Before we commence the Social Welfare Bill I want to inform the House that amendments Nos. 1, 3, 6 to 42, inclusive, are out of order as they involve a potential charge on public revenue.
Social Welfare Bill, 1988: Committee and Final Stages.
Our amendment to this section has been disallowed. It referred to increasing the child allowance. I am disappointed that the Minister did not address himself to the inadequacies of this Bill. There are some positive items in it but there are also some negative ones, particularly relating to children. There seems to be a total disregard now for the problems involved in raising children and for the recognition by the Department of Social Welfare of their special place in the home in particular. I am disappointed that the other House did not see fit to increase these rates relevant to child benefits. Perhaps the Minister would respond and let me know why even in difficult times the Government did not do so. I hope in future Social Welfare Bills that this major problem will be seriously addressed by the Government.
The section includes increases in the new rates for social insurance benefits as promised in the Programme for National Recovery and they are in line with inflation. The 3 per cent generally applying here is above the rate of inflation which was anticipated at the time, 2.5 per cent. Senators will know the rates predicted at this stage are even lower than 2.5 per cent. The increases are consistent with what has been agreed between the national partners.
In relation to the point made by Senator Ferris, I emphasise that while we would all like to see further increases — especially in child benefit — payments this time were directed towards those in greatest need and on the lowest payments from the additional resources available. That included the children of those on the lowest incomes. In adjusting the rates for the children of those on the lowest incomes an additional £9 million was provided. Consistent with the recommendations of the Commission on Social Welfare and many statements by Deputies in the Dáil and Members in the Seanad the Government placed the emphasis on those with the lowest incomes. I will certainly bear the Senator's remarks in mind on future occasions.
There is one point I would like to raise with the Minister in regard to child benefit and that is in relation to the position of children of people on unemployment benefit who are in third level education and over 18 years of age. Children can remain as child dependants if in full-time education until they are 21 years of age in cases where, for example, their mother is a widow. This provision does not apply to other social welfare recipients and, as a result, much hardship is caused. I am very disappointed, particularly in terms of equality in education, that the Minister did not look at this matter.
What the Senator has said is correct in that apart from a few exceptions which include widows, benefit is not paid for those over the age of 18. The general principle is that dependant allowances are not paid for those over 18 years of age but this has been balanced on the other side by the grants system. If people qualify for a grant they will receive benefit in that way. The grants system was intended to meet the requirements of people in that regard. It would cost to widen the scheme of paying dependant allowances beyond the age of 18 to include the long-term unemployed and this would need to be considered further.
I thank the Minister for at least recognising that in the area of child benefit a deficiency exists. A Minister for Social Welfare is faced with the question of what are his priorities. The Minister has admitted that dealing with this area should be one of his priorities and I think this matter should be addressed. The Minister referred to the Programme for National Recovery— that magnificent document. On reading that document one can see that it also has deficiencies. It was confirmed in that document that levels would be maintained at their existing levels or increased in line with inflation but what the Minister and his negotiating team failed to make clear to the trade unions of that time is that the qualification requirements would be made much more strict. For example, in regard to the payment of disability benefit one now needs to pay additional contributions before qualifying and the Minister has also changed the qualification requirements in regard to the payment of maternity allowances which are mentioned in subsection (b). While it is grand for the Minister to say he will maintain the levels of income, it was underhand to change the ground rules and make it obligatory to have paid additional contributions before one could qualify. That is a matter which will have to be addressed by the trade union movement in particular in future discussions and negotiations and they should ensure that the ground rules will not change in the middle of the game as happened in this case.
In regard to the payment of death benefit concern is being expressed by families where an elderly parent has died, and in particular by wives whose husbands have died. If a husband dies a certain number of years before his wife and has paid no contributions no death benefit will be paid to his family. This is the case where the husband dies up to ten years before his wife. There is a general impression that death benefit is paid to the family on the death of the mother. Unfortunately, this has been refused in many cases. Could the Minister clarify this matter? Because the amount involved, £100, is small we should consider paying this benefit in all cases rather than allowing the family to suffer.
On the points raised by Senator Ferris, various elements of the rationalisation programme of the schemes were notified during the past year. Some of the changes did not come into effect until later due to the timing of benefits but the arrangements were made in such a way that they would only apply to new claimants. It was my desire that they should not affect existing claimants and that future claimants would be aware of the new requirements in advance. They are not part of the Programme for National Recovery but, on the other hand, they were being considered before the programme was drawn up.
I take it the Senator accepts that there is an obligation on me as Minister to ensure that the schemes work efficiently and that the resources available to me are directed towards those for whom they were originally intended. If you look at the drift which has occurred in schemes, you will find that problems which were never anticipated when the schemes were devised have arisen. That applies to some of the schemes mentioned by the Senator. The new arrangements were intended to ensure that the beneficiaries had some recent connection with the workforce. Outside that there is a panoply of schemes available on a means tested basis. Our fund is for the workforce and for those people with a reasonably recent attachment to the workforce and it is on those principles that the changes were made.
On the question of death benefits and ensuring that they are generally available to beneficiaries, to extend their payment would impose an additional cost. There are cases where one might like to see the death benefit being paid even if it is only £100 at present. Nevertheless, it is useful and I accept what Senator Cregan has said in that respect. People are very glad to receive it at the time. To extend payment of the benefit to other categories would impose an additional cost and it would also be a further development of the scheme. That is something that can be considered at another time.
Here, we are talking about people who have paid contributions to the State for many years. Under this Bill we are going to give the self-employed, because of payments they are prepared to make, benefits and pensions even though they may have a lot of money, may be very highly rated and, for that matter, have a very high standing in society. They will have to pay at a rate of 5 per cent. On the other hand, we are not prepared to consider those who may have paid contributions for up to 40 years. We are talking about people who look after their mother for years after their father dies and after all that they will get nothing from the State. This is a very small sum, £100, when compared to the money we will spend when giving people pensions who will only pay contributions at the rate of 5 per cent in two years time. They may also be in receipt of a private pension. I do not think we have our priorities right. The Minister should consider, at very little cost, the idea of giving a death grant to the family of every person who paid in contributory amounts as a worker.
Let me refer back again to the dependants of people on social welfare who are over 18 years and attending second level education. No money is coming in for those children who continue in education. If they are at second level and over 18 years they are outside the cover as dependants for social welfare. Equally at third level a number of courses at regional colleges do not attract grants. An anomaly exists where somebody takes a national certificate at a regional college. An ESF grant applies to the first two years but if the student goes on for a diploma in the third year and has not got two honours in the leaving certificate the parents get no income for the upkeep of that student. Those are two areas of grave injustice. I ask the Minister to have a look at them.
The long term unemployment assistance people are the first to come to mind in relation to that situation. I will take note of it. It would mean, for instance, extending from 18 to 21 years the age limit for payments of benefits for child dependants to recipients of long term unemployment assistance.
This idea was mooted four or five years ago as regards the family income supplement. The Minister said on Friday that approximately 5,000 were claiming this benefit. Are we saying that only 5,000 employees in the country are earning £108 per week or less? That number surely must be higher. There are people who are getting less than that. The income supplement is designed to provide that the wife or husband of a claimant must collect it every week. Should we provide that the employer should pay the family income supplement rather than the State? It is a cost to the State. It is an embarrassment to the family who because they are on low earnings have to look for it. PRSI and PAYE are paid by the employer on behalf of the employee and the FIS should be subtracted from the amount he has to pay in PRSI for the employee and given to the employee directly. That procedure would not embarrass the wife with four or five children who has to get an income supplement. It is sad to think people in our society live on that amount and work hard for it.
This is of concern to any of us who have been trying to convince people in that lower income bracket that with the removal of food subsidies there was a scheme which they could resort to which would at least balance the lower income of people with large families. That is what the scheme was designed for originally.
As has been confirmed by Senator Cregan, there are more than 5,000 of these families in the country. The Department and the Minister must question the efficiency and efficacy of his promotional scheme for these people. Quite an amount of money has been spent by the Department on national advertising in the media to bring this scheme to people's attention. Unfortunately, and for some unknown reason it does not seem to get through to the people who need and would qualify for the scheme.
It is an embarrassment.
Possibly it is an embarrassment. For some reason people are unaware of the scheme or unable to qualify or apply for it. We must address this problem somehow. One way to address the problem is through the employer. All employers should make their employees aware of the scheme, but I would have reservations about using the employer to pay the difference, although later he claims it back. Unfortunately then all employers would avail of the scheme to pay their employees less in the knowledge that they could get additional funds from the State to top it up, so to speak. As a scheme it must be kept separate from social welfare in recognition of the fact that there are large numbers of children in some families and wages do not necessarily take that into account. The State in its role as a guardian of the family under the Constitution has taken unto itself the responsibility of ensuring that additional incomes are available for some families. This could apply in a job with 20 men working on it, ten of them having five children and ten having ten children. They all have the same wage. The employer should not be expected to make a difference in payment to some just because they have more children because that is a matter for the families. However, the State must take this matter on board and have regard to it. We are not getting the message to the families who are in need and would qualify.
