I welcome the Minister and his officials, Tom Mulhern, Geraldine Gleeson and Tim Quirke. We want to conclude Committee Stage today so that people can receive their payments on 1 January. Some of us would not like to be seen to delay that.
Social Welfare (No. 2) Bill, 2001.
Section 1 agreed to.
NEW SECTIONS.
I move amendment No. 1:
In page 3, before section 2, to insert the following new section:
"2.-The Minister shall as soon as may be after the passing of this Act prepare and lay before both Houses of the Oireachtas a report on the increase in the consumer price index since the commencement of the Act of 2001 to the commencement of this Act, and the said report shall compare the percentage increases in payments set out in Schedules A and B to this Act with the corresponding provisions of the Act of 2001.”.
This is an extraordinary session of the committee in unique circumstances. We normally would have had a week or two to tease out some of the points the Minister made today following our contribution on the debate in the Dáil. I fully accept that we must ensure people at least get their backdated rises by the middle of February.
There should be a mechanism in the Bill whereby the impact of inflation is taken into account. I know the Minister will say this has been one of our better years. This was a fundamental issue this time last year. The Opposition argued very strongly that social welfare increases were barely covering themselves with inflation running at 7%. Inflation is still a factor. Deputies will have noticed that since the summer, particularly in the groceries and drinks sector, there has been a significant rise in inflation. The 4.6% to 4.7% measured by the CPI may not really reflect the impact of inflation on the poorest households. Although the basic £8.06 is greater than the4.6%, it is still a serious issue. I hope the Government drafts a social welfare Bill that takes account of inflation.
I know most of the attention was on benchmarking. Separate amendments on that issue have been tabled by me and my Fine Gael colleagues. The Combat Poverty Agency stated that general income rises were 10.8% in most of the past year. Almost half of that has been taken away by inflation and that is very significant. Social welfare Bills should have a mechanism to take that into account. That can be contrasted with the PPF, for example, and the negotiations leading to it. Inflation is a key element in deciding pay increases. Why should this not be provided for in social welfare legislation? This is an old argument.
I support the amendment. We had an opportunity to debate this issue last year, the difficulty this year is the short truncated period we have to debate the entire Bill. I do not blame the Minister for that. If the budget was in early November a lot of these problems could have been resolved. There would have been a longer run-in to discuss the legislation. That is the problem we face this week.
Deputy Broughan made a valid point about inflation. When I studied economics the most fundamental lesson I was taught about inflation was that it affected low income families more than anyone else because their incomes were much lower and, consequently, they depended on basic foodstuffs to get them through the week.
The St. Vincent de Paul Society sent us a very interesting submission, which we had the opportunity to debate with its delegation a month ago. It stated 60% of a poor person's budget was spent on food bills. I agree with the Minister's projection regarding inflation of 4.4% for the next 12 months, but the difficulty is that is not an issue for approximately 15% of the population who must live on small incomes. If one is living on a small income of which 60% is used to buy food at a time when food inflation is running at almost 10%, a mechanism must be employed to ensure social welfare increases match inflation.
The amendment is not wide of the mark. There is even a review mechanism under the PPF. The point I have always made about social welfare increases is that there is no absolutely no review mechanism built in. They are introduced annually following financial resolutions tabled by the Minister for Finance. There should be a mechanism to allow us to review the effects of increases on the poor.
One way the Minister could do so would be for himself and the Minister for Finance to make a statement to the House every three months on the effects of inflation throughout the year. That was another element of my pre-budget submission that the Minister did not mention on Second Stage. That would be a good amendment to the Social Welfare Bill. It would not cost any money and would permit the Minister and the Minister for Finance, who ultimately has power over the allocation of moneys for such measures, to explain to the House every three months the effects of inflation and the CPI on social welfare increases. If the Minister conceded to make a state of the union address every three, four or six months in the House, it would be a useful development. There are review mechanisms in other areas of policy and the PPF, but such a mechanism is not built into the Social Welfare Bill. Social Welfare recipients are not part and parcel of the PPF. The amendment has merit and while I am interested in the Minister's reply, I can guess what it will be.
I thank you, Chairman, and Deputies for facilitating us on Committee Stage. I accept the comments regarding the short time we all have had to prepare. Deputy Hayes said the budget should have been announced in November, but then we would be accused of not delivering on payments until much later. I was a strong proponent of the Government's view that we should reduce the timescale between announcing and delivering on increases. It is not all doom and gloom for Opposition Members because, while they may only have a short time to debate this legislation, they will have an opportunity to repeat themselves when the Social Welfare Bill comes before the House next year. There are two Bills this year which is an advantage for the Government as it can highlight the great work it has done.
Inflation is estimated at 4.9% for this year. The annual inflation rate has fallen in the past six months. The annual change up to October was 4.3%. The main rates of social welfare increased by 10.3% and 10.4%. This represents a 5.1% and a 5.2% increase in real terms this year. The projected rate of inflation for 2002 is 4.2%. The main rates of social welfare will increase by 9.4% from January 2002. This represents a real increase of 5%.
I have outlined all the reasons that it is not feasible for the Minister to come into the House now and again to make a statement, even though in recent years it might have been to the Minister's advantage to proclaim the message that in each of the budgets that the Government has been lucky enough to bring forward there have been increases in social welfare payments.
There is nothing to prevent the committee from requesting the Minister to respond regarding increases during the year. It has always been a case of swings and roundabouts when it comes to increases, but social welfare recipients have largely benefited in recent years. If it happens that the increases are lower than the rate of inflation, generally compensation is made the following year. That has always been the case, where possible. During the lifetime of the Government the CPI has risen significantly. An objective analysis would show social welfare increases have outpaced the rate of inflation and been in line with the increase in average industrial earnings and greater than it in some years.
QAAs have increased from 13.1% to 17.4% which represent real increases of 8.2% and12.3%. In addition to the general increases for QAAs, recipients of contributory, retirement, invalidity and private person's pensions aged over 66 years will be given a further increase of £6 and £7 per week bringing the overall increase to £15 per week. These combined payments represent increases of between 23% and 25% or real increases of between 17.9% and 20.5%. An increase of £10 in personal rates represents an increase of between 9.2% to 10.5%, or a real increase of between 4.8% to 6.1%. There has been a real increase of 7.3% in widow's pensions and 6.9% for lower social welfare payments over the rate of inflation. An increase of £8 equates to a real percentage increase of between 3.1% and 5%. There have been real increases in every payment.
Deputy Hayes mentioned an incorrect figure in regard to food inflation which is running at 6.8% for the past 12 months. The Government committed itself in its action programme to increasing social welfare pensions to £100 per week by 2002. Contributory pension has been increased by £16 more than we intended. Similarly, non-contributory pension has been increased by £5.53 more than intended. There have been real increases in recent years of between 4% and 5% at every level. While I cannot accept the amendment, that would not prevent the committee from requiring the Minister to respond to inflation variations.
Are all the figures the Minister went through officially published during the year or are they available to him only now?
What figures?
The various figures.
The CPI figures?
Not only the CPI figures but the comparisons given in terms of the various figures.
Figures such as the old age pension——
Are the various figures given available in an official publication during the year or could the committee request that information from the Department?
Yes. The £10 increase given this year is 9.2% to 10.5%, which, in effect, is a real increase over the anticipated rate of inflation of 4.8% and 6.1%. That also applies to other increases. Those figures would be available to the committee on request. We have all these figures.
The only problem in all this is that we have to operate on the basis of the previous year. There is no point thinking in terms of what will happen in the future. For example, we do not know what will happen in earnings growth next year, given that, according to Mr. David McWilliams and others, we are definitely in a recession. In that context it is difficult to measure what will happen. The 5% inflation figure the Minister gave for 2001 is high. Workers are being compensated on average to the extent of approximately 10.8% in that regard, but the Minister has not met that target for people in receipt of social welfare benefit.
Last year the social welfare increases were 10.3% and 10.4%.
The difficulty about all of this is that effectively we have to operate a year in reverse and the Minister has to act on the basis of what has happened in earnings and inflation in the previous year. To some extent, it is a compensatory mechanism as we move into the next year. I accept what the Minister is saying - the Chairman is right and I agree with Deputy Hayes - this should be kept under review because after Christmas there will be a strange scenario in the sense that I presume there will be euro-wide inflation rates as well as our local position. There is a case for putting this measure into the heart of the legislation
Table A 19 of our annual statistics report, which we issue every year and of which members probably get a copy, gives information on the index of short-term payments, the consumer price index and the average industrial earnings over a number of years.
When the Minister came into office, the increases were paid for 29 weeks of the year but they are now paid for 52 weeks of the year. What is that worth to the recipients?
That statement is not accurate.
It is accurate.
It is not accurate.
It is very simple. I am sure the Minister and his officials will answer that point. I do not want an answer from the Deputies opposite.
The Deputy should ask a social welfare recipient if it is accurate? Social welfare recipients would tell him that previously they had to wait for months for their increases, but they do not have to wait for them now.
On a point of order——
What is the point of order?
The Deputy said that in the past increases were paid for 29 weeks of the year. If one got an increase that ran from April to April, irrespective of how one calculates it, that is not an increase for 29 weeks but for 52 weeks of the year.
I presume Deputy Brady was referring to the calendar year.
Yes. That is what it is all about.
What about the following year?
Payment of the increases is now being brought back to January. When the Deputy's party was in office, the increases were not paid until——
The point the Deputy is making is different from——
I want the Minister to answer my question.
I will answer the Deputy's question. Every time we have framed a budget, the Minister for Finance and his officials have asked how much we need in the budget year and how much we need in a full year and we operate on that basis. In the past, successive Ministers for Social Welfare would have had a pot of money, which they tried to ensure covered everything. If they had difficulty doing that, which they always had, they pushed payments out to later in the year.
Correct.
In other words, instead of introducing an increase in, say, April, they pushed it back to September or October, as has been done over the years.
By yourselves.
Social welfare recipients want their increases paid as soon as possible after they are announced. That is what we are doing. When I came into office the payments were made for only 29 weeks of that year, but henceforth, unless the position is regressively changed, all budgetary increases will be paid in the budget year, for 52 weeks of the year.
I do not know if this is relevant to the amendment before us.
It is very relevant to it.
The Chairman is doing a good job.
I know he is. I am sick of hearing balderdash being thrashed out here as if it were fact. It even stated in the Minister's script that when he came into office in 1997 the increases were paid for 29 weeks. That is not true.
Will the Deputy give way?
Let the Minister make his point.
To take the 1996 budget, the increases kicked in from a particular time. From memory, I think they were delivered in May.
June.
They ran then from that June until the following June. Therefore, in 1997 if an increase was granted, it ran from the start date until the next increase the following year, which was for 52 weeks. I acknowledge what the Minister said, that they have clawed back the date increases are paid. The date of payment of increases has been clawed back by a little each year and now they will be paid on 1 January. I remember everyone on this side of the House last year and the year before asking why taxpayers were able to get their increases at a particular time but social welfare recipients were not. The date of payment of social welfare increases has been gradually clawed back to ensure parity with the date of payment of taxpayers' increases.
Why are we unhappy then?
Deputy Brady's statement is incorrect.
The statement by the Minister is not accurate; never in the history of this State was an increase given for 29 weeks in a year. That has never happened and it is incorrect to say it has.
It is not. I am sorry if I nettled the Opposition.
I was never a school teacher and I might not have the same command of the English language as some Deputies, but I do not know if Deputy McGrath's argument stands up. I think it was the rainbow Government that started this process - even if it moved the payment of the increases back only by a week or two.
Exactly.
The rainbow Government started the process and it must have seen some value in it. The Minister has made huge strides and completed that process. I do not know what the argument is about.
The argument is about misleading statements.
To me it is an non-argument.
Everything is a non-argument to the Deputy. Wait until he moves to this side of the House and then we will hear the arguments and——
What is of benefit——
——he will have changed his position.
Social welfare recipients will get their increases as early as possible. The Deputy is correct in saying that in 1997 the increases were delivered on 2 June. Increases will now be delivered effective from 1 January. That will be a major benefit to social welfare recipients' income. As I said on Second Stage, it is 4% to 5% of an increase, apart from the percentage increase they will get in their overall payments.
If the Minister were to think back to 1991, the increases were delivered on a certain date, in 1992 they were delivered on another date and in 1993 on another date. One can go back as far as one likes——
What is the point?
That is what the Minister was doing.
The Minister is a type of quasi-historian.
He specialises in that.
I studied history. My recollection is that it was an Administration led by Charles Haughey - I am not sure who were the Ministers for Finance and Social Welfare - that put social welfare increases back to the later part of the year. The Minister should check it out. Fianna Fáil pushed the date out and now it is bringing it back.
That is wrong.
It would have been done by every Government.
Fianna Fáil started it.
I will give the figures. In 1992 it was 23 weeks and it was 23 weeks until 1995. As the Chairman said——
It is further back. We are talking about the 1970s and 1980s.
I do not have figures for then.
The Jack Lynch era maybe.
We look to the future.
As Fianna Fáil was in power for most of the time, it must have been it.
If the Deputy wishes to be a historian, perhaps he should look at the Christmas bonus. We introduced that and every time the Deputy's party was in power it was reduced and every time we were in office it remained the same or was increased.
An amateur historian.
I am aware the time allocated for Second Stage was curtailed and some members did not get to contribute but this discussion must be on the amendment.
Would it be a useful exercise to organise a plenary debate on this every three or four months? The Minister comes before the committee at various times in the year but does he not accept that the debate needs to take place not just in this committee but between him and the Minister for Finance? Ultimately, decisions on increases or the extensions we are seeking in the benefits will involve a Department of Finance decision. In other parliaments the Minister with responsibility for public expenditure and the Minister with responsibility for social security regularly come before parliament in plenarysession, even if it is only once every six months, to address it on the effects of the changes on inflation. I accept the Minister is not prepared to commit to that practice by way of legislation but will he make a verbal commitment to it? If, in four or six months time, I seek a debate with this Minister and the Minister for Finance, will he make a commitment to have it?
There will have to be Dáil reform before that happens.
I support Deputy Hayes. We are due to start using a new currency. We are already within that currency system but we will soon physically use it. Concerns have been expressed in the past few years by some economists that if, for example, the euro strengthens against sterling, there could be significant inflationary pressures. That could happen in the coming year and it would have an impact on the people we represent. There is due to be a general election and, hopefully, there will be a new Administration but this will be an ongoing issue as the year progresses. Some people think we should not do away with our reserves in theCentral Bank because we might still needthem.
Can we get back to the amendment?
I have nothing further to say on it. While I can come before the committee, I do not see the reason for the Minister for Finance and I debating inflation during the year. Neither I nor the Minister for Finance has a say in relation to inflation. However, all Ministers for Finance predict the inflation rate for the coming year and the Estimates are based on that. More often than not, inflation tends to be lower than estimated by the Department of Finance; historically, that is the case. To a certain extent, therefore, people have made gains on the basis of inflation being over estimated. If we were to go to the Dáil every three months to debate these issues, there would be cries for a budget every three months, which would be impossible. Governments must frame their Estimates and budgets from year to year.
Two years ago, when inflation was more serious, did the Minister not go to Cabinet seeking a revision of the rates?
He was sent away with a flea in his ear.
Would it not have been helpful in that circumstance if there had been such a mechanism in the House? At that time, inflation was getting out of hand and the Minister was aware that it was impacting negatively on social welfare recipients. It was reported that the Minister went to Cabinet, although I am not sure if the Minister confirmed the reports, and asked for——
I cannot comment on what happens in Cabinet.
Tell us what happened.
——some recognition of what was happening to social welfare recipients but he was turned down.
What I can say and I have said before is——
Would it not have been helpful for the Minister to have a mechanism in the Dáil to discuss this?
——that the report was incorrect.
It was incorrect. So the Minister did not realise what was happening to people on social welfare.
I did not say that.
The Minister does not believe it but we want to help him. We are on his side.
I do not need any help——
We want to help him with the Minister for Finance, Deputy McCreevy.
——as I have proved with this and every other budget with which I have been involved.
Deputy Fitzgerald is right. In fact, the Minister occupies a footnote in chapter four of Deputy McCreevy's book.
Amendment, by leave, withdrawn.
I move amendment No. 2:
In page 3, before section 2, to insert the following new section:
"2.-The Minister shall as soon as may be after the passing of this Act prepare and lay before both Houses of the Oireachtas a report on the implications of closing the differential between the rates of periodic benefit and assistance paid to an adult dependant and the rates paid to a qualifying adult, and of removing any limitation of the amount of payment made to a couple as opposed to a corresponding payment to two adults who are not living together.".
The Minister referred briefly to this. The Minister for Finance has moved ahead with individualisation in the tax code. There was a terrible crisis among Fianna Fáil backbenchers about it a few years ago but that appears to have been resolved. Two members of a household who are working get full tax relief as individuals. Why has the same thing not been done in the social welfare code?
The Minister will make numerous statements, particularly about over 66 year olds, and claim to have gone above 85% in the increases. However, let us talk about the broad group of younger people on assistance payments or on the new basic payment, for which I commended the Minister. If the Minister had, as many people wanted, increased the adult dependant rate to 70% of the main rate this year, it would have meant an increase of at least £4, which would have resulted in the Minister increasing the amount by £12 instead of £8. In relation to individualisation, therefore, he has made a hospital pass, as it is known in rugby football, in terms of passing this issue to the next Government. It will be that bit more difficult to get the adult dependant rates up to the 70% or, indeed, to get everybody to a rate applicable as an individual, regardless of who they are.
It still remains a large task for this Minister and his successors to ensure that adults are no longer paid a derisory £62, as they will be on 1 January. In effect, the Minister should have opted for the 75% rate across the board this year. He has made it more difficult for his successor next year to reach that level and, in subsequent years, to reach the desired target of fully individualised payments.
Will the Minister restate his policy on individualisation? What targets would he set in this regard? Is it the intention, from a policy point of view, to move towards full individualisation? If so, is there a timeframe for it? Did he have a timeframe when he took office? What is the current position on reaching the target of individualised payments following the budget?
The issue of individualised payments will take a long time to resolve. Even under the PPF the most on which they could agree was administrative individualisation, which involves dividing the existing payment in two, which is not a huge leap. This was the first Government to indicate clearly that it would increase progressively qualified adult allowance on contributory old age pension to the stage where it would reach the non-contributory old age pension rate, in other words, that it would move towards some form of individualisation. However, that was a first step which we are continuing in the budget. In the case of the other payments, to a certain extent it is built into the target of reaching the figure of 70% or whatever is deemed to be the eventual target. When we took office QAA was somewhere in the region of 59% to 60%. It is now over 66%.
I do not accept what Deputy Broughan says about a hospital pass. The only hospital pass the Government will give to the next Government is the ability or otherwise to reach the all-time record achieved in the last two budgets of a £850 million increase in the social welfare budget.
