Is the question agreed?
Private Members' Business. - Social Welfare Bill, 1990: Committee Stage (Resumed).
Amendments Nos. 9 to 15, inclusive, not moved.
Question proposed: "That section 4 stand part of the Bill."
Deputies
No.
Question put and declared carried.
I ask that our dissent be recorded.
That will be done.
SECTION 5.
As amendments Nos. 16 to 20, inclusive, involved a potential charge on the Excheqer they have been ruled out of order.
Amendments Nos. 16 to 20, inclusive, not moved.
Question proposed: "That section 5 stand part of the Bill."
Section 5 (1) provides for an increase of 5 per cent in the rates of monthly child benefit. The rate of payment for each of the first four children will be increased from £15.05 to £15.80 and the rate of payment for each other child will be increased to £22.90. Section 5 (2) provides that the increased rates of child benefit will come into effect from 2 October. It is estimated that this measure will cost £2.5 million in 1990 since an estimated 1.129 million children will benefit from these increases.
During the Second Stage debate on the Bill some Deputies criticised the level of increases provided for in the child benefit scheme. Child benefit is paid in recognition of the important role of the family within society and represents a contribution by the State towards the upbringing of children. Child benefit is payable regardless of parents' means.
Child benefit should not be seen in isolation but rather as one of a range of family income support measures administered by the State. The needs of social welfare recipients with child dependants are met by way of the child dependant increases which are payable to the recipient. In the case of workers on low incomes additional support is available through the family income supplement scheme and the special child-related tax exemption scheme.
I am very much aware of the financial needs of families with children and I have made significant progress in recent years in increasing the level of social welfare payments to families with children. I am very pleased that I have been able to make substantial further progress in this year's budget in improving the position of families dependent on social welfare. These improvements include an increase in the minimum child dependant payment from £10 to £11 per week, the payment of child dependant increases until the age of 20 to recipients of long-term payments where the child continues in full-time education, a 5 per cent increase in the child benefit and the introduction of a clothing allowance for families on social welfare.
The child benefit increase is the first overall increase in this benefit for three years. There was an increase last year in respect of the fifth child. The budget must be seen in the context of the package provided, particularly, for children and the way in which the Government have been targeting and directing resources to those who are in greatest need.
I am disappointed at section 5 but it is welcome in so far as it increases the amount of child benefit. There was an attempt last year to let this payment fade into the distance and confused messages came from the Government side about its future. I am concerned that the question of the older child might rise again in regard to this benefit. As the Minister rightly pointed out this is the only social welfare child benefit which is not related to income and, as such, is of great importance to persons who are outside the social welfare system. The token increase of 5 per cent after a three year freeze, which only relates to this year's inflation level, inevitably means that the value of this benefit has dropped substantially since 1986, the last occasion on which there was an increase.
I am also concerned at the fact that the increase will not come into effect until 2 October 1990. This will mean a future drift in the value of this increase for families. The first drift occurred in 1983 when the increase did not come into effect until July. Since then increases in the benefit, along with all other social welfare increases, have been paid in July. The Minister should reflect on this and agree to bring this increase into operation in July along with the other increases in social welfare benefits. As it stands this increase is only a token for families who have enormous expenses to meet.
The Minister referred to his package of measures for families on social welfare. As I said during the debate on sections 3 and 4, this package is seriously inadequate and is a poor response to low paid families in the tax net for whom child benefit is perhaps of greatest significance than for families in the social welfare system and those on higher incomes.
I ask the Minister to accept the amendments in my name because I believe they would be of immense help. My amendments propose the inclusion of a payment for children over 12 years and the payment of the increases in July in line with the payment of increases in other social welfare benefits. I could ask for 101 other things, for example, a genuine increase which is related to the rate of inflation since 1986. I know my amendments have been ruled out of order but they would improve the Bill if they were accepted by the Minister.
This section deals with the rates of child benefit. Perhaps we should take sections 5 and 6 together, as they are related, one dealing with the age of children and the other with the amount of money paid in child benefit. I am in your hands, a Leas-Cheann Comhairle.
I have no objection to discussing the sections together and having separate votes.
We will have to vote on them separately. I do not know if this would be the wise thing to do. I think we would make more progress if we took the sections separately.
I want to refer to the figures in our amendments, which were ruled out of order. We believe they are still within the realm of reality because they were based on research. Our basic objection related to the number of children involved. The Minister has been kind enough to tell us the number of children who will qualify. This is the section that gives specific income to all parents whether or not they are in the social welfare category. Over the last number of years this payment has been made directly to the mother and is a very important part of her income that she looks upon as her own. The Minister has not touched this for about three years. He contemplated some kind of means testing at one time but this led to widespread criticism. I am glad the Minister has dropped the idea because, like Deputy Flaherty, I consider this a very important payment as do the recipients. Having allowed it to languish for three years the Minister has now increased it by 20p, effectively a cut when one looks at monetary trends.
I am dissatisfied with that. That is why I suggested an amendment which was ruled out of order. The amendment took into account the figure that was researched as being necessary to maintain a child with some degree of nourishment. Irrespective of the trace elements contained in it and the nutritional value of the food, this figure was a gesture towards increasing these amounts.
No matter how much one gives some families they may not be able to comprehend their responsibilities. This happens in the area of rent. People need more than just money to help them. They may need counselling and other things. Some families with children are at risk and tremendous back up services are needed. In addition to making gestures like this small increase there is a responsibility to children who are at risk in some families. I know Deputy Woods is a caring Minister and I hope he will take this on board because when we make suggestions like this we have a legitimate reason for doing so.
The increase is inadequate and almost offensive because of its nominal nature. The independent non-governmental agencies who carried out the research, the people dealing with children, with poverty, with social problems, have identified families with children as being in greatest need. We have a responsibility to address that. If the Minister feels some families do not really need this benefit that can be addressed in other ways, but the woman in the home should not be the one to lose the benefit. I would respectfully suggest that any thoughts the Minister might have had in this area would be dropped now, once and for all. With the upturn in the economy I hope the Minister will address the question of child benefit separately from payments for children in the social welfare category.
I referred earlier to the amendment that was ruled out of order. We felt that the starting date of October for the increased payment should be brought forward to April. That point has been made by my colleagues on this side of the House. Up to 1983 it was paid in April when it was moved to July and now we are to have October payments. October is possibly the worst month to increase this benefit because with the return to school in September low income families are in greatest need. I would ask the Minister to cast his mind into the real world where people with school going children are struggling on low income and social welfare benefits and think of the stress and strain on such families. Child benefit is something that some people live for from month to month because it is such an important part of the family's overall income. I appreciate that our amendment was out of order but it is very wrong of the Minister not to increase the benefit until October. Mothers of low income families are going hungry and sacrificing their own health in favour of their children.
The Gibney and Lee report mentions that half of the families on social welfare rely on the St. Vincent de Paul and on moneylenders for financial help. It goes on to say that there is also a low level of alcohol consumption which was noteworthy in the light of the popular misconception that much of the poverty in disadvantaged areas is caused by drink. There is a feeling among certain elements of our society that the poor are only poor because they wish to be poor, that they are in the pub every night of the week. It is a pity somebody would not mass produce the reports which show the contrary to be true.
The rate of increase is very sad, to say the least. It works out at about 2.5p per day. My wife mentioned this morning that she had got her revised children's allowance book. We have two children and we got £1.50, 75p per child per month. That is 2.5p per day, enough to buy maybe one apple per week. In the light of the debate today which emphasised the importance of fruit eating by children that is a startling fact. I am not happy that this increase will not be implemented until October, and the rates are far too low.
While listening to the other speakers I was reminded that I too received my revised children's allowance book this morning for my two children — and I am looking forward to my increase in another month, all going well.
(Interruptions.)
It did not discourage me at all because, I can assure the Deputy, that it is a mild element in the context of rearing children. It was, however, a slap in the face in that it indicated that our debate today, as far as the Department of Social Welfare were concerned, would be entirely academic in that the increases in relation to the post-October period, have been printed in this booklet. It is unfortunate they adopt that attitude. They could at least have pretended to listen to what we have to say here by awaiting the decision of the House.
I was also anxious to point out that the last increase in 1986 was from £12 to £15 which reflected inflation at the time. I make a final appeal to the Minister to see if he can do any better than the 5 per cent he is offering to mothers and children, particularly since the 5 per cent relates only to inflation in the coming year. It clearly does not make up for the fact that there has not been an increase for two years. This is the single payment that goes to all families regardless of income and is paid directly to the mother.
It is important to emphasise that child benefit is a universal payment. Deputy Byrne talked about low income families. We are increasing the payments to low income families. The money has been targeted specifically and purposely towards low income families over the past three years in accordance with the wish of everybody in this House. The Commission on Social Welfare and the ESRI report said that resources should be targeted to those people who are at risk. The Deputy referred again and again to low income families. The Government have directed money to them. Increases have been given in unemployment assistance, bringing up the minimum weekly payment to £11. The Commission on Social Welfare have said we should aim to have a minimum weekly payment of £10 per week and we have exceeded that. The lone parent scheme which is being introduced will have a payment of £13.50 per week. The Government have been addressing the need.
The child benefit scheme is very important to the broad range of families. It also supplements low income families. People are inclined to forget that such families get it as well. A family with five children on long-term unemployment assistance will have £138 per week from us and another £20 in child benefit, bringing their income up to about £158 per week.
When I came into office a study was in progress initiated by the Labour-Fine Gael Coalition. It was felt that the universal system was not well targeted and studies were being done to relate Finance and Revenue records to Social Welfare records so that they could be matched and a cut-off point could possibly be introduced. This is what I inherited and the argument has been going on for some time. The percentage of people at the very high level of take home pay is very small. Only 2 per cent of PAYE and PRSI contributions earn over £20,000, although there would be a higher percentage if one considered the self-employed and the wider population. I made the argument that the percentage was very small.
I had thought that Deputies would be very happy that we are back to a situation where the increase is 5 per cent, with inflation expected to be 3 per cent for the relevant period, but perhaps there is still a desire to have some cut-off point.
Deputy Byrne mentioned bringing payments forward. The cost of that increase in a full year would be £10 million. There are 1.29 million children in that system and consequently it is broadly based and the cost of any improvement is very high. That is the reality we have to face. In bringing forward the increase this year to April instead of October we would incur a cost of £5 million.
The Minister has let it slip to October. It was April.
