I am pleased to have the opportunity to introduce this important legislation today in the Seanad. I apologise for my inability to be here earlier due to the fact that I had to attend the Order of Business in the other House.
This legislation is important because its essential purpose is to protect and improve the living standards of the 800,000 people and their 700,000 dependants who are in receipt of weekly social welfare payments. This year's Bill goes further than that. The public perception of the annual Social Welfare Bill can vary a great deal. Some see it, for example, as a technical piece of legislation which does no more than give effect to the general increases in rates of payment announced in the budget. Others see it as a statement of my Department's work programme for the year. Neither perception is accurate as far as this year's Bill is concerned. The 1996 Bill gives legislative effect to the improvements in the rates of payment announced in the budget last January, but it also goes much further than that. It is a genuinely reforming Bill, introducing fundamental and far-reaching changes into the social welfare system.
The Bill makes provision for two new payments — the disability allowance and the one parent family allowance. The new disability allowance to be administered by my Department is a replacement for the existing disabled person's maintenance allowance, currently administered by the health boards. The new one parent family payment will amalgamate the existing lone parent's allowance and the deserted wife's benefit and will remove the concept of desertion from the social welfare system. This year's Bill also provides for radical reform of unemployment assistance, which will make it more attractive for people to avail of part time work opportunities, and for an independent appeals system for people whose claims for supplementary welfare allowance have been turned down by enabling them to make a further appeal to the social welfare appeals office.
By the same token the Bill should not be viewed in isolation but against the background of an ongoing work programme within the Department of Social Welfare. As Senators know, the social welfare system has been developed and adapted over several decades and has served this country well. It is now a large and complex system which provides a vast range of payments and services to our society. The level of expenditure by my Department serves to demonstrate this point well. I have already mentioned that weekly payments are provided to approximately 800,000 persons, in turn benefiting almost 1.5 million persons when adult and child dependants are taken into account. In addition, £2.9 million a day is spent on payments to elderly and retired people; £3 million a day is spent on payments to unemployed people; £1.4 million a day is spent on the sick and disabled; and £3.6 million a day is spent on family income support, including widows, widowers, lone parents, carers, families getting child benefit, families at work on low pay and other miscellaneous allowances.
There is unquestionably a need to reform and streamline this system and to enable it to interact more effectively with other services such as health and employment. It must be acknowledged also that this level of reform cannot be achieved overnight. The Bill before this House goes some distance along the right road, but it will take time to complete the journey. It is in this context that I refer briefly to some of the other ongoing initiatives in the social welfare area as it is important that this House and the public should have a greater awareness of the wider picture.
The Government has committed itself to the development of a major national antipoverty strategy. A high level interdepartmental committee is now working on drawing up the strategy in consultation with, and including participation by, those affected by poverty. This is the first time that an Irish Government has committed itself to set out an across the board national strategy designed to address all aspects of poverty and disadvantage.
The Minister for Social Welfare, Deputy De Rossa, last year piloted the establishment of the Commission on the Family, which is examining the needs and priorities of families today and which will recommend how they can be strengthened and supported for the future. The commission will make an interim report to Government through the Minister for Social Welfare by October of this year and will produce a final report by June 1997.
The work of the expert group on integration of the tax and social welfare systems is now being finalised and I expect that its report will be published by the middle of this year. This report will provide valuable guidance on the steps required to restructure the taxation and social welfare systems. My Department is also preparing a discussion document on social insurance and the PRSI system which will be published shortly and which will provide a focus for debate on this crucial aspect of the social welfare system. The ESRI has been commissioned to review the minimum adequate income rates that were recommended by the Commission on Social Welfare in 1986.
The report of the task force on security for the elderly has been published and last week the Minister announced that he had secured Government approval for a £6.5 million package of new measures to improve security for the elderly. This will bring the total expenditure in this area to £8 million this year. Among the wide range of measures approved are the extension of the budget tax relief measure, at an additional cost of £5 million, to include relatives who install security systems in the homes of elderly people living alone, and an additional £2 million in grants which will be made available this year by my Department to voluntary groups to support the installation of security equipment. I believe that these measures will prove effective in bringing about tangible improvements in the security of elderly people and, equally important, in easing the widespread fear that the recent attacks have engendered among them.
