The Bill provides special major increases for the unemployed. However, I am concerned to ensure that the quality and dignity of the service provided to people who have to rely on social welfare is of an acceptable standard. Even in the present tough budgetary times we must ensure that the less well off do not suffer indignities when applying for or collecting social welfare payments. In this regard I call on the Minister to ensure that the work on the new employment exchange for Cork proceeds with all possible speed. The two existing exchanges are inadequate to provide the kind of modernised, humanised and dignified approach we should be adopting in the latter years of the 20 century.
I appreciate the efforts being made by the Minister to improve the quality of the service in Cork. Last January he visited Cork employment exchange to inaugurate a new computerised payment system for the unemployed in Cork. I understand that this new development is part of the Minister's plan to make Cork a major link in his strategy to improve considerably delivery of social welfare services at local level. The new computer system enables computerised payments dockets and pensions to be produced in Cork while the claim information is stored on computer in Dublin. The two centres are linked by a telecommunications network. This new system will provide a number of benefits which I have been seeking for social welfare claimants in Cork. It will give better information on their claims, a faster response to changes in their circumstances and quick payment which is an essential development. It will mean more time and attention for claimants and it will increase the options for more flexible payment and signing arrangements.
The other benefit of the computerisation of unemployment payments in Cork is that it improves the Department's control of unemployment payments and helps to cut down on fraud and abuse. About £600,000 is paid out in unemployment payments at Cork exchange each week. Already 1,200 claims have been transferred on to computer and the remainder will be on by the middle of the year. Plans are in hand to extend this system to Cobh in County Cork.
The computerisation is central to the development of the comprehensive new service, the one-stop shop, which the Minister is introducing nationwide. Already several significant developments have taken place in this service in the Cork area following discussions I had with the Minister. Six months ago a facility was introduced in Cork which enabled sickness certificates to be entered on computer at the Cork exchange. This has speeded up payment of disability benefit to people in the Cork area. Now 2,500 sickness certificates are processed in Cork each week. Cork was the first location to have this new service and I hope it will be introduced in other locations from now on. Decisions on unemployment assistance claims which formerly were made at headquarters here in Dublin, causing a number of delays, are now all made in Cork. This approach, which was introduced in Cork on a pilot basis, is designated to cut down on the time taken between application and payment of unemployment assistance and is very welcome. A scheme which allows unemployment assistance to be paid without a further means test to people from families whose means have already been assessed by the Department is also in operation and results in a quicker and better service. On-the-spot means testing for unemployment assistance began in Cork in December 1987 and enables decisions to be taken on many applications without a home visit. I welcome that very much because people were waiting for up to three or four months for this investigation to be carried out. This procedure ensures that the time taken between claim and payment is kept to an absolute minimum. Already the new claims being dealt with in this way in Cork city average about 30 per week. In addition to Cork city this facility is now operating in Bandon, Dunmanway, Macroom, Mallow and Fermoy and throughout the county. It is a very progressive development.
These new developments are of major practical importance for people awaiting social welfare payments. They reduce delays inherent in sending claims to Dublin, they eliminate red tape and bureaucracy and mean that people concerned have money in their pockets more quickly to enable them to provide basic necessities.
The increases in social welfare rates contained in the Bill are a concrete example of our commitment to meeting the needs of people dependent on social welfare. Fianna Fáil have a great tradition of caring for the elderly, the sick, the disadvantaged and the unemployed. I am proud to be part of that tradition and to be here today to support the Government in the major advances we are making. The increase of 11 per cent in the lowest rate of payment shows clearly that this Fianna Fáil Government are prepared to take the action required to improve the lot of those on social welfare. While other political parties have spoken at length about the special needs of people on low payments, this Government are prepared, even in the very tough times we face at present, to make an additional £53 million available for those on long-term unemployment assistance and supplementary welfare. In the course of the budget debate the Leader of the PDs said such increases were not necessary. Lest there be any misunderstanding, I refer to the Dáil debate of 11 February 1988, column 1914. There was some reference yesterday to asking the Minister to withdraw some statement he made regrding this, but I want to quote the Official Report. Deputy O'Malley said:
. . . I have reservations about the increased payments of up to 11 per cent for the long-term unemployed. Every Deputy and party supports improving the lot of the long-term unemployed, but is this the best way to go about it? I do not believe so.