One of the good things the Minister has done is to create, to some extent, a floor. If there is a reversal of roles and we are sitting on the other side of the table this time next year and the Minister is on this side berating us, does he agree that it is likely that the Government, irrespective of which parties are in office, will ensure it will at least match the rises given in the previous two years? That is a good development. It will be put up to future Governments to at least come up with the sum of £8.06. From that point of view, it is a step forward.
The Deputy will have to come off the fence and say how he will pay for it.
I told the Minister yesterday that I will have no problem with that. There are ways.
Taxation.
In other words, there will be no jobs.
In recent years there have been unbelievable surpluses in the current account of £3 billion, £4 billion or £5 billion. There has been £1 billion a year in the social insurance fund. On the current account, it certainly seems there is plenty of money to do the things we need to do. One must make choices. It might come down, for example, to a choice between a super stadium and a hospital or introducing full individualisation in the social welfare system.
Quite clearly, one can do both.
One cannot.
I remind the Deputy that, while he may be going out on a limb in saying one can raise corporation tax, it was a member of his party, when Minister, who devised the policy for which his party at least claims credit. It left us a hospital pass when it left office in the sense that it had brought the negotiations at EU level to a certain point. We had to finish them and subsequently implement what was an excellent corporation tax regime, which, the Deputy must admit, has been one of the key successes of the economy and is the reason so many people are at work today.
Does the Minister actually believe this propaganda?
Does the Deputy not believe it?
It is astonishing.
At the weekend a commentator was saying that the debate on the budgetary side, including taxation and social welfare, was phoney. Because of the stability pact we are constrained when it comes to borrowing. It is all academic. It is history. Because we are a member of what is a huge currency union the impact of borrowing on such a small part of it would be residual. The other point the person concerned was making was that we could not move ahead, as the Minister's party has tried to do, with the tax regime of Texas and attempt to have the social welfare regime of Sweden.
The Deputy should say that to taxpayers. Commenting on television Deputy Rabbitte said that it was his hope that all commentators would be clamouring at the weekend, but they were not. The best commentators of all are members of the public. The Deputy knows, as I do, that they were more than happy with the budget delivered.
Not in the constituency of Sligo-Leitrim.
In terms of costs, as the Minister said, moving towards individualisation is primarily a financial issue. What costings were placed before the Minister in making decisions about the choices to be made in individualising payments in the different categories?
I do not have the figures, but it would cost hundreds of millions, if not billions, of pounds to do it over an extended period. It would have to be something Governments would do progressively. I claim credit for the fact that this was the first Government to move significantly with some purpose. As the Deputy will appreciate, we probably picked the fairest category, that is, women who through no fault of their own had to leave the workplace to work in the home as a consequence of which they did not have the advantage of continuing their stamps. We started the move with those aged over 66 years, the qualifying adults of their spouses. Their payment has risen to 85% as a result of this and last year's budgets.
That was an important move which everybody present would obviously welcome. How does the Minister see the strategy of moving towards individualisation developing during the years in terms of his grand plan with its high costings? He is correct in stating it is a long-term issue and a very expensive one, but what is the macro plan in his Department?
What would the Deputy recommend - 85%?
We have to raise it as high as we possibly can or fully.
Because there are now so many females working we will reach the stage in a few decades where virtually everybody will receive a payment in their own right. Individualisation will take effect.
It will be a big issue in the interim.
The figure of 60% was set in one of the previous social partnership agreements, progressively worked up to by the previous Government and achieved in our first budget. The commitment in the following social partnership agreement was that it would reach 70%. That has been done. Progressively we will get to the stage where many will be taken care of, but resources will only permit so much to be done. The other way of doing it would be to freeze or slow down the main rate and increase QAAs.
That would be problematic.
It would cause quite a number of anomalies. We made changes last year to the old age pension rate of £10 and £15 - £25 for a couple - which caused quite severe difficulties for those not entitled to full payments. If we continued the £15 increase over a period, there would be some on QAA means-tested payments who would be getting much more than the main recipient.
Everyone agrees it is a welcome move. Not so much in the case of pensioners, but those on unemployment assistance etc., the gap was too wide. It was an incentive for couples to pretend they were not living together. The system should never encourage people to pretend they have a different status.
Amendment, by leave, withdrawn.
I move amendment No. 3:
In page 3, before section 2, to insert the following new section:
"2.-The Minister shall as soon as may be after the passing of this Act prepare and lay before both Houses of the Oireachtas a report on the provisions of the Social Welfare Acts which are not in force by reason of the fact that a commencement order has not been made, and the plans if any for bringing such provisions into effect, including in particular the FIS provisions of the Social Welfare (No. 2) Act, 1995, dealing with divorce.".
We tabled this amendment only in order to inquire about the major sections. The Minister told Deputy Hayes that section 17 of the Social Welfare Act, 1988, which provides for the actuarial review of the social insurance fund, would have been commenced and I presume it was. The major legislation the Minister promised in that area, to which we will come later, has not been introduced. Which sections, if any, are relevant? Last year this issue was very topical because the previous year the Minister had abandoned searches on the roadside. The Garda pulled out and the Minister quietly abandoned that section of the 2000 budget. What sections are outstanding?
The Minister stated child benefit will be covered by the Social Welfare Bill, 2002. The rationale behind this legislation was to introduce changes from 1 January and that any other changes would be dealt with in next year's Social Welfare Bill. Will the Minister consider amendments to some schemes in advance of the publication of the Social Welfare Bill, 2002 because a number of other changes, as Deputy Broughan said, under the consolidation Act have not been invoked in this legislation?
The scope of the Minister will always be limited in terms of what is allowed under the Social Welfare Bill because it is dictated by the budget and, therefore, there is no leeway for me to agree to anything that would cause extra expense. The reason for this legislation is to ensure payments are made quickly. Child benefit and other increases will not take effect until 1 April and, thus, can be taken under next year's Social Welfare Bill. That will provide the Oireachtas with an incentive to pass the Bill by that date in case it slips down the pecking order.
But the Minister could have done so through this legislation.
Yes, it would not make a difference. The payments will not be paid until 1 April and the budget dictated that.
This is strange legislation because we cannot table amendments which will increase expenditure. This is theatrical.
That has always been the way.
I know but the Minister could have made the changes in the resolutions made by the Minister for Finance. Will the passage of the Bill next March be another PR exercise?
We could have made regulations but it was felt primary legislation would be required.
Child benefit is not the only scheme to be changed.
There will be other small changes.
We have received complaints about the social welfare budget. One complaint relates to the income disregards of a spouse on an invalidity pension. People have checked in their local social welfare or Comhairle office and have found there have been no changes to a large number of schemes. Will the Minister make changes to disregards and other areas to give those in receipt of payments a boost?
There have been changes in that respect.
What about the carer's allowance?
They are outlined on the facts sheet.
Deputy Broughan referred to invalidity pension. I had a case recently involving an individual whose husband was claiming the carer's allowance——
The upper ceiling for QAA and retention of full child dependent allowances increases from £145 to £155 per week from January 2002. It may well that the individual whom the Deputy mentioned might have been talking about the position now rather than in January. That is done by regulation and, therefore, it is not in situ.
I refer to the statutory provisions that have not commenced. All sections of the Social Welfare Act, 2001, have commenced with the exception of section 37(6), which provides for the commencement of the amendment of the provisions to the principal Act and the consolidation Act required as a consequence of the introduction of the euro currency with effect from 1 January 2001. The sole provision in the 2000 Act to be commenced is section 3, which relates to changes in the administration of the SWA that will be addressed in conjunction with additional administrative issues. All sections of the 1998 and 1999 Acts have been commenced.
There are, however, some provisions in earlier Acts for which commencement orders have not been made. The 1997 sickness allowance scheme has not been introduced. The overall purpose of the proposed scheme will be reviewed as part of an ongoing review of all income maintenance schemes. All those who would have qualified for sickness allowance are currently catered for through other payments. Nobody has lost out as a result. Section 26(1)(b) of the Social Welfare Act, 1997, contains powers to prescribe the provisions relating to benefit and privilege in the context of means assessment.
Section 10(4) of the Social Welfare (No. 2) Act, 1995, provides for regulatory powers under which a divorced person may receive a qualified adult allowance in respect of more than one person. The need for this provision is kept under review. Section 22 of the Social Welfare Act, 1995, provides for regulatory powers designed to standardise the arrangements applying to various social welfare schemes in regard to absence from the State. It is planned to introduce the relevant regulations later this year.
Section 20 of the Social Welfare Act, 1994, refers to the integration of occupational injury benefit and unemployability supplement payable under the benefit scheme of disability benefit. A number of EU directives await transposition into domestic law and they are proceeding apace.
When the Minister makes regulations will he examine a number of simple changes that could be made at relatively little cost? Maternity benefit is based on one's qualifying stamp year. If one makes a claim in 2001 the relevant qualifying stamp year is 1999-2000. The rate of benefit payable is 80% of one's earnings in that year. There have been substantial increases in wages during that time and it is not fair that if a woman takes maternity leave now, the level of benefit she will receive will be based on her income two years ago.
That issue will be addressed in a later amendment.
Will the Minister make a change given that it would only involve a small cost? There is a question of fairness to women involved in this issue.
I will deal with it when we reach that amendment. There are arguments on both sides in this regard.
The Minister should at least give them an option.
An increase of £8 in the invalidity pension has been introduced. However, a case involving one family was brought to my attention last week. Following the budget the spouse who was in receipt of the invalidity pension will no longer be able to obtain the full tax credit under the home carer's allowance as the £8 increase will breach the existing income limits. There are currently two income limits, £4,000 and £5,000, with a buffer zone in between. This issue relates to the Finance Bill but this increase will lead to a family losing money throughout the year unless the income disregard is increased under that legislation.
I ask the Deputy to forward the details of the case to me. With regard to medical cards and so on if the social welfare rates increase, the income disregards also increase, as has happened already. There was provision in the budget in this regard even though people may criticise us in regard to medical cards. The limits have increased to take account——
What is the position regarding the carer's allowance?
I am not sure. I will check that for the Deputy.
The Minister referred to the FISC provisions for divorce under the Social Welfare (No. 2) Act, 1995. Have they been introduced?
The two payments under QAA relating to the Family Law (Divorce) Act, 1996, have not been introduced.
Is there any intention to introduce it?
The provision is being kept under review on an ongoing basis. I do not know if there is a huge demand. The provision is already in place.
Amendment, by leave, withdrawn.
I move amendment No. 4:
In page 3, before section 2, to insert the following new section:
"2.-The Minister shall as soon as may be after the passing of this Act prepare and lay before both Houses of the Oireachtas a report on the social welfare situation of persons resident in Ireland who are in receipt of pensions under the social security legislation of any other jurisdiction.".
This arose on a number of occasions. I seek information in this regard. The Minister reported on a number of occasions on Question Time on the position of those who made social insurance contributions before 1953. I understand some living outside the jurisdiction or returning home would be eligible for any measures under this heading. How do they stand at present? Will the Minister also make a statement regarding means testing of people who receive a pension from another jurisdiction?
Deputy Broughan tabled this amendment last year. When we clarified the position, his question related to people who had British Rail pensions and whether they would qualify for the living alone allowance or the over 80 allowance. We made the point that the allowances are an integral part of the Irish pensions system and are designed to cover specific contingencies and have nothing to do with pension payments made to Irish people by other EU member states or under a bilateral agreement. None of these schemes is connected with British pension recipients in Ireland.
Amendment, by leave, withdrawn.
Amendments Nos. 5, 6 and 9 are related and may be taken together by agreement.
I move amendment No. 5:
In page 3, before section 2, to insert the following new section:
"2.-The Minister shall as soon as may be after the passing of this Act prepare and lay before both Houses of the Oireachtas a report on the implications of introducing a system of benchmarking or indexation of all social insurance payments for the purpose of giving security of income to all recipients thereof.".
This formed part of the reason a vote was held an hour or two ago in the Chamber. Regarding the Minister's attitude to benchmarking and indexation, we belatedly received the benchmarking report six weeks ago and found it very interesting. One aspect about which I wondered was that the committee did not consider the minimum wage as a benchmark. It considered various other options and came down in favour of gross average industrial earnings.
A major criticism of the Minister's administration, which we heard last night and this morning, is that we are not clear whether he accepts the benchmarking report and the target of 27% of gross average industrial earnings with a possibility of revising that, depending on how the economy performs, up to 30%. The Labour Party gave a commitment a few months ago in Cork that we would strive in any Government in which we took part for 30% of gross average industrial earnings and would not allow people slip below that. The Minister said he would reach the 31% mark in contributory pensions in 2002. The pensions report argues for a figure of 34%. For years the trade union seniors groups had a target of 40% but they appear to have adjusted that recently to 34%.
The Minister criticised Father Healy and CORI and the fact we quoted them. Why should we not do so? He and his colleagues have in the past decade, and prior to that, issued the quickest and most thorough critique of the budget. The Combat Poverty Agency and other groups will issue their analysis in a few weeks. CORI's basic wish in 1997 was that parties would commit themselves to a basic income for all people. One of the striking features of the past five years and possibly why the CORI document is so negative about the budget and the Minister's social welfare improvements is that, instead of saying to Fr. Healy that this is not the way the Government wants to do business, that it does not believe paying every citizen a certain sum of money and taking some of it back in taxation is efficient, the Minister has waltzed around Fr. Healy and his colleagues for the past four or five years. We have not even reached the Green Paper stage, never mind a White Paper or legislation on basic income.
We must pay great tribute to our trade union colleagues, Peter Cassells of the ICTU, his successor, David Begg, Des Geraghty of SIPTU and all the colleagues in the trade union movement for the manner in which they have tried to advance this cause. I also give credit to the community and voluntary pillar, including Fr. Healy whom I have mentioned. It also includes the INOU, Treoir, the Vincentian partnerships, the St. Vincent de Paul and all the groups which have combined to form the "open your eyes to child poverty" initiative. Their fundamental achievement under the Programme for Prosperity and Fairness has been to bring forward this idea that people on social welfare assistance and benefits should not be made live in penury in a prosperous society. The critique is that, despite the Minister's improvements of the past two years, such people have fallen further behind since he came to office. Through the partnership talks, we have managed to bring forward the idea of a basic income being a serious issue for future Governments.
I commend the Minister and give him credit for the fact that he has probably created to some extent the notion that there will be a floor below which people on social welfare will not be allowed slip, that no matter what happened in previous decades, this will not happen again and that there will be a fundamental benchmark. All the Minister has to do is publish the report and state at one of his public relations events that he accepts this and is committed to it. He has not done that and that is a concern. He could have built it into this legislation. That is why Fr. Healy wanted Green and White Papers - he wanted legislation guaranteeing the payment floor for those on social welfare.
The minimum wage is disgracefully low and should be higher.
We introduced it.
We advocated it down the years. The Dáil through the Committee on Enterprise and Small Business played a role in forcing the Minister, Deputy Harney, to bring it forward eventually.
That is nonsense.
That is true and the reality of what happened. The people who raised the issue and made it an item for discussion were, again, Peter Cassells and the ICTU group. They said, and rightly so, that they would not enter another partnership negotiation unless the Government introduced the minimum wage. The Minister will remember the campaign on behalf of the minimum wage when we marched through the streets. I understand we will not have a £5 minimum wage until October of next year.
It is a poor politician who has to walk up and down the street.
It is a free society.
Especially a poor politician who gets his name taken.
The Minister obviously has a difficulty with the concept of freedom of speech.
Some of the Minister's predecessors were not afraid to march the streets when it was necessary.
We did it in our student days, but we have evolved from that.
This area should not just be confined to indexation and benchmarking. It should include the minimum wage, although there is a form of benchmarking in that area which does not exist in social welfare. A few weeks ago at a meeting of this committee at which the Minister was not present but which was attended by one of his officials, officials from the Departments of Enterprise, Trade and Employment and Finance strongly defended their decision to turn down this report. They said benchmarking could not be accepted because the Minister for Finance must have discretion. If he were given discretion, increases lower than inflation could be introduced.
There should be a benchmark index. The figure of 27% is a good start. The Labour Party's target is 30% and we will publicise that in the general election. We will support increases of that order.
The Labour Party knows it will not be in power. Following Deputy De Rossa's performance as Minister for Social Welfare, how can they ever go back to the people?
I was looking at the Department's website last September.
I am delighted the Deputy looks at our website.
I saw the report we have been talking about for the past 12 months there. Nobody told me the report was due to be published or invited me to its launch. Normally, the Minister would buy a full page advertisement in the newspaper to tell everyone about such a report. We proposed these same amendments to last year's Social Welfare Bill and the Minister advised us to wait for the report. The report has now been published. I compliment the Department officials on having the courage to stick their heads above the parapet and support the majority recommendation. The three officials who were on the expert group put their names to the report and said it was the way to proceed. They deserve the same support from the Minister as they have given him in recent years. What is the Minister's position on this issue?
The Minister refused to be drawn when I asked him questions in the House last evening. When officials from the three Departments came before the select committee some weeks ago it was clear that the Department of Social, Committee and Family Affairs was in favour of the report and that the other two Departments were opposed to it.
This issue is bigger than mere party politics and I said as much to CORI, the Society of St. Vincent de Paul and the other third pillar groups which came before the committee. The implementation of this report would require a huge degree of persuasive politics throughout the country. We would have to make arguments to middle class people who know nothing about this issue and do not understand the poverty which exists in parts of our communities, rural and urban alike. If we are to make progress, we need more than political parties simply saying they are committed to implementing the report.
Combat Poverty, in its analysis of last year's and this year's budgets, pointed out that the Minister is the first Minister for social welfare to suggest that we are trying to move social welfare payments in the direction of general income levels. I give him credit for that. Why can he not make a commitment to accept, between now and 2007, this committee's recommendation? In order to achieve consensus we agreed to recommend that the lowest rate of social welfare payment should be 27% of gross average industrial earnings. The current figure is about 21%. We can achieve 27% if year on year increases of the magnitude which all sides of the House want to see are made. This is a touchstone issue and to achieve it will require more than party politicking. It could be an important legacy of the Minister's period in office.
Did the Minister have discussions with his three officials who agreed to the majority recommendation, unlike those from the Departments of Finance and Enterprise, Trade and Employment, before they signed the document or since? Will the Minister now sign up to the report to which his officials have already agreed? He owes as much to his officials who have been working on this subject during the past 12 months.
When I read the excellent report on a sunny September afternoon, I recalled our discussions of last year and was optimistic that a decision would be forthcoming. What is the Minister's position?
These are the Department's targets. Is this report merely a ploy? I am sure the figure could have risen to 27% this year if the increase given to child benefit had been spread differently. This statistic takes no account of the increase in child benefit. I am concerned that Ministers may become obsessed with this report and with the requirement to show progress on it every year. This could drive Ministers away from the commitment to child benefit, at which we have just arrived.
