I am delighted to have this opportunity as Minister of State at the Department of Social Welfare to contribute to the budget debate.
Much has been written and spoken about the economic effects of the measures in this budget. Financial and economic commentators have discussed their likely impact on the main economic indicators, on the climate for fostering and promoting enterprise and on our competitiveness vis-á-vis our main trading partners. They have also focused on the effect on the public finances generally.In this regard, the Exchequer borrowing requirement has figured prominently and the targets set by the Minister for Finance have been analysed by the various commentators.
However, for a huge number of people in our society the annual budget has a much different dimension. I am talking about the 800,000 people and their 600,000 dependants who rely on the State's social welfare system for their weekly income. About 39 per cent of our population are in that category. When one includes recipients of child benefit, the proportion increases to over half our total population. That is why the social welfare improvements in the budget are so important for such a huge number of people. Right across the country, sick and disabled people, unemployed and retired, pensioners, widows, widowers and lone parents are all affected in one way or another.
The measures announced in the budget are a set of well-balanced provisions which will benefit a wide cross section of Irish society. Families will be better off through a substantial increase in child benefit which will also be paid for 18 year olds in full-time education, and child dependant allowances paid up to age 22 in similar circumstances. The sick and disabled will get an increase in their weekly payments in line with inflation and will get the increase this year six weeks earlier than previously. Unemployed people will get the same increase and at the same earlier date. In addition, they will benefit from the intensive placement and guidance service which is being introduced on a pilot basis for the long term unemployed, as well as extra places this year in community employment and further improvements in my Department's back to work allowance scheme.
Workers will benefit through the improvements in personal taxation and the reliefs introduced into the PRSI system.Employers will also gain from changes in business taxation and further improvements in employers' PRSI. Pensioners will have their weekly payments protected against inflation and also will get the increase six weeks earlier — something they have been seeking for years. They will also get a free colour television licence.
I make those points in answer to the strident and shrill cries from the Opposition benches in the last number of weeks. They have deliberately homed in on the 2.7 per cent increase and ignored the main features on socal welfare in the budget, which provide much more benefit than a so-called 2.7 per cent increase.
Carers in our society will benefit from an extension of the carer's allowance, a further improvement in the means test and a free travel companion's pass for the pensioner for whom they are caring. Voluntary organisations will benefit from an additional £3 million being provided by the Government in recognition of the trojan and often taken for granted work being done by the voluntary and community development sectors.
The 2.5 per cent increase in weekly social welfare rates cannot be judged in isolation from other improvements. To do so gives an unbalanced and unfair picture of the impact of the general rate increase. Let us look at the impact of the budget improvements as a whole in a number of concrete examples.
A couple with four children in receipt of long term unemployment assistance will receive a new weekly payment of £180.03, including the child benefit increase. This amounts to a weekly increase of £8.86 or 5.2 per cent, over double the general increase of 2.5 per cent. If one child is 21 years of age and still in full time education, the family could benefit from a further £13.20 a week by way of the continuation of the child dependant allowance up to age 22. Similarly, if one of the children is 18 years of age, child benefit of either £27 or £32 a month will be payable for them from September until they reach 19 years of age.
A couple with three children on either disability benefit or unemployment benefit will get an additional £7.25 a week, an increase of 4.8 per cent — bringing their weekly payment to £159.45 when account is taken of the child benefit increase. As set out in the example above, the family could also benefit from the continuation of child dependant allowances and additional child benefit depending on the ages of their children.
A social welfare pensioner getting a contributory old age or retirement pension with a spouse under 66 years of age and additional income of £8 a week will get an increase of £10.04 a week or 8.6 per cent, bringing their new weekly payment to £127.09. This increase includes the fuel allowance of £5 a week payable when additional income in these circumstances does not exceed £10 a week.
In all cases, social welfare recipients are getting the increase in their weekly payment six weeks earlier than normal, that is, from the middle of June instead of the end of July.
This budget provides a total of over £90 million for social welfare and related improvements in 1995 and some £212 million on a full year cost basis. This is a huge amount of money by any standards. It demonstrates this new Government's concern for the less well-off sections of our society. It should also be taken on board by the Opposition which appears to have overlooked the real impact of the social welfare budget. It probably suits the Opposition to do so but now and again it should look at the budget's deeper implications.
