Dáil Éireann díospóireacht -
Tuesday, 13 Dec 1983

Vol. 346 No. 9

Private Members' Business. - Smallholders' Social Assistance: Motion.

Dr. O'Hanlon

I move:

That Dáil Éireann calls on the Government to provide social assistance to alleviate the hardship of smallholders in need, following the abolition of the notional method of assessment.

Before commencing I should like to pay a tribute to Minister of State, Deputy F. O'Brien, whom I understand is leaving the Department of Social Welfare. I should like to thank him for his courtesy. I wish Deputies Pattison and Donnellan, who I understand are becoming Ministers of State at the Department of Social Welfare, every success during their terms of office.

The reason for this motion is that smallholders and my colleagues whose names are appended to the motion believe that the Government are using the result of the High Court ruling that the poor law valuation system was unconstitutional to launch a major onslaught on the standard of living of the small farmers of the 12 western counties. Indeed, the farmers of those counties have lost confidence in the Government, as have my colleagues who appended their names to the motion. Indeed one of their own Ministers has lost confidence. Because of a letter the Minister sent out earlier this year it is important to recognise that it was this Coalition government who abolished the notional method of assessment in the Social Welfare Bill earlier this year. The Minister, in the course of that debate, used the High Court judgment of July 30 1982 in saying:

...that sections of the Valuation (Ireland) Act, 1852, were unconstitutional, the Attorney General advised that the continued use of the notional method of assessment of means is unlawful and the 1981 Act should be amended as soon as possible.

The first question I should like to pose to the Minister is, does that ruling apply to the distribution of benefits, in this case, social welfare benefits, which are made available through the legislative processes of this House? Also, did the judgment include the paying out of benefits or did it refer only to the collection of tax? As I said, it was this Coalition Government who abolished the notional system of assessment for smallholders. We are asking Deputies on both sides of the House to give consideration to the very serious implications of this decision.

An Ceann Comhairle

I think we are probably violating the sub judice rule because, as I understand it, this decision of the High Court is on appeal to the Supreme Court. If we were to dissect the judgment of the High Court and have a long discussion on it we would be violating the sub judice rule.

Dr. O'Hanlon

I do not want to say any more about it except that the comments you have made yourself, Sir, probably render the situation worse, in that the Minister has taken precipitate action in advance of the decision of the Supreme Court. However, we shall not say any more about that.

The Minister circulated a letter which received a lot of publicity in local papers around the country. He gave the impression that it was the Fianna Fáil Government who were responsible for the abolition of the notional system when he said, in his letter dated 14 September 1983, referring to the High Court case that this position was accepted by the previous Government which took the initial action to give effect to the High Court ruling. While the previous Government did not investigate any other smallholders under the notional system, they did not bring forward, nor had they any intention of abolishing the notional system altogether.

It is important to recognise that it would be more realistic to recognise the small farmers' unemployment assistance as an income supplement, as a compensatory measure for farmers living in disadvantaged areas where traditionally farm incomes lagged behind those of other areas. This is recognised not alone by our Government but by the EEC who have provided all kinds of special schemes for the western counties, for example, the western drainage scheme and the western headage payments. This is a recognition of the fact that people in these areas are endeavouring to make a living on land totally uneconomic to work.

Unemployment assistance was introduced under the Unemployment Assistance Act implemented 50 years ago this year. While farmers could apply for unemployment assistance, provided they satisfied the necessary means test and were available for and able to work, it was not until 1966 that they were given recognition in their own right. In that year this income supplement for smallholders in the western counties was initiated in five counties of Connacht, three counties of Ulster, in Clare, Longford and parts of Limerick and Cork where there were people living on very small holdings. The Government of the day decided that they should introduce a notional system of assessment for such people. That assessment was based on what has been the basic social philosophy of all Governments here, to try to retain as many people as possible on the land, rendering it attractive for as many as possible to remain on smallholdings in the west.

The Report of an Inter-Departmental Committee on the problems of Small Western Farms acknowledges the difficulties in devising a system which would not have unfortunate side effects. I am referring to a report on small western farms, published by the Government Stationery Office in 1962 in which it was said:

Some more flexible method of assessing means which would have an incentive rather than a disincentive effect should be devised.

That was one of the reasons why a Bill was introduced in this House in 1965 whose provisions were implemented in 1966.

We are talking about some of the very poorest people in the land, people living on small holdings. Over the past three years we have had two by-elections in Donegal. Practically all Members of this House, including the Minister, were in Donegal, west Donegal in particular, and saw the circumstances in which these people, about whom we are talking this evening, live. It is fair to say that one would not have to be a social welfare officer, or an investigating officer to recognise that these people need some supplementary income to help them survive on their land. In fact, whilst canvassing, one would need only to look over the garden gate to see the type of land, much of it bog and rock, which these people work.

The people in Donegal have reared some of the finest families in the land, and that applies throughout the western seaboard. Had it not been for the contributions through the Unemployment Assistance Acts they would not have been able to survive on the land and the west would have been denuded of many more of its population. The legislation to give effect to the notional system was introduced in 1965 in the Social Welfare (Miscellaneous Provisions) Bill by a former Member, Mr. Kevin Boland, whom I will quote during that debate:

The object of the change is to make small farmers in the congested areas free to work their holdings to maximum capacity and to participate readily in all schemes designed to increase agricultural output without being concerned about losing some or all of their unemployment assistance as a result of expanding farm income arising from greater effort and enterprise on their part.