That point is well made and I will not repeat it. The Departments of Finance and Enterprise, Trade and Employment and IBEC are, at least, consistent in their positions. Other groups who were part of the discussions under PPF and who signed up to the majority opinion then decided they wanted more. We must be consistent in making agreements. The document was published on the website with my knowledge because it is a PPF document of public record. I was not about to suppress it. I am surprised the Deputy was not told it was available. I may even have issued a statement in relation to it but I cannot recall doing so. In any event, there was nothing to hide.
Before, during and after the discussions in relation to this matter, my officials acted completely under my authority and instruction and with my knowledge. The negotiations were hard fought. Between the Deputy's proposal to this committee and the final result of its deliberations, changes were made. I kept a close eye on that and I believe the committee was correct in the position it adopted. The report says:
The majority of the group considered that the target of 27% of gross average industrial earnings on a current year basis for the lowest social welfare payments was not an unreasonable policy objective. Given current uncertainties in relation to the short-term economic position, it was difficult to be prescriptive about the precise timeframe although it would not be unreasonable to expect that the target would be met in full by 2007.
That was framed at a time when there was quite a lot of uncertainty and there has been even more uncertainty since. An increase of 27% presupposes and implies an estimated annual average increase in relation to the lowest social welfare payments of £9.70 over the six budgets between now and 2007. I raised the lowest social welfare payments by £9.56 in this budget. Actions speak louder than words.
This issue will feed into the process of the national anti-poverty strategy review, the results of which will be available in the near future. In our budget speeches the Taoiseach and I referred to how we see us moving over a period. I ask Deputies to look again at what we said and thank them for recognising that I am the first Minister not just to speak about reaching average industrial earnings but for having achieved that goal over the last number of budgets. Many people do a lot of talking but never implement what they talk about. I would criticise some parties on the opposite side who do too much navel gazing but do not take enough action where it matters.
Give us a chance.
I might not necessarily be referring to the Deputy.
On a point of information, the Minister may recall that a colleague of ours from the Louth constituency who was in the House this morning lost the whip early in his career over a social welfare budget because he deemed it insufficient.
He was correct because it was not sufficient. I recall that instance. I must say the Deputy came from a Fianna Fáil background.
He had backbone.
He was a Fianna Fáil councillor long before he became a Labour Deputy.
He saw the light.
He knew there was no future for him. I was not around then - that was the time of Pádraig Faulkner.
Deputies should stick to the amendment.
As I said previously we are on target. We have already reached the old age pension payment of 30% and it is a sensible policy to raise other payments as and when resources permit. It would be our objective into the future to pursue a strategy of increasing other payments as resources permit so there are broadly similar levels in relation to average industrial standards in our community. I can say no more than that. It will feature in the national anti-poverty strategy review.
Gross average industrial earnings are a useful barometer. However, it is a narrow barometer if one considers all those who work in the public sector.
That is the point the chairman made.
That is why I thought the group might have explored the linkage to a minimum wage. They did not do so because when one begins to talk in terms of a minimum wage one immediately talks about costs and competitiveness in the economy. For example, if one said we will hit 50% of an average minimum wage of, say, £7 or \12 an hour, then one would be building it into the centre of the economy. I know you chose what you chose and you still have not accepted it, which is the basic point. You may say actions speak louder than words but sometimes one must say exactly where one stands. There have been huge resources for the last five years but they were only deployed fairly in the last two years, therefore, the fundamental question remains.
I was reading the Vincentian report, the presentation of which Deputy Hayes and I attended. There is a lot of that type of stuff coming forward. There were interesting articles last year by Kitty Holland in The Irish Times. Deputy Hayes referred to a study in DCU. Given that we are getting quite a lot of information, including the benchmark approach, is there merit in setting budget standards as referred to in the Vincentian report? Perhaps we should decide what is necessary for a family of one, two or three people to lead a reasonably good life with dignity. The bottom line in the report was that last year a lone parent with two children was approximately £40 short for reasonable food, clothing and control of bills. However, such a person was not desperately juggling or getting into arrears with the local authority, the gas company and so on. Such a citizen would need an extra £40 per week at his or her disposal to have a reasonable income. The Minister has gone some way towards achieving that target when everything is taken into account, including child benefit, but overall a lot more needs to be done.
I believe the amendments should be accepted. If the Minister was brave enough to stand up to the Minister for Finance, Deputy McCreevy - which he is not - he would accept the report.
What is the percentage now?
There is also the question of the average industrial wage.
It is more than 25% but I will check that figure.
The question of budget packages is interesting. We should call a spade a spade. In 1996 the social welfare package amounted to £161 million, 24% less than in the previous year. This is important because it is all relative. That was a relative sum of money in those days when one chose to give a total social welfare package which was 24% less than in the previous year. The income tax package in 1995-6 was more or less the same. More given in tax changes in 1996 rather than spreading it somewhat. The following year the social welfare package increased exponentially by 33% from a figure of minus 24% the previous year. It increased by 40% in 1999, 27% in 2000 and 110% in 2001. Obviously it was the same this year.
Many of the discussions relate to the relative issue. Groups such as the Vincentians and CORI should know well from their religious education - a bit like the miracle of the loaves and fishes - that one gets a sum of money and one must do the best one can, no matter how large or small the sum. I am proud to have been Minister for the last five years when all these advances took place. More could have been done but in my view we have reached social welfare levels that none of us anticipated five years ago. I accept it is not excellent for one to have to live on social welfare payments. However, I must go back to what has been done in regard to employment. People in my constituency who thought they would never work are all working now. When these people are working they are not claiming social welfare, which is a saving to the State. They contribute tax, albeit a much lower rate of tax. I do not agree with the Deputy's philosophy on taxation. There used to be an attitude that it did not pay to work. Exponentially social welfare payments have increased but it pays people to work. Because of the progressive changes over the years, particularly in the last five years, people know it is better to work.
Benchmarking is a good idea but it cannot operate on its own and there are other aspects. That is one of the reasons we want this proposal dealt with in the context of the national anti-poverty strategy review.
Putting off the national anti-poverty strategy review is putting off the day when decisions are made.
I am not putting off anything. I have given commitments.
I do not think that is the way to approach the issue. To go back to the point I made, the Minister is correct. If we as a society wish to move from the lowest rate of social welfare it will require more than just a party or group of parties talking about it. It will require the same kind of consensus we had, up to a point, in the 1980s in respect of getting the economy right and encouraging competitiveness. There are sections of the modern Celtic tiger economy that do not recognise the abject poverty in our midst, or that relative income poverty has grown substantially in the past ten years, both during the terms of this Government and the previous one. The problem of relative income poverty has not been addressed and the Minister admitted as much yesterday when answering Deputy Broughan's question on the household budget survey.
I represent a constituency where 25% of households, or approximately 8,500 houses, are local authority dwellings. I accept there has been a dramatic shift as regards people who are coming off unemployment benefit and into work. That change has made a dramatic difference, particularly to our poorest communities. I know that for a fact because I represent a constituency with a substantial number of local authority estates which house people who never thought they would be working yet are doing so today. That has made a dramatic difference to them and to their families' lives.
The difficulty, however, is that many of the jobs that were hard won in recent years will be the first to go in the economic downturn I am already witnessing in my constituency. It is unfair to tell people who have been encouraged back to work, realising that it is worth their while to work rather than stay on the dole, and then go through a period of unemployment, even if it is only for a short time, that they will not get the kind of benefits they have paid for through the PRSI system. That is the problem.
I accept there have been dramatic changes over the past four and a half years, and during the three year term of the previous Administration. The fact is, however, that we still do not have the kind of supports we should have for those on the lowest rates of unemployment benefit and assistance. Putting off the day when a decision has to be taken on this report will ensure that we will never reach the kind of rates that should be attained in the short-term.
The Deputy said he studied economics and it is a fact that in times of economic boom what he calls relative income poverty, or relative income disparity, between lower and higher levels increases. That is an economic fact.
It does not have to happen.
The converse applies when there is an economic downturn. One cannot measure things purely on relativity because many other factors must be taken into account. All researchers say that, so it is somewhat nonsensical for people to continuously refer to relative poverty on its own. If the average income in a midlands village is £10,000 per annum and somebody there wins the lotto, there will be a huge increase in relative income differential. That does not mean, however, that people earning £10,000 are any poorer the next day. That is a basic illustration of how the relativity argument is not that relevant to ordinary people. What is relevant is that their basic incomes have increased substantially over the past five years, as regards even the lowest social welfare payments.
I accept the Minister's point concerning statistics that show 20% of people pay 70% of income tax, but as society improves everybody's needs change. People, rightly, want to participate in the good life in which they see a significant minority indulging. From that point of view, relative poverty is an issue that must be faced up to.
That is not relative poverty, it is relativity.
Yes.
Income poverty.
No, it is not. It is relativity. There was a time in this country when we had no millionaires, yet we now have millionaires all over the place.
There was never such a time, Minister.
There was.
They just did not admit it.
We had very few millionaires.
They did not pay tax.
We have many millionaires but that does not mean the rest of us are poor.
There is not a system one can put in place to ensure that when times are good, and the resources are there, substantial allocations can go to lower income groups in society.
The ESRI figures prove that is happening.
The other benchmark that people can look at in future——
"Benchmark" is a real buzz word.
——is the actual growth in the economy. There are other ways in which one can look at the situation to ensure everybody is included. The Labour Party exists because it believes in equality for everyone, not only equality of opportunity. We believe that a decent proportion of whatever extra resources are available in the good times should be given to the less well off.
I agree with Deputy Hayes' point that we require political consensus to move that idea forward. To some extent, that is what has happened over the past 18 months. The Minister has continually referred to the national pensions fund which was given a kick start by those unfortunate Eircom shareholders the Minister will meet in the coming months when he is campaigning on the doorsteps.
The Deputy should stick to the point. That was never even mentioned.
Does the Deputy recall who was on the board and presided over all that, and who did not buy any shares apart from taking a big whack of money as a director?
When the pension fund was established we got a couple of lines in the press stating that the Minister for Finance, Deputy McCreevy, was considering it. We should have had a major public debate about this matter. For example, the Minister could have done all kinds of things, including reducing the national debt by £8 billion, thus lowering it to £20 billion. Yet, he decided to opt for the pension fund about which there was very little debate.
Next to Luxembourg, we have the lowest debt to GDP ratio in Europe.
When the Bill was going through the House, there was no attempt to involve people. Many of the people we represent will not benefit from that pension fund as they will be dead long before their time because of the conditions in which the Government has left them.
Amendment put.
The Committee divided: Tá, 7; Níl 8.
Tá
- Broughan, Tommy.
- Browne, John (Carlow-Kilkenny).
- Fitzgerald, Frances.
- Hayes, Brian.
- McGrath, Paul.
- O’Keeffe, Jim.
- Upton, Mary.
Níl
- Ahern, Dermot.
- Ahern, Noel.
- Brady, John.
- Brennan, Matt.
- Foley, Denis.
- Magennis, Marian.
- Moloney, John.
- Wade, Eddie.
I move amendment No. 6:
In page 3, before section 2, to insert the following new section:
"2.-The Minister shall as soon as may be after the passage of this Act prepare and lay before the Oireachtas a report on the implications of the majority recommendation of the Social Welfare Benchmarking and Indexation Group in respect of reaching a target of 27 per cent of gross average industrial earnings by 2007 for the lowest social welfare payment.".
Amendment put and declared lost.
I move amendment No. 7:
In page 3, before section 2, to insert the following new section:
"2.-The Minister shall as soon as may be after the passage of this Act prepare and lay before the Oireachtas a report on the implications of paying interest to social welfare recipients where his Department is unable to deliver within a reasonable period of time either planned increases or benefits to recipients who have applied for the first time to his Department.".
This amendment asks the Minister to look at the length of time it takes to pay some departmental schemes. I am critical of the fact the Department failed to ensure that people will receive their benefits on 1 January. I know the arguments but am not convinced, given that the Minister knew for a year and a half. However, setting that matter to one side, in recent months we have seen a dearth of schemes organised by the Minister's Department whereby people are not getting paid on time. Child benefit and carer's allowance are examples. People contact my office with complaints about the length of time between an application and receipt of payment.
It may be backdated but the idea of a penalty imposed by the Department on itself for failing to deliver these payments within a reasonable period should be addressed in a report. If one owes money to Revenue, one must pay a penalty and interest. From a customer service viewpoint, it would be good for the Minister to consider a regime that would penalise his Department for this failure.
I support this amendment. Under the appeals system also, people receive retrospective payments. There is a view that there should be an independent appeals system because the Department adjudicates on its own decision which is against a fundamental principle of law.
At any given time there are tens of million of pounds outstanding to the Department in overpayments or claims that have to be paid back in small sums of perhaps £2 or £5 per week. No interest is charged on those. Likewise, the Deputies fail to see the point about these payments. I will not repeat the arguments. We have been criticised for the delay but are trying to concertina the period between announcement and delivery, which all Deputies will welcome.
The time lag between application and decision varies from scheme to scheme, depending on the scheme's complexity and requirements. Delays are kept to a minimum and many are outside the Department's control, because necessary information may not forthcoming from the claimant, for example. I cannot accede to the request, if that is what the amendment is getting at - that is not the matter on which the Deputies spoke.
We want to shorten the time between the budget and delivery of increases. This is being examined and will include closer work with the payment suppliers and the security printers. The focus will be on delivering more payments by electronic means. I can list all the schemes which will be paid on time and those which will be paid in February, although I think Deputies are aware of them. A major information campaign on this will be launched.
The Minister said he does not charge interest on the payments of those who defraud the system.
It is not necessarily that they defraud the system. It might be that someone claims for what he or she is not entitled to.
Last year, he gave a figure of about £270 million that he managed to claw back in such cases.
I do not know the figure offhand, but there are savings of that kind every year. There is an EU wide measure for calculating them. We do not pick figures out of our head.
Does the £270 million go straight back into the social insurance fund on the current account?
It is taken into account in the estimation by the Department of Finance of what money is required from year to year.
So it exists within the social insurance fund.
Not necessarily in the social insurance fund. It depends on where the money comes from.
It is, then, a nominal amount of money that the Department of Finance factors into the Minister's departmental estimation.
Yes. It is nominal in effect because it is a reduced estimate.
As a member of the Strategic Management Committee, I see many departments using technology to get applications quickly to and from people, particularly through the Internet For what schemes in the Minister's Department can applicants use the Internet? In Revenue, one can transmit accounts and annual returns that way.
Claimants can download application forms from the Internet. Soon, they will be able to make applications through it. It is part of the reach process, which we expect will be on stream early next year.
Amendment, by leave, withdrawn.
Section 2 agreed to.
NEW SECTIONS.
Amendments Nos. 8 and 40 are related and may discussed together by agreement.
I move amendment no. 8:
In page 4, before section 3, to insert the following new section:
"3.-The Minister shall as soon as may be after the passing of this Act prepare and lay before both Houses of the Oireachtas a report on the implications of making provision for a parental leave benefit to be funded from the social insurance fund.".
This issue was highlighted by our colleague, David Begg, general secretary of ICTU, as we both pointed out. The trades union movement strongly believes that we have had the resources in recent years to extend benefits and to use the surplus to provide new and innovative ones. A glaring anomaly for many years in equality legislation, which followed EU directives, is that people can obtain unpaid parental leave but there is no parental benefit particularly in the early weeks after the birth of a child or at other key points in the child's life. There should be some possibility of establishing, through the social insurance fund, resources to provide this benefit. My party is committed to that and we had an interesting discussion on it at our conference.
A serious aspect of this is that the £1.8 billion surplus we had in the social insurance fund will now be £635 million less and the opportunity to introduce this kind of benefit has been reduced. That is the fundamental reason we think the Minister for Social, Community and Family Affairs, Deputy D. Ahern, should have resisted the Minister for Finance, Deputy McCreevy, and asked him to balance the budget in some other way. The issue of borrowing was, I feel, only a red herring. Why would the country borrow when it has a current budget surplus of £5 billion?
This fund should have been left alone. It could be argued that it is a hypothecated tax to which we are making a significant change today in relation to the employers' contribution - a change we decided not to oppose. The amendment offers the Minister the opportunity to introduce a major new development for parents which would have given parents of young children the chance of an easier life combining home duties with work. We spoke about family friendly work practices when discussing the family support agency a few weeks ago and the Minister has the opportunity to support them here. Perhaps parental benefit is in his manifesto but he could have introduced it over the last three years when he had the opportunity. He should have done it and our trade union colleagues believe it is time he did. He has the opportunity in this Bill and so I am pressing the amendment.
The argument has been made that people, particularly women, should take up work or return to work but unless we put in place a modern social security system to match a working parents' lifestyle we do a huge disservice to the labour market itself. We have seen a radical change over the past five years in the number of people returning to work, especially women. Parental leave and benefit is also a gender issue. It is right and proper that men should be entitled to take a few weeks paid leave when their child is born. This is not a radical departure but happens in most EU countries. Ourselves, Britain and one or two other EU countries do not have this provision. Deputy Broughan is right. Putting in place a modern social security system, based on the idea that people who pay insurance get something back from it, would be a key device to help create a flexible, modern workforce.
We all know the pressures parents are under and those pressures increase on the birth of another child. We do not have within our labour law or social security system the kind of flexibility that will ensure those under pressure can take a break. There is a high level of discrimination against men on this issue. They are frequently told on the birth of a child that they must get back to work within 24 hours. That does not make for good parenting and it does not get men involved in the process of the birth and the critical few weeks following it. People may ask how our forefathers managed. I am sure the Minister will agree that if we want to put in place flexible arrangements for parents we need to implement this kind of measure.
I agree with Deputy Broughan. We had the opportunity to introduce this measure this year. The money was there and it would not have cost too much if the Minister decided to do this instead of allowing a raid on the social insurance fund. I am interested in hearing what he has to say on the matter.
It is the luxury of the Opposition to be generous. Of course going into the next election every party will claim to be in favour of paid parental leave and we will do likewise. We have to work within the partnership process. That process is examining this issue and there is common assent on the principle of paid paternal leave. If it was to be done through the social welfare system the cost would depend on the level of payment, the duration or payment and the level of take-up. It has not been specifically agreed that it should be a social welfare payment. If it was paid at the rate of disability benefit lasting four weeks it would cost £28 million while a payment equivalent to the maternity benefit rate would be in the region of £66 million. The cost would depend on how it would be taken, on whether time was taken as reduced hours or days or weeks off. It would be difficult to administer in the form of a State payment. Part of the examining process is considering how it could be paid and looking at the approach taken by other countries.
