Social Welfare Bill, 2000: Report Stage.

Wednesday, 22 March 2000

Dáil Eireann Debate
Vol. 516 No. 4

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An Ceann Comhairle: Information on Séamus Pattison  Zoom on Séamus Pattison  Amendment No. 1 is in the name of Deputy Broughan. Amendment No. 2 is related. Deputy Broughan is not present.

Minister for Social, Community and Family Affairs (Mr. D. Ahern): Information on Dermot Ahern  Zoom on Dermot Ahern  If amendment No. 1 was moved, I could accept it.

An Ceann Comhairle: Information on Séamus Pattison  Zoom on Séamus Pattison  The Minister may move it.

Mr. D. Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  I move amendment No. 1:

[806] In page 5, line 6, to delete “ACTS AND” and substitute “ACTS,”.

Amendment agreed to.

Mr. Broughan: Information on Thomas P. Broughan  Zoom on Thomas P. Broughan  I move amendment No. 2:

In page 5, line 7, to delete “1979, AND” and substitute “1979 AND”.

It is a technical amendment.

Mr. D. Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  I cannot accept amendment No. 2 because I am advised that the comma is correct in its place and should be retained.

Amendment, by leave, withdrawn.

Mr. Broughan: Information on Thomas P. Broughan  Zoom on Thomas P. Broughan  I move amendment No. 3:

In page 5, line 13, after “one” to insert “and may be cited together as the Social Welfare Acts, 1993 to 2000”.

This refers to the complexity of Social Welfare Bills over the past six or seven years. We have had major consolidation in relation to the Finance Acts. The Taoiseach referred to the contribution of our late colleague, Deputy Michael Ferris, to one of those Bills in this Dáil. I referred on Committee Stage to the fact that we have 44 major schemes, possibly 45 with the carer's benefit. There is long-standing agreement that we should consolidate. We can start today by including a simple reference after line 13, in page 5.

Mr. J. O'Keeffe: Information on Jim O'Keeffe  Zoom on Jim O'Keeffe  I am in favour of consolidation. In relation to social welfare, we are dealing with a very complex system. Every year efforts are made to simplify things. Then new schemes are added and matters become even more complex. In my early days in the Dáil, I was involved in a consolidation Bill, and there has been another one since. I would be keen to see regular consolidation. One of the difficulties is that many recipients of social welfare do not fully know their rights. That is contributed to by the fact that we have such a morass of legislation that it is difficult to ascertain fully those rights. That applies in particular to practitioners, those in advisory centres, Dáil Deputies, Senators and councillors who are doing their best to find their way through the legislation to advise their constituents. While the amendment proposed by my colleague, Deputy Broughan, does not involve consolidation of legislation, the spirit behind it is that we should make a further step towards an up to date consolidation Bill. I would be happy if the Minister agreed that an up to date consolidation Bill should be considered. He might put steps in train to ensure such a Bill is introduced in the near future.

Mr. D. Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  I can confirm, as I did on Committee Stage, that moves are afoot in my Department to bring forward consolidating legislation. As in any other area of responsibility, although particularly in this area given that so many [807] changes are made to the social welfare code from year to year, there is need for constant consolidation of the legislation.

With regard to this amendment, there is no need for a collective citation because, as I said on Committee Stage, section 3(8) of the Social Welfare (Consolidation) Act, 1993 covers this issue. That subsection states “References in any other enactment to the “Social Welfare Acts” means this Act and every enactment which is to be construed together with it as one.” In effect, this amendment is not required. I can give an undertaking to the Dáil that my Department will bring forward consolidating legislation. I do not know when it will be ready, but work on it has started in the Department.

Amendment, by leave, withdrawn.

An Ceann Comhairle: Information on Séamus Pattison  Zoom on Séamus Pattison  Amendment No. 7 is related to amendment No. 4 and they can be discussed together by agreement.

Mr. Broughan: Information on Thomas P. Broughan  Zoom on Thomas P. Broughan  I move amendment No. 4:

In page 5, between lines 13 and 14, to insert the following:

“(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 rationale for the differing commencement dates of social welfare and tax aspects of the annual budget.”.

This amendment refers to a report on the rationale for the differing commencement dates and raises one of the most irritating aspects of social welfare provision. On 6 April each year most citizens with incomes from the private or public sectors benefit from the taxation changes made in the budget. This year there was much controversy and lengthy discussion inside and outside the House on the taxation changes and several subsequent amendments were made by the Minister, Deputy McCreevy. Most citizens expect increases in their incomes two or three weeks after the budget is announced. However, social welfare recipients must wait a further month before they get their increases. The Minister trumpeted many of those increases including the increase in contributory pensions and the £7 increase for senior citizens. It is unfortunate that those recipients have to wait an extra month to gain the benefit of their increases.

In recent years the Minister brought forward towards April the commencement date of budgetary provisions and he promised to ensure it will coincide with the commencement date for tax changes from the budget in 2001. A significant number of increases in benefits, including the increase in child benefit will not come on stream until September, when the parents of school going children incur most expenses. Therefore, significant changes in child benefit will not be introduced until late this year.

[808] While the provision for carers is positive, they will have to wait until at least October to benefit from it. The Minister was not clear about that provision. Have we to await the introduction of amending legislation from the Minister for Enterprise, Trade and Employment, Deputy Harney? The total addition involved in moving the date forward to April to coincide with the tax changes would be approximately £20 million. I urge the Minister to do this for the 1.5 million citizens who are primarily dependent on social welfare. Many of these claimants paid significant amounts into the system over the years in social insurance.

Mr. J. O'Keeffe: Information on Jim O'Keeffe  Zoom on Jim O'Keeffe  The contrast arising from the last budget between a married couple who are earning a total of £100,000 between them and a married couple where the husband is disabled and both are unable to work as a consequence is startling. The couple earning £100,000 will gain £77 a week from the last budget and this additional benefit will come on stream from 5 April. However, the household where the husband is disabled will gain £7 a week, including £4 for the person on disability assistance and £3 for the qualified adult dependant. There is a difference of £70 a week between the two.