The Government found it necessary to introduce that legislation to ensure that farmers would be able to work on the land with the aim of getting the maximum production without having investigating officers coming along to reduce their incomes. The debate was on 29 June 1965 and it is interesting to read the contributions of Deputies. For instance, Deputy Declan Costello, the author of Fine Gael's "Just Society", said:

There are special changes in the Bill which deal with special cases of applications by smallholders for unemployment assistance. Of course, the general idea is a good one. I should like to know why the Minister is to restrict this benefit to areas he will define by order and why this new scheme should not be operating throughout the country as a whole.

Not alone did he want it applied to the 12 western counties but he wanted it extended throughout the country. Deputy Corish, former leader of the Labour Party, listening to him, intervened, "Hear, hear". Deputy Tully, a former prominent member of the Labour Party, wanted to know why it was being confined to certain areas. He, too, wanted it extended to the whole country. Deputy Crotty of Fine Gael said on that occasion:

I am glad the Minister has brought in sections 8 to 10 in this Social Welfare Bill which will enable people in the congested areas to work the land to the fullest capacity and to the extent of their ability, and that there will not be strict inspection of every family and every beast on the land for the purpose of a means test in relation to home assistance.

They are the views of prominent and respected Members of the House when that Bill was introduced. The circumstances are exactly the same and one can justifiably ask why the change in the social philosophy of the Coalition? What we are trying to do now is to ensure that those who live in smallholdings, in the west coast particularly, will be able to survive to rear their families in confidence.

There was criticism of the notional system in the early years. The system was based on an income of £20 per £1 PLV and the rate remained unchanged until 1976. In the early seventies the number of farmers who benefited increased from 6,958 to 24,180 in 1976. It was realised then that perhaps some farmers at the upper end of the scale did not need this direct supplementary income and measures were taken by successive Governments to bring the system back into line. The £20 per £1 PLV was the accepted basis for those of £15 and less than £20 PLV. That was increased to £30 per £1 and those on more than £20 PLV were credited with £40 in the £. Those with less than £15 PLV would benefit fully. Therefore, the imagined inequities in the scheme were eliminated. Today one can see 118 questions on the Order Paper for written reply addressed to the Minister for Social Welfare and it makes one realise the problems of so many people coming up to Christmas.

In this motion we are talking about small farmers. In my constituency recently a small farmer came to me. He has seven children and he was receiving £75.25 per week in the last two years. Suddenly, at 6.30 p.m. that Saturday, a social welfare officer arrived and after two weeks the farmer found himself with £6 per week. I ask the Minister to say in all honesty how he expects anybody to manage his affairs on a small farm and seven children on £6 per week.

This criticism does not come from our side of the House only. I have a quotation from the Roscommon Herald of December 2 1983:

Speaking at a Fine Gael District Executive meeting in Castlerea last Friday night, Senator John Connor was critical of the way Department officials are taking welfare allowances from small-holders in west Roscommon.

That is the problem. People are losing their welfare allowances, in this instance in west Roscommon.

Calling for these cases of harassment and inequities to be brought to his notice he said he would be meeting Fergus O'Brien, TD, Minister of State with a view to having these officials and faceless bureaucrats brought to heel.

I hasten to add that my experience of the officials of the Department is that they do their jobs conscientiously and efficiently. I do not want to cast any reflection on the officials who do their work. They are working under the system and the regulations. Ultimately the Minister has to take responsibility for the manner in which these people are losing their benefits.

The farmer I mentioned whose benefit was reduced from £75 a week to £6 a week appealed his case. After six months he got over £40 a week. It is wrong that he should have to wait that length of time. This is an indication of how the smallholders are being asked to survive. Surely a case can be made for a notional system of assessment for these smallholders.

The ICMSA expressed concern about the administration of the income supplement for small farmers. In an article in a newspaper in your own town, a Cheann Comhairle, they said:

The ICMSA has achieved a significant breakthrough on the Farmers' Dole issue following a case made by the Association which met Minister of State Fergus O'Brien... Mr. O'Brien expressed concern at the situation of farmers who have had their Smallholders' Assistance suspended or restricted when the facts were outlined to him by the delegation.

That appeared in the Anglo Celt of 2 December under the heading “Agri-News”. The Minister said he was most anxious to resolve the problems of the farmers concerned as quickly as possible. The Minister went on to say that the Department of Social Welfare were drafting a new assessment system which would give full recognition to all farm expenses involved in production. The Minister gave the delegation his personal assurance that “every single genuine case that ICMSA had on file involving farmers who believed they had been unfairly assessed in their entitlements to Smallholders' Assistance would be reviewed and resolved immediately”. The final comment is that the ICMSA hoped that would be done before Christmas. That is right and correct because we are talking about people who are trying to manage on very small holdings.

On 22 March 1983 speaking on the Social Welfare Bill, as reported in volume 341, column 455, the Minister of State said:

On the question of smallholders and of doing away with the notional system, assessment on a factual basis is a fair system which will in time work out satisfactorily. There is no question of hounding people or taking money from them. In any welfare system there must be obvious fairness. The administration of any welfare system has to be seen as fair. It must also show that people in need will not be cast aside. Whatever money we have—and vast sums are being expended—it must be spent where there is hardship and necessity. That is what we intend to do and that is what we will do.

That is all very well but we have to submit that that is not what is happening. In the 12 western counties, including your constituency and mine, a Cheann Comhairle, people are not able to survive on what they are receiving. I was told about a case in Donegal of a girl who received a scholarship to go to the university. She got the higher education grant but that was not sufficient for her. She intended to go to the university but, as a result of the doing away with the notional system of assessment, their supplementary income was reduced and her parents were unable to give her the extra money necessary and she did not go to the university. We are speaking about the difficulties people have in trying to live on some of the poorest holdings in the land. Anybody who was at the by-election in west Donegal and saw the quality of the land knows that these people need a supplementary income. In doing away with the notional system of assessment we have left these people in a much worse position. Many of them will be unable to carry on and we will have a major reduction in the population of the west.

