I am pleased to introduce the Social Welfare Bill 2004, the first of two Bills which will implement the social welfare package of €874 million announced in last week's budget. The package represents an increase of €244 million, or almost 40%, on the 2004 package of €630 million. It brings the projected level of social welfare expenditure for 2005 to over €12.25 billion, which constitutes an increase of €1 billion, or almost 9%, on the allocation for 2004. That it is the highest ever level of social welfare expenditure is an indication of the Government's priority, which is to protect and improve the living standards of social welfare recipients, as well as a clear demonstration of its commitment to addressing the needs of people with disabilities, their carers, children, the elderly, widowed persons, the unemployed, those who are parenting alone and disadvantaged and vulnerable people who are on the margins of society. The package continues the Government's substantial annual increases in social welfare expenditure, which has increased by almost 60% in the last four years. The current level of such expenditure is twice that in 1997.
The budget of the Department of Social and Family Affairs, which is over €12 billion, is the largest spending allocation of any Department. I wish to elaborate on what that means in real terms. For every €3 that will be spent by the Government in 2005, almost €1 will be spent on social welfare payments. An estimated 970,000 people are expected to claim weekly social welfare payments next year. When one takes dependants into account, almost 1.5 million people, or two out of every five people in the State, will benefit from welfare supports. The increases of €12 and €14 in weekly social welfare payments are three to four times greater than the expected rate of inflation in 2005. The increases range from over 7% to over 10%, compared to next year's expected rate of inflation of 2.5%.
Ireland has changed dramatically for the better since the Government took office. The number of people at work has increased to almost 1.9 million, the rate of unemployment has fallen dramatically from 10% to 4.4% and the number of low-paid workers removed from the tax net has increased. Those on the minimum wage will be taken out of the income tax net entirely in 2005. Social welfare spending has more than doubled, from €5.74 billion in 1997 to a projected €12.25 billion in 2005. Gross average industrial earnings have increased by 71% in the past decade, but social welfare payments have increased by between 87% and 95%, and by even more for larger families. Substantial improvements in the conditions for entitlement to a range of social welfare schemes and services have been implemented. New social welfare benefits, such as farm assist, carer's benefit, the widowed parent grant and the respite care grant, have been introduced and enhanced. All the real social welfare improvements have led to a significant reduction in consistent poverty in recent years. According to the ESRI, the overall level of consistent poverty in 1998 was 8.2%. This was reduced by over a third, to 5.2%, by 2001, the latest year for which figures are available.
I could spend a long time citing more facts and figures to confirm the pivotal role played by the Department of Social and Family Affairs in the lives of many people and the great strides made in recent years. The Department is concerned with more than statistics, however. The payments, benefits and supports it provides to almost 1 million people are a weekly lifeline for many of those who struggle to make ends meet. The Department is often the last safety net for those descending towards poverty, marginalisation and economic and social distress. It is more than an efficient and effective administrative structure for processing and delivering State entitlements, however, as it needs to be people-centred, above all else. The Department must continue to shape the welfare system to meet individual needs. That will be the Department's guiding principle under my stewardship. It will react and respond speedily and sympathetically to those who reach out for a welfare lifeline. It will not be guided only by rules and regulations that sometimes blur the real purpose. I remind Senators that a one-size welfare system does not fit everyone.
While the Department of Social and Family Affairs represents a valuable source of payments, entitlements and supports, it must be viewed in a broader context. It is concerned with the welfare and the overall well-being of those who are caught in a daily struggle to make ends meet, including children at risk of poverty, carers who look after those unable to care for themselves, the elderly, the unemployed and many others to whom we must reach out and support. The Department must constantly monitor the pulse of our changing society and broaden and evolve to respond to changes. The economic surge of the Celtic tiger era did not raise all boats — some people were left behind, for whatever reason. The rising tide must lift those who were left behind on the previous occasion during the new wave of economic growth we are enjoying.
