side say this was a visionary Bill. It does not say much for his vision if he thinks this is a visionary piece of work.
Senator Twomey referred to the cutbacks in the dental scheme. We are still led to believe that dental check-ups will be allowed as under the existing scheme but the funding has been slashed dramatically. Tooth extractions and fillings and dentures will no longer be covered under the scheme. What is the point of people paying PRSI contributions if they cannot get that coverage? Surely that is what PRSI is about. It is very short-sighted because whatever will be saved in the short term could cost a lot more in the long term.
It is very ironic that the Government which gave out about a system based on universality decided on budget day to cut child benefit across the board. I recently spoke to two women, one of whom is from a high income family. She did not want the child benefit to be touched because she intended giving it as a lump sum to little Johnny when he reaches 18. The other woman is from a very modest background and has four children. I know that the child benefit payments she receives go to putting clothes on the backs of her children and food on the table. For the Government to decry a system based on universality and then use a universal axe to cut it right across the board does not make any sense and is completely unfair. If the Government had any guts it would have introduced a reduction in child benefit based on the income of those who receive the benefit, but it does not have any guts.
Senator Cummins made a strong argument for carers. I am involved with carers because my mother has been a carer for most of her life. A total of nearly €10 a week of a reduction in the carer's allowance is completely unacceptable considering the work they do to keep their loved ones in their family homes, thus saving the State millions week in, week out. They provide the love and care which the people would not get if they were in an institution and yet the Government sees fit to cut nearly €10 a week from the allowance. This is completely unacceptable.
I refer to the cut in the jobseeker's allowance for those under 23. There is some merit in the argument that young people under 23 are often living at home and may not need the same level of payment to meet their expenses. However, there is a clear counter-argument which is that this is a direct indication to young people under 23 who are out of work to hop on the next flight or boat and get out of the country. That has happened far too much throughout Irish history; extensive numbers left the country as recently as the 1980s. It is disgusting that a Government would engage in such an obvious attack on young people. It has virtually told them to leave the country. There are no jobs for young people on leaving school or college. That is not their fault but the result of squandering on the part of the former Taoiseach, Deputy Bertie Ahern, in particular, and his then Minister for Finance, Deputy Cowen, now Taoiseach, when they knew and were warned left, right and centre that the property bubble could not be sustained but did nothing about it. Young people under 23 years of age will suffer; effectively, they are being told to leave the country, which is not acceptable.
I may be misquoting what Senator Norris said the other night but I understood him to say he was happy that an additional €56 million would be allocated to FÁS for training schemes. In the light of what we discovered about FÁS, we should not be investing more money in such schemes. During a recent debate on a Bill that dealt with reforming the board of FÁS I said we should not reform the board but get rid of it. We should break it up into its constituent parts. Local authorities should run community employment schemes; that is where they belong. Apprenticeships and other educational initiatives, at which FÁS is very good, should be administered by another organisation, not the discredited body FÁS has become. I say this, having expressed several times my regard for the work FÁS employees have done throughout the country. However, they were badly led by senior management, some members of which are still in office. Throwing another €56 million at that organisation after what has gone before is a step in the wrong direction.
To describe the Bill as a visionary document beggars belief and flies in the face of the reality which the many people who depend on social welfare will face during the coming weeks and months. It is a shocking indictment of us in post-Celtic tiger Ireland that we are discussing attacking the most vulnerable in society and taking a few bob off them when there has been such wanton waste by the Government during the past 12 years.
I thank Senators for contributing to the Second Stage debate on the Bill and take the opportunity to respond to some of the main issues raised.
I appreciate that the cuts being made in the welfare area will not be easy for people, but I genuinely believe that if the Government does not take steps now to reduce overall public expenditure and avoid excessive borrowing, we risk making the economic situation far worse for everyone, including welfare recipients, in the long term.
