For the convenience of Senators, I have two versions of my speech. I have a short version, to allow me keep within the time allocated, and a slightly longer version which will provide Senators with more information on the matters I will refer to.
This Bill is an important piece of social legislation. Its primary purpose is to give effect to the increases in social welfare payments announced in the budget. However, it goes further than that. It provides for significant improvements in our social welfare services and continues the Government's policy of care and support for those who depend on social welfare. It provides for: the increases in social welfare announced in the budget; the extension of social insurance benefits to part-time workers; the introduction of pro rata pensions for people affected by mixed insurance; the extension of the carer's allowance to additional groups, and other provisions to improve schemes and administration.
Over the past four years we have targeted extra resources to social welfare recipients and families at work on low pay to give them a decent standard of living. We have taken steps to eliminate anomalies in the system introduced many new caring schemes. In short, we are making our social welfare services more flexible and more responsive to the real needs of people.
The new Programme for Economic and Social Progress has set the agenda for social welfare during the nineties. It sets out to meet the needs identified by the Commission on Social Welfare. Over the term of the programme, the Government are committed to improving the level of payments to the tune of £400 million in 1990 terms as the resources of the economy grow. I am delighted that the first steps towards implementing the social welfare commitments in the programme have been taken in the Bill before the House today.
There has been a lot of talk recently about the incentive to work. It has been suggested that people are better off on the dole than at work. That is nonsense. Through our progressive social policy over the last three years we have raised the real standard of living of both the unemployed and those families at work on low pay. We have reached the Commission on Social Welfare's priority rates while increasing the incentive to work. The combination of increased child related tax exemptions, family income supplement and child benefit makes a very significant contribution to the incentive to work. As a result, a married person with four children earning £162 a week will now get an extra £13.30 per week. A person at work with four children earning £160 per week gross will now end up with £175.20 per week in cash. This is £44.20 per week more than if they were receiving unemployment benefit. The same family were only £22 better off at work in 1987 when this programme began. The incentive to work has, therefore, been doubled since 1987.
This Bill removes a major disincentive to work which existed for those on long term unemployment assistance. Senators will be aware that there are many seasonal jobs or short term work opportunities available for varying lengths of time. Many long term unemployed people are reluctant to take up these jobs because they lose the extra benefits associated with their long term unemployed status if they work for more than 20 weeks. I am now removing that disincentive. People on long term unemployment assistance can now take up jobs for up to 52 weeks and return to their long term payment without any fuss and without loss of extra benefits.
The extension of full social insurance cover to part-time workers from 6 April next is a further major incentive to work. I will deal with this later in my speech. The new area-based response to long term unemployment set out in the new Programme for Economic and Social Progress is a further initiative specifically designed to tackle the problems of the long term unemployed in black spot areas. It will ensure that a range of options will be available to the long term unemployed resulting in a greater possibility of a job.
The social welfare package in this Bill costs £164 million in a full year and £71 million this year. Gross expenditure on social welfare is now, for the first time, in excess of £3 billion per year.
The main improvements in rates are special increases of up to 11 per cent for those on the lowest payments; a 4 per cent general increase in all social welfare and health board payments while a new minimum child dependant allowance of £12 per week is being given to over 380,000 children of those on social welfare. We now have three rates of child dependant allowance whereas four years ago there were 36. In addition, the higher rate of child benefit, £22.90, will be paid for the fourth child onwards. This will benefit almost 400,000 children. Child dependant allowance will be paid up to age 21 for school-going children of long term recipients and the allowance will continue throughout the summer months where the child is not receiving a payment in his or her own right. As Senators will be aware, that allowance was normally stopped in June and the person had to reapply in September. It will now be continued throughout the summer months and if the child does not return to school in September it will be stopped.
The family income supplement paid to people at work is being substantially improved. A family with two children on £140 per week will get an increase of £7 per week in addition to improvements under the child tax exeption limits. School-going children up to age 21 can now be included and the restriction on the amount of payment based on family size is gone. The maximum personal rate for the carer's allowance is being increased from £45 to £50 per week while a new minimum adult dependant payment of £33 per week is being introduced for all unemployment payments and disability benefit, an increase of 6.5 per cent. In addition, widowed people and parents will continue to receive adult dependant or child dependant allowances for six weeks after the death of a spouse or child.
