This is clearly an opportunist election budget focused on trying to undo the damage done to the Government parties by the succession of budgets of the former Minister for Finance, Mr. McCreevy. I welcome the increases in social welfare and pensions and the care package for the disabled. However, these measures are in line with what has been set out in Sustaining Progress and were advised by the Combat Poverty Agency, in particular in regard to increasing personal rates by a minimum of €12, increasing the qualified adult rate by €9, which was not achieved in some areas, and reforming the means test and income disregards.
With regard to the money advice and budgeting service, the level of spin has caused many to accept the situation. Some commentators appear to have forgotten the essential principle that the best way out of poverty is through employment and removing the obstacles to getting into employment. As I will illustrate, the budget did nothing for lone parent families. The smoke and mirrors and spin will not conceal the fact that the budget tried to give the impression that all is well at the castle. Nothing could be further from the truth. While most of the cuts were last year visited upon the marginalised and those who could ill afford to bear them, I was the subject of abuse from Fianna Fáil backbenchers and Ministers who stated the cuts were not taking place. It took me 72 hours to sieve out the fact that there were 16 savage cuts, although it was stated that this was nonsense. The former Minister for Social and Family Affairs, Deputy Coughlan, stated that I was engaging in sensationalism and that the cuts would have no impact. However, I brought the various community and voluntary organisations to the Joint Committee on Social and Family Affairs, which I chair, where they pointed out the impact of the cuts. Despite this, it was still stated there were no cuts.
The former Minister for Finance, Mr. McCreevy, would not give the former Minister for Social and Family Affairs, Deputy Coughlan, the €58 million she wanted. She should have fought a harder battle and the Labour Party indicated it would support her in that. She did not fight, however, as I anticipated and expected her to for the people she represented.
The former Minister, Mr. McCreevy, was the author of the dirty dozen cuts, so, by implication, he became the grandfather of the savage 16 cuts. I was not surprised because they were in line with the ideology on which the former Minister articulated his economic philosophy. It was the ideological bent of the Government, which then went to Inchydoney to be converted. Fr. Healy might think he has changed Government policy and he was delighted to be in a position to welcome a budget for the first time in 19 years. However, he did not delve into the interior of the budget to assess the insidious nature of some of the measures which will impact on the very poor and which will not facilitate the transition from unemployment, which is the best way out of poverty, for many, including lone parent families who require assistance with child care costs to alleviate their burdens and facilitate their progress into work.
After so many budgets favouring the rich, horses and greyhounds, it was obviously impossible for the new Minister to put right all the damage in one year, which I accept. However, this is especially the case as the only source for increasing social expenditure arises from the buoyancy of the economy, which is not predicted by the Department of Finance unless it has its figures very wrong. Improvements in the equity of the tax system to ensure that millionaires make an appropriate contribution to society are put on the long finger with talk of a review of tax breaks and with some progress possibly to be made in next year's budget. With such a light-hearted conversion to socialism this year, we have every right to ask how long this will last. If general economic circumstances are less favourable next year, will the Government revert to its normal approach and let the most vulnerable once again bear the full burden of any shortcomings on revenue, which was the case in 2003 when the Estimates were announced?
We must examine the context of the budget and social welfare changes if we are to determine the true situation. With regard to relative income poverty, 22% of the population live below the 60% median, an increase from 16% in 1994. The depth of relative poverty has increased, a higher proportion of people live in long-term poverty and Irish performance in this regard is among the worst in the EU. To ensure that those in low-paid employment are looked after, we must focus on the facts. Employee households account for 17% of the poor and 35% of poor children are in working households. These are the issues. There is a higher poverty risk for welfare recipients of between 40% and 50%. Welfare increases have lagged behind income growth, although this was once referred to as the only way to ensure the poor would not fall further into the poverty trap.
Ireland, one of the most prosperous countries in the world, has the highest relative income poverty rates in the European Union and has held this position of shame throughout the 1990s. The EU joint report on social inclusion, published in 2004, stated that during the period of the Celtic tiger, with high economic growth and falling unemployment, poverty in Ireland rose, with 21% of people in poverty in 2001 compared with the EU average of 15%. The comparison between Ireland and the other EU member states in terms of our payment for social protection is a shocking indictment of the commitment we have to alleviating poverty and, in particular, ensuring that the deprived and marginalised get help when they need it most.