All of these initiatives are underway in parallel with the day-to-day work of my Department. The House will appreciate that it is not possible to reflect all of this reforming work in the Bill. As I mentioned earlier, however, the Bill contains a number of significant measures and I will now outline its provisions on a section by section basis.
The usual provisions relating to the short title, construction and definitions are contained in sections 1 and 2. The general increase of 3 per cent in the weekly personal and adult dependant rates of social insurance and social assistance payments, payable from early to mid-June 1996, is provided for in sections 3 and 4 of the Bill. Section 4 also provides for the special increases of £5 per week in the carer's allowance and the new living alone allowance of £6 per week.
Section 5 makes provision for the further substantial increase in the monthly rate of child benefit announced in the budget. With effect from 1 September 1996, child benefit will increase by £2 per child per month. This means that the monthly payment will now amount to £29 for the first two children and to £34 for the third and subsequent children. Senators will recall the very substantial increases in child benefit introduced last year, which reflected our desire to provide real support for families and to channel resources to those in greatest danger of suffering from poverty. Over the last two years we have provided increases of 45 per cent in respect of the first two children and 36 per cent in respect of other children.
Section 5 also provides for the increase, from £200 to £500, in the grant payable on the birth of twins. It further provides for the introduction of a new grant of £500 payable in respect of twins on reaching four and 12 years of age. This new grant will be effective from 1 January 1996 and has been widely welcomed. It recognises the substantial additional costs for the parents of twins which arise especially at birth and at the relevant ages.
Section 6 of the Bill provides for an increase of £10 in the income limits applied in determining entitlement to family income supplement from mid-June, 1996. The effect of this change is that most current recipients of FIS will receive an increase of £6 per week.
Section 7 sets out to remove what has been widely perceived to be one of the greatest disincentives to taking up work opportunities, the immediate loss of child dependant allowances on taking up employment. This section provides for the continued payment of increases for dependent children for up to 13 weeks to people in receipt of such increases at the full rate who have been unemployed for 12 months or more and who take up employment which is expected to last for at least four weeks. This is a practical measure which will help significantly to ease the transition from unemployment to employment.
A primary focus of the budget was on ensuring that the social welfare system was work and worker friendly. A crucial element of the package of measures contained in the budget related to PRSI reform. The necessary legislative provisions required to give effect to these reforms are contained in sections 8 to 12 of the Bill. These changes will come into effect on 6 April 1996.
Section 8 provides for a number of significant changes affecting both employees and employers. These include an increase of £30 in the 'PRSI Free Allowance' for employees insured at class A. The effect of this change is that these employees will not be liable for PRSI in respect of the first £80 of weekly earnings; an increase in the ceiling up to which PRSI contributions are payable by employees from £21,500 to £22,300 per annum; the reduction in the lower rate of employers PRSI from 9 per cent to 8.5 per cent; the reduction in the main rate of employers PRSI from 12.2 per cent to 12 per cent; an increase from £231 to £250 in the amount of weekly earnings below which the new reduced rate employers contribution of 8.5 per cent will apply; and an increase of £1,000 — from £25,800 per annum to £26,800 per annum — in the ceiling up to which PRSI contributions are payable by employers.
Section 9 caters for self employed people. In the first instance, it provides for the existing PRSI free allowance to be increased from £10 to £20 per week, or £1,040 over a full year. Second, it provides for a reduction in the minimum social insurance contribution payable by the self-employed from £230 to £215 per annum. Third, it provides for an increase in the annual income ceiling, from £21,500 to £22,300, up to which PRSI contributions are payable by self-employed contributors.
Section 10 provides for an increase, from £520 to £1,040, in the amount of reckonable income in respect of which optional contributions are not payable by share fishermen under the optional social insurance scheme. Section 11 provides for a reduction, from £230 to £215, in the annual rate of voluntary PRSI contributions payable by a person who ceases to be a self-employed contributor and subsequently becomes a voluntary contributor.