When the additional cost this year of the social welfare budget improvements is added to our existing commitments for 1995, total spending for this year will exceed £4 billion. This will be the first time in the history of the State that overall social welfare spending has exceeded that figure. It means we are spending at the rate of over £11 million each day for every day of the year or £77 million per week. I wish to refer specifically to two significant measures in this year's budget: the general increase for all recipients and the increase in child benefit for all families.
A 2.5 per cent increase is being given in all weekly social welfare and health board payments from the end of June next. The general increase in weekly rates is by far the most expensive single item in the social welfare budget improvements. It will cost almost £43 million this year and £76.6 million in a full year. I point out the reality of this situation for the benefit of those who call for greater expenditure and, at the same time, reductions in taxation. The increase which will apply to personal rates and adult dependant allowances is designed to compensate social welfare recipients for the expected increase in prices this year and, thereby, maintain their real income.
As Deputies are aware, the increases will be brought into effect from the middle of June instead of the normal implementation date of the end of July. That is being done at a cost of an extra £9 million this year. I am surprised that previous Governments have ignored that aspect of the rate increases. This Government has not. I have always been conscious of the time lag of up to six months between the announcement of the rate increases and their implementation date and I am delighted that the Government will consider bringing the dates forward even further in the context of future budgets.
As has already been explained to the House, the general rate increase is not being applied to child dependant allowances payable with social welfare weekly payments. Child dependant allowances will, however, be payable up to age 22, instead of age 21, in the case of recipients of long term social welfare payments.
Child benefit is recognised as our universal income support mechanism for children. It has proved to be an effective method of directing resources to families, particularly families in need. Almost half a million families benefit in this way every month. In line with the commitment in the new Programme for Government, a substantial increase in child benefit is being given in this budget. The monthly payment for each child is being increased by £7 from next September. This is a very significant increase and will be of great benefit to all families with children.
The extra £7 will mean a new monthly rate of £27 for the first two children which is an increase of 35 per cent on the existing rate. The new monthly rate for the third and subsequent children will be £32 which is an increase of 28 per cent.
In addition to the role which child benefit has in directing resources to families, child dependant allowances payable with weekly social welfare payments also figure prominently in any discussion on the question of incentives to work. The fact remains that increases in child dependant allowances have been shown to create barriers for unemployed people wishing to return to the workforce, especially for those with large families. The significance of child benefit is that it is paid to families regardless of work status. The essence of the new child benefit supplement proposed in the programme for A Government of Renewal is that it will help to alleviate many of the employment and poverty traps in the present system. Consequently, child dependant allowances payable with all weekly social welfare and health board payments are not being increased in this budget. They will be maintained at their July 1994 rate.
In addition to the increase in the payments, it is also proposed from next September to pay child benefit up to age 19 for those in full time education, including those attending FÁS courses for which no weekly course allowance is payable. Under present arrangements, child benefit ceases to be payable at age 18 irrespective of whether full-time education is being pursued. Similarly, child benefit is not currently payable to 16 to 18 year olds on FÁS courses without a weekly allowance. These improvements will be welcomed by many families. Even the Opposition might give some credit for this.
On almost all occasions when the issues of creating employment and improving the situation of the lower paid are raised, it is suggested that one solution is to integrate the tax and social welfare system. It is one of the many formulas that are thrown around in economic debates which do not have a precise meaning. There are many views as to what precisely integration might mean.
Some people point to a total integration of systems, perhaps even going so far as to replace the existing tax and welfare systems altogether with a unified system, such as tax credits or basic income. Others say the solution is "strategic integration", that is, to leave the systems separate, but to make sure that they work together in a more co-ordinated way.
From my many years as a public representative, I am all too aware that there are serious practical problems with the lack of co-ordination of tax and social welfare. I realise, of course, that this is a very complex area, and I am very glad that the expert working group on the integration of tax and social welfare has been working on this topic for some time. As Members may be aware, there is a commitment in the programme A Government of Renewal to publish the working group's report this year. I met the group last week to discuss its work and I understand it hopes to report in good time to meet the Government's commitment. I am looking forward very much to receiving its conclusions.
The main reason for integrating tax and social welfare is to remove poverty and unemployment traps. The working group's interim report, which was published in January 1994, showed that relatively few people are affected by these traps. Nevertheless, they should be reduced as much as possible or eliminated.