In 2001, Ireland spent less than 15% of its gross domestic product on social protection while the other 14 member states of the EU, as it then was, spent 20% of GDP. No amount of spin doctoring by the Government can conceal this reality, although Inchydoney man might try some tricks to indicate that the Government is ameliorating the situation. The Government is partial to using a different measure of poverty, consistent poverty, developed by the ESRI in 1987 to characterise the predicament of the disadvantaged. Members may have guessed the point, namely, that consistent poverty has been reducing in Ireland. The Minister made the point again this morning, as does every Minister at every possible opportunity. However, if one were to ask how consistent poverty is faring in other EU member states, nobody knows. Why? It is because this measure is peculiar to Ireland and does not allow for inconvenient international comparisons. Enough has been said. As used to be written, QED.
The savage 16 cuts can be divided into three groups. The first two groups are payments enabling and supporting progression to work for lone parents and to education for all adults. What has happened? The cuts have been tinkered with at the margins. Why was the qualifying period increased from six months to 15? It was stated that there was some abuse but no evidence of this was presented. Instead, the claim was just trotted out. One should not deny support to those in need. If a few people abuse the system, they should be dealt with but the entire system should not be cut off. No evidence was presented for the claims which were simply trotted out when convenient. While it is stated that the system has now been eased or amended or otherwise, the English language is precise. The system was emasculated. However, the Government, in trying to draw back from the river of destruction, has brought the qualifying period back to 12 months. What about people like the young girl about whom I spoke in this House going back to third level education? The best way out of poverty is through education and work and by providing for this country by becoming a teacher or whatever. However, this girl will not qualify. Let us call a spade a spade. Nothing has been done. Like that girl, everything is in the doldrums.
The transitional half rate for lone parents is to be discontinued where a recipient of one-parent family payment takes up employment and where earnings are in excess of the upper threshold of €293 per week. People used to get it for 12 months, but now they will get it for six months. They say half a loaf of bread is better than no bread where I come from, but let us be clear about a few things. I was told I was being alarmist and sensationalist about these cuts and that they did not mean anything. I wanted to know who they would affect and if we had the statistics to indicate how many people would be affected. Fair play to the Minister in that he came into the House and told the truth. He was not able to answer those questions, yet his predecessor said they would have no major global effect even though we said they would have. We were right.
If the Government was working in line with Sustaining Progress, all those policy changes and instruments used to effect policy changes would be poverty proofed. The Government did not do that or if it did, it was done incorrectly because the proof of the pudding is in the eating. The Minister would not be here today saying he is amending or easing those cuts if they did not have the impact we predicted and set out in clear and concise fashion. We were right and the Government and all those around it were wrong. We must give ourselves a small pat on the back, not that we deserve it, for trying to ensure the poor were not forgotten in the rush to ensure the rich were always insulated when cuts had to be made. I am proud of the role the Labour Party played. We led the charge and others joined in. We were right from the beginning, from November 2003, and we launched a campaign in December 2003, although not too many people were behind us in leading the charge to ensure those cuts would be reversed.
The big problem is the €293 — the cut off point — which has not been touched since 1997. I think it was my colleague, Proinsias de Rossa, who introduced this in 1997 and it was innovative at the time. At that time the regulation allowed lone parents to work and earn up to €146.50 per week without losing any of their allowance and it later allowed them to earn up to €293. However, that figure has not been increased in the past seven years despite repeated requests from OPEN, the One Parent Exchange and Network, seeking to have the amount of income increased, which can be earned before the State payment is lost. If the amount was index linked, it would be €350 or €360. This is an insidious cut. As we have pointed out over the years, we are not fools.
In 2000 the Irish Congress of Trade Unions pointed out that child care costs had doubled between 1997 and 2000. It can be safely assumed that like a balloon, once they have gone up, they will never come down. Child care costs have obviously more than doubled again between 2000 and 2004. The effect of these developments is that lone parents wishing to work are in an impossible position. They lose all their State payments when they go above the limit — well before they earn enough to cover Ireland's extremely high child care costs and before they address their own living expenses. This is a situation into which some of the great organisations evaluating this budget have not looked.
One lone parent with two children stated: "I got paid on Thursday, did a big shop, looked out for special offers and bought the basics but there is usually nothing left by Wednesday — maybe some mince in the freezer or sausages or soup and bread." These are real stories and are not made up. Those who are very rich and who do well out of this Government, and who will continue to do so, might not know much about that, but I have never forgotten from where I have come.