The Programme for Prosperity and Fairness contained a commitment that the Department of Justice, Equality and Law Reform would look at the operation of the Parental Leave Act in consultation with the social partners. In line with that commitment a working group was established. The working group is chaired by the Department of Justice, Equality and Law Reform and comprises representatives from ICTU, IBEC, ICOS representing the farmers' pillar, the National Women's Council of Ireland representing the voluntary and community pillar, the Department of Finance, the Department of Enterprise, Trade and Employment, the Department of Social, Community and Family Affairs and the Equality Authority. The deliberations of the group are nearing completion and the current position is that no agreement could be reached in relation to the question of paid paternal leave. Some members are not in favour and while others agree in principle with the merit of paid paternal leave they feel the implications and the full range of options for paid leave were not properly explored by the group.
It is not a simple matter of saying that we favour paid paternal leave because there is not total agreement in regard to it. My Department's views in relation to how it could be paid as a social welfare payment is that it would be difficult to administer as a payment given the different circumstances that would be involved.
Did the Minister say it would cost £68 million annually if its basis was similar to maternity benefit?
That is the estimate.
Amendment put and declared lost.
Amendment No. 9 not moved.
Amendments Nos. 10 and 24 may be taken together by agreement.
I move amendment No. 10:
In page 4, before section 3, to insert the following new section:
"3.-The Minister shall as soon as may be after the passing of this Act prepare and lay before both Houses of the Oireachtas a report on the increases granted under the Social Welfare Acts having regard to the impact of such increases on-
(a) the local authority differential rent scheme, and
(b) the rental subsidy scheme for private accommodation.”.
Last year the Minister told us that the local authority differential system was not his responsibility but the responsibility of the Minister for the Environment and Local Government. We asked for a system of joined-up Government where, if a social welfare increase came in immediately, the system demanded that 15% of that would be paid. One of the questions last year was the inconsistency between different counties and the types of systems they used.
The problem of rents identified last year has been exacerbated over the past year. In my constituency rents continue to be extremely high. I am not sure if the changes brought about in the budget by the Minister's colleague will necessarily see a large drop in those rents. There seems to be inconsistency in the manner in which rent supplement is applied.
I do not wish to labour the point. Relatively small increases have been given but when the differential rent scheme is applied, much of that increase will be taken up by increased rents. A person in private rented accommodation will see a deteriorating situation. I have a question for the Minister arising from the amendments. What is the position on the proposal to integrate the rental subsidy scheme with the local authority housing departments? This was proposed almost four years ago. The money comes from the Minister's Department but the people are employed by the health board. The people we met throughout the year feel their views have not been fully aired and articulated. As the Minister is aware, a long-standing recommendation, supported by all parties, is that there would be integration of the rent subsidy scheme with the local authorities so that if rent payments have to be made, they will be given by the local authorities. There has been no progress to date on this proposal. I would be interested in hearing any information the Minister can give the committee. Both of these amendments deal with the real problem where these increases will be taken up for about 10% of the population who depend on the social housing sector for accommodation.
The transfer of the rent supplement to local authorities was a Government decision of a number of years ago. It has proved difficult to implement in practice. It is outside my Department - it is a matter for the Department of the Environment and Local Government. There are significant industrial relations issues because of the different structures between local authority and health board employees. They are the subject of discussions and negotiations. Perhaps the Deputy could put down a question to the Minister for the Environment and Local Government.
Will the Minister for Social, Community and Family Affairs provide the money?
The principle agreed was that we would fund somebody for 12 months but thereafter they would transfer. That was a compromise reached by the working group that looked at the issue. It would allow people some flexibility.
I cannot dictate to local authorities but we take certain things into account when we are making changes. Last year I introduced a special disregard of £5 in the assessment of rental supplement for people aged 65 and over in receipt of a social welfare pension. Instead of a reduction of £2 per week in the rent or mortgage supplement, a single person received an increase of £3 per week. Overall they gained £13 last year. This year pensioners again received increases which are higher than the increase in the standard rate of supplementary allowance. In order to ensure pensioners benefit from the additional increases, the budget also raised the amount of the disregard in the assessment of rent supplement to \10 or £7.88. As a result of changes that were made in the budget in relation to the £9.56 for the lower social welfare payments, people who are on standard rates of one parent family payment, long-term UA, UB, disability benefit and other schemes are not affected by the clawback of budget increases. They will benefit from a small increase in the amount of rent supplement payable.
On the broader issue of differential rent, this was raised with me previously and I have raised it over the last while with the Minister for the Environment and Local Government. I understand that a circular will issue shortly from the Minister for the Environment and Local Government giving guidance to local authorities on limiting the amount they take on foot of social welfare increases. That will have the effect of unifying the approach of local authorities around the country.
Amendment, by leave, withdrawn.
I move amendment No. 11:
In page 4, before section 3, to insert the following new section:
"3.-The Minister shall as soon as may be after the passing of this Act prepare and lay before both Houses of the Oireachtas a report on the implications of introducing increases in child benefit with effect from the first payment date on or following the 1st day of January.".
The rationale of moving to January is to bring the tax and welfare year into line with the financial and calendar year. We have succeeded in doing so except in the case of child income. If the next budget was to bring it back to January, what costs would that entail?
If my memory serves me correctly, somewhere in the region of £80 million. It cost about £75 million to £80 million to bring it back from June to April. It is a very significant costing and it could be more because next year's figure is so much more. The overall budget for child benefit is £82 million. The overall total is much more than when we came into office. Bringing in earlier payments will be very costly.
Amendment, by leave, withdrawn.
I move amendment No. 12:
In page 4, before section 3, to insert the following new section:
"3.-The Minister shall as soon as may be after the passing of this Act prepare and lay before both Houses of the Oireachtas a report on the implications of bringing the child benefit for twins into line with the provision for multiple births of 3 or more children.".
The organisation that campaigns on this issue still feels that the Minister is not giving a fair deal to twins and parents of twins. All multiple births should be treated the same. The organisation says that the Minister did not fulfil the 1997 promise despite the 150% target.
I maintain that we fulfilled our commitments in relation to this issue. We said we would increase it by 150%. I would have liked to have done that but this year I was not able to do the 100% for multiple births. People who have multiple births have received the benefit of the extremely significant child benefit increases over the last three years. We tend to forget that over the past three years the Government increased child benefit by £8 and £10, by £25 and £30 and then another £25 and £30. Cumulatively over the last three years child benefit has increased fairly dramatically for everyone, including parents of multiple births.
In his opening remarks on the night of the budget, the Minister referred to some of the welcoming comments made by the Combat Poverty Agency in relation to the budget. However, does he also accept its criticism in respect of dealing with third and fourth children? While there were increases in child benefit in the budget, the Minister did not do anything significant for third and fourth children. This point was made clearly by the Combat Poverty Agency in the submission it sent us directly after the budget. Bigger families on low incomes have to carry the excessive cost for children. Given that the Minister accepted its compliments, does he accept its criticism as well?
It is not often that the Combat Poverty Agency says complimentary things about any budget. When Fine Gael and Labour were in Government, it criticised their budgets also.
We established the agency.
Does Deputy Broughan have the right people on the board?
The Minister appointed the board, so he is all right.
I do not accept the criticism of the Combat Poverty Agency because we have given child benefit increases, which even it had not expected in the last budget. Its critique of our last budget was very complimentary in comparison with what it might have been previously.
The previous three budgets.
Again this year it has been very complimentary. When the Government gives something substantial, people take it as a given and want to push it more. The day they are not satisfied is the day they are redundant. All pressure groups have to keep pushing the bar as high as they can.
The Minister sounds like the Minister for Finance, Deputy McCreevy, and his poverty industry.
I have some views on that.
Let us hear them.
I will not go into them in this debate. It is not valid for me to be lectured by people who never have to put up with the representations and the personal interaction that public representatives have to make. I would never accept criticism from groups who do not do as much as we do in this area.
Amendment, by leave, withdrawn.
Amendments Nos. 13, 14, 26 and 27 are related and may be discussed together.
I move amendment No. 13:
In page 4, before section 3, to insert the following new section:
"Child dependant allowance.
"3.-The Minister shall as soon as may be after the passing of this Act prepare and lay before both Houses of the Oireachtas a report on the implications of providing for a uniform rate of child dependant allowance by increasing the different rates to the maximum rate and of increasing the child dependant allowance for widows and widowers to \25 per child per week.".
The Minister referred to the child dependant allowance earlier. Along with the fuel allowance, this is one of the few allowances he has never increased during his period in office. The social partners deserve much credit for the provisions on child benefit in the three-year programme. After this programme, I assume we will have to look again at children's income in general. There is a strong case for targeting available resources at poorer children, given that our child poverty rate is 3% above the EU average based on recent figures.
The Minister mentioned the Combat Poverty Agency. When Mr. Walsh briefed us a few months ago on all these issues, he specifically asked that the Minister address this matter this year. He wanted the Minister to bring everybody up to £15.20 over a two-year period.
Over the years, I have had strong representations from widows and widowers with relatively young children, including one person who calls to me every three or four weeks to ask me to look after widows. I have to put that to the Minister. Despite the increases last year and this year, she feels £17 is derisory in that regard. Once next year's target for increases in child benefit are reached, we must look at this.
A long-term unemployed person will get about £38 to £40 per week for the first and second child in child dependant allowance and child benefit. I hope my colleague, Ms Joan Burton, will be back in this House as a Deputy within a few months. She was a very good Minister of State at the Department of Social Welfare and initiated the real expansion of child benefit. Deputy Wade may not want to believe that, but it is true.
I thought Deputy Proinsias De Rossa got the credit for that.
There were dramatic increases in 1993-94. We had this debate in our own councils involving the then Minister of State, Eithne Fitzgerald.
Was that the year they gave nothing to the old age pensioners?
At the time the decision was made to leave the child dependant allowance and extensively improve child benefit. Obviously, this has been accelerated very significantly in recent years. We utterly reject the notion of taxation of benefit, as suggested by some people, and I cannot envisage any political party doing so. It is often lower middle-income people who get caught in these traps. They would end up paying tax on their child benefit. The other model would be to revert to child dependant allowances. The Combat Poverty Agency, the Vincentian Partnership and some other groups made a strong case for that in recent years. This should be on our agenda and my amendment reflects this. Once we have achieved a basic level of child income, we should target poorer children. This should be fundamental in the next four or five years.
I agree with Deputy Broughan that there must be a way to target the poorest of the poor families because of the way child benefit goes to all families. There is no other mechanism whereby we can help lift those families out of poverty at the other end of the spectrum. It is wrong that the Minister has tabled no amendments on child dependant allowance. It must be unconstitutional to have three rates for different children. The son or daughter of a widow gets £17.50. The son or daughter of an unemployed person gets £13.50. Last year the Minister rightly pointed out that at one time there were 30 different rates, which was ridiculous. We should have made progress this year. It has been the source of criticism by many groups and I hope we can make some progress on it shortly.
There was one specific commitment given by the Government and it is the subject of amendment No. 27 in my name. It relates to the extension of the child dependant allowance to children up to 22 years of age who are in full time education. The Minister has made a very small improvement in the scheme this year, whereby students will get the allowance up to the end of the year they start in a course or at school even if they are over 18. That was a cast iron commitment in the PPF and the figures made available to me by the Department of Finance do not constitute a huge sum of money. Why did the Minister not go with the PPF commitment this year?
Now that we are moving towards substantial child benefit payment, does the Minister accept that parents have the right to obtain that money on a weekly or twice monthly basis? The Minister failed to address my submissions on that matter in the House over the past week or so. Has his Department examined this? It would be sensible to give people the money weekly or twice monthly, according to their choice.
Targeting money generally leads to disincentives because cut-off points are introduced. I take Deputy Broughan's point, which relates to the last one made by Deputy Brian Hayes, that there may well come a time when more can be done in the area of child benefit with regard to CDAs. Due to past three budgets, the child benefit payment is now a substantial amount of money. The amount set aside for it was £400 million when we came to office and it will be £1.5 billion next year, which is an amazing increase. The 1994 policy froze the CDAs, thereby reducing the possibility of disincentives. The rationale behind the policy is that I want to give money to people irrespective of their employment or marital circumstances. It is a disincentive to lone parents to marry or to take a partner as there is a potential that they would lose the CDA whereas child benefit is universal and goes to people irrespective of a change in employment or marital status. The policy adopted in 1994 with which I agreed when I took office in 1997 was entirely logical.
I made changes in the budget to provide for the extension of CDA payments until the end of the academic year in which the young person reaches 18 years of age. This measure comes into effect in April and is the first step in increasing the age limit to 22, as promised in the PPF which has some time left to run. The policies of indexation of CDA and of increasing child benefit by more than the rate of inflation have been in place since 1994 and it is important to recognise that over that period the combined CB and CDA payment has increased by more than double the rate of inflation. In 1994, child benefit represented 29% of the total CB-CBA payment for a four child family. Today, it represents 57% and from April next that representation will rise to 65%, which is a very substantial increase.
Child benefit creates a basic income for children, which is something we should always have had. Does the Minister envisage CSA and child benefit ever being means-based?
I could see that happening. There was a suggestion some time ago that we might merge the two into one payment.
Can the payment be made on a weekly or twice monthly basis?
That issue will arise when we get closer to a substantial payment. The child benefit delivery system is, with due respect to the Department, quite antiquated and it would take a totally new computer system to do that. I accept that the more the payment is increased, the greater will be the need for a different delivery system. Changes are being made under the new service delivery model and we will be looking at making payments in the way the Deputy has outlined.
What will be the cost of the extension to 22 years of age for children in full-time education?
I can get that figure for the Deputy later.
The Minister should take his time about making the payment a weekly one. Many parents like to get it monthly.
Amendment, by leave, withdrawn.
Amendment No. 14 not moved.
I move amendment No. 15:
In page 4, before section 3, to insert the following new section:
"3.-The Minister shall as soon as may be after the passing of this Act prepare and lay before both Houses of the Oireachtas a report on the implications of the extension of the family income supplement to the families of persons who are self-employed and phasing out of the back-to-work scheme.".
This amendment is resubmitted due to shortness of time. This is still an issue.
This amendment involves the extension of the family income supplement to the families of persons who are self-employed and phasing out of the back-to-work scheme.
Has your thinking developed since last year?
I doubt it very much.
Amendment, by leave, withdrawn.
I move amendment No. 16:
In page 4, before section 3, to insert the following new section:
"3.-The Minister shall as soon as may be after the passing of this Act prepare and lay before both Houses of the Oireachtas a report on the implications of extending the social welfare free schemes to widows and widowers with dependent children.".
I refer here to the general problems the Minister mentioned in relation to developments in contributory and non-contributory pensions for survivors. Families headed by a widow can be very vulnerable, particularly those with young children. I noticed yesterday that the Minister did not provide for further extensions of the free schemes, though in gas, electricity and household benefit some of the amounts have been increased. Of all the groups to be considered, this one should be looked at. Last year the Minister said that distinguishing between lone parents and widows and widowers would be unfair, but the argument remains to be made that the matter of widows should certainly be kept under review.
I support that. The difference between lone parents and widows is that this is an insurance based system, as people contribute through PRSI. If a husband or wife dies and they were formerly working and paying into the social insurance fund, then the argument can be made to extend the free schemes to them. The analogy to lone parents, which was the argument made last year, is not correct. This is a once-off circumstance in which people have paid substantial sums of money over their lifetimes and when they die young there is a need for the survivors to draw from that insurance. The Minister did not refer to the fact that I proposed this in my pre-budget submission. It would have been good to extend this to all widows, irrespective of age. The argument to be made to the Department of Finance is that these people paid contributions and if someone dies at age 45 the State should provide an additional benefit. This amendment is a very effective way to help people.
Not all deceased people have made contributions and the cost of extending this to all widows would be in the region of £30 million.
It has increased since I last checked.
The problem is not the Department of Finance, it is the potential for the Department to be sued by a lone parent to determine whether or not they were being discriminated against vis-à-vis widows.
Why is it the same principle for CDA? The difference on CDA is widows can see the £17.50.
Nobody has taken that point. There are issues and the strong advice is that we cannot do it for widowers.
Are the free schemes now paid out of the social insurance fund?
Yes.
Could the case be made that a widow, even of a contributor, would have a right to it?
That would not take in all widows. It could be extended but there would be other people who are making payments and are under 66 years with a contribution record, but who are not getting the free schemes. In the review of the free schemes, that was one of the reasons for the strong view regarding not making it applicable to people under 66 years, except in some exceptional circumstances such as those covered between the ages of 60 and 66. I received representations from all sides of the House and looked at this in some detail. The best we could come up with for widows under 66 years was to increase the normal payments and to give a substantial bereavement grant. In effect, a widow under 66 years who has children will receive £2,500 on the death of a spouse from a combination of the increased widow-parent grant and the bereavement grant. We have given a commitment to increase the payment for widows over 66 years. We are very close to fulfilling that and we will do it next year for the contributory old age pension rate.
Amendment put and declared lost.
Section 3 agreed to.
Sitting suspended at 5.12. p.m. and resumed at 6.10 p.m.
Amendment No. 17 not moved.
NEW SECTIONS.
Amendments Nos. 19, 23, 32 and 33 are related to amendment No. 18 and all may be taken together.
I move amendment No. 18:
In page 4, before section 4, to insert the following new section:
4.-The Minister shall as soon as may be after the passing of this Act prepare and lay before both Houses of the Oireachtas a report on the implications of abolishing the means test for carer's allowance and introducing a carer's payment.".
I tabled amendments Nos. 32 and 33, which relate to increasing the income disregard for carer's allowance. The much publicised pre-budget submission I produced on behalf of my party some weeks ago proposed an increase of up to £370 for a married couple and £175 for a single person under the allowance. There were some improvements in this year's Social Welfare Act which I welcome, but I encourage the Minister to go further. The reason I arrived at an increase of £370 for a married couple was to ensure that would be twice the rate given under the national minimum wage. That would be a fair assessment because even under the Minister's proposals there is still a significant group of people outside the ambit of carer's allowance who should be in receipt of support under the scheme.
I asked the Minister yesterday what is the maximum rate payable under the scheme and how many of the 22,000 recipients of the allowance are on that rate. He might refer to these questions in his reply. The group of people most perturbed by the financial resolution that was put before the House and by this legislation is carers. According to the Minister's figures there are approximately 53,000 carers while the Carers Association and other representative groups claim there are in excess of 100,000 carers. We must move rapidly to at least recognise that people who are full-time carers have the right to obtain a carer's allowance and to receive other social welfare payments, which is currently prohibited under the social welfare code.
Amendment No. 33 relates to a proposal outlined in our pre-budget submission which would provide half rate carer's allowance for persons already in receipt of other social welfare payments. If it is accepted that the allowance is a form of payment in respect of work done in caring for a loved one or friend, it should also be accepted that a reasonable payment should be provided. People who foster children receive £200 per week from their health board and virtually the same care, if not more substantial care, is provided by those who should come within the carer's allowance scheme. Why is the rate of carer's allowance less than half that for foster care?