The number of people in farming has been reducing over the years. Approximately 100,000 people have left the land since 1971. In 1971 288,000 people were working on the land and in the 1981 census that figure was reduced to 196,000. Surely in these days of rising unemployment when we cannot create jobs, when the Government have failed to create jobs, they must adhere to the social philosophy of all Governments since the foundation of the State and ensure that people can live on the land.

In the NESC document No. 41 they gave various options for amending the smallholders assessment scheme. They recognised that the principle of income supplementation is necessary. That is accepted in all European countries. They pointed out that a minimum income was guaranteed to farmers in 1966. One of their options was to abolish the notional assessment and revert to the pre-1966 factual assessment of income, which is exactly what the Minister did in the Social Welfare Bill this year. Their comment was:

From an administrative point of view, however, such a change would be more costly and time consuming. Furthermore, a reversal to a factual means testing could be regarded as a retrograde step in welfare administration.

We agree with that, but that is exactly what the Minister did. Another option was to retain the notional basis of assessment but provide for an updating of the land valuation system as a result of the High Court action. Perhaps the Minister is right in saying it is not possible to use that, but I would ask him to question whether this applies to the administration of social welfare schemes resulting from legislation or refers only to the collection of tax. There is another suggestion regarding the adoption of a regional notional income providing for periodic adjustment with a base on an updated land valuation. It is said that this would be more equitable than the present system. The recommendation of the NESC is as follows:

From the point of view of administrators and claimants the less complex an assistance scheme is, the better. In assessing farmers' means for small holders' assistance we recommend that regional notional incomes with a base on an up-dated land valuation be adopted and that the multipliers be adjusted periodically.

There are certain anomalies which create serious problems for people who are used to being assessed on a notional basis. To receive maximum benefit under the smallholders' unemployment assistance scheme one must have no means whatsoever. It has been suggested that people on higher valuations are doing better than those on lower valuations. Another problem with a complex method of assessment is that income is assessed on the basis of a whole year. In the 12 western counties, in areas where the land is suitable, most of the farmers are engaged in the production of milk and hence they are getting a higher income during the summer than in the winter. I would ask the Minister whether he believes that a farmer with a wife and two or three children who is getting £30 or £40 in unemployment assistance during the summer months would be able to save that money for the winter months. We are speaking about people living on the poorest land and we are suggesting in the method of assessment we are using that if they have a so-called "high" income in the summer they should be able to save some of that money for the winter. Surely something must be done to rectify the matter.

In answer to a parliamentary question of 8 December last it was revealed that 1,141 small farmers lost unemployment assistance. Can the Minister be sure that all those people have sufficient money coming up to Christmas, simply because they happened to have an income from milk production during the summer months?

The same applies to board and lodgings. The Minister of State prepared a booklet earlier this year which states that there are no statutory criteria for the assessment of board and lodgings and that each case is decided on its merits. This is creating serious hardship for many people, not only in the western counties. The wife of a smallholder may go out and do a few hours work each day and her income will be taken together with her husband's if a young adult in the household applies for unemployment assistance. He or she may be credited with means of £27 or £28 per week and receive nothing by way of unemployment assistance or perhaps as little as £1.40 a week. I saw a girl cry as she asked me "Is that all the State thinks I am worth, the price of a packet of cigarettes?"

These are the problems caused by the system as operated by the Minister and aggravated by the abolition of the notional system. We are not surprised that the situation is as it is because the whole social philosophy of this Government is totally insensitive to the needs of the people and many are unable to manage as a result of the Government's social policy. I will not deal with the rise in unemployment resulting from Government policies. The Taoiseach stated in this House that the policies being pursued were diametrically opposed to the policies necessary to create employment. The number of people who can expect to be out of work continues to rise. This afternoon we passed a Supplementary Estimate for another £70 million, again as a result of total lack of judgment by this Government earlier this year. We told them that unemployment would rise, that more people would be out of work because of their policies and that more money would be needed for unemployment benefit and pay-related benefit.

The Government's attitude to children is shown by the Christmas Eve announcement last year of the introduction of major charges for school buses. There was no increase in the children's allowance this year and no double dependants' allowance for children in September, or for the children of short-term recipients of social welfare payments at Christmas, even though the Minister stated that the scheme this year was exactly the same as the scheme last year. The Fianna Fáil Government last year gave a double dependant's allowance for children at Christmas. Even that would alleviate in some way the hardship suffered by all those on low incomes, including smallholders. Increases of 10 per cent and 12 per cent are totally inadequate for those on social welfare payments. The 5 per cent increase in October to those unemployed for more than 15 months was very meagre, costing £2 million. It was pointed out again and again on this side of the House that the increases were totally inadequate.

I would ask the Minister to find some way of giving a direct supplementary income to smallholders on very poor uneconomic land, particularly in the western counties outlined in 1966 when the scheme was introduced. I would ask him not to take the easy way out by abolishing the notional system and hiding under the umbrella of the High Court decision.

I ask the Minister to face up to the reality of the situation and to give the smallholders a direct supplement so that they will be able to continue to live on the land, so that in ten years' time it will not be found that everybody has gone off the land in the west. I ask him to look at the system and ensure that these people will be able to survive there and rear their families there.

An Leas-Cheann Comhairle

The Minister to move the amendment. He has 30 minutes.

Minister for Health and Social Welfare (Mr. B. Desmond)

I move amendment No. 1:

To delete all words after "Dáil Éireann" and substitute the following:

"notes that entitlement to unemployment assistance is now decided on a uniform basis in the case of all applicants having regard to their actual means and further notes that with a view to alleviating the position of unemployment assistance recipients generally the Government provided an increase of 5 per cent in the standard rates of assistance from October last to those who had been unemployed for 15 months or more, including smallholders whose entitlement to assistance was based on a factual assessment of their means."

