As always, I thank you and the select committee for the invitation to appear before the committee to discuss my Department's Estimates and the output statement. I thank the committee for its work on this important area. It is my third occasion as Minister to appear before the committee in regard to the annual Estimates.
As the Acting Chairman said, there is an important new element this year in our discussions. I refer particularly to the annual output statement. That is a new feature regarding reforms to the budget and the Estimates process which was announced by the Minister for Finance in the 2006 budget. The primary purpose of the output statement is to enhance accountability and try to give us clearer evidence of the results of public spending. It is an attempt to link key outputs with important and strategic inputs, being largely in the form of finance and staffing resources. The document supplied to members is an important one that will make our work a good deal easier.
This statement will link the financial allocations of the Estimates with the annual output targets, and they are linked to the high level goals in the Department's statement of strategy. In that way we get a more integrated, joined up process.
Each Department's output statement is being presented to the relevant committee at the same time as the annual Estimates, which is the purpose of this meeting. Following this process, the Select Committee on Finance and the Public Service will co-ordinate the preparation of a report to the Dáil on the deliberations. That output statement will also be published in each Department's annual report. This is an important reform and breakthrough and it should make the work of all committees and the budgetary and financial processes much more transparent.
It is worth emphasising, in particular, that the new process is very much a work in progress both for Departments and officials as well as for the members of select committees, who have been used to dealing with the Estimates. This will be the first occasion on which they will be able to examine inputs and compare them to outputs. This marks an important beginning in this process.
The statement before members sets out the financial allocations and output targets for 2007 only. Next year the statement will report on performance against these targets as well as setting out targets for the year ahead. I made those opening comments on the output statement as it is a new feature and one I wanted to highlight. I wish the process well as we are in the early days of it and I believe it will make a fine contribution to the quality of our financial management.
The Estimates before us show that total spending on social welfare by the Department has increased by €1.8 billion, which represents an increase of 13% on expenditure in 2006, from €13.5 billion in 2006 to reach its highest ever level of €15.3 billion this year. This corresponds to 29% of total gross current Government spending and more than 9.5% of gross national product. Expenditure of this level is very significant, involves very large sums and provides a lifeline for many people. Each week, payments are made to approximately 980,000 persons, while more than 563,000 families receive child benefit every month.
As members will have heard me say in my previous appearances before the select committee, I do not see the role of my Department as merely to spend money. I have made this point time and again, as often as not to remind myself of it because it is an important direction. The role of the Department is not only to spend money in a focused and targeted way but to have real regard for the social policy objectives that lie behind the spending and whether we can develop those social policies, social programmes in a more reasonable way. Whether it affects carers, elderly people, children, lone parents, people with disabilities or others, these are important sums of money which are before us for consideration.
The budget was another important step in this direction. I had a number of priorities in putting the provisions together with the Minister for Finance. One was to improve the position of our older people, to recognise their valuable contribution and to make sure they could live their later years in dignity and security without the threat of poverty or isolation. I wanted to take a decisive step towards the elimination of poverty, especially continuing to confront the unacceptable remaining levels of child poverty. I also wanted to further improve income supports to carers and to strongly recognise their valuable service to the community and to society as a whole. I further wanted to ensure that this budget reflected, and underpinned with substantial financial supports, a social welfare system that is an active one rather than a passive-reactive one. The decisions taken underline that.
In attempting to deliver on these objectives in the budget we secured an additional €1.4 billion, which allowed me to substantially increase the levels of pensions and welfare payments. As in the case of all budgets, we set out to reduce the gap between those at the bottom of the ladder and those who are more fortunate. This Department is very much a safety net and it is important that it fulfils that duty as well.