We must move in the direction proposed in the amendments. Carers are perturbed by the budget and by this Bill. They are not happy in any shape or form with the very small budgetary increases.
As Deputy Hayes said, carers were the most disappointed group in terms of the budget. I note from my colleague in Limerick that the Minister of State, Deputy O'Dea, has been telling people that abolishing the means test would cost £600 million. I would be interested to know how he worked out that figure and the basis for it.
The Minister likes to look back on the past. During the term of the rainbow Government, the number in receipt of carer's allowance doubled. That number has more than doubled in the Government's term of office, given the extra resources that have been available. When the 3,200 carers receive their enhanced allowance, it should be borne in mind that half the number of carers the Minister quoted from CSO figures will not qualify for that allowance. The point that carers and key carer groups, including the Carers Association, Care Alliance Ireland and NAMHI, have continually put to us is that we need to fully recognise the work of carers. While the Government has made improvements, which I do not think anyone would dispute, we have not given carers full recognition for the work they do. That may involve establishing their work on a legislative basis.
The disability commissioner Bill, formulated by the disability groups, was introduced by Deputy Fitzgerald. The disability commissioner and needs assessment legislation in place in the United Kingdom would commit the Government to significant extra spending on people with disabilities and their carers. The carer's Act in England does precisely that. Giving full recognition to the work of carers is a challenge that remains to be met. Prior the introduction of the carer's allowance by the then Minister, Deputy Woods, the prescribed relatives allowance was in place. While the carer's allowance has been in place for ten or 11 years, a large number of carers are not adequately catered for.
The Minister disputed research in this area from the Western Health Board. Last autumn a report by the South-Eastern Health Board prepared in conjunction with the University of Ulster, Coleraine, found that the main problem expressed by many carers was that they do not get any recognition for the work they do. The most fundamental form of recognition is a payment. Abolishing the means test would effectively ensure a payment for the many carers who do not currently qualify for the carer's allowance. I ask the Minister to reconsider doing that.
In relation to the income disregard for the carer's allowance, Mr. Ger South and other able advocates for carers from Limerick, who carried out a survey, attended a meeting of this committee. They were given a message by the Taoiseach around seven or eight months ago that he would raise the income disregard for carer's allowance for a married couple. Although the Minister for Finance increased the income disregard to \158.72 for a single person and to \317.43 for a married couple, he could have gone further and increased it to \225 for a single person and to \450 for a married couple, as set out in my amendment. Compared to what the Minister did last year, his movement in this area is very limited this year. That was the reason for the initial annoyance of the Carers Association and other such bodies. They thought the Minister would move forward more fundamentally but he did not.
Amendment No. 23 deals with an issue raised with me every few months, particularly by widows and lone parents who look after a disabled relative on a full-time basis. The Minister has refused to allow them access to any part of the carer's allowance. Our colleagues in the United Kingdom, where a Labour government is in office, have——
It has given only a £2 increase to the old age pensioner.
Ireland is a wealthier country now. It has moved forward in certain areas. The Scottish Labour government, which is effectively what it is, has given free long-term care in every respect to all its seniors. It has made some amazing developments in that regard. The idea of holding some part of the carer's allowance, or whatever it will be called in the future, with another payment seems a reasonable proposition. For example, Mel Cousins's study, which is a little dated as it was carried out five years ago, indicated, as did a review, that a significant proportion of carers would have access to another allowance and, therefore, the net cost of what my amendment proposes may not be as great as might have been anticipated.
The Minister could have gone further and effectively abolished the means test or considered the possibility, as demanded by Mr. South, Mr. Eddie Collins and other representatives of carers, of giving full recognition to the work of carers once and for all and accepting the consequence of that, whatever it would mean in terms of the ultimate size of the social welfare budget. That is the most fundamental point I want to make.
I welcome the £100 increase in the respite care grant. I requested that the grant be increased to \1,270. The Labour Party has requested this for the past number of years. The Minister should consider developing a respite system rather than having an extended system of respite and community care. The Minister does not seem to have moved very far in those areas. Fine Gael suggested providing a particular amount of respite care during the year and we would be mindful to provide for something similar in addition to the respite care grant. While improvements have been made and it would be unfair to say they have not, on my findings the carers' advocates is the group most disappointed with the budget. They feel the Minister has let them down.
On the carer's allowance, I welcome and compliment the Minister on the improvements that have been made in recent years. The increase in the respite care grant is to be welcomed, although we have a long way to go before carers will be satisfied. Was the Deputy referring to his colleagues in the Labour Party or the Workers Party in Limerick or to the carers when he said the carers felt they had missed out?
I was referring to the carers.
The Labour Party has a few wings in Limerick. The carers came out openly on local radio——
They made a presentation to the committee.
Deputy Wade was present on that occasion.
I invited them. The Deputy might not remember that. I do not talk as much as the rest of the members. A member of a political party, which has now merged with the Labour Party, is causing it great problems. He made matters very political in the run up to the last election. It was Seán Ryan, a councillor who has now pulled out of the race to be elected to Dáil Éireann in my constituency. He made the carer's allowance situation highly political and nearly toppled the late Jim Kemmy, whom Members cried about——
Was he a member of Democratic Left?
No, he had his own party. He was not a member of the Labour Party for long, only for a couple of years.
Almost everybody in the Labour Party was at some stage a leader of their own party. That is our tradition.
I had to deal with five leaders in east Limerick at one stage. There was Deputy Noonan, a leader in the background, Nora Bennis, Desmond O'Malley and Jim Kemmy who were party leaders while my colleague, Deputy O'Dea, wanted to be leader of the party down there. It was tough to survive it all.
Deputy Hayes mentioned people on social welfare getting 50% of the carer's allowance. Is there any development on that in the Department? That is the big issue among the carers we meet at local level. The people on social welfare getting——
Getting half the carer's allowance plus other social welfare benefits.
Listening to the Carers Association, one would never think that this was a big issue. I do not think the Carers Association represents the carers I meet or the bulk of carers. The issue has moved from the carer's allowance to the social welfare recipients. Has there been any development in that regard?
My officials say that if only 2,300 are benefiting from the increased payment, this would presuppose that all the others in the overall figure are in receipt of the maximum payment. Otherwise, they would have increased as a result of the budget change. We will double check those figures but it is probably logical that if 2,300, as per the figure given——
Added on?
No, getting increases. If the existing carers get increases as a result of the change in the budget, the balance of the figure must be in receipt of the full payment. However, we will double check it. We do not have the figures to hand. I thank the Deputies, particularly Deputy Broughan, for at least acknowledging that there have been changes.
I am not trying to be political but if one looks at the changes since 1990, when the carer's allowance was introduced, the most dramatic took place in the past two or three years. We did not do a huge amount in my first year in office because we were waiting for the report. Following its publication, we did a massive amount in the following year and incrementally built upon that in successive years. People must accept that there is only so much the Department can do in this area. The issue of carers is primarily a matter for the Department of Health and Children in that it can provide many more supports. We only deal with income adequacy. The social welfare system was designed to pay a basic payment to people on low incomes; it was not designed to pay people for providing care.
This brings me to the point made by Deputy Hayes in relation to the difference between foster care and carer's allowance. Foster care is completely different. Most of the people cared for by people in receipt of carer's allowance would be known to the carer or there would be a relationship of some type whereas in foster care there would be no such relationship. To a certain extent, the children would come from dysfunctional families and there would be many other difficulties which would not apply to caring. The Deputy is not comparing like with like.
The work is not different. In many respect, the carers do more.
It would be different but it was never designed as a payment to repay people. It was always only a payment that would basically be a low income supplement. We have progressively extended it and, to a certain extent, we have done that because of pressure. I have given a commitment that over time we will increase it to average industrial earnings, which is, relatively, a sizeable income. I believe it will be the wish of every political party to reach that level.
The numbers involved have increased dramatically from 9,000 to 22,000. The cost of paying carer's allowance concurrently with another social welfare payment is not available due to data limitations but, based on the number of claims awarded or refused where the applicant received another social welfare payment, it is estimated that it would cost in the region of £36 million annually to pay it to this group alone. However, the full cost would be much higher.
I stand on my record. This Government has delivered substantial increases in the carer's allowance and there are substantial benefits accruing to the allowance. I am particularly proud of the respite grant which was initiated three years ago at an initial amount of £200. It is now £500. The carers are also in receipt of the free schemes. Something that was not publicised properly was the issue of people in receipt of domiciliary care being able to receive carer's allowance as well. There have been dramatic improvements.
While I accept a lobby group such as the Carers Association being unhappy, I received, particularly in the period immediately prior to the budget, numerous letters from ordinary people who took the time to write to me to thank me for the changes in the carer's allowance area and in the social welfare area generally. They are now seeing real benefits. They can take holidays and have a reasonable source of income. I agree with the chairman that many people appreciate what has been done.
Similarly, we regularly receive letters from people who are concerned and upset that they cannot get this payment even though they are carers. That is also a fact and I am sure the Minister receives letters in that regard too. The Minister said it was never designed as a payment to pay people. The Minister of State at the Department of Health and Children, Deputy Moffatt, has direct responsibility for carers.
For the elderly.
Yes, but this issue comes under his remit in respect of developing policy——
On the needs assessment issue.
He takes a different view. He sees it as a first step towards payment for the work being done. On the basis of the Minister's argument about income adequacy, is it his view that this issue should not be his Department's responsibility but the responsibility of the Department of Health and Children?
It is interesting that the Comptroller and Auditor General drew attention to carer's allowance in his report this year. To what extent is the Minister constrained by his budget? His Department's budget is the largest, being practically 35% of the national budget. I used to be a member of the Committee of Public Accounts. If one reads between the lines, the Comptroller and Auditor General seems to be saying this is a payment which he wants watched carefully. The two issues he raises are full-time caring and medical needs. Is the Minister constrained in looking at fundamental reforms in this area because the allocation has grown? The allocation has grown impressively over the past decade. As a result the Comptroller and Auditor General wants it kept under careful review. For instance, he asked to what extent the medical report was reviewed and how is it full-time caring. He asked fundamental questions. If it were to evolve into a carer's payment, would the Minister agree that it would probably be logical to have it administered by the Department of Health and Children?
I have made my view clear. Deputy Broughan is somewhat correct in what he says about the issue of control of spending in this respect. To a large extent my Department would not have the capability of examining the minutiae of each individual case. The carer's allowance is more or less approved on the strength of the medical information provided. There is a referee system and reviews by medical referees, but by and large we do not have the wherewithal which, for example, the Department of Health and Children through the health boards would have, in terms of assessing the general situation of a carer and the person being cared for. There are issues in that regard. Given the fact that the payment has increased from zero to £132 million in just 12 years and there have been substantial increases, no doubt there are issues which must be looked at as we move forward. Obviously the accounting officer in the Department, that is, the Secretary General, will have to be aware of that in the context of what the Comptroller and Auditor General stated in his report.
On the broader issue of policy, my view is there is only so much a Department like mine can do. There is pressure from people such as the Deputies opposite and others on all sides of the House and outside the House who say it is not possible to live on the payment following the budget changes and that there are carers who are bereft of other income and who are in difficulty. I have expressed this view previously.
We have initiated discussions with the Minister for Health and Children, Deputy Martin, about all aspects of the carer's allowance, nursing home subvention and even home help. We want to see if there is a better model which can be provided to assist people to look after elderly people, particularly in the home, while at the same time recognising there comes a time when people cannot continue to care for somebody at home as they may need constant care and attention on, in effect, a hospitalised basis.
Why did the Minister state last night that he would not create a database? In contrast in the area of unemployment there is a basis for the estimate because we can state there are 154,000 signing on. We also know how many people are availing of the lone parent's allowance. Although this is straying into the health area, why is not possible for the local health board to become involved? If the health strategy evolves, the primary care area, which is one element of it, is one where it is well past time that we started moving towards multi-discipline local GP practices. If we had such practices, which would be different from local health centres, would it not be possible to know the numbers being cared for on a full-time basis, for example, in Howth? I cannot see why that information is not available. The NAMHI reports are brilliant in that we know exactly how many young people and adults have an intellectual disability. Once somebody is categorised, we know exactly what happens. It took a long time to get that information and it has been available for only a few years, but why is such information not available in this area? If we did know, at least we could be making policy.
The most irritating aspect of discussing this is the way some people - obviously the Minister of State, Deputy O'Dea, is one of them - state that there are 200,000 carers, the Carers Association state there are 100,000 and the Minister states there are 50,000 and we will be reaching 25,000 at the end of next year. It seems to me we should be able to establish the figure once and for all.
I agree with the Deputy that we do need those figures. That is one of the reasons we pushed the CSO to try and verify the figures in order that my Department, the other Departments, outside groups and Members of the Oireachtas would at least have some understanding of the numbers involved. Whether a person is a full-time carer or not is an extremely subjective issue. A party may be caring for an elderly person, not necessarily giving a huge level of care but doing so on a full-time basis. That is one of the reasons for the carer's allowance review, which was really only an expenditure review. It was not a review which looked at all aspects, including other supports which are probably nearly as important, if not more important, to not only the carer but the person being cared for. The review, however, came up with the view that so much could be done in the area of carer's allowance but that we needed to look at the whole issue of needs assessment. Following a system for needs assessment being put in place, the issue of cost of continual care on a non-means tested basis could be put in place. In my view that is the direction in which we should be going.
This comes back to the point the Deputy made about the Comptroller and Auditor General, who is raising issues. When you start giving non-means tested payments based on extreme situations you need greater control mechanisms to be sure the money is going to the right people.
Amendment put and declared lost.
Amendment No. 19 not moved.
Amendment No. 20 involves the insertion of a new section. Amendments Nos. 22 and 34 are related and all three amendments may be discussed together by agreement. Is that agreed? Agreed.
I move amendment No. 20:
In page 4, before section 4, to insert the following new section:
"4.-The Minister shall as soon as may be after the passing of this Act prepare and lay before both Houses of the Oireachtas a report on the implications of subsuming the carer's allowance into a new continual care payment to be paid to medically approved recipients without reference to individual or family means.".
We referred to these amendments earlier. The Minister mentioned the 1998 report which was very good. Members could follow up on the systems employed in other countries, particularly Germany, where the German Government has tried to get society to face up the reality that 40% of the population will require care when they are older and that arrangements should be made in this regard. The amendment seeks the extension of the carer's allowance to a continual care payment on the basis of a needs assessment provided for in legislation.
One of the ambitions of the various carers associations is to have caring inserted in the Constitution but when the Constitution review group examined this proposal, it framed its response to include parents of dependent children as well as family carers. The cost of the carer's allowance is the other element in the cost of disability allowance which we have sought continuously over the past number of years. Extra costs are incurred to cater for people with disabilities and these should be met by introducing a cost of caring allowance.
I tabled amendment No. 34. We also proposed in our pre-budget submission that a cost of care allowance should be introduced. I questioned the Minister about this yesterday and it is clear he supports such an allowance on a non-means tested basis. The issue is when it will be introduced. I acknowledge what the Minister said in regard to the reservations expressed by the Comptroller and Auditor General but progress is needed because those who do not receive any support under the carer's allowance scheme must be recognised. Massive costs are borne by those who care for a relative or friend.
We examined the care needs of the individual when drafting our proposal. There could be different payments depending on the needs of the individual concerned and, therefore, we proposed sums of £750, £1,000 and £2,000. These are considerable sums, particularly for non-means tested payments. Such a payment has been sought by many of the associations concerned and it is a logical extension to improve the carer's allowance and the introduction of carer's benefit. We need to make rapid progress on this issue and I encourage the Minister to examine it further.
As I have said previously, the recently published health strategy commits the Government to reforming the current arrangements, including the carer's allowance in order to introduce an integrated subvention scheme which maximises support for home care. The issue of the continual care payment will be examined in that context. The Department of Health and Children has already begun work on this with my Department, which will continue in the new year, and we hope to develop proposals in this area. The Minister for Health and Children and I have discussed this issue on numerous occasions, particularly in the recent past, to ascertain how it can be progressed. I accept the Deputies' points regarding a cost of continual care payment and such a payment needs to be brought forward.
Amendment, by leave, withdrawn.
I move amendment No. 21:
In page 4, before section 4, to insert the following new section:
"4.-The Minister shall as soon as may be after the passing of this Act prepare and lay before both Houses of the Oireachtas a report on the implications of identifying key areas of disadvantage both urban and rural with proposals to give additional social insurance and social assistance supports to the population of those areas.".
I feel strongly about this issue which I also raised last year. A spatial dimension was introduced to welfare benefits when the island allowance was introduced. It was in that context that I sought to introduce a similar amendment last year. I referred to ex-offenders on Second Stage. A significant percentage of the prison population comes from certain deprived areas. The governor of Mountjoy Prison recently outlined the characteristics of the prison population and pointed out that 85% of prisoners never had a proper job.
Despite the establishment of partnership companies and the efforts of many local development groups, we still have not made an intensive enough effort to address disadvantaged areas over the past five years. I also want to explore through the amendment the possibility of providing support through the social welfare system to people who live in these areas. Spatial health and security statistics are not available and that is why the Minister for Justice, Equality and Law Reform established the National Crime Council. One has a greater chance of dying at an early age in certain areas and an individual's life expectancy can vary by up to a decade depending on where he or she lives.
A Vincentian Partnership delegation appeared before the committee to discuss the problem and it highlighted the fact that people in disadvantaged areas may not vote regularly and may not bring their full weight to bear on the Oireachtas. My party and other parties of the left would win more seats if more people in these areas voted. I have always been unhappy with the performance of the Combat Poverty Agency and the national anti-poverty strategy in this regard. There has not been a spatial dimension to the strategy. One can live in a certain area of Dublin and one's quality of life will be poor but if one were to live a few streets away, one might as well be living on a different planet.
It is often said that the measure of the integration of a society is the extent of spatial inequality. Other capital cities such as Stockholm are safer by night and that is related to greater social integration. Ireland is a stratified society and successive Governments have failed to regenerate disadvantaged areas in which the Department has more customers. The Minister has not introduced a dynamic approach to the poverty agenda to remove such divisions in our society.
Rural poverty and urban disadvantage have always been key components of the NAPS and will continue to be so under the review. I do not accept the Deputy's statement that the Government has not made an effort in regard to examining poverty from a spatial perspective. We introduced the RAPID programme and quickly followed up with the CLÁR programme, even though we were not obliged to do so under the PPF. The Minister for the Environment and Local Government will soon bring forward proposals regarding provincial towns which will be included in a similar programme to RAPID. County and city development boards also have a strong social inclusion focus. Nine local authorities are about to pilot social inclusion units. A considerable amount is being done. We were criticised by some parties for dividing the country in two for the purposes of Objective One and Objective One in transition status. I thought that was the right way to proceed to maximise our advantage from an EU point of view.