A further difference is that the benefits for the well off couple will come on stream in April while the modest increases available to the household with the disabled person will not come on stream until May. The Minister will pat himself on the back and say that social welfare increases in the past came into effect later in the year. However, I do not accept that argument. There is so much money available at present that the continuing restriction on the payment of increases to those on social welfare has no validity whatsoever. The example I mentioned highlights this point.

The additional cost of approximately £20 million mentioned by Deputy Broughan is correct. Given that the increases are modest in the context of the moneys that are available, they should be paid at least from the beginning of the tax year in the same way as the benefits to taxpayers will flow from that time. This is why I tabled the amendment. The Minister should take into account the case made by the Opposition.

It is the function of the Opposition to highlight defects in the system and, in terms of social welfare matters, the extent of problems and poverty in society. The Minister's reaction to this aspect may at times be similar to that of a duck to heavy rainfall. However, he should take on board the latest report of the Combat Poverty Agency on child poverty which confirms everything we have been saying over the past year about this matter. It confirms the extent of poverty in society and highlights the need for action in that regard. The Minister can take that action. We will deal later with the modest increases in child benefit, but those increases will not even come into effect until next October. When there is independent verified confirmation of the extent of poverty in [809] society and an acceptance that one of the major ways to deal with it as far as children are concerned is through the child benefit system, the Minister should be prepared to take into account the Opposition's suggestion of at least paying the modest increases from April. That is the best we can do in regard to these amendments which represent one last plea to the Government to soften its position on this issue. While I welcome the fact that the payments of the weekly increases have been brought forward to May, it is really only a job half done as all increases should be payable from April.

Mr. D. Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  In recent decades, Governments, due to recessionary pressures, have tended to push back the effective payment dates of social welfare increases in order to maximise the money available to them in the budget year. Since taking up office, this Government has reversed that trend. In the past two budgets, I brought the increases forward by two weeks from the 29 weeks paid by the previous Government to 31 weeks. In other words, people were being paid for 31 weeks under this Government as opposed to 29 weeks during the reign of the previous Government.

This year, we brought the payments forward by an extra four weeks; the budget increases announced in December will be paid for 35 weeks of the initial year. We committed ourselves in the budget to go even further in next year's budget which will effectively result in social welfare increases in that year being aligned with the effective date for tax increases, namely 5 April. By this time next year, this issue will no longer be relevant because the Government will have delivered on its commitment to bring social welfare payments forward to 5 April.

The additional cost of bringing forward the general increases to 6 April would be £20 million and the additional cost of bringing forward the implementation date for child benefit increases to April would be £44 million. Over the years, child benefit increases were implemented in September in order to give parents a boost as children returned to school. Obviously, parents will receive the full increase from the year September to September and will also be entitled to whatever increases occur thereafter.

This Government has reversed the trend set down by previous Governments which, owing to limited fiscal resources, were obliged to push back the effective date in the budget year. On the one hand, we are being accused of being inflationary while on the other we are being accused of failing to spend all the money with which Deputy O'Keeffe alleges the Government is awash.

Mr. J. O'Keeffe: Information on Jim O'Keeffe  Zoom on Jim O'Keeffe  Giving money to social welfare recipients will not cause inflation.

[810]Mr. D. Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  The Government must balance its various commitments. We have shown a commitment to bring social welfare payments forward to 5 April and, by this time next year, this issue will no longer be of relevance as we will have delivered on that.

Mr. Broughan: Information on Thomas P. Broughan  Zoom on Thomas P. Broughan  I welcome the fact that, over the past three or four years, the operative date of all income changes has moved towards the first weekend in April. However, there is a double standard and hypocrisy on the part of the Government in regard to this matter. Some months ago, the Minister for Finance made a fundamental change in regard to capital acquisitions tax which will cost in the region of £46 million. The people who will be affected by that change already have, by definition, major income resources as they are in a position to sell shares and move capital around to their best advantage. The Government is prepared to facilitate those high earners at a cost of £46 million yet it will not provide a much smaller sum of £20 million for the poor. This draws attention to the harsh, almost monetarist, approach of the Government to these matters. I appeal to the Minister to bring all social welfare increases back to 5 April.

Mr. J. O'Keeffe: Information on Jim O'Keeffe  Zoom on Jim O'Keeffe  We do not have the firepower to make the Minister change his stony hearted position. I make a plea to the Minister, although he gives every indication of rejecting it.

Amendment put and declared lost.

Mr. Broughan: Information on Thomas P. Broughan  Zoom on Thomas P. Broughan  I move amendment No. 5:

In page 5, between lines 13 and 14, to insert the following:

“(3) The Minister shall not later than 6 months after the passing of this Act prepare and lay before both Houses of the Oireachtas a report on the measures required to close the differential between the rates of periodical benefits and rates of periodical social assistance paid to a beneficiary and the rates paid to a qualified adult.”.

One of the core problems of social welfare provision is the fact that dependants receive less than 70% of the main rate of benefit or assistance. As I said on Committee Stage, some dependant benefits are appallingly low for adults to live on, particularly the key unemployment assistance rate of £47, which has been increased from £43.20. Given the recent improvements in the economy, the Government should be ashamed to offer any citizen £47 as a basic income. The new non-contributory pension of £51.70 is appallingly low, as are the better invalidity benefit and contributory pension rates of £58.30 and £60.20, respectively.

We discussed this matter at length at Question Time when the Minister said the previous benchmark was 60%. However, all parties have had extensive discussions with the voluntary sector [811] and groups such as CORI and the Seniors' Parliament who are demanding a minimum 70% rate. The Minister said he will implement this over three years. However, given our economic progress, this is a ludicrous time frame. The Minister should have offered the 70% rate this year. The ultimate issue which the Minister should address is individualisation of social welfare payments. For the past few years, Deputies on these benches have pressed the Minister to look at this issue. This year, the Minister for Finance, Deputy McCreevy, and the Government acted decisively on tax individualisation. However, there has been little movement on our request for individualisation of social welfare benefit. The Minister has taken baby steps on the important issue of the low level of dependant allowances when he should have taken more decisive action.