This is as clear a statement as one can get that the Progressive Democrats have no time for the less well off in our society. It reinforces the yuppie tag they received initially and which they have been trying to shake off ever since. This Fianna Fáil Government know that these people need help now and they are giving it to them.
Shortly before the budget major play was made in certain sections of the media about the need for a change in policy to make provision for welfare recipients on the lowest payments. The Government saw that group as a priority. The Programme for National Recovery provided that the Government would maintain the value of social welfare payments and give special increases to the lowest paid. The Government took decisive action and introduced a major change of policy to make special payments to this group of people. Yet the media have been silent. They should recognise these increases for what they are, a real transfer of resources to those most in need. The additional expenditure involved is about £30 million. This is a major boost, given the present constraints on the public finances.
While the Labour Party have been congratulating themselves on maintaining the value of social welfare payments during their period in Government, they made no special provisions for those on the lowest payments. In no area did they give increases of over 8 per cent in real terms as a special extra bonus to people they claim are most in need of special assistance. They simply gave increases to match inflation or slightly more. They talked about the great steps they took by setting up the Commission on Social Welfare. What happened after that? They seemed to recognise the need but took no action. They talked rather than acted. These increases, together with the special increases for children, are meaningful in money terms and will ease the burden on the more hard-pressed sections of society.
The Fine Gael spokesman, Deputy Jim Mitchell, appears to regard this Bill as very disappointing. How did he feel when he was a member of the previous Coalition Cabinet that made no special provision for people on the lowest welfare payments. Worse still must be his shame at the Fine Gael Government's decision to defer the social welfare increases in 1987 from July to November of that year. How can he seriously suggest that this Government are not concerned about the welfare of people on social welfare? His lack of concern is evidenced by his lack of action on behalf of the same people about whom he now professes to be passionately concerned. Where was that compassion when he was sitting around the Cabinet table? What special measures did his Government take to improve the lot of the less well off in society?
Deputy Mitchell is on his hobby horse when he talks about giving loans to people who are caught in the grip of moneylenders but is that the answer to their plight? Even if he considers that it is the answer, let me ask him what action he took during his period as a Government Minister to do anything about tackling this problem. It is time to face up to reality. This Government have taken more initiatives and decisions in the past year to improve and develop the social welfare system than the previous Coalition Government did in its four years in office. This Government care about the people and these increases and this Bill are clear evidence of that.
The Government's decision to extend social insurance to the self-employed is a major new development in social insurance. The Commission on Social Welfare recommend the extension of social insurance to introduce greater equity into the financing of the social insurance system. Even before the commission was established I understand the present Minister, Deputy Woods, had developed proposals for the extension of social insurance to the self-employed. In over four years in office the Fine Gael/Labour Coalition Government, were unable or unwilling to make further progress on this scheme.
The speed with which the scheme has progressed to the stage where we are considering legislation today indicated the type of decisive action which this Fianna Fáil Government are prepared to take. I congratulate the Minister and his colleagues on bringing this legislation before the House. I believe it is important that widows and old age pensions should be available as of right for people who are self-employed and who contribute towards the financing of the overall cost of social insurance. It is a move towards treating citizens equally so that the self-employed will enjoy the same rights as employed persons who have basic pension rights without a means test.
I am concerned, however, about the amount of misinformation that has been generated on this same subject. I will refer to two items. The first was an article in The Irish Times dated 19 February 1988 in which the headlines stated that this scheme would cost £800 million. This is totally incorrect. The economist author of the article appears to have based his assumptions on a fundamentally flawed basis with the result that his conclusions were way out of line. I am glad the Minister has dealt at length with this aspect of the matter in his speech. However, I would go further than the Minister and call on the person concerned to acknowledge his error and set the record straight from his professional viewpoint. His article received widespread coverage in other sections of the media. I do not have the detailed reference but it is only reasonable that an opportunity should be given to show the correct position. Lest anyone thinks I am being unduly harsh in one particular area, it is well to bear in mind that this article got widespread coverage and conveyed an impression, highly erroneous, that this scheme will be an intolerable burden on the taxpayer in the longterm. That is not the position. Furthermore, the assumptions in the article were used by a second economist in an article in Business and Finance magazine which, in effect, retraced the original heresy.
These views appear to have been taken on board by Deputy Mitchell and others without any checking or cross-referencing. The original author has a moral and, dare I say it, professional duty to acknowledge his erroneous assumptions as regards the income to be collected from the new system. If he has any doubts about the error of his ways I am sure the Minister would be only too pleased to advise him of the details. This should be done and done urgently.