I can say safely that up to 30,000 families would qualify under this scheme if they applied for it. That information should be available through the Revenue Commissioners who know the income of all income earners—or they should know if everybody is in legitimate employment and employers are sending in the returns. At least they have a record of the wages. Is the Minister telling me now that the Revenue Commissioners are unaware of the family situation of each income earner? If so, that is due to removing child allowance from the income tax allowances. That was an instrument by which the Revenue Commissioners were aware of family commitments.
We are missing out somehow and I am worried about the number of families with large numbers of children who do not earn sufficient money when money — to which they have contributed — is available to them from the State. However, they have not the benefit because they are unaware of the scheme. Nobody knows what FIS is, certainly not that category of income earners. They need assistance in this regard and we have responsibility to bring it to their attention. The Department of Social Welfare should advise employers that some of their employees who have family commitments should be made aware of this scheme because the figure of 5,000 does not accord with the facts to our knowledge.
The number in the scheme in December 1984 was 1,425. In December 1985 it was 4,600, in December 1986 it was 4,800 and in December 1987 it was 5,532. There has been a gradual slow increase in the numbers participating and indications at the moment are that the numbers are increasing further.
As has been said, we have made several efforts through advertising campaigns to make people aware of the FIS as, indeed, did the previous Government. Senator Cregan raised the question of payment through the employers. I would be very much concerned that in that case some unscrupulous employers might use that as a basis for reducing the payments they make weekly and might see it as a useful sort of floor in that sense. If that were to start happening it would defeat the whole purpose of the FIS. That will have to be watched as the benefits of the supplement, we hope, spreads further.
Senator Ferris recognised this difficulty and he suggested that it would be important to keep the payments separate. Payment is made through a book, with which people are familiar, at the post office and so far as I can see virtually nobody feels any embarrassment about going to the post office with a book for child benefit. I have checked with people who have very high incomes where the wife collects the payment. I thought they would not claim it in those cases but they do. The child benefit is money which comes to the wife for family purposes. Likewise, there is a booklet which can be used and cashed at the post office. I am not aware of any difficulty or embarrassment in that sense as it is not something for which one has to queue. It was introduced in a fairly convenient form.
In relation to the Children Bill an amendment was adopted in the Dáil on Report Stage the effect of which is to give the Minister power to make regulations to vary the upper income limits applicable to families with two or more children and to vary the maximum rates payable for the second and each additional child up to and including such numbers of children as may be prescribed. If the present formula is continued upwards it will become ridiculous because the amounts are very great, as you go further up. Therefore you would need to increase by smaller amounts to keep within the general principles of the family income supplement. Even if the rates were increased under those principles they would still have to be varied. I have arranged for a detailed review of the scheme which is being carried out by a consultant at present, the results of which are expected within a month. I will then consider what I can do based on the experience of the scheme and on the advice, results and recommendations arising from that study.
In the meantime I am increasing the levels of the standard percentage and taking the opportunity in this Bill to give the Minister the flexibility subsequently to make changes other than the standard ones which are possible under the FIS as it stands at present. That was one of the matters referred to by Senator Ferris particularly if there were more than five children. By regulation the Minister would now be empowered to make such a change. That is a matter which will be considered when the review of the scheme is completed and the results are available.
Perhaps the Minister would address himself to the problem of communicating this scheme to categories of people we know would qualify. I know the Minister has said — and I agree — that he has done quite an amount of media advertisement but unfortunately that does not seem to be read by the people who should be getting that message. Has the Minister or his Department any plans for using other avenues — including employers or the Revenue Commissioners who have some information — to make this scheme known to categories of people who would qualify and that the application form might be sent out even if it was not returned? We have an obligation to lowly paid people with large family commitments to do something now that we have an excellent scheme.
The Minister admits that the take-up of this scheme has increased from 1,600 since 1984 to 5,500. Senator Ferris made the point that there could be 30,000 people who would be eligible for this supplement. A scheme is available and money is being made available. The idea is excellent that people who are lowly paid should receive a supplement. I have no objection to the booklet being used if it is not an embarrassment. We are not selling it. It is an area into which the PAYE sector are paying money. The Revenue Commissioners are not informing anybody about it and we are not prepared to give the employer an opportunity to do so because there may be some fraudulent activities. That is possible if we are not careful enough. We must be able to ask whether there is fraud in areas such as this.
This scheme was well advertised. Many of the people claiming these benefits — and I am sure this would prove to be correct if checked — are local authority workers. I am aware that advice is given by local authorities to employees earning under the specified amount to apply for the supplement. They are informed of it by management within the local authority. What is wrong with telling the trade unions that any person on a low income is eligible for the supplement? Trade unions are capable of advising their members on the benefits available to them. In the private sector there are many people who earn very little money and who are not aware of this supplement. Every avenue should be availed of to inform those people of the supplement. It is only fair to people who have large families, who are on low incomes, that they should be informed of the supplement. The impression is that these people cannot get any more money and yet the money is there. The Minister has money in the coffers which should be used in this area. There are more than 5,500 people who should be availing of it.
I would like to support my colleagues on this side of the House on the point being made about the underuse and the lack of knowledge by those on low incomes of the family income supplement. I think there is a problem. It may well be that the problem arises because a number of the persons who would be eligible are not in contact with social workers or are not in contact with people who would advise them if they were in direct contact with them. I share the view expressed that, even with the increase which the Minister has indicated to just over 5,000, there is a grave under take-up of this important supplement for families on very low income.
I welcome the fact that the Minister has indicated to the House that a review of the scheme is taking place. He said a consultant is working on that review. It is particularly important in relation to that review of the scheme that the review should ultimately be made public. Certainly it should be made available to the Members of the House so that there can be a greater awareness of what the problems are in the take-up. I know that FLAC who advise persons in relation to social welfare problems are concerned that the family income supplement is not properly taken up. In many cases the type of family earner would not be somebody who would be likely to come in contact with FLAC or other bodies of a similar nature. Therefore, I ask the Minister to make the review report available either by publishing it or making a copy available in the Oireachtas Library as soon as it has been given to him. It may be something on which we should have a further discussion in this House.
I am concerned at the low take-up of this scheme. I can understand the Minister's anxiety in not having it promoted by employers. I can see the danger there. Most people on low incomes are not members of trade unions. If they were members of trade unions they would be receiving a rate higher than the rate provided in the scheme. I imagine most people who benefit from the family income supplement are housed by local authorities.
I ask the Minister to consider using the assessment methods in local authorities especially rent assessment. Where the number of children and income of the parent are known, and where the assessment officer, especially in the rental section, is of the opinion that the family are entitled to family income supplement, there would be no difficulty in passing on the information. That is one avenue — I am sure there are others like that also — which I bring to the attention of the House.
That is an area where some information would be available. I will consider the Senator's suggestion. Senator Ferris called for advertising targeted towards the people instead of broad advertising. Following the review being done, I would intend to use that to help to target groups and to use any other ideas we have at the same time. When we were discussing this in the Dáil, I had a look at the possibility of leaving some alterations in it, but it becomes so complex when you take the different factors operating that it is better to take the power, which we have done in the Bill to do it by regulation and, at the same time, to await the result of the review body and see how we can target it better at that stage.
There are quite a few members of the Defence Forces and local authorities who actually are utilising the scheme. The numbers are going up all the time. Last year we had some success. The original estimate referred to did not contain real hard information. This is in an area where it is very difficult to have hard information because you must be in full-time employment. No one had that information readily to hand. For instance, it must be taken in conjunction with the number of children which is a big factor in the whole scheme. The take-up is increasing currently. Senator Cregan said he was quite sure members of local authorities would benefit from the scheme and do so.
Many people inform others about the scheme. The trade unions inform people about it, we inform people at any of our offices, the National Social Service Board through the information centres inform people about it. There is a good deal of information going out of a general nature to people about the scheme and about its operation. I would certainly look at the question of better targeting once we have the report of that review group. I will see about the situation of making information available to Senators and Deputies when I have the report.
The ceiling has been increased up to £16,200, and after that you do not pay any more PRSI. There is a problem here. It is fine to say to people earning over £16,200 that you must have your own health cover and we will give you a hospital service card, but we forgot to tell them they must now pay £10 for the card. It is all very fine to say to people that they pay PRSI up to £16,200. The PRSI is deducted from the employer and the employee. The employee is quite annoyed that he has to pay another £300, or £400, or £500 per year to the VHI. He then goes to the local hospital and is asked to pay £10 for the hospital services card. That is quite annoying. Could that situation be clarified? I appreciate it may not be in the Minister's hands.
I would say not; let us stay with social welfare.
The person pays the PRSI through social welfare. You must pay £10 to get the hospital services card but you pay through your PRSI payments. Could the Minister clarify the situation?
Before the Minister replies on the same section, we have now distorted the whole concept of the pay-related scheme. First of all we have ceilings, and floors. We have a cut-off point where people stop contributing and their contribution has no relationship to their pay, which is what the scheme is about. We have interfered with the floor, we started reducing the percentages, which also distorted the concept of the pay-related scheme which was to cushion people who unfortunately were either sick or out of work in a period immediately after they were employed, so that their income in that traumatic period of sickness or unemployment would in some way be related to what they were earning when they were fortunate enough to be employed.
