Will the Minister confirm that the changes in the section will effectively abolish the deserted wife's benefit and that new claimants will not be able to claim that benefit? What saving will accrue from its abolition? I understand that benefit will be absorbed into the new single parent allowance payment.
SECTION 3.
Amendment No. 2 not moved.
Question proposed: "That section 3 stand part of the Bill".
On a point of order, this section does not deal with the deserted wife's benefit scheme.
It deals with the social insurance fund.
It deals with social insurance rates.
It deals with social insurance benefits.
I thought the Deputy had misread the section because he was referring to the deserted wife's benefit scheme.
This section deals with social insurance benefits and the new rates that will apply. If the Minister proposes to abolish a scheme, such as the deserted wife's benefit scheme, that will appear only in this section.
It is dealt with in section 19.
That deals with assistance benefits.
The abolition of the deserted wife's benefit scheme is covered in section 19.
Section 3 deals with the social insurance benefits.
I am not arguing the point, only clarifying the position.
Section 19 introduces the new scheme which replaces the existing scheme. Section 3 deals with the payment and rates of deserted wife's benefit. In regard to the schemes, it is appreciated that it will be necessary to provide for equal treatment of parents in the near future. This could be achieved in various ways, but the manner in which it is being dealt with here is to replace deserted wife's benefit with a new means or income tested scheme. That change has various implications in the context of the social insurance fund and social insurance rates. The rate of deserted wife's benefit is higher than that of the new single parent allowance.
Will the Minister confirm that new applicants will not be able to claim deserted wife's allowance? Will he also confirm that existing claimants will be allowed retain their benefit except in cases where their income exceeds the qualifying limit under the scheme in which case they will lose their entitlement to that benefit? Will he indicate the cost involved in that change?
On a point of order, I wish to clarify that section 3 deals with increases in rates, not deserted wife's benefit scheme or its replacement. That is dealt with in section 19. We appear to be wasting time. We can quickly move to section 19 when we can discuss it at length.
It does not matter which section the issue is debated under. Section 3 deals with rates, some of which apply to a scheme that the Minister proposes to abolish.
The Deputy is out of order. The section deals specifically with increases in social welfare rates and that is what we should be discussing. If the Deputy is not happy with the increases he should say so, but if he is we should move to the next section. When we reach section 19 we can discuss the deserted wife's benefit and the lone parent's allowance. That would be in order.
Section 3 deals with social insurance benefits.
It deals with increases in social insurance.
It is the only section that deals with social insurance benefits.
It is not. Section 19 deals with the issue the Deputy has raised.
Section 3 deals with social insurance benefits and section 4 with social assistance payments. Part III deals with social insurance contributions, Part IV with the new disability allowance, Part V with one parent family payments, Part VI with unemployment assistance. Part VII with pensions, Part VIII with the amendment of the Principal Act dealing with supplementary welfare allowance and Part IX with miscellaneous matters. Part II covers the section that deals with payments under the social insurance fund.
It is not in order for the Deputy to deal with the issue he raised under section 3. He will have all the time he requires to debate it when we reach the relevant section. Section 3 deals with the increases in social insurance benefit rates. The Deputy may continue to talk about that section and the Chair may allow him to do so, but when I reply to him I will do so in regard to the increases in the rates.
The Deputy is entitled to make a passing reference to the issue when making a point on the rates. Part V provides for the introduction of a new one parent family payment which will replace the deserted wife's benefit and lone parent's allowance. Any detailed discussion on the replacement of deserted wife's allowance should be reserved until we reach Part V which covers sections 17 to 21. Apart from a passing reference in connection with the rates, it would not be in order to go into any detail on it at this stage.
Part V deals with a social assistance scheme. This section relates to the benefits paid under the social insurance fund. We can take it, if the Minister likes, that deserted wife's benefit will be at a zero rate in future.
I ask the Deputy to confine his discussion to rates.
Social insurance benefits range from pensions to disability, invalidity and other payments under the social insurance fund. One of the payments to which these rates relate is the deserted wife's benefit, which currently stands at £68.10 plus £17 for each child. The Minister proposes that, in future, only existing claimants will maintain the deserted wife's benefit and all other deserted wives covered by the social insurance fund will not receive these rates of payment. They will receive a zero rate. There is, therefore, a change in the number and types of rates under the social insurance fund. There will not be a deserted wife's benefit but it is from this fund that the deserted wife's benefit is being removed. That is why I have raised it under social insurance benefits.