The extension of class A insurance to community employment workers, currently insurable for the purposes of occupational injuries benefit only, is provided for in section 12. This extension will affect community employment workers in two ways. Those commencing work on a community employment scheme on or after 6 April 1996 will be compulsorily insurable at the class A PRSI rate. Those who are already participating in community employment on 6 April 1996 will be given the option of either paying class A PRSI or of continuing with their existing class J PRSI which gives cover for occupational injuries benefit only. The circumstances in which existing community employment participants may elect to pay class A PRSI will be provided for in regulations but with the proviso that a further change of mind will not be allowed for the duration of participation in community employment.
The sponsors of community employment workers will be exempt from paying the increased employer contribution arising from this extension and they will continue to be liable for their contribution of 0.5 per cent in respect of occupational injuries benefit. Workers participating in the pilot part-time jobs opportunities scheme, administered by the Conference of Religious of Ireland, will be treated in the same way as community employment workers for the purposes of this section. Section 12 also includes provision for regulatory powers to modify the social insurance status of Telecom Éireann employees so as to enable their reduced PRSI status to be maintained in the event of Telecom Éireann forming a strategic alliance.
I referred earlier to the fact that this Bill provides for the introduction of two new payments. The first, the disability allowance, is catered for in sections 13 to 16. This new social assistance payment will replace the disabled person's maintenance allowance which hitherto has been administered by the health boards. It represents a major step forward in our provision for people who are unable to return to work due to illness or who have disabilities.
A notable feature of the new payment arises from a commitment given by the Minister for Social Welfare last year. Under the existing arrangements a lower rate equivalent to half the rate appropriate to a married couple applies when both members of a couple are in receipt of disabled person's maintenance allowance. Under the new arrangements for disability allowance, however, qualified couples will receive two personal rates of disability allowance rather than the lower rate.
Section 13 sets out the eligibility criteria for receipt of disability allowance, outlines the basis on which means will be assessed, provides for the weekly rate of the allowance and for increases in respect of adult and child dependants. A number of transitional provisions are required to effect the transfer of existing recipients of disabled person's maintenance allowance onto the new disability allowance scheme. These are contained in section 14.
Section 15 makes the necessary amendments to the Social Welfare (Consolidation) Act, 1993, arising from the establishment of the new scheme. This section also makes appropriate provision for the inclusion of disability allowance in the system of continuing payments for six weeks after the death of the recipient and provides for a number of other consequential technical amendments to legislation. Section 16 is a standard measure providing that the new allowance will be brought into force by way of a commencement order.
The second of the new payments which are being introduced under this legislation is the one-parent family payment. This new payment will replace and enhance the existing lone parent's allowance and deserted wife's benefit. It is envisaged that it will come into effect from the start of next year.
The new payment has two main objectives. In the first instance, it will remove the concept of "desertion" from the social welfare system. Second, it will ensure equality of treatment for men and women in the area of lone parenthood. The necessary legislative changes required to facilitate the introduction of the new payment are contained in sections 17 to 21.
Section 17 sets out the conditions of entitlement for the new payment. These are broadly similar to those applying currently to the lone parent's allowance scheme. It makes provision for improved earnings disregards for lone parents in employment or self-employment and for a change in the method of assessing the value of capital. In the case of persons who have applied for, or who are already in receipt of, the lone parent's allowance, this section provides for their transfer to the new scheme and ensures that their entitlements will not be reduced by virtue of that transfer.
Section 17 also provides regulatory powers to exempt a social welfare recipient from the obligation to transfer to the Department of Social Welfare or the health board any payments they receive from a liable relative. These powers are being taken as a consequence of the new arrangements being introduced for lone parents whereby a proportion of maintenance payments can be retained towards their housing costs.
Section 18 ensures that the position of women in receipt of deserted wife's benefit, deserted wife's allowance or prisoner's wife's allowance is protected. Similar protection is extended to women who have applied for any of these schemes and whose applications have not been finalised prior to the introduction of the new arrangements.
The deserted wife's benefit scheme will be discontinued for new claimants once the new uniform payment for lone parents is introduced. Special transitional arrangements are being made, however, for women who by virtue of being aged under 40 lose entitlement to this benefit because they no longer have a child dependant and who would otherwise have re-qualified for benefit under the existing arrangements on reaching 40 years of age. Section 18 provides that the entitlements of women aged 38 and under 40 on the introduction of the new arrangements, who would otherwise have re-qualified for deserted wife's benefit on reaching 40 years of age, will be maintained.