It is appropriate for me at the outset to outline the origins of the notional system of assessing the means of smallholders for unemployment assistance purposes. As we know, it was first introduced in 1965. Prior to that smallholder applicants or unemployment assistance were treated in the same way as other applicants, that is if they satisfied the means test, if they were unemployed, available for and seeking work they were eligible for assistance. In the early sixties, however, it was proposed that a less exacting method of assessing means for unemployment assistance purposes would be more favourable to smallholders on small farms in western areas as it would enable them to work their holdings and increase their incomes without losing the unemployment assistance payments. The method devised was to calculate farm means on a notional basis by reference to the poor law valuation of the land. In 1965 it was, therefore; provided that in calculating means derived from the use of land in certain specified areas the yearly value would be derived from the use of land in certain specified areas the yearly value could be deemed to be £20 for every £1 of the rateable valuation of the land. The areas specified were counties Cavan, Clare, Donegal, Kerry, Longford, Monaghan, all the counties of Connacht, and the poorer parts of west Cork and west Limerick.

It was considered that this method of assessment would allow smallholders in those areas to increase their production without affecting their entitlement to unemployment assistance, because as long as their valuation remained the same and provided they had no other means their assessment would remain unaltered.

The motivation underlying the introduction of the notional system was, therefore, to stimulate increased output by smallholders in the areas concerned. This might be regarded as something not entirely appropriate to the functions of the Department of Social Welfare. However, at the time it was considered that because the Department had a network of local officers the most convenient mechanism to achieve the overall objective would be to operate through the social welfare system.

The special arrangements for smallholders continued to operate, subject to a number of modifications, until last year. On 30 July 1982 the High Court, in an action brought by a number of farmers, gave judgement that sections of the 1852 to 1974 Valuation Acts were unconstitutional. My Department were advised by the Attorney General that the continued use of the notional method of assessing means based on rateable valuation was no longer lawful, that it should be discontinued and that the social welfare legislation should be amended as soon as possible. I would stress that the previous Government in the person of Deputy Woods took the initial action to give effect to the High Court ruling by discontinuing the application of the notional system to new smallholder applicants for unemployment assistance. When the new Government took up office they gave effect to the legal advice which had been received by repealing the relevant sections of the social welfare legislation in the Social Welfare Act, 1983. The Act also provided that existing recipients could continue to retain their entitlements pending reinvestigation of their means on a factual basis. The reinvestigation process started in May 1983 and under the legislation must be completed within three years.

It was envisaged when the notional system was introduced that it would encompass a relatively small number of applicants — basically those with rateable valuations under £10. In 1965 there were approximately 8,000 smallholders on unemployment assistance based on factual means assessment and the vast majority of those were under £10 valuation. The numbers increased rapidly, however, in the following years. By early 1967 the numbers had risen to over 11,500, by early 1970 to 15,500, by early 1973 to 21,000 and by early 1976 to a peak of 31,000.

The main reason for this huge increase in the numbers benefiting under the scheme was the method of calculating the amount of unemployment assistance payable in individual cases. This was done by deducting from the maximum rate of assistance the amount of means assessed. Over the years there were regular significant increases in unemployment assistance rates while means notionally assessed remained the same at a flat £20 per £1 valuation. Consequently each annual increase in the rates of unemployment assistance widened the valuation range within which smallholders could qualify for unemployment assistance and increased the numbers covered by the scheme.

As a result a whole new group of people who by no stretch of the imagination could be compared with other applicants for unemployment assistance and who by the criteria set down when the notional system was introduced would not have been covered, were brought into the scheme. In 1976 and subsequent years, therefore, specific measures were taken to restrict the application of the scheme, measures taken by the Fianna Fáil and Coalition Governments of the day. These measures consisted of increasing the £20 multiplier for valuations over £15 in 1976 and introducing variable multipliers for different ranges of PLV in 1979, withdrawal of the notional system for those with valuations over £20 in 1977 and the exclusion of smallholders on notional assessment on a number of occasions from the budgetary increases in rates of unemployment assistance. The measures taken were, however, on a very ad hoc basis and designed purely to prevent the scheme from getting totally out of control. No consistent policy was followed from year to year and the result was unsatisfactory.

The result of the various measures taken to restrict the scheme over the years was that the number of smallholders in receipt of unemployment assistance had fallen to some 20,500 by the beginning of 1983. Of those some 7,700 were on factual assessment of their means. Even allowing for this decrease in the overall numbers, however, it is clear that the scheme still covered a much larger number of applicants than those for whom it was originally intended. A very significant fact regarding the number of smallholder recipients of unemployment assistance in early 1983 is the numbers who were receiving unemployment assistance based on a factual assessment of their means. The various restrictions of the notional system over the years, and, in particular, the denial of budget increases on a number of occasions, meant that, increasingly, smallholders were finding it more beneficial to have a factual assessment and take advantage of the higher rates of assistance which applied to those factually assessed.

In 1980 the budget increases in rates of unemployment assistance were withheld from all notionally assessed smallholders. If my memory serves me right, that was a Fianna Fáil decision. They were individually advised of their option to have their means factually assessed. About 5,000 of the 18,000 then on notional assessment availed of the option and about two-thirds of those gained as a result. There is no doubt that the notional system, which by 1980 involved three different multipliers and three different scales of unemployment assistance rates in addition to the two standard scales — urban and non-urban — which applied to factually assessed applicants, had no clear underlying philosophy and was in need of radical reappraisal.

