Select Committee on Social Affairs debate -
Friday, 24 Mar 1995

SECTION 3.

Amendment No. 1 not moved.

Question proposed: "That section 3 stand part of the Bill".

Mr. J. Walsh

It is a pity my reasonable amendment was ruled out of order. One of the difficulties about having Committee Stage today and one of the reasons we were anxious to ensure we had some time for debate on Tuesday was to give Members a reasonable period in which to study the Bill, put down amendments and have them debated. I did not receive these amendments until this morning, which did not give me a great deal of time to study them and when I came into the meeting I found some had been disallowed. My amendment sought increases at least in line with those recommended by the Commission on Social Welfare. The estimated cost of increasing current social welfare personal rates to the commission on Social Welfare main rates — as supplied to me in reply to Parliamentary Question No. 160 of 31 January 1995 — was in the region of £60 million this year and £136 million in a full year. These rates do not provide the necessities of life for the unfortunate people concerned. In such good economic times I felt this was an appropriate year to make a quantum leap forward for these people.

I thank you, Chairman, and the officials in the Department for responding at short notice to questions I raised in relation to this Bill. I note, in relation to question No. 3, that the cost of social insurance for 1994 was £47.5 million and in 1995 it is only £38.6 million. In relation to question No. 4, the cost of assistance increases in 1994 was £49.5 million and in 1995 it is only £38 million. It is extraordinary in this particularly good year that instead of seeking to improve the lot of these very deserving people — only as late as today we read in one of our newspapers that thousands of people are driven to contacting the Samaritans evey year — it is a dramatic step backwards. I regard it as a slap in the face to them. As a minimum the increases for those categories recommended by the Commission on Social Welfare should have been allowed and I am disappointed that reasonable amendment was not allowed. I cannot agree that it is reasonable or appropriate this year to grant an increase of only 2.5 per cent. I will oppose the section.

Miss Flaherty

On the question of the two disallowed amendments, we would all wish to move towards the full rates of benefit recommended by the Commission on Social Welfare. This Government finds it as difficult as the outgoing Government to meet all the priorities and wishes in regard to social welfare. It is important to make substantial progress. This year priority was given to families with children and I welcome the improvement in the dates of payment of various benefits. When the payments are not made until much later people find it difficult to meet many of the increases that occur throughout the year. Frequently benefits announced in late January are not paid until well into the year. To move the date of payment forward by six weeks is a significant improvement and one we should acknowledge. What further progress does the Minister expect to make in this area?

I am concerned about the recipients of disability benefit who have slipped behind in recent years and who are excluded from many of the benefits which are automatically paid to other categories of recipients. Further consideration needs to be given to people in receipt of disability benefit and I hope the Minister will place them high on his list in terms of the development of the social welfare system.

Dr. Woods

This section provides for the increases in the weekly rates of social insurance payments announced in the budget. What would be the cost both this year and in a full year of increasing the social insurance rates to the main rate recommended by the Commission on Social Welfare? In previous years an attempt was made to bring the rates closer to the main rate. Last year the priority rates for all payments were exceeded and many of the rates are now at 93 per cent or 95 per cent of the main rate recommended by the Commission on Social Welfare. I am disappointed that no further progress has been made in this regard. I appreciate that it may not have been possible to go all the way this year but it should have been possible to go some of the way.

Proinsias De Rossa

Deputy Walsh's amendment appears to be out of order as it would impose a charge on the Exchequer. This is a problem I came across many times as an Opposition Deputy.

The Commission on Social Welfare indicated that the range should be between £50 and £70 and if that is indexed to inflation the figures are between £66.60 and £79.90 in current values. The cost of applying the lower rate for assistance and insurance fund provisions, recommended by the Commission on Social Welfare, would be £216 million in a full year. The cost of increasing the personal rates of social insurance fund benefits would be £33 million this year and £106 million in a full year. One is talking about £139 million for the personal rates only and clearly it is not within the capacity of the Exchequer to meet this cost.

As I have repeatedly said, the emphasis placed on the rates of increases is mistaken as it ignores the strategy being pursued by the Government to tackle poverty. We have allocated an additional £103 million this year for child benefit payments. This is the best way of tackling the problem of poverty rather than spreading the available money across all rates.

Apart from the increase in child benefit, all increases are being paid six weeks earlier than usual. In recent years virtually all Governments pushed the date for the implementation of the increases later into the year so that it was almost July before they were paid. I have brought the increases forward six weeks and have announced my intention to bring the date closer to April when the tax changes occur.

Like Deputy Woods, I am disappointed that we do not have the resources to meet the rates recommended by the Commission on Social Welfare. As a former Minister, the Deputy is aware of the choices which have to be made when formulating a budget and the decisions which have to be made about allocating the available resources. The resources I managed to negotiate were significantly ahead of those available to previous Ministers. It is Government policy to direct significant resources towards families and children as a way of tackling the real poverty which exists. This is not to say that this is the only area in which poverty exists but it is only fair that I am given time to reverse much of the damage done to the social welfare system in recent years.

Dr. Woods

The Minister referred to a figure of £216 million. I asked the extra cost of increasing the social insurance benefits to the main rate this year. We are dealing with social insurance benefits and I would prefer to stay on this point instead of talking about the overall budget. I do not think the figure of £216 million is correct.

Proinsias De Rossa

What I said is that the total cost of increasing all benefit and assistance rates——

Dr. Woods

I asked only about insurance. We are dealing with the insurance section.

