Select Committee on Social Affairs debate -
Thursday, 21 Mar 1996

SECTION 6.

Amendment No. 4 not moved.

Question proposed: "That section 6 stand part of the Bill."

Minister for Social Welfare (Proinsias De Rossa)

Section 6 provides for an increase of £10 in the weekly income thresholds used for determining entitlement to family income supplement. This increase will come into effect from 13 June 1996. The FIS thresholds are being increased by £10; most of the existing 11,500 recipients will gain by £6 per week. It is estimated that an additional 1,000 low paid workers with children will now qualify for FIS.

In addition to the increase in the rates provided for in the Bill, provision is being made in the budget for the following improvements in FIS: a reduction from six to three months in the minimum expected duration of employment, which will benefit some 300 workers; the extension of FIS to job sharers accompanied by a reduction from 20 to 19 in the minimum number of hours the person must work per week; an increase in the rate of FIS payable on the birth of a child rather than waiting for the annual review as at present. The changes, other than the ones covered in the Bill, will be provided for by way of regulation.

Mr. J. Walsh

The amendment I put down concerned the extension of the family income supplement scheme to community employment scheme workers. Has any consideration been given to that? If not, will the Minister explain the reason?

Proinsias De Rossa

We have decided not to extend it at this time. It is not a matter to which I was in a position to give any detailed consideration until now. I am willing to examine the issue, bearing in mind that community employment schemes are financed by the Department of Enterprise and Employment through FÁS. It would be inimical to have the Department of Social Welfare topping up the payments being made by FÁS in the circumstances. As the Deputy knows, in the section dealing with PRSI we have provided for improvements in relation to coverage under PRSI but that is as far as we can go at this stage.

Mr. Bradford

When the Minister reviews the community employment aspect of the scheme, in so far as it can be reviewed, will he consider the possibility of providing family income supplement for self employed persons? This matter has been raised previously by way of parliamentary question and otherwise. I realise there is a cost factor involved but we all know people who are making efforts to create jobs for themselves and other family members and, in certain circumstances, an FIS type scheme would be greatly beneficial in that regard. I realise this is not a matter for the Bill before us but perhaps the Minister would review it in 1996.

Proinsias De Rossa

It would be extremely difficult to police an extension of the family income supplement scheme to the self-employed area. Self-employed persons make their own returns with regard to income tax; by and large they have self assessment. The intention of the family income supplement in the first instance was to assist those people who had children to support and who, because of the social welfare they were in receipt of, might be better off remaining on social welfare if the top-up was not available to them through the family income supplement scheme. I am willing to examine this issue again but I would not hold out any expectation that we would be in a position to extend FIS to the self-employed. In addition to FIS, we have a back-to-work allowance which enables people to initiate self-employment and retain social welfare benefits. I am sure Members are aware of the provisions of that scheme under which 75 per cent of social welfare entitlement can be retained in the first year, 50 per cent in the second and 25 per cent in the third. In addition, an applicant living in a partnership area will be eligible for an area allowance, thus allowing them to retain 100 per cent of social welfare equivalent. Members will see there is substantial support for those initiating self-employment.

The family income supplement was directed specifically at employees and any attempt to include the self-employed at this point would be going beyond its scope. Nonetheless, a fair amount of work remains to be done on the family income supplement, for example, how the calculation of people's entitlement can be improved. We have increased the threshold by £10 this year but there are other improvements, with obvious cost implications, we would like to introduce. Our current thinking is concentrated more on its improvement in the case of employees than the self-employed.

We are also committed to and working on the introduction of a special child benefit supplement, the intention to incorporate child benefit and FIS for those whose income is below a certain level. The expert group on the integration of tax and social welfare — whose report we expect before the summer — are also working on it . Therefore, members will realise considerable work has already been undertaken on making our social welfare system work-friendly, thus easing people's route from unemployment to employment. The improvement of the family income supplement, the extension of the child dependant allowance for 13 weeks and the back-to-work allowance, which predated my entry to the Department are three aspects. The number of applicants increased from 10,000 in 1995 to 15,000 in 1996 and we are doing a considerable amount to assist people to move into employment or to become self-employed.

Mr. J. Walsh

I understood the aim of the family income supplement was to assist low paid families, thus alleviating their poverty. I do not understand why those on low levels of pay participating in community employment, who meet the relevant criteria — like those within other qualifying categories — cannot benefit. Likewise, as Deputy Bradford said, I see no reason the self-employed, including small farmers, whose earnings are below the relevant threshold, who also meet the criteria, should not be eligible.