There is a saving to the Exchequer under the social insurance fund as a result of the change and the removal of deserted wife's benefit. What would be the saving in a full year as a result of the removal of deserted wife's benefit for future claimants? I accept that the entitlements of past claimants are preserved.
The section with which we are dealing relates to the increase in rates. Section 3, together with Schedule A to the Bill, provides for an increase of about 3 per cent in the weekly personal and adult dependant rates of social insurance payments, as announced in the budget. Section 3 (1) provides for an increase of at least £2 in the weekly personal rates of payment and an increase of about £1 in the adult dependant rates. In addition, the living alone allowance payable to pensioners aged 66 and over is being increased by £1.10 from £4.90 to £6 per week. Section 3 (2) provides that the increased rates will be payable from various dates from early to mid June 1996.
The costs of improvements in the social insurance payments are £29.03 million in 1996 and £52.07 million in a full year. The Deputy's question about savings does not arise because there is an actual increase in the amount of expenditure under the social insurance fund. Over 404,000 recipients and about 72,000 adult dependants — about 476,000 people in total — will benefit each week from the improvements in the rates of social insurance payments. Together with improvements in the rates of social assistance payments about 866,000 recipients with over 152,000 adult dependants will benefit, which is about 1.014 million people in total.
The additional cost of increasing social insurance payments from April 1996 would be £6.01 million. The additional cost of increasing insurance and assistance payments from April would be £12.83 million. I can also cover the Exchequer subvention to the social insurance fund if the Deputy is interested. The deserted wife's benefit and the deserted wife's allowance will be dealt with under section 19.
The Minister said that the overall cost of social insurance will increase. According to the Department's leaflets, there are 13,666 recipients of deserted wife's benefit to whom the rate would apply and there are 22,000 children, giving a total of 35,944. That document was published in June 1995. What was the cost of deserted wife's benefit in the past year and what is the estimated cost for the next full year?
I make the point again that the Deputy is attempting to debate an issue which does not arise until we get to section 19.
The cost of the rates surely arises.
Let me finish. The proposal for the new scheme for deserted wife's benefit is that it will commence in January of next year. All existing recipients would be saved. Only those who might come into the system from January of next year will result in a "saving" to the social insurance fund. Any savings as such would be minimal in 1997 and would accumulate over a number of years. In reality therefore, there is virtually no saving to the social insurance fund, certainly in the first year of operation. I emphasise again that I have no intention of getting into a debate on the deserted wife's benefit and the deserted wife's allowance schemes. We should deal with that under the proper section.
It is becoming very difficult to get the information from the Minister. I seek very simple information as to exactly what is happening. Will the Minister confirm that he is abolishing deserted wife's benefit?
The abolition or otherwise does not arise under this section.
If it is abolished, there will not be a rate for it here unless the Minister is going to include a zero rate in future.
I ask the Deputy to leave the detailed discussion on that matter until we reach the relevant section.
This section deals with the social insurance fund. When we come to discuss the other section the chairman might well say that we are dealing with an assistance payment and that it is not the time to discuss the social insurance fund. This is the section on which one normally discusses the changes in the social insurance fund which arise from the changes in the rates.
For instance, the Minister has talked about the overall payments and their effect and he has said there will be an increased cost. Of course there will be an increased cost. On 28 February, the Minister told us in answer to a parliamentary question that the cost of the social insurance rate increases in the 1994 and 1995 budgets and the projected full year costs of the 1996 budget are £56.6 million in 1994, £39 million in 1995, which is much less than £56.6 million, and £52 million in 1996.
I suggest that the cost of these rate increases is directly relevant and if we cannot discuss the cost of rate increases we might as well not be here. It is clear from the Minister's reply that in 1994 the cost of the increases in this section was £56.6 million. That cost was reduced to £39 million last year and is £52.1 million this year. Taking the figure of £56 million for social insurance rate increases for 1994, that is equivalent to more than £60 million in the current year. The rate of increase however, is only £52 million in 1996. Why is the Government allocating less money for social insurance increases this year than in 1994? When I asked the Minister the effect in 1997 of the changes made here he said that the difference will not be great. Perhaps he will give the number of extra people who will become eligible for deserted wife's benefit in a full year. That would give some indication of the changes that will take place.