Proinsias De Rossa

I will make the replies as I feel I should and if the Deputy is not satisfied with them, he can follow with whatever remarks he wishes. The total cost in a full year of moving all rates of payment by the Department of Social Welfare towards the lower end of the main rate recommended by the Commission on Social Welfare would be £216 million. That is based on the figures submitted to Deputy Walsh in the last couple of days. It is very simple to add up the figures. The Deputy will note from Appendix 1 on that information sheet that insurance benefits would cost £16.79 million and the increases in adult dependant allowance would cost £1.52 million. In the long term, we are talking about a cost of approximately £69.84 million for social assistance and £7.53 million for adult dependant allowances. Additional money would be required for the full year. A significant amount of money would be involved in meeting the basic rates recommended by the Commission on Social Welfare, but there is a committment in the Progremme for Government to do so in respect of unemployment and disability benefits, and that commitment will be fulfilled. On my recommendation a Government decision was taken on this occasion to concentrate available resources in the area of child benefit. The advantages of concentrating money in that area are obvious to anyone who has considered the effects of social welfare increases on various categories of benefit and allowance. Child benefit is not taxed; therefore, any increases that families receive as a result of these increases in child benefit will not be liable to the tax on unemployment and disability benefits introduced by Fianna Fáil Ministers. Neither will child benefit be lost when a parent moves from unemployment benefit or assistance or disability benefit into employment. We are thereby eliminating the poverty and unemployment traps created by concentrating assistance on child dependant allowances as distinct from child benefit. There is a range of advantages in applying significant increases to child benefit as opposed to applying them to either personal rates or particular child dependent rates and that argument stands on the basis of a range of research carried out by the Combat Poverty Agency and the ESRI. I fully stand over the decision and have no difficulty in defending it.

Miss Flaherty

The Minister is working on estimated figures of employment, unemployment, etc. Does he have the figures given in last year's budget and the actual turnout? What is the estimated figure for those who will be in receipt of unemployment benefit or assistance at the end of this year?

Proinsias De Rossa

The costings we are providing are based on the unemployment estimates for 1995 which were incorporated in the Estimates. My understanding is that is being estimated at around 260,000.

Miss Flaherty

What was last year's estimated figure?

Proinsias De Rossa

The figure was approximately 270,000 last year.

Dr. Woods

The Minister referred to the figures supplied to Deputy Walsh which include the figure for which I asked the Minister. I do not understand why he will not give figures relating to the sections. This section deals with social insurance benefits. The additional cost of personal rates of social insurance benefits this year will be £16.79 million. We are not talking about £21.6 million or anything of that order. The increases in adult dependant allowance will cost £1.52 million. The figures involved are not those to which the Minister referred and I am surprised he quoted such figures. It is important we are forthright. I appreciate the Minister cannot do everything in this Bill, but it is disappointing that, for the first time in a number of years, we have not tried to go further towards meeting the rates recommended by the Commission on Social Welfare. One of the basic deficiencies in the Bill is that there has been no progress in that direction. The 2.5 per cent is a separate issue. It is probably fair to say each of the Minister's predecessors when introducing Social Welfare Bills in the last number of years tried to meet the rates recommended by the Commission on Social Welfare. In the past Deputy De Rossa was very critical of the fact that progress was not made towards meeting those rates.

The long term and short term figures given to Deputy Walsh include old age and retirement pensioners and those on unemployment benefit who are paying into the social insurance fund which this year was in surplus by some £50 million. Therefore, the money was available. The Minister had a great opportunity this year in that this is the first year the social insurance fund recorded a surplus. The Minister stated that the increases in social insurance benefit would cost £16.7 million. He keeps harking back to child benefit, which we will be discussing under a later section. What proportion of those in receipt of social insurance benefits will not benefit from child benefit? What proportion of those who receive unemployment benefit under this section have children? In other words, how many have child dependants as well as adult dependants? On unemployment benefit, and the insurance section, what proportion of those people do not have children and, therefore, cannot benefit from the steps taken by the Government on child benefit?

Kathleen Lynch

Why was the insurance fund not surplus to the tune of £50 million this year? It seems an extraordinary increase. It appears to be a very precise figure and it is amazing that that should occur. Research will show that people with children are more likely to fall into the poverty trap and when resources are directed towards people with children people without children will not benefit. That is self explanatory. If a person understands anything about poverty and the effects it has on people who have to live within the global term "poverty" they will recognise fully that directing resources is a much better way of doing business rather than making a flowery speech, spreading resources around very thinly and not doing anything for anyone.

The figures may not be outdated but as it is almost ten years since the Commission's report we must take another look at how to deal with poverty and eliminate it from various groups. I am staggered more than amazed at Deputy Woods's reaction. I fought with him over a number of years in regard to social welfare. He is suddenly concerned about people whom he appeared to have had very little regard for over the years. Where exactly did the £50 million come from?

Proinsias De Rossa

On the figures Deputy Woods is seeking, my Department went to considerable trouble in the past few days preparing these statistics which Deputy Walsh has. I fail to see why Deputy Woods is insisting that I should locate these figures for him when all he has to do is open the book before him and pick them out. It might be useful to remind the Deputy that while there have been moves in the direction of the lower range of the CSW rate over the years, in one specific case in 1992 the then Fianna Fáil Minister for Social Welfare actually reduced the rate of injury benefit from 108.7 per cent, as it was in 1985, to below 90 per cent of the CSW rate. It is unusual to have a former Minister claiming that he moved all these forward when there is evidence to indicate that in one case the rate was actually pulled back from being ahead of the rate to below it. It is also true that in many instances, if indeed in not most instances, increases provided by Fianna Fáil in some social welfare benefits were paid for by cutbacks in other areas of social welfare. Indeed, the injury benefit is one such case. Another is the abolition of pay-related benefit by Deputy Woods when he was Minister. That provided, obviously, for an increase but it meant applying money which was a right at the time to people paying social insurance in a different way.

It is easy to promote a case in relation to a percentage of this and a percentage of that but if percentage increases were the answer to poverty I would have dealt with it in this budget, but they are not. That was recognised by the social partners when they negotiated agreements. They provide for basic increases in line with inflation across the board and then they apply additional increases for low paid workers.

On the statistics the Deputy is seeking on unemployment benefit the total claimants for unemployment benefit would be 62,909, and with child dependent allowances would be 26,227, and those without child dependants would be 36,682 or 58 per cent of the total.