Mr. J. O'Keeffe: Information on Jim O'Keeffe  Zoom on Jim O'Keeffe  Essentially, this amendment deals with the position of women in society, particularly those whose spouses are in receipt of social welfare. Qualified adult dependants are usually women at home whose husband loses his job or becomes disabled. This amendment deals with the core issue of how much we value the role of women which is why I am so supportive of it. The amendment also relates to the thorny issue of individualisation which has considerable resonance following the turmoil of the last budget. It is accepted that two people living together can live more cheaply and that 70% should be paid to a second adult in a household. Why is this not being paid? It is not because of money as the Minister has that. He referred to inflation – no independent economist would suggest that the poor or payments to them are creating inflation. The danger of inflation is not a defence in rejecting our suggestion that the 70% rate should be given to qualified adult dependants.

The Minister will have to come up with some other excuses. If it does not cause inflation and he has the money, why does he not pay it? There is no political will to accept the case being made or advice from the independent group established by the Minister to examine the treatment of married and co-habiting couples and one parent families under the tax and social welfare codes. The group unequivocally recommended the figure of 70%. Why do we not pay it? The Minister has not given an adequate answer. The only reason I can see is that the position of women in our society, who are affected by this, is not an issue as far as this Government is concerned.

Mr. D. Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  Political insults may be made but I remind Deputies that when their parties were in Government, the Commission on Social Welfare recommended a 60% rate. The fine words about how women in the home and spouses should be paid in their own right were not put into practice when Deputy O'Keeffe's party was in Government. The benchmark of 60% was set then and it was left to us to achieve that when we entered office, which we quickly [812] did. However, we were not prepared to stop there. We established a working group to examine how we could improve on the 60% rate and it recommended an increase to 70%.

The Government and I reject Deputy O'Keeffe's assertion that there is no political will on this issue. The Government is ahead of any suggestions by the Opposition. After the report was published, we quickly decided that we would reach the level of 70% over three budgets and we started doing so in this Bill by giving increases above the rate of inflation, from 8% to 17%. Deputy O'Keeffe is correct that the working group examined individualisation of social welfare, on which it could not agree. However, it was in favour of reaching the 70% rate. When this is reached, we will hopefully move towards the 100% rate over a period. Deputy O'Keeffe is correct that costs are lower for two people living together; this was researched by the working group. They looked at the individualisation issue and recommended that the existing arrangements for separate payments be made available on a more general basis. This would involve implementing a general scheme of administrative individualisation which, for example, would allow for the payment of a qualified adult allowance direct to the person concerned, something of which I am in favour. This would involve complex social issues which must be considered carefully. It also raises questions about the position of a qualified adult when the social welfare payment is no longer payable, for example, when the recipient takes up employment.

One of the objectives of the Programme for Prosperity and Fairness is to develop proposals to progress the individualisation of social welfare payments in the context of the continuation of joint assessment of means. Working groups will be established under the programme, first, to produce proposals to progress the implementation of administrative individualisation within the social welfare system and, second, to provide proposals for the development of a fully inclusive social insurance model which will facilitate combining work and family responsibilities in the context of changing work and social patterns.

There is a commitment in the PPF to establish working groups to examine this issue. As far as I am concerned, the Government made a commitment in the original Programme for Government to bring forward proposals in relation to pensions for women in the home who took time off work for caring duties. I am fully committed to bringing forward proposals to ensure that women in those circumstances will qualify for pensions in their own right, something they could not do previously. The Government is committed to that. We are doing it on an incremental basis and in consultation with the social partners. As a result, I cannot accept the amendment.

The necessary research will be carried out by the working groups which are to be set up in conjunction with the social partners under the new programme.

[813]Mr. Broughan: Information on Thomas P. Broughan  Zoom on Thomas P. Broughan  The Minister has repeated his usual line of recent years. I am glad the Programme for Prosperity and Fairness appears to have laid down a benchmark in this regard. The Minister will also be subject to invigilation outside the House to ensure a serious move towards the 70% rate.

On Committee Stage, I calculated that had the Minister opted for the 70% rate this year, the dependent recipient would receive £54.25 in the case of long-term unemployment assistance or £60 in the case of non-contributory old age pension. Those amounts, in an economy that will be worth 100 billion euros in 2000, are not lavish. I appeal to the Minister to move to the 70% rate this year.

Amendment put and declared lost.

Acting Chairman (Mr. Briscoe): Information on Ben Briscoe  Zoom on Ben Briscoe  Amendment No. 10 is related to amendment No. 6. Is it agreed that amendments Nos. 6 and 10 be discussed together? Agreed.

Mr. Broughan: Information on Thomas P. Broughan  Zoom on Thomas P. Broughan  I move amendment No. 6:

In page 5, between lines 13 and 14, to insert the following:

“(3) The Minister shall prepare and lay before both Houses of the Oireachtas a statement on the increase in the Consumer Price Index for the period of 1 January 2000 to 31 December 2000, within seven days of the publication of the relevant figures by the Central Statistics Office, and the statement shall compare the increase in the rates specified in Schedule A and Schedule B over the rates specified in the Social Welfare Act, 1999 in percentage terms with the increase in the Consumer Price Index for the said period.”.

These amendments relate to the level of social welfare increases this year and to the fact that so much of the benefit of such increases can be lost as a result of spiralling inflation. There have been lengthy discussions in the House with the Minister on indexation, the subject of amendment No. 10.

There is an urgent necessity for a benchmark for the application of social welfare increases but the Minister has been unwilling to establish it. In recent speeches he has spoken of the amounts by which he increased social welfare payments but he has been unwilling to reference those increases to incomes in the booming economy. Amendment No. 6 is based on an amendment which was put down by my colleague, Deputy De Rossa, a couple of years ago which urged the Minister to monitor the effects of inflation and to ensure that social welfare recipients, the most vulnerable section of society, are protected from huge price increases.

This year the Minister has claimed credit for increases ranging from 5.2% to 5.7% across the 44 schemes. However, they coincide with a major [814] inflationary spiral in the economy. The recent disturbing report from the CSO puts inflation at more than 4% and we are told that if we measured it in the same way as the other 14 member states, it would now be at least 4.6%. If one gives an increase of 5.2% and inflation is running at 4.6% it amounts to a small increase. That is the fundamental problem this Minister and the Minister for Finance, Deputy McCreevy, must address.