We now have the lowest inflation rate in the European Community, 2.6 per cent. Therefore, the general increase of 4 per cent provided for in this Bill would clearly keep those on social welfare ahead of inflation. This more than meets the Government's commitment to the social partners to protect all payments against inflation.
We are going further than this. Again, this year we are giving special increases of up to 11 per cent to those on the lowest payments. This is the fourth year in a row in which extra resources have been provided to raise the standards for the lowest paid. The personal rate of supplementary welfare allowance and short term unemployment assistance will be increased by over 11 per cent from July. Families on these payments will receive increases of over 9 per cent. As a result, some 100,000 people will benefit from these special increases. Families of those on unemployment benefit and disability benefit are also getting special increases ranging up to 7 per cent.
The main features of the new arrangements for part-time workers are social insurance cover is being provided for all part-time employees whose earnings exceed £25 a week; the condition under which employees are only insurable if working for 18 hours or more is being abolished. The arrangement whereby employers had to establish whether or not an employee was mainly dependent on earnings from that employment is also being abolished; part-time workers will now have access to the full range of social insurance payments. Benefits such as old age and retirement pensions will be paid at the full rate. Unemployment and sickness benefits will be payable on a pro rata basis to insured people earning below £70 a week; only part-time workers earning £60 or more a week will be required to pay the class A contribution of 5.5 per cent. Employers will contribute at a rate of 12.2 per cent in respect of each employee, an increase on their present rate of contribution.
In February last I signed regulations bringing 21,000 part-time workers into the protection of the social welfare system. Eighty per cent of these employees are women. I stated at that time that if employers attempted to reduce hours of work or wages in order to bring employees' weekly earnings below the threshold specified I would not hesitate to take action. Following discussions which I had with representatives of ICTU, SIPTU and the employers in the contract cleaning industry, it emerged that some employers were prepared to reduce employees' earnings below the threshold and that in some case this process had already begun. The effect of this action would be to deny workers these vital benefits and to undercut competitors. I am now reducing the threshold to £25 or more a week. I am confident that this threshold will reduce the scope for evasion and the effect of the black economy. As a consequence, the number of part-time employees who will benefit will increase from 21,000 to 27,000.
One sector largely affected by the new provisions is the contract cleaning industry. Thousands of women who work in this industry will now have access to social welfare benefits and pensions for the first time. The weekly cost of full social insurance cover to an employer at the threshold is £2.82 per employee per week. This is a small sum to pay to guarantee substantial insurance benefits for workers. I am very pleased to include these workers in the social welfare system in line with the commitment in the Programme for Economic and Social Progress.
I am delighted to tell you that we are solving once and for all the problems of people with a mixed insurance record. Pro rate pensions for persons who failed to qualify for old age contributory and retirement pension because of their mixed insurance records are provided for in sections 23 to 27. This initiative will be of great benefit to some workers, such as employees in CIE, who previously lost out on a social welfare pension when they retired. To assist the many people who may be wondering about their rights a freephone facility will be provided on this issue in April.
The Government are committed to the elimination of fraud and abuse in the social welfare system and to reducing the effect of the black economy. An extra £20 million of taxpayers money will be saved this year in a major crackdown on PRSI related fraud. The crackdown will involve: overhauling the PRSI registration system; and ensuring that employers comply with their PRSI obligations for their employees and the recruitment of additional staff costing £1 million to investigate firms and detect defaulting employers. Inspectors of my Department will carry out surveys on 15,000 firms annually to ensure that employers are complying with the law. Last year for the first time we carried out surveys on 2,400 employers. As part of the crackdown I recently announced an amnesty for employers and employees. I will not take legal action against employers who do not meet their obligations under the PRSI system on condition that they now come clean and make arrangements to pay what they owe and to bring their PRSI payments up-to-date. Similarly, employees and other individuals fraudulently in receipt of any social welfare payment will be immune from prosecution on condition that they now report to my Department and make arrangements to repay the moneys received. Already a reasonable number of people have come forward.
The increased investigations by inspectors of my Department will mean reduced opportunities for fraudulent activity in the future.
There has been a lot of comment recently about the alleged inadequacy of the carer's scheme introduced last November. Successive Governments shied away from a scheme of this nature. I was successful last year in getting the support of the Government in getting the resources necessary to get a scheme up and running. I made it clear from the outset that the scheme was aimed at people on low incomes. I appreciate that many other people also provide care, but we had to start somewhere. My next priority is to extend the scheme to people providing full-time care and attention to recipients of disabled person's maintenance allowance. I am now doing this in this Bill.