On the query by Deputy Lynch about the social insurance fund, for the first time since the social insurance fund was established a projected surplus was to occur in 1995. That has arisen primarily because of the self-employed who have come into the system and who will contribute £90 million this year. However, they have only begun to come into the system and as the years roll on they will obviously become entitled to benefits arising from those payments. In addition, the surplus projected for 1995 is being used to cover 90 per cent of the £60 million which we have set aside for equality payments to which the High Court recently judged married women were entitled. Most of those payments arise as a result of insurance based claims so there is no misuse of the fund. I think the fund is well used in this area.

Dr. Woods

The Minister gave one of the figures I asked for, that approximately 58 per cent of those on unemployment benefit would not be in a position to receive child benefit and, therefore, they just receive the basic increase of 2.5 per cent. He did not give the figure in regard to all the insurance. Is it roughly one third that would have child dependants and, therefore, two-thirds would not have child dependants and would be solely dependent on 2.5 per cent?

Proinsias De Rossa

My Officials are compiling those figures at the moment but I would draw the Deputy's attention to Appendix 3 of the document his spokesperson was supplied with. It contains a list of old age pension contributors. The number with children is 940 in respect of which 1,309 dependant child allowances are paid; 1,614 pensioners in receipt of retirement pension receive allowances in respect of 2,212 children; of the 108,000 old age non-contributory pension recipients at least 1,308 receive allowances in respect of 2.249 children; of the 15,000 in receipt of pre-retirement allowances 2,427 receive allowances in respect of 4,446 children. Of the total 256,616 who receive various old age pension payments 6,365 claim child dependant allowances in respect of 10,216 children.

Of the 41,869 in receipt of disability benefit, 19,522 receive allowances in respect of 42,040 children; of the 40,226 in receipt of invalidity pension 11,404 claims allowances in respect of 23,254 children; of the 740 in receipt of injury benefit, 323 claim allowances in respect of 747 children; of the 854 in receipt of interim disability benefit 359 claim allowances in respect of 766 children; of the 8,646 in receipt of disablement benefit 250 claim allowances in respect of 578 children; of the 499 in receipt of death benefit 143 receive allowances in respect of 265 children. Of the total of 92,834 in receipt of various illness payments 32,000 receive child dependant allowances in respect of 67,650 children.

Of the 90,671 in receipt of survivor's pension 8,246 receive child dependant allowances in respect of 15,259 children, of the 19,043 in receipt of non-contributory widow's pension none receives an allowance; of the 13,662 in receipt of deserted wife's benefit 9,804 receive allowances in respect of 22,282 children; of the 2,095 in receipt of deserted wife's allowance, none receives an allowance, which is also the position in the case of the seven in receipt of prisoner's wife's allowance.

On the question of lone parent's allowance 29,987 unmarried parents receive allowances in respect of 40,506 children; 8,714 separated spouses receive allowances in respect of 20,444 children; 1,880 widowed parents receive allowances in respect of 3,859 children and 119 prisoners' spouses receive allowances in respect of 332 children.

On the question of maternity benefit no child dependant is payable; 3,971 are in receipt of this benefit. The 449 persons in receipt of orphan's contributory pension receive allowances in respect of 709 children; 171 persons in receipt of orphan's non-contributory pension receive allowances in respect of 237 children; of the 16,550 in receipt of supplementary welfare allowance 7,500 receive allowances in respect of 5,700 children; the 10,671 in receipt of family income supplement claim allowances in respect of 32,078 children; of the 5,056 in receipt of carer's allowance, 1,666 receive allowances in respect of 4,027 children. Of the total of 203,046 in receipt of family income support payments 79,297 claim allowances in respect of 155,433 children.

Of the 62,909 in receipt of unemployment benefit 26,227 claim allowances in respect of 55,502 children; of the 196,309 in receipt of unemployment assistance 62,841 claim allowances in respect of 165,721 children; of the 10,139 smallholders 5,513 claim allowances in respect of 16,746 children. Of the total of 269,438 who receive various unemployment payments 94,728 claim child dependant allowances in respect of 237,969 children. On the question of rent allowance no child dependant allowance is payable; 794 claim this allowance. Of the overall total of 822,728, 212,391 claim child dependant allowances in respect of 471,268 children. These allowances are paid in addition to child benefit.

Mr. Crawford

I would like to have seen a bigger increase and I fully understand Deputy Wood's disappoinment which is more acute because he is now on the Opposition benches. The reality is the Minister has produced the best possible results and has also brought forward the date of payment. I hope in time he will be able to pay the increases for April.

I wish to refer to self-employed now paying PRSI. The Minister stated that the amounts available are increasing but because many of the self-employed will be unable. because of their age, to pay contributions over a ten year period, they will not receive any pension. In a letter I received this morning a former president of the ICA wrote that she will pay contributions over an eight year period and inquired if it would be possible for her to receive an eight-tenths pension. There is an anomaly in the system in that while the self-employed have been forced to pay contributions many will not receive a pension. Does the Minister have any plans to rectify this anomaly?

Kathleen Lynch

If these figures were already available to the people who were asking for them it is a time wasting exercise to be carrying on with that charade. Our business is to important for that.

Dr. Woods

I asked the Minister for the percentage.

Kathleen Lynch

I would have thought Deputy Woods would have had them for the last number of years but he probably did not have them then either. On the point made by Deputy Crawford, it seems strange that people who were accepted into the scheme under the self-employed terms cannot now qualify because they will not have been in the scheme for ten years when they reach 65 or 66 years of age.

Mr. J. Walsh

On a point of order, I put down an amendment on that matter on section 7.

Chairman

I was about to point out to the Deputy that her remarks are not relevant to this section. There will be an opportunity to contribute at a later stage.

Kathleen Lynch

I will wait until later to make my comments.

