The main purpose of this Bill is to give effect to some of the measures announced in the budget on 5 December. In the budget, my Department's two priorities were to ensure those in most need of assistance would be protected and that we do as much as we can to help people to get ready to return to work.
Since I became Minister for Social Protection, I have been very conscious of how crucial welfare expenditure has been in protecting the very vulnerable and minimising poverty during a time of enormous economic crisis. The remarkable poverty-reduction impact of welfare has greatly underpinned social cohesion. This is in contrast with other countries affected by the economic crisis where the consequences of increased poverty are sometimes played out violently on the streets. Social cohesion is a reason certain investors in sovereign bonds have backed the Irish economic recovery. As a consequence of social transfers in Ireland, the at-risk-of-poverty rate has been reduced by 31%. This is one of the highest reductions among all EU member states.
Welfare ought to be both a safety net and a springboard to a better future. That is why I am attempting to transform the Department of Social Protection through our Pathways to Work plan from being a mere provider of income support to an effective and engaged public employment service that assists people on the live register or otherwise far from the labour market to start their progression back to work, training or a job placement. We will be providing 10,000 new places on employment schemes next year and opening many new Intreo offices.
We will be providing more than 6,000 additional child care places for people transferring from welfare to work, with particular emphasis on after-school care. Senators will recall our discussions this time last year, particularly on lone parents, in which we stated we wanted more opportunities for people in education, training, community employment, etc. We stated we wanted to improve child care provision and discussed specifically the question of after-school care. I am very pleased we are making a breakthrough in regard to this provision this year.
In moving from a passive to an active social welfare system, we are transforming a system that has been mismanaged and neglected over many years by Fianna Fáil Governments. Recent ESRI research on jobless households highlighted the utter failure of previous Governments to introduce any meaningful reforms to the social welfare system to encourage work specifically. Jobless households are homes where unemployment, illness, disability or age mean that adults spend less than one fifth of the available time in employment. The ESRI examined working-age adults and their dependent children and found that the percentage of jobless households grew from 16% in 2007 to 22% in 2010. As such, in 2010, more than one in five people was living in a household without a working adult. For children, the findings are even more damning and alarming. In 2010, nearly a quarter of children were growing up in jobless households.
In 2010 nearly one quarter of children were growing up in jobless households and the most damning finding of all is the astonishing fact that between 2004 and 2007, at the height of the boom, the share of households defined as jobless recorded a double-digit increase to reach 15% of the total. The average across the eurozone in 2007 was just below 10%. It is important to recall, and people will remember this, that the then Taoiseach, Bertie Ahern, and the then Minister and Tánaiste, Mary Harney, travelled to jobs fairs around the world inviting people to come to Ireland. The problem was they did not travel down to the local social welfare office to invite people on the live register to get back to work in Ireland. That is part of our difficulty having built up this extraordinary level, by all European standards, of a 22% jobless household rate. Allied to that is a figure that no other European country has, namely, 16% of our working age adult population are either on some kind of illness benefit, disability benefit or invalidity pension. No other country in Europe has statistics like that, again raising the most profound questions about the way our social welfare system works to help people who unfortunately have become unemployed back to work.
During the 2004-07 economic boom Ireland was one of the few countries in the EU to experience an increase in the proportion of jobless households. This occurred despite Ireland recording the highest rate of employment growth in the EU over the previous decade. At the same time the tendency of jobless households to be in poverty was reduced due to the very significant increases in welfare rates. The official data shows that in 2010, the last year for which figures are yet available, social transfers reduced income poverty by 60%, from 40% to 16%, as the full effects of the crisis were unleashed. Furthermore, if pensions are included the impact on poverty reduction rose to 68%. In simple terms, while the welfare system in other EU countries had a modest impact in reducing poverty, the Irish system's positive contribution to poverty reduction is an outlier.
The reality is entirely at variance with the opinions expressed by some other well-informed commentators. However, while the social welfare system has proven highly effective at preserving a threshold of decency for those most in need of support, it has largely failed to date in helping them into work or training to improve their prospects for the future. Instead of introducing the kind of reforms that were brought into other European countries to change from a passive to an active social welfare state, including job search assistance, education, training and skill development and services like child care, the former Government had little ambition for the unemployed and its only solution in many cases was to write a cheque. The fact is that until very recently the State was prepared to tolerate a large minority of our citizens being consigned to a life on the margins and inter-generational disadvantage underwritten by welfare payments.
This Government is challenging the way things have been done in social welfare in this State. We have greater ambition for those citizens who are unfortunate enough to be unemployed. From everything I know about the reforms we have undertaken in the past year people are delighted to be offered an opportunity, whether interning through JobBridge or participating in helping their own community in a local community employment or Tús scheme. People are so anxious to have an opportunity to contribute and, ultimately, to make themselves and their families financially self-independent.