In recent weeks we have heard even more disturbing comments. The chief economist of Davy Stockbrokers says he expects an inflation rate this year of 7% across the services sector. People on social welfare use services as much as people on incomes in the private and public sector so a 7% inflation rate would be most disturbing. The Taoiseach and the Minister have assured people at various meetings that the inflationary spiral will be brought under control and taper down to 2.5%. Looking at the housing market and the services sector, however, one must be deeply concerned that this will not happen.

The amendment asks the Minister to monitor this matter carefully to ensure that people on social welfare will get a genuine increase in real terms. There is little point in the Minister referring to the events of recent years because we are in a new type of economy. Fundamental changes in the energy markets and elsewhere make it impossible to predict what will happen.

Amendment No. 10 deals with benchmarking. A plethora of research and studies in recent years have urged the establishment of a benchmark. Before the introduction of the budget, the Minister was urged by Share the Wealth Campaign, CORI and other dedicated interest groups for people on social welfare to consider the 50% of median income benchmark. The Labour Party calculates that if the Minister had done that, the basic rate would now be £85.50 per week instead of £77. The current rate is significantly below even the modest benchmark of 50% of median income.

There are other groups, however, which believe the benchmark should be referenced to average household income or even the average industrial wage. The problem I and my party have with this Minister is that he will not give leadership on this issue. He is the Minister for Social, Community and Family Affairs but he is not prepared to say: “This will be the benchmark; this is what the Fianna Fáil and Progressive Democrats Government will do and we will hang everything else on it”.

I have asked him for the past 18 months to offer some guidelines. The average industrial wage, for example, is now approaching £9 per hour. There was an interesting discussion on it during the debate on the National Minimum Wage Bill. Seniors are seeking a benchmark of 34% of the average industrial wage for contributory old age pensions. That is significantly higher than the Minister's much vaunted target of £100 per week. There is no point in plucking figures [815] from the air, be it in respect of senior citizens, people on unemployment assistance or on invalidity benefit. The figures should relate to average incomes. It is good to see 20 and 24 year old men and women in our constituencies earning £400 week. It is a welcome development and we are delighted for them and for the success of our education system and the economy which is permitting it. However, we cannot then expect somebody who has worked for 40 years to live on an income of less than £100 per week. This is to offer them a tiny share of the benefits of the economy.

I ask the Minister to give guidance to this House and lead the Government in the area of social welfare. He should establish a benchmark against which future social welfare rates will be based. To do it on the basis of median incomes, as requested by the Share the Wealth campaign and others, would be a first step. However, the Minister has lamentably failed in this Bill to establish even the most modest of benchmarks. He should execute his office in the way it is meant to be executed and tell us what is his proposed benchmark.

Mr. J. O'Keeffe: Information on Jim O'Keeffe  Zoom on Jim O'Keeffe  These amendments focus on the issue of inflation, which is the enemy of the poor. The poor do not create inflation and payments to the poor do not contribute to it, yet the poor will suffer the consequences of inflation. One of the biggest defects of the Government is its inability to cope with inflation. Its policies are contributing to inflation. We now have the highest inflation rate in the EU, something of which we cannot be proud.

Inflation is not merely an economic statistic, it affects everybody. The increase of £4 per week proposed to social welfare recipients will be of little use if it is eroded by inflation. It will be worse for those recipients who smoke because the increase in the price of cigarettes will more than offset their increased benefit. That price increase alone has contributed 0.5% to the inflation rate. I am a reformed smoker and am now an anti-smoker and will take any reasonable steps to discourage people from smoking. The impact on inflation of the price increase on cigarettes should have been neutralised by price reductions in other areas.

The Government appears to be washing its hands of this problem. Its approach appears to be based more in hope than expectation that the rate of inflation will tail off by the end of the year, although it will still be the highest in the EU. It is soldiering on in the face of clear signs of danger, not only in Europe but in the world. There is the problem of oil price volatility, although it does not affect the economy as much as it used to. There is also huge volatility in America, especially on the stock markets, increasing interest rates and the continuing weakness of the euro against the dollar. The Government appears not just to be helpless in the face of inflationary trends—

[816]Acting Chairman:  The Deputy is straying from the amendment.

Mr. J. O'Keeffe: Information on Jim O'Keeffe  Zoom on Jim O'Keeffe  The Government is not only helpless in the face of inflationary trends but is contributing to them. The result in terms of social welfare means that those trying to survive on very modest means, derived from social welfare, will be the worst affected. That is why I support these amendments. The Government should have a true appreciation of the impact of its policies, or non-policies, on inflation in as far as they apply to those who are trying to survive on social welfare. There is a major weakness on the part of the Government here because it does not even know what is happening.

Mr. D. Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  I would remind Deputies on the other side of the House that in 1995, when their parties were in Government, the CPI was 2.5% while the budget increase allocated to social welfare was 2.5%, which resulted in a nil increase to social welfare recipients.

Mr. Broughan: Information on Thomas P. Broughan  Zoom on Thomas P. Broughan  The increase this year might be negative in real terms.

Mr. D. Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  By contrast, last year the rate of inflation was 1.6% while the budget increases allocated to social welfare by the Government ranged from between 4.3% and 7.2%, a real increase in social welfare payments of between 2.7% and 5.5%. The increase for pensioners was even higher at 7.2%.

Deputy Broughan may have been correct to say we should not look back too far. I will look back to this time last year when Deputy De Rossa, among others, spoke up the inflation rate. He suggested that the inflation rate for 1999 would be between 6% and 7%. Some leading commentators suggested then that inflation would be in double figures. Inflation for last year was 1.6%, lower than the expected rate of 2% on which the social welfare budget was based. Had the rate been 2.5% some Deputies would be complaining that those in receipt of social welfare would not have got as much as they expected. Nevertheless, they were well buffered from any eventual increase in the CPI and the real increase they secured was even better than that forecast by the Department of Finance and my Department. The social welfare rates increased from between 4% and 8.3% from the beginning of June 1999, which effectively meant that social welfare recipients enjoyed increases of between 2.4% and 6.6%. Deputy Broughan did not refer to the £7 increase for pensioners, which represents an increase over last year's payments of between 7.9% and 8.9%. The increase of £4 per week represents an increase over last year of between 5.2% and 5.6%.