Will the Minister confirm that the rate for deserted wife's benefit is higher than the personal rate and the rate for children? By transferring deserted wife's benefit from this section, the rate will be reduced. In reply to earlier questions we were told that deserted wife's benefit for a wife and two children amounts to £102.10 whereas under the new scheme it will be £94.90, a difference of £7.20. By taking deserted wife's benefit out of this area those receiving that benefit will lose by £7.20 per week. That arises as a result of the rate changes. Will the Minister confirm that that is the position?
I have said all I have to say on the matter.
I wish to lodge a protest on that.
By answering that question I would be repeating myself.
The Minister is not being helpful. He is here to give answers so that we are clear on what is happening, but he says he will not give any more information.
That is a distortion of the facts.
I asked the Minister how many claimants there would be in a full year.
The Deputy insists on trying to debate section 19 under section 3. I indicated I am prepared to spend all night debating that section when we come to it if he wishes. Under section 3 we are dealing with the rate of increase in social insurance benefit schemes. If the Deputy has a question on whether the amount allocated to a certain category is too little or too great let us debate that, but to debate under this section a new scheme, a very important development in the provision of support for one parent families, is in breach of the rules of this House. It would be of greater benefit to move to the next section so that we can deal with section 19 as quickly as possible.
In what year does the Minister expect there will not be deserted wife's benefit under the present rates? How many years will it take to phase out the existing claims?
This section deals with an increase in the rates in existing schemes. No person who currently gets an increase under these schemes will lose deserted wife's benefit or any other benefit. People currently on benefits will continue to receive payment until they no longer qualify under existing rules and regulations. There is no question of any person losing out as a result of the proposed change. It is improper of the Deputy to debate this issue under section 3.
Deserted wife's benefit is a payment under the social insurance scheme and we are entitled to information on it. A general increase of 3 per cent, or £2 per week, is inadequate. That was highlighted by a number of organisations such as the INOU and others whose members depend on these payments. Following the budget the CORI produced a document in which it states that the general increase of 3 per cent to social welfare recipients is extremely disappointing since many social welfare recipients receive less than the poverty line of income. It also states that since coming to power this Government has presided over a widening in the poverty gap. If we continue with increases such as those for last and this year, 2.5 per cent and 3 per cent respectively, by the year 2010 — we are celebrating the millennium with a clock lodged in the Liffey, the chime in the slime — our marginalised citizens will have little to look forward to.
The personal rate was increased by £2, from £62.50 to £64.50. Does the Minister realise the cost of a pair of shoes? A person on that amount finds it very difficult to survive. The rate of invalidity pension was increased from £64 to £66 and retirement pension from £72.80 to £75. Last year there was a derisory and insulting increase of 10p in the living alone allowance, from £4.80 to £4.90. This year at least the amount was rounded off at £6, which is of some benefit to those living alone. Those people were, however, further insulted by being told they will receive a tax allowance if they provide greater security in their homes.
I had tabled amendment No. 2 as follows:
In page 5, before section 3, but in Part II, to insert the following new section:
"3.—In the Principal Act, in all cases where means testing is part of a scheme, the actual interest earned from capital rather than notional interest rates shall be used in the calculations.".
Although I raised this matter many times over the past year, I made allowances for the Minister in his new portfolio. However, this year's social welfare budgetary provisions demonstrate no imagination, no real care for those who have put aside, say, £2,000 or £3,000 for a decent burial or other essential purpose. They are assessed on an unrevised notional interest rate.
A person can approach almost any financial institution — a local bank, Trustee Savings Bank or credit union — to find out the amount of interest earned on one's savings over the preceding month, six or twelve months. I cannot understand why people cannot be assessed on the actual amount of interest earned, why they should be surcharged on having set aside a few pounds for a specific purpose. Since this means of assessment has implications beyond social welfare payments, at the very least I should like the Minister to explain the thinking behind it.