Section 19 provides for the appropriate amendments to the social welfare legislation consequent on the introduction of the new one parent family payment. Section 20 provides for the definition of a qualified parent for the purposes of the payment to include a parent who would otherwise be a qualified parent but for the fact that his or her marriage has been dissolved. Section 21 is a standard measure which provides that the arrangements in respect of the introduction of the one parent family payment will be brought into effect by way of a commencement order.
Section 22 provides for the fundamental reform in the manner in which earnings from unemployment are assessed for unemployment assistance purposes. The existing arrangements are extremely complex and frequently act as a disincentive to people faced with an opportunity to avail of part-time or casual work opportunities.
I referred earlier to the work of the expert group on the integration of the tax and social welfare systems. While that work had not been completed prior to the 1996 budget, it was nonetheless in a position to make a number of valuable recommendations which we were able to take on board in drawing up the budget proposals. The reform of unemployment assistance contained in section 22 is the direct result of one such recommendation.
Under the existing legislative provisions, unemployment assistance is payable in respect of a day of unemployment provided the person is unemployed for at least three days in a period of six consecutive days. As a result, someone who works for four or more days in a period of six consecutive days loses entitlement to unemployment assistance for the remaining days in that period. Furthermore, unemployment assistance paid for days of unemployment in the period of six consecutive days is reduced where earnings from days worked exceed a certain threshold or disregard. This disregard amounts to one sixth of the maximum weekly rate of unemployment assistance appropriate to the person's family circumstances plus £15 for each day worked.
Any earnings in excess of the disregard are assessed as means and are deducted from the appropriate rate of unemployment assistance. The resulting amount — the weekly rate less means — is then divided by six to give the daily rate of unemployment assistance. It is this daily rate which is then payable in respect of each day of unemployment in the six day period.
That brief summary of the existing arrangements serves to underline the complexity of the system. We are now setting out to make the system more user friendly. The new arrangements will provide that unemployment assistance will be payable in respect of a week of unemployment rather than in respect of a day of unemployment as at present; a week of unemployment will be defined as any three days of unemployment in a period of six consecutive days; unemployment assistance will be payable at the weekly rate — in other words it will be paid in respect of both days of employment and unemployment in the week of unemployment — and earnings will be assessed at 60 per cent. for claimants with children. For claimants without children, a daily disregard of £10 will be applied for each day worked and earnings in excess of this amount will be assessed at 60 per cent. This daily disregard will protect people without dependent children from losses which they would otherwise suffer.
The impact of these changes is substantial on two grounds. First, by greatly simplifying the existing arrangements, unemployment assistance recipients will be in a better position to assess readily the effect on their net income of undertaking part-time work. Secondly, the new arrangements provide a significant improvement in net income for those who take up such work. To take one example, a married recipient of unemployment assistance, with an adult dependant and three dependent children, who earns £90 for three days work will now be better off by £9.50 per week. If that person earns £60 for the three days work, he or she will better of by more than £27 per week.
Section 22 also provides that unemployment assistance at the higher longterm rate will be payable to claimants who, immediately before claiming UA, were in receipt of the carer's allowance.
Section 23 makes provision for two amendments to the rules governing the means test for unemployment assistance and the pre-retirement allowance. First, it provides that allowances in respect of accommodation provided for a child, paid by a health board under the supported lodgings scheme, will be disregarded in the assessment of means. Secondly, it provides that a specified amount, which will be set initially at £2,000, received under the rural environment protection scheme, will be disregarded in the assessment of means for the purposes of unemployment assistance.
The purpose of section 24 is to incorporate into primary legislation provisions relating to homemakers, made under regulations in 1994, which enable contribution years spent working in the home on a full time basis caring for a child or an incapacitated person to be disregarded in calculating a person's yearly average number of contributions for the purposes of the old age contributory pension. This section also increases from six to 12 years the qualifying age for a child under this scheme.