It is accepted by independent commentators that while the CPI will be somewhat high in the initial months of this year it will taper off later in the year. It is expected that the consumer price [817] index over the year will be about 3%. In effect, social welfare recipients will still be well ahead of expectations in that their real increases will range from 2.1% to 5.7%. For QAAs, these increases will range from 7.7% to 17.2% representing real increases, if the 3% is deducted, of 4.6% to 13.8%. We can only speak for our tenure, and in that we have given social welfare payments well ahead of the rate of inflation, something the Deputies present cannot say they did when their parties were in office a few short years ago.

It is accepted that there are a number of exceptional circumstances which have led to the consumer price index increasing in the first few months of this year. The Government took a decision to increase the price of tobacco which it knew at the time would have implications for the consumer price index in the first few months of this year. We did that for good, health related reasons to raise additional funds from the tobacco industry to invest in much needed cardiac treatment and research. That was something on which we took a decision for good reasons.

The Programme for Prosperity and Fairness is based on an agreed assumption between all partners that the inflation rate over the period of the programme will be between 2% and 2.5%. Obviously there are mechanisms to review that. It is accepted that, over the period, we will have underlying low inflation. I do not accept the argument of Deputies opposite that the Government is not doing something about inflation. We agreed the Programme for Prosperity and Fairness and are strong supporters of the social partnership programme, something of which the Deputies opposite in varying forms were not in favour over the years. I gathered over the past few sessions that Deputy Broughan was not a supporter of the programme. However, I am glad to see a substantial amount of the trade union movement is coming out in favour of the programme. I hope it is put in place. I agree strongly with the comments in The Irish Times today of Father Seán Healy who is a strong supporter of the programme agreed between the Government and the social partners.

The Government is conscious of the issue of inflation as regards social welfare recipients. Last year social welfare recipients did better in the increases than was anticipated but as was expected by the Department of Finance. People should guard against unwarranted comments which could lead to a situation where there might be a run of inflation. The comments made by Deputy De Rossa and others last year were unfounded and that will be the same this year. However, inflation is something on which the Government will obviously have to keep a close eye.

Mr. Broughan: Information on Thomas P. Broughan  Zoom on Thomas P. Broughan  I am glad the Minister referred to the Programme for Prosperity and Fairness. I have always believed in partnership. I support the [818] basic ideal and had seen it work effectively at local level long before I entered the House. I was involved in that type of development. However, I have grave concerns about the level of pay increases in the context of projected inflation rates and the movement towards the euro where we have lost control of monetary policy and the emphasis is on fiscal policy.

Mr. D. Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  Was the Deputy not in favour of joining the euro?

Mr. Broughan: Information on Thomas P. Broughan  Zoom on Thomas P. Broughan  We are experiencing grave difficulties in that economic conditions which suit huge economies such as Germany and France do not necessarily suit ours. That is something we must monitor closely in the coming months.

There is a review mechanism for the pay increases under the programme. Trade union leaders recently made the point clearly and rightly before they entered their conference that there is a review mechanism if inflation goes out of control. The issue is that we are discussing social welfare recipients. As far as I am aware, they do not have a review mechanism whereby in September or October we can request the Minister to introduce another social welfare budget to cover inflation. There is nothing like that for social welfare recipients.

The Minister mentioned CORI, Father Healy and the fourth pillar of the voluntary sector in the programme. There are worthwhile aspirations in that segment to which the Government is committed. However, the key issue is that, if inflation increases, and the Minister agreed it is being increased for different reasons, such as the energy reason which did not exist last year, and it significantly increases along the lines many economists believe it will, there is no review mechanism for social welfare recipients. The only action that can be taken is for the Minister to at least give us some guidance as to how he would cope if, during the year, people received increases which turned out to be well below the increase in the cost of living.

The Minister should talk to our constituents, any woman or man exiting a supermarket with groceries or pulling out of a petrol filling station, and ask them if, in the past two to three months, there has not been significant inflation in the economy because there has been and there is no question about it. The 4.6% estimate is too low and the increases the Minister gave this year of 5.5% are ludicrously low in the context of such significant inflation.

The Minister did not address amendment No. 10. We have had the reports on the reform of the tax and social welfare system. It is up to Government to decide. We need to have a basic index to which we can relate social welfare benefits and assistance increases. It is no use talking of £150 a week for seniors, as the Minister did at the Fianna Fáil Árd Fheis. While that would be good, if the average industrial wage were £600 a week, then it would be only one quarter of the average indus[819] trial wage. The Minister must address this issue because it is one of the core and fundamental issues for which his Department has responsibility to the House. I urge him to adopt the amendments.

Mr. D. Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  I did not address the second issue and I will address it quickly. As regards social inclusion generally, in the previous partnership programme, the Government of which the Deputy's party was a member committed to spending £225 million on social inclusion measures over the three year period. We delivered on the vast majority of that but we went further. We delivered over £1 billion, which is way above what was agreed in the partnership programme. In the two years and nine months of the new partnership programme, we will increase that to £1.5 billion, which is three times the amount of money the previous Government dedicated two and a half years ago to social inclusion measures and that £1.5 billion is in a shorter period.

If I were to make benchmarks, I could be accused by the social partners of setting my own targets and, to a certain extent, that criticism would be justified in that I would not be doing it in connection with partnership. For example, some time ago I and my Department decided that we would indicate new targets for NAPS. The social partners were in contact quickly to say they were not consulted. As far as I am concerned they should be consulted. The Government discussed the benchmarking of social welfare payments with the social partners in the negotiations on the Programme for Prosperity and Fairness and we agreed to set up a working group with an independent chairman. Once the agreement is put in place, the terms of reference will be brought forward in consultation with the social partners. It is hoped the working group will complete its task by April 2001.

I am sure Deputy Broughan agrees it would be inappropriate for me to second guess the deliberations of the working group which will examine this issue. The Department will be represented on that working group. The Deputy cannot have it both ways.