Work is ongoing on a national basis and on targeting geographic areas. In addition, work has been done on the issues referred to during Question Time yesterday relating to the reintegration of former prisoners and efforts to allow them re-enter education or engage in training or work while retaining their social welfare benefits so that they are not disadvantaged as a result of having gone to prison.
Amendment, by leave, withdrawn.
Amendment No. 22 not moved.
I move amendment No. 23:
In page 4, before section 4, to insert the following new section:
"4.-The Minister shall, as soon as may be after the passing of this Act, prepare and lay before both Houses of the Oireachtas a report on the implications of relaxing the rule that a recipient of carer's allowance cannot claim another social welfare payment at the same time.".
Amendment put and declared lost.
Amendment No. 24 not moved.
I move amendment No. 25:
In page 4, before section 4, to insert the following new section:
"4.- he Minister shall as soon as may be after the passage of this Act prepare and lay before the Oireachtas a report on the implications of introducing a new infancy payment to cover the considerable capital and other costs associated with the birth of a child.".
The Chairman advised me at the beginning of the meeting that, if one puts forward novel ideasin a particular year, the Minister frequently implements and claims credit for them the following year. I put forward this suggestion in the hope it might be put in place at the beginning of next year.
This is a proposal we made in our pre-budget submission whereby young couples with their first child would be paid what is known as an infancy payment or whatever one wants to call it to cover the considerable capital and other costs associated with the birth of a child. Research has shown it takes a considerable amount of money to bring a child into the world. These are not medical costs but the considerable costs involved in the early years, especially the first few months especially of a child's life. As a way of encouraging people to have children and ensuring an adequate source of funding for young parents, we should examine the introduction of an infancy payment, particularly for the first child. Recent research shows that somewhere between £2,000 and £4,000 is put aside by parents in the first year to deal with the costs associated with having a child. I speak with a degree of experience of this in recent months.
The Deputy should declare an interest.
I should declare an interest. If one reads the recent comments of the former Taoiseach, Dr. Garret FitzGerald, and one sees his projections relating to the number of children who will be born in future, we need to incentivise child birth and child rearing. One way to do that would be to provide funding for the first child, which would go directly towards the costs associated with that very difficult stage of the first few months after the child is born. I make the proposal on the basis that we will see it in next year's Social Welfare Bill.
I support this amendment. Due to demographic concerns, France introduced a direct payment for the first two children born in a family. The proposal has merit in the context of the costs associated with future generations of senior citizens. It is important to maintain the birth rate.
I have news for Deputy Hayes. I have already examined this matter. Two or three years ago we examined the possibility of introducing this payment. However, I decided to increase child benefit rather than going this route because, if a grant of £1,000, for example, is introduced for each birth and there are 52,000 births in a year——
The Deputy referred only to the first one.
There are 52,000 births a year.
Not all of them would be first time births.
I do not know what the proportion would be.
The Minister is correct. If it were given to everyone, it would be very expensive.
I misunderstood what the Deputy said about the first child. The costs would be substantial and even £1,000 might not be sufficient to meet them. That is the reason we plumped for increasing child benefit massively because it gives a good stream of income to mothers especially.
It is an issue we keep under review and we examined it in the context of what other countries have done. Other European countries have introduced similar types of payments in this respect. There is an element of a birth grant in the system already in terms of multiple births, but obviously that only applies to a very small proportion of overall births.
I would not see this as an income adequacy issue, rather as directly helping people who have decided to have their first child. The associated astonishing capital costs are growing and inflation in terms of the cost of child rearing is colossal.
The Deputy should have thought about it before he did anything.
It is all the pressure.
Perhaps I should have listened more closely in my biology lessons. As the Minister knows, this area is very difficult, especially where a woman returns to work some months after giving birth. This issue obviously will still be on the burner. Perhaps the Minister will examine it in the context of the first child. That would cut down costs considerably. If a grant were given for each of the 52,000 children born each year, the cost would be considerable. However, giving it for the first child would be a good way of incentivising couples.
The committee has discussed this on a number of occasions and believes the first child should receive the highest rate of child benefit and that people should receive less for other children.
The Combat Poverty Agency has said the opposite.
Yes.
It is not the only agency which has said so.
A person who telephoned me the other day said he had five children and wanted to know why his two remaining dependent children are not regarded as the fourth and fifth children, which they are legally, rather than the first and second.
Is that the way it works?
Yes. It is the first child who qualifies.
Amendment, by leave, withdrawn.
I move amendment No. 26:
In page 4, before section 4, to insert the following new section:
"4.-The Minister shall as soon as may be after the passage of this Act prepare and lay before the Oireachtas a report on the implications of rationalising the existing different rates of child dependent allowance as a means of assisting low income families.".
Amendment put and declared lost.
I move amendment No. 27:
In page 4, before section 4, to insert the following new section:
"4.-The Minister shall as soon as may be after the passage of this Act prepare and lay before the Oireachtas a report on the implications of extending the child dependent allowance to children up to 22 years of age who are in full-time education.".
Amendment put and declared lost.
Section 4 agreed to.
NEW SECTIONS.
I move amendment No. 28:
In page 5, before section 5, to insert the following new section:
"5.-The Minister shall, as soon as may be after the passing of this Act, prepare and lay before both Houses of the Oireachtas a report on the implications of increasing fuel allowance to \13 and \20 respectively and extending the fuel allowance season for pensioners to 52 weeks.".
The Minister deserves some credit at long last for increasing the fuel allowance for the first time since the former Minister, Barry Desmond, was in office. Given the statistics for fuel poverty we discussed on Question Time the occasion before last, a strong case could be made for extending the fuel allowance season to the whole year for pensioners and having as a basic target an increase in the allowances to \13 and \20. The Minister said previously that it is also an issue for the Minister for the Environment and Local Government. We must move to a clean air situation as soon as possible but all senior citizens must have access to adequate heat. I commend the Minister for this measure.
In recent weeks, representatives of Bord na Móna have expressed their concern at the move by the Minister for the Environment and Local Government to force people to abandon traditional solid fuels and the negative impact this may have on the coal industry, which is now largely controlled by Bord na Móna. There is also concern about the impact of this move on the levels of heat enjoyed by people in non-clean air areas. This matter must be kept under close review, given that the allowance is so tiny.
I welcome the changes that have been made. The issue of fuel poverty is important. The Minister with responsibility at the Department of the Environment and Local Government, Deputy Dan Wallace, recently admitted that more than 50,000 local authority homes do not have central heating or, according to the Department, an inadequate source of heating. Dublin Corporation is at the top of the list on this issue. This may be because the Taoiseach is in the constituency.
It is not his constituency.
He lives in the area. Income poverty is not the only sort of poverty. An elderly person can have a sufficient income but an appalling heating system. More than 50,000 homes do not have central heating and a considerable number of homes are not properly insulated. I welcome the small increases in the fuel allowance but we need to go further.
I thank Deputies for their remarks in relation to the increase. In the Dáil today I understand a Deputy asked who influenced me in this regard. Last year I came under considerable pressure from the Taoiseach to increase the fuel allowance and I finally decided to spend £25 million - the sum needed - to increase the old age pension by an extra £1 instead. I make no apology for deciding to give all old age pensioners an extra £1 for 52 weeks in the year as opposed to giving some an extra fuel allowance for only 29 weeks. There are issues in relation to the cut-off point and how money is allocated. The £7 allowance is not necessarily all spent on fuel.
We should extend the fuel allowance progressively to 52 weeks of the year so that it is eventually dovetailed into the main payment. I went as far as I could this year, within the budget available to me.
Amendment, by leave, withdrawn.
I move amendment No. 29:
In page 5, before section 5, to insert the following new section:
"5.-The Minister shall, as soon as may be after the passing of this Act, prepare and lay before both Houses of the Oireachtas a report on the implications of doubling the back to school allowance.".
The Minister has made a small improvement in this allowance but there is still a significant issue. Every summer, my colleague, Deputy Shortall, calculates the cost of sending a teenage child back to school. This year she estimated the cost at between £600 and £700. The allowance, even with the welcome addition, is minuscule.
The change in relation to the disregard will benefit almost 8,000 children in almost 5,000 households. In addition to easing the means test, I have increased the payment rate. This will benefit 72,000 children in approximately 50,000 households.
A working group has been set up to review the back to school clothing and footwear allowance scheme. I hope that working group will report shortly. This will allow other proposals to be looked at in order to bring forward improvements in the scheme.
Is it possible to extend the application date? There is a three month timeframe for applications for the grant. Has the Minister examined the possibility of having a rolling application date for applications? Difficulty is often caused when applications are made late.
This issue was raised before. The allowance is paid through the health boards and there are time difficulties with the boards. There were difficulties in the earlier part of my Ministry and we tried to have the allowance paid earlier.
Some of it is paid too early and some is not paid until Christmas.
There are difficulties in that respect and I take the Deputy's point. I will look at the matter.
Is there a possibility of a two phase payment, depending on income?
No.
Many people are just missing the cut-off point for the allowance. The more attractive the allowance, the more people will——
——clamour for it.
There may be something to be said for a grade A and grade B payment.
Amendment, by leave, withdrawn.
Amendments Nos. 30 and 39 are related and may be discussed together.
I move amendment No. 30:
In page 5, before section 5, to insert the following new section:
"5.-The Minister shall, as soon as may be after the passing of this Act, prepare and lay before both Houses of the Oireachtas a report on the implications of increasing the earnings disregard for one-parent family payments.".
This is another aspect which the Minister has not increased during his time in Government. Last year he told me there were only a few hundred lone parents who would lose their benefit completely in such a situation. The limit of £12,500 is quite low. My amendment asks that an increase be considered.
Some studies this year showed that having employment is an important step for a person rearing a family on his or her own. The point was made very strongly in the One Long Struggle report. The cut in CE schemes had a very detrimental impact on lone parents. There appeared to be no logical explanation for much of what was being done by the Department of Enterprise, Trade and Employment but changes had a big impact on customers of the Department of Social, Community and Family Affairs. Did the Minister not even consider raising the level in line with inflation?
My amendment is almost the same as Deputy Broughan's. The route out of poverty is through employment but we seem to have a different view of that argument when it is applied to lone parents. The weekly income limit has not been changed for some years. We should at least increase the limit in line with inflation. There are substantial poverty traps for lone parents who do not see an incentive to work even though they want to work and improve their skills. If we see employability as the way out of poverty, we should be able to extend it to all lone parents.
Between 300 and 400 lone parents per year exceed the limit and as one gets closer to the upper limit of £12,000, the figures are very small indeed. I looked at the issue but a number of changes will be made and proposals will be implemented in regard to payments to lone parents. There will be much more pro-active interaction with lone parents on a one-to-one basis to try to get them back to work. Reports in this area have shown that lone parents wish to get back into work and are doing so. Approximately 70% of lone parents in receipt of the one parent family payment are actually declaring income apart from the payment. There is a definite move to work on the part of lone parents. This is something we will keep under review.
Amendment, by leave, withdrawn.
I move amendment No. 31:
In page 5, before section 5, to insert the following new section:
5.-A person whose income is below \400 per week shall not be liable to make contributions under the Health Contributions Act, 1979.".
Due to the short length of time available, I repeated an amendment from last year. As this could be an issue I would like the Minister's view on it.
The health contribution is paid in general by people earning more than £280 per week. People with medical cards do not have to pay. The contribution yield is £658 million per year and the money goes directly towards funding the health services. The amendment proposes an increase in the threshold of approximately £35 per week which would cost £29 million. This reduction would directly impact on the funds available to the health services. I find it difficult to believe that so soon after the publication of the health strategy and the criticisms from the other side of the House about the level of funds being provided that they are suggesting we should take almost £30 million directly out of health funding. As maintaining the health contribution at its current level is part of the overall budgetary arithmetic, it will not be possible to change it without resorting to compensating measures elsewhere. What are the compensating measures being suggested? Are we supposed to go back to borrowing, additional taxation or cuts in other expenditure?
The threshold ensures people on the lowest incomes do not have to pay contributions. Since coming to office, the Government has increased the threshold by 42%, from £197 to £280. This is ahead of the growth in earnings over the same period. The health contribution creates a problem with the step effect. Once a person goes over the threshold of £280 their weekly contribution goes from zero to £5.62. Increasing the threshold worsens the step effect. At the proposed threshold of £315, the drop in income would be £6.30. Ireland's aggregate income tax social contributions, including health contributions, are the lowest in the EU. Specifically for a single person on the average industrial wage the tax wage in Ireland is 28.8% compared to an EU average of 45%.
The point is that we are talking about low paid workers. There is some disappointment that in the overall budgetary context people on the minimum wage will still be caught for tax despite all the fine promises made by various Ministers. When people receive wage increases under the PPF they immediately jump into this relatively low threshold and suddenly find themselves paying health contributions. I know it is something the Minister did not look at last year, and it is unlikely he will do so. However, I want to put the case again and perhaps it could be considered in the negotiations for the next agreement.
The ESRI report shows pretty conclusively that the distributive impact of the budget for the lowest income sectors is way ahead of the richest.
In the last five years?
Over the last couple of years but particularly this year.
The Minister will be judged on the last five years.
Absolutely.
Amendment, by leave, withdrawn.
Section 5 agreed to.
NEW SECTIONS.
I move amendment No. 32:
In page 5, before section 6, to insert the following new section:
"6.-The Minister shall as soon as may be after the passage of this Act prepare and lay before the Oireachtas a report on the implications of increasing the weekly income disregard for carer's allowance to £370 for a married couple and £185 for a single person.".
Amendment put and declared lost.
Amendments Nos. 33 and 34 not moved.
Section 6 agreed to.
SECTION 7.
Question proposed: "That section 7 stand part of the Bill."
The subject of our motion last night which was voted down today was that the fundamental course of action of the Minister and his colleague, the Minister for Finance, in removing \635 million from the fund and putting it into the general Exchequer is unwarranted. Obviously it can be made legal. What are the implications of this action for the 1952 and 1998 legislation? It is easy to say the fund has been subsidised for years to the tune of £11 billion and that the Government is now entitled to take £500 million out of it. However, if one looks at it in relation to the benefits to which we referred and the fact that the fund has a specific purpose, this seems to be a course of action which the Government should not have embarked upon. It sets a very bad precedent for the future because others may feel they can easily raid the fund. It is unfortunate that a phoney debate was set up by the Minister for Finance between borrowing and not borrowing given the resources still available to him this year. I do not think the borrowing aspect should have come into the argument.
The Minister referred on a number of occasions last night to the comparison between the two funds. The 1% fund is a different type of fund in that it is taken straight out of the national revenue. We are talking about getting wide views from the parties in regard to supporting carers and having a national consensus on how we should move forward. It is unfortunate in regard to the other fund that there was no real debate. The issue came up during the summer and Deputy McDowell had a very short time to discuss it. Suddenly it became law. We could have a debate on paying the debt. It is a very important national decision to build up a savings fund of that nature.
All the social partners agreed.
We were not consulted as representatives of the people.
You were consulted.
We had a vote but it should have been a wider debate. As it now turns out it was kick started by robbing the poor Eircom shareholders who did not sell their shares within the first 24 hours of the flotation. It does not seem right to remove money from that fund. As Deputy McDowell said, a future Government may decide to put 0.75% into the fund. It is not of the same order as interfering with the social insurance fund because this is something which affects people individually. They paid the money individually. It is not just being taken from a sum of revenue and being put into another account This is a fund for the future.
I commend the Minister for Finance in general terms on thinking about the future and putting down a marker. As a nation we were like a household that had no savings of any kind. Down through the years this committee was trying to support some of the households. It was good to have a surplus in the account and to have national savings. However, the two funds are different. I believe we will be discussing the pensions fund after Christmas. The studies I have read seem to indicate that ourselves, the UK and the Netherlands get all the plaudits for pension provision because, in addition to the first tier, we have the most outstanding second tier in occupational pensions - only 30% of the private sector PRSAs get into action. Given that fact, perhaps the 1% was less urgent in this country than in a number of other countries such as Germany. The Minister talks about demographic projections but we are talking about a lengthy future, decades from now. It is good that we have some national savings but I regret the fact that the Minister for Finance, Deputy McCreevy, did not allow a few days' debate on the 1% fund at the time it was announced, because it was such a major decision.
The Bill was debated.
I know we had a debate on the Bill, yes. Given the fact that we have a creaky and backward health system, and many bad schools - all the issues that people have been raising in the past couple of weeks - things remain to be done before we put aside so much money for posterity. It is a pity that we did not have such a debate, but this account is different. People talk about hypothetical taxes and one could argue that is exactly what this is. When the Attorney General was a Member of the House, both he and his party, the Progressive Democrats, were gung-ho to abolish the social insurance fund. I recall, one day, agreeing with the Minister, Deputy Woods, who strongly defended the fund. It is regrettable that the Minister, Deputy Dermot Ahern, has allowed the Minister for Finance to take this step. When he is resting in his chateau in north Kildare——
Or the south of France.
——Deputy McCreevy wants to be able to look back on his five years in office and say, "I delivered. I didn't borrow and I kept to my own straight-talking economic financial sense. I got through the period and that's it". He will probably say, "Look at the woeful Minister for Finance we have today", but he could have made different choices. I am not sure that we need a 12.5% corporation tax, for example, given that citizens pay 20%.
But the Labour Party would not change that if it got into Government tomorrow.
I am expressing a personal view. I am on the left of my party.
The Deputy cannot have it every way.
I am saying that I, personally, would make hard choices.
The Deputy is speaking on behalf of his party.
Please allow the Deputy to continue.
Thank you, a Chathaoirligh. I would make hard choices about some of these issues. Although it sometimes feels like I have been in the House for only a short time, this is the tenth budget I have debated. Essentially, the Finance Bill is about tax breaks for business and how to keep track of them. There are only a couple of pages on the bulk of the honchos, and the rest is for self-employed people and business. I did not accept it 20 years ago when Mr. Vincent Browne and various other journalists in that era, including Mr. Tansey, were wailing and moaning about the national debt and the country going to wrack and ruin. In 1987, small people bore the brunt of the costs associated with fixing up the country when they had not caused the trouble in the first place. The trouble was caused by people who would not pay their fair share of taxes. I have strong views on this matter. The Minister, Deputy McCreevy, was one of those voices who was ranting and raving in the early 1980s about balancing books, retrenchment and cutbacks. Yet, ordinary people suffered drastically in the 1987-90 period because they bore the brunt of the actions taken.
I do not accept that this workers' fund should be paying to eulogise or establish the reputation of the outgoing Minister for Finance. The Minister should have approached the matter in a different way; he did not need to do this.