One of the Minister's predecessors started to interfere with the maximum limits and I expressed to him both here publicly — although he was a colleague — and at parliamentary party level my problem about interfering with the concept of the pay-related scheme. I am extremely worried that we have now done irreparable damage to the concept because of the ceiling limits and the percentages of wages they are allowed to get under this scheme. Certainly, I recognise that there must be a difference between what one gets on social welfare and what one got when working. Otherwise there is no incentive to go back to work. I will accept a reasonable differential to keep the balance right, to ensure that there is an incentive to go back to work. I believe we have now made the difference so great that we have moved away from the anomaly we might have created. We have penalised people in the social welfare categories by having the percentage too low. In my opinion the ceiling should not be there at all. If people are fortunate enough to be working I think they should contribute to the fund no matter what their earnings are, and this should apply also to the health contributions, which is dealt with in the previous separate piece of legislation.
I worry about cut-off points because I feel the principle is important, that those who are fortunate enough to earn more than £16,200 should continue to make contributions to the scheme. A social scheme should take into account the less well off and if we follow through the example the people in the very high income brackets should help to subsidise in some way the fund which should be available for people in the lower income categories who are unemployed or sick.
The section deals with the ceiling for pay-related social insurance contributions. The health contribution is collected with it, but it only passes through us and on to the Department of Health, so it does not really come into this legislation.
Senator Cregan raised the question of the health charges and VHI. The VHI contributions are still tax allowable. I know you may see headlines in the papers every so often to the countrary but they are tax allowable still. The £10 hospital services charge is absorbed by the VHI for people who are VHI members. That was the way that was done. For people who are not VHI members, a special scheme was introduced which was a particularly attractive once-off scheme which operated for a number of months and people were invited to apply and become part of it. There is a difference between health and social welfare, in that when you go over a certain limit for health you do not get the full benefits, you get a restricted benefit. You get a bed in a public ward and many of the beds in public wards are of a very high standard.
The increase in revenue this year from raising the ceiling is £2 million. That will not have a major effect on the employee because it will be shared proportionately between the employer and the employee. If we were to do as Senator Ferris suggests and remove the ceiling altogether — I doubt if Senator Cregan would agree with him on this — the extra revenue earned would be considerable — £79 million in a full year. The employers would end up paying an extra £53 million and the employees £26 million if that was the case.
If there was not a minimum rate the benefits would also increase.
The Senator is talking about pay-related benefits and that comes under the next section. We will deal with that matter when we come to that section. In the past number of years the ceiling has increased on a formula that relates to the general increases in incomes in industry generally. In 1983 the figure was increased from £9,500 to £13,000, an increase of 36.8 per cent. That was during the time of the Coalition Government and Senator Ferris will be familiar with what happened then. He may have had an influence on that sizeable increase. That increase was probably such a shock to the system that in 1984 there was no increase in the ceiling. In 1985 there was a more normal increase from £13,000 to £13,800, an increase of 6.1 per cent. In 1986 there was an increase of 6.5 per cent; in 1987 there was an increase of 5.4 per cent and this year the figure is being increased from £15,500 to £16,200, an increase of 4.5 per cent. I think Senators will agree that the increase will not be a major burden either on employers or employees.
The Minister mentioned the figure of £16,200 and said that the employer would suffer if he had to pay a higher amount and the employee a lower amount. There is an argument to be made, and this was also stated on Friday, about grading amounts. It could happen that the people earning a lot of money could have paid all their contributions on the £16,200 by October and from then on neither the employer nor the employee would have to pay any more. The person earning £7,000 or £8,000 a year pays a certain amount in PRSI every week as does the employer. Admittedly, that person does not pay as much and I appreciate that. We are dealing with a Bill which proposes to bring people who are making a lot of money into a system but yet they will not have to pay on any money earned over £16,200. People who are paid up to £35,000 or £40,000 a year will get the same benefits as those on £7,000 a year and will get a pension at the end of the day even though they could have other pensions. Admittedly, their pension will be taxable and that is where the State will gain.
Are there many people earning £20,000 or £25,000 a year? That is questionable. The people earning that amount will pay PRSI on the first £16,200 only. If there was a graded system where, for instance, a person earning less than £10,000 a year pays a certain amount of PRSI each year, a person earning over £10,000 a year pays a greater amount and a person over £20,000 a year pays even more, in that way we would be recognising that the person who is earning more will have to pay more PRSI. It would be good idea in principle if everybody was in the welfare system. The people who are making a lot of money are gaining at the end of the day and have every facility available to them even though they might not need it. The idea of giving everybody over 65 years of age a medical card might a good idea. Some of them would not use it but others would. That might work out cheaper for the State at the end of the day. I think that was done at one time.
As regards contributions, the person who is earning over £17,000 a year is doing well. Should a person not have to pay a certain amount per week on the first £10,000, a higher amount on earnings from £10,000 to £20,000 and an even higher amount on earnings over £20,000? The employer and the employee would then know how much they would have to pay. Would it be possible to introduce such a system and would the State not gain from it? The Minister has said that the State will get £59 million from this scheme. I would not mind if we could get £20 million more from the people on high earnings.
Does that surprise the Minister?
I will be examining the whole question of financing as it has many implications for the different people involved. In any system there is the question of benefits, of assessing contributions and of keeping people's records. The present system is income-related. I know when somebody pays at the higher rate, by the end of the year they do not have to pay anything. This can be quite misleading because they think when a budget is introduced that they have been hit very hard whereas they are just contributing normally again at the beginning of the new year. That can be confusing but it would be much more confusing for us to have to look for other ways of operating the system. We might even lose money in the process. That is one of the difficulties. The system is fairly straightforward, whatever quirks there may be about it. I assure Senators I am considering the financing of the system generally.
I move amendment No. 2:
In page 5, before section 10, but in Part II, to insert the following new section:
"10.—The increase in the prescribed relative allowance payable under sections 50 (ii), 51 (2), 81 (3), 86 (3), 91 (3) and 103 (2) of the Principal Act shall be paid directly to such prescribed relative.".
We hope the Minister will accept this amendment. It does not create a charge on the Exchequer and that is why it was allowed. It addresses itself to the principle that the increase in the prescribed relative allowance which is payable under the various sections would be paid directly to the prescribed relative. We have come a long way in the area of social welfare, particularly in regard to women's rights, women in the home and the family. In the past many of the allowances payable were paid directly to the father or the husband and it became acceptable that all these payments should, by right, be payable to the woman as the responsible person, with most demands being made on her. I am suggesting the same principal should be carried into this section dealing with the prescribed relative allowance. I understand that the number of beneficiaries is not great and that there would not be any great administrative difficulty in accepting this amendment. I am suggesting that the amount in question should be paid directly to the prescribed relative rather than to the person who is being cared for.
The prescribed relative allowance is an increase in pension payable to incapacitated pensioners who have a prescribed relative living with them who is providing full time care and attention. Apart from the prescribed relative, the pensioner must be living alone or only with children under 18 years or persons who are incapacitated. It is an increase based on the entitlement of the pensioner. The number of beneficiaries is 2,250. The prescribed relative must not be engaged in employment outside the home, must not be in receipt of or entitled to any other benefit, pension or allowance from the Department of Social Welfare and must not be a married person wholly or mainly maintained by his or her spouse.
The purpose of the scheme is to provide a measure of additional income maintenance to a pensioner towards the support of the relative who is looking after him or her in this way. It is akin to an increase in pension for an adult dependant. It is based on the entitlement of the pensioner. Payment of prescribed relative allowance is based on need. If the relative is working or in receipt of social welfare payments, no allowance is paid. The allowance is paid to the pensioner, not to the relative. It was never intended to compensate the relative for the service which he or she is providing. Social welfare schemes are based on the criterion of providing income maintenance in situations of need, not on providing compensation to people for services rendered. The social security system provides a measure of income support in various situations of perceived need, with the fall back of the supplementary allowance scheme which is designed to ensure that no person falls below a certain minimum level of income.
Notwithstanding these considerations, I accept that this is an area which needs to be examined. I indicated during the debate on this Bill in the Dáil that I will be arranging for such an examination. The immediate question which will arise is the adequacy of the existing payment. Once we transfer from the principle of paying a supplement similar to the living alone allowance to the incapacitated pensioner, we come to the question of comparing that amount with other amounts for single persons and unemployed persons. That is one of the difficulties, especially if the payment were to be made directly to the prescribed relative. This would, of course, have financial implications. I understand the point the Senator is making and I reiterate my undertaking to examine the matter to see if it is possible to have the allowance paid to the relative and yet to have it defined in such a way that it does not have a wider implications.
I welcome the Minister's commitment to examine this matter with a view to paying this allowance directly to the prescribed relative. I would accept most of what the Minister has said if the prescribed relative were a dependant of the pensioner, but those of us who deal with these people know they are not actually dependants and are not treated as such. I do not know what the State would do if they did not have the voluntary services of these people. In many cases they are martyrs who have chosen to stay at home to look after elderly relatives who need care and attention. They save the State millions every year by keeping old people out of institutional care. Instead they keep them in comfort at home and give them the loving care to which relatives are entitled. In the rat race of the modern world what category of person will give up the opportunity of a career, of marriage and the freedom to go on holidays and avail of all the other opportunities? This is the choice made by prescribed relatives who remain at home and are given little or no recognition by the State.