Amendment put and declared lost.

Mr. J. O'Keeffe: Information on Jim O'Keeffe  Zoom on Jim O'Keeffe  I move amendment No. 7:

In page 5, between lines 13 and 14, to insert the following:

“(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 rationale for the differing commencement dates of social welfare and tax aspects of the annual budget and in particular the possibility of paying all social welfare increases from 6 April each year.”.

[820] Amendment put and declared lost.

Mr. Broughan: Information on Thomas P. Broughan  Zoom on Thomas P. Broughan  I move amendment No. 8:

In page 5, between lines 13 and 14, to insert the following:

2.–Not less frequently than every 3 months commencing on the passing of this Act, the Minister shall prepare and lay before both Houses of the Oireachtas a report on any provisions of the Social Welfare Acts which are not yet in force, and the plans, if any, for bringing such provisions into force.”.

My colleague, Deputy Breeda Moynihan-Cronin, tabled similar amendments in recent years because she was concerned that many of the provisions of the Social Welfare Acts had not been implemented. On Committee Stage the Minister referred to the actuarial review of section 17 of the Social Welfare Act, 1998, the new sickness allowance scheme under Part IV of that Act, section 26(1) of that Act, section 10(4) of the Social Welfare (No. 2) Act, 1995, in relation to how a divorced person may receive a qualified adult allowance in respect of more than one person, section 22 of the Social Welfare Act, 1995, in relation to standardising arrangements which apply to various social welfare schemes and section 20 of the Social Welfare Act, 1994. A significant number of provisions of social welfare legislation have not been implemented. This amendment requests the Minister to rectify that or to explain why they have not been implemented.

Mr. D. Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  All the sections of the Social Welfare Act, 1999, have been commenced. There are some provisions from earlier Social Welfare Acts for which commencement orders have not been made. Section 17 of the Social Welfare Act, 1998, which provides for actuarial reviews of the social insurance fund to be undertaken on a five yearly basis will be commenced later this year. Part IV of the Social Welfare Act provides for a new sickness allowance scheme. When this scheme was proposed we had difficulties with the technological changes required. All those who would have qualified for a sickness allowance are being catered for through other payments; they are not losing out. In the meantime we decided to carry out a review of all the sickness payment schemes and we will examine it again when that review is complete.

Section 26(1)(b) of the Social Welfare Act contains regulatory powers to prescribe the provisions relating to benefit and privilege in the context of means assessment. The relevant regulations will be introduced some time this year. Section 10(4) of the Social Welfare (No. 2) Act, 1995, provides regulatory powers under which a divorced person may receive a qualified adult allowance in respect of more than one person. Nothing has been done on that because to date no cases have come forward. If that changes, we [821] will look at it. That provision was included at the time to protect such a situation if it arose.

Section 22 of the Social Welfare Act, 1995, provides regulatory powers designed to standardise the arrangements that apply to various social welfare schemes in relation to absence from the State. It is planned to introduce the relevant regulations later this year.

Section 20 of the Social Welfare Act, 1994, provides for the integration of occupational injury benefit and employability supplement payable under the benefits scheme with disability benefit. The overall role of occupational injury benefit payments will be included in the review of the sickness and disability schemes this year. Decisions on the implementation of this section and the other one to which I referred will be taken in light of the findings of that review.

Mr. Broughan: Information on Thomas P. Broughan  Zoom on Thomas P. Broughan  I accept what the Minister said. This relates to consolidation. We should implement laws when we make them and not leave them on the Statute Book.

Amendment, by leave, withdrawn.

Mr. Broughan: Information on Thomas P. Broughan  Zoom on Thomas P. Broughan  I move amendment No. 9:

In page 6, between lines 2 and 3, to insert the following:

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 social welfare situation of persons resident in Ireland who are in receipt of pensions under the social security legislation of any other jurisdiction.”.

This amendment refers to the report on the social welfare situation of persons resident in Ireland who are in receipt of pensions under the social security legislation of another jurisdiction. This matter was brought to my attention during the year by Deputies Seán Ryan and O'Shea. In one case a person on a British rail pension did not qualify for the living alone allowance or the over 80 allowance, although they qualified for the other free schemes. There is also a problem with means testing because of the strength of sterling vis-à-vis the euro and the punt. There has been a negative impact on the incomes of a number of people who retired to this country because the Department is assessing their means based on the fluctuations between the euro and sterling.

Mr. J. O'Keeffe: Information on Jim O'Keeffe  Zoom on Jim O'Keeffe  We are talking about people, particularly British people, who retire to this country and are excluded from the living alone allowance even if they live alone. We could adopt a nationalist stance and say it is their problem if they decide to live here. However, I do not share that view. We should have an open door policy for people retiring to this country and encourage them to live here. Many people left this country when they were young to earn a living in the UK and they have now retired here on UK pensions. [822] It is wrong to exclude people in this category from the living alone allowance. If their income level is such they should be allowed to qualify for the payment.

On Committee Stage the Minister referred to the living alone allowance as being an integral part of the pension system and stated that we have to comply with obligations under EU legislation. I accept these facts but that is not my point. I am not suggesting that we adopt a progressive approach to comply with EU obligations. If retired people are living on pensions not paid for by the Irish Exchequer we should be prepared to extend to them the same benefits, such as free fuel, the living alone allowance and so on, which are applicable to those who came through the Irish pension system. I hope the Minister will give an assurance to examine this issue this year. I am aware of cases of genuine need of which the Minister should take account, and I would be happy if he gives an undertaking to examine this issue with a view to dealing with it in the next budget.

Mr. D. Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  If the Deputy is aware of cases of dire need I would ask him to forward the details to me and I will undertake to have them examined. People involved in such cases are entitled to non-contributory benefits. I can go no further than reiterate what I said on Committee Stage in that the living alone allowance is an integral part of the pension system. We are complying with EU regulations and could be accused of going outside those regulations if we granted this request.