It should also be remembered that the complexities involved in moving from social welfare to work and back again can often be as much of an obstacle to taking up work as the amount of gains or losses. Rules such as those governing earnings from casual work and the assessment of means after seasonal work are very complicated and must constitute some disincentive to taking up work. Some of these issues really are a matter of integration within social welfare rather than interaction between social welfare and tax but they are all part of the same general problem.
Traps arise not only from the operation of the tax and social welfare systems but also from cash and non-cash benefits administered by other agencies. In particular, the fear of loss of the medical card can prevent many people from taking up a job. In many cases, these fears are unfounded, as there are now many situations where an unemployed person with a medical card can get a job or a place on a training course or enterprise scheme and keep the medical card for up to two years.
There are considerable incentives in the budget for making the transition from an unemployment payment to work. It illustrates how important it is to look at the whole package of benefits, and not just to define social welfare in its narrow sense, when we are looking at poverty traps.
It is widely recognised that the current arrangements, whereby people getting unemployment payments get child dependant allowances whereas those at work do not, contribute to work disincentives.Efforts have been made over the years to address this, especially through family income supplement and through the child additions to the tax exemption limits, which remove low paid workers with children from the tax net. While these have certainly helped the situation, their effects have been limited. On the tax side, the exemption limits for families with a large number of children are now considerably higher than the tax allowances.
Clearly, there is a need for more substantial reform of this area. A number of ideas have been raised in the past. In particular, a lot of interest was raised by the ESRI's research last year on the effects of abolishing child dependant allowances payable with social welfare payments and replacing them with an increased child benefit, paid regardless of whether the parent was at work.
The Government's programme A Government of Renewal states:
We will work towards a basic income system for children by systematic improvements in child benefit, and the creation of a child benefit supplement payable to all social welfare recipients and to low and middle income families.
The child benefit supplement will eliminate some of the worst poverty and unemployment traps in the tax and social welfare systems.
It will replace child dependant allowances currently payable to social welfare recipients and family income supplement which is currently payable to very low income families.
In this year's budget, we have taken one step along this road by giving a significant increase of £7 per month in child benefit. Given the value of this increase, no change was made to the child dependant allowances, family income supplement, or the child additions to the income tax exemption limits.
The House will recall that my colleague, the Minister for Finance, announced in his budget speech that the Government will be asking the expert working group to consider this further, and advise on the best overall strategy. I believe that the expert group is in a position to plan the best overall strategy in this regard, in the light of the work which it has already done in this area. I look forward to its conclusions later this year.
Deputies will be familiar with the information services provided by the Department of Social Welfare and I am sure most of them will agree that my Department is to the forefront in terms of the quality and effectiveness of its information strategy.
The social welfare system consists of a number of interlinking schemes designed to support individuals and families in a wide range of circumstances.The circumstances under which people may need to access the system can be very complex indeed and, therefore, the services and programmes required to address those needs will, inevitably, tend to be quite complex also.
Through experience and training, officials who administer State funded services become very familiar with all their aspects, no matter how complex or difficult the underlying legal terminology might be. Members of the public rarely have the same opportunities to familiarise themselves with the various schemes and there is a clear onus on service providers to ensure that information is readily available in simple, clear and unambiguous language.
The purpose of a good effective information system must be to break down complexities and simplify the system to the point where each citizen is fully aware of his or her rights. People must be afforded the best possible level of guidance, advice and assistance when seeking benefits and allowances to which they are entitled in law. To achieve this, public sector organisations must listen to their customers and tailor their services to meet the real needs of people. My Department will continue to seek the views of its customers and their various representative bodies to ensure that the information services are attuned to their needs.
Apart from the comprehensive range of written leaflets and booklets, the Department of Social Welfare also makes good use of advertising and promotional activities to inform and advise citizens of new services or improvements to existing services. These include national and local papers, which regularly carry advertisements on social welfare matters; information which is displayed constantly on Aertel; local radio, which is becoming more and more a feature of our information strategy, and our own staff officials, who frequently give presentations and talks to a wide range of statutory and voluntary bodies.