I wanted to examine the challenges that face social policy in the 21st century. In particular, I introduced a range of innovative measures for women, pensioners and carers, among others, as well as a number of important initiatives to reward work and encourage education and training. The following are some of the main achievements. The State non-contributory pension increased by €18 per week to €200 per week, while the contributory pensions increased to €209.30 per week. Considerable progress was made in bringing the level of qualified adult allowance for pensioner spouses to the level of the State non-contributory pension. It now stands at €173 per week which is more than 86% of the non-contributory pension. We are committed to closing that gap completely. Furthermore, from September next, the payment for a qualified adult will be paid directly to the qualified adult for the duration of entitlement of a State pensioner. I regard that as an important change, particularly in recognition of the role of women in the welfare system. The net effect of both these measures is that, for the first time, enhanced pension entitlements will be paid directly to qualified adults who are mainly women. These measures will make the welfare system fairer and more accessible.
Approximately 26,000 pensioners on reduced rates of payment will benefit from the changes in the general means disregard for the State non-contributory pension. The employment earnings disregard was increased from €100 to €200 per week. As I discussed with members of the select committee previously, this measure is to try to incentivise older people, if they wish, to re-enter the workforce and to allow them to retain their pension. They can now earn up to €200 per week without it having any effect on their non-contributory pension.
The budget also provided for an increase of €20 per week in the personal rate payment to recipients of the various social welfare schemes for persons of working age. This brought the level of the lowest rate of payment to €185.80 per week. This was a commitment given in the national action plan on social inclusion and Towards 2016.
Members will also be aware that the minimum rates of maternity and adoptive benefits were increased by €25.20 per week to €207.80 per week, while the period of paid maternity leave was extended by a further four weeks to 26 weeks. That took effect on 1 March.
A number of entitlements announced in budget 2007 were designed to facilitate re-entry into the workforce. We also introduced a number of measures aimed at eliminating unnecessary complexities in the system across the schemes. We made changes to the upper income threshold for one-parent families, particularly the limit of €400 per week, which one-parent families are now permitted to earn without affecting their lone parent allowance. That was particularly important in the context of the reforms in respect of lone parents.
We also devoted special attention to carers this year. Every member of this select committee admires the work of carers. In particular, I was pleased that from September next we will be able to introduce a new additional means-tested payment, equivalent to up to half of the carer's allowance. That will be introduced for people who have another social welfare benefit. I take this opportunity to thank the members of the select committee who unanimously recommended this change to me and I was pleased to be able to respond to their request. I salute the members for that innovative proposal which is now under way. This figure is tentative but it will enable approximately 18,000 social welfare recipients, who are engaged in full-time caring, to retain entitlement to their primary payment and receive half the maximum rate of carer's allowance. I stress that figure is tentative because there are various issues involved, but approximately 18,000 recipients will benefit from that change. The select committee can be proud of itself in that regard.
We made some changes in regard to the disability allowance. As and from June 2007, the capital disregard for disability allowance will be increased by €30,000, which has increased from €20,000 to €50,000. That is a gesture but an important one in terms of permitting those seeking a disability allowance to have capital of that amount.
As members will be aware, we increased child benefit rates, which will take effect next week. All three qualified child allowance rates were standardised to a single rate of €22 per week, family income supplement thresholds were changed to €185 per week and the rate of payment of the back to school clothing and footwear allowance was significantly increased, with the allowances doubled in some cases over a two year period.
We have made substantial progress. A contributory pensioner couple gained €2,180 per annum or 11.6%. A lone parent who earns €16,000 per annum with one child under six years gained €1,347 per annum or 12.8%. A couple in receipt of family income supplement and earning €30,000 per annum, with three children under 12 years, gained €3,288 per annum or an increase of nearly 26%. These are significant increases.
One can take comfort from the commentary of the ESRI on these changes. It described the last budget as:
One of the most progressive budget packages over the past decade and a half ... Poorer families gained substantially more in percentage terms than those at the middle and top of income distribution. On average, the poorest one-fifth of families gained close to 5 per cent from Budget 2007.
It has endorsed the emphasis of the budget on poorer families gaining substantially more than those at the top or middle of income distribution. That was the clear intention of this and previous budgets.
I thank the committee for its work and look forward to its consideration of the Estimates for 2007.