I realise that if we paid everybody for looking after aged relatives there would be total abuse of the system, but where it has been proved that the caring relative falls into the category I have outlined, some recognition must be given by the State. Unfortunately, their services are sometimes not acknowledged by the people for whom they are caring and they are often subject to abuse. The have no income of their own and they cannot qualify under any social welfare scheme. I am glad the Minister recognises that there is a problem.
Another matter to which the Minister referred is the possibility of giving a decent allowance to people in this category. I did not raise this question because I might have been considered to be out of order. We must balance the services of these people against the cost of the State of taking these pensioners into institutional care. The State should recognise that the prescribed relatives are providing a very cheap service and doing so on a voluntary basis.
We are not involved in the wider question of making payments to people who choose to mind their relatives at home. That could be a very big market. It is essentially a health board question. We are talking here about a payment based on a pensioner's entitlement where he or she is incapacitated. I appreciate that very often the person who is caring for the pensioner will be collecting the pension but may not get any part of it. Senator Ferris pointed out that some older people are difficult to deal with, but some people are difficult to deal with even while they are young. Anyone who has experience of dealing with elderly people, especially where they are confined and incapacitated, is aware that it can be a very onerous task. We will certainly look at the question to see if there is any way in which that payment can be made or transferred to the relative who is giving service in that case.
I move amendment No. 4:
In page 6, paragraph (b), lines 14 to 22, to delete all words after "Income Tax Acts" in line 14.
As we know certain categories of artists are allowed tax concessions on their income. Ireland has been looked upon as a tax haven by artistic people and this has encouraged the right category of people to choose Ireland as their place of residence and base. These people make a useful contribution to the country and increase the reputation of the country internationally. For that reason the Taoiseach, in a moment of inspiration, decided that these people should be excluded from income tax on their earnings provided they were resident here. Obviously this is being continued in this section by the exclusion of their income for social welfare purposes.
I put down this amendment because income should not be excluded for social welfare contribution purposes. Under the present system of non-contributory pensions, nobody is shy about divesting himself of his property in order to qualify for a non-contributory pension and the total cost of that to the Exchequer, which is in the region of £200 million to £300 million, will prove that. I have no problems with the exclusion of their income for income tax purposes but all income earned by people in the self-employed class should be taken into account for social welfare purposes. These people are the ones who are most likely to fall on difficult and rough times and many of them if they are not members of voluntary benevolent funds during their working lives, will be penniless at the end of their days. If they are excluded during the period when they have an income they should also be excluded from being beneficiaries. That is the reasoning behind my argument.
My motive in putting down this amendment was that it would benefit this category of people. In the good days when they have an income they should, for social welfare purposes, make a contribution. The maximum contribution laid down in other sections is up to £4 per week. If you start making exemptions for certain people in this case many people in the self-employed and farming categories could point to the anomaly whereby artists are excluded from paying contributions under the Social Welfare Acts.
This is slightly complicated because the effect of this section is — and not as the Senator thinks — to exempt them from the exemption they had. They have an exemption in relation to income tax and this exempts that income so that we can charge PRSI on it. As I said, this is complicated. I introduced an amendment in the Dáil, and that is included here, which enables their income to be brought in. Otherwise they would have been left out altogether and, as the Senator rightly said, we will not be able to charge PRSI when they have an income. The effect of the amendment which I put forward in the Dáil is to exempt that arrangement for this purpose. In effect this means that we will be able to charge PRSI on their income while the Revenue Commissioner will not be able to charge tax on their income for tax purposes. The effect of the amendment which I put forward in the Dáil is to make sure they are included. The Senator should have no concern about that. They are included and they will pay in the same way as any other contributor. Their income is not subject to tax but we have to make sure they contribute PRSI.
You catch them on their own money.
For PRSI but not for income tax and with a ceiling.
The Revenue Commissioners can then be informed.
Because they are artists the Revenue Commissioners will not charge them tax.
I am not talking about the artists I am talking about the income——
The Senator only raised the question of the artists.
That is an art in itself. I am trying to come to grips with the parliamentary draftsman's jargon.
I move amendment No. 5:
In page 13, between lines 36 and 37, to insert the following:
"17H.—Where a return of reckonable income has not been made by a self-employed contributor, contributions shall be liable at a rate of £10 per week (£520 per year) until such income figures have been made available, at which stage the provisions of section 17C will apply to the relevant period and any excess of contributions shall be offset against the liability thus calculated.".
I have no doubt the reason this amendment is allowed is because instead of making a charge on the Exchequer it takes into account the overall good of the Exchequer. This amendment deals with people in the self-employed category who possibly will refuse to make any returns whatsoever on their income. If that happens the Department will have no figures to work on and will not be able to make any deductions from them for pay-related benefits and other contributions.
It would be lovely if everybody made a declaration of his or her income. However, every day one hears officers of the Revenue Commissioners expressing concern about the number of people who fail to make returns. We know that many people make an effort and, with the changes in the Income Tax Acts and other Acts, more demands will be made on the self-employed, employers and farmers to make declarations. There is a controversy at present particularly among the farming sector about the percentages being charged, whether they should be included at all or whether they should have the opportunity to voluntarily opt out and look after themselves in the future, while, in fact, knowing that the opposite will happen.
I accept the principle that all these people should be included and the Minister has put a limit on the amount of money he will take from them. This will remove the anomaly whereby a person can legally divest himself of his property but still enjoy the benefits. There is nothing wrong with the State looking after people who have paid their contribution into a scheme but I am worried that some people will not make returns available or will dispute the methods by which returns will be made. This amendment is a means of taking from them an interim payment which is twice the amount that would be taken from them if they had made their returns. It could be an incentive. If the Minister accepts the amendment, a repayment could be made later in the year if they send in their reckonable income. This is a measure of my concern for the limited resources the Minister keeps quoting. I am trying to ensure that more money will be available for some of the essential services that are being curtailed and here is one way to get money. Is this not how most of Irish society works? If we provide incentives people will do something but if we impose penalties they may not be paid.
In this Bill the Minister is granting an amnesty to everybody who makes their returns before September, but if they do not make their returns, the penalty will apply. This will put money into the coffers and improve the revenue position.
I appreciate the intention of the amendment but I contend that it is not necessary. In this arrangement we have a new scheme of collection with certain minima to be paid. I think the Senator was anticipating what I was about to say because he recognised that the penalties which applied to tax will now apply in this area, which would not have happened previously. The extension of the social insurance cover to the self-employed closes a major gap in the coverage of the system. It is a radical reform which, again, has been talked about for many years but is only now being tackled by positive action. I am sure Senator Ferris will be glad it is being tackled now.
As far as the collection of tax, PRSI and the health contributions from the self-employed are concerned, we are into an entirely new ball game. There can be no comparison with the way things operated in the past, and it is wrong to make such comparisons. We are now talking about one integrated system of collection for tax and PRSI with the same legal and administrative processes for collecting the amounts due. This, together with the introduction of a system of self-assessment which involves full payment up-front, overcomes the biggest problem in the present system. It is important not to under-estimate the effect of the changes which are coming into operation in this area and which will have a major impact on the new PRSI collection system for the self-employed. From 6 April, 40,000 directors and 9,000 doctors, dentists and others will start paying social insurance for the first time. Their contributions will be deducted from their salary as in the case of employees. That begins immediately from 6 April. In the next few days, the Revenue Commissioners will be supplying my Department with details of 165,000 self-employed people who are already paying income tax under Schedule D. These self-employed people will be registered for PRSI purposes in my Department and early in May they will receive a registration form. The information required on the registration form is essential to ensure that the self-employed person gets full benefit of any social insurance contributions paid in the past as an employee or in any other EC member state. From July next, these Schedule D taxpayers will be notified of tax and PRSI due. Both the tax and PRSI must be paid before 1 November 1988 or interest falls due. The Revenue Commissioners are also supplying details to my Department of over 10,000 farmers who have completed farm profile forms and whose income is too low to require them to pay income tax. These will be registered for PRSI and the Department of Social Welfare will collect flat-rate contributions from these farmers.
In summary, therefore, 215,000 farmers and self-employed people will be registered almost immediately and the collection process will commence from 6 April. The process of registering the remaining 35,000 small farmers, shopkeepers, tradesmen and other self-employed people will then be undertaken by the Department of Social Welfare. An advertising campaign, coupled with an analysis of available records, will be used for this purpose. Another important provision which is included in the Bill is the measure to assist people affected by gaps in insurance prior to 1974, and that we will be coming to later.
I appreciate that the suggestion the Senator has made in this amendment is well intentioned and designed to ensure that there will be a penalty if contributions are not made at the proper time and in the proper way. I would like to assure him that the penalties which apply to taxes will apply to this area. The health charge, the PRSI and the tax will all be collected together as one sum, and will be pursued together for administrative purposes, which is very important. The Revenue Commissioners have often said in the past that their real difficulty was that amounts of VAT or PAYE to be collected were very substantial, and they were pursuing them separately. They said they would devote their manpower resources particularly to administratively and legally pursuing those amounts. They would then have to go through the whole process again for the PRSI contributions. Under this system, these charges are being combined. It is an integrated system and will have all the penalties that go with the self-assessment scheme and, as the Senator knows, there are substantial penalties there.