Where do we get the £5 million? That is the problem. We managed this year to get £216 million in total for those depending on social welfare. Never was such a large amount provided. It is true that most of it is targeted to the elderly, people on means-tested payments and those in receipt of supplementary welfare and long-term unemployment assistance. There is no point in quoting statistics about people at risk if our actions are not directed towards them. We must be mature enough to say this is what we are doing this year. At least let us keep child benefit moving. The total cost of child benefit this year is £211.5 million.
Deputy Byrne mentioned the problems which face low income people in the autumn with the opening of the school year. The increase will come at the beginning of October, which is not too far behind. A family with five children will receive £86.10 per month or £21.52 per week from October. The Deputy mentioned low income families and we have specifically directed the clothing allowance to them. We did it because everybody directly involved on a daily basis in that area said it was the thing most needed at the beginning of September. It is a new scheme being introduced this year for the first time. I met with the community welfare officers and this is what they believe is the most effective way. I am taking the most practical means to direct money to those who need it most. This was also recommended by the Society of St. Vincent de Paul, and I met them, and by other groups.
Many low income groups will not qualify for the clothing allowance.
The Deputy also mentioned low income mothers and mothers in general. I agree with him about the importance of the child benefit scheme. Some people seem to miss the point that child benefit payments go directly into the hand of the mother. Perhaps we should be providing that it be paid to the spouse who is minding the children at home. It goes directly to the mother in the vast majority of cases and is particularly valuable. I regard it as a very important scheme and I am glad it is being increased to more than allow for inflation this year.
Deputy Flaherty talked about the group who benefited from the tax allowance that was there previously. The tax allowance was abolished not by me but by the Fine Gael-Labour Coalition. That was a problem from the point of view of families depending on child benefit and assistance who yet did not come into the direct social welfare categories. The child tax allowance was abolished and in that way the children were dropped out of that system. We have brought a child tax allowance back for the lower income families. Following April families who have the £200 child tax allowance which was introduced last year will have that allowance raised to £300. That is a substantial tax related exemption. It means in effect that a family with, say, five children and an income of £8,000 will be totally exempt from tax. The tax is brought in at the lower level. That is more evidence of the Government directing their efforts particularly towards people at work on low incomes. There is also a benefit above £8,000 to about £11,000 on a reducing scale. The Government plan to see how that works. It started last year and is only running well at this stage. The rates have been increased very substantially in the budget, consequently it will be very interesting to see the uptake as time goes on.
The other measure for families at work is the family income supplement scheme. We have increased the payments under FIS very substantially since 1986. The maximum amount which a family with four children can receive under the FIS scheme has almost doubled from £22 per week to £42 per week and we are planning further substantial improvements in that scheme very shortly arising from the budget and the current arrangements.
All in all, I am very pleased that this section provides for the continuation of increases in the child benefit scheme. I hope that can be further considered for the future and that the views Deputies have expressed in relation to the needs of older chidlren, for instance, can be considered in the context of future budgets.
Question put and agreed to.
SECTION 6.
Amendments Nos. 21 to 24, inclusive, not moved.
Question proposed: "That section 6 stand part of the Bill."
This section deals with children of varying ages and I compliment the Minister because he has made an effort at least to rationalise the ages at which children are cut off from benefit or, to put it another way, the ages at which children are still considered to be dependants, irrespective of the age of majority. We in the Labour Party believe that children who are still going to school full-time or who are trying to get additional training but still do not have an income are still dependants. The Minister has been moving in the right direction in raising the ages for benefits. He has promised this year to raise the age to 20 in some cases and next year he hopes that the improvements in social welfare provisions will apply to all who can be classed as dependant children, irrespective of age. Of course, we are never satisfied and the Minister realises that.
We had hoped that this year the various benefits and schemes would apply to children of all ages provided the children met the requirements specified by the Minister of still attending school and in receipt of full-time education or training and still being dependants. They are penalised by health boards if their parents do not have the medical card. Those children are treated as adults although they have no income and legally they are debarred from holding the medical card unless their parents have it. They are being discriminated against by one State sector and we hope the Department will not discriminate against them. The Minister has made efforts at rationalisation in regard to ages and we had hoped he would do more, but that is why we put down amendments which, unfortunately, were ruled out of order because of the charge on the Exchequer. The concept of what we want to do remains and we would like to see further rationalisation of this.
While I welcome the fact that in this section the Minister is bringing in a number of additional benefits and will be paying child dependent allowances up to the age of 20, I am very concerned that the group I mentioned under sections 3 and 4 are once again excluded. This intensifies the picture I am painting of their becoming one of the poorest and most at risk sub-groups in the social welfare system, and there are many of them. I am sure the Minister can tell me how many recipients of unemployment benefit are in receipt of pay-related benefit, and how many are not.
I started school at age five and would have been disqualified during my last year in school had I been dependent on social welfare. Families come to us who are barely managing on unemployment or disability benefit and suddenly their child who is still at school is cut off at 18 years of age. There is absolutely no acknowledgement of that. The only alternative is to take the child out of school and then that child can have unemployment assistance. They face further economic deprivation if they wish to allow their child to remain at school, and it puts immense pressure on the child especially when facing examinations and he is already highly stressed.
The Minister has obviously accepted this issue in principle because he has moved to extend this benefit for all other beneficiaries but in section 6 (1) he still excludes particular recipients of disability benefit and unemplyment benefit from any benefit under this scheme. Today the Minister told me the cost of extending the scheme. In a written reply he told me that to extend it to the age of 19 for children of recipients of disability benefit or unemployment benefit it would cost approximately £1.5 million, £2 million to raise it to 20 years of age and £2.5 million to raise the age to 21. I would be glad if this group could be covered up to the leaving certificate but they should be brought at least in line with the other groups whose benefits are being increased.
In my amendment, which was ruled out of order, I asked the Minister to bring that group in line with the second group. Obviously he has been convinced by the arguments. I know the theory about DB and UB being short-term. If you are on basic unemployment benefit you are on the lowest level of benefit. You are suffering from a recent period of unemployment and trying to cope with it and to suddenly find that your child is not acknowledged by anybody — indeed becomes a non-person when he or she goes over 18 — adds insult to injury in a very difficult situation. I am startled that the figures are so large and I should like to know how many children are involved.
Given the Minister's record over the last few years, there will be buoyancy in his Department because, between the time the Estimates were published in December and the final budget figures in January, another £25 million has emerged. I gather that the Minister has set aside £5 million for the new carer's allowance which will not come into play until October. The criteria will be a lot stricter than everybody expected and I have no doubt that under that heading there will be substantial savings because he will not expend that kind of money. The Minister has accepted this issue in principle for all other recipients and it could also be conceded here because, if there is another income in the family, at most it would be only a partial child benefit. There may be a little overlapping in two areas where there may not be the greatest need but, given that we have not got around to reforming this area, it is a small price to pay to give some assistance to a group which, I am convinced, have slipped to the bottom of the pile.
The pressure groups to which the Mininster referred earlier, in assessing the impact of the changes in this budget, also indicated that this group seem to have slipped to the bottom of the pile and they are concerned that people who should be in benefit and in a relatively good position are particularly disadvantaged, even though they are in receipt of supplementary welfare which can be quite significant. I hope that the Minister will make some improvements for this group on Report Stage so that there will be a real impact on their circumstances.
Deputy Ferris welcomed the increase to young people of 20 years of age and said that naturally he would like to raise it to 21 years of age. Last year the age for receipt of this benefit was 19, this year it is 20 and it will be 21 next year. The Government have accepted a commitment in that regard. That is why I was allowed to say that it was a phased arrangement over three years. When I say things like that it might sound as if I am speaking off the cuff but that is not so.
We will be watching the Minister.
This increase applies to the old age contributory pension, the retirement pension, the invalidity pension, long-term unemployment assistance, pre-retirement allowance, the old age non-contributory and blind pensions, the carer's allowance and disablement pension to persons who are also in receipt of unemployment supplement. It is quite a wide provision and applies to a large number of people. As I said, the scheme will apply to people aged 21 next year and it will be a uniform scheme.
Deputy Flaherty referred to disability and unemployment benefit. These are short-term payments and people may have difficulty in regard to them. One group are more easily identified, those on long-term disability benefit, who are not able to transfer to invalidity pension because they are not badly disabled. We know that about 40 per cent of those people were offered invalidity pension but did not change to it. Obviously, there is a tax consideration and that is why they would not change. Consequently, I presume the Deputy would not be concerned about them.
I accept that there is a group of people on long-term disability benefit who could be disadvantaged. We will look at that to see if they can be defined. This does not occur in other countries, particularly in the EC, because one is not allowed to stay on disability benefit on that basis — one either goes on to a long-term payment or gets employment. Some people on unemployment benefit are in and out of the workforce and again there is a problem of definition.
Deputy Ferris asked about people who do not have pay related benefit. From my own recollection, the number is probably something over 40 per cent. Again it depends on who they are, some of them may be unemployed for a very short time and others for longer periods. However, if they are unemployed for 15 months they come under the unemployment allowance. On that basis it is hard to see how many people are affected. Supplementary schemes cannot be open to all the unemployed because it would mean that people on pay related benefit and on short-time unemployment benefit would be gaining from something intended for people on a lower income.
One of the problems of solving these issues is the fact that you would then see some of the residuals in areas which had not been considered heretofore. I take it that the Deputy agrees it was right for me to increase unemployment assistance to £52. I did that as a priority but we will see if anything can be done about identifying other categories for future reference. I know that the Deputy is particularly concerned about those on long-term disability benefit who do not have the opportunity to draw an invalidity pension. How that should be handled is another matter which will have to be considered because there are people who should be on invalidity pension and it is obvious that they are not going over to it because it is taxable. They are eligible for a long-term invalidity pension and they should be on it. As I said, in other countries they would not be given this option. Perhaps some people have not considered that when you are in receipt of long-term invalidity payments you get certain other benefits as well.
I noted what Deputies said and I will keep their views in mind for future reference.
I welcome the Minister's acknowledgement in regard to long-term recipients of disability benefit. I am also concerned about recipients of unemployment benefit if there is not a pay-related element — and indeed even if there is — because pay-related has become such a tiny additional element of benefit. The benefit is already £4 lower than that accruing to the long-term unemployed. The periods of unemployment may be short-term but more often than not they are quite long periods and people are faced with a dramatic change in their family income. I would like to put on the record that this is a group about whom we should be concerned. I have seen in individual families the impact of the loss of any payment for a child. They have to stretch the combined payment to cover a child who is 18 years old. It is just not possible without making sacrifices and it inevitably puts them well below the poverty line, even with pay-related benefit.