Has the Minister given any consideration to having the family income supplement paid to the spouse remaining in the home rather than to the husband who will usually be working, now that there is a more enlightened attitude to women remaining in the home?

Miss Flaherty

In the case of the family income supplement does the figure of £195 refer to gross or net income? Second, a critical issue for most people taking up employment is the retention of facilities such as a medical card. While I know attempts have been made to ensure the continuation of entitlement to such facilities, in the case of the family income supplement is the retention of a medical card guaranteed?

Proinsias De Rossa

The payee of the family income supplement is optional; it can be paid directly to the relevant employee or to the other spouse but I understand a high proportion of such payments are made to the spouse rather than to the employee.

To answer Deputy Flaherty, assessment in the case of FIS is based on gross income but I hope to move to a transition to "net" income with relatively high cost implications in the foreseeable future.

People participating in community employment or other schemes introduced in this year's budget will retain entitlement to their medical card, the intention is that such entitlement will continue for a period of three years in the case of the long-term unemployed. As the Deputy is aware, at present entitlement to a medical card is assured in the case of anyone drawing the back-to-work allowance or participating in community employment schemes provided their weekly income does not exceed £250.

Dr. Woods

How many people benefited from the family income supplement in 1994-95 and what is the estimated number of those likely to benefit this year?

Proinsias De Rossa

The family income supplement was introduced in September 1984. The numbers of families who benefited in 1993 were 9,605, in 1994, 10,671 and in 1995, 11,398.

Dr. Woods

And its cost and estimated number of beneficiaries in 1996?

Proinsias De Rossa

Does the Deputy mean the numbers likely to be involved in 1996?

Dr. Woods

Yes, on which the Minister's costs are based.

Proinsias De Rossa

I will endeavour to get that information for the Deputy.

Miss M. Wallace

With regard to the difficulty of establishing the precise income of self-employed people for the purposes of the family income supplement, I came across a specific case — reported to the Select Committee on the Family — of a self-employed person clearly able to show his precise income. He had a business bank account, reflecting many transactions, credits or debits, from which weekly payments of £100 were made to his personal account on which he and his family lived. His accountant was able to substantiate these figures. Yet that married man with a number of children on a specific weekly income of £100 was refused the family income supplement merely because he fell into the self-employed category.

Proinsias De Rossa

One can give all kinds of individual examples but no one scheme can be geared specifically at such individuals, it must cater for all. It would be impossible to confine it to the type of case to which Deputy Wallace referred. Unlike employees, self-employed people make their own returns, compile their own accounts, have their own accountants and engage in self-assessment with regard to their tax liability.

While I do not have precise statistics to hand — I make this point off the cuff — my understanding is that there are, nationwide, something in the region of 5,000 people only who declare an income in excess of £25,000 per annum. That seems an extraordinarily low level of income for the vast majority of self-employed people. We would be opening up the scheme to such an extent that it would be impossible to target it at those who need it. The scheme was deliberately constructed to assist people where the only jobs available to them were in employments giving incomes which were relatively low compared with the income they might have if they remained on social welfare. When the scheme was introduced I welcomed it as an important development. To extend the scheme as suggested by the Deputies to farmers and the self-employed would have huge cost implications.

Question put and agreed to.

NEW SECTION.

Mr. J. Walsh

I move amendment No. 5:

In page 8, before section 7, to insert the following new section:

"7.— (1) The recommendation of the Commission on Social Welfare in relation to a common basic payment or minimally adequate payment shall be recognised as the official poverty line.

(2) The official poverty line rate shall be established at:

(a) for a single adult, £50.00 per week at 1985 prices,

(b) for a married couple, 1.6 times the weekly rate for a single person at 1985 prices,

(c) for each child under the age of 18 years, £10.00 per week at 1985 prices.

(3) The official poverty line rate shall be indexed annually in line with the Consumer Price Index.".

From time to time reports have been produced by various bodies putting the number of people living in poverty at certain figures. At one time 1 million people in Ireland were said to be living in poverty and at other times the figure was put at 500,000. I suggest we establish a poverty line and use that as a base line. One of the most credible base lines we can use is that established by the Commission on Social Welfare in its report, which is now ten years old. The poverty line for a single adult was £50 per week at 1985 prices —£68.50 at 1996 prices — and for a married couple, 1.6 times the weekly rate for a single person at 1985 prices which is £110. Those are not exorbitant amounts by any standards. If this poverty line was indexed annually in line with the consumer price index it would be a useful measure by which to establish policy. Ten years on from the Commission on Social Welfare report it is time we established this base line. I will be pressing this amendment.