Mr. L. Fitzgerald

I had hoped that on Committee Stage we would see a change of heart from the Minister in relation to the rates of payment in specific areas. Not only am I disappointed but I am baffled at how the Minister for Social Welfare, with his ideological history, could take the stand he and the Government have taken consistently since the publication of the budget. I have listened to radio interviews, watched television performances, analysed responses to questions from people in the media as to how a Minister and a Government can stand over an increase of 2.5 per cent for people who have no child dependants at a time when it is quite apparent to the ordinary man in the street that the rate of inflation will be at least 2.9 per cent. There are those experts who say — and they are not always right — that inflation will be in excess of 3 per cent. My educated guess, from reading the research, is that it will be at least 3 per cent. If it will be 2.9 per cent and not any more, how can we as politicians debate section 3 and articulate our feelings about the most marginalised, deprived and forgotten people, the old age pensioners? How can we give them 2.5 per cent and say we are looking after all the marginalised?

When questions were put to the Minister on television and on radio to some of his colleagues — the Deputy who spoke previously to me is one of them — the first response given to the point that this was unfair and unjust and was the first time in 30 years that people in this category were treated like this was that it was not true. In all the cases about which I have heard since the publication of the budget the elaboration is on the basis of the £7 increase in the child allowance, which all of us welcome and regard as a positive step forward and a further development on what already had been started. However, that is not an answer to the fundamental question about the most marginalised in our society who are getting an increase of 2.5 per cent and who have no child dependants. Almost without exception the answer to this question has been the statement that it is not true. That assertion is supposed to divert the attention of the person asking the question and the public at large away from what must be accepted as a wholly unjust, unfair and miserly increase of 2.5 per cent which, in net terms, will represent a decrease this year for old age pensioners, those on social welfare, single people and social welfare recipients who have no child dependants. There is absolutely no justification for that decision in the budget. There is no justification whatsoever for the Minister coming in here today on Committee Stage, having heard a cross-section of views from around the country and in the media — and I do not always agree with the media, no more than the Minister — and not raising that particular aspect.

I have spoken to many old age pensioners and social welfare recipients who have no child dependants and all of them have told me they feel insulted, let down and ignored. They feel that they do not count in society. If I sound emotional about this, and perhaps I do——

Proinsias De Rossa

The Deputy sounds hypocritical.

Mr. L. Fitzgerald

That is the type of remark the Minister and his colleagues have been using on television and on radio to try to divert attention away from the truth. There is a lot of anger, annoyance and disappointment out there. I can rest my case safely on that. I ask the Minister again, in the interests of the most vulnerable and marginalised about whom he seems so concerned, to reconsider this aspect. The record clearly shows Fianna Fáil-led Governments never let those people down.

Kathleen Lynch

It was only married women who were let down.

Mr. Flood

I would remind the Minister that if we appear a little harsh regarding his performance we are not doing anything different from what he did when he was on the Opposition benches. The Official Report will show that. He should not over-react; we are not being personal. He is in Government now and he must carry the can for his actions and the actions of the Government and I know he is well able to do that. I would remind the Minister also that in regard to the 2.5 per cent, which is spoken about so frequently, there are obviously a whole range of categories of people who will soon find that increase wiped away unless the Minister suggests to his colleague, the Minister for the Environment, that he should ask local authorities not to increase local authority rents this year. If he does increase the rents he will eliminate the 2.5 increase. This has been a perennial problem. The Minister might be able to use some influence in this area because he has referred to that particular issue in his contributions in the past.

The Minister claimed the 1994 budget gave a miserable level of increases which told their own story. That is on the record and it was said with regard to an increase of 3 per cent. He also said that the failure to provide adequate increases in social welfare payments was particularly cruel. I know the Minister will justify that and talk about the increase in the child allowance, which we welcome. The fact remains, however, that there are many areas where, to use the Minister's own words, there is a certain amount of cruelty involved. That is the reality and those are the facts. An increase of 90p a week is not much to offer a person. In the past we at least tried to cope with the effects of inflation. This year, for the first time, we have not done that because although there is a 2.5 per cent general increase for a large number of people, it is suggested that inflation will probably be 2.9 per cent or more. I hope it will be less but if it is more people will be adversely affected. We cannot change that no matter how we dress it up and no matter what statements are made by Deputy Lynch, the Minister's colleague from Cork, it is still the same story. Recipients who get a 2.5 per cent net increase will, on the basis of inflation, be worse off. With all the difficulties in the money markets at the moment the particular forecast of 2.9 per cent may be wide of the mark, the figure may be much higher.

I do not think we are being alarmist or harsh on the Minister. Some of the language used was used by him last year and in previous debates, and he was perfectly entitled to his view. He is now in the hot seat and in a position to provide increases he spoke about, given the very good economic conditions that exist — even Government spokespersons in the House referred to the good economic conditions which prevail — but unfortunately when it was put up to him, he did not deliver. He made improvements but not in all the areas to which he referred in previous debates on these issues. That is the problem and we cannot dress it up or introduce flowery language. When social welfare recipients receive this money at the end of the week, they will realise we are right, we do not have to say it for them.

Proinsias De Rossa

I am quite happy to take criticism directed at me as I do not believe it is intended in any way to be personal and I do not take it personally. Much of what is being said by Fianna Fáil spokespersons is hypocritical and is based on the record I have before me of what Fianna Fáil did in the past. The main spokesperson said that this is the lowest increase in 30 years, but that is not the case. I have a list — as have Deputies — of the CPI increases from 1985 to 1995 and the social welfare increases for each of those years. When Fianna Fáil came into Government in 1987 the CPI was 3.2 per cent and the social welfare increase was 3 per cent — that is outlined in Appendix 4. It is only eight years since 1987, not 30 years ago and the increase that year was miserable, not only was it below the CPI, no improvement was made except a general across the board increase. This year I gave more than half the increase available to me to child benefit in a direct attempt to overcome child poverty in society. That is the point Fianna Fáil spokespersons choose to ignore.