Let us look at the eight supplementary cuts. There have been no clear-cut reversals. Two of the cuts are subject to further consultation.Crèche and diet supplements are a little bit better, but are narrow in focus. The rent supplement change is limited to those who have lost employment through illness or disability. Let us look at the six month criterion to ensure that people who have a short term income need, such as people who have become ill or unemployed, are assessed by local authorities as having a housing need are not disadvantaged. The best way to deal with this is to ensure adequate housing is provided for those people. We have always said that. However, as Deputy Stanton said, not enough money is being provided. There is no clear-cut reversal of those eight cuts. Some of them have not been touched, while others have been tinkered with to give the illusion of a reversal.
Let us look at the six benefit payment cuts that are weakening the PRSI system. One cut had been amended before the budget, one has been slightly improved, although the principle of the cut remains intact, and there have been no changes to the other four, nor has there been any explanation to justify why there is no intention to change them. The entitlement to half rate child dependent allowance in respect of unemployment and disability benefit had been discontinued where the claimant's spouse or partner's grossly weekly income is in excess of €300, but it has been increased to €350. That is not a reversal but a slight improvement. The current weekly income threshold for the purpose of payment of reduced rates of disability and unemployment benefit is being increased from €88.88 to €150 per week.
Entitlements will be discontinued for new claimants to half rate of payment of disability and unemployment benefits where the recipient is already in receipt of the widow's or widower's pension or one parent family payments. That was amended due to pressure from the National Widow's Association of Ireland and Joe Duffy on the national airwaves. There has been an increase from 39 to 52 in the number of paid social insurance contributions for entitlement to disability, unemployment and health and safety benefit. There has been no change. There has been an increase from 13 to 26 weeks in regard to the period where claims for unemployment and disability benefits were linked. The maximum duration of unemployment benefit will be reduced from 390 to 212 days. This reminds me of the three card trick where one always thinks one is winning but no matter how well one watches the cards, one never picks the queen. There is nothing in the proposed measures in that they only tinker around the edges.
The Minister was not in a position to find the €50 million needed to reverse those cuts. No amount of Inchydoney spin or any other sort of spin doctoring will disguise the fact the Minister could not get the €50 million to reverse the social welfare cuts. The former Minister for Finance, Charlie McCreevy, is gone but his ghost lives on here. It would have been an awful insult to what he stood for if the Minister had succeeded in getting that money.
Let us look at some of the other cuts. There is nothing under direct provision for asylum seekers. There has been no change in that since 2000. There is nothing on child care in the Social Welfare Bill, which I pointed out in regard to one-parent families. The number of one-parent families is not small. There were 150,634 lone parent households listed in the 2002 census. Lone mothers accounted for 85% of that total. Some 79,915 lone parent families were in receipt of State support. These are unvarnished, public statistics. However, census statistics and figures do not reveal how vulnerable lone parents are or how their predicament in a prosperous country is getting worse rather than better. Therefore, there is nothing for them in terms of child care and nothing either in the back to school clothing and footwear allowance. A recent Labour Party study showed that it can cost up to €1,000 to send children to secondary school in September. The €80 primary school allowance is paltry, as is the €150 allowance for secondary school, which is designed to meet the cost of school books, uniforms and other school equipment. One would not get a pair of decent runners for that price, however, so let us be clear that nothing has been provided in those areas.
In addition, nothing has been provided in the child dependant allowance, although I appreciate that the Minister has indicated he is examining that matter. It is part of the MABS proposal which has also been raised by the Combat Poverty Agency. I can see the Minister's approach to the matter, which may be broadly termed a child benefit supplement, amalgamating the family income supplement and the child dependant allowance. That is a sensible way to proceed in dealing with child poverty. We cannot disguise the fact that it is a major issue.
The argument made by independent commentators in favour of the child dependant allowance is that it is much more targeted. Surely the Department of Social and Family Affairs could devise some system to prevent people from losing out on secondary benefits. Most of the departmental officials are very diligent. I thank the Minister for his help yesterday when we received an excellent briefing on the Social Welfare Bill. His staff were very co-operative and I deeply appreciate that. Some of the officials are beginning to know us well. They know more about our idiosyncrasies than we do ourselves.
Since 1994, there has been no change in the threshold for secondary benefits, which now stands at €317. Because the threshold has not altered for ten years, there is downward pressure, which means that more and more people are flowing out of the system because they do not qualify. Those areas must be examined, otherwise people will end up with less and less.