There are interest penalties on late payment. Where a taxpayer fails to remit a minimum of 90 per cent of his annual liability within one month of the due date, that is by the end of October, an interest charge of 1.25 per cent per month is applied. Where the taxpayer fails to submit his return of income by 31 December, a surcharge of 10 per cent of his liability is imposed. There are appropriate fines after that, and they will apply to the contributions coming under this legislation which will be paid in one amount. It is a very interesting and important development on collection generally and it will have a major effect on the amounts of money collected and on the efficiency of the collection.
I welcome the Minister's remarks and I can see his reasoning for suggesting that this amendment is not necessary. Did I hear him correctly that in addition to PRSI and other tax, health contributions are to be included in the package?
Yes, in the same package.
That is an anomaly in the present system because the Revenue Commissioners send out seperate bills. We talk here about the benefit to the Exchequer and trying to make sure the scheme works, but what do we hear when we talk to the self-employed? They tell us of the different tax bills they get for varying amounts, assessments and otherwise. It is so confusing that they throw up their hands in despair. I am delighted that the Minister has confirmed that whoever is dealing with this will deal with it as one package and cut out some of the confusion that abounds for the employers, the self-employed and farmers. Up to now the farmers' experience was of somebody — a rate collector — walking into their garden looking for the money. When that happened the farmers paid 99.8 per cent of all their charges because they had a relationship with the collector. If they get a notice in the post it could be put aside to be read when the cows were being milked, but if a cow started to calf the letter might never be read. When the rate collector walked into the farmhouse a pot of tea was made for him and when the poor story was told arrangements were made for the payment of the rates. In all cases the total amount was paid by the end of the year. However, it has taken the rural people some time to adjust to the new system.
Major anomalies have arisen in regard to health contributions with the result that health boards are bereft of funds and have had to close hospitals. I am glad the people will receive one bill covering all levies in future. Will that bill be sent by the Department of Finance or the Revenue Commissioners?
The Revenue Commissioners.
I hope they pass the money on to the Minister when they get it.
We will be looking for it.
Under this section a person who becomes a self-employed contributor from 6 April onwards and who at any time prior to that was an employed contributor will be given credit for past contributions.
The section gives a choice of date of entry. In order to qualify for the maximum old age contributory pension the claimant is required to have a yearly average of 48 contributions from the beginning of the contribution year in which he entered into insurance to the end of the last contribution year before he or she reaches pensionable age. Many self-employed persons who would become compulsorily insured on 6 April 1988 would have been previously insured by virtue of their employment at an earlier stage. The section aims to give the choice to that person. We are trying to avoid anomalies as existed in past arrangements, for example, those that arose in 1974. It is a benefit in that contributors can have a choice.
This section deals with amounts payable for injury benefit and unemployment assistance. The self-employed in this scheme will not qualify for unemployment assistance but if they are injured in the course of their self-employment will they be covered?
No, they are not covered. There are difficulties of definition in regard to this and I have asked the National Pensions Board to consider that matter. The cover at present includes widows and orphans and cover for old age pension purposes but does not include occupational injury.
A lot of hassle is being created in regard to injury benefit. The Minister is investigating those who are on injury benefit and having them brought before doctors. Will a person who pays voluntary contributions be entitled to the same benefit as those who pay the full contribution?
The simple answer is "no". It is a separate employment related occupational injury scheme for voluntary contributors. Senator Ferris was concerned about general invalidity benefits and that matter is being examined by the National Pensions Board.
I am concerned about the people who pay voluntary contributions but who do not opt for the scheme covering the self-employed. Many people availed of the opportunity to pay voluntary contributions and have gained in regard to occupational injury and disability benefits. I would like the Minister to clarify their position because there is not a lot of information available about it.
Voluntary contributors are not covered for invalidity or occupational injury benefits. If they are self-employed they will be brought into the system from now on and will contribute at the new rates. Those who are entitled to benefits under the present scheme will retain them under the new system. Being such a kind Minister for Social Welfare I do not consider those benefits should be taken away from them. They would retain their credits but they also have cover for deserted wives allowance and so on which are not included in the scheme for the self-employed. They will be treated very well under the new arrangement.
That is what I wanted to hear. Will they gain any benefits? We must consider those who paid voluntary contributions, not the self-employed but those who are employees of the State who are not covered by the PRSI or social welfare system. Those people were liable for a small contribution but they obtained certain benefits. If my memory serves me correct they paid in the region of £7 annually at the outset and that figure was increased by a small amount over the years. A voluntary contributor, if he becomes a self-employed contributor, will cease to be a voluntary contributor. What is the position of those employed by the State who are not covered by social welfare but are voluntary contributors? What benefits will they gain under the new scheme? I am sure that some people who are paid high salaries avail of this scheme.
If they have been voluntary contributors and are self-employed they come within the provisions of this system.
If they are employees?
We are not making any change in relation to them at present. The changes being effected are to meet the circumstances in which a voluntary contributor is now being brought within the provisions for the self-employed; where they are at present self-employed we are bringing them within the provisions for that category. Normally they would have been paying at the rate of 6.6 per cent — adjusting the limitation on benefits available under this system — that is in relation to widows and orphans and old age pensions. They will be credited with the contributions they will have made in the meantime.
I think the Senator is talking about people who might have been employed in the public service and then became voluntary contributors, thereby keeping alive that pension by way of voluntary contributions. But that is a different question beyond the scope of what we are dealing with here although it does fall within the scope of the whole question of a national pensions scheme. The National Pensions Board are examining that question at present. In 1976 there was a report on a national pensions plan. In 1978 there was a Green Paper published on a pensions scheme for the self-employed. In 1982 I prepared a draft White Paper on a national pensions plan. In the meantime the National Pensions Board was established and nothing has happened since.
When I resumed office in the Department I wanted to proceed in that direction as rapidly as possible. The category contributing the bulk of the £331 million expended by the Exchequer per annum was that of the self-employed. For that reason I asked the National Pensions Board to omit that area and report generally. That report was published at the beginning of January last, having been made available to the media, both Houses and so on. Strangely enough, the final published version will be available this evening and generally available within the next couple of days. I regard this as a priority area because we appeared to be getting completely bogged down in dealing with the matter nationally. Therefore, I extracted this area and had it dealt with as a matter of priority. Meanwhile the National Pensions Board are examining the whole question. It is in that context that other questions, such as those of retirement conditions, invalidity payments and other sectors, including the public sector, fall to be considered.
The Minister has made a very good point. I appreciate that he is endeavouring to bring more people within the provisions of the system overall. Would I be correct in saying that as from 6 April next — when the payments fall due — any voluntary contributor with more than 156 weekly contributions would be eligible for the full benefits?
Only in so far as they would be eligible for the pensions, that is widows or old age pension. It does not really change their entitlements. In fact it somewhat limits their entitlement because, for instance, they would have been eligible for deserted wives' benefit.
I an endeavouring to establish from which angle the Senator is arguing, whether he is worried about more or less expense.
More benefits. It is possible that people employed in the public sector who had paid on a voluntary basis, for example, in health or education — because of the benefits they will now receive by way of redundancy payments — would gain because they would have had 156 weekly contributions paid. Am I correct in that contention?
No, all they could do is continue to have the entitlements they had heretofore if they are now self-employed. If they had taken up the voluntary contributions themselves, having left insurable employment, they would have continued their entitlements to these pensions. The only difference is that, if they are now self-employed, they will be eligible for the provisions of this system and will have to be considered.
I might pose a slightly different question. Earlier, when responding, the Minister confirmed that the self-employed can qualify for widows' and orphans' and old age pension only. How many contributions will be required on the part of that category to be eligible in future? For instance, this year if a person has eight or nine months only left in self-employment and is contributing will such a person now qualify without being subjected to a means test, or is there a prescribed period stipulated within which they must have been contributing? I know the answer but I want the Minister to tell me.
The conditions will be the same as those applicable to others, for instance, to employees. If they enter, as it were, fresh now they will require four years' contributions to qualify for a widow's pension, ten years' contributions to qualify for an old age pension but if they had a record of previous contributions they would carry that record forward with them. That would mean that, had somebody already established a previous five years' contributions, they would require only another five years to be eligible. Some people might already be eligible for widows' pension, or would have two years contributions paid and would require only another two. All of these different permutations within the system have all been taken into account in the actuarial studies and costings.
The Minister mentioned a requirement of ten years' contributions for eligibility to old age pension. I can tell him that he will experience the gravest difficulty in getting 58 year old self-employed persons to make any contribution because there would never be any benefit accruing to such people. I take it the Minister recognises that fact. Such people would be subjected to means tests in order to qualify. How has the Minister addressed that problem?
Certainly I will not address that problem on this section.
The Minister did respond.