As regards the means test and currency exchange rates, a considerable number of Irish non-contributory pensioners receive British pensions and it would not be practical to assess entitlement to non-contributory pensions each time the currency rate changes. Accordingly, prior to 1 January 1999, when determining the value of social security payments made in other EU currencies for the purpose of assessing a claimant's means, the Department employed an exchange rate mechanism used within the EU for social security transactions between member states. Since 1 January 1999 the conversion rates are fixed for countries participating in EMU. This exchange rate mechanism continues to be used for non-participating countries, including the UK, and is provided for under Article 107 of Council Regulation EEC 574/72 on social security for migrant workers. The rate represents the average of the daily exchange rates in the first month of the quarter for use in all transactions during the course of the succeeding quarter.

It has been the Department's practice to use the rate of exchange which is most beneficial to the pensioner between the rate at the time the review commenced or the rate at the time the decision is made. We accept that, because of currency fluctuations, people feel they are losing out. However, we can only give the value of our pension at a particular time and that is what we do.

[823] Amendment, by leave, withdrawn.

Mr. Broughan: Information on Thomas P. Broughan  Zoom on Thomas P. Broughan  I move amendment No. 10:

In page 6, between lines 2 and 3, to insert the following:

“4.–The Minister shall not later than 6 months after the passing of this Act prepare and lay before both Houses of the Oireachtas a report on a system of benchmarking or indexation of all social insurance benefits and social assistance payments to give security of income to all citizens.”.

Amendment put and declared lost.

Acting Chairman:  Amendments Nos. 11 and 13 are related and may be taken together.

Mr. J. O'Keeffe: Information on Jim O'Keeffe  Zoom on Jim O'Keeffe  I move amendment No. 11:

In page 6, between lines 38 and 39, to insert the following:

“(1) Not less than 3 months after the passing of this Act, the Minister shall prepare and lay before both Houses of the Oireachtas a report on the extent of child poverty in the country and on the feasibility, in the context of the surplus funds in the Exchequer, of increasing child benefit to £25 per week for children under 5 years and by 25 per cent for children over 5 years.”.

This amendment focuses on child poverty. When dealing with this issue on Second and Committee Stages we did not have the independent verification which is now available. This verification comes from the Combat Poverty Agency which is within the Department's ambit. There is considerable child poverty despite all the signs of economic activity and wealth. We should be ashamed of this fact but, more importantly, as politicians we should be doing something about it. We are in a position to do something about child poverty but we are not doing so.

This amendment focuses on child benefit as all independent commentators accept that increasing child benefit is the most effective way of dealing with child poverty. I agree with this assertion but have come to the view that in the near future we will have to return to the issue of child dependant allowances. This is a separate issue but, because of changes which have taken place, we must question the thinking that there should be a cap on such allowances.

Increasing child benefit is the most effective way of dealing with child poverty. The Minister will tell us of the great job he has done this year in comparison to previous years when there was less money available. However, that is not the issue. Giving an extra few pounds per week in child benefit from next September will not make the necessary impact on child poverty. We have to be far more realistic in our approach. This will cost a lot of money but the issue is the priority we are giving to children. If we are not giving them priority then we should say so. If the money [824] is available it is either being put away, which has some merits, or it is being spent in other areas. We must give a higher priority to children and that is why I support the approach originally suggested by Deputy John Bruton of giving £25 per week for children under the age of five. When this was suggested the Minister raised the step down factor but that can be overcome by providing a 25% increase in the rate for children over five years of age.

We must focus on this issue. It is easy to talk about monthly payments and so on. In yesterday's UK budget, the Chancellor of the Exchequer gave increases in child benefit but it has weekly payments. We will have to start thinking along the same lines as we now have the money to do so. I urge the Minister to give serious consideration to this amendment.

Mr. Broughan: Information on Thomas P. Broughan  Zoom on Thomas P. Broughan  I support this amendment. Child poverty is at the heart of many of the social problems we face, particularly in the most disadvantaged areas. On Committee Stage and during a recent Question Time it was pointed out that eleven of the 12 most disadvantaged areas in the country are in Dublin, the remaining one being on the north side of Cork city. The Minister stated that 25 areas will be targeted in the PPF which, I presume, will include the 12 areas to which I referred. Child poverty is a core element of deprivation in each of those areas. Before the budget, Deputy Shortall produced a pre-budget paper on behalf of the Labour Party, A Better Deal for Children and Families, which called for a basic increase of £10 per month for the first and second children. The Minister failed to reach even this modest target. In amendment No. 13 we call again for an additional parental payment of £20 per week for children under five years of age and £10 per week for six to 14 year olds. Those proposals would offer significant financial support to all families, particularly those living in poverty. They suggest a dramatic change of approach to that of the Minister.

The Minister said on Committee Stage that such proposals would cost a significant amount of money – up to £500 million. In the context of the size of the social welfare budget and the development of the economy, £500 million would be a small price to pay for the fundamental support which would then be granted to our children.

The Labour Party called for a national network of child care task forces with a budget of at least £30 million to ensure access to pre-school and child care facilities. We also called for reform of the tax and welfare systems to create incentives for two parent families. That is a key issue which the Committee on Family, Community and Social Affairs has attempted to address on a number of occasions and to which it will return. The Labour Party also requested making available £20 million for family support and child protection services.

We came up with a comprehensive approach but the Minister is proceeding on an ad hoc basis in one of the core areas of his responsibility. I ask [825] him to examine this again. We all met many of the voluntary groups working in the child care sector. Once the impact of the budget was appreciated, it was sad to see the disappointment among those groups. The Minister raised the hopes of those involved in child care but then he and the Minister for Finance dashed those hopes in their responses.

This is an area which the Labour Party will address in a future Government. We would have to wait a long time for this Minister to do it.

Mr. Perry: Information on John Perry  Zoom on John Perry  I appeal to the Minister to examine the proposed increases. They are totally inadequate. The most critical years are the initial years and the State could make a huge investment in future generations by supporting parents, particularly those rearing families on £42 per month. That amount is nowhere near enough. A box of premium baby food costs £9 and a packet of disposable nappies costs £8. It is recommended that children up to three years of age should be fed premium baby food but most parents stop after one year because of the cost.