This is the Achilles' heel of the Bill. The Minister has been hoisted by his own petard, primarily because specific commitments relating to this fund were given to the people by Fianna Fáil during the last election in regard to which the party has done a complete U-turn. The Minister may laugh all he likes, but he has been caught out on this issue. His party's manifesto contained exacting pledges and commitments to the people which the Minister, together with his colleague, the Minister for Finance, has chosen to ignore and ditch.
Yesterday, the Minister made some childish remarks about me. He was quite ageist in suggesting that young people have no role in politics, even though I do not feel all that young at the moment. The committee should recall the specific and exacting commitments that were given by Fianna Fáil in advance of the last general election. Only six points were made under the heading of reorganising and refocusing the social welfare system. This was not an exhaustive list of commitments, it was very specific. The first commitment made by Fianna Fáil in 1997 was to create a new board to supervise the financing and operation of the social insurance fund. Where stands that commitment? The second commitment stated: "This fund is the workers' guarantee that their benefits will be there for them when needed, without interference of means testing". It is quite clear that if one starts raiding £500 million from the fund, one is interfering and undermining the principle behind the "workers' guarantee", to use the Minister's own words. That is quite clearly the case.
The trade unions are up in arms about the third commitment which stated: "Board members will include representatives of employers, employees, self-employed people, retired people and other interested groups". What progress has been made on that commitment? The fourth commitment was a very sensible one: "An actuarial assessment of the fund and its future needs will be placed before Dáil Éireann, at least every three years". We are now slightly more than four and a half years into the life of this Dáil, so where is that particular commitment?
Those are four clear and specific commitments in the 1997 Fianna Fáil manifesto which have not been honoured. They have been completely ditched in the Bill now before us. Despite all his palaver, including the kind of personalised remarks he makes, the Minister has not dealt with the substantive point I made in the House last night.
I now wish to discuss the legislation itself. I agree wholeheartedly with Deputy Broughan's comments that section 7 is defective. If the Minister had told us exactly what he was using the money for, we could have argued about it, but we have had no such explanation. Instead, there has been a straightforward raid of half a billion pounds. Over the weekend, I read through the Official Report of the debate on the 1952 legislation, including the comments of the former Minister, Dr. Ryan - a relation of a distinguished Member of this House. It is clear from the record that this was a workers' fund, amalgamated in 1952 with the intention of paying out clear liabilities. I am aware of the fundamental distinction concerning the fund which, incidentally, makes up about 46% of the total expenditure of the Department of Social, Community and Family Affairs. There is a current account and an investment account. The Minister is in charge of the current account and his colleague, the Minister for Finance, is in charge of the investment account. It is not a normal current account, however. I would argue that it is a liabilities account in that it is there for specific purposes. This is clear if one reads one of the amending pieces of legislation in the 1993 Act. Section 7(5) dealing with the social insurance fund, states
Moneys standing to the credit of the current account of the fund and not required to meet current expenditure, shall be transferred to the investment fund [controlled by the Minister for Finance].
So moneys standing at the end of the day in the current account can be given over for investment by the Minister for Finance. Therefore, it is not a typical current account where one simply decides one is going to take £10,000, £20,000 or £30,000 out and use it for another purpose. It is there for a specific purpose.
The Minister should read the 1952 legislation which provides a clear role for the Comptroller and Auditor General. Subsection (7) of the original Act, which was passed in 1952, clearly states that the accounts of the funds can be prepared in such a form, in such a manner and at such time as the Minister for Finance and the Comptroller and Auditor General may direct. Has the Minister sought approval from the Comptroller and Auditor General? What is the view of the Comptroller and Auditor General? We had a debate earlier in the context of other amendments where the Minister cited the reasons he could not extend payment. He said that in the view of the Comptroller and Auditor General we could not do it. In this episode of "Raiders of the Lost Ark", has the Minister sought the views of the Comptroller and Auditor General? The 1952 legislation sets out the role of the Comptroller and Auditor General.
Last year the Minister lectured the Labour Party about its proposals to take money from the pensioners' fund which is part of Government revenue.
That is right.
His hypocrisy about the social insurance fund is unbelievable. He thinks he will get away with it, but the public will not buy it. The Minister might be right in that this is a "cute hoor" Fianna Fáil stunt which the public will not recognise. Fianna Fáil will say it has done the business and provided the money. However, it has serious implications for the future. We would not be doing our job as legislators if we did not highlight the gross abnormality in the legislative process. If one reads the 1952 legislation, the changes made in 1993 and the amendments made in 2000, there is a cast iron guarantee that the moneys in the fund must be used for specific purposes and not at the whim of the Minister for Finance at any given time. I want the Minister to address that issue. Why did he not explain why the section is included? There is an argument that he is showing us how the PRSI fund will be utilised. However, section 7 does not refer to that. This is a straightforward raid of the fund and that is why it is difficult for Opposition parties to concede on this issue.
Deputy Broughan said we do not know what the situation will be in the next 12 months. The Minister in his financial statement projected a surplus next year of £1.4 billion. No one knows the draw down on the fund in the next 12 months. The Minister mentioned the recent increases in unemployment assistance and unemployment benefit payments, as set out in the November unemployment statistics. He knows the difficulty we could face in six months if unemployment continues to rise. We have the problem that we cannot extend other benefits to workers who paid into the fund because the Minister for Finance has pulled a fast one on the Minister for Social, Community and Family Affairs and taken £0.5 billion out of it. There are serious implications for the Minister, his colleague and the Government. The public does not buy it. Last night the Minister asked me where we would get the £0.5 billion.
The Deputy did not answer the question.
I will answer it now.
The Deputy could have borrowed it.
It could have been borrowed. The Governor of the Central Bank appeared recently before a committee of the House and he was questioned about a substantial reserve in the Central Bank which was used to prop up the Irish currency. The reserve fund will still exist after the currency changes in January. There is an argument that a partial sum, which was used to prop up the punt, will now be used to prop up the euro. When the pension reserve fund was established, my party's spokesperson at the time, Deputy Noonan, proposed flexibility on the issue of taking money out of the Exchequer in any given year if there was an economic downturn. We proposed that approximately 1.5% could be taken in good times which could be reduced to three quarters of 1% in bad times.
A flexible friend. The Deputy would not do it.
The savings scheme is only for five years.
The Minister asked me a question yesterday evening and I am responding. We proposed an amendment which was voted down by the Minister for Finance. An achievement of the Government was the establishment of the national pension reserve fund. The House and the Government should take credit for it. It is a sensible policy to put money aside, particularly in bad times, to ensure we have funds to meet pension demands in the future. However, there should have been flexibility in the legislation to allow such a percentage reduction in difficult times. I have given the Minister two answers in response to his question yesterday.
What can we do? We are taking Committee Stage this evening and Report Stage on Friday. The Minister has negotiated a bad deal. When the Minister for Finance knocked on his door, he threw up his hands and told him he could take £0.5 billion from the fund. However, it is not the Minister's money. It is part of the contributions made by workers and their employers. It is bad legislation. People will look back on this as one of the most irresponsible acts of the Government and they will blame the Minister for Social, Community and Family Affairs because he has responsibility for the current account. I know the Minister's responsibilities because I read the legislation carefully. The Minister should go back to the Minister for Finance and ask him to come up with another mechanism.
I will not do so. I am proud of the fact that, as a result of the Government's management of the economy over the past five years, we have not only given large amounts of tax back to the people, but we have broken all records in that regard. We have allowed people to have a reasonable net income. Any taxpayer will tell the Deputy that for once in their lives they see a good benefit in their pay packets. People can see increased amounts of money in their pay cheques which they did not see before. We used to be one of the highest taxed countries in Europe. However, we are now the lowest and most of that change has happened in the past five years. Similarly, we have been able to preside over the best social welfare packages in the history of the State. I have been proud on five occasions to be able to say that I have been in receipt of the highest increases in the social welfare budget in the history of the State.
When I came into the House in 1987 the big issue for all sides of the House was the fact that the International Monetary Fund was going to close the country down from a financial point of view. We had a GDP ratio of approximately £133 million at that time. We had all types of figures about how much the national debt meant to every man, woman and child. We were close to bankruptcy during those years, mainly due to the economic management of my party led Government——
The 1977 Government, an appalling one.
No, since 1987——
The year 1977.
No, since 1987.
The year 1977.
The national debt rose from £12 billion to £24 billion during the four years in the 1980s that the Deputy's party was in government.
It was the Minister's party in government——
I did not interrupt the Deputy when he spoke. Not only have we given huge tax and social welfare packages, we have reduced the national debt from a GDP ratio of 133% to about 33% as a result of the budget. Today, in terms of the debt-GDP ratio in Europe, we are second only to Luxembourg, which has no debt. We are, in effect, the best. Apart from this, we have put £5.5 billion aside into a national pension reserve fund onto which we are adding another 1% or £800 million. Next year there will be £6.3 billion in the bank for pensions for the workers to whom the Deputy keeps referring. Also, 1997 was the first year in recent memory that the social insurance fund went into surplus. Even when we take out £500 million, there will be a £1 billion surplus next year which, all things being equal and continuing as we have been, will accumulate to about £2.5 billion in 2003 and £3.3 billion in 2004. The indications are that, as the demographics for the next ten to 15 years indicate, we will still have a high proportion of workers in the economy.
There could be another rainbow Government in the meantime.
Unemployment may go up or down slightly, but we will have roughly the same cohort of workers.
I do not accept the Deputies' argument. No household would borrow money or use the flexible friend to which Deputy Hayes refers. Unless there was a strict regime for the pension reserve fund, no Government would put money aside. I have been in the House for over 15 years, in good times and bad, and every Government, regardless of circumstances, is under pressure to use whatever resources are available. In fact, the pressure is worse when times are good. I reject Deputy Hayes's flexible friend financial policy. He obviously had to ask Deputy Noonan what he should say about my specific challenges on how Fine Gael would pay for its proposals.
I reject that. There were no challenges. The Minister would not answer my questions last night.
The Deputy selectively quoted from our document. If any promise in it remains unfulfilled——
It is not a policy document, but a manifesto
——I would not mind if it relates to the social insurance board. I guarantee that not one person in my constituency would raise that with me.
Does that make it right?
People will ask if we committed ourselves to reach a figure of over £100 in old age pensions and I will be able to say that we have gone further.
We certainly have.
We have gone further by giving £116. I am able to defend my promises in the manifesto. As I said last night, I would love to have had a discussion with the Deputy on "Morning Ireland" about these issues where I could publicly challenge——
We are debating them now.
——the piffle from Deputies on the other side of the House. Can the two Deputies guarantee that no future Government in which they may serve - if they ever get the chance - will not take money out of the social insurance fund?
What was the exact mechanism whereby this happened? Is there any communication between the Department of Finance and the Minister's Department about it? Did the Minister or his staff, when they received the request of the Minister for Finance, Deputy McCreevy, think it was a joke? Did the Minister request that the Minister for Finance look elsewhere or that he leave the betting tax as it was? It is not just the social insurance fund, but also the Central Bank, which has a board with one or two distinguished members from our side of the city. However, it is expected to approve. At least, when the money from the capital redemption fund was nicked, the Minister concerned stated specifically what he would do with it.
I want to know what was the actual mechanism by which it happened. Did the Minister consult his senior staff who look after the fund? We had one good presentation from the Department, but are still expecting legislation and other developments promised by the Minister. Nothing has changed in five years. Did the Minister for Finance insist? Did the matter then go before the Cabinet where the Minister was coerced into granting the money?
This is a bad precedent for the national pension fund also as it makes it easier for a future Government to take money from it since the present Government did it in the case of the social insurance fund. In the past personal taxation was too high, such as when we paid 58p in the pound in tax and PRSI, which was an incredible amount to inflict on taxpayers, especially those in the PAYE system. However, we should look at the social insurance fund in a positive way rather than depressing it in the first few years it is in surplus. There are opportunities to spend the money as part of the social welfare budget as many of those on assistance were workers. How did it all happen and was there a showdown between the Minister for Finance and the Minister for Social, Community and Family Affairs?
I cannot understand how the Labour Party can begrudge the elderly and the less well off in society what they gain from the social insurance fund. If it was Fine Gael I might understand because it once took a penny off old age pensioners, but the Labour Party should be ashamed of itself. It thinks itself a socialist party.
It is our workers' money.
It is the people's money and the Labour Party is afraid to see it go back to the people.
That is the point. We do not know where it went. What is it going towards? Will it go to Government jets for gallivanting around Europe?
Does the Labour Party begrudge it to the people who lost sweat and blood to build this country?
It is not going to the workers, that is the point.
Can we get back to the issue? I asked the Minister a number of questions. Actually, he said he had not spoken to Deputy Noonan all day but that he had the answer for him the previous night but would not give it to him because he refused to answer the Minister on the benchmarking question. I thought the Minister's assessment of economic policy was interesting - all things being equal and going as they are. That is some template for the next 12 months. I have never heard a more incompetent assessment of where the economy is headed. The Minister has got this wrong and he has not answered my questions yet.
Has there been any discussion with the Comptroller and Auditor General? If the Minister for Finance was in charge of everything - current spending and investment - it might be all right. This is the responsibility of the Minister for Social, Community and Family Affairs. The current side of the social insurance fund is his responsibility. Has the Minister sought advice from the Comptroller and Auditor General given that in subsection (11) of the 1952 Act there are specific responsibilities for the Comptroller and Auditor General?
The 1993 Act replaced the original Act.
I have that Act here. In which section is he referred to?
It is the overall Bill.
No, in which section is he referred to?
Section 7.
Section 7(11) is quite clear. It states "accounts of the fund shall be prepared in such form, in such a manner and at such times as a Minister for Finance may direct and the Comptroller and Auditor General shall examine."
It is not necessary to get advice or assistance from the Comptroller and Auditor General.
I am not suggesting that.
It says "at such times as the Minister for Finance may determine".
I am not suggesting that but am asking a question which I want answered, given that the C&AG is mentioned in the original Act and again in the 1993 Act. Has the Minister sought his view on this issue?
No, and I do not have to and neither does the Minister for Finance.
Given the unprecedented development being brought to bear on——
It is not unprecedented.
Given this radical change in policy does the Minister not accept there is a role for the Comptroller and Auditor General?
No.
That is astonishing given that the Minister has consistently argued that the Comptroller and Auditor General has responsibilities on other Votes within the remit of this committee. When will we see a new board to supervise this? This is central: it is not like, for example, Deputy Brady issuing a statement to The Meath Chronicle making a commitment on behalf of Fianna Fáil.
There is a commitment in the PPF.
To what?
To set up a social insurance board.
It is to have trustees.
Yes, and progress is being made.
What about the actuarial assessment?
That is already in situ, as I said on Second Stage this morning. I remind Deputies that in the Social Welfare Act, 1998 I introduced a provision whereby actuarial reviews would be carried out every five years because the advice from the Department was that three years was too soon. The first review was due to be completed by the end of 2002. However, I brought this forward to this year and my Department has further engaged external consultants to conduct an actuarial review of the social insurance fund for the period 2001-06. This work is under way and will be completed shortly. That has indicated——
I am in possession.
The Deputy is waffling.
I would like to welcome Deputy M. Brennan to the House. He should come out of retirement because his party will lose his seat.
I have been here before and have listened to the Deputy and have watched him on the television. He has been waffling all evening.
That has indicated a year on year increase in the social insurance fund will be somewhere in the order of £3.3 billion. When I used the phrase "all things being equal" it was plain language for a no policy change proposal which is exactly how this is framed.
That is going forward by the seat of one's pants. How can the Minister make that kind of commitment?
I am not making a commitment but saying that they are the figures coming from the actuarial review.
For the Minister to get some comfort from that he is leaving us short.
The whole point of an actuarial review is to look to the future.
I must also point out that Fianna Fáil slagged the Rainbow Government in 1997 but public spending now has been let go out of control. Under this Government spending leapt by one fifth, more than three times the rate of inflation. The Government has recklessly failed to meet even its own undemanding targets on containing expenditure, overshooting by £600 million of taxpayers' money. The projected deficit of close to \3 billion at the end of next year is breathtaking. The hypocrisy of Fianna Fáil on this issue is something to behold.
Does the Deputy recall that in those years the national debt was very high and the taxation burden on the unfortunate taxpayer was much higher than it is today? We have achieved a lot on those issues and have substantially reduced taxation over the last five years. We have given the highest social welfare budget increases in the history of the State, reduced the national debt by massive amounts, invested massive amounts into the pension piggy bank and still——
And raided the workers' fund.
——even after taking £500 million, we have £1 billion remaining. What we are doing is——
On a point of information.
Can I just answer? The Deputy makes these ideological references——
On a point of information, in absolute terms the national debt was at its highest under the Minister for Finance, Deputy McCreevy. It is because growth has been so massive that it has changed percentage wise.
That is like the argument and claptrap from some Deputies in the House. No later than this afternoon some Deputies were saying it is a disgrace that we have the lowest spend on social protection in the EU. They see the figure but do not take into account the fact that we have the youngest population in the EU, the most workers and the least number unemployed. All we are getting is claptrap from reports that have not taken those factors into account. Now the Deputy is doing the same. I am sick listening to Deputy Broughan going on with ideological catchphrases in relation to workers' this and that. Deputy Hayes said he thought it was my money or the Government's. It is not our money and we have said that bluntly. We are giving this money back to the people. In a way what we are doing is redistributive.
We do not know what it is being spent on.
We are giving money back to the less well off. Shame on those who do not agree with that.
The Minister did not answer my question. What communications were there between the two Departments in order to arrive at a decision?
There was absolutely no disagreement between the Minister for Finance, Deputy McCreevy, and me. I admit, however, that during the years there would have been disagreements in relation to the level of social welfare payments. In relation to the budgetary negotiations, this year was the easiest because we were ad idem. I am a strong supporter of the idea that one does not go off and borrow if there is money in the bank. We do not do what parties opposite did - provide for minuscule social welfare payments when there is money in the bank. We do not go off and raid pensioners’ money when there is money in the bank. There was zilch correspondence, although the Minister for Finance and I are on the best of terms.
The Opposition asked how the figure of \635 million will be spent. Perhaps the Minister will answer that question. What will be the total social welfare package or spend this year?
Nearly \7.5 billion.
How much of that money will come out of the social insurance fund and how much of it will come from the Exchequer?
The general increases will account for a proportion of 45% or less of the social insurance fund and 55%——
With more than \635 million coming into the Exchequer.
Yes.
When the Opposition asks how the \635 million will be spent——
It will be going into the Exchequer, but equally one could say that the money will be going into the national pension reserve fund. There is a considerable amount of money coming this way.