The National Pensions Board with its acknowledged experts worked out figures based on actual calculations which showed that the particular economist has his figures wrong. Why he did not study that report, as appears to be the situation, is strange. I am not suggesting he has any improper motives or intention to mislead but he appears to have created a lot of uncertainty among people who have not studied the position and examined the facts.
A second item of misinformation I want to refer to relates to the advertisement published by the Irish Farmers' Association in the daily media shortly after the decision was taken to extend social insurance to self-employed persons, including farmers. That advertisement tried to create the impression that the self-employed were being unfairly discriminated against as compared to other groups. The IFA were alleging that civil servants were paying only 0.9 per cent for the same benefits that farmers would get for a higher rate of contribution. This is totally misrepresenting the situation. Established or permanent civil servants pay 0.9 per cent for contributory widows' and orphans' pensions, deserted wife's benefit and limited occupational injury benefits. Farmers will receive a contributory old age pension which is not payable to civil servants. The IFA, in a handbill which they are circulating calling for equal treatment and fair play for self-employed persons, including farmers, say that equity demands that all citizens should pay the same contribution for the same benefits. I believe that equity, morality and fair play also demand that the IFA should not seek to misrepresent the situation. The IFA deliberately misrepresented the position in relation to different groups in society. It is not true to say that the civil sevants get the same social welfare pensions as do the private sector employees or the self-employed.
Under the proposed arrangements social welfare insurance for farmers and the self-employed will come into operation from April 1988. The IFA stated that they would not accept the situation where the following contribution rates would apply for pensions: civil sevants, 0.9 per cent; private sector and some of the public sector 2.4 per cent; self-employed, 3 per cent, increasing to 5 per cent over two years; for contributory old age pension and survivors pension 66 years of age.
Civil servants are not covered for contributory old age pensions and, accordingly, they are not liable to contribute towards the cost of such a pension. They do, however, pay the correct rate towards widows' and orphans' pension. If the IFA are suggesting that everybody should pay the full rate of PRSI then that is a separate matter and I want to emphasise that. I understand from the Minister that the question of social insurance cover for civil servants is one of the items that will be examined by the National Pensions Board. In the meantime, it should be borne in mind that there is an occupational retirement pensions scheme for civil servants which provides the basic income in old age.
The Minister has dealt with the question of higher rates for self-employed persons and this seems reasonable to me. I fail to see how any farmer or self-employed person could argue that they should be treated as an employee. I can see the logic in the Minister's approach in not treating the self-employed as being both employer and employee. That would mean that they would be liable for the combined contribution. Self-employed persons are in a different category from employees. Employers pay a contribution in respect of their employees and it is unreasonable that the self-employed should pay at the same rate as an employee. The Government's decision to go for a higher rate for the employee but not as high as the combined employer-employee rate is a sensible and workable one.
On the overall financing of social welfare, I am concerned about the burden of PRSI on the lower paid. The Commission on Social Welfare have recommended that the upper income limit for contributions for PRSI should be abolished. The present Bill raises the upper income limit from £15,500 to £16,200. I would like to take this opportunity of asking the Minister to consider further raising this upper income limit. For instance, how much would an upper income limit of, say, £20,000 to £25,000 raise? PRSI is regarded as a regressive tax in that it bears more heavily on the lower paid. Some of the additional revenue raised should be used to provide an exemption for, say, the first £3,000 of income. This would ease the burden of PRSI on the lower paid and would not result in any cost to the Exchequer.
Members of the Opposition frequently quote from documents. In the Programme for National Recovery we made a commitment in regard to caring for basic values in social welfare in particular. Our intention is to continue improving the status, dignity and security of older people in the community. In regard to the pre-retirement scheme the over 60s and the long-term unemployed will not have to sign on at employment exchanges. This is a very positive step and is part of our commitment. We also stated that we would examine sympathetically cases where people fail to qualify for pensions because of a change in the structures of the system between 1950 and 1970. We are also implementing the pro rata pension scheme. All the conditions in our manifesto clearly show that in this area of social welfare, which is a very sensitive area where the most vulnerable sections of the community are affected, Fianna Fáil have taken a very positive line. We have implemented in a very short time, many of those conditions.
I congratulate the Minister. He has made tremendous progress in a very short space of time. I have worked very closely with him. I am glad he listens to what we have to say and as a result there are very positive provisions in this Bill which will affect people throughout the community.