Furthermore, apart altogether from the fact that the notional system had by the late seventies embraced a much larger number of smallholders than was originally intended, doubts were being more frequently expressed as to whether the scheme had achieved its original underlying aim of increased farm output in the areas concerned. The point was often made that the unemployment assistance scheme, even under the notional system of assessment, still remained a disincentive to increased farm income.

Mr. D. Gallagher

Codology.

Mr. B. Desmond

I would refer in particular to a number of NESC reports which pointed out that there was a definite disincentive under the notional system to acquire additional land in as much as this would increase total valuation and lead to a reduction in, if not a complete loss of, payments under the scheme. Other reports suggested that in the light of the changing scene in the agricultural sector and the introduction of other incentive schemes for farmers, such as the disadvantaged areas scheme introduced in 1975, the necessity and, indeed, desirability of the smallholders' scheme of unemployment assistance were open to question. A great deal of concern was expressed to the effect that farmers with relatively high incomes could qualify under the scheme although they could not reasonably be regarded as in need of assistance. In effect, the scheme has become a method of support for a limited section, though admittedly in general terms the less well off, of the farming sector.

Deputies are well aware of the level of assistance organised by the State through the Department of Agriculture for the agricultural sector as a whole. It is appropriate for me to mention here a few of the measures taken by that Department to assist farmers in disadvantaged areas, in particular, and these are still in operation.

There is a headage payments scheme for disadvantaged areas. This is part of an EEC measure whereby cattle headage, beef cow and sheep headage payments are paid to eligible farmers in certain "less favoured" areas. These areas consist of counties Galway, Leitrim, Mayo, Roscommon, Sligo, Cavan, Clare, Donegal, Kerry, Longford, Monaghan and parts of west Cork and west Limerick. The Sliabh Felim area is also included and certain mountain sheep areas scattered throughout the country. The aids were introduced

to ensure the continuation of farming, thereby maintaining a minimum population level or conserving the country-side in certain less favoured areas

and

to encourage farming and to raise farm incomes in these areas.

That is the particular purpose of the headage payment schemes in those areas.

The following aids are also available in those areas for eligible farmers:

(i) Cattle Headage Scheme

Thirty-two pounds is paid on each of the first eight livestock units and £28 for each of the next 22 livestock units subject to a maximum of £872. An estimated 63,500 farmers will receive some £26 million under this scheme in 1983.

(ii) Sheep Headage Scheme

The first 150 eligible ewes are paid £9.50 each and the next 50 eligible ewes are paid £6.50 each subject to a maximum of £1,750. An estimated 18,700 farmers will receive some £9 million under this scheme in 1983.

(iii) Beef Cow Headage Scheme

Thirty-two pounds is payable on the first ten beef cows and £28 on each of the next 18 beef cows, subject to a maximum of £824. An estimated 9,600 farmers will receive nearly £2 million under this scheme in 1983.

There is a programme for western development which was introduced in 1981 and which consists of a range of measures designed to alleviate the special problems of agriculture in the west of Ireland. These aim to develop services such as electricity, water supplies and roads in as much as the living conditions of farmers and of the rural communities in those areas are in need of improvement. It applies to counties Donegal, Cavan, Monaghan, Galway, Mayo, Roscommon, Sligo, Leitrim, Longford, Clare, Kerry and parts of west Cork and west Limerick. As Deputies know the measures include:

(a) Infrastructure

(i) Rural water supply

(ii) Agricultural roads

(iii) Electrification

(b) Direct Farm Aids

(i) Land Improvement grants at a rate of 70 per cent.

(ii) On-farm investment grants of 40 per cent for farm buildings and 30 per cent for fixed equipment.

(iii) An interest subsidy for two years on borrowings of up to £100 for each beef calf reared to fattening stage.

(c) Forestry

(d) Agriculture

(e) Agricultural Marketing and Processing

In all, if one takes the 1981 prices, the injection is no less than £300 million of particular benefit to these areas to ensure the maintenance of farm income and of the many smallholders in the area.

I must also have regard to the criticism frequently put that the smallholders' scheme was inequitable by comparison with the scheme as it applied to unemployed people generally, all of whom are subjected to factual means assessment. Many people object to means tests but they do represent a reasonably fair way of allocating scarce resources and are likely to be with us for some time to come. I consider that the operation of the means tests should be and should be seen to be equitable as between the different categories of people to whom they apply. The overall cost of unemployment assistance in 1984 will be over £260 million and the numbers of people long-term unemployed and dependent on unemployment assistance is a matter of grave concern. I want to ensure that the resources available to me are used in the fairest way and to the best possible effect.

In the light of the experience to date therefore and bearing in mind the necessity in present circumstances to make the best possible use of the limited resources available, I am convinced that the fairest system for applicants for unemployment assistance is the one which we will have in future, namely, a system in which the means of all applicants will be assessed on a factual assessment basis and their entitlements determined accordingly. Factual assessment of means is just that — an attempt to assess the factual situation as far as income is concerned.

I would like to say a few words about what factual assessment of means actually involves because there has been a lot of comment in recent months regarding the manner in which means for farming and small holding are assessed. Much of that comment has been quite wrong and many misleading statements have been made. The suggestion has been made that officers of my Department take account only of the gross income from the farm and do not take account of the costs involved in earning that income.

I would like to take this opportunity therefore to set the record straight and to outline briefly the method of assessing farm income. What we are trying to assess is the normal yearly income from the farm. The basis of the calculation of farm income is the net income over the 12 months preceding the investigation of means. The applicant is interviewed in all cases and the assessment is made on the basis of information supplied by the farmer himself. I stress that point in parof gross income from farming activities such as the sale of stock, crops or other produce, sale of milk to creamery and so on. If there were exceptional circumstances associated with the particular year in question, allowance would be made for this. Account is also taken of additional income, for example, from letting of land, hiring out of machinery or from headage payments.