When Fianna Fáil was re-elected to Government in 1989 — I remember that year well because I was elected to the Dáil and the European Parliament — the consumer price index was 4 per cent while the increase provided by Fianna Fáil was 3 per cent, again below inflation.

Dr. Woods

Read the footnote.

Proinsias De Rossa

Deputies can read the footnote as well as I can.

Mr. Flood

The Minister does not like that.

Mr. L. Fitzgerald

He should not be selective but should put all the information on the record.

Proinsias De Rossa

Point 3 of the footnote states that LTUA increased by 11.9 per cent, SWA increased by 11.1 per cent and STUA increased by 7.7 per cent. Those increases were to bring payments up to the priority rates recommended by CSW in 1985. It took four years for Finanna Fáil to finally get around to increasing payments, not to the main rate, but to the priority rate. These crocodile tears about the lowest increase in 30 years are not based on fact. I appreciate Deputies have their job to do as Opposition spokespersons but there is no comparison between what Fianna Fáil did in the past and what I have done this year in terms of fundamentally tackling poverty.

On the point made by Deputy Crawford on the self-employed and pensions; in 1988 the self-employed were brought into the PRSI net. There is a ten year requirement for contributions before one can qualify on retirement. Even if the person concerned does not qualify for a benefit they can still qualify for a non-contributory pension if their means are below a certain level. If a spouse dies the remaining widow or widower, if they do not qualify for a widow's or widower's pension, may qualify for a non-contributory pension. If, however, they do not qualify for either, and there are less than ten years' contributions, the amounts paid can be refunded to them. My information is that there is not a huge number of people in that position, but the cost of providing pensions to those people would be quite significant — even the ten year threshold is extremely generous in terms of the benefits that are derived from the contributions made.

On the point raised about the surplus in the social insurance fund and how that arose, I mentioned that it was largely as a result of the contributions now being made by self-employed. It also arises from increased contributions as a result of greater numbers of people at work.

Deputy Flood raised the point about local authority rents, an issue about which I have been concerned for some time. Almost 75 per cent of the increase paid to old age pensioners last year was clawed back, certainly in the Dublin Corporation area, as a result of rent increases in August last year — these people had only received their increases about a week beforehand. This year they will receive the increase six weeks earlier so they will have it in their pocket before there is any likely rent increase. Parties in Government have co-operated with Dublin Corporation to bring about a situation where the corporation agrees it will take no more than 15 per cent of the budget increase in any rent increases that arise this year. That is a significant development and I urge Deputies who may be a member of local authorities in their respective areas, or their councillor colleagues, to see whether they can persuade other local authorities to adopt a similar approach. It is annoying for elderly people in particular who are concerned about how to make ends meet to have increases which they get one week taken from them the following week by a rent increase. The Department of Social Welfare has no direct control over that nor has the Department of the Environment. Setting rents is a devolved function of local authorities who set the rates and the rent within the context of terms set by the Department of the Environment. It is for councillors on each local authority to ensure the rent structure they agree at local level does not result in a clawback of the social welfare increases people receive. I appeal to Deputies who also may be members of local authorities on that issue. A headline set by councillors on Dublin Corporation could be followed by others around the country.

I have no intention of changing the Bill. The increases are set in the context of directing substantial resources towards child benefit. The emphasis on the percentage increase of 2.5 per cent is against the reality that the increase in the money available this year is 25 per cent more than the increase that was available in 1994 and is 35 per cent more in a full year. The Opposition are misdirected in their attacks. While I get the same criticisms from people without children who say they would be much happier with a bigger increase — I would have been much happier if I was able to give them a bigger increase and I hope to be able to do that in the next couple of budgets — it is a question of deciding that while the opportunity is available to me I will make a significant impact on the question of poverty rather than looking for the easy headline.

Mr. Flood

That makes a welcome change. You have been in the headlines on these issues for the last seven or eight years.

Proinsias De Rossa

I was not Minister.

Mr. Flood

The Minister probably knows from his involvement with local authorities, that the level of local authority rents is a bone of contention for people who are adversely affected by it. The Minister's information regarding one local authority is very interesting. The problem is that each local authority has to determine its rent structure and that allows for the usual ad hocapproach. Some areas might respond favourably to the approach of the local authority mentioned by the Minister but in other areas they would not for different reasons, such as financial ones. It would be far better if schemes such as those mentioned by the Minister were put on a statutory basis.

Local authorities have to act on a whole range of issues for which they have statutory responsibility. We could get this issue out of the way and every area would be treated the same, if it could be put on a statutory basis that increases in rents because of increases in social welfare would be for a specific figure so that every local authority would know what priorities they might have in this area. Will the Minister raise this with his colleague at Government level as we in Opposition will do, on the basis of the fine achievement of that local authority? I disagree with the 15 per cent because that is pushing the recipient backwards but that could be teased out.

Chairman

That point is more appropriate to the Minister for the Environment. We should not allow the discussion to develop on that point.

Dr. Woods

On the consumer price index figures to which the Minister referred, could he clarify if these figures are the outturn figures in the earlier years or the figures at budget time?

Proinsias De Rossa

They are outturn figures.

Dr. Woods

What Deputy Walsh asked for was the figures at budget time and said this was the first time in 30 years that a Minister had undercut the expected rate of increase.

Proinsias De Rossa

The predicted rate of inflation is 2.5 per cent and the increase provided is 2.5 per cent so there is no question of undercutting the predicted rate of inflation. My information is that the CPI figures in this chart are outturn figures but I do not know that for definite and I am sure Deputy Woods does not know it so he is guessing. I will get the predicted figures at budget time for each of those years and I can come back to him either today or Tuesday. The figure predicted by the Department of Finance which bases its predictions on the Central Bank is that by the end of this year inflation will be 2.5 per cent. I do not have a ball into which I can gaze to see the future. I can only accept the predictions given to me and base the construction of the budget on that.