Proinsias De Rossa

Section 7 provides for the continued payment of child dependant allowance at the full rate for up to 13 weeks to people who have been unemployed for 12 months or more and who take up employment which is expected to last at least four weeks. Unemployed people who take up self-employment, employment other than community employment, employment under a scheme funded by FÁS or seasonal employment will qualify for these payments. Where the person concerned qualifies for family income supplement at a rate higher than the value of child dependant allowance, family income supplement will be paid in lieu of child dependent allowance, effective from the date of commencement of employment. Any child dependant allowance which has been paid prior to the determination of the family income supplement entitlement will be treated as payment on account of family income supplement.

It should be noted that this is a very significant development in making our welfare system work friendly. One of the difficulties which people perceive to be a problem is the loss of child support when a person takes up employment. In most public and private employments there is no built in family supplement, unless the income is so low that a person qualifies for family income supplement. A person with three or four children, depending on the level of income they are being offered in the new job, may be only marginally better off financially in terms of their take home pay. The ability to retain for 13 weeks the child dependant allowance is an important reform and should not be passed over lightly. It will link in very effectively where the level of employment is such that a person will qualify for FIS and ends the gap which would have existed up to this year between application for FIS, taking up a job and receipt of FIS. This is important in the context of the other job initiatives the Government has outlined in the budget, particularly in relation to the long-term unemployed.

The most effective way of dealing with poverty in general is to ensure that a person can have access to a reasonably well paid job giving them an income which also enhances their self-esteem and encourages re-entry to community activity.

I do not propose to accept Deputy Walsh's amendment. It is now ten years since the Commission on Social Welfare published its report and the rates of pay recommended by the commission are obviously out of date. One does not know whether they are too low or too high. In order to assess that, the Government's policy agreement in December 1994, A Government of Renewal, contained a commitment to commission the Economic and Social Research Institute to review the minimum adequate rates recommended by the commission in 1986. The ESRI review is already under way and will be completed in July next. This review, which will be published, will put forward new rates and will provide an updated objective basis for assessing the adequacy of the current rates of social welfare payments. The ESRI review will also examine how the proposed rates could be indexed in future years. It is important that that point be emphasised. It would be relatively easy to establish a particular line at this time but it is a little more difficult to ensure that that line remains valid. We need a mechanism to ensure that the rates automatically click into place as they fall out of line with the actual standard of living in society.

The ESRI will be making recommendations on how adequate levels of income can be maintained. It would be inappropriate to use a rate set by the commission ten years ago as an official poverty line as this would pre-empt the review being undertaken by the ESRI.

The general increase in the rates of payment provided for in this Bill will mean that contributory old age pensions will increase to 110 per cent of the main rates recommended by the commission; widow's and widower's contributory pension will reach the main rate; the carer's allowance, which will reach 99 per cent of all long-term social assistance payments, will increase to 95 per cent of the main rate. Apart from the extent to which the rates recommended by the commission are out of date, it should be remembered that any given level of income that is deemed to be an adequate rate of payment for social welfare purposes is not necessarily an appropriate measure of poverty itself. It is generally accepted nationally and at EU level that other factors, in addition to income, should be taken into account in determining what is an appropriate definition of poverty in any society at any given time. At a broad level, these factors relate to a person's ability to participate in society. The proper debate on this whole issue will follow on the publication of the ESRI report. I would welcome Deputies' comments on the report following its publication.

The ESRI is working on another report, also expected in July, on the whole question of poverty. It will deal with household income. It has not been updated since 1987. That will be an important addition to our understanding of household income in Ireland and how the income of people on social welfare relates to general household income. The other report commissioned by my Department in relation to adequacy will also be an important part of that. It would be inappropriate to accept the proposal as outlined by the Deputy.

Mr. J. Walsh

I felt like cheering when this was one of the amendments accepted. I got a note stating that amendments Nos. 2 to 4, inclusive; 6; 8 to 13, inclusive; 15 and 16; 18 to 26, inclusive, and 28 had been ruled out of order. When an amendment is accepted it is an occasion of great celebration and to have it dismissed this way is an inadequate response.

Proinsias De Rossa

It is an inadequate amendment.

Mr. J. Walsh

It was not inadequate in 1993 when the Minister put down a similar amendment.

Proinsias De Rossa

That was three years ago.