In addition, section 24 will also remove an anomaly in the existing provisions whereby the year in which a person commences or ceases to be a homemaker cannot, in practice, be disregarded since the person involved is required to be a homemaker for the entire contribution year in order to benefit under this provision. The amendment provides for regulatory powers to award credited contributions in the contribution year in which a person first becomes or ceases to be a homemaker and to prescribe the time and manner of making applications to be considered as a homemaker.
The provisions of section 25 arise from the proposed discontinuance of the deserted wife's benefit scheme — to the extent that it affects women without children — and the deserted wife's allowance scheme. It provides for an extension of the pre-retirement allowance scheme to separated men and women aged 55 years and over who have not had an attachment to the labour force within a specified preceding period.
Section 26 provides that a person who is entitled to a pro-rata old age contributory or reciprocal pension, an EU pension, or a pension under a reciprocal agreement, will be entitled to receive whichever is the higher. A technical amendment to the Social Welfare (Consolidation) Act, 1993, arising from regulatory changes made in April 1995 providing for the extension of full social insurance to new entrants to the public service, is also catered for in section 26.
Section 27 provides for the survivor's pension to be renamed as widow's or widower's (contributory) pension. It also provides that a widow or widower will remain entitled to a pension at the rate which would otherwise have been payable had they not remarried. At present, in the case where a widow or widower remarries and where the second spouse dies, it is possible that the widow or widower may, on reapplying for a pension, fail to satisfy the contribution conditions or qualify for a pension at a lower rate than that payable before remarriage. The pension position of these people will now be protected under legislation.
Provision was made in the Social Welfare (No. 2) Act, 1995, giving effect to the commitment that no spouse would lose out in terms of his or her social welfare entitlements on becoming divorced. A corresponding provision is made in section 28 as a result of the renaming of the survivor's pension to the widow's or widower's contributory pension. Section 29 provides that the provisions of sections 5 to 28 will be brought into force by way of commencement orders.
As Minister of State with specific responsibility for customer relations I am particularly pleased that the Bill makes provision for an independent appeals system for people whose claims for supplementary welfare allowance have been turned down by the health boards. The absence of an independent appeals system has been the subject of sustained criticism for some time past by Oireachtas Members, other public representatives and interest groups. The Ombudsman has also expressed concern about the adequacy of the current arrangements.
Section 30 provides for regulatory powers to give effect to these new arrangements whereby claimants of supplementary welfare allowance who are dissatisfied with the outcome of an appeal to the health board against an adverse decision may make a further appeal to the social welfare appeals office. Section 31 provides for regulatory powers to specify the procedures to be followed on appeals decisions relating to claims for both social welfare payments generally and for supplementary welfare allowance. Regulations to be made under these powers will provide that all such decisions and determinations will have to be given to claimants in writing and will have to set out the reason or reasons for an adverse decision.
An amendment to the existing provisions relating to revised decisions by deciding officers, appeals officers and officers of the health board in the case of supplementary welfare allowance is contained in section 32. This relates to cases where a new fact comes to light resulting in a revised decision being made which reduces a person's entitlement. The deciding officer will now have discretion to decide that the reduction in entitlement should only take effect from a current date where, for example, he or she concludes that the person concerned could not reasonably have been expected to know the relevance of the fact. The purpose of section 33 is to provide an immediate avenue of appeal to the social welfare tribunal — without first having to appeal the deciding officer's decision to the chief appeals officer — to people who are disqualified from receiving unemployment payments by virtue of their participation in a trade dispute.
The Bill also contains a number of miscellaneous measures which I will outline in brief. Section 34 provides for an amendment to section 261 of the Social Welfare (Consolidation) Act, 1993, relating to the award of expenses to representatives of appellants at oral hearings. The practice at present, by agreement with the Incorporated Law Society, is that expenses of £30 are awarded to solicitors and to other professional witnesses in respect of attendance at an oral hearing. This practice has been the subject of a successful challenge in the High Court. Accordingly, the current legislation is being amended to provide that costs incurred by a person in relation to any matter referred to an appeals officer will not be awarded but that expenses will continue to be paid as at present. This section is modelled on the legislative provisions applying to the Employment Appeals Tribunal which similarly does not award costs.