When the gross income has been ascertained it is then reduced by the amount of the costs actually and necessarily incurred in connection with the working of the farm. These would include items such as rent, rates and annuities, the cost of seeds, fertiliser and feeding stuffs, renewal of tools and farm machinery, repairs to farm buildings, fences and the like, veterinary expenses, the cost of electricity, petrol and diesel and so on.

In relation to farm machinery, hire purchase and other instalments are allowed or a reasonable annual allowance is made for depreciation. An additional and significant cost item for many farmers in recent years is interest paid on moneys borrowed and here again such interest is allowed where it arises out of borrowings in connection with the working of the farm and where it is paid. Necessary labour costs, excluding that of husband or wife, are also allowed as a deduction in calculating net income. I defy anybody to go into an urban area throughout the country and point out that method of assessment to some fellow applying for unemployment assistance in an urban area. Frankly that system of assessment is more than fair.

I want to emphasise, therefore, that the purpose of the exercise is to determine the facts and the officers of my Department have no vested interest in denying any person whatever he may be entitled to. There is a detailed interview with each applicant for unemployment assistance and for this purpose the social welfare officers undergo a comprehensive training programme and have detailed instructions to guide them. Furthermore, they are working under the control of district supervisors who have many years of experience in this area. Finally, any person who is dissatisfied with the amount of means assessed against him can appeal against the decision and have his case referred to an appeals officer for determination.

I am emphasising in particular the question of the method of assessing means because I regard it as crucial in this whole debate. I am not suggesting that the assessment of means is a simple straightforward exercise in all cases because often the information required may not be readily available to the applicant. What I am saying however is that there is a well-tried system in operation whereby a fair and reasonable assessment can be made. Since I took office as Minister for Social Welfare I have had the method of assessing farm means subjected to detailed analysis and I am satisfied that all possible measures are taken to ensure that the assessment in individual cases is a fair one. Reference has been made to the allegedly lower results for family farm income emerging from the farm management surveys carried out by An Foras Talúntais. Discussions have been held with An Foras and comparisons have been made between the results of their surveys and the average income as assessed for unemployment assistance and they have been found broadly comparable.

I have listened also to the views which have been put to me by various farming representatives on this whole matter and it is clear to me that what farmers want is a fair and reasonable assessment of means. They are not seeking that assistance should be given to any person who does not have a genuine entitlement. They accept too that the abolition of the notional system will result in some farmers having their entitlements reduced or cut off. I have met no resistance, however, to the idea of factual assessment, provided the assessment is fair. In my view the system as I have outlined it is fair and with a view to providing more information about it, and promoting a greater understanding of it, a memorandum setting out in detail the method of application of the means test for unemployment assistance purposes was circulated some while back to all Deputies and Senators. I would urge Deputies to study this memorandum because I would hope it would provide them with grounds for a greater belief in the equity of the system.

It is inevitable that a number of smallholders who earn a reasonably good living will suffer reduced entitlements, or indeed have their payments terminated entirely. Others, however, and particularly those with smaller farms in areas where the land is poor will benefit from the change-over to factual assessment.

Reassessments so far have been concentrated as far as possible on smallholders in the higher valuation ranges. Nevertheless it has been found that some 1,000 or 25 per cent of those reassessed have had their rate of assistance increased. This is because on the change-over to factual assessment the rate of unemployment assistance payable is calculated by reference to the higher rates of assistance which apply to those assessed on a factual basis and which include all the budget increases given down the years.

I readily accept unemployment is a shattering experience at any time but what is of greatest concern in present circumstances is the increasing duration of unemployment and the extent to which unemployed people are becoming dependent on unemployment assistance as their long-term source of income. In the early stages of unemployment the existence of unemployment benefit and pay-related benefit can to some extent cushion the blow but once a person has been unemployed for over 15 months he ceases to be entitled to unemployment benefit and must rely on unemployment assistance. It was with this in mind that earlier this year I sought the authority of the government for increasing by 5 per cent the standard rates of unemployment assistance paid to all those who have been unemployed for 15 months or more. Over 80 per cent of all unemployment assistance recipients, including smallholders whose means have been factually assessed, will benefit from this increase.

I accept of course that the only real solution to unemployment is the creation of employment. The unemployment benefit and assistance schemes can at best only alleviate the problem and unfortunately it is in times of economic recession when the demands on the unemployment schemes are highest that there is the greatest difficulty in making available the resources necessary to provide an adequate level of income under those schemes to an increasing number of applicants. As far as smallholders on unemployment assistance are concerned the problem is not one of unemployment as such but rather of under-employment and low incomes. For this problem the only long-term solution lies in the area of agricultural policy through efforts to make holdings more viable and capable of providing a reasonable level of income. The unemployment assistance scheme can play a limited role but we must be careful that this role does not develop into one of inhibiting progress and thereby perpetuating an unacceptable standard of living. However, the social assistance scheme has been and will continue to be an important source of income for those smallholders who meet the criteria laid down in the scheme.

It is difficult to say at this stage what the effect will be of the abolition of the notional system in terms of the overall numbers of smallholders qualifying for unemployment assistance. As I pointed out earlier, the review has concentrated as far as possible on smallholders with higher valuations, amongst whom it is likely that a higher proportion of applicants will have a reduced entitlement. The overall number of smallholders on unemployment assistance at the end of November is estimated at 18,700 — a reduction of some 1,800 on the figure at the beginning of this year. I would expect that as the review progresses, the numbers failing to qualify on the basis of factual assessment would decrease and the numbers qualifying for a higher rate of assistance would increase, as we go down to the lower levels of valuation.