Before I outline the contents of the Bill, I wish to mention some of the welfare areas that were targeted specifically in the budget, in which I have tried to recognise and support in a special way the contribution carers make to society. Like everyone else, Senators are aware of the commitments and sacrifices involved in the work of carers, who provide a valued and valuable service. The package of measures I agreed with the Minister for Finance commits additional spending of almost €40 million to enhance supports for carers and to allow more carers to qualify for entitlements. Carers will benefit from eight separate increases or improvements as a result of this year's budget. Carer's allowance and carer's benefit will increase by €14 per week and the annual respite care grant will increase from €850 to €1,000. Almost 33,000 full-time carers are expected to receive the latter grant next year. The grant has been extended to include all carers who provide full-time care, subject to employment-related conditions, thereby recognising and acknowledging the challenges faced by carers who care for several people. Some 9,200 full-time carers will receive the grant for the first time as a result.
The carer's package expands the income limits for carer's allowance, so that all those on average industrial incomes can qualify, by increasing the weekly means test income disregard by €20 to €270 for a single person and by €40 to €540 for a couple. A couple with two children can earn up to €30,700 and receive the maximum rate of carer's allowance, while the same couple can earn up to €49,200 and receive the minimum rate of carer's allowance, free travel, the household benefits package of free schemes and the respite care grant. These improvements will result in an additional 1,000 new carers qualifying for payment and 2,400 existing carers, who are currently in receipt of a reduced payment, receiving an increase in their weekly carer's allowance payment. I am committed to the cause of carers.
The most recent budget, with previous initiatives, went some distance in responding to the specific needs of carers. It was my first budget as Minister for Social and Family Affairs, just as it was Deputy Cowen's first budget as Minister for Finance. There will be further opportunities to address the needs of carers and I look forward to taking them. I will continue to meet and listen to carers to shape the entitlements and supports that are most vital to the valuable work they perform. A lot has been done but, as the cliché goes, there is more to do. I assure the House that we will work towards recognising and rewarding carers.
Let us consider what the Opposition has labelled as "cuts". These were introduced last year and I have been reviewing them since I became Minister for Social and Family Affairs. Some of the 30 or so groups involved in making pre-budget submissions told me that several measures needed easement. With that in mind and following detailed examination, I decided to amend and ease nine of the measures at this time, while instructing that those remaining should be subjected to a continuing active review.
To remove any lingering doubts, I want to make it very clear that significant improvements have been made in the following ways. As an employment incentive, I have arranged that the one-parent family payment will be restored and will continue to include a half-rate transitional payment for six months when employment paying over €293 per week is gained. The weekly income threshold for half-rate child dependant allowance in respect of certain benefits has been increased from €300 to €350.
The qualifying period for the back to education third level option has been reduced from 15 months to 12 months. As I stated in the Dáil last night, I am sympathetic to considering a further reduction in the qualifying period in this regard, perhaps to nine months. The qualifying period for entry into second level education has not changed and remains at six months. As a further boost in this area, the cost of the back to education allowance has been amended by increasing the grant from €254 to €400.
I have made major changes regarding rent supplement. The six-month rule has been abolished and replaced by a new criterion such that those with a short-term income need will not be disadvantaged. This applies to cases of illness or unemployment, together with those who are assessed by a local authority as having a housing need, the elderly, homeless people and those who are disabled. Previously, rent supplement was not paid to those who refused two offers of local authority accommodation. I have raised this to three offers, which I believe to be reasonable in order to strengthen the leadership role of local authorities in dealing with long-term housing needs. To that end, I will be having discussions with my colleague, the Minister for the Environment, Heritage and Local Government, on how best to ensure housing assessments are carried out in a speedier fashion for all applicants for rent supplement. I increased the income disregard from €50 to €60 per week for the payment of rent supplement and have decided not to increase the relevant minimum contribution of claimants from the present rate €13 per week. I have asked the social partners to examine the non-payment of rent supplement where one member of a couple is in full-time employment.
The Money Advice and Budgeting Service is a significant contributor to anti-poverty measures. I have recognised this by providing in this year's budget special funding of €700,000 so the service can develop additional services in this area.
The purpose of the crèche supplement is to provide short-term emergency support in cases such as those in which a parent has a medical appointment. I have ensured that existing recipients continue to receive the supplement and that new cases referred by health professionals will be able to receive payment. I will be consulting my Cabinet colleagues on this matter.
Correct diet is important for many people who have particular medical needs and I have therefore restored payment of the dietary supplement, with immediate effect. Given that it is some years since diets were last comprehensively assessed, my Department has commissioned a study by the Irish Nutrition and Dietetic Institute on the most appropriate diets over and above normal food costs. I will study that report.