Traditionally people have always put aside a few pounds for the rainy day or for a decent burial. These people now tend to put that money under the mattress or elsewhere in their homes. They are further discouraged from placing funds elsewhere under this Bill, leading to many unfortunate people being viciously beaten, sometimes left dying or dead by others seeking their relatively small savings. Whenever older people call to our clinics and one tries to persuade them to deposit their small savings in a local bank, post office or credit union, invariably their response is that they are afraid their pension will be reduced or withdrawn. These fears are exacerbated by the use of notional interest rates. As is typical of any departmental procedure, it is not straightforward. While the first £2,000 are disregarded, any savings in excess of that figure are subject to a certain charge, rising ultimately to a punitive 15 per cent. I doubt if there is any financial institution here or elsewhere in the European Union where one can earn that type of interest on deposits.
Since my amendment merely sought equity and fairness, I am disappointed it has not been allowed. At the very least this committee and the electorate are entitled to reasoned argument on this system of notional interest.
Deputy Joe Walsh's approach to this is quite extraordinary. He raised the matter of interest rates. Late last year when I was endeavouring to ascertain the resources available to me for expenditure this year, I was not helped by a statement made by the Leader of the Fianna Fáil Party, Deputy Bertie Ahern, to the Institute of Directors, as reported in The Irish Times of 8 December 1995 by Tom McEnaney:
Ireland should be spending less on social welfare, according to the Fianna Fáil Leader, Mr. Bertie Ahern. "At a time when the economy and jobs are growing strongly social welfare expenditure ought to be in decline", he said. Speaking to the Institute of Directors yesterday, Mr. Ahern said he was "mystified as to why, given the current economic conditions, there should be any question of exceeding agreed budget guidelines on social welfare ......
That was said at the precise moment I was seeking additional resources to help the very people about whom Deputy Joe Walsh has expressed concern. Based on the inflation figure of 2 per cent announced last evening, this year's increase is exceptional, being 50 per cent above the current rate of inflation, leaving no room for argument based on percentages. I very much doubt whether, at any time over the past ten years, any payment in excess of the prevailing rate of inflation was made.
Of course we are all concerned about the adequacy of social welfare payments. The need for review has been stressed by me in my capacity as a Minister and as a Member of the Opposition. The Commission on Social Welfare published their recommendations in 1985-86. During most of the intervening ten years the Fianna Fáil Party was in Government and improved rates considerably. This year's increases will enhance them further, demonstrating that progress is being made.
We need to update the rates recommended by the Commission on Social Welfare some ten years ago. To this end I have asked the ESRI to establish what would be considered adequate payments and how they should be indexed; in other words, having established an adequate baseline, how we should ensure no departure from it. While I understand Deputy Joe Walsh's line, he is wrong to contend there is no imagination being brought to bear on the subject or no progress being made.
I have said repeatedly I intend to standardise assessment of capital across the different systems of payment and I have done that in respect of the lone parent family allowance and disability allowance, both of which will be addressed in the course of our discussions. While they represent important improvements, this revision cannot be effected overnight, affecting as it does hundreds of thousands of applicants. Apart altogether from cost, there is a huge administrative task involved in reassessing every single applicant at present in receipt of a means tested payment but I am determined to overcome such administrative difficulties.
I hope Deputy Joe Walsh will continue to discourage older people from retaining savings in their homes. Apart from any argument he might advance in relation to their fears of my departmental assessors, it is possible they have an equal fear of the tax inspector. Many of them have been misinformed of how much capital or alternative income is disallowed for assessment purposes. I hope Deputy Walsh will assist my Department in its efforts to ensure they fully understand their rights in relation to savings and so on. I have made an important start in revising assessment of capital in respect of the one parent family payment and disability allowance. I ask the Deputy to accept it is not a question of being unwilling to make the changes but that the changes will take time to implement.
I support Deputy Walsh on the issue of the calculation of entitlements.
It will be in order to discuss the means test on the next section but it not relevant to this section. In the interest of giving the benefit of any doubt to the Opposition I allowed Deputy Walsh some latitude on the matter to which the Minister replied but I remind Members that the means test is not relevant to this section.