Section 35 is designed to deal with the specific problems facing people moving from short-term payments, such as unemployment benefit, unemployment assistance and disability benefit to old age pension. Under the existing provisions, these short-term payments are only payable up to date on which the person reaches age 66, whereas the payments of old age pensions do not commence until the next following Friday. Section 35 provides regulatory powers under which the short-term payment may be continued until the date on which payment of the pension commences. This will ensure that there is no gap between the two payments.
My Department is also currently implementing a new computer system known as the integrated short-term payment system. The purpose of the new system is to improve service delivery for claimants of short-term payments. This system will encompass the making of supplementary welfare allowance payments, a function which, under existing legislation, is vested in the health boards. The regulatory powers required to enable supplementary welfare allowance payments to be made by my Department are provided for in section 36. It is important to note here that entitlement to these SWA payments will continue to be determined by the health boards as at present.
Section 37 provides for a number of amendments to the Third Schedule of the Social Welfare (Consolidation) Act, 1993, to improve the provisions relating to the assessment of means for social assistance payments. These include, for example, a prescribed amount of earnings in respect of employment of a rehabilitative nature which will be disregarded in the assessment of means for social assistance purposes; provision is being made for the deduction of child minding earnings before the 50 per cent disregard of remaining earnings is applied in the case of lone parents; the disregard of allowances paid by a health board in respect of accommodation provided for children under the supported lodgings scheme in the assessment of means for social assistance payments other than unemployment assistance, which is being provided for separately in section 23; and the disregard of payments up to a prescribed amount awarded by the tribunal in hepatitis C cases.
Last year's Social Welfare Act provided an extension of child dependant allowances, where appropriate, up to age 22 where they were in full time education. This year, section 38 provides for a further extension of that age to the end of the academic year after their 22nd birthday.
Under existing legislation an increase of disablement pension, known as the constant attendance allowance, is payable where the degree of disablement is assessed as 100 per cent and the claimant is so incapacitated as to require someone to attend to his or her personal needs. Section 39 provides regulatory powers for the payment of the constant attendance allowance in cases where the degree of disablement is assessed at less than 100 per cent. The amount of the increase payable in such circumstances will be less than the amount payable where the degree of disablement is assessed at 100 per cent and the rate may vary in relation to the degree of disablement.
Section 40 provides that fees payable to the Comptroller and Auditor General in respect of an audit of the accounts of the social insurance fund will be borne directly by the fund. This amendment arises because the Comptroller and Auditor General is now legally entitled to charge an audit fee.
The purpose of section 41 is to extend, from two to six years, the period within which legal proceedings may be brought against the estate of a deceased person for the recovery of over-payments of social assistance. Under the household budgeting scheme operated by my Department certain social welfare recipients can opt to have deductions made from their payments and paid over to specified bodies, such as the ESB and local authorities. In response to requests from existing participants, section 42 extends the scope of the scheme to include bodies not currently covered.
Section 43 is a technical amendment designed to update a reference in the Social Welfare (Consolidation) Act, 1993, to section 9 of the Minimum Notice and Terms of Employment Act, 1973, which has been replaced by section 3 of the Terms of Employment (Information) Act, 1994. Section 44 provides for an amendment to the Combat Poverty Agency Act, 1986, under which the period within which the board of the agency is required to submit each three year strategic plan may be extended, by not more than six months, by the Minister of the day.
Section 45 and 46 provide for an increase from £178 to £188 in the amount of weekly earnings below which employees are exempt from liability for the health contributions and the employment and training levy. The corresponding annual income exemption level for self-employed people is being increased from £9,250 to £9,730. These changes are being made at the request of the Department of Health and the Department of Enterprise and Employment and will take effect from 6 April 1996.
This Social Welfare Bill is wide ranging and innovative. By providing for increases in weekly rates of payment which are in excess of the projected inflation rate for the year, it will improve the living standards of people dependent on social welfare. It will simplify many aspects of the very complex social welfare system and remove disincentives to employment which currently exist. It will also consolidate the pro-work, pro-worker and pro-family policy directions which this Government has fostered since coming into office. It is the most far-reaching and important social legislation presented to this House for many years.
I commend the Bill to the Seanad.