I have already given an undertaking that I will review the scheme. This review will include an examination of the means test provisions as they now apply. In addition, I also have in mind extending the scheme to members of religious orders requiring full-time care and attention. I am having this question examined by the Department at present to see if appropriate arrangements can be worked out. I will also examine the question of how we should provide for people who are caring for more than one incapacitated pensioner.
Apart from the social welfare scheme for carers there are a number of other provisions under the income tax code which are designed to assist people looking after elderly and infirm persons. For example, an incapacitated person's allowance is available whereby a deduction up to a maximum of £5,000 is allowable in respect of expenditure incurred in employing a person to take care of a taxpayer, or the spouse of a taxpayer, who is totally incapacitated by reason of mental or physical infirmity. The dependant relative's allowance of £110 is also available in respect of certain dependent relatives incapacitated by old age or infirmity. The income tax code does recognise the position of those caring for the elderly and infirm. I believe that there may well be scope for health boards to become more involved in provisions for carers. In reviewing our scheme I will be in touch with the health boards with a view to co-ordinating our approach to providing assistance to carers.
I would now like to briefly mention the main provisions of the Bill. Section 3 to 5 provide for the increases from July next in the various payments. Section 6 provides for extending the age limits for payment of child dependant increases with certain long term social welfare payments from 20 to 21 where the child is in full-time education. This measure will take effect from September. This section also provides that family income supplement will continue to be paid where the child is between 18 and 21 years and is in full-time education.
Section 7 increases with effect from July next the amount of family income below which FIS is payable and also provides for the abolition of the maximum payments which were related to family size.
Section 8 provides for the extension of the carer's allowance to the carers of DPMA recipients and those getting a pension from another EC state or a country with which we have a bilateral social security agreement.
Section 9 provides for the first time for the payment of an adult or child dependant allowance to be continued for six weeks after the death of a spouse or child. This recognises the burden which parents and widowed people have to endure following the sad loss of a child or spouse. It is intended to ease the adjustment in the early stages of bereavement.
The remaining sections of the Bill deal with a variety of issues: for example, the abolition of the seven year test for receipt of the maximum rate of unemployment benefit — this is a benefit to those who apply for that payment; minimum payment of £5 per week unemployment assistance for certain young people; customary increases in the earning ceiling for PRSI purposes, and no increase in the contribution rate; easing of contribution conditions from £48 to £39 for receipt of short term benefits; the standardisation of maternity provisions to take account of the new provisions in the Worker Protection Bill, 1990; reduction in the number of PRSI classes; measures to deal with the mixed insurance problem; measures to further control fraud and abuse; abolition of separate employers' occupational injuries and redundancy contributions; miscellaneous provisions, including the exemption of income derived from casual employment as a home help and from the Haemophilia HIV Trust Fund from the means test; provision of non-discriminatory measures for dealing with payments of supplementary welfare allowance, family income supplement and disabled person's maintenance allowance; and, finally various technical amendments to the Pensions Act, 1990.
This is important social legislation. It is the means by which we can ensure that the position of those dependent on social welfare is protected. In addition it allows us to continue the progress we made in the past four years in progressively improving payments and modernising the system. In that regard I would like to point out that in the period 1983 to 1986 those on unemployment assistance had a real increase of 5.9 per cent while, during the period 1987 to 1991 the real increase is 30 per cent. That is a very clear indication of the size of the increase and improvements that have been applied over the last four years. I note that some Senators are concerned about implementing the improvements suggested in the report of the Commission on Social Welfare. We have, in very large measure and in real terms implemented improvements recommended by the commission by providing far greater improvements and increases than were provided in the equivalent period before we came into office just four years ago.
We can look forward to the nineties with confidence in the knowledge that the social welfare system will continue to improve the standard of living of those dependent on it and meet the changing needs of society in Ireland today. There is a great deal more to be done but given the circumstances and the resources available, we have made huge strides over the last number of years. I am particularly happy that the Programme for Economic and Social Progress has guaranteed that social welfare will have a prominent place in the allocation of the resources which will be generated under that programme in the years ahead. I commend this Bill to the House.