The Government has avoided making cuts in the State pension. We have also fully protected more than 420,000 children in welfare dependent and low income families from cuts in child benefit. We have ensured cuts in weekly rates for those aged under 66 years are lower than the decreases in prices during the past year; therefore, their income has been protected in real terms.
Several Senators have stated people with disabilities, those on illness payments and carers should have been excluded from the reductions in weekly welfare payments. While I can completely understand this sentiment, the reality is that there are more than 280,000 people on these schemes and the reduction in payments to these recipients accounts for more than €125 million of the savings being provided for in the welfare budget. If we were to exclude these schemes from the general 4.1% reduction, much greater cuts would have to be made in payments to other claimants aged under 66 years, namely, jobseekers, lone parents and widows. Instead of reducing these payments by €8.30 per week, we would have to reduce them by about €11.50 per week.
It should also be acknowledged that, even with the changes in the budget, supports for carers and people with disabilities are still far better than they were a few years ago. The rate of payment for disability allowance, for instance, has been increased significantly since the scheme was introduced in 1996. The rate has gone from the equivalent of €85.70 in 1997 to €204.30 in 2009, an increase of about 130%.
In addition to improving payment rates, we have also enabled more people with disabilities to qualify for the allowance by significantly improving the means test and putting in place generous disregards for those who are able to take up rehabilitative employment. Prior to June 2006, once earnings exceeded the disregard threshold of €120, additional income was fully assessed. Now income from rehabilitative employment greater than €120 but less than €350 is subject to a 50% tapered withdrawal rate, meaning that such claimants can earn up to €430 a week before the allowance is fully withdrawn. Almost one in ten claimants of disability allowance, or more than 9,000 claimants, are engaged in work or participating in community employment schemes.
In 2007 the assessment of a spouse's or partner's earnings for disability allowance and other working age schemes was reformed to ensure a family would always be better off where a spouse or partner was earning. With effect from September 2007, €20 per day of earnings, subject to a maximum of three days a week, is disregarded and the balance assessed at 60%. In 2007 changes were also introduced to the capital disregard in the means test for disability allowance which was increased from €20,000 to €50,000.
Taken together, the increase in numbers availing of the disability allowance and sustained increases in the rates of payment have meant that even after this budget, expenditure on the scheme will be almost five times what it was in 1997. Expenditure on illness benefit and invalidity pension will also have increased by about 290% and 170%, respectively, in the same period.
For carers under 66 years of age, in budget 2007, the rate of carer's allowance and benefit was increased by 11.1 % to €200 per week. In the 2008 budget the rate was increased to €214, an increase of 7%. In budget 2009 the rate was increased to €220.50, an increase of more than 3%. That is the context in which we should view the reduction proposed in budget 2010. The rate of carer's allowance for carers under 66 years of age will be €212, a reduction of 3.85%. This brings the rate back to just €2 less than what it was in 2008. Carer's allowance rates for carers over 66 years of age have not been changed and remain at €239.
The Government is acutely aware and appreciative of the contribution made by carers to people needing ongoing care and support. Despite the difficult budgetary situation, the Government continues to provide significant supports for carers. Carers make a considerable contribution to society which is reflected in the additional supports they receive compared with other recipients of social assistance. Payment rates for carers are 8% more than the jobseeker's allowance and, in addition, they have household benefits, free travel and can avail of the respite care grant.
During the years the means test for carer's allowance has also been significantly eased and is now one of the most generous in the social welfare system, most notably with regard to spouse's earnings. Since April 2008, the income disregard has been €332.50 per week for a single person and €665 per week for a couple. This means that a couple with two children can earn in the region of €37,200 and qualify for the maximum rate of carer's allowance as well as the associated free travel and household benefits package. A couple with an income in the region of €60,400 can still qualify for a minimum payment, as well as free travel and household benefits. These levels surpass the Towards 2016 commitment to ensure those on average industrial earnings continue to qualify for a full carer’s allowance.