It is interesting that Senator Ferris should mention that. In fact several Deputies mentioned similar cases. One such case cited to me was of a person aged 58 who had suffered two heart attacks who was pleased to learn that she would be eligible, within a reasonable period for widow's pension. Of course, that entitlement will continue as well.
It has always been a matter of considerable debate at estimates meetings of local authorities that they should have to contribute part of the cost of unemployment assistance schemes. I am glad the Minister is now taking up this matter in the Department. I hope it will mean a real saving to local authorities and that his colleague, the Minister for the Environment, will not reduce the rates support grant as a result. I ask him to try to ensure that will not happen.
I have been told local authorities will not benefit. Under the 1970 Act, the health boards accepted responsibility for regionalisation of the health services but they allowed the community care programmes to operate at county level. The home assistance officials and the rent collectors operated as part of the community care team. Therefore, a person employed by the local authority was also working for the health boards. On that basis, the Health Act allowed charges to be made against local authorities for the distribution of home assistance or supplementary welfare. That has now been transferred to the health boards but the county council estimate has not benefited. We were not allowed to include it as a legitimate rates charge but there was no evidence of any improvement in the rates support grant to the local authority to balance it. It has also had the effect of reducing the amount of supplementary welfare being paid to special categories, which were normally confined to non-contributory pensioners, widows and old age pensioners. The county council, through their supplementary welfare system, used to assist these people but that is not now the case. Payments which amounted to perhaps £5 have been withdrawn by the health boards as they are pleading inability to pay, God help us.
We ultimately provide the money for the supplementary welfare allowance and we do not put any limit on the amount. Changes are being made here and if Senator Doyle and Senator Ferris do not tell the Minister for Finance about them, I will not tell him. If nothing else, it will be an administrative benefit. It is an anachronism but it may have side benefits. Deputies and Senators have called for this over the years and it is a step in the right direction. Total unemployment assistance payments at present amount to £418 million and this payment will only cost £500,000, which is very small by comparison. It will be paid from 1 January 1989——
Will the Minister's Department still be responsible for the payment of supplementary welfare?
The Minister referred to a sum of £418 million and to the fact that they make refunds to the health boards who make the payments on behalf of the Government. I am worried about the conditions to which people are submitted to get this breadline money. It is difficult enough to have to submit to a means test but it is worse to have to bare your soul in premises which are not designed for privacy. People are subjected to critical public analysis in front of others about why they are in difficulties. They are interrogated by supplementary welfare officers and people prefer to go to moneylenders before they go to the supplementary officers because of the lack of privacy to which I referred. Conditions in some towns are unbelievable and the criticism arising from this should be addressed. We are talking about people in real trouble, perhaps their cheque has not come in the post and at times their children are hungry. Their position is certainly not made easier by having to go to a supplementary welfare officer to make a case within earshot of 20 other people who all talk about it afterwards. It is a dreadful system which should be remedied.
The supplementary welfare allowance scheme is operated by the health boards and we give them the bulk of money required. As I said, there is no limit on the amount and it is operated by community welfare officers. The total expenditure on the supplementary welfare allowance is £44 million. Senator Ferris was highly critical of unemployment assistance payment levels and supplementary welfare levels. In an earlier section, we increased the levels for those on the lowest payments — unemployment assistance and supplementary welfare allowance — by 11 per cent plus a 6 per cent increase for the children of those beneficiaries. That has had a major impact on the allowances to which I referred.
I will be speaking on Schedule B when we come to it.
An additional £30 million has been provided for the payments the Senator mentioned. A 3 per cent increase would have cost £23 million and we are providing £53 million for those two categories to increase the single personal rate, at urban level, from £37.80 to £42 per week. We are also providing additional increases for the children of people on supplementary welfare or unemployment assistance. We did this because the increments for those children were the lowest in relation to all the schemes. Quite an amount has been done on this occasion for those people and it will have an impact. At a time when resources are very limited, we have directed significant additional funds to those on the lowest payments who are officially classed as poor. It is important to recognise this. I open the newspapers every day and I read that something should be done about the poor. We have now given substantial increases of course, we would like to do even more but we are helping those officially recognised, by means testing, as the poorest people. I know there are all sorts of other poverty traps but these are the greatest numbers affected and on the lowest payments. That is being tackled at present in a fairly substantial way through the increase which has been given. I would like to get across the point that certainly these account for a major part of the poor at present, if not the major part, and they are receiving these increases. Whatever about making further improvements in the future, there is no doubt that these are exceptional and substantial increases which are being given at a time when resources are very limited.
The Senator also referred to the matter of privacy and the interviewing procedures. It is our intention to have these interviews carried out as privately as is physically possible. In the social welfare area we are arranging for the faster treatment of claims and assessment of claims across the counter with a follow up checkup afterwards on selected claims. We are trying to speed up that process to reduce the numbers going on to supplementary welfare for those reasons. I would like to assure the Senator that my efforts will be directed towards reducing those numbers coming across and to providing privacy and suitable premises. The Senator will see that increasingly we will be providing these through the country.
There is the question of discretion when interviewing and there has to be discretion when interviewing in regard to the supplementary welfare allowance. We have all sorts of schemes to provide for all sorts of situations and there is discretion in the fall-back one. Obviously, the community welfare officers have to ask questions and have to determine the position and this, I have no doubt, is not an easy task for them. I know that in some cases people are not treated as well as they should but by and large I think they are treated well. I accept what the Senator has said, that in some cases they are not. Obviously, it is open to abuse and this is something they have to deal with day in and day out.
The Senator also referred to moneylenders and in this regard he may be aware that we have asked the Combat Poverty Agency to carry out a specific and special study on moneylenders with a view to breaking their grip in this area and providing a means whereby people will not fall back into that trap. That report is due out in September. I regard this as a very serious problem and in so far as I am responsible I want to do what I can about it. Obviously, the control of moneylenders is a matter for the Department of Justice but the problems that arise are a matter for us in the Department of Social Welfare and we have taken those in hand and are dealing with them. We are consulting with the various bodies involved on a regular basis. I am very familiar with this problem from my own experience on the ground.
I thank the Minister for his comprehensive reply to the points I have raised. As he is aware I spoke from experience as a public representative who has to deal with people who have to go through this process. As he rightly said the supplementary welfare allowance is discretionary and could be open to widespread abuse. Therefore, a certain amount of investigation is required. What I am suggesting is that to come to grips with the problem in regard to moneylenders a new brief will have to be given to community welfare officers so that they will have to have regard to the special circumstances of those who come cap in hand in real difficulties.
Whatever questions are required to be asked should not be asked in a public place which could and does cause embarrassment for the person concerned to such an extent that it almost creates a disincentive for this person to go to claim. This is the last port of call for people in difficulty and I would like to think that when people find themselves in such difficulties they would have a friend they could turn to who would at least listen sympathetically to them and ask whatever questions are required and then make a decision. Our job as public representatives would be made an awful lot easier because at present we have to go to the superintendents of the community welfare officers concerned and others to deal with these cases. I could talk for hours about the attitude of some community welfare officers to people in this category. It is easy to be high and mighty when investigating people who are on the bread line but these people are in difficulty. I have no doubt that they have to be investigated and interrogated — if you want to call it that and that is what most of them consider it to be in any case — but I am suggesting that this investigation should be carried out in the most humane way possible. A bit of privacy would ensure this to a large degree.
The points which the Minister made in reply to Senator Ferris are valid and I know he is very aware of the problems in regard to social welfare. Supplementary benefit amounts to £44 million a year. Last Saturday morning in my local clinic I met a person who was investigated by the employment exchange and as a result had his benefit removed. He is a deserted husband with two children. He was told by the local exchange that he would have to go to the community welfare officer and that he was not available for work. They did not say they had work for him, or that he must go and look for work. They just said he was not available for work, which is very questionable, but that is another argument.
I think the Minister is finally recognising that the local unemployment exchange or labour exchange should be renamed because in another part of this Bill he recognises that anybody over 60 should not have to go to the local employment exchange to collect money. The vast majority of people, whether we like it or not, who go to the local exchange at this time do not go looking for work as the exchange cannot offer it; they go looking for money. They sign once a week and they receive their money. Investigations are constantly taking place to make sure that people are not working and drawing benefit at the same time. There is also an answer to that which I outlined last Friday.
How did we bring about a situation where one person on one side of a counter must say with embarrassment to a person with two children and no wife that he is not getting any money and instead gives him a bit of note and tells him to go across the road to the other side of George's Quay to ask for supplementary benefit? When he goes there at 2 o'clock on a Friday he will receive £17 to keep him going. That is not caring, nor is it providing a proper system. How can the Minister say that he must give £44 million to one body to assist a person who has already been told by another body that he is not going to get any money from them but that if he goes across the road he will get it from another person in another office? That is ridiculous. Why can he not be assessed in the one room at the one counter? Even if he is being investigaged let us give him so much in the meantime to keep him going. Why can that not be done, without cutting him and his children off and saying he must go to a community welfare officer?
We are dealing with section 26.
Which deals with that particular payment.
We should not swing back to Second Stage speeches.
I would appreciate it if there was a general discussion on welfare and then we could go through the Bill.
Yes, but I cannot allow that.
I appreciate that.
We are going to have a problem with the first item when we come back.