The Commission on Social Welfare suggested that people on benefit should receive 10 per cent more than those on assistance, to acknowledge the level of contribution. There was a view that that demarcation should be maintained but in our efforts to respond to a very real need, to increase the assistance payments, we have discriminated against this group and pushed them out on a limb. As I have said, I have witnessed individual cases which bring this home to me time and time again. We should put on the record that it is not just disability benefit recipients who are affected but also unemployment benefit recipients, in particular in the context of this payment because it is a mainline child dependant payment and not an optional extra. It is related to an assessment of their needs and if it was discontinued it would be an enormous loss and would present them with very difficult choices. If the age was extended, even to 19, it would at least take those children past second level education and would preserve them from the worst effects of their parents' unemployment.
On the question of unemployment benefit rates and the differential, the commission proposed doing away with pay-related benefit and then having the differential. If you take the pay-related benefit on top of the £48 you would be talking about £66. The average pay-related benefit is just over £12 which would bring the average payment to slightly over £60. Therefore the differential would still exist. I was very conscious of that when compiling the figures.
The Minister said that 40 per cent of people are not on it.
I appreciate that but there is still a differential with the pay-related benefit. The difficulty with doing away with the pay-related benefit is that the other payment would not be sufficient and would have to be increased to a satisfactory level. Disability benefit and unemployment benefit are short-term and insurance-based payments which means one can have other income. In many cases there is other income for a variety of reasons — that is a feature of the insurance schemes generally — but that does not take from what the Deputy is saying in relation to some cases which arise. We would probably need to look closer at that area to see what sort of cases arise and the numbers involved. The thinking behind this was that these schemes would not be means tested and one could have any other income coming into the household and still get benefit. I accept what the Deputy says about some people falling into that difficulty and not being able to get any of the supplements which apply and therefore I will look at that position.
I accept that the Minister is going to look at the particular case that has been raised. He said that because unemployment benefit and disability benefit are considered to be short-term, it is not easy to handle them. People on long-term disability benefit do not receive pay-related benefit and indeed after a year and three months people on unemployment benefit are also outside the pay-related category. Leaving those aside, there are many people — and the Minister has records of these in the Department — on long-term disability benefit who should obviously be on invalidity pension, which is not means tested either because it is based on contributions. They have not moved to invalidity pension for tax purposes or otherwise. We believe that people in those categories should be considered in regard to the amendment suggested by Deputy Flaherty. The Minister has said he will consider this problem because there is obviously a slight anomaly in this regard. He knows there are a number of people on disability benefit for five, six, seven, eight or ten years and obviously we cannot treat those people as employable again. They will obviously be dependent on social welfare and if they have dependants that should be taken into account, particularly if those dependants are under the age of 20 — the age will be 21 next year — and attending school.
The Minister in his last contribution said that disability benefit and unemployment benefit are paid by virtue of insurance contributions and hence one is entitled to have other income. Similarly with invalidity pension and widow's pension. They are also based on contributions: the income is taxable — and the person may receive other income in addition. It is wrong to exclude this group, because they are a varied group. People may go in and out of employment for short periods. There may be part payment in relation to a child if there is other income coming into the home — presumbaly it will be an earning wife and only half the benefit would be payable. Given the Minister's excellent record in relation to savings in his Department, I know he will produce a great deal more than £2 million savings this year and, if he is really convinced, he could deal with this matter and still look at necessary reforms in the general area of disability benefit, in particular in relation to these dependants, even, as I have said, to cover them initially beyond their second level schooling.
Question put and agreed to.
SECTION 7.
Question proposed: "That section 7 stand part of the Bill."
This is what is now looked upon as a hardy annual or just increasing the ceiling for pay-related benefit. I realise the Minister inherited this habit of pay-relating or increasing the ceilings. Is there any valid reason for having a ceiling on this payment? We are really dealing with people in relatively high income brackets, paying pay-related benefits.
The initial concept of pay related benefit as advocated by most socialists and the trade union movement was that pay related benefits were an instrument to cushion people from the truama of losing a job and that it eased them into unemployment benefit or indeed unemployment assistance. I think that the time is ripe to examine why there is a ceiling on the payment of PRSI and why there is a ceiling on the payment of benefits? Now that the percentage of income related to pay related benefits has been reduced to 12 per cent of income, I wonder what is the whole concept of pay related benefit? I respectfully suggest that the benefits are no longer related to pay in any way. The Minister inserted a provision in section 7 (2) for an early date, that is because he is a beneficiary. We would have frightened the Minister if we had suggested moving the date back to October or other such dates. I am also trying to help the Minister to ensure that he will have more money. Perhaps the Minister could explain the reason for the ceiling on PRSI contributions?
The Deputy made a very eloquent speech about section 11.
I will be dealing with section 11 later.
No, I was dealing with section 7.
In this section we are increasing the ceiling for contributions and I presume the Deputy does not want to remove this ceiling altogether, because that would mean a lot of money accruing to the Minister for Social Welfare?
I asked the Minister why there is a ceiling?
Section 11 refers to increasing the pay related benefit.
The Deputy asked about removing the ceiling?
The Deputy is in favour of removing the ceiling and having people on much higher income pay PRSI. The reason for the ceiling is that employees will pay their PRSI up to a particular point and not beyond that. I know that in Britain, for instance, there is no ceiling for the employer and that he pays a contribution on the full income. Our ceilings are very much the same for both the employer and the employee but the employer ceiling is a little higher now; this year it will rise to £18,600 from £18,000 while the ceiling on the employees contribution goes up to £17,300 from £16,700. The differential was introduced last year for employers but the employees rate of contribution is being increased only in line with changes in income.
The wider question of increasing the ceiling further and bringing in the kinds of income that would be involved would fall to be considered by the inter-departmental group who are looking at the PRSI system generally. As the Deputy probably knows, and we will discuss this later, there are questions about the rate of PRSI for the people on the lowest incomes and about how the scheme might currently be modified. What matters to the individual is the take home pay at the end of the day and that is affected by both PRSI and the tax take. That whole question is being considered at present by an inter-departmental committee who began to consider the matter just after the budget. In the budget we took certain steps such as exempting people earning below £60 per week in any particular week — and we will discuss this later — but we then set about considering the whole question of PRSI and we will bear the Deputy's point of view in mind.
The Deputy is relating the contributions of PRSI to the level at which pay related benefit would be paid but that is more properly dealt with in section 11 so I will leave that until we get to that section as other Deputies may have something to say about it.
The Deputy raised the question as to why the section will come into operation on 6 April. The reason is that it is tied in with the Revenue and it would create enormous difficulty in collecting revenue if this was not so, and I am sure the Deputy would be chasing me if we let the collection system slip. When the equation is worked out in the first instance, we look at the income from 6 April and we try to provide as much as possible during the year in terms of the increases that can be provided. The fact that the section comes into operation from 6 April certainly helps me as Minister for Social Welfare in trying to get the improvements we are interested in.
Question put and agreed to.
SECTION 8.
I move amendment No. 25:
In page 8, subsection (1), line 25, after "1988)" to insert "of the Principal Act".
This is a technical amendment to section 8 of the Bill. It is being made on the advice of the parliamentary draftsman's office. The amendment clarifies that section 17C (d) referred to in section 8 of the Bill is section 17C (d) of the Social Welfare (Consolidation) Act, 1981. It is a very technical arrangement.
Amendment agreed to.
Question proposed: "That section 8, as amended, stand part of the Bill."
(Carlow-Kilkenny): Would it be possible at this stage to refer to the PRSI payments made by the self employed where some people experience the difficulty of having paid contributions for nine years but yet finish up getting nothing in return? I know we are in the middle of the Bill and it may not be possible to do anything at this stage but would it be possible that the Minister consider paying PRSI to the self employed on the basis of their pro rata contributions so that if they made contributions for nine years they would be entitled to receive nine tenths of the difference between the contributory and non-contributory pension or in the case of having paid contributions for five years that they be entitled to half the difference? There is a substantial difference in the rate of pension for a husband and wife over 66 years, a £27.10 difference between the contributory and non-contibutory pension and it would make quite a difference if the self-employed were to receive the pro rata difference between the two pensions. Perhaps the Minister could consider giving those who will not have ten years contributions something on a pro rata basis. I accept that will cost extra money but I would like to hear the Minister's views on this.
Deputy Browne has raised a very relevant point on the question of the self-employed and their contributions to the PRSI scheme. In so far as it has gone, the scheme has been very successful and I am very happy with it.
The Minister has not had to pay out any money yet.
We have had to pay out very small amounts to people who would previously have had stamps.
Next year the Minister will have to pay the widows.
In the case of widows, some will be eligible as of now but for the majority payment will be much further on. There was much argument among the experts, and I am not talking about the experts in my Department of course because they are very accurate, about the scheme. When I say it was succesful, I mean that in the sense that it was our view that the income would be higher than was anticipated and we have been proved correct. This year the income will be £62 million.
Deputy Browne asked a very relevant question about those who are 55. If they are taken into the scheme they will get an exceptionally good deal. To make the scheme work we should have people joining it from 25 to 40 years of age. It is not economic to be taking on people in their fifties. The estimated cost of bringing people in that age group into the scheme is very substantial. The Deputy recognises that it will involve a huge cost and he asked if it would be possible to introduce a pro rata arrangement. When we introduced the scheme we agreed to review it at the end of three years and the points raised by the Deputy will be considered in that review which takes place at the end of the year. The financial experts tell me that it would be too expensive to include those over 55 but I would rather wait to get an estimate of the number of people involved. I would be anxious to include those up to 60 years of age but I must bear in mind the cost involved. However, all is not lost as far as those people are concerned. It is not the popular thing to point out that the full benefit applies to the widow if the person concerned dies within the nine years. The full widow's pension, and all that goes with it, will be paid. There is also a refund paid at the end.
I am investigating this matter and I am aware that the financial experts are not inclined to go any further because they consider we have gone too far to date. I will bear the views of Deputies in mind and take them into consideration when we are carrying out the review. The Deputy may be interested to know that I have asked the National Pensions Board to assess the possibility of introducing the invalidity pension for those people. That pension is fairly clearcut. As the people involved are self-employed it would be very difficult to apply a disability benefit to them. The board will be examining this from an actuarial point of view to see if the suggestion is feasible.