Dr. Woods

I accept what the Minister says in relation to the prediction at this time because that is all a Minister can do, but it is normal to provide a margin above it. The ESRI has predicted 2.8 per cent and the Minister may hold then to the Department of Finance prediction and that is fair. The Minister is aware that he on very sticky ground on 2.5 per cent at this stage. That was not the point I was making. The Minister has made my point by saying that the only thing a Minister can do at budget time is work on the predictions at that time. That is the figures referred to over the years, and people say that for some 30 years there has never been such a low increase.

Proinsias De Rossa

Surely this is a foolish argument. The Deputy should base his argument on reality rather than on predictions. One cannot argue that it is the worst increase in 30 years when the figures prove it is not.

Dr. Woods

There is no point in arguing the point. The Minister made my point clear by saying that at budget time all he can do is work on the predictions. It is interesting to note that even with the Fine Gael-Labour Government in 1986, the long term unemployed got something extra on the general 4 per cent increase to bring them up to 5 per cent. In every year after 1987, which was a particularly difficult year, up to this year something was done about people on the lowest levels, and the table bears this out. There has been some debate about whether we should ask questions at this time. The purpose of a Committee Stage is to ask questions, in fact, Deputy Liam Fitzgerald highlighted that, pointing out this Stage gave Members an opportunity to elaborate on the provisions of this and all Bills. While that may be a tedious procedure, it forms an essential component of our democracy. It ensures that the provisions of a Bill are made clear, going beyond the public relations exercise. Otherwise everything becomes a public relations exercise, with statements, sometimes slight misrepresentations, certainly a great deal of bluster.

Deputy Lynch referred to the surplus money. That arose from unemployment figures being down, employment figures going up, from increased contributions, and fraud and abuse detection by the Department having been partricular good in the past year.

In the circumstances in which we now find ourselves it is clear from these discussions that, in relation to the actual money, the Minister is providing fewer funds this year for those on all the combined social insurance benefits, even taking into account the early payment dates. When I was faced with a choice of advancing payment dates or paying a higher rate, I knew that, if I paid a higher rate recipients would have had that amount in their pockets thereafter. While I would have liked to have advanced the payment dates also, I chose to put the money in their pockets. Any recipient faced with that option; knowing that he or she will not have that increase for six weeks only but consistently thereafter, would choose to take the greater increase. Certainly, they would not want a smaller increase paid a few weeks earlier.

This section deals with unemployment benefit, with all old age pensioners, whether they be retirement pensioners or old age contributory pensioners, and provides payments for widows, invalidity pensioners, widowers, under the survivor's scheme — a very important and large sector of our community — receiving less money in actual terms than last year. The figures given by Deputy Walsh demonstrate that the total was £47 million for this sector last year and is £38 million this year. The sum of £47 million last year, taking into account increases granted this year, with inflation and so on probably would amount to £55 million; instead they will receive £38 million this year. Therefore, in real money terms, this sector will receive less money. They are being granted a 2.5 per cent increase, based, as I think the Minister is aware, marginally on the predicted inflation rate only at this time, compared with last year when they received 5.9 per cent plus an additional 3.8 per cent, minimal.

Therefore, it is clear that the total allocation of money to these recipients, or the transfer to them from their own fund, is being reduced. The percentage increase granted them is less at 2.5 per cent and is likely to be below the prevailing rate of inflation bearing in mind the present position of the financial markets.

From the list the Minister provided it is clear that approximately 74 per cent of these people will not benefit from the child benefit increase. There is no point in getting into a bluster about this; we are all in favour of child benefit. I set up the committee which recommended this increase. While they recommended an immediate £5 increase the £7 increase granted by this Government is very welcome as our child benefit is low anyway, but one must recognise that people who do not have children cannot benefit. Old age pensioners have no other compensation so, as far as this section is concerned, approximately 58 per cent of those on unemployment benefit will not be eligible for child benefit.

We need to get this in perspective. The Minister has made a very serious error of judgment here. While he probably made it with the best will in the world he has made a serious error, leaving a very large number of people with a very marginal increase of 2.5 per cent. While investing the money in child benefit, which is very welcome, he should have insisted that other beneficiaries were allocated something of the order of 3 per cent at least which will be necessary to maintain them apace with or ahead of the rate of inflation.

There has been no move toward the implementation of the rates recommended by the Commission on Social Welfare. The Minister may recall decisions in the past, inferring that I had reversed payments. He knows I was not the Minister at the time. He knows also there were amalgamations of other benefits with injury benefits, an exceptional circumstance. No amount of blustering gets away from the hard fact that what is happening here is very much what Deputy Liam Fitzgerald said, a reduction for old age pensioners, a hard blow to those people who have paid into the fund, when the fund is in good order, capable of paying them at least the kind of increases they received in recent years. This year something better should have been done for them. All of that has been left aside — I would say in charity — mistakenly.

The Minister said he has taken a very hard line approach, contending that what he is doing is in his view the best approach, that there is no way he is going to change it. That leads me to question whether there is any point in discussing these matters on Committee Stage. Effectively, the Minister is saying to old age pensioners, widows' contributory pensioners and invalidity pensioners who receive little enough, "live horse, and you will get grass". He is saying he might be able to do something for them in future budgets. They should not have to await the end of the rainbow to get their just desserts or the money they contributed to his insurance fund; that is the harsh reality. While in charity the Minister has done something valuable on child benefit, continuing with what the Fianna Fáil-Labour Government had done, constituting an increase of almost £5 on the preceding year's allocation, nonetheless the Minister has made a serious mistake and should reconsider the position of those people in this sector.

Proinsias De Rossa

I do not intend to prolong this discussion. I find it hard to comprehend the argrument advanced, that despite the fact that there is a general increase of 2.5 per cent, in real money terms people are receiving less; that is a non sequitur. It does not follow. The purpose of the 2.5 per cent increase is to ensure that, in real terms, people maintain their position. The budgetary increases in other areas are designed to ensure that particular categories are assisted in climbing out of poverty and, therefore, the argument put forward does not hold water. I have not heard anyone argue that the increase of £7 in child benefit is not welcome and should have been less. One party argues that more should have been given by way of a general increase and that we are spending too much money this year. It is critical of the fact that I found £200 million this year to pay equality payments to married women and claims that expenditure breaches the public spending ceiling.

