Léim ar aghaidh chuig an bpríomhábhar

Seanad Éireann díospóireacht -
Tuesday, 18 Dec 2001

Vol. 168 No. 26

Social Welfare (No.2) Bill, 2001: Committee and Remaining Stages.

Sections 1 to 6, inclusive, agreed to.
Question proposed: "That section 7 stand part of the Bill."

Section 7 refers to the raiding of the social insurance fund. The section states: "In the financial year 2002, an amount of €635 million shall be paid out of the Fund into the Exchequer". With those two lines, a fundamental alteration in the social fund has been made. Under the Social Welfare Act, 1952, the Minister for Social Welfare is charged with the management and control of the current account of the social fund while the Minister for Finance has the task of managing the investment account of the fund, but sums payable out of the fund shall be paid out of the current account of that fund.

The Minister referred to this issue and a number of speakers, particularly on the Government side of the House, mentioned that raiding the fund to the tune of €635 million is, in effect, giving people's money back to them. That appears to be a logical statement, but is it? The Bill states that the money shall be paid out of the fund into the Exchequer. The Exchequer manages funding across a number of projects and a range of spending headings, including social welfare, pensions and so on, but it also covers capital spending. We do not have any indication, beyond the fact that the €635 million will go into the Exchequer, where that money will be spent and, therefore, we do not know that it will go directly back to the people who paid into it. The argument will be made, and I can almost hear it, that it will go in some way to the benefit of the people who paid into it, but will it go towards the major roads building projects or the building of hospitals? Will it go back only to social welfare recipients or to workers and employers? It is going into the Exchequer so we do not know precisely where it will end up.

I challenge the fundamental principle of taking this money in the first place and, in making the argument, I want to quote the General Secretary of the Irish Congress of Trade Unions, David Begg, who, on the night of the budget, when the news of the raiding of the fund was announced, reminded television viewers that the fund had been established and supported by workers and employers through their contributions for nearly 50 years. He said it provides a range of basic benefits for which workers have paid through their social insurance contributions and that by diverting the €635 million from the fund into the Exchequer, the Ministers for Finance and Social, Community and Family Affairs have attacked a key principle of social solidarity and undermined its basic purpose.

The €1.8 billion surplus to which the Minister referred offers a unique opportunity to enhance existing benefits and introduce new ones. The Minister and other speakers talked about using this money rather than borrowing. Because the fund is designed for this purpose, it could have been used in the past and, if it had not been raided, could have been used in the future to introduce PRSI funded parental leave benefit within the scope of the social insurance fund. Another suggestion made by my colleague and our spokesperson in the Dáil, Deputy Broughan, was to introduce an improvement in the homemaker's scheme. There are many other benefits, such as the contributory old age, widow's and widower's pensions, which could have been enhanced further by using the surplus in the social insurance fund.

The raiding of the fund is a very serious matter and one over which we could not stand. Now that the principle has been established in this legislation, we have no guarantee that this Administration, particularly if its ambition to get re-elected is realised, will not do it again. Has the fundamental principle of the fund been completely changed? I would suggest it has and that this is possibly not a once-off move. If this Government gets a chance, it will do this again.

I support the opposition to the section.

In my Second Stage response, I referred to the issue of the social insurance fund. In the other House, I challenged the Opposition to say how it would fund the record social welfare package. It would be naive of anyone to think that a package of the size of £850 million would have been achieved but for the fact the fund was there with substantial surplus moneys.

Again I ask the Opposition how it would have funded a £850 million package. In the other House, I could not get an answer from either of the main Opposition parties. The Labour Party spokesperson said he would cut corporation tax – that was his personal preference. I challenged him on that and said I could guarantee that if his party was in Government after the next election, it would not touch the issue of corporation tax because it set up the negotiations to reduce corporation tax to 12.5% over a certain period before it left office. It was left to this Government to finish the negotiations and to implement the reduction which was more difficult. It was wrong and misleading of Deputy Broughan – he is not here to defend himself, but I am just saying what he said – to claim he would reduce corporation tax to fund this package.

Fine Gael took a day or so to come back with an answer which I referred to as the flexible friend approach. It said it would not put as much money into the pension reserve fund when times were bad but that when times were good, it would put in probably more than we have said we would put in – the 1% – which, in effect, means that it will probably never put enough money into the pension reserve fund.

I would say that the Government could be criticised if nothing else had been done. Everyone has said the Government was great to put aside the pension reserve fund and, of course, it was. As I said before, there will be a sum of £6.3 billion in the pension reserve fund next year. If that is not social solidarity, I do not know what social solidarity is. This is money which, as Senator O'Meara said, has been contributed by employees and employers over the years. In a way, it is redistributing some of the wealth of our country to the people who are less well off.

While people might have a problem with the principle, what really matters to people are their individual circumstances. I do not think the public is too interested in the principle of the social insurance fund, particularly if it is in surplus. I say that because for years it was in deficit and the taxpayer subvented it. There is an absolute guarantee that no matter what, the social insurance fund will be subvented by the taxpayer. Given the increase in growth and our demographics whereby we have the youngest population in Europe which will be in its most productive phase for at least the next 15 years, if not longer, all the indications are that the social insurance fund will be in fairly massive cumulative surplus over the next couple of years.