(Carlow-Kilkenny): The Minister has told us that he will refund 50 per cent of the payments to the small farmers and business people who cannot benefit but, on the other hand, if they qualify for a non-contributory pension the Minister will be keeping that 50 per cent of their contributions. That must be the most unjust decision that the Minister has ever made. Will the Minister explain how he can describe the latter as a non-contributory pension when he is keeping half of the payments? The Minister should consider that issue when he is reviewing the scheme at the end of the year.
I have no doubt that that matter will be considered. The National Pensions Board recommended that approach. It must be remembered that all the information we have is based on estimates. We will know a great deal more later.
There is no doubt that the scheme has become very popular in spite of the reservations expressed initially by the IFA. Many people, particularly widows, are requesting information about the scheme from public representatives. I am surprised that the Department are not prepared to deal with applicants until they have a tax number. It is unfortunate that many of the self-employed, widows and small farmers have never been in the tax bracket. It takes some time for them to make their contributions. I accept that those who have not made sufficient contributions will only receive a portion of them back. Is it the Minister's intention to discontinue the payment of non-contributory pensions? Is it the Minister's intention to ask everybody to contribute so that shopkeepers, the self-employed, farmers and on so on will be able to benefit instead of having to transfer their possessions to a relative before they qualify? Will the Minister outline his long-term aim in regard to this?
Most people are in the scheme but there are still those who are under the £2,500 income limit. They are not included and must depend on the other scheme. The reason we are seeking tax numbers is so that people will register. The amount involved is very little, £104 per annum. One of the difficulties we have is that people who pay contributions are not registered for the benefits. Obviously, we will catch up with them in due course but we would be happier to have them registered. There is no doubt that the scheme is going well despite the fears and concerns expressed about it. It should be borne in mind that we had to run an extensive campaign to get people to understand that the scheme provided benefits as a right and that we were removing the means test. I will keep the points raised in mind.
Deputy Browne extended the debate wider than we had anticipated. An amendment tabled by Deputy Browne and myself in relation to the regulations and the awarding of pro rata pensions was ruled out of order. Is this a general application or is it confined to this section? In relation to the point made by Deputy Ferris, I gather from discussions I have had with the Minister's Department that the number of people who are in a contributory position is increasing but that need not necessarily be a steady and increasing index. Because of the level of unemployment over the past decade when those people arrive at pension age we will see an increase again and people will be dependent on non-contributory benefits of one kind or another. In view of the fact that the Minister responded in such detail to Deputy Byrne I am looking forward to his reply.
I do not think I have conceded anything but I have conceded that it is an issue that has to be examined. It is one that can be examined in the context of the overall review of the operation of the scheme. All these things will come back ultimately to the costings, the number and the realities of the situation. The Deputy has raised in effect the question of mixed insurance. I think she also raised that issue in a paraliamentary question.
Yes.
The mixed insurance issue is being examined by the National Pensions Board. I took out the part which I had identified but which was not too difficult to operate. Once we get into the mixed insurance issue we are into a very wide ranging situation. That is the one that has occurred and which is continuing to occur, so if it is to be changed it must be part of the overall scheme rather than once off remedy. That issue is being examined by the National Pensions Board.
Section 8, as amended, agreed to.
SECTION 9.
Amendments Nos. 26 to 29, inclusive, not moved.
Here we have amendment No. 30 in the name of Deputy Byrne. I observe that amendments Nos. 40 and 56 are cognate and I am suggesting, therefore, that we discuss amendments Nos. 30, 40 and 56 together by agreement if that is satisfactory. Is that agreed? Agreed.
They relate to entirely different sections and the reason for having them in any one section would be quite different.
They are cognate. My desire is that they be taken together, but if the House wishes to have them taken separately that is a matter of opinion.
They are dealt with separately.
I am merely asking that they be discussed together. There can, of course, be separate decisions if required. That is the usual procedure.
I move amendment No. 30:
In page 9, between lines 18 and 19, to insert the following:
"(d) Where it is proposed to make regulations under this section, a draft of each regulation shall be laid before each of the Houses of the Oireachtas, and shall not come into effect until a motion approving of the draft has been passed by each such House.'.".
I have reservations about the amount of legislation in this Bill that in a sense has still to be written into the regulations. From a quick glance at the debate last year I know from Deputy De Rossa that he was fighting for some formula whereby these regulations would be brought before the House for inspection, for ratification and, in fact, for the right of the House to vote on them. I think that would be the correct procedure. It appears that there are a number of other Deputies here who share similar reservations because of the amount of references made to the regulations. Can the Minister outline why he feels these amendments are not acceptable to him? Why does he feel the regulations should not be brought before the House for us to debate and vote on them?
The reason I identified one particular section is that there is a substantial change involved. While regulations may be desirable here, may I ask that amendment No. 56 in my name be considered in the context of the carer's section? One of those regulation proposals occurs in the carer's section to which my name is attached. Can we deal with the other two amendments separately?
Amendment No. 56 can be taken separately if you so desire, Deputy. Would you prefer it that way?
Yes.
Amendment No. 56 will be taken separately in due course.
I would like to deal with the point referred to in Deputy Byrnes's amendment. I was trying to address this problem in amendment No. 26, which somehow was ruled out of order. I have to accept that there was obviously a reason for that. I was trying to remove the provisions that would be subject to regulation and to remove the actual words "subject to regulations" Deputy Byrne is trying to ensure that the regulations when made will come before the Houses of the Oireachtas. I, too, was hoping that we would have sight of these regulations. I know that is not always possible, but we wanted to ensure that the House would have an input into those regulations.
Amendments Nos. 30, 40 and, indeed, amendment No. 56 are designed to require that regulations relating to the PRSI exemption scheme for low paid workers and the proposed new lone parent's allowance and the carer's allowance schemes will need resolution of approval of each House of the Oireachtas — in other words that they will have to be brought in here to be debated in the House before they can be put into operation, before I go into any detail that is unnecessarily bureaucratic, would cause delays and is not administratively feasible or desirable. That is putting it in a nutshell.
Before I deal with my general objections to these amendments I would like to make a specific comment in relation to amendment No. 30, which relates to the PRSI exemption for low paid workers provided for in section 9 of the Bill. As I announced during the Second Stage debate on the Bill, I intend to introduce this exemption which will benefit up to 50,000 low paid workers with effect from the beginning of the coming income tax year, that is with effect from 6 April next. The effect of this proposed amendment, however, would be to delay the introduction of this scheme. As Deputies will be aware, the Social Welfare Bill will not be enacted until Friday next, the same day on which this House will be going into recess. Consequently, if the proposed amendments were carried the necessary regulations could not be made in sufficient time to have the exemption introduced with effect from 6 April. That is the classical difficulty which applies at different stages once you put those requirements into a measure such as this.
On a more general level I must point out that the basic features of the PRSI exemption for low paid workers and the new lone parents allowance and carers allowance schemes are contained in the Bill. During the Second Stage debate I set out in detail how each of these three schemes will operate, who will benefit and the conditions under which they will benefit. The regulations which I propose to make will deal essentially with routine administrative matters. The PRSI exemption regulations will specify that the exemption will apply to persons earning £60 per week or less. In addition, they will set out how the exemption is to be applied to persons paid other than on a weekly basis — for example, those paid fortnightly. The regulations will also deal with other situations such as persons concurrently employed by more than one employer, how persons who benefit under the exemption will be affected by periodic lump sum payments, such as overtime payments, bonus payments and so on. These are the technical administrative difficulties which arise and they have to be sorted out in an administrative way; otherwise we will choke up the system and get into a bureaucratic system which will ultimately fall down around our necks. I would strongly advise against that. That is why I am providing for this kind of flexibility in the arrangement. The Deputy must trust the officials, who, as civil servants, are servants of the public, and the Minister who can be brought before the House at any time within 30 sitting days of the introduction of the regulations so that we can have a full debate and if the Deputy feels some modification should be made, it can be made in due course. At least the scheme will go ahead and if the Deputy wants to make amendments he can make them later.
Regulations relating to the lone parent's allowance and the carer's allowance will deal with routine administrative matters, such as provisions relating to claims and payments, applying existing provisions in relation to the appointment and duties of social welfare officers to the new schemes and provisions for dealing with situations in which persons are entitled to more than one benefit or assistance payment under the Social Welfare Acts. In addition, regulations relating to the lone parent's allowance will specify the circumstances in which a person is to be regarded as a separated spouse for the purposes of the new allowance. As I made known on Second Stage, all separated persons who make reasonable efforts to obtain maintenance from their spouse will be covered by the new scheme. This is a major breakthrough in terms of the lone parent's scheme and I must be left to work this out with my officials. This is a very complicated area and we cannot delay and come back later. It will take some time to work out these issues. I want the measures to be introduced as quickly as possible and I am trying to sort out the technical difficulties. Even with the best goodwill the Minister for Social Welfare will be under a lot of pressure at the end of the day to try to get the new regualations into operation. The people outside will not thank me or the House if the regulations are delayed at that stage. This is why I believe the approach we are taking is the better one.
Therefore, it must be evident to all concerned that the various regulatory powers referred to in these amendments will deal with routine administrative matters. It would be entirely inappropriate to provide that regulations providing for such matters should require a resolution of approval by the Houses of the Oireachtas. As I have already indicated, all the relevant features of the three schemes in question have been explained in detail and adequately discussed on Second Stage. In addition the three schemes will be the subject of further debate on Committee Stage. Furthermore, the regulations will have to be laid before the House in any event and Deputies will then have the opportunity of raising any objections they may have to the provisions contained in them. It is not as if Deputies will not have the opportunity to put forward their views in regard to these regulations; they will.
It is my intention to introduce the lone parent's allowance and the carer's allowance schemes with effect from October next, or earlier if the necessary administrative arrangements can be put in place. The necessary administrative arrangements include, for example, all sorts of agreements about what is to be done, how it is to be done, etc., so that we could be tied up in a knot at the end of the day and delay the process even though we may be in a position to go ahead with the schemes. I am concerned that the introduction of these schemes could be unnecessarily delayed if the relevant regulations require a motion of approval.
As I said at the outset, I believe the arrangements in the Bill are adequate. Every opportunity will be availed of to let people know about the scheme, in so far as it can be made known at this time. We will have to work out the details subsequently, and this will be done in all good faith. This is done by the Minister for Social Welfare in many areas and is common practice in the social welfare area. From that point of view, I believe it would be undesirable to accept Deputy Byrne's amendment. Of course, the inclusion of amendment No. 30 would cause chaos at this stage. This measure has to come into effect on 6 April; otherwise people will not be able to receive the benefit on a week by week basis from there on. I hope Deputy Burne recognises the position he would place me in as Minister if amendments Nos. 30 and 40 were accepted and the difficulties they would give rise to on the administrative side.