There are contradictions in Fianna Fáil's argument about the budget. It is contradictory to argue that public spending must be confined and at the same time call for increases to be given to various categories. Perhaps the alternative argument is that there is a hidden agenda, that the increases in child benefit should have been rolled back and paid out in some other way. If that is the case, Fianna Fáil should say so. Reduced public spending and more social welfare expenditure cannot be argued for unless cutbacks are made in other social welfare areas, which was the practice of previous Ministers for Social Welfare.

Mr. Flood

The Minister suggested child benefit should be taxed.

Proinsias De Rossa

I made a deliberate decision on the 2.5 per cent increase and how resources negotiated for the social welfare budget would be allocated and I am sure Deputies opposite will accept that as a Member of the House I would be aware of the response to it, particularly by Fianna Fáil. I made the decision in the full knowledge that this type of attack would be made. However, I am satisfied that the people outside this "hothouse" in which we spend most of our lives are by and large happy with the provisions in the budget.

Mr. Flood

The Minister should come to west Tallaght to see if that is the case. The Minister of State, Deputy Rabbitte, is aware of the position there.

Proinsias De Rossa

Tallaght, in particular, will benefit considerably from the budget, ranging from the reductions in PRSI, the obligations on the low paid, to the increases in child benefit. Given the demographics of Tallaght, I am sure there is hardly a household there what will not benefit as a result of the increases in child benefit.

Mr. Flood

The Minister would be surprised.

Proinsias De Rossa

I am certain about that. This is a circular argument. I am implementing the social welfare policy of this Government and my party by targeting the problem of poverty in a coherent way. Clearly Fianna Fáil does not like that and that is its prerogative. I am happy to defend what I am doing. Fianna Fáil's argument ignores the other benefits in the budget for childless people. These include an increase in the minimum unemployment assistance benefit for young people from £10 to £25, increases of 11 per cent for students under the student summer scheme, the provision of a free colour television licence for those who were previously entitled to only a black and white one, extension of free travel to cover Northern Ireland, changes in the carer's allowance in relation to the income disregard for the spouses of carers and the provision of a companion pass for the cared. A range of benefits in the budget have been ignored because Fianna Fáil is obsessed with percentages.

Mr. Flood

They are all Fianna Fáil schemes and they were all in place for the Minister.

Mr. J. Walsh

It is not acceptable in these good times that the Minister should leave behind old age pensioners, those on invalidity pensions and sectors who are most in need, and adopt a hardline and callous attitude that it is just too bad for them and that everything must be put in the context of the major and welcome increases in child benefit. Yesterday, I asked officials of the Department of Social Welfare questions on child dependant allowances and I thank them for their assistance as they must have worked extremely hard over a short time to provide that information. I note that the increase in child dependant allowance for the old age contributory and retirement pension is nil, it is also nil in respect of the survivor's pension, deserted wife's pension, invalidiy pension, disability and unemployment benefit, old age non-contibutory pension, lone parents's allowance, carer's allowance, unemployment assistance, orphan's non-contributory pension, supplementary welfare allowance and pre-retirement allowance. If the Government had such a caring attitude towards children, it would have made some gesture in respect of the child dependant allowance. In that regard is the Minister still of the view that child benefit should be paid in respect of every child, regardless of income, whether £100,00 or £5,000 per annum? Deputy De Rossa stated on Committee Stage of the Social Welfare Bill, 1994 on 9 March 1994:

An enhanced child benefit will be paid universally and those in the tax net and with substantial incomes would repay some of it through the tax system. The payment would be accountable for tax purposes and that is why I suggest that integrating the tax and social welfare codes is important in terms of what I am arguing for here.

In the context of the integration of the tax and social welfare codes, is the Minister still of the view that child benefit should be subject to tax?

Chairman

That question is not relevant to this section. Is section 3 agreed?

Mr. J. Walsh

I want to ask another question. What benefit will recipients of increased payments of unemployment benefit, disability benefit and invalidity benefit gain from the equal treatment payments?

Proinsias De Rossa

That question is not relevant to this section.

Dr. Woods

This section deals with insurance.

Proinsias De Rossa

It is not dealing with equal treatment.

Dr. Woods

It is these people who will receive it.

Proinsias De Rossa

Some will and some will not, it depends on the claim.

Dr. Woods

Some will.

Chairman

This section provides for an increase in rates. The question now being asked is not directly relevant to this section. Is the section agreed?

Dr. Woods

Are you trying to cut short the debate?

Chairman

No one can accuse us of that.

Dr. Woods

Chairman, you have been here long enough to know that much discussion takes place on the earlier sections which is not necessary on other sections because often the points are similar. Sometimes sections 3 and 4 are discussed together, for instance, and voted on separately subsequently. The Minister said he has taken a hardline decision in relation to these increases.

Proinsias De Rossa

I did not say "hardline"

Dr. Woods

The Minister said it was his firm decision. He decided to put the money elsewhere and hold pensioners back to a 2.5 per cent increase. He decided to give all the people in this area less than they got last year, except the small number who will benefit separately from child benefit. We know the percentages — approximately one quarter will benefit. The Minister said old age pensioners are not concerned about it. The Minister is missing the reality on the ground. I agree with my colleague from Tallaght. The position is the same on the north side. I walked into a hostelry in Edenmore and the first words from a group of retired people were that the Minister did not even give them the price of a pint. They will have to go to their daughters for another 10p for the price of the pint.

Kathleen Lynch

It is a disgraceful comment to suggest old age pensioners are interested only in alcohol.

Mr. Flood

There is nothing wrong with them enjoying alcohol and they are entitled to it.