We view each and every individual person on the live register or otherwise distant from the labour market as an untapped resource and a future employee who will participate in the rebuilding of this country and its economic recovery.
We view it as the mission and patriotic duty of everybody who works for the State to work together to transform the system for people who are in jobless households, locked out of working and simply find it impossible to get back into the stream of work, education and training to become financially independent. That ambition is the reason we are moving from a passive to an active social welfare state. The Government is asking the hard questions about our system of social welfare. Other countries have moved on. For example, the Dutch went from being called "the sick men of Europe" to the Dutch miracle by questioning the basic assumptions underpinning their social welfare system. Until the Government took office, we have never had that debate or made the fundamental decision to transform the social welfare system. By not doing so, successive Governments essentially collaborated in the destruction of human potential and the locking in of generations of disadvantaged and wasted lives. The Government will not tolerate that situation any longer. We will work every day to transform the social welfare system, not as an end in itself but because doing so will transform the lives of those living and growing up in jobless households. It should not simply be seen as social welfare expenditure but as an investment in the people and communities and their capacity to be offered opportunities in a positive way by the State. In that regard, there will be no cuts to the core weekly payment rates and we will provide 10,000 new places in employment schemes next year and open many new Intreo offices to get people back on a pathway to education, training, work experience and employment.
The Bill defers the date on which age reductions in respect of the one-parent family payment are to apply from the beginning of January 2013 and 2014 to the beginning of July in each of these years. It will also extend the period over which the transitional arrangements for the continued payment of one-parent family payment are to apply from the end of December 2014 to the beginning of July 2015. This is to provide more time for the creation of the additional child care places to which I have referred, as I promised last year in response to contributions to the debate on last year's Social Welfare Bill in this House and elsewhere. We had much expert commentary from Senators on all sides who acknowledged the importance of giving people who were parenting on their own an opportunity in life. The pieces are now in place.
Social welfare offices are being transformed not simply into payment offices but offices that help people in seeking education and training and findindg work. We have extra child care places, particularly after school care places which will be available in the next six months in conjunction with the Department of Children and Youth Affairs. We also have an additional 10,000 places in the community employment, JobBridge and Tús schemes, as well as in a new scheme specifically for local authorities called the local authority social employment scheme. I wish the private sector was able to provide more jobs, but clearly there is a time lag between economic recovery and the private sector being in a position to provide more employment opportunities.
These are positive achievements. I recognise, however, that the budget also contains measures that give rise to concern. I avail of the opportunity afforded by the debate in this House to outline the reason the Government have taken these measures and to reflect on how we can best best with the very difficult situation in which the State finds itself. None of us wants to cut social welfare payments for its own sake. Howeveer, securing the long-term viability of the social protection system is a vital goal that services the interests of a society as a whole, not only those who directly benefit from social welfare payments.
How can we best secure the long-term viability of the social protection system? One aspect that we must recognise is that the amount we can spend is limited by the amount available to us. We cannot bury our heads in the sand about this. As Members are aware, the State has been spending far in excess of its revenue for several years and cannot continue to do so indefinitely. I note all the parties in this House in their pre-budget submissions actually accepted the requirements to reduce expenditure and make savings.
Much progress has been made in reducing the general government deficit with most of the fiscal consolidation required to deal with that problem implemented. However, in 2012 the deficit will still be over €13 billion, equivalent to more than 8% of gross domestic product, GDP. The deficit has to be reduced further if we are to retain any say over our affairs and, ultimately, regain our capacity to determine our own economic and social development. In that regard, the Government is committed to reducing the deficit to 7.5% of GDP in 2013, 5% of GDP in 2014, before reducing the deficit below 3% in 2015, so that we stabilise and then reduce the stock of debt. This budget is a vital part of this.
Discussions are continuing on the promissory notes and other aspects of the banking debts imposed on the State. I am confident a positive outcome will be achieved that will contribute to achieving these aims and reduce the burden on the taxpayer. While almost 30% of gross government debt relates directly to support to the banking sector, no matter what outcome the Government achieves in this area, even it were to achieve the entire elimination of all banking debt and the associated interest payments, there would still be a current deficit. Accordingly, it would still be necessary to reduce that deficit. This is the context within which the Government has had to structure the 2013 budget. Tax and other revenues had to be increased while, at the same time, expenditure had to be reduced.
I hear fairy stories from those who have met the troika claiming it says we can reduce expenditure any way we fancy. That is not the way the troika operates. Anyone who has dealt with the IMF in any country will know it is made up of a balance in both tax increases and expenditure reduction. Perhaps we should all go to meet the troika together.