The Minister may have convinced me to take the same serious view of the first two amendments and obviously I accept that there is a particular problem with regard to the April date, but given that we are so close to 6 April, perhaps the Minister will clarify his thinking behind one of the issues he referred to, that is, the person with two sources of income. I want to refer to the case of a person I know who, having retired early from teaching due to illness, receives a sickness pension amounting to £30 per week. Obviously this pension is based on the public service rate for former national school teachers who retire early from teaching and take up low paid positions, which are within the exclusion limit. I am interested to know how that person will be treated.
The Minister in his reply indicated how many of these people depend on the regulations and how they are presented. The Minister said he hopes to introduce the other two schemes by October. If the orders have to be made by way of regulation we might be able to indirectly influence the outcome if they have to come back to this House at an early date.
I doubt that.
The Minister will just delay the benefit. I will deal with the issue of the carers' allowance separately. Some of the definitions in the Bill will be vital to its application. I ask the Minister to clarify the position in relation to the case I raised in order to reassure us.
The Minister has convinced me of his reasons for not accepting the amendments. However, this begs the question why my amendment to section 9 was not accepted? My amendment removed any need for the Minister to introduce regulations and would have allowed him to legislate now. This would have made things much easier for him, but I realise that legislation needs regulations to bring it into effect. This will enable the Minister to change certain figures afterwards by way of regulations. I know that we can debate the figures once the regulations are laid before the House, which is the way things are normally done.
Deputy Byrne wanted to provide that we could debate such regulations in case they would be at a disadvantage. I am sure that where there will be an advantage we would welcome their speedy introduction by the Minister. My amendment sought to help the Minister in this respect.
I must have power to make regulations, which is the other side of that coin.
I thought the Bill would give the Minister that power.
I do not want to delay the debate for too long but as 6 April is the payment date for the 60,000 people who will benefit by their exclusion from PRSI payments, obviously one would be keen to help rather than hinder them at this stage.
It is important for us to see the regulations the Minister has in mind as quickly as possible, preferably in conjunction with the reading of the Bill. There is a reference to disqualification of lone parents from receiving allowances "except where regulations otherwise provided." The Minister says he has to work out the details of these regulations. That seems ominous because the details finally decided by the Minister and which suit him may be upsetting to the Opposition. That is why I feel we should have the opportunity to debate regulations in conjunction with the Bill.
The disqualification is where a person is, perhaps, in prison. There is nothing devious about any of these things. The finer details have to be worked out within the terms that are set out here. The final administrative detail can be quite complicated and that is where the regulations come in. Once the regulations are introduced the Deputy has 21 sitting days in which to move a motion in the House about them.
How soon, and by what method, are the regulations brought to the attention of the House?
They are laid on the table of the House immediately. The Deputy need not be concerned. I make lots of regulations and 99 per cent of the time everybody agrees with them. Sometimes Deputies may want to change the whole system afterwards. The Minister, however, makes the regulations under the criteria set down here.
I am still waiting for the regulations to be made under the Air Pollution Act.
There is no smoke without fire.
We are still waiting for the regulation outlawing the marketing, sale and distribution of coal.
That may be in order on the Order of Business. It is not in order on the section.
At the risk of upsetting the Chair but in attempting to be helpful to the Deputy, I will send to him and the other two Deputies who are here, Deputies Flaherty and Ferris, a copy of regulations which I signed yesterday on the pre-retirement allowance. When the Deputy has a look at them he will see what is involved and he will not want to read too many of them afterwards. There are about 30 pages of technical detail in that one alone. It gives an idea of what our officials do to keep us on the rails when we get wonderful ideas. I will also send the Deputies a copy of the one due on 6 April which I will have to work on as soon as the Deputies allow me out of the House. Thereafter the Deputy will find that the regulations are laid on the Table of the House and he can get a copy at any time.
The Deputies are guaranteed pleasant holiday reading for Easter.
I was asked a question about the pre-retirement allowance. It will be satisfying, however difficult, to give some sort of reply. We are all very appreciative of the work of the Department because struggling through the legislation even ten years since the Act was consolidated and trying to devise amendments to the Bill is difficult enough. I can imagine what it is like to bring in the full range of statutory regulations etc. Is there any possibility of the Minister replying to the question I raised about a person with two sources of income, one from a separate rate of PRSI?
It is only the full class A people who are covered.
So a person in that category would benefit from the exemption.
If they are on full class A rate.
The person I have in mind also has a £30 income at another rate.
Such persons would benefit.
Amendment, by leave, withdrawn.
Question proposed: "That section 9 stand part of the Bill".
I am having much more difficulty with the general exemption. It is welcome on one level and it seems churlish to say that one would not welcome an exemption for those with under £60 a week. I have no doubt, however, that this is a fundamentally flawed approach to the reform of PRSI. I know the Government are unhappy with it because their response after the budget was a response to the concerns expressed by the junior partners in the Coalition that something should be done with the PRSI area in the context of the fundamental reform of taxation. The debate on the Social Welfare Bill last year makes very interesting reading with Deputy Harney expressing the PD view of what should be done with PRSI. We in Fine Gael share a good deal of that view in regard to the targeting of people on low pay because so many of them are in the tax net. The findings of the ESRI as late as last September were that the removal from the tax net and from PRSI, which is looked on as a tax, of that group of low paid workers would greatly reduce the incidence of poverty in that group. One of the frustrations of dealing with the Social Welfare Bill in isolation is that so much of what one would like to say would relate to an integrated reform of the tax system as well. In this case all that is relevant are reforms in the PRSI system. I have no doubt that this exemption for those on £60 was beaten out at the Cabinet table. Since doing that the Government have established an inter-departmental committee to look at it. This indicates that the Government are concerned first about the broad policy and second about whether this is the right way to approach it. We in Fine Gael believe it is not the right way to approach it and our suggestion is that £2,500 to £3,000 of the income of all, not just those whose income is under £60, should be exempt from PRSI. Who can this cut off of £60 be relevant to? What kind of employment are we acknowledging and encouraging if we are talking about £60? That kind of income must be a supplementary income. It simply cannot be an income for a family. Perhaps it might affect low paid women or very young people. Introducing a figure like this creates an inevitable trap. It encourages employers to target employment at this level and it seduces the employees, in their great need for employment, to also look to this figure.
Once they go over that amount, there is a period before they make up the difference. An increase does not become immediately valuable until the gap is bridged again when they go back to full PRSI. The experience of payment arising out of equalisation legislation has indicated just how easy it is to trap people. People, largely women, are volunteering to get lower wages and work fewer hours so that they remain within a certain category. It is a fundamentaly flawed approach to reforming PRSI. It is undoubtedly of benefit to this group of people but perhaps at a very large price. They may be forced to refuse an increase or they may encourage the black market by taking the increase under the table. This is a bad approach. The unions believe the wrong option has been chosen. Our proposal that the exemption should be extended is a costly one but it is justified in the context of a substantial move to remove low paid people from the tax net and to encourage employment.
We have recently had representations from the apparel industry who are particularly affected by the PRSI structure. It is a relatively low paid industry but it is very competitive internationally. They feel that PRSI exemptions for their workers would be of substantial benefit in creating extra employment. This debate is important because there is so much long-term unemployment. The reform of the PRSI system is essential to the creation of an atmosphere where employment is more possible. This exemption is so limited in its application and has so many possible negative effects, many related to women, that I am very concerned about the section and will oppose it. I would press the Minister to adopt the approach proposed by us in our disallowed amendments.
We have suggested a figure of £3,000. There are two reasons. PRSI is considered to be a second element of taxation because it is based on gross figures. There is a need to reform the system for the low paid. The Minister set the figure of £60 per week as a suggested exemption. Such a basis would have relatively little impact for part-time employees and people in short-term employment. If the figure were set at £3,000 as suggested by me or at £2,500 as suggested by Deputy Flaherty or on an annual basis, there would be a real benefit for people in short-term employment or in part-time and seasonal employment, particularly in the tourism industry. There is a belief that people should be exempt from income tax and PRSI payments up to a certain limit. There is also a good argument on the employers' side. An incentive to the creation of employment would be the exemption of employers from the payment of their level of contribution.
We must consider what pay-related now means. It is fast moving away from having any relativity to pay because of the ceiling which has been imposed, the percentage paid to an employee out of work and the length of time it is paid. The original benefits are being eroded and we are not dealing with the kind of people who rarely benefit, which is what we are trying to do in this amendment by suggesting annual figures as opposed to weekly figures.
Deputies have suggested there should be a different arrangement. Deputy Flaherty feels that the provision we are making is not adequate and that we are excluding everyone who earns less than £60 per week. Other countries within the EC operate an exemption limit. There is an exemption limit in Britain below the level of £2,500. The difference there is that a person does not benefit. In this case the benefits will still apply once a person is working 18 hours a week. I would see this as part of a review of the whole scheme. The reality is that it would take a fair deal of study and investigation to decide how best to do it in the interest of employees and of the social insurance fund and scheme as it operates. If we are to exempt the first £3,000, which is roughly £60 per week, and leave it as an allowance against PRSI — a person would not pay PRSI on the first £3,000 anyway — the cost for employees would be £117 million, for employers £240 million and for both £357 million. Very large sums are involved once we go right across the board. The whole system needs more investigation and arrangements have been made for an interdepartmental committee to examine the question urgently.
The only way to operate this scheme effectively is on a weekly basis. It would not be of much value to people if they had to wait until the end of the tax year. The weekly basis was chosen so that people could benefit immediately in any week in which they would earn less than £60. The Revenue Commissioners estimated the numbers who would be involved. It would cover a wide range of people who are currently earning very low incomes, still doing 18 hours a week. Deputy Flaherty asked what kind of people would be included. It could include people like students and certain people working in cleaning and other areas. I would see it as a start to tackling the whole question of people on low pay. The cost is estimated at £11 million in a full year and £8 million in the current year, affecting approximately 50,000 people.
The purpose of the inter-departmental working group is to consider the relationship between PRSI and income tax and their combined impact on the low paid, and to make recommendations. This is what Deputy Flaherty and Deputy Ferris have been talking about and it is being considered urgently. There are very major questions involved and how best to tackle them at the end of the day is a matter which is getting priority.