Dr. Woods

We were in place where people socialised. They do not go to Russia to socialise. The reality is that those on contributory old age pension will receive an increase of £1.80 per week; those on non-contributory old age pension will receive only £1.50 and those on widow's contributory pension will receive only £1.60. I cannot understand how a Minister claiming to represent the left can say that increases of £1.50 and £1.60 per week are adequate, that he is satisfied with what he has done and that it was an intelligent decision. I find that very difficult to understand. The pensioners, widowers, invalidity pensioners and those in receipt of assistance will understand this very quickly. The Government has let them down badly. We support what is being done in relation to child benefit but when we get down to the hard reality of the transfers of money the old age pensioners, by and large, have been left out, as have many other categories. That is clear from the figures which have been discussed here. What we are asked to support will be a bitter disappointment when it comes through in the cheque.

Deputy Walsh said child dependant allowances are not increased. That is part of the rationalisation between child benefit and child dependant allowances. It is noteworthy that child dependant allowances are not being increased. When child benefit was increased earlier child dependant allowances were also increased. I would not argue with the Minister on that. I accept that if we are to rationalise the two and give the increase where there are children, at least they are getting it. It is important to note that they are not getting it in this case. The cheque which will come through will represent an even lower increase than 2.5 per cent in terms of the weekly payment to the long term unemployed.

Proinsias De Rossa

If I may interrupt the Deputy I can give him——

Dr. Woods

Please do not. So far as people with children are concerned they will not receive the child dependant allowance. If we take the total figure it will not be an increase of 2.5 per cent. It cannot be because they will not get any increase on the part which is the child dependant allowance. Therefore, a couple with three, four or five children, on unemployment benefit, for instance, will receive a direct payment of less than 2.5 per cent. If child benefit is added, the payment will be increased. I think the Minister will find that when the payments go out in practice. If the two payments were integrated and arrived in the one package, that would make for a different situation. In any event, as Deputy Walsh said, we find this most disturbing and it is something about which the Fianna Fáil Party feels very strongly. We are planning to oppose the section because of the low increase of 2.5 per cent and the fact that no improvements have been given under the recommendations of the Commission on Social Welfare. Notwithstanding the fact that in a later section there is an increase in child benefit, some 74 per cent of the people who have paid insurance payments all their working lives cannot claim a child benefit and are limited strictly to the very miserable 2.5 per cent increase.

Proinsias De Rossa

Old age contributory pensioners are on 109.3 per cent of the CSW recommended rate, retirement pensioners are on 109.3 per cent and widows contributory pensioners are on 99.2 per cent. To argue that the 2.5 per cent increase is a worsening of the situation and is not moving them in any way towards the CSW rate is an attempt to mislead this committee. The statistics the Deputy has in front of him point out very clearly that they are already ahead of or almost at the CSW rate and that the 2.5 per cent increase being proposed will protect them against the predicted rate of inflation. What the Deputy is proposing to do is vote against an increase in social welfare and he is trying to justify himself in doing that. In addition, the Deputy is wrong in relation to the increases for children despite the fact that the CDA is not increased. A couple with one child, on old age contributory pension, retirement pension and adult dependant allowance, under 66, will receive 4.6 per cent; a couple with two children will receive 5.1 per cent; a couple on unemployment benefit or disability benefit with one child will receive an increase of 3.1 per cent; a couple with three children will receive an increase of 4.8 per cent; a couple with four children will receive an increase of 5.2 per cent; and a couple with six children will receive an increase of 5.8 per cent.

Dr. Woods

In child benefit?

Proinsias De Rossa

Yes. The Deputy is arguing that even with the increase in child benefit people will be worse off. However, they will be considerably better off despite the fact that the child dependant allowance is not being increased by 2.5 per cent. This makes sense; support to children should be given through child benefit. As I stated a number of times, and as outlined in the Programme for Government, the intention is to move to a point where child support is given through child benefit instead of the child dependant allowance, thus eliminating the traps in which people find themselves when trying to move from unemployment into employment and particularly into low paid jobs. All we have heard for the past two hours is justification for Fianna Fáil voting against an increase in social welfare.

Dr. Woods

The Minister alleged that I am misleading him in regard to figures, I wish to refer him to the figures supplied by the Department which I have always found to be correct. There are 256,616 recipients of old age pension and only 6,365 have children. That is the reality and he should not try to mislead the public, the press and Members. I stated clearly that the increase of 2.5 per cent was too little and that there is no movement in the section towards the Commission on Social Welfare rates. There is also no movement on disability or unemployment benefits and the Minister should not try to mislead people. The point I have been trying to get across to him is that the vast majority of those people cannot benefit from the increase in child benefit. We do not disagree with the increase in child benefit but the reality is that 74 per cent of these people will not benefit from it as they do not have children. In the case of old age pensioners, 99 per cent of 98 per cent will not benefit.

Proinsias De Rossa

It is 109.3 per cent.

Dr. Woods

I am talking about the percentage who will not benefit from the increase in child benefit. The Minister said that the absolute rate is higher than the main rate. However, the rate for old age pensioners should be kept well ahead of inflation. They have no earning capacity and deserve our support and all we can give them. The 2.5 per cent increase is too litle. It would not have cost much to give an additional 0.5 per cent increase, and the Minister. has made a mistake.

Proinsias De Rossa

It should be noted that Fianna Fáil is voting against this increase because we did not give an extra 30p.

Question put.

The Select Committee divided: Tá, 12; Níl, 9.

Tá
Bradford, Paul.	Kenny, Sean.
Costello, Joe.	Lynch, Kathleen.
Crawford Seymour.	McGrath, Paul.
De Rossa, Proinsias.	Pattison, Seamus.
Flaherty, Mary.	Ryan, Sean.
Hogan, Philip.	Timmins, Godfrey.

Níl
Brennan, Matt. Clohessy, Peadar. Fitzgerald, Liam. Flood, Chris. Geoghegan-Quinn, Máire.	Smith, Brendan. Smith, Michael. Walsh, Joe. Woods, Michael J.

Question declared carried.