Is breá an rud é go bhfuil mé anseo arís ós comhair an choiste. Gabhaim buíochas as ucht an cuireadh a bheith anseo ós comhair an choiste mar gheall ar na Meastacháin don bhliain seo.
Although this is not my first occasion to appear before the committee, it is the first time I have done so to discuss the annual Estimates. While my Department has had to adapt its expectations, as have other Departments, of what is possible in the current economic climate, I consider that the Government has lived up to its commitments to protect the least well-off in society and that this is reflected in the Estimates for 2003.
Total spending on social welfare included in the Revised Estimates volume has increased by 8% from €9.5 billion in 2002 to reach its highest ever level in 2003 of €10.3 billion. Deputies will be aware that, following a reallocation of ministerial responsibilities in the wake of the general election, responsibility for community affairs has passed from my Department to that of the Department of Community, Rural and Gaeltacht Affairs. This includes responsibility for the community development programme, the Vote for charitable donations and bequests and the voluntary activity White Paper implementation unit.
The total Revised Estimate allocation for this year includes the impact of the measures announced at the time of the publication of the Abridged Estimates volume last November as well as the impact of the social welfare package announced at the time of the budget in December. The budget package costing €530 million in a full year provided for an increase in social welfare rates at the beginning of January 2003 as follows: an €11 per week increase in the personal rate for widow-widower's contributory pension and deserted wife's benefit, aged 66 and over; a €10 per week increase for all other pensioners aged 66 or over and 65 in the case of retirement and invalidity pension; a €7.00 per week increase for recipients of invalidity pension, aged under 65, widow-widower's contributory pension, DWB, death benefit pension, carer's allowance, all aged under 66, carer's benefit and disablement benefit; a €6.00 increase for all others aged under 66; and proportionate increases for persons in receipt of reduced rates.
At the time of the budget, I informed the Dáil that in difficult times, the Government has sought to protect the real value of social welfare payments while giving additional support to older widows, widowers and pensioners who are generally not in a position to supplement their income with further earnings. This conclusion was supported by the analysis of the Combat Poverty Agency which appeared before this committee earlier this year. The agency noted: "Budget 2003 maintains the living standards of low income groups in difficult economic circumstances by providing a total welfare package slightly ahead of forecast wage growth." I am pleased that the continuing fall in consumer price inflation will confirm this conclusion as the year progresses.
The budget package also provided for a further instalment of the Government's commitment to increase the level of spending on child benefit. While the Minister for Finance announced that he was not in a position to complete the programme in 2003, as had been intended, he also indicated that this will be done over the next two budgets.
The new partnership agreement further underlines the Government commitment to those on lower incomes. In particular, Sustaining Progress contains specific commitments in relation to the achievement of the NAPS targets on the lowest rate of payment, child income support, as well as the existing Government commitments on child benefit and increasing the rate of the basic State pension to €200 per week by 2007.
Members of the committee can hardly but be aware that the more difficult economic circumstances required the Government to take a closer look at its spending in the run up to the publication of the Abridged Estimates Volume for 2003. Given this, the Government decided to appoint an independent Estimates review committee which was asked to review the pre-budget Estimates proposal of Departments and to identify all available options for achieving economies in existing services. The report of the committee was subsequently published and, while very useful in securing agreement on the Estimates, decisions in relation to the Estimates were a matter for Government which decided the recommendations on their own merits.
The recommendations of the committee were largely accepted by Government and were reflected in the allocations to my Department when the Abridged Estimates Volume was published. The most significant measures relating to specific aspects of my Department's spending involved changes to the back-to-work allowance, the back to education allowance and supplementary welfare allowance.
The committee had recommended that, in view of the decline in unemployment since the scheme was introduced, the back-to-work schemes should be progressively phased out. While it had been recognised in earlier consultancy reports that the eligibility conditions for the schemes needed to be tightened up, I felt that the wholesale abolition of the scheme was not warranted. Instead, following discussions with the Minister for Finance, I secured funding to ensure that the scheme was re-focused on the very long-term unemployed and on those in receipt of payments such as disability benefit and allowance, invalidity pensions and lone parents. The scheme is now operating on this basis for new entrants. Those who were already in receipt of a payment were unaffected.
The committee had also recommended that back to education payments over the summer months should be discontinued on the basis that students could secure employment to support themselves. This measure was implemented with a number of safety net features. Those who were in receipt of payments other than unemployment payments before moving to the back to education scheme will revert back to their original payment. On the other hand, those who were in receipt of unemployment payments prior to going on to BTE will be eligible to apply, in the normal way, for unemployment payments if they fail to find employment during the summer months.
I emphasise that lone parents and people with disabilities will continue to retain payments during the summer period. Students taking part in work experience as part of the course of study will continue as previously, provided that confirmation from the college registrar that the work is an integral part of their course is received by the Department of Social and Family Affairs. I also recently asked my officials to liaise with relevant bodies to identify specific postgraduate courses which would significantly add to a person's employability. As a consequence of this review, my Department will continue to support those on the Higher Diploma and Graduate Diploma in Education course.