I have some difficulty as I am so convinced about the wrongness of the approach here. The Government are now committed to a substantial review of this area. Can I have a little more detail about the inter-departmental committee and their terms of reference and the consultations with the unions who are very anxious that this be tackled? Perhaps I can accept this exemption with the reservation that the whole matter is being examined and perhaps there will be some more fundamental proposal next year. Otherwise I might feel obliged to press this section to a vote because without that understanding I would wish to put a very significant marker here. It would have been better, if the Government were anxious to deal with this area, to use these funds, if they are aimed at the low paid worker, for increases in exemptions or personal allowances. Can I hope that next year this will become part of the universal scheme to apply to all low paid workers? I suppose we all know the situation of the low paid worker in the context of the alleviating arrangements in equality legislation. They have become a trap, essential as they were, and the Minister's proposal is to extend them by £5 this week. It is appalling to see women arguing themselves into a lower income situation, as they must because of the consequences.
I think we are straying very far from this section and there is a great deal to be done. I think I will put the question.
I would like the Minister to develop it more.
In deference to the Deputy, since she has asked me to explain a little more what is involved, let me say that the Government are concerned at the impact of social insurance and income tax provisions on low paid workers and have established this interdepartmental working group to examine this area. There are various ways in which we can build on the exemption for low paid workers provided for in this Bill. We could develop the exemption by extending it to other workers or by adapting it to take account of family circumstances. This approach is not without its problems, however, as it could develop a poverty trap for those just above the exemption limit. This is the trap the Deputy referred to. Alternatively we could introduce an allowance to be offset against PRSI, but aside from the issue of cost this would benefit high earners in addition to those on low incomes. We could turn it into an allowance for everyone at the same rate. It applies to everybody anyway and it is a question of what level to put the allowance at. It is one possibility. I raised about ten different alternatives in this area which could be considered. It involves the Department of Finance as well as ourselves. The finance involved is quite substantial. We could introduce an allowance to be offset against PRSI but this would benefit everybody. A further option would be to introduce a tiered contribution system with those on higher incomes paying proportionately more than those on lower incomes.
All these options will have to be examined by the interdepartmental working group to whom I have referred. As part of their examination it will be necessary to consider not only the effects on take home pay but the effects on the overall administration of the tax and social welfare systems. It would be necessary to consider the impact on those who must pay for whatever changes are proposed through taxation or otherwise. I would like to assure the Deputy that the terms of reference are as I have stated, to consider the relationship between PRSI and income tax and their combined impact on the low paid, and to make recommendations. I believe the terms of reference are broad enough and the systems which will be examined will be very relevant ones.
When will the Minister have the review group's report? Will he have the implications of that review for next year?
I hope they will be well in time for that. That is why it is started immediately. I hope the position will be well resolved in time for next year.
Question put and agreed to.
Section 10 agreed to.
SECTION 11.
Question proposed: "That section 11 stand part of the Bill."
I am opposing the section and I have an amendment down to that effect. Section 11 is of tremendous importance to The Workers' Party and we are opposing it. I would like to outline some of my reasons, and then the Minister will probably tell us his ideas. Deputy Ferris referred to pay-related benefit. Over the years there seems to have been a co-ordinated approach by the Minister to slowly but surely strangle pay-related benefit to death, in other words to do away with it. It was introduced in 1981. The provision in this Bill is to raise the amount from £69 to £72. The increase of £3 might seem nominal and it might be argued that it is only keeping pace with inflation, but people who are unfortunate enough to require pay-related benefit through unemployment or otherwise, find a tremendous gap between their former earnings as full-time employees of a company and their payment as recipients of social welfare on the dole drawing unemployment benefit. Pay-related benefit was there to cushion families who would be seriously in need of such cushioning as compared with single people. It was to cushion them after the horror of finding that they were out of a job and having to report that to their family. At least in the interim — I believe it is 15 months — there was a process whereby one's standard of living would slowly deteriorate by virtue of the dropping of benefit to 40 per cent, 30 per cent, 25 per cent and ultimately to 20 per cent before you were a recipient of unemployment benefit. That was an intelligent process and I congratulate whatever Minister brought it in.
In 1981 a deduction of £14 was made from your weekly earnings. Last year, for instance, a ceiling of £11,000 was divided by 50 to give the average weekly earnings and the balance divided by 12 per cent which gave the weekly pay-related rate. You held that weekly rate for 15 months and it dropped after some time. You received 14 per cent up to the 159th day and so on. Although the upper limit of £11,000, the figure we divide by 50, has not altered in the last three years, the pay-related benefit on that maximum allowable income for benefit would be about £18.12 per week. It is not a huge sum by anybody's standards and the scheme should have been developed to allow for a bigger sum. The £11,000 should have been allowed to rise and the pay-related to get smaller which, at the end of the day, would have provided a far greater cushion than before. We see this as a phasing out process and we are not happy with it. Instead of phasing out the pay-related benefits we should like to see them reinforced, developed and strengthened to bring about conditions whereby they would act as a more secure cushion for people who are unfortunate enough to be out of work.
Pay-related benefit, as the Deputy said, is a supplement to disability benefit, unemployment benefit, maternity allowance and injury benefit and is paid for the maximum period of 15 months. Benefit is calculated at the rate of 12 per cent of a person's reckonable earnings in the relevant income tax year between a floor of £69 and a ceiling of £220 per week.
The purpose of section 11 is to increase the floor or earnings disregard used in calculating pay-related benefit from £69 to £72 per week in the case of new claims arising on or after 9 April 1990. That is in line with standard practice over the years.
The Labour Party also consider that the whole concept of the pay-related scheme is being eroded because there is a feeling that if it is continued it will be a disincentive to going back to work. I do not know any employed person who would regard pay-related as a disincentive to going back to work. Most people with whom we come in contact on a daily basis who are temporarily out of work because of illness look forward to returning to work; they would not allow any social welfare payment to act as a disincentive because people are happier at work.
This is an excellent scheme which is intended to insulate a person from the trauma of losing a job. It was a cushion for their family and dependants. However, it is now looked on as being in some way a disincentive, which I do not accept. There should not be a cut off point at the top for contributions or in relation to benefits. It should be used for the purpose for which it was originally initiated, a pay-related benefit. Unfortunately, we seem to have lost that concept.
We have a long road to travel and we should not be spending too much time on the concept of what is already there. Conceptual matters in regard to pay-related should perhaps be left for another day when there will be more time to discuss it. The section provides for an increase in the allowance and we should not avail of this opportunity to take issue with the concept of pay-related. We are dealing with facts, we could talk until the cows come home but it will not alter the section.
I hope that the Minister will heed some of the points made in the House and perhaps they might alter his opinion. Presumably, that is why we debate Bills.
The Minister has not answered my question because he said that it has been standard practice over the years and that is how it has been done. Is the Minister telling me to read between the lines and that I will then realise that he is running the scheme down? It is being abolished on a yearly basis and the logic of the standard practice is that the scheme is dead. If the scheme is dead let the Minister say so now rather than having it become a cancerous growth over the next eight or ten years. That is the sort of honesty I am looking for from the Minister and if he clarified the matter we would know whether we want to push it to a vote.
The pay-related benefit floor has increased each year since 1981. It is being increased to £72 for new claimants only from next April. If the relationship between the floor and the flat rate benefit was maintained the floor should now be £120 instead of £72. Even after raising the floor to £72 in April, therefore, pay-related benefit recipients will be more favourably treated compared with the original design of the scheme in 1974. What is affecting this is that the flat rate is being increased. This was recommended by the Commission on Social Welfare and Deputies are now asking me not to adopt this part of their proposals.
The commission said we should increase the basic flat rate payment and that that was the most important thing because the pay-related benefit could vary. The fact that we are increasing the basic flat rate payment is the cause of the problem. We are only changing the rate by the same proportions as it has been changed every year since 1981. In that sense there is nothing unusual in what is being done here. I know the Deputy would like to see a greater increase in pay-related benefit and he would also like to see a greater increase in flat rate benefit, but you cannot have it both ways. It costs an awful lot more to increase the flat rate benefit and everybody benefits from it. It is that increase that is having this effect.
It is hard to get the Minister to tell us that the scheme is dead.
It is still there.
The Minister is saying that the flat rate benefit is being increased and is congratulating himself on the so-called increase, which is somehow making this pay-related benefit scheme out of date and unnecessary, but I do not accept that argument. What the Minister is trying to indicate is that when a man or woman loses his or her job, there will be only one prospect facing that person and that is that they go onto the flat rate of unemployment benefit. The cushion is then removed for these families. That is precisely the opposite concept to what is in the Bill. I am not happy that we should be facilitating the demise of the pay-related benefit.
Question put.
The Committee divided: Tá. 61; Níl, 22.
Tá
- Ahern, Bertie.
- Ahern, Dermot.
- Ahern, Michael.
- Andrews, David.
- Aylward, Liam.
- Barrett, Michael.
- Brady, Gerard.
- Brady, Vincent.
- Brennan, Mattie.
- Callely, Ivor.
- Clohessy, Peadar.
- Connolly, Ger.
- Coughlan, Mary Theresa.
- Cowen, Brian.
- Cullimore, Séamus.
- Daly, Brendan.
- Davern, Noel.
- Dempsey, Noel.
- Dennehy, John.
- de Valera, Síle.
- Ellis, John.
- Fahey, Frank.
- Fahey, Jackie.
- Fitzpatrick, Dermot.
- Gallagher, Pat the Cope.
- Geoghegan-Quinn, Máire.
- Harney, Mary.
- Hillery, Brian.
- Hilliard, Colm.
- Jacob, Joe.
- Kelly, Laurence.
- Kenneally, Brendan.
- Kirk, Séamus.
- Kitt, Michael P.
- Kitt, Tom.
- Lawlor, Liam.
- Leonard, Jimmy.
- Leyden, Terry.
- Martin, Micheál.
- McDaid, Jim.
- McEllistrim, Tom.
- Molloy, Robert.
- Morley, P. J.
- Nolan, M. J.
- O'Connell, John.
- O'Dea, Willie.
- O'Donoghue, John.
- O'Keeffe, Ned.
- O'Leary, John.
- O'Rourke, Mary.
- O'Toole, Martin Joe.
- Power, Seán.
- Quill, Máirín.
- Roche, Dick.
- Stafford, John.
- Treacy, Noel.
- Tunney, Jim.
- Wallace, Dan.
- Wallace, Mary.
- Woods, Michael.
- Wyse, Pearse.
Níl
- Bell, Michael.
- Byrne, Eric.