It is wrong to say it could have been used for this, that and the other. The inference has been that no new schemes have been brought in. That is incorrect. Prudently, we have brought in new schemes, such as the carer's benefit, the free schemes for people in receipt of the carer's allowance, the over 56 special pension and the pre-1953 special pension, all of which would be, by and large, funded by the existing social insurance fund. That is to name but a few of the improvements which have been made at the same time as managing a surplus in the social insurance fund and, obviously, looking at the issue of the cumulative surplus as we move forward over the next few years. As I said earlier, there will be somewhere in the region of £3 billion in the social insurance fund in just two years time.

Some of the Deputies in the other House tried to indicate that there was a divide between myself and the Minister for Finance, Deputy McCreevy. There was no divide and we were ad idem in this regard that it is nonsensical for the Government to borrow while having a substantial amount of money in surplus in what is, in effect, the people's fund. The alternative is to give people less money out of the resources available at budget time and to go back to a stage where people would get social welfare increases of the order of £1.50 to £3. We were not going to go back to that. As far as we are concerned, we have incrementally built up the increases to such an extent that old age pensioners have received 50% extra in their payment since this Government came into office. Even people on the lower rates have received increases somewhere in the region of 30% and over.

The increases in child benefit are absolutely astronomical. People have very short memories and we would not have been able to give £325 million for the second year in a row if the issue of the social insurance fund had not been written into the equation. We would have had to go back to the situation five years ago where mothers with three children got an increase of £7 per month instead of £80 per month this year and next year. Mothers got £1 for the first two children and £5 for the third child as opposed to £25 for the first two children and £30 for the third child this year and next year.

As far as this Government is concerned, what it has done in this Bill and generally in relation to the budget is prudent management of the resources available. We are very proud to bring forward a budget which, for two years in a row, contains the largest social welfare budget in the history of the State.

Question put.

Bonner, Enda.Callanan, Peter.Cassidy, Donie.Chambers, Frank.Cox, Margaret.Cregan, John.Dardis, John.Farrell, Willie.Finneran, Michael.Fitzgerald, Liam.Fitzgerald, Tom.Fitzpatrick, Dermot.Gibbons, Jim.Glennon, Jim.Glynn, Camillus.

Kett, Tony.Kiely, Daniel.Kiely, Rory.Lanigan, Mick.Leonard, Ann.Mooney, Paschal.Moylan, Pat.Nolan, M. J.Norris, David.O'Brien, Francis.O'Donovan, Denis.Ó Fearghail, Seán.Ó Murchú, Labhrás.Ormonde, Ann.Ross, Shane.Walsh, Jim.


Coghlan, Paul.Coogan, Fintan.Cosgrave, Liam T.Doyle, Joe.

Keogh, Helen.Manning, Maurice.O'Meara, Kathleen.Ridge, Thérèse.Taylor-Quinn, Madeleine.

Tellers: Tá, Senators T. Fitzgerald and Gibbons; Níl, Senators O'Meara and Ridge.
Question declared carried.
Sections 8 and 9 agreed to.
Schedules A and B agreed to.
Title agreed to.
Bill reported without amendment and received for final consideration.
Question proposed: "That the Bill do now pass."

I thank Senators for allowing us to deal with this as quickly as possible. It was important, given that there are increases to deliver on 1 January, to pass this Bill, the first of two based on the budget. I thank Senators and my staff, who have put in considerable work behind the scenes. I wish the Cathaoirleach and Senators a happy Christmas and a prosperous new year.

I thank the Minister. I regret we did not get what we wanted but that is to be expected. As I have said already to the Minister, he is almost saint-like at this stage. Next time – though he may not be coming in next time—

He will be here.

The Minister said we are only here to criticise the Government. Does he think we are here to praise it? He is not the sole repository of good ideas. I applaud the good elements of the Bill although I regret what has not been done. The Minister kept asking us what we would do but I remind him of the old Dublin saying, "Youse is the Government". I echo the Minister's good wishes for everyone present and hope we have a prosperous new year, particularly in view of what we are discussing today.

I thank the Minister and his officials and look forward to the second phase of social welfare legislation in the new year which will doubtless be as positive as today's Bill.

I, too, thank the Minister. He is a lucky politician to be Minister for Social, Community and Family Affairs at a time of such unprecedented economic prosperity, which he inherited of course from the previous Government. I hope the next phase is just as good. We would have done things differently and will do things differently in the future. I commend the Minister on his work as I know that in general his heart is in the right place. We might have done things differently but much has been achieved in the past few years and that should at least be acknowledged.

I congratulate the Minister on this budget allocation which is due to his determination and skill. I am a Member for 19 years and have never before seen a Minister receive such an allocation. It is all about getting allocations in the budget. Many years ago the communications sector received a very poor allocation every year until Deputy Albert Reynolds took office and used his influence. Deputy Ahern has also used his influence to get the largest allocation in the history of the State.

The children's allowance is a godsend to the poorer section of society and I never thought I would see the day when the allocation would be £50 and £60 per child over two years. I saw families reared on those allocations per quarter, never mind per month, in the past. I wish to be associated with the kind words of congratulation to the Minister.

Many years ago I said of Deputy John Bruton, who went on to lead Fine Gael and become Taoiseach, that he was a person who would go places when he became a Minister, even though he was on the opposite side of the House. I say the same today. Deputy Dermot Ahern is a dynamic, young, energetic and enthusiastic Minister, who will go much further in years to come.

I did not know there was a vacancy.

I thank the Chair for his handling of the passage of this Bill through the House.

Question put and agreed to.