Vol. 501 No. 5
7 Mr. O'Shea asked the Minister for Social, Community and Family Affairs his views on whether the growing gap between the incomes of the poor and the better off gives rise to concern in view of the ESRI report dated October 1998 which shows that social welfare rates has risen in the past four years by 16 per cent while the average incomes for all households have risen on average by 22 per cent. [6435/99]
One of the Government's key objectives is the establishment of an inclusive society where everyone has the opportunity and the incentive to participate in the social and economic life of the country.
With specific regard to increases in social welfare rates, developments in this area in recent years have been determined having regard to the commitments contained in An Action Programme for the Millennium, Partnership 2000 and the national anti-poverty strategy.
The recent budget increases mean that all rates of payment will be at or above the minimum rates recommended by the Commission on Social Welfare, ranging from 100 per cent to 123 per cent of the minimum rate. This is in keeping with the commitment in both Partnership 2000 and the national anti-poverty strategy that the minimum rates would be achieved for all rates by the end of 1999. I am delighted to be able to do so.
In addition, another substantial step was made towards increasing the old age contributory pension to £100 by 2002, as provided for in An Action Programme for the Millennium, with an increase of £6 per week announced in the 1999 budget following a £5 per week increase in 1998. The 1999 budget also provided increases in child benefit – £3 per month for the first and second children and £4 per month for subsequent children which, together with increases in the weekly income thresholds for the family income supplement, will also be of significant help to many low income households. Similarly, low-income farmers and certain fishermen will benefit from the new farm assist and fishing assist measures contained in the 1999 Social Welfare Bill which are specifically geared towards supporting those most in need.
In general, there have been significant real increases in social welfare rates in recent years. For example, between 1995 and 1998, social welfare payments increased by 13 per cent to 14 per cent compared to a total rise in the consumer price index of less than 6 per cent over the same period. The changes announced in the 1999 budget amount to an increase of 4.3 per cent in the general rate and over 7 per cent for pensioners compared to an expected inflation rate of around 2 per cent and expected growth in average industrial earnings of about 5 per cent.
In relation to future increases a number of factors will have to be taken into account. It will remain a priority to ensure that the value of payments will, at the least, be maintained in real terms. In addition, as stated previously, this Government is committed to raising the old age pension to £100 per week – a rate of increase expected to significantly exceed inflation.
It is intended, in the context of NAPS, to consider the issue of income adequacy in its broad sense, including the areas of taxation, employment, etc. In this regard, my Department intends to examine the role of social welfare rates and, in particular, the appropriate future direction for social welfare payments, now that the Commission on Social Welfare's minimum rates have been achieved. This examination will, of course, also take account of other considerations, notably incentives to employment, budgetary considerations, etc.
This process will be informed by all relevant research and data, including the ESRI's Review of the Commission on Social Welfare's minimum adequate income and the national pension policy initiative, Securing Retirement Income, as well as the research referred to by the Deputy. The forthcoming report from the ESRI on recent poverty trends, 1994 to 1997, expected by Easter 1999, which will update the 1994 Living in Ireland survey on which the original NAPS targets were based, will also have an important role to play in this regard.
Was not the central finding of the ESRI's budget report of last October unanswerable? I accept the Minister's point that the rainbow Government was in power in 1994 but so was this Government and there was a significant increase in income in average households over social welfare households which are totally dependent on us for their income.
I commend the Minister on seeking to fulfil the promise made to the electorate concerning the £100 per week payment for pensioners. However, effectively, the Minister is introducing a multi-annual budget for pensioners. He has decided on a target towards which he is moving. Is there not a case for doing the same for all other social welfare recipients, those on insurance and assistance? Should we not set a target for, let us say, 2002, and for 2007 with regard to the NAPS parameters, and try to move towards those targets? This would provide a decent basic income.
The CSW was the target set for all primary payments.
That was a long time ago.
It has been upgraded and that is the best target we have. The first question to ask is where we go once we have achieved that rate. That will be looked at and the ESRI has made statements in this respect. The institute has given one view concerning social welfare and another view on the control of wages. The money available is finite.
The decision made by the Government when it came into office was not dictated by the ESRI. It was a political decision based on the common sense of politicians who know that old people have fallen behind. We made that decision and we are sticking by it. The £5 and £6 increases given in successive budgets go further than would have been required to achieve the £100 target by 2002. We only needed to give about £4.75 in those two years. I assure the Deputy, and others, that as long as the Government is in office, it will concentrate on old age pensioners not only with regard to social welfare, but also in areas covered in the last budget, such as the announcement by the Minister for Health and Children, Deputy Cowen, of radical changes in relation to medical cards. In addition, the Minister for Finance took 15,000 old age pensioners out of the tax net.
I make no apology for concentrating on this area. However, this does not mean we should forget other people. The current inflation rate is 2 per cent, although the Opposition said the ultimate inflation rate for last year would be well over that figure.
The Minister should not count his chickens.
The Minister's memory is slipping. It is very selective.
I recall Members on that side asking the Government to raise social welfare payments to take into account what they and some uneducated commentators said would be the 6 per cent rate of inflation at the end of the year. The rate was only 2 per cent, which was forecast. People other than old age pensioners on primary payments received increases of more than double the rate of inflation.
Deputy J. O'Keeffe rose.
I ask the Deputy to be brief as I want to ensure another question is taken before the end of Question Time.
Perhaps the Ceann Comhairle could also address those remarks to the Minister who appears to be using about 90 per cent of the time available. However, I take the Ceann Comhairle's point.
I apologise if I am talkative but I have a story to tell.
Now that we have finally crawled past the target set in the Commission on Social Welfare's report, which dates back to 1985, and in light of the enormous Exchequer surplus and the contrasting poverty levels, does the Minister see any merit in establishing a new commission on social welfare to have a fresh look at the problems in society?
That is a separate question, Deputy.
Would it be a way to address the growing gap between the incomes of the poor and the better off referred to in Question No. 7?
I am delighted the Deputy raised that issue, although it may be a separate question. The entire system is weighed down by reports, some of which may never be implemented. The examination of the new targets will include consideration of the ESRI's review of the Commission on Social Welfare's minimum adequate income and all the other reports which are available. The ESRI report, which will be published around Easter, will have some views in that regard and they will be taken into account.
As I stated previously in relation to the national anti-poverty strategy, I have undertaken to review and, I hope bring forward new targets, particularly given that we have almost reached the targets on employment, which is the best cure for poverty, set by the previous Government for 2007. Those targets will be achieved this year and we can go further in relation to all the targets in the NAPS. This will be part of the process.