Budget 2007 provided for new arrangements, whereby those in receipt of a social welfare payment, other than carer's allowance or benefit, who were also providing someone with full-time care and attention could retain their main welfare payment and receive a half-rate carer's allowance. The need to retain the half-rate carer's allowance was the main issue raised with me by carers in recent months and the Government has left this payment in place. We have also maintained the value of the annual respite care grant at €1,700 for each care recipient. All carers providing full-time care and attention for a person in need of such care, regardless of their means or social insurance contributions, will continue to receive it. It is worth remembering that ten years ago the respite care grant was only €254 and available to recipients of carer's allowance. The domiciliary care allowance, paid to parents and guardians of severely disabled or ill children under 16 years of age, is also being maintained at the current level.
It is estimated that the combined expenditure on carer's allowance, carer's benefit, the respite care grant and half-rate carer's allowance will be €650 million in 2009. That compares with a total expenditure of just €46 million in 1997. Therefore, while I regret that we had to cut the weekly rates for carers in this budget it is only fair to acknowledge the significant improvements that have been made in recent years.
Senator McFadden asked a number of questions about section 15, which deals with the habitual residence conditions. She asked if the legislation would be retrospective. The answer is it will not. It will apply to claims decided following on the enactment of the Bill. She also inquired whether section 15 would have implications for schemes other than child benefit. That section will apply to all the social assistance schemes as well as child benefit.
Senator Norris inquired about reduced rate jobseeker's payments to people who unreasonably refuse offers of training or education. That measure is not provided for in the Bill but it will be included in the next social welfare Bill which will be introduced next year.
Senator Quinn inquired about employer's PRSI. A new job stimulus programme is being introduced in 2010 under the employer jobs PRSI incentive scheme. Where an employer creates a new job and takes on a person who has been unemployed for six months or more, the employer will be fully exempted from the liability to pay PRSI for the first year of that employment. That will give employers an 8% to 10% saving on employment costs for each new job created. Full details will be announced early in 2010.
Even with the changes provided for in the Bill, €21.1 billion will be spent on social welfare in 2010 — €676 million or 3.3% more than the expected final expenditure figure of €20.4 billion for 2009. We have avoided making any cuts in the State pension. We have also fully protected more than 420,000 children in welfare-dependent and low-income families from cuts in child benefit. In addition, we have ensured that cuts in weekly rates for those aged under 66 are lower than the decreases in prices over the past year. The Government appreciates that reductions in rates will be difficult for people but we also know that if action is not taken now we will put social welfare payments at greater risk in future.
- Boyle, Dan.
- Brady, Martin.
- Butler, Larry.
- Callely, Ivor.
- Carroll, James.
- Carty, John.
- Cassidy, Donie.
- Corrigan, Maria.
- Daly, Mark.
- de Búrca, Déirdre.
- Ellis, John.
- Feeney, Geraldine.
- Glynn, Camillus.
- Hanafin, John.
- Keaveney, Cecilia.
- Leyden, Terry.
- MacSharry, Marc.
- Ó Brolcháin, Niall.
- Ó Domhnaill, Brian.
- O’Brien, Francis.
- O’Donovan, Denis.
- O’Malley, Fiona.
- O’Sullivan, Ned.
- Ormonde, Ann.
- Phelan, Kieran.
- Walsh, Jim.
- White, Mary M.
- Wilson, Diarmuid.
- Bacik, Ivana.
- Burke, Paddy.
- Buttimer, Jerry.
- Coffey, Paudie.
- Coghlan, Paul.
- Cummins, Maurice.
- Doherty, Pearse.
- Donohoe, Paschal.
- Fitzgerald, Frances.
- Hannigan, Dominic.
- Healy Eames, Fidelma.
- McCarthy, Michael.
- McFadden, Nicky.
- Mullen, Rónán.
- O’Reilly, Joe.
- O’Toole, Joe.
- Phelan, John Paul.
- Prendergast, Phil.
- Twomey, Liam.
- White, Alex.
When is it proposed to sit again?
Amárach ag 10.30 a.m.