- De Rossa, Proinsias.
- Ferris, Michael.
- Gilmore, Eamon.
- Higgins, Michael D.
- Howlin, Brendan.
- Kavanagh, Liam.
- Kemmy, Jim.
- McCartan, Pat.
- Mac Giolla, Tomás.
- Moynihan, Michael.
- O'Shea, Brian.
- O'Sullivan, Gerry.
- O'Sullivan, Toddy.
- Quinn, Ruairí.
- Rabbitte, Pat.
- Ryan, Seán.
- Sherlock, Joe.
- Spring, Dick.
- Stagg, Emmet.
- Taylor, Mervyn.
Tellers: Tá, Deputies V. Brady and Clohessy; Níl, Deputies McCartan and Ferris.
Question declared carried.
SECTION 12.
Amendments Nos. 31 to 38, inclusive, not moved.
Amendment No. 39 is in the name of Deputy Eric Byrne but I observe that amendment No. 59 is cognate and I suggest therefore that we discuss amendment Nos. 39 and 55 together by agreement. Is that agreed? Agreed.
I move amendment No. 39:
In page 11, subsection (1), line 39, to delete "may" and substitute "shall".
We are seeking this change because we consider it important that we commit ourselves to making specific regulations.
The wording of the section gives me power to make the regulations which are essential for the introduction of the lone parent's allowance. Needless to say I would not have included this very important section if I did not intend introducing the scheme. As Deputy Flaherty said, I have worked on this scheme for two years and it is totally inconceivable that I would do that and not introduce the scheme. In amendments Nos. 39 and 55 the Deputy is suggesting that I should include the word "shall". Under the provisions of the Bill as initiated the Minister may make regulations in relation to the lone parent's allowance and the carer's allowance schemes. The purpose of the amendments is to compel the Minister to make such regulations. The Deputy does not trust the Minister and I find that amusing. Does the Deputy think that I would go to the trouble of preparing such schemes, of getting them through the Government and having the money approved in the budget and not be interested in bringing forward the regulations to give effect to the schemes? That would not happen.
The Deputy, a new Member, is very suspicious about everything that takes place in the House. I hope that in due course he will learn to be less suspicious. We mean what we say and we do our utmost to bring all schemes into operation. I made known on several occasions during the course of the Second Stage debate that I expect the necessary administrative arrangements to facilitate the introduction of these schemes to be in place by October next, and I intend to introduce both schemes from that date. I should like to remind Deputies that the Social Welfare Act, 1989, contained similar regulatory powers relating to the widowers' non-contributory pension and the deserted husband allowance schemes. Deputy Flaherty referred to them earlier. I undertook during the passage of the 1989 Act to introduce those schemes with effect from October 1989 and as Deputies will be aware, I did that.
I do not have any objection in principle to the proposed amendments. Nevertheless I am disappointed that the Deputy should question my intentions in relation to the introduction of new schemes by proposing amendments designed to compel the Minister to make the necessary regulations. If I was not so easygoing about such matters I would take umbridge at the Deputy's suggestions. As the person who was responsible for the preparation of these schemes it must be obvious that I intend introducing them. It is important that the Minister should have flexibility for some of the reasons I outlined earlier. As I want the Deputy to feel happy about what is taking place in the House and to understand that I am paying attention to what he is saying, I am prepared to adopt his suggestions. Since it is my intention to introduce both schemes in October I do not propose to oppose the amendments.
I welcome the Minister's positive response to the amendments. We debated the use of those words in the last Bill before the House. The word "may" appears to be a favoured word of the parliamentary draftsman. It is contained in a lot of legislation and I have sought on many occasions to change it but without success. I do not distrust the Minister and I accept that he will introduce the schemes in October. I have failed so often to have the word "may" changed that I had given up hope of any Minister making the change. I compliment the Minister.
Amendment agreed to.
Amendment No. 40 not moved.
Question proposed: "That section 12, as amended, stand part of the Bill".
I welcome the decision of the Minister to set up the lone parent's allowance scheme. It will bring a certain dignity and coherence into a whole series of allowances for persons who are looking after children and families on their own and who up to this were defined by various titles, some of which had a certain stigma attached to them. The new scheme will remove a lot of discriminatory language. The circumstances of the people concerned are difficult enough without them having to endure any other traumas. It highlights the terrible inconsistency of the corresponding benefits. I know the Minister is well aware that widowers and other separated and deserted husbands have no entitlement to benefit and there is absolutely no justification for that and that it is something that will have to be dealt with and resolved. Other categories of lone parent of the female variety are excluded while some are included. There is absolutely no coherence in that area. Perhaps the Minister would indicate his thinking in relation to that area.
There is one particular element in this which a number of the organisations representative of welfare organisations have expressed particular concern about, that is section 12, chapter 5A 198D. — (2) in the context of the disqualifications which the Minister is proposing for persons who may be claiming this benefit. It may appear entirely logical that if the Minister is establishing a lone parent's allowance that cohabitation as man and wife is a reasonable ground for disqualification. However, deciding whether persons are cohabiting as man and wife involves the most degrading and humiliating searches of their dwellings and residences, checking their bathrooms and bedrooms for evidence of intimacy between any two people. Along with the issue of the lone parent's allowance, which the Minister indicates he has done a good deal towards resolving, is the provision that somebody who is separated is not required to prove desertion. That requirement was the main obstacle to people in need of benefit remaining on supplementary welfare for many months. These groups have asked that this requirement should be examined in the context of looking at how the Department treat people on unemployment assistance where cohabitation does not inevitably mean exclusion from or cutting off of benefit but it does mean reductions in the amount payable, particularly where persons may be marginally disturbed, they may be in a very loose relationship and they may simply be living in the same dwelling with another person. There is undue humiliation not essential to the question of what the Department would be willing to give under other headings in terms of economic support. I am sure this argument has been made directly to the Minister. I would like to hear his thinking in relation to it and whether he would be sympathetic to it. Does he see the possibility of movement or change in that area?
Like Deputy Flaherty, I welcome this new chapter in the social welfare code of the terminology of "lone parent." It removes some of the stigma that attached to previous payments in these categories and it puts them, at least from the point of view of a description of their status, in the same category, whether they are a widow, a widower, separated, unmarried or whatever. We even have some divorced people living in this country because their husbands, by virtue of their disappearing to England for five or more years, are initiating divorce cases in England and leaving the spouse at home with no opportunity to contest the divorce case.
Over the past number of years we have come an extraordinary way down this road towards accepting that these tragic situations occur. I am extremely concerned at the restriction on means testing as contained in section 12, Chapter 5A, 198C.—(2) paragraphs (a) and (b). We are talking about the same old figures that had been set down in the seventies of amounts exceeding £6 as beginning to have an effect for means purposes. I tried to amend those figures and was not successful for obvious reasons, but I am anxious that the Minister would keep this figure in mind. I have put down parliamentary questions to the Minister requesting that he would update that figure which in today's terms should be of the order of £30. That would allow people who are separated, unmarried mothers and all those in the lone parent categories an opportunity to go outside the home and to have another small income which, apart from the financial benefit, would have therapeutic value for the person living in traumatic circumstances such as some of those described in the main Chapter.
There are a group of people in this category who will be means tested because they have no contributions from which to benefit. I am concerned that discrepancies will arise between those who have contributions, whereby they can receive the allowance by way of benefit, and those who have no contributions and will receive this allowance by way of assistance.
In relation to the issue of cohabiting the Department of Social Welfare are the only Department who apply this notional interpretation of cohabiting. I know that widows have lost their widow's pension because it was insinuated that they were cohabiting. I know of couples who are living together who have offspring, who are not married, who have a happy relationship and for the purpose of social welfare the husband who is unfortunate not to have a job is unable to qualify for unemployment assistance even with his dependent children simply because he is reputed to be cohabiting with a common law wife who has a job. He is means tested although legally he has no access to her income. There is dependence on the generosity of each side of the union. Whereas nobody wants to stand in moral judgment on people living in these situations, the application of social welfare to people penalises them.
It is very difficult to convince social welfare officers of legitimate friendships which are outside the sphere of cohabiting. It is almost obscene to have to go into the privacy of one's home to prove it, and to disprove the insinuation is almost impossible. We are concerned that there are hundreds of anomalies in regard to cohabiting and certainly representations have been made to the Dublin welfare group who do excellent social work and assist the groups at risk. Representations have been made by the federation of services for unmarried parents and their children. They have some extensive documentation which compliments the Minister for what he is doing and they hope this is the beginning of the opening up of this whole area which was begun, as I said in my Second Stage contribution, by the late Brendan Corish and ably assisted by the late Frank Cluskey. Some of these groups were recognised by the State because there was a need for the State to assist them. The Minister has put all that together in this section and described them all under one heading and I compliment him for that. However, I am extremely worried about the restriction on means testing which could make it difficult for these people to qualify in the future.
The three areas highlighted by my colleagues both on my right and left are also of concern to me. I am most concerned about paragraph 198D (2) of section 12 which states:
A lone parent shall not, if and so long as he and any person are cohabiting as man and wife, be entitled to and shall be disqualified for receiving payment of an allowance.
Perhaps the Minister will outline how he proposes to police the implementation of this paragraph.
Because there is no divorce in this country many lone parents whose marriages have broken down should be eligible to receive this payment. I want to say at this point that The Workers' Party very much welcome the introduction of a lone parent's allowance. In fact, we have been arguing for years that there should be such an allowance. This relates again to the question I raised earlier in regard to the regulations. It is no accident that three amendments were put down in regard to the regulations. We were afraid that the Minister would produce regulations on his definition of "cohabiting". Will the Minister define the term "cohabiting as man and wife"? Some people enter into what they believe will be long-term stable relationships which turn out to be short-term relationships.
Platonic friendships.
Exactly. I should like to know how the Minister will implement the provisions of this paragraph in those circumstances. I have no experience, personal or otherwise, of how this provision operated in the past in regard to single parents and unmarried mothers but I have heard enough about the type of policing which goes on to know that it causes great anxiety and fear among single parents and unmarried mothers who are in receipt of benefit. An inspector from the Department of Social Welfare may allege that people are cohabiting as man and wife when, in fact, it was only a short-term relationship. Single parents or unmarried mothers would lose their benefits in such circumstances. We need to be satisfied that the Minister will adopt an extremely liberal approach to this issue.
I want to refer to the £6 means test. It is unacceptable that a person should be allowed an income of only £6 per week. When the widow's allowance was introduced in 1975 a person was allowed to have an income of two thirds of the allowance. We would argue that £30 should be the basic starting off point for this allowance.