In reply to what the Minister said with regard to——
If the Deputy is asking a question on the means test it is not relevant to this section but will be relevant to section 4.
The Minister said he intends to standardise capital assessment and a question arises on that which needs clarification.
I will allow the Deputy to ask a brief question only because this matter can be discussed at length on section 4.
With regard to the point being made by Deputy Walsh on the calculation of entitlements and the idea of notional as distinct from actual interest being used, the Minister appealed to Deputy Walsh to encourage elderly people to ensure their capital is placed in financial institutions but the Minister missed the important point. If an inspector from the Department of Social Welfare calls to a person with a view to calculating his or her capital and uses the notional interest idea, the inspector is assuming a higher income for that person than is actually the case. One can understand, therefore, an elderly person keeping their money at home rather than in a financial institution. Will the Minister indicate whether this idea will form part of the standardisation of capital assessment to which he referred?
If the Deputy is asking whether I will accept real as distinct from notional rates of interest the answer is "no" because that would be disadvantageous to people with low levels of savings. I can deal with this issue in more detail on the section to which it refers but the fact is that under the standardised provision, the amount of implied rates would be zero on the notional basis on savings up to £2,000. To apply a real rate of interest to savings would disadvantage those with small amounts of savings as against those with large amounts. The large notional rate is in relation to very large amounts of savings, for instance, up to £60,000. Currently people can have assessments made on that basis. The anomaly of the current system is that there is a lesser notional rate on higher rather than lower rates of savings. There is an unfairness in the system in relation to how the current notional rates apply and I am seeking to iron that out so that it applies equitably across the board. Those who have large amounts of savings clearly have some obligation to use the income from those savings to support themselves.
I do not know if this is bureaucracy gone mad but the extent of a person's savings is not relevant because they only get an actual income from those savings. That actual income is the only income that should be taken into account. With regard to the Minister's point about the zero figure for the first £2,000, we could establish the straightforward principle that the first £2,000 of savings is disallowed in terms of income. That goes back to the point made earlier by Deputy Walsh that £2,000 is the amount people would save for their burial, etc. Interest would not be counted, therefore, on the first £2,000 but on amounts after that there should be an actual rate regardless of the amount of money a person has saved. There is little point in assuming that people with large savings will pay a higher rate of interest. They can only get the interest rate which applies in the financial institutions and that is the only figure we should take into account. People with savings in financial institutions earn virtually no income from them and it is grossly unfair for the Department of Social Welfare to assume a much higher rate.
We are getting into an area of debate which is not relevant to this section. We will talk about it at length when we are dealing with the other section.
Will the Minister reply to this question on the next section?
If the Deputy raises it again it will be responded to.
Will the Chair give an assurance that the Minister will reply to this question on the next section?
It is relevant to the next section but it is out of order on this section. I am trying to be as flexible as possible but, unfortunately, when I give an inch members take a mile.
There is a tradition in this House that issues discussed on earlier sections are not discussed again if they arise later in a marginal context. I am sure that tradition will be observed here also. I want to be clear about the rate for deserted wife's benefit. The rate referred to in the section will remain for existing payments but the rate for future claimants is not included.
That is not true. The Deputy is deliberately wrong.
I am talking about the rate for deserted wife's benefit referred to in this section.
Those currently on deserted wife's benefit will be entitled to receive it for as long as they fulfil the requirements currently applying to it. Any increases, therefore, that apply to rates of payment on insurance schemes will apply to deserted wife's benefit in the same way. There is not any question of zero rating or no further increases in deserted wife's benefit in future for those currently on the scheme.
There will not be any further increases for any future claimant. As and from the coming into operation of these provisions deserted wives — apart from existing claimants — in future will not be able to claim these rates. I have said repeatedly that we understand that existing claimants retain their position——
That is under section 19.
——but no future claimant can claim these rates.
Section 19 deals with increases in the existing schemes.
We are saying to whom these rates will apply in future.
The Deputy is being deliberately obstructive.
They will not apply to future claimants. Therefore, in effect, deserted wifes' benefit is gone except for those who retain it.
I appeal to the Deputy not to create a scare amongst thousands of women who are currently on deserted wifes' benefit that that benefit is gone. The Deputy did this last year and created worry and concern for thousands of women who thought their deserted wifes' payments would be abolished. That is not fair.