The committee made other recommendations in relation to supplementary welfare allowance and rent supplement, in particular, reflecting perhaps the fact that these are some of the fastest growing areas of social spending. The minimum individual rent contribution by a supplementary welfare allowance rent supplement recipient increased to €12 per week from its previous rate of €7.62. This is the first rise since 1994. In addition, the maximum amount which the health boards can pay in rent supplement has been restricted to 2002 levels.
Rents have increased dramatically in recent years. There were suspicions that landlords had been revising rents upwards in response to changes in the maximum rent limits set by the health boards. The effect of capping the maximum rent will be twofold. As an anti-inflationary measure, it should lead to a rent price freeze or, in some instances, a reduction.
A more intensive programme for the processing of asylum applications by the Department of Justice, Equality and Law Reform will be followed up by savings in the payment of SWA.
While the combined impact of measures announced at the time of the publication of the Revised Estimates volume had an estimated impact of €97 million on departmental spending, this was more than offset by the €530 million the Government allocated in the budget package. This was significantly larger than the tax package announced by the Minister for Finance. At a time of increased economic uncertainty, this clearly emphasises the Government's commitment to protecting those at highest risk. My colleagues and I are committed to safeguarding the position of all social welfare recipients and I look forward to making further progress, in the years ahead, on the achievement of our social inclusion commitments.
As I stated earlier, social welfare expenditure in 2003 will be approximately €10.3 billion. This corresponds to about 29% of total current Government spending and 9.4% of gross national product. This makes it very important not only in terms of overall Government spending, but also in its contribution to the individual well-being of many persons in the State. It is incumbent upon us to ensure that we are clear and consistent in the objectives for this spending and ensure that we can see the tangible effects, particularly on those who are disadvantaged in our society. For the committee's information, I will provide a brief overview of the areas where this money goes.
The largest amount goes to old age pensioners, who receive 23% of total expenditure. Widows, widowers and one parent families account for 17%; child related payments, mainly child benefit, take up a further 17%; 15% goes on payments related to illness, disability and caring; unemployment now accounts for 11% of my Department's total expenditure, while employment supports amount to a further 3%; 10% goes on a range of other supports such as free schemes, supplementary welfare allowance and the bereavement grant; and the remaining 4% is spent on administrative expenses such as staff pay, accommodation and IT expenses.
What is the impact of all of this spending on income support? The effects of the Government's social and economic policies have been clear. The real value of payments has increased over time. Long-term payments for a couple without children have risen by over 52% since 1998, while short-term payments for a couple without children have risen by over 46%. The level of child income support has increased considerably in recent years. The social welfare payment of a couple on a short-term payment with two children has risen by over 54%, way ahead of inflation which increased by 23.5% over the same period.
In 1994 consistent poverty was almost 15%. By 2000, it stood at just over 6%. Consistent poverty among children has been halved from 17% in 1997 to 8% in 2000. In the revised national anti-poverty strategy, a new target of €150 per week in 2002 for the lowest rates of social welfare payments is to be met by 2007 and this should have a further impact on measured poverty.
Members of the committee will be aware that while the Exchequer makes the most significant contribution in terms of resources, as it funds all the systems-based schemes and universal schemes such as child benefit, employees and employers, as well as self-employed, also make a significant contribution to the social welfare system through the operation of the social insurance fund. Exchequer funding is expected to amount to €5.5 billion in 2003. This is broken down as follows. The largest single category of Exchequer funded payments is child benefit at over €1.6 billion. This represents an increase of 205% over expenditure in 1998 and is due to the substantial increases in child benefit in recent budgets. The level of spending will increase further by €317 million when the Government has completed its programme in the next two budgets.
The second largest category is one-parent family payment, an expenditure of over €667 million. This is an increase of 9% on last year, reflecting the budget increases in rates as well as an increase in numbers of approximately 2,900. The next largest category of social assistance expenditure is unemployment assistance at €599 million. This provides for a weekly average of 77,500 recipients. Despite the current economic slowdown, this is 91,400 lower than the numbers in 1997. Members have details of further spending in the briefing material produced by my Department.
Of the €10.3 billion which will be spent this year by my Department, €4.9 billion is provided by way of contributions from workers, their employers and the self-employed to the social insurance fund. The combination of the solidarity and contributory principles which underpin the operation of the social insurance fund are heavily influential in the design of income support programmes and are a practical example of social partnership in action. There have been significant improvements to the social insurance scheme in the past 15 years. Coverage has been extended to self-employed and part-time workers, as well newly appointed public servants recruited since 1995. New benefits have been introduced, such as carer's benefit, as well as improvements to the existing schemes such as the increased duration of maternity benefit.
Since 1997 the social insurance fund income has exceeded its expenditure and no Exchequer contribution to the fund has been needed. A surplus is projected this year. However, we cannot assume that the relatively benign circumstances which give rise to the surplus will continue. To this end, an actuarial review of the social insurance fund was published in 2002 and copies of the report were, as required by law, laid before the Houses of the Oireachtas. The conclusions of the report will play an important role in the future development of the social insurance system.
The Estimates I have presented today contain two key messages. The first is that social welfare spending is not immune from the need to examine public spending for its effectiveness and efficiency and to ensure that Government spending is prudent and well targeted. The second is that at a time of difficult economic circumstances, the Government has, once again, demonstrated its commitment to protecting the less well off in our society, thereby tackling the evils of social exclusion and poverty. I commend the Estimates to the committee.