The Minister has been broadminded enough in his discussion. He has been very constructive and we are all trying to do the same. The points he made are very valid. He recognises that people are getting benefits, that people are entitled to benefits but that there is embarrassment and hassle regarding supplementary benefit in particular. That is an area that you, a Chathaoirligh know as well as I do is an embarrassment to people who are quite prepared to borrow from certain people and pay substantial amounts of interest rather than go through the hassle of going to the welfare officer.
Senator Cregan, I understand it equally as well as you and Senator Ferris but I am trying to clear section 26 of this legislation on Committee State.
I am quite prepared to sit down but I will be standing up again to discuss this matter.
In his response to Senator Ferris's contribution on this section the Minister alluded to the fact that he was providing for as much privacy as possible and, as soon as is feasible, for interviewing at unemployment exchanges. That is one side of the coin. I heard yesterday about a married man with three children being asked by officers of the Department who were in the area interviewing all those who were signing for either benefit or assistance why he was not going to England looking for work. A single man also told me that he was asked why he was not going to England looking for work. It was also alleged to me on this occasion by a second party — who was not present but had heard it second hand — that people are being asked at these interviews if they knew of people who were signing for either benefit or assistance and working at the same time. I welcome the Minister's assurance about privacy but some matters come close to harassment and these incidents which were described to me yesterday concern me greatly. The Minister is to be complimented on moving down the road to improving the level of payment to long-term unemployed people but long-term unemployed people should not be treated in the way I have described by officials of the Department.
I ask for a small piece of information on the supplementary welfare payment which I think the Minister said was £44 million. This is the lowest payment made to people who are really destitute and at the end of their wits, I suggest. What was the previous year's allocation to this fund?
To answer the last question first, since it is easy to answer immediately, it was £40 million. It is £44 million this year. That is the estimate.
Senator Cregan raised a question about deserted husbands. A deserted husband, under the legislation which the Senator, I and our predecessors provided here in this House would be excluded because technically he obviously is saying he is not available for work because he is a deserted husband and has to mind the family. In some cases that may be allowed to run and nobody raises the question. He would then be technically covered under supplementary welfare instead. However, this raises the wider question of allowances and benefits for men as well as women. This is a case where women have the benefit and men do not have it. That is for future consideration because it is a problem, limited as it may be at present.
On the question of what the supplementary welfare officer gives, initially the supplementary welfare officer must have considered that there was some other source of income because it is directly related to the means at the time. I do not know because one would have to go into each individual case to find out the circumstances.
It is not out of their own pocket anyway.
Senator O'Shea raised the question of the importance of having privacy as soon as possible. I agree with him on that. In relation to the married man with three children and the allegation that somebody asked him why he was not going to England, at first hand I can only assume that is probably a misinterpretation of what was said during the conversation. I have often heard people talk about something and then say that all they were interested in was whether you were going to England. That question would be outside the officers' competence and would not be part of the requirements. It should not have been said, if it was said. If the Senator gives me the information on the case I will look into it. The advice we would give to people in that respect is to be sure to have a number of things in order before they contemplate going abroad, for instance, that they know someone they are going to, that they have a job nominated and that they have somewhere to stay. We put a good deal of time and effort and will be putting more into that area to ensure people are well advised if they themselves make such a decision. That is another question. It would not be part of the interviewing in relation to a person's eligibility for unemployment assistance here.
The Minister might like to explain what is meant under "Chapter 2A Pre-Retirement Allowance." This is a new concept of payment to people who had prior to this been on long-term unemployment and still had not reached retirement age. It is intended that one payment would be stopped and the person would qualify for the other on the understanding that he or she would not be taking up work and would not be available for work but would not be investigated, and the provision would come into play when the person reached a certain age.
The Senator has described it fairly well. It is part of the arrangements for flexibility for people who are a long time on the register of unemployed. Most people will agree, as the Members of the Dáil agreed, that it was a civilised development in our current circumstances. It is totally optional. Senator Cregan will be glad to know it will be done by book so the embarrassment he was concerned about in other cases would not apply. In other words, instead of having to sign on and come under all those provisions, one would have a pre-retirement allowance book. The condition would be that one could not enter into insurable employment, and anything one might do would have to be of inconsiderable extent and so on. We are thinking of people who have reached the age of 60. It would give an option to some such people. A person living in a place such as a village may find no great difficulty in getting in to sign on but people further out must travel and on the outskirts of Dublin and other places that might cost £1.80 a week.
It is harder in the country.
It is harder in the country. We try to make arrangements with the local Garda stations. The cost of having to go there is then a deduction from the amount the person is getting. Senators will appreciate that it is particularly difficult if you are over 60 and trying to seek employment and also to comply with all the conditions. Such a person may be interested in mending a window here or there, or cutting grass and should we really be worrying about that sort of think if it is inconsequential? The economy can manage to run without getting unduly upset over that kind of arrangement. I think it would provide some dignity for those people and we will see how it goes.
The Minister said I would be satisfied with the option but the argument I made on Friday last was quite the opposite. We are recognising at long last that the retirement age in this country will be 60. If we are to give any fair option of employment to the young people we will have to say to people who are already employed in State and semi-State structures that they should retire at 60 even though it will cost us a lot of money. There are many people who will avail of that option. How do we assess long term unemployment? What is the assessment? Is it six months?
If you become unemployed on the day you are 60 will you get this benefit?
The day you are 60.
If you become unemployed, after 15 months you will get the book. You can take the book and do anything you like, for example gardening, and get £4 or £5 an hour while there are young people with no jobs. Every opportunity must be given to the unemployed person to get work legally. I have no objection provided it is legal. I know this matter is not within the Minister's brief. We cannot discuss it here because it is a matter for another Minister unfortunately.
I do not like the idea of the optional book. We are telling people: "You are old. We do not need you. Go to the local post office and draw your benefit." They could be very good and busy people. I spoke to a person a few days ago in a manufacturing plant and he said that the person over 45 years is the better manual worker. From a technical point of view he may not be, but from a manual point of view he is. That has been proved in a particular plant. I am surprised that our younger people are not prepared to consider the idea of manual employment.
I recognise that the Minister is trying to shorten the unemployment list. How many people over 60 will now be taking the book and will not be on the unemployment list? They will be on a pension list. They will not be eligible for employment and they will not be recognised as unemployed. That is an area that is questionable. Some people who are long term unemployed constantly go to the employment exchange and I would much prefer if they did not go there. There are areas with which I agree and there are areas with which I disagree.
This is the trouble with innovation. You have to start sometime and someone has to stick his neck out. I am prepared to stick mine out at this stage. I could go on wondering about all these things. I judge by my own expertise. It is optional. People in that group must prove that they are actively seeking and are actually available for work which means that they have got to be looking for work all the time. I know that for people in that category there is very little work available. You will find individuals who will have work available to them. The total number on the full rate of unemployment assistance, which is the category I am thinking of, is only 3,000. It is not likely to have any earth shattering effects. It can be reviewed as it progresses. If we are to create flexible arrangements for people in part time employment, for instance, suiting employers there is always a problem with doing anything different. If we stick to the same rigid scheme all the time no one will be able to criticise us for ever doing anything different. I am trying to do a number of flexible things in the circumstances in which we find ourselves at present and that is just one of them. It is welcomed by people in that area and the reaction to it generally has been favourable.
There are 3,000 on unemployment assistance. There are more than 3,000 people over 60 on social welfare. This is a very good Bill. The Minister has recognised that there are many problems in his Department and many problems in the system of payments. You get less on unemployment assistance than on social welfare. A person on social welfare who has been using the system for the past five or six years gets a very good benefit in comparison to someone on unemployment assistance. That is what I see is wrong with the system. The Minister is spending £7 million a day but some people are getting too much and others are not getting enough. That is where I would like to see changes. These are the areas the Minister must recognise. The person on unemployment assistance goes to the exchange every week in the hope of getting a job somewhere. There are a lot more than 3,000 people between the ages of 55 and 65 who are not working. They are on social welfare and they are drawing bigger benefits. They should all get the same amount of benefit.
The Minister is right to have courage in this area. The innovation in this scheme is to be welcomed in general. First, it is an optional scheme. If somebody over 60 still wants to be in the workforce and is making an effort to get employment he can draw unemployment benefit. There is nothing to stop him doing that. I am concerned that there may be a small anomaly because paragraph (b) refers to a person who has been in receipt of unemployment benefit or unemployment assistance for not less than 390 days.
If people go on to this optional pre-retirement allowance directly from unemployment benefit, obviously they will lose money because the payment of unemployment benefit and unemployment assistance is different and is means tested. I would like confirmation that if people went into this scheme directly from unemployment benefit when they were still in credit, their payment under the pre-retirement allowance at the age of 60 would be greater than that of somebody going directly on to the dole. That is the only anomaly I can see. I think it is a great scheme.
You can go from unemployment benefit to long term unemployment assistance if you have been unemployed for the required period.
I know there are disadvantages, you lose money.
The people we are talking about here would be those who have been means tested.