I would be very concerned——
The Deputy is being irresponsible.
——lest the Minister misrepresents the position. We have been clear from the start that existing claimants retain their deserted wifes' benefit but that those who claim it after these provisions come into operation will not be able to claim these rates.
This section does not deal with the rates. The Deputy is talking about section 19, this matter does not come under section 3.
The Minister is unnecessarily upset about this.
I am because the Deputy is obstructing the committee.
I am not obstructing the committee, I am merely seeking clarification. The position of existing claimants for deserted wifes' benefit is being retained. Those who exceed the existing income thresholds will not be able to come back into this scheme. Previously they were able to come back on these rates if their income was less than the income ceiling. It is not quite as simple as the Minister might suggest. Broadly speaking, the position is fairly clear: for new claimants there will be no deserted wifes' benefit and existing claimants will retain their existing entitlements. New claimants will go on the new scheme — which we will discuss later — which has lower rates. Instead of claiming the rate of £68.10 they will claim a rate of £64.50 if they qualify under the means and incomes test. A deserted wife with two children will lose £7.20 per week while a deserted wife on her own will lose £3.60 per week. What is the cost of deserted wifes' benefit in a full year and the cost of the rate increases?
I wish to turn to the general increases which cover the social insurance fund. The 3 per cent increase this year is an improvement on last year's increase of 2.5 per cent which we regarded as disastrous for those on old age pensions, invalidity pension, deserted wifes' benefit, widows and others who came under this section. The Minister makes much of the 2 per cent inflation rate, as I expected, following the reference in this morning's newspapers. It is a misrepresentation because that is a three months' current rate. The annual rate for these figures is the November to November rate which is 2.4 per cent. That is an annual change. The 2 per cent inflation rate to which the Minister refers is a misrepresentation because it is only a three months change which can vary as the year goes on. The rate we should be looking at is the 2.4 per cent rate for comparison with the 3 per cent increase.
Will the Minister confirm that the rates for child dependant allowance are frozen this year and that there has been no increase for two years? The Minister is claiming the improvement will come under child benefit and that he is proceeding along the lines of integrating the two as far as possible. From a practical point of view the rate for child dependant allowance remains as it was last year and the year before. Is the Minister satisfied with the rates of increases this year? He could hardly have been satisfied with the rates of increases last year for old age pensioners which were accepted by everyone as being disastrously low and restrictive? In view of the increase this year, which is somewhat above the inflation rate, is the Minister satisfied where growth rates are in excess of 5 per cent and wealth generation rates are over 5 per cent that old age pensioners are just keeping pace with, or are marginally ahead of, inflation this year? If I took the Minister's approach, and referred to the figure in this morning's newspaper, the figure would be 7 per cent, that would make the situation worse from the point of view of pensioners. If we take the more evened out annual position and if the growth rate is over 5 per cent, does the Minister believe he should ensure that pensioners can participate in the growth in the economy and in incomes generally? They are in a very restrictive position as they cannot get extra funds anywhere else. They are dependent on the increase which the Minister gives and those who are fortunate have an occupational pension. They very much depend on the social insurance fund pensions to which they have contributed over the years. Is the Minister satisfied they are keeping pace with growth as well as inflation? That is one of the basic issues.
The Minister referred to a speech by the leader of our party, Deputy Bertie Ahern; he misrepresented what our party leader said, took it out of context and has repeatedly done so despite the fact that it was clarified by our party leader within a matter of a couple of days. For instance, we would all have to agree with our party leader when he said we should not have so many people unemployed, that they should be involved in the economy and in the workplace. Because they are not and because the number of unemployed people is increasing, the reality is that it is costing more. It is easy to take comments about such a situation out of context. As Minister for Finance, Deputy Bertie Ahern clearly showed his support for people who depend on social welfare. The people know that and that they can rely on the support. Perhaps the Minister will answer some of my questions.