Information officers are available to deal with inquiries in each of the 59 local offices throughout the country. A telephone inquiry service is also provided and this was recently broadened to include a freefone service on budget 1995 which ran for a period of five days immediately after the budget. Staff working on this freefone dealt with almost 1,000 calls each day and were able to assist and advise callers on the range of social welfare improvements announced on budget day.
My Department, therefore, clearly recognises its responsibilities and is responding to the information needs of citizens in a constructive and helpful manner. These information services will continue to be developed further in consultation with our customers and other relevant organisations.
Information is not the preserve of the service providers only. If statutory agencies concentrate on their own individual services, there is a danger that information relating to those services can become too compartmentalised. This may mean people seeking information having to visit a number of different offices or organisations to get a complete picture of their rights and entitlements.This fragmentation of information must be addressed through greater interdepartmental co-operation. In this regard, social welfare information leaflets are being reviewed to include, where appropriate, references to services and schemes administered by other Government agencies. This is also an important development.
It is also important to mention the invaluable role of non-governmental organisations in the provision of information, counselling, guidance and advice at local and community level. No matter how well developed and effective the information services of the State become, there will always be a need for the services provided in an increasingly professional manner by the thriving and vibrant voluntary sector.
The voluntary sector can provide a broad level of support in terms of information and advice to people within their own communities. Organisations who make up the voluntary sector have varied interests and many focus their services to meet the needs of a particular target group.
Information provided in an interactive fashion will ensure that the intricacies and problems can be teased out fully in an informal atmosphere. The provision of information in these situations will often include advice and advocacy services which will help people to obtain their full rights and entitlements. Voluntary groups can and do assist people to overcome difficulties they may encounter in seeking their rights and entitlements. There is a further dimension to this because the voluntary groups also can bring these difficulties, obstacles or anomalies to the attention of the service providers and can influence change in delivery procedures to avoid similar pitfalls in future cases.
The programme A Government of Renewal contains a commitment to consult and work with the National Social Service Board and the Director of Consumer Affairs in overhauling the facilities for community information. This will be achieved by strengthening and building on the tapestry of information services already in existence in the voluntary and statutory sectors.
All voluntary groups will have a role to play in this regard. I believe that the agreement to transfer responsibility for the National Social Service Board to the Department of Social Welfare is an important step towards this process. The NSSB provides support and resources to over 200 organisations who have access to its files. The board also operates at local level through 83 citizens' information centres throughout the country and the closer working links will ensure greater coverage, in geographic terms, of effective information services. Funds are being provided this year by my Department to assist in the computerisation of information files held by the NSSB and other voluntary organisations. The computerisation of these files will have a knock on benefit for the many groups and organisations who use the NSSB data as a basis for their own local information services.
Additional funds will also be made available from my Department this year to enable groups and organisations in the voluntary sector to develop other aspects of their information services. Details of these will be advertised shortly and organisations will be invited to make applications for funding to my Department at regional level. This cooperative approach offers the best way forward to ensure that all citizens are made aware of their rights and given every possible assistance and guidance to avail of the wide range of supports, benefits and allowances now available under our modern and comprehensive social welfare system.
As I said earlier, this is a well-balanced budget, not only in the financial sense but also with regard to what it seeks to achieve in social and economic terms. Social welfare spending will exceed £4 billion this year for the first time in the history of the State. This brings us to new levels of support and protection for those who, for one reason or another, need to call on our services. It demonstrates the commitment of the Government to look after the needs of the vulnerable and the disadvantaged. I am glad, as a Minister of State in the Government, to support this budget.
Whenever one moves from Opposition to Government, a certain transformation takes place, apart from the physical movement involved in moving from one side of the House to the other. Nothing has ever matched the transformation which has taken place in the Members who have moved to the other side of the House. They see things now with far greater clarity and have a far greater focus on the real needs of the community than they ever did when they were on this side of the House.
My good friend and colleague from my constituency of Kildare obviously watches television as he made references in his budget speech to "Star Trek". Deputy McCreevy likened the budget to a call by Fine Gael, in particular, to the Minister for Finance, following in the steps of the commander of "Star Trek" who would say "Beam us up, Scottie", to "Beam us up, Ruairí". The antics of the Opposition in the last couple of weeks have been somewhat similar but, finding themselves floating around in that vastness of political outer space, theirs is a strident cry to "Beam us in, please, somebody".