The Minister and a number of his colleagues referred to the scheme to clawback some payments from the spouse of the beneficiary. I should like the Minister to explain how he envisages going after a spouse and proving maternity or paternity. Will blood tests be carried out on such people or will they be dragged through the courts? In some cases innocent people could be brought before the courts. This is a very complicated and dangerous area. I should like the Minister to explain how he proposes to clawback these payments from the spouses of the beneficiaries and to define the cohabitation element. These are very sensitive areas and I should like the Minister to guarantee that he will bring in regulations dealing with them. If these two areas are dealt with by way of regulation we will have to see the regulations and have a very serious debate on them.
As the Deputies have acknowledged this is a very important section both in its departure and development. I should like to thank the Deputies for the welcome they have given to this section.
One of the points raised by the Deputies related to the future. We have taken a major step, with the introduction of the lone parents' allowance, in streamlining the number of schemes for persons with similar needs, that is, lone parents who have the responsibility of looking after one or more children. Now that the concept of a separate allowance catering for lone parents has been enshrined in the legislation we must go further and ask what additional policy measures we should be considering to meet the changing and diverse needs of that section of the community.
There is an obvious need to introduce measures which will maximise opportunities for lone parents to achieve some degree of financial independence. This is something I am particularly keen on. We are taking a very major step in what we are doing here now — it is a very important step in principle — but I would certainly like to look at the ways in which we can help people in that situation to get back into the workforce. These people very often do not realise that measures are available to them at the moment.
Both Deputy Ferris and Deputy Byrne referred to the £6 means test. This will be £6 for a parent and £6 for each child so that it cannot be less than £12 for a start. If a person has four children it will be £24 for the children and £6 for the parent, which will make a total of £30 for a start, plus expenses for baby sitting and travelling to work. These are also provided for and can be brought together under the scheme. These people may hire somebody to mind their children for £30 or £40 per week. I am not saying that is what the figure should be — it happens to be the amount paid by quite a few people I know — and I do not want to get into an argument about what it should be. If a person pays £40 to someone to mind his children the reasonable expenditure in that area can be taken into account as well as the £30, which would give a total of £70. This means that a person can earn £70 plus reasonable travelling expenses to work. Of course, there would be limitations on these expenses but it means a person could earn £80 per week, hire somebody to mind their children and receive the full payment. The full payment for a person with five chidren will be the basic rate plus the payment for the five children.
People do not fully appreciate that this will be the position. I see it from a long-term point of view. I believe that what we are doing here is very important but I see a danger from a long-term point of view in regard to lone parents, especially young lone parents — this would apply in particular to young unmarried mothers, a title which will not be used once the Bill is introduced as they will be covered by this scheme.
Young people in that situation will end up close to poverty. We may raise the floor and bring them out of the lowest levels of poverty, but they will never have very much. That is why we need to provide opportunities for them to get back into the workforce so they can increase their own earning capacity and improve their position for the future. There is a need to introduce measures which will maximise the opportunities for lone parents to achieve some degree of financial independence. We are talking about opportunities to improve education, skills and even confidence levels that will facilitate a return to the workforce. All of these take the time and attention of the Minister and the staff of the Department. In addition there is a need for assistance in finding suitable employment and access to suitable child care facilities at a reasonable cost.
Another measure worthy of consideration is the question of continuing some form of payment related to child dependant allowances, rent assistance or other specific needs for a specified period after entering the workforce. Again all of these have price tags on them and all have to be considered within the contraints of general resources. These are important questions for consideration in the context of further devloping our services to meet the needs of lone parents in a changing society and give them the opportunity to get back to the fullest possible participation in our society.
A number of questions have been raised about the sharing of accommodation. We are not alone; the UK operate a similar system with similar criteria. It is interesting that in Australia they use the basis of the domus, in other words, if one is in the house and sharing the house that is it. That, however, has negative effects on many people. It is not quite so simple to find a criterion which does not disadvantage other people at the same time. Many of the systems have criteria like living together as man and wife because one is paying the man and wife on certain bases otherwise. This question is touched on by the household survey.
In relation to the liable relative, which is linked to that, Deputy Byrne spoke about a scheme to claw back payments. This is particularly important. I do not agree that people can just walk away and leave the taxpayer to pick up the Bill for their dependants. I do not believe our society should condone that but many people do it and there is evidence that it is normally women on low income who are left with the children without the opportunity of getting back into the workforce or having a decent life at even slightly above the poverty level. One thing which made me feel very strongly about this was the case of somebody who drove off in a BMW, leaving us with the problem of looking after his wife who had been used to quite a good standard of living. The husband went off and started another liaison and could not be pursued. The wife got deserted wife's benefit and that gave her a floor from which she could start to operate. The person in question was self employed and operated various deals and businesses, but the taxpayer was left to look after his family because the wife was not in a position to pursue him after an initial effort. Even if only a small percentage make a contribution, it is important to introduce this liable relative concept. That was included in the 1989 Act. It only needs a commencement order, and we are anxious to get on with that as soon as possible. The reason this has not been done before now is that we have been doing so much and have decentralised our whole pension office down to Sligo. However, we are in a position now to pursue that whole issue. In the meantime a working group were set up in the Department to examine the new provisions for the administration in particular of the schemes for deserted spouses and to advise on the most effective ways of implementing the new provision. A detailed report has been completed and is being considered. It is expected that it will be soon possible to provide for the coming into force of the liable relative provisions.
I am conscious of the need for people to be encouraged to get back into the workforce and earn a little so they can get up from the basic payments. That relates also to maintenance payments which we will have to keep an eye on.
The lone parent allowance scheme will cover other categories like the separated and divorced, some of whom would have had to go onto supplementary welfare. Deputy Flaherty mentioned Chapter 198D. (2), the question of cohabiting as man and wife. I will certainly bear in mind the points raised by Deputies in relation to that. Most of the cases in that area occur following allegations made by people rather than otherwise.
I would like to thank the Minister for his detailed reply. It is getting a little hard at this stage to keep track of either the Minister's or my own thoughts. I would like to ask whether a particular category of person will be included in the provisions.
The Minister will recollect that recently a colleague of mine raised the case of a lady whose husband had an English divorce. There was a desertion initially and she got the deserted wife's allowance. There was a death and although she was divorced and the husband was gone she continued to be paid the deserted wife's allowance. I presume that category of person whose status is fairly grey will be covered in the Bill. We have the problem since we have not dealt with the issue of divorce and have not dealt with the knowledge that divorces occur. We have difficulty in including people from other jurisdictions. Will they be covered? I welcome the fact that unmarried fathers are being included.
Regarding the debate in relation to means, I share the view expressed by my colleagues. The general amendment which was ruled out of order proposes that in all cases the means disregarded should be raised to £30. It is absolutely essential that our social welfare system should become more work friendly. At present the consequence of engaging in employment for as little as £6 is loss of income. Given that we cannot and do not anticipate being able in the future to offer full-time employment to the many people who would like to have it, we should not penalise them unnecessarily if they can get part-time employment. Successive Ministers have looked at this matter and left it alone since 1974. The Minister might indicate the thinking of the mandarins in his Department in relation to the disregarding of £6. Why was it introduced at all if it was not intended to be relative to the situation in which people find themselves? Are they thinking of expanding it? The Minister refers to the existing additional allowances for unmarried mothers where babysitting costs can be taken into account and there is a £6 additional disregard for each child. This disregard was introduced in 1982. There has been no substantial improvement since 1982 for that category.
Those who are most active are pressure groups working on behalf of the persons most at risk in society. A great need has been identified for them to have greater flexibility. I know of one case of a separated wife living in Ballymun who has benefits from all the means tests allowed to her. She is in full-time, reasonably well paid employment but when all her expenses are taken into account she is very poorly off indeed. Apart from the dignity and closeness to sanity that employment gives her, it is arguable that she would be as well off out of work. It is a terrible dilemma for people who are trying to help themselves. It is a problem which should be addressed for this category in particular. Many lone parents want to work for both social and economic reasons. It is difficult enough for joint parents to cope with children but the demands on a single parents are very heavy indeed. The best way to get back into the workforce is through part-time employment but if the consequence is a pound for pound loss in benefit a person is working solely for social or personal reasons. It is an urgent issue for this category.
Will the Minister clarify that the general regulations will be generous, given that they are now to apply to the total group who are being included and that mean testing, will all its inadequacies, will now be applied to this category? I hope when we look at the regulations in the fine print we will not find an equalising down rather than up.
I now refer to cohabiting. It is possible for the Department to look at the income in such a household in the same way as they do where unemployment assistance is involved, not in a particularly intrusive or undignified way. I have not much direct contact with persons directly affected and I suppose it is not the sort of issue people would talk about fairly freely. The free legal aid groups and the welfare rights groups say this is a problematic area. Relationships can be temporary and if a person is automatically disqualified when somebody shares a roof, that person may be forced to become a dependant and may be pushed into a relationship which is not in the best interests of those concerned. The Minister might consider altering the rate of allowance for the time of cohabition. I know it is fraught with difficulties but it is an issue that has been raised extensively and it is worth a sympathetic look. I welcome the Minister's willingness to do that.
I thank the Minister for his explanation of additional relief under means testing particularly for deserted fathers. I know several of them who have to stay at home to look after their children. The information the Minister gave is of benefit.
I support the concept that the deserting spouse should answer to his or her responsibility to the family. We have insisted that the lone spouse at home should do so and with the restrictions on the free legal aid system such people have been unable to process proper claims for maintenance under court orders simply because they could not get advice readily through free legal aid because of cutbacks. When the deserting spouse was outside the jurisdiction the deserted person was told that she — or he — was not making sufficient effort to trace the spouse and was often forced to live on supplementary welfare. The Minister has confirmed that within the jurisdiction he will pursue such people as soon as he can bring this commencement order into place. Has he any hope of pursuing people outside the jurisdiction if they are within the EC jurisdiction? We have a working relationship with our partners in Europe particularly in the area of social welfare and recorded contributions. The Minister might have some access to people who have deserted their families and are in England or elsewhere within the EC. Can he follow that through on the basis that it can be done at home here in our own jurisdiction?
A Cheann Comhairle, I wish you a pleasant evening. It is midnight. I am sorry Deputy Flaherty had to be kept here until this hour of the night for such a long debate. Perhaps we can adjourn now and go further in the morning.
Progress reported; Committee to sit again.