The income eligibility limit for medical cards should ensure that people in receipt of increases, such as invalidity or other allowances, are not denied medical cards. The eligibility limits, including income criteria, should be raised to ensure that all those who receive an increase will not lose their medical cards.
I refer to the MABS service and the crèche supplement. We were promised by the Minister's predecessor that the Department of Justice, Equality and Law Reform would look after this matter. The Department of Social and Family Affairs probably thought that nothing had been done because the matter was fobbed off to another Department. The crèche supplement is critical in the context of facilitating people's participation in the workforce and ensuring they get such opportunities. The situation is similar with regard to the dietary supplement. An average loaf of bread may cost approximately €1.60 but a gluten-free loaf for someone who is a coeliac can cost €4.60 or €4.80. The supplement was important for such people, particularly those on low incomes who want to live normal lives yet require help due to the additional demands on their income caused by medical problems.
The €700,000 supplement provided under the MABS service is a pure cop-out and it has not been reversed. MABS does not provide money but it provides important advice. However, the financial safety provided for thousands of people in debt has now gone. Some such people were in the grip of moneylenders and may have found that, following an assessment of their household income and expenditure, they were €25 or €30 short. That money was provided by community welfare officers. The sum of €700,000 is nothing — it concerns the examination of methods to avoid poverty, but MABS cannot solve the poverty issue. It is trying to help people to deal with their income shortfalls and has been doing so successfully. I compliment the representatives of MABS in that regard. They appeared before the Joint Committee on Social and Family Affairs and gave a wonderful presentation of their work. They were seeking improvements in the system, however.
The Combat Poverty Agency suggested that MABS should provide SSIAs as part of its service for indebted households. In other words, if people are encouraged to accept a scheme under the MABS criteria whereby they can save €100 per year, why does the State not give them an additional €400 in the same way as well-off people receive money through SSIAs? Why can those who are most in need not be helped by such an innovative scheme, as proposed by the Combat Poverty Agency? It is incumbent upon the Minister to consider the advice of an independent agency that was established to advise the Government.
The Society of St. Vincent de Paul spends €32 million annually to deal with poverty by providing food, clothing, furniture, fuel and cash. The society's expenditure is up 7.5% on last year.
Before concluding I must speak about my favourite topic of carers, to which I have devoted much time. As chairperson of the Joint Committee on Social and Family Affairs, I am appalled by the Minister's failure to deliver anything of significance to carers. I have received a news release from the Carers Association which is disgusted with the Government's failure to deliver on its pledge to support them. The association's news release states:
It is vital that the needs of all family carers are recognised and that the necessary support structure be put in place through the development of an all-inclusive national strategy. The Government must formally recognise the extensive contribution made by family carers. A national strategy will contribute to improving the lot of a very vulnerable sector of society, ease pressure on the health service and, for minimal investment, lead to actual savings in the health budget.
Hear, hear to that. The joint committee did a lot of work on this matter and produced a unanimous report. No consultants were involved, it was produced by Deputies and Senators. According to the statistics, 148,800 people are classified as carers, although the Minister is working on the basis that there are just 50,000 full-time carers. I have been informed by the association in Clare, Caring for Carers Ireland, that there are approximately 300,000 carers. That is because many people have not classified themselves as carers, even though they may work through the night to look after their infirm relatives. It is the human, compassionate and familial thing to do and all they want is recognition from the State for their efforts.
For €220 million we could abolish all the form filling for the means test, which creates a barrier to people receiving a carer's allowance. The work of those carers is saving the State over €2 billion, so on a cost-benefit analysis they provide a nine to one return. The Government has been remiss by failing carers in this way. If the State paid them an allowance it would be but formal recognition of their contribution. The Minister has missed an opportunity to do so.
I am glad to see the respite care grant has been extended but, while I acknowledge that increase, how will the Minister evaluate the 9,000 people concerned? The Minister thinks there are 48,000 carers, of which 14,000 or 15,000 are working while another 10,000 are working ten or 12 hours per week in the home. I know what the Minister is trying to do but it is the wrong way to go about it.
The report by the Joint Committee on Social and Family Affairs recommended that half the rate of social welfare should apply for widows or widowers working as carers. Such carers should be entitled to receive a dual application of social welfare payments. The current system is artificial and should be abolished.
When one contrasts the treatment of carers with that of high income earners, some of whom do not contribute tax revenue, it is clear that the Taoiseach's professed socialism is totally spurious. I hope the Minister will re-examine the position of carers who deserve no less.