They would not be means tested on unemployment benefit. In regard to the first category mentioned in subsection (b) "who have been in receipt of unemployment benefit", if they were in receipt of unemployment benefit last week they are still entitled to it this week, but if they opt to go on the pre-retirement allowance you are going to give them dole rate instead of unemployment benefit rate for the pre-retirement allowance.
They would have exhausted their unemployment benefit and would then go on to unemployment assistance. It is only an allowance scheme. It is a pre-retirement allowance specifically, so it is an allowance scheme. They would have to be assessed for allowance at that stage in any event because it would be at the allowance rate.
You will eliminate the category I refer to and they will continue to draw benefit?
Yes and then they go on to draw the allowance.
While I have many reservations abvout certain sections of this Bill, this is one section I welcome. Will the Minister indicate how many people will now benefit by the removal of the anomaly in the present scheme? How many people will qualify for pensions who did not qualify because of the anomaly in the averaging system?
The number of people who would benefit would be 1,250 which is the figure now remaining. The cost would be over £2 million in a full year but it would come down as time goes on. It would cost £600,000 for the rest of this year from 1 October. That £600,000 is being met by savings which we have in the Department, mainly arising from stemming abuse and unwarranted claiming.
This Schedule deals with the various rates of payments which come into effect in July.
As I have said before, I do not like interrupting any of my colleagues but we dealt with this in detail on section 3. I will not curtail discussion now on the Schedule but I would appreciate if we did not have repetition.
I had put down many amendments which would have allowed a wider debate, but according to the rules of the Seanad you had to rule them out of order. Therefore, I have to deal with Schedule A which deals with the rates of benefits. I take it I can debate them because this is the Committee Stage of the Bill.
The Minister has kept on reminding me about the improvements in the Bill which will come into operation in July. Previously, the Minister was worried about that date because he felt it should have been March or April. However, he came down in favour of July, and I have to accept the reasons he has done that. In line with the national pay agreement and the Programme for National Recovery there is a commitment to retaining the levels of increases in line with inflation. In some areas the Minister has bettered it, particularly regarding some of the lower categories, for example, the rural unemployment assistance. The Minister has done more for these categories as a general principle.
However, I have got a lot of complaints from women and single women, in particular, that this budget seemed to have totally disregarded their problems. We should address this specific category because this allowance is an extremely difficult one under which to qualify. Not alone is there an age limit, but there is a means test, which almost ensures that one has to stand out in the middle of the street without a roof over one's head to qualify. It is extremely difficult to qualify for it. The categories of people who qualified were usually the people who were in the prescribed relative category. They never got anything for staying at home, they are now spinsters and at an age where they do not qualify for the pension and are getting the pre-pension allowance for the single women. I am not satisfied we have addressed their problem correctly. They should have had a considerable increase given to them, in view of their special category.
They are mentioned here in one of the sections but the Minister, I am sure, will be able to address himself to it as well. Perhaps he would agree with me that this is a special category. The cost to the Exchequer would have been minimal because of the number of people involved. It is an area that has been neglected and I feel we should have addressed it.
I would like to make a few points, but I will not delay the House too long. I congratulate the Minister on the increase given to single people. It was recommended in the social welfare report. There are many problems for people who are living alone, particularly men. I am aware of Senator Ferris's point as regards women who are not getting proper recognition. I will make a general point with regard to the moneys that are being spent. I will make some comparisons which the Minister might consider at a future date.
A single person is getting £42 — which is not enough — but is an 11 per cent increase in comparison to the others. Some of these people are in a dire situation. They are paying high rents to landlords of £15 and £20 a week and they have to live on the rest. The Minister is aware of this. Let us go down through the various categories. The categories have been cut from six to four as regards children. Why do we not have one type of benefit?
Senator Ferris made the point with regard to the person who is not prepared to retire at 60 because of the difference between the rate of unemployment benefit compared with unemployment assistance. The benefit and assistance are two different rates which is crazy. That person should get the same amount. Why does a person have to go to a doctor? The doctor gets money from the State if the patient has a medical card, and because he signs on at the exchange he has a medical card. The doctor gets the money, we pay the doctor every month and yet the person gets more money from us because he is on social welfare.
I gave guidance to Senator Ferris. I wonder was Senator Cregan listening?
There are two more areas. What is the difference between a person of 80 and 79? What is one year? There is a big difference in money and I do not know why. The fact is that of the vast amount of money from DIRT tax, some come from old age pensioners who do not spend money. They save their money and they leave it after them. Some do, but unfortunately enought of them do not. Why do we give an allowance to a person over 80 years of age with dependants? Why do we bring in these categories? I will give an example of the case of a husband and wife with three children on £98 a week and a husband and wife over 80 years with £110 a week and they have free fuel, free electricity, free travel and free television.
Senator Cregan, you are back to section 3.
I apologise. All I am asking is that we bring in a system where we recognise everybody as equal, including the lady who gets nothing.
I have to inform the Senator that there are people over 50 years of age who marry people aged 20. The social welfare system is very broad and comprehensive and it has to cater for many different circumstances. In regard to a point made by Senator Ferris, by bringing forward the increase from November to July, as we did last year, it means a considerable additional expenditure. We are maintaining the July date in the current year and at the same time making the other improvements. This is satisfactory in the present circumstances. Obviously, my primary objective was to make increases in the system. As the Senator knows, once those increases are given they are there for all time.
We have given some extra increase to single women. That payment will now be £42 which is similar to the rate of unemployment assistance. We took the opportunity to increase the amount by more than 3 per cent. The Senator mentioned that we are introducing a sort of pre-retirement age of 58. In a way that is true and it makes one wonder about the position of men in similar circumstances. These are matters which could be considered in the future. When dealing with equality at that level here are many ramifications.
Senator Cregan welcomed the increases and I thank him for that. We will be trying to rationalise the different categories. The trouble is that if we rationalise them upwards it would cost more money and if we rationalise them downwards people would be very upset. The Senator mentioned unemployment benefit and unemployment assistance. The difference is that the rate of unemployment benefit is higher than that of unemployment assistance. The pay-related benefit applies in terms of unemployment benefit. It is a right irrespective of any other payment a person gets. In order for a person to receive unemployment assistance his means are assessed. A person on unemployment benefit may have some savings, for instance, from which he gets interest but that does not affect his benefit. The benefit is limited in duration to 15 months. Nevertheless, it is an assistance for that time. The advantage of all these benefits is that people get them irrespective of their means.
Senator Cregan raised the question of the difference between 79 and 80 years of age. I hope some day the Senator will be able to come back and tell us the difference. I am sure that is a difference but we decided that 80 years of age would be an arbitrary level. Obviously people of that age are in need of a great amount of heat, as the Senator has said. It is certainly a very big requirement at that age and the fuel allowance for the winter months would not cover their needs.
A person of 79 years of age has the same needs.
The Senator will have to wait and experience the difference between those two ages. If I am fortunate enough to experience the difference myself I might be able to talk on the matter with greater wisdom.
We will certainly be rationalising the schemes. As I mentioned earlier, the increase in child allowances cost £9 million. When the Minister for Social Welfare wants to give increases totalling, say, £101 million in a full year, at the same time he has to consider rationalisation because all those increases cost money. I am sure Ministers for Social Welfare over the years would like to have done many things that seemed logical but the extra cost was always a problem. Notwithstanding the current circumstances, we have managed to do a number of these things this year.
Although it is difficult in this House to make amendments to a Bill which creates a charge on the Exchequer, we still managed to put down some amendments which the Minister was able to debate with us. The Minister's response to the debate will be of use to us when trying to explain to people the differences that the passage of this Bill will make to them and the changes that will take place in the area of social welfare as a result of it. I thank the Minister for being forthcoming in his response to the debate, even if the Chair felt at times that we were straying slightly. The response added to the quality of the debate and it has remained us of the improvements that will be made as a result of this Bill. I hope the public, when they read the debate on the Social Welfare Bill, will benefit from the discussions that took place today in the Seanad.
I also wish to thank the Minister. The discussion was very wide and constructive and the Minister was very open and fair and was prepared to listen to our comments. Since the last time he was in this House he has made improvements to the Bill and I congratulate him on that. I am sorry that he has so little money and so much to do. He is keen to make improvements and I congratulate him in that respect.
I thank the Senators for their contributions to this debate. It has been a very searching a very useful discussion from my point of view. This is a major Bill. The debate indicates how important it is. It includes the extension of social insurance to the self-employed. That is a major development. We are taking positive action to direct additional resources towards those who are clearly identifiable as the poor in our society. In my contribution I have elaborated on the collective system to an extent which I was not able to do in such detail previously. It is very clear what is going to happen on 6 April and I have given that information to the Senators today. The changes in relation to company directors and Schedule D taxpayers are taking place at present so that the scheme can be implemented from 6 April.
I would like to place on record my appreciation of the work done by the staff in my Department who have a huge task before them. I also thank the Revenue Commissioners who have been very helpful to us in regard to this extension of PRSI to the self-employed. This scheme also includes provision for pro-rata pensions, pre-retirement allowance and a number of other features. This is a very valuable Bill. In conclusion, I thank you, a Chathaoirligh, and I thank the Members of the Seanad for their contributions and for being so helpful to me during the course of the passage of this Bill through the House.