I am very afraid that if there was a change of Government and the Opposition started to borrow money, it would double the national debt as happened some years ago. When Deputy Dick Spring was Tánaiste and former Deputy Garret FitzGerald was Taoiseach the national debt was doubled. I would not like to see the Opposition getting back into power and borrowing like that again.
Deputy Broughan referred to the Government jet. Every Government needs a jet. When Deputy John Bruton and Deputy Dick Spring were last in government there were two Government jets.
I did not get an answer to the question as to whether the Opposition parties would take money out of the social insurance fund. I thought they were going to give me a commitment that they would not.
They are not.
Question put.
The Select Committee divided: Tá, 8; Níl, 6.
Tá
- Ahern, Noel.
- Ahern, Dermot.
- Brady, John.
- Brennan, Matt.
- Dennehy, John.
- Foley, Denis.
- Collins, Michael.
- Eddie, Wade.
Níl
- Browne, John (Carlow-Kilkenny).
- Broughan, Tommy.
- Coveney, Simon.
- Fitzgerald, Frances.
- Hayes, Brian.
- Mitchell, Gay.
Question declared carried.
NEW SECTIONS.
I move amendment No. 35:
In page 5, before section 8, to insert the following new section:
"8.-Sections 20(6) and 224(7) of the Principal Act are hereby repealed.".
These provisions in the principal Act refer to allowing the giving of proof of various matters in court by the mere production of certificates. Proof should come from witnesses who can be cross-examined. While it is not directly related to the business we are conducting today, we could be leaving unconstitutional elements in the Bill as happened with the Employment Equality Act.
In any proceedings instituted under the Social Welfare Acts, where the collector general and an officer duly appointed by the Minister sign a certificate stating that an amount is due and payable in respect of employment or self-employment contributions by a defendant, these sections provide that the certificate shall be evidence that the amount is due unless the contrary is proved. These provisions have been in place in relation to employment contributions since the introduction of PRSI in 1979 and since 1988 with regard to self-employment contributions. Amendments were made last year to provide that such certificates can now be signed on behalf of the collector general by an officer of the Revenue Commissioners. This was requested by the Revenue Commissioners in order to be consistent with changes being made in the Finance Bill to allow an officer of the Revenue Commissioners certify the assessment and debt due in income tax.
I heard the argument last year. I hope a future Government will look at the matter.
Amendment, by leave, withdrawn.
Section 8 agreed to.
I move amendment No. 36:
In page 5, before section 9, to insert the following new section:
"9.-The Minister shall as soon as may be after the passage of this Act prepare and lay before the Oireachtas a report considering the implications of extending the range of benefits under the free travel scheme by:
(a) removing the peak hour ban for those attending hospital,
(b) promoting community access and travel initiatives,
(c) relaxing the accompanying rules for the elderly,
(d) promoting agreement between other EU states to allow free travel concessions overseas (Europass),
(e) preserve rights to free travel with private operators on franchised public routes, and
(f) utilise the taxi sector for elderly people living in rural areas.”.
I am looking for a report on extending the benefits under the free travel scheme, a matter we touched on yesterday at Question Time. Since 1997, 581 licences have been granted to private bus operators who cover very important routes throughout the country. However, only 40 have applied to the Department of Social, Community and Family Affairs to be included in the free travel scheme with which the process of licensing private bus operators should be integrated. The buses belonging to an operator granted a licence should be made available to old age pensioners who may want to use the service.
There are other parts to the amendment, including the removal of the peak hour ban for those attending hospital. The Minister made some concessions in his Second Stage speech. He said he supports promoting community access and travel initiatives which he is trying to improve under the national development plan. I am, therefore, calling on him to relax the accompanying rules for the elderly to ensure somebody going to hospital can be accompanied free of charge. I also want him to extend the Europass, about which my colleague, Deputy Jim O'Keeffe, spoke when spokesperson on social welfare. We need to further our agreements with other European countries. In addition to my proposal on private bus operators, we should look at extending a voucher scheme to ensure elderly persons have access to taxis.
These are some of my ideas on extending the free travel scheme and I am interested in hearing the Minister's response.
As we debated this matter yesterday, I will not go over it again. Apart from Bus Átha Cliath, Bus Éireann and Iarnród Éireann, there are 80 private transport companies offering a service. There have been restrictions on free travel since its inception. These apply at peak times on city bus services in Dublin, Cork and Limerick. They do not apply to the mentally handicapped, to those attending long-term rehabilitation courses, to certain work experience programmes or to certain disabled or blind people. These people are issued with free travel pass which enables them travel during restricted hours. There are no peak-time travel restrictions on the DART, suburban railways or on services provided by private transport operators outside Dublin.
I spoke to the Deputy yesterday and before then about areas that are not covered by public transport. My Department cannot provide public transport, which comes under the remit of the Department of Public Enterprise, and I cannot force private operators to apply to the free scheme. It is entirely a matter for themselves. The difficulty in rural areas led the Government to establish an interdepartmental committee on rural transport led by the Department of Public Enterprise and it will report in the new year. The Minister for Public Enterprise, Deputy O'Rourke, introduced the rural transport initiative last July, for which £3.5 million is available, and 20 pilot projects are up and running or are about to come on stream. In the budget I have extended the companion travel pass to invalidity pensioners. Approximately 10% of people in receipt of invalidity pension are over the age of 65 so significant concessions have already been made in this area in recent years and the possibility of making further improvements will be kept under review.
I welcome the companion travel pass, which is a credit to the Minister. It is excellent that one can have such a pass. Deputy Brian Hayes raised the matter of taxis in rural areas. Many people in rural areas need to hire taxis to go to towns to collect pensions, go to mass on a Sunday, see the doctor and do their shopping. Some small provision of £5 or £10 per week for people in particularly rural areas would help them a lot.
The Minister said thatprivate operators cannot be compelled to participate in the scheme. If there is a tender for urban routes will a condition of winning be participation in the free travel scheme? There are two or tree private operators in our area and people who took out their travel passes on one were asked for £4, which did not make them very happy.
That is an issue for the Minister for Public Enterprise, Deputy O'Rourke. I would like to extend the free travel scheme to all operators.
Is it true that CIE is paid whether people with free travel passes use the service or not?
CIE is paid a subvention every year.
Where there is no public service available it would be wonderful if that money could be diverted to people for taxis. The north Meath community development association has established a bus service for remote areas, but it is very limited. It would be marvellous if it could be extended.
It is proposed to extend that initiative nationally.
The rate of the CIE subvention is agreed in negotiations between it and the Minister's Department. How is this determined in the case of private bus operators? Is it based on vouchers or the number of passengers they put through their books?
There is a private operator in my constituency and from that I know that surveys and spot checks of such operators are conducted from which a figure is arrived at. The figure is subject to negotiation and there were some intense discussions in my constituency. Further information can be given to the Deputy later.
Amendment, by leave, withdrawn.
I move amendment No. 37:
In page 5, before section 9, to insert the following new section:
"9.-The Minister shall as soon as may be after the passage of this Act prepare and lay before the Oireachtas a report considering the implications of progressively increasing the non-contributory old age pension so as to reduce the existing differential between it and the contributory pension.".
Fine Gael was happy with the increases in pensions this year, as set out in our pre-budget submission. I welcomed the increases when I spoke about the contributory pension. We made a specific commitment to reduce the gap between the contributory and non-contributory pensions and this amendment is a way for the Minister to commission a report to examine how that can be done. That would ensure that non-contributory pensioners are given a fairer pension. In the years ahead there will be fewer and fewer non-contributory pensioners because of the number of people who have been paying into the scheme. I suspect that the number now is small enough. I am interested in hearing the Minister's reply.
If I were not in the chair, I would declare myself against that. Is it not contrary to the fund you were talking about a few minutes ago?
I am not suggesting that the pensions should be equal. I am trying to understand why there is a £10 difference at the moment.
It is generally felt appropriate that there should be a differential between contributory and non-contributory pensions. That was confirmed by the commission on social welfare and by the national pensions policy initiative. If there was no differential there would be no point in paying contributions. People would qualify for the same money irrespective of their circumstances. A differential applies in almost all other social welfare payments and it has been suggested that it should be 10%.
Amendment, by leave, withdrawn.
I move amendment No. 38:
In page 5, before section 9, to insert the following new section:
"9.-The Minister shall as soon as may be after the passage of this Act prepare and lay before the Oireachtas a report reviewing the application procedure for the social monitoring scheme.".
This is a straightforward amendment. This year someone suggested to me that we look at a longer application period for the alarm systems that are put in place. It is operated through the Minister's Department, it is a good scheme and we on this side of the House welcome it. It was mentioned to me throughout the year that the application time presents difficulties for some. If they do not apply before a certain time they lose out in the following year. I want the Minister to review the application procedure and the length of time allowed. It has been brought to his attention.
I am not aware of any difficulties and we are reasonably flexible in relation to applications. There is no cut-off date, though there might be an understanding that the application must be made by a certain month. If difficulties are being experienced by the Deputy they may relate to the paperwork involved. This is a scheme whereby substantial portions of taxpayers' money is paid out to various groups around the country and the issue of control is quite important. My officials have to be absolutely rigorous in our procedures. What is involved is not particularly onerous but it has worked well and every effort is made to get the money to the groups as quickly as possible.
When groups apply for money, do they have to specify who the money is for?
No.
They become the Department, in effect.
In effect, but they do it on the basis of a survey done by the group.
Some of the smaller ones operate like that. If one makes an application to them they may say it will be next year before it can be dealt with.
Amendment, by leave, withdrawn.
Amendments Nos. 39 and 40 not moved.
I move amendment No. 41:
In page 5, before section 9, to insert the following new section:
"9.-The Minister shall as soon as may be after the passage of this Act prepare and lay before the Oireachtas a report on the implications of increasing maternity benefit for mothers on the basis of current yearly income as against the assessment of income two years prior to the birth of a child.".
This amendment relates to maternity benefit. I understand the payment of maternity benefit is made on the basis of the woman's salary from two years previous. I think that should be addressed. If one is a civil servant payments are made on the basis of current income but it does not apply in all cases. People make PRSI contributions in the current year so why is this distinction made when it comes to maternity benefit? People are paying the into the fund and expect something back from the year in question. I ask the Minister to look at this in terms of updating the income requirements for the year that the woman is actually going on maternity benefit.
The level of maternity benefit is set at 70% of the woman's earning in the relevant income tax year, subject to minimum and maximum weekly payments. For claims made during 2001 the relevant income tax year is April 1999-April 2000. The 2001 tax year will apply in respect of claims made in 2002. Unlike social welfare payments, maternity benefit is not taxable. In addition, if the employer does not pay any wages for the maternity leave period then the woman would generally be entitled to an income tax refund for that period. When these factors are taken together, the rate of maternity benefit in many instances equates to approximately 100% of the woman's net earnings, subject to an upper ceiling. Where the woman is entitled to be paid by her employer during maternity leave then the combination of maternity benefit and reduced wages will generally bring her weekly income to the level of her pre-maternity leave net earnings.
If social insurance payments were to be made fully earnings related it would involve a substantial increase in expenditure. This, in turn, would require a significant increase in the current levels of PRSI. The level of social insurance contributions paid in EU countries where the benefits provided are earnings related - France, Germany, Italy and the Netherlands - range from 10% to 43% in the case of employees and 20% to 45% in the case of employers. The equivalent social insurance contribution in this country is 4% for employees and 10.75% for employers. The current system uses the most recent earnings which have been verified by the Revenue Commissioners. For instance, while the tax year has in the past ended on 5 April, employers had until the end of May to submit their P35s, that is details of the earnings, tax and PRSI paid by, or on behalf of, employees in the income tax year. Following completion of the necessary checks on this data, the PRSI and relevant earning details are transferred to my Department with the bulk of it being received by October. These details are then checked further and are used for the beginning of the calendar year in January. While the beginning of the income tax year will change from 6 April to 1 January at the beginning of 2002, the relevant income tax year for maternity benefit claims will remain unaffected by this change.
The alternative to this arrangement is to take current earnings into account. A number of difficulties would arise in this case. Which reference period should be used? For instance, claims for maternity benefit must be submitted at least six weeks before leave commences. A woman's earnings in the period immediately before the commencement of maternity leave may either under or over represent her normal earnings. A significant number of women are in receipt of disability benefit in the period immediately before taking maternity leave and may have no earnings from employment in this period. Under the current system, the rate of maternity benefit payable is calculated automatically. If recent earnings were to be used then they would have to be entered in the case of some 30,000 claims annually. This would lead to delays in processing claims. If current earnings were used, the employer would have to certify the earnings detail in all cases. Investigations would have to take place where discrepancies occurred between the earnings detail supplied by employers and those held by the Department. That would lead to further delays in processing claims. Incomplete or incorrect earnings details supplied by the employer could lead to over payments and under payments.
In the circumstances, the operation of the current system is considered to be more appropriate.
Reading between the lines the Minister is saying there could be cases where women would lose out under what I am proposing. That is because six weeks before they take maternity leave they might not be earning an income. There are potential downsides to it. Why can they not have a choice? They could choose to work with the current system or under what I am proposing. A number of women have raised this with me and feel it is unfair that their maternity benefit being determined on the basis of a previous year's PRSI contributions.
We can examine it. Perhaps it is an issue that can be teased out by the committee. I can see the arguments that are being made for it. Quite apart from the issue of disability benefit, it is an administrative nightmare and one which would cause long delays.
Amendment, by leave, withdrawn.
I move amendment No. 42:
In page 5, before section 9, to insert the following new section:
"9.-The Minister shall as soon as may be after the passage of this Act prepare and lay before the Oireachtas a report on the implications of having an hourly rate of pay for the Students Summer Job Scheme commensurate to the rate of pay for the national minimum wage.".
This is an old chestnut. The Minister did make some improvements to the students summer job scheme this year. Yet, as he told Deputy Broughan yesterday, it is quite ridiculous that four months after the end of the scheme some people are only getting paid now. If the Department was told there would be a financial penalty if they did not make these payments more quickly, then I think they would make them more quickly.
I ask the Minister to consider this amendment in advance of putting next year's student summer job scheme in place. At the very least there would be a simple rate, namely, the national minimum wage. It is wrong that the current hourly rate under the scheme should be less than the national minimum wage. We have asked all employers to implement the minimum wage, yet this scheme operated by the Department, which is very good, does not abide by the legislation we passed. This is a glaring anomaly. The Minister argues that it is not employment under the terms of the legislation. For the small amount of money given to the students involved, I think the national minimum wage should be the benchmark.
My opinion on this scheme has not changed. It is not covered by the legislation and we have legal advice supporting that. There was a time when work would not have been available for students during the summer, but there is now work available for many students. If there was no differential students would not take up those jobs. Employers are screaming out for summer staff and often cannot get them. The scheme has had its day. I accept it is still useful for communities, especially in the west, for community work throughout the summer. However, the scheme was established at a different time when there were difficulties in the labour market. That is not the case now and we must make decisions on schemes based on changing circumstances. They have changed in respect of this scheme.
It is bad practice to have a scheme which pays people an hourly rate less than the national minimum wage. Does the Minister have figures for the uptake this year? Someone told me it had increased, which would disprove the point made by the Minister. If more people have applied for the scheme this year, it means more community groups are using students during the summer.
I am told the figures for last year were 6,000 and there is an estimate of 4,500 for this year.
It has fallen.
Amendment, by leave, withdrawn.
I move amendment No. 43:
In page 5, before section 9, to insert the following new section:
"9.-The Minister shall as soon as may be after the passage of this Act prepare and lay before the Oireachtas a report reviewing the social welfare provisions available to those who are seeking asylum and the need to increase direct provision for this group of people to £20 per week for adults and £10 per week for children.".
I was disappointed by the Minister's response to the financial statement in that he did not move to increase the provisions given to asylum seekers. My amendment seeks £20 per week and £10 per week for adults and children respectively. I know a group within his Department has examined this. Repeated questions from me and others have elicited the response that it will come to a conclusion soon. It is time we made a decision. We should bite the bullet on this issue and increase this very small payment to asylum seekers. The Minister is aware these people are in a difficult position. I am aware they receive child benefit and are entitled to supplementary assistance. That said, we need to increase the provision given to these people. I know this is not an election winner, but in the context of what took place last weekend in the Wexford and Waterford areas and our overall treatment of refugees, we need to increase the payment under this scheme.
I support the amendment in general terms. The Irish Refugee Council, one of the groups which made pre-budget submissions, sought a direct provision of £35 per week. The asylum and immigration system is a mess, and I heard this morning that the work permits Bill has not been brought forward. Obviously the Minister, Deputy O'Donoghue, knows the system is a mess because he is mostly responsible for it being so.
I would like to see asylum seekers working while they wait for the final determination of their applications. I know such determinations can sometimes be difficult to make. However, a country such as Nigeria is not far away in communications terms and it should be possible to expedite the process and give people encouragement. One factor in stirring up racism is where indigenous people who are struggling perceive others as receiving a great deal while not contributing anything to the community. We need a policy in this regard and the Government has not come forward with one. For us the right to work is a key point. People should be able to work.
On the other side of this development in the economy in recent years, civil servants told members of the Committee on Enterprise and Small Business that the number of agencies which brought people into the country to work had mushroomed from a handful to 500 or 600. It is extraordinary the Government has not implemented legislation in this regard. This also relates to the discussion on the previous amendment in that it was suggested that up to 35% of jobs in the tourism industry are filled by immigrants.
We need a coherent policy for those who wish to come here to work, and allowing asylum seekers work may be the key reform which is necessary. Determination of their status should not take months or years but, in the meantime, there should be a facility for them to earn a living. This would be an important right to give people.
I will not go into details but I do not accept there is no policy. The Government has a definite policy. We granted an amnesty to certain people who had sought asylum by granting them leave to work after a certain period. That is the one and only time we did so and we were correct in doing so. There is a fine balance in this and it can be seen in the speed with which a worldwide economic slowdown has occurred, as evidenced by the unemployment figures in this country. If we were to allow an open door policy and let all asylum seekers work while a decision was being made on their applications, in effect, the decision would be irrelevant because by the time it would be made the applicants would be integrated into society, even though they would not necessarily have rightly qualified for asylum.
From that point of view, the policy the Government has implemented has proved to be correct in that it is balanced. On the one hand, it lives up to our obligations under EU conventions, which cost the taxpayer a substantial amount of money - an estimated £100 million a year. I could have done with that money in my Department and so could other Ministers in their Departments. On the other hand, the policy tries to remains in tune with a Europe-wide policy. We cannot break with the policy of other European countries, which is to have a system of vetting asylum applications and allowing applicants stay if they are genuine.
There is a working group on the issue the amendment raises and it is due to finalise its work soon. Obviously we will have to examine the issue then.
Amendment put and declared lost.
Section 9 agreed to.
Schedules A and B agreed to.
Title agreed to.