The remaining measures will be continuously monitored to ensure that there is no disadvantage caused. These include graduated rates of payment and the increase in paid contributions for entitlement to certain social insurance benefits.
It is a sad fact of life that, more often than not, the most vulnerable of the vulnerable in society are children. This budget set out to further improve entitlements and supports targeted at directly benefiting children and families. I know there has been some questioning of the policy of not increasing the child dependant allowances on the grounds that these payments are made only to recipients of social welfare. The Government's policy is to concentrate resources for child income support on the child benefit scheme.
After the budget, child benefit will account for over 66% of child income support, while in 1994 it constituted less than 30%. There are sound reasons for this policy. Child benefit is more neutral vis-à-vis the employment status of the child’s parents and it does not contribute to poverty traps whereas the loss of child dependant allowances might do so. As Senators are aware, child benefit is a near-universal payment. They will appreciate that the child dependant allowance had not been changed since 1994, but the view of successive Governments is that child benefit represents a better way forward.
As part of Sustaining Progress, special initiatives are being taken to end child poverty. Payments that would replace the family income supplement and child dependant allowance, and perhaps the back to school clothing and footwear allowance, are being considered. Perhaps we can put a new scheme in place. I am particularly interested in studying the findings of the NESC report on child poverty.
My priority in this budget package is to make significant progress in delivering on the social welfare commitments contained in the programme for Government, Sustaining Progress and the national anti-poverty strategy. We are focusing our resources on the relevant areas.
Sections 2 and 3 reaffirm the Government's commitment to supporting pensioners. The Bill provides for an increase of €12 per week in the personal pension rates, increasing the rate of old age contributory pension to €179.30 per week and the old age non-contributory pension to €166 per week. This is a real increase of over three and a half times the rate of inflation. There is also an increase of €12 for those in receipt of widow's and widower's contributory and non-contributory pensions. Widows aged under 66 who are in receipt of those pensions will benefit from a €14 increase, bringing their weekly pensions to €154.30 and €148.80, respectively. Proportionate increases will be applied.
Proportionate increases apply to qualified adult rates across the board to match the other increases. These increases are already on the record of the Houses. I am conscious of the needs of other vulnerable groups in our society, particularly those who are unemployed, disadvantaged or ill, and those who provide care for the elderly and the ill. Accordingly, I am providing for a weekly increase of €14 in the personal rates that apply in this regard. The rate of carer's allowance will reach €153.60 per week while the new carer's benefit rate will be €163.70 per week.
The social welfare increases included in this Bill will become payable from the first pay day in January 2005. Some 160,000 customers who receive long-term payments by means of electronic payment through a post office will receive their increases on the first pay day in January. Obviously, there are some administration issues to be addressed.
The production of new order books will entail a minimal delay, and the new books will be issued to all customers in mid-February 2005. These customers will receive a lump sum arrears payment covering a period of six weeks in their first payable order of the new book, and the weekly increase will be included in their weekly payable orders thereafter. A further 260,000 customers will receive their new order books in April. To minimise inconvenience, they will, however, receive a special arrears payment in mid-February, covering the previous six weeks, and seven weeks advance payment. I trust this will be helpful.
Section 4 provides an increase of €39 in the weekly income thresholds applied in determining entitlement to family income supplement. This could mean a weekly increase of €23.40 for most eligible families. Sections 5 and 6 of the Bill provide for changes to the PRSI structure. Section 7 of the Bill provides for changes to maternity and adoptive benefits. We are meeting substantially our commitments under Sustaining Progress to raise the limit in respect of these benefits to 80% of average weekly earnings over the life of that agreement. This measure will benefit the majority of recipients and will take effect from January 2005.
Section 8 provides for an increase of €44 per week in the health contribution threshold, thereby increasing the weekly income under which no contribution is payable from €365 per week, or €18,512 per year, to €400 per week, or €20,800 per year. This measure, which will take effect from January 2005, will benefit some 95,000 income earners.
This Social Welfare Bill, the first of two instalments, builds further on the progression of social inclusion measures adopted by this Government over recent years. It safeguards the living standards of those who rely on social welfare income and other supports and prioritises the allocation of resources in favour of those most in need. I commend the Bill to the House and look forward to a constructive debate.