Mr. J. Walsh

The Minister's past is catching up with him again. We are not addressing section 7, the amendment would insert a new section in page 8 before section 7. If that were established, it would be of some help. I want these poverty lines recognised so that statistics and reports would be more beneficial in planning and devising policy. There would be no cost involved. This is sensible.

There is still a substantial number of rates of payment below the rates recommended by the Commission on Social Welfare. I have a copy and apart from the first four all the others are below the recommended rates. The figure of £50 is the equivalent of £68.50 at today's prices. The personal rate of unemployment benefit and disability benefit is £64.50 and of non-contributory old age pension and unemployment assistance, £62.40. There is great poverty and we need a benchmark to allow us to plan and develop policy initiatives to eliminate it. To talk about another report which will be available in a few months' time is of little value to those living in poverty.

Proinsias De Rossa

It is a bit late in the day, ten years after the Commission on Social Welfare reported, for Fianna Fáil to propose——

Mr. J. Walsh

Blame Fianna Fáil.

Proinsias De Rossa

——that we include ten year old rates as poverty lines when it resisted——

(Interruptions.)

Proinsias De Rossa

Am I entitled to speak?

Mrs. Geoghegan-Quinn

The Minister should speak through Irish.

Proinsias De Rossa

It is a bit late in the day, ten years after the Commission on Social Welfare reported, for Fianna Fáil to propose official poverty lines——

Mr. J. Walsh

That is not what the Minister said in 1993.

Proinsias De Rossa

The Deputy can reply when I finish.

Mr. J. Walsh

The Minister should offer something sensible.

Proinsias De Rossa

I repeat — I should be allowed to finish the point — that it is a bit late in the day, ten years after the Commission on Social Welfare reported, for Fianna Fáil to propose official poverty lines when it resisted any such attempt to do so when in office. Now, when I have initiated a mechanism for updating the rates, it suddenly decides that the rates recommended by the commission are adequate poverty lines. When we receive the ESRI report on the adequacy of household incomes and are aware of the mechanism proposed to index rates it will be far better for those living on inadequate incomes than the kind of nonsense the Deputy is proposing ten years too late.

Amendment put.

The Select Committee divided: Tá, 8; Níl, 12.

Tá
Doherty, Sean.	Wallace, Dan.
Flood, Chris.	Wallace, Mary.
Geoghegan-Quinn, Máire.	Walsh, Joe.
Martin, Micheál.	Woods, Michael J.

Níl
Bradford, Paul.	Flaherty, Mary.
Byrne, Eric.	Hogan, Philip.
Costello, Joe.	Kemmy, Jim.
Creed, Michael.	Kenny, Sean.
De Rossa, Proinsias.	Pattison, Seamus.
Fitzgerald, Frances.	Sheehan, P.J.

Amendment declared lost.

Miss Flaherty

Before proceeding, will a senior member of staff sort out the problem with the bells? As this is important legislation, loss of a vote could have significance for all of us. Unless Members watch their monitors they will not know when a vote is called. The system should work properly to alert Members moving around the House.

Chairman

We have already made inquiries.

Miss Flaherty

Is the Superintendent responsible for the matter?

Chairman

I understand contact has been made and we are awaiting a response. As a convenor, perhaps the Deputy could do something about the problem.

Miss Flaherty

I will.

Mr. Flood

Do division bells ring in other committees? If that is the case, it is extraordinary that the appropriate procedures of the House are not followed for this important legislation. This ham-fisted approach makes the job of convenors very difficult.

Chairman

We are trying to get an explanation for the problem.

Miss Flaherty

I suggest we adjourn for 15 minutes to enable the Clerk to discuss the matter with the Superintendent.

Sitting suspended at 11.20 a.m. and resumed at 11.40 a.m.

Chairman

Members will be glad to learn that division bells will be rung for votes. Division bells were recently introduced on a trial basis in Kildare House but there is no provision in Standing Orders which requires bells to be sounded for a vote at a select committee. Until such time as a permanent system is introduced select committees using the Dáil or Seanad Chambers will be able to use their systems.

Dr. Woods

Division bells are rung in Kildare House and Deputies can be confused if a similar system is not operated here. Standing Orders will probably catch up with this in due course.

Chairman

The Dáil system will be used until such time as a permanent system is introduced for committees.

Proinsias De Rossa

Before we deal with section 7, I promised Deputy Woods I would give him the FIS figure for 1996. It is expected that an extra 1,000 families will qualify for the supplement this year, bringing the total to approximately 12,500 as against 11,500 in 1995.

Dr. Woods

Thank you.