To sum up, therefore, having regard to developments that had taken place and the legal advice I received I had no option but to discontinue the notional system of assessment of means derived from land. There has been a lot of criticism about this but let us be frank about it, the whole question of notional assessment of means had been under question long before 1983. It had been closely scrutinised over the years and previous Governments, including Fianna Fáil Governments, took frequent measures to restrict the application of the scheme. These included the notional multiplier being increased, thus increasing the means assessment; the notional method of assessment was withdrawn from those with valuations over £20; those with valuations over £15 were excluded from budget increases and on subsequent occasions all smallholders on notional assessment were excluded from budget increases.

Nobody can deny that these restrictive measures were an indication of dissatisfaction with the essential soundness and equity of the system. We were faced with serious financial problems in trying to find the resources that are necessary to meet all the demands that are made on the Exchequer. Not least of those are the demands for social welfare. Next year the Department of Social Welfare will spend close on £2 billion and it is vital that this huge amount of money be spent to the best possible effect. At present the total numbers receiving unemployment assistance is about 111,300. Of these some 18,700 are smallholders of whom about 8,000 qualify for assistance on the basis of the notional method of assessment. I cannot agree that, in a scheme where the basic criterion for entitlement depends on means, one section of the population should be given different and more favourable treatment as compared with another. I think it is important that all be treated alike and the use of a common means test is a fair and equitable way of achieving this.

If anybody considers that the method of applying the means test is unfair in any given set of circumstances, they are open to avail of the appeal system. They are open to make representations to me and they will receive every consideration. It is something at which I am quite prepared to look from time to time. There has been an enormous amount of propaganda in relation to this, more particularly from some lugubrious Deputies of the Opposition Party from the west. I am implementing a High Court decision. I am doing no more and no less. The Fianna Fáil Government in 1982 took a decision to implement the High Court decision and my immediate predecessor took the initial steps of issuing circulars prior to leaving office so implementing the High Court decision and I continued to implement that High Court decision and no amount of propanganda can get rid of that particular decision. Indeed, in relation to the extra £70 million for which I had to come back to the Dáil today, that £70 million is largely due to the situation at the end of 1982 when estimates were made and these estimates were inherited by me at the beginning of January 1983. There was not a great deal of time in which to consider the amount since we had only a couple of weeks and there had been a fall off in PRSI of £35.5 million because of the very serious economic situation in relation to unemployment and the level generally of employment. As a consequence I have to provide that money. Lest there be any cavil about the double week at Christmas, I say to Deputy O'Hanlon that if the Fianna Fáil Party had provided even a penny of that for the 1983 Estimates——

Dr. O'Hanlon

They were provided in 1982 when they were in Government.

Mr. B. Desmond

In 1983 when I took over the Estimates not one shilling for that double week at Christmas had been provided and I had to get £17.18 million to do so. Nothing can hide that in practice.

Mr. D. Gallagher

Ba mhaith liom cuidiú leis an rún atá molta ag mo chara anseo, an Teachta O'Hanlon, maidir leis an scéal tábhachtach seo a bhaineann le iarthar na hÉireann ar fad. Tá sé níos tábhachtaí ná riamh go mbeadh saol cóir, cearta, agus teacht isteach ceart ag muintir na hÉireann. Sin rud a bhí acu fhad agus a bhí an scéim seo atá caite amach anois ag an Rialtas seo i bhfeidhm, agus feicfimid sna blianta atá romhainn an dochar atá déanta ag an Aire seo, dochar a bhéas níos measa ná a tharla nuair a bhí an Gorta Mór ann, nuair a fheicfimid na feirmeoirí beaga atá in iarthar na tíre ag fagáil a gcuid gabhaltaisí agus ag tabhairt aghaidh arís ar Shasana agus ar áiteanna eile le slí beatha a bhaint amach dóibh féin agus dá bpáistí.

I would like to refer first of all to some of the statements made by the Minister in what I would regard as a most unfair presentation in relation to the question of the abolition of the notional system of assessment for smallholders. He referred to benefits that have been made available to the farmers in the disadvantaged areas. First of all he referred to infrastructure and rural water supply. What is involved here? A grant of a few hundred pounds to enable farmers in the west to get an amenity which they have been awaiting for many a day. While rates were in operation these small farmers paid for the people of the towns who had this facility. Now the Minister tries to make capital of the fact that a few pounds are made available and used for this, in order to bolster up his case for the abolition of the notional system.

He has a very lame case to present to the House when he has to introduce matters of this kind. He refers to agricultural roads. What is involved here? A grant of 50 per cent to a farmer who wants to build a road to his house, something which he has not already got and which is available to citizens in every other part of this country. No direct grants are available to farmers for electrification. The only grant available is an 8 per cent EEC grant to a person living in rural Ireland who wants to have electricity brought into his house. A person who builds a new house and want to have electricity installed has the benefit of an 80 per cent grant from the EEC. Let us look at what is happening to the people of rural Ireland in relation to this. They must pay huge costs to have electricity installed in their homes, whereas a person living in urban Ireland in a city or town has no charge of this kind to meet. When the people were building their houses and getting electricity for the first time they had a charge of £2,000 and in some instances as high as £3,000 from the ESB and were given an EEC grant of up to 80 per cent towards the cost of having electricity installed in their homes.

When the Minister introduces this kind of argument to bolster up his case it shows the lame duck he is on in relation to the question of the abolition of the notional system. He refers to direct farm aids. How many small farmers can avail of these? Farm investment grants of 40 per cent for farm buildings and 30 per cent for fixed equipment suggest that the Minister should have consulted with the Department of Agriculture before putting these figures before us. He referred to farm modernisation grants which have been abolished since this Government took office.

These are a few points in the Minister's speech which I think I have a right to refer to and I know that my colleague, Deputy O'Hanlon, will take up other matters when replying to this tomorrow night.