The cost of deserted wifes' benefit in 1995 was £75.5 million; the 3 per cent increase costs £2 million or thereabouts. As I indicated last year, one of the imaginative and innovative proposals in the budget was that I gave dramatic increases in child benefit — which I continued this year — and froze the child dependant allowances — which I did this year. The thinking behind that is simple, that support for children is better directed through child benefit. A person does not lose it if they have work and it is not taxable. It cannot be taken away from them in any way, through differential rent assessment or otherwise. It is one of the more positive and imaginative changes we are seeking to make in the social welfare system which, for some odd reason, Fianna Fáil is not willing to acknowledge.
The question of whether I misrepresented Fianna Fáil is a matter for itself. I simply quoted, word for word, the report in The Irish Times of 8 December of what the leader of Fianna Fáil said. I make the point again that this was extremely unhelpful at a time when discussions were underway on the level of expenditure in the social welfare area in 1996 and there was massive media pressure on the Government to cut back on expenditure in this area. There were screaming headlines about social welfare monsters and so on. It was extremely unhelpful for the leader of the Fianna Fail Party to say he could see no reason there should be an increase in social welfare expenditure. If he corrected what he said at a later stage, it did not get the same headlines that his original statement received. The damage had been done and could not be undone.
I am afraid we would do old age pensioners and others a disservice if we were to tie their pensions to growth rates which are extremely difficult to predict and very volatile. One could have low growth rates and high inflation rates and vice versa. We have to establish, as we are attempting to do, what is an adequate income for a range of people, including old age pensioners, based on what the ESRI will produce for us later this year, and once we achieve adequate levels of income look at ways of ensuring they are maintained so that people do not lose out in bad as well as good times.
They are the main points raised by the Deputy. We can discuss deserted wife's benefit and allowance at length when we reach the appropriate section.
I have listened to the Minister talk about his great gaisce on the rates and quoted from the CORI critique published after the budget. The INOU, which represents the unemployed, stated that the greatest criticism of the Bill lies in the fact that social welfare payments will be increased by 3 per cent only this year and that this is compounded by the fact that the child dependant allowance will be frozen for the second year running which is extremely disappointing.
When I recently asked the Minister the cost of social insurance rate increases in 1994 and 1995 and the projected full year cost in 1996 he stated in reply that the cost in 1994 was £56.6 million; in 1995, £39 million and in 1996, £52.1 million. What is most regrettable about the figure for last year, when the people most in need of help received a kick in the teeth, is that the country could have afforded for the first time in many years to give a higher increase. They deservedly felt that they were entitled to receive a lift. The stark reality is that the figure for this year is down on the 1994 figure. No matter how much one tries to wriggle and blame Fianna Fáil one cannot get away from the fact, as the INOU stated, that the child dependant allowance will remain frozen for the second year running.
People find it extremely difficult to comprehend, at a time when there are banner headlines in the newspapers and the Government is claiming credit for the good growth rates, low inflation rates and the consumer price index, that the poorest of the poor are being left behind. This is extraordinary and incomprehensible. When it comes to helping those most in need of help various excuses are put forward as to why this cannot be done. Despite the good performance of the economy, the stark reality is that if rates continue to be increased by £2 per week for those in receipt of £62 or £64 per week, by the year 2010 they will still be receiving less than £100 per week. It is hard to blame them for becoming despondent at this prospect. I express my disappointment that they are being left behind.
The Minister implied that I was trying to tie increases to growth rates. I did not say that; what I said was that, in addition to increasing rates in line with inflation, old age pensioners should benefit from good growth rates. This would have to be done on an ad hoc basis. In times of growth they should receive something extra, otherwise they will only hold their own and will not benefit as things improve.
The Minister said that the cost of the increases in deserted wife's benefit this year will be £2 million bringing the total to £77.5 million. Effectively, he is transferring the cost over time, as this benefit is phased out, from the social insurance fund to the general taxpayer under the social assistance schemes. Will he confirm that is the case?
I have already told the Deputy that I will deal with that matter when we reach section 19.
I am talking about the increases in the rates. Since the Minister is not prepared to answer the question I will take it that, effectively, he is transferring the liability of £77.5 million over time from the social insurance fund to the general taxpayer.
I am prepared to answer the question, but the Deputy will have to wait until we reach the appropriate section.
Question put and agreed to.
Sitting suspended at 1 p.m. and resumed at 2 p.m.
Section 3 agreed to.