When talking about this question of the notional system and how it was introduced one must go back to the situation here in the late fifties and early sixties when we had mass emigration from rural Ireland, when whole families were leaving the land. The method in which the factual system was being used was such that the farmer who tried to improve himself, who bought a few cattle or tried to get the most out of his land, was penalised under the system. The person who was doing nothing on his land, was not stocking it or improving it, was getting full benefit, as it was called, because he had no stock or was not in any way trying to improve himself. As a result of this the person who might have benefited from having a few cattle had to make judgment as to whether he should keep those cattle or benefit from the full amount of social welfare that he would get from the State if he did not bother to do anything on the land. In other words, there was no incentive for a person to do anything on the land because of the way the factual system operated.

As a result of the interest taken by some rural organisations at that time, deputations were sent to the Government and the Minister for Social Welfare and one of the things suggested was that a notional system of assessment would be introduced. I happened to be with Father McDyer on one of these deputations in relation to this matter, and the Government of the day saw the sense of introducing this notional system. We have seen the results of that in rural Ireland. The whole life of the west changed as a result of that. Up to then we had mass emigration, families going away, fathers of families being away for most of the year, school numbers going down, schools closing, and all of rural Ireland was dying. It would be dead now were it not for the introduction of this system. When this notional system was introduced farmers could stock their holdings, drain, fertilise and improve the land and get full benefit from it. They could avail of the various grants from the EEC mentioned by the Minister, and we have seen the result. Rural Ireland has been transformed and the introduction of the notional system of assessment did more than anything else to improve life in rural Ireland. The people there were now in a position to avail of these grants. The structure in relation to population, employment, life on the land and in our little towns and villages, the whole countryside, was transformed.

I say categorically here and to any forum that nothing did more to improve the lot of the people of the west than the introduction of this system. People have improved their houses and their holdings. Little creameries have cropped up. We see cattle marts. There is life in every little town that you go into at present in the west. The shops look better and brighter because the people have a better standard of living. They can go and spend their money in these towns. Thank God for the day the small farmer can drive into town or even to the employment exchange. We have seen the improvements that have occurred in the west as a result of the introduction of the notional system of assessment. For long enough people in the west were laughed at and were scoffed by people working in industries in towns when they came in on their donkey and cart to do their shopping.

As Deputy O'Hanlon has said, we are not blaming the social welfare officers because they are doing a job for the Government. Last June the Minister said there would be cuts of £5 million in social welfare at a time when unemployment was increasing. The only way he could get the £5 million was to hit the farmers in the west. He need not come in here and tell us people are not losing their dole money. I have written countless letters to his Department on behalf of constituents who have lost their social welfare payments or have suffered large reductions in such payments. These people are in a desperate situation. They have to pay the cost of school transport, there has been a cut in the health services and they have to pay rates by the back door in the form of water charges. In addition to all of that, now their steady income is being taken from them.

How can a small farmer in the west, with five or six cattle and who may sell two or three cattle each year, be in a position to survive unless he has some money to supplement his income? I will give the Minister an instance of a case with which I am familiar. A married man with five children was in receipt of £51 social welfare. The social welfare officer assessed his income from milk as being worth £76 per week and his social welfare benefit was cut to £6 per week. If one adds £76 to £51 one gets a total of £127 which is the average industrial wage. Recently we were told £7,000 per year was the average industrial worker's wage. The notional system was never meant to be dole money: it was meant to supplement the income of the small farmer to help to keep him on the land and it has been very successful in doing this. I do not think the Minister would regard a wage of £120 per week for a man with five children as excessive. I have read the circular the Minister has sent out in relation to the method of assessment but I do not agree that that method is being used. All that is being used is the gross income of the small farmer but his expenses are not taken into account. I have been told this by my constituents.

Mr. B. Desmond

Do they not appeal?

Dr. O'Hanlon

There were 16,500 appeals.

Mr. B. Desmond

There never were. The figure is more likely to be 600.

Mr. D. Gallagher

When I raised this question—I was rather annoyed about it at the time—the Minister said that small farmers would not lose their dole as a result of the abolition of the notional system. The figures given by him today show the numbers whose unemployment assistance has been cut off or drastically reduced.

We are back to the situation that existed in the fifties. People are frustrated and anxious about their future. If people are in receipt of £50 or £60 a week they more than need it for the running of their homes and for keeping their children in school. They have to buy school books and clothes for their children and also give them a certain amount of pocket money. We will have a situation where people will not be able to send their children to secondary school. Nowadays children will not go out if they are not properly dressed and if they do not have some money in their pockets.

We accept that some farmers who were doing quite well were not entitled to social welfare benefits. However, in every sector there are always people who use a situation to their advantage. Generally speaking, the principle was right. It served a good purpose in revitalising the west and in this connection I include disadvantaged areas such as Kerry and Donegal. In those areas emigration had stopped, people felt secure in their holdings and, most important, the heads of families were able to stay with their families. Because of the farm supplement they could stay on the land and work it to the best advantage. I can tell the Minister that the advantages gained by people in the west as a result of the notional system will have gone in six months. We will revert to the situation of the fifties, with people packing their bags and seeking work elsewhere in order to give their families a decent standard of living. The unfortunate thing is that these people will have nowhere to go. There was a time they could take the emigrant ship. Our young educated people will be roaming around rural Ireland with nothing to do. The whole of rural Ireland came to life when the notional system was introduced. One could see it in the number of football and hurling clubs and in the social life. Already there is evidence of the frustration that has been caused. People feel let down by this Government. It is no use for the Minister to say Fianna Fáil were responsible. The decision was taken when the Finance Bill was introduced and there is no way the Government can get out of their responsibility for taking that decision. They cannot gloss over it.

Debate adjourned.