The best accountant in any home is the mother but even they face difficulties when they are only given £42 per month for footwear, clothing and other essentials for growing children. By accepting the amendment calling for a payment of £25 per week, the Minister would give parents an assurance that the Government is investing in the future of their children.

Child care is an area of huge importance. The Government has clearly indicated that developers can invest in crèche facilities. We should, however, support those who need most help – the parents. They are the best carers and, given adequate support, could solve many of the problems in this area.

Mr. D. Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  This year there was an increase of £106 million, or 25%, in the child benefit budget, bringing the total bill to £575 million. Anyone who says that a Government which increases child benefit by 25% in one year, the largest increase in the history of the State, is not making an investment in children is talking nonsense. This Government is dedicated to increasing child benefit exponentially and, with the social partners, we have made a commitment to increase child benefit and move toward a figure of £100 for the third and subsequent children over the period of partnership. That will require substantial investment over the next two years and nine months.

I will not repeat what I said on Committee Stage about the proposals made by Deputies. I accept they have a view about the payment of child benefit for children under five and those over five. Targeting under fives would cause huge difficulties for families. A family with three children aged two, three and four would lose a substantial amount of money per week as each child reaches five years of age. The reduction would [826] continue over a three year period and it would represent a huge reduction in weekly income over that time. I have children and I know they do not become any less expensive once they reach the age of five, they become more costly. Deputies have revised their proposals about under fives and are now saying a payment should be made for children between five and 12 years of age. Again, when children reach 12 they become even more expensive.

The Department and I have closely examined payments to families for children. The best method of targeting those at the lower end of the scale with young children is through the child benefit route. It is universal and goes, usually, to the female spouse. By using the scatter-gun approach suggested here it would be much more costly. It would be much easier to give a substantial payment to everyone with children under five with smaller increases for those with children over five but it would be wrong. We have already examined the differential between CDAs and child benefit and recognise that it will have to be addressed.

I received the Combat Poverty Agency report this week. It proposes to provide a self-financing universal child care subsidy of £32.50 per month, which is not a huge amount of money. It states “self-financing” and goes back to its original proposal – if I am reading it correctly – in which it proposes that this additional £32.50 per month child care element in universal child care should be fully funded by restructuring the tax and welfare treatment of households. This would be an additional £100 child benefit as proposed. It advocated restricting the transferability of bands between married couples and directing the resources in an enhanced child benefit for families with children.

In effect, it is moving towards something for which the Minister for Finance was roundly criticised, that is, individualisation and restricting the tax bands. One of the moves made by this Government, which I am prepared to defend, is moving to individualisation which takes into account the many working couples who have child care costs. My area of responsibility is child benefit and, in this year's budget, I have provided a 25% increase in child benefit payment. It is a universal payment to every family.

I come back to the point that I could have used that £106 million to provide a larger payment to children under five years but that would have been the wrong way to go because it would disadvantage people with older children. We should substantially increase child benefit between now and the end of the Programme for Prosperity and Fairness in which there is a commitment to make progress to reach a level of £100 for the third and subsequent child.

Mr. J. O'Keeffe: Information on Jim O'Keeffe  Zoom on Jim O'Keeffe  I understand from where the Minister is coming. We always pride ourselves on being family conscious. We encourage families and believe the family is the basic unit of society [827] under our Constitution and according to our general thinking. We have this notion that we are prepared to do anything to encourage the concept of family. To a degree, that notion is fraudulent unless we are prepared to back it. We are not prepared to back it if we are not prepared to give reasonable child benefit. If we look at where we stand on child benefit internationally, the amount of support we give to children in our society is appalling. We are at the bottom of the European league table. How can we allow ourselves to continue with this deception that we are a family oriented country when we are not prepared to provide support for families? That is the thinking behind this amendment.

I was not impressed by the Minister's opposition to the amendment. I understand from where he is coming and, from the narrowly focused view he presents, it stands up. However, if we look at the broader concept, it does not accept the point about the need to support families and the extent of child poverty and the lack of support, in comparative terms, which we provide for children. On that basis, the Minister's defence is very flimsy and does not stand up and I must press this amendment.

Mr. Broughan: Information on Thomas P. Broughan  Zoom on Thomas P. Broughan  I am sympathetic to the Fine Gael amendment. I have borne in mind the Minister's comments. It is difficult if one gives an allowance or benefit to young children, in particular, to reduce it at a particular time even though they are still young. That is something all sides of the House will have to tease out in the years ahead. I was very interested in the Combat Poverty proposals to which the Minister referred and I welcome the opportunity to study them in detail. They address the type of issue the Labour Party has raised in amendment No. 13 on the introduction of a child benefit support or a parental payment which would be a significant support to the family.

Deputy O'Keeffe made an important point in that we still significantly lag behind other countries. If we take the net benefit for the first two children, we are basically talking about £10 per week. I am not too sure of the changes which took place yesterday in the budget of the Chancellor of the Exchequer, Gordon Brown, but when we compared the figures last year, the UK provided £15 sterling for the first and second child. The supports we provide are significantly below those in other countries. The Minister faces a huge task in this regard and it is one which, with the help of colleagues in the Combat Poverty Agency and other groups, we should try to fundamentally address in the coming years.

I make a plea for children in the 25 most deprived areas, both rural and urban. In the next year or so, the Minister should look at ways to provide extra supports for child care. In my constituency in a parish with 45% unemployment, a child care programme is starting. We need fundamental support in such areas and the amount of money which the Minister and the Minister for [828] Finance, Deputy McCreevy, have allocated is minimal compared to what we need.

Mr. D. Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  I do not accept that. This year £46 million is being dedicated to the supply of child care of which my Department is getting £5 million. We will be hard pushed to spend that money and to find organisations through the community development projects—

Mr. Broughan: Information on Thomas P. Broughan  Zoom on Thomas P. Broughan  The Minister can spend it in my constituency.

Mr. D. Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  I have no doubt there will be one or two which might benefit if they apply. I assure the Deputy that is the case in terms of spending the £46 million. That figure will be paid out over the programme of the national development plan in which £250 million has been committed to the supply of child care. Over that period, there will be a substantial increase in the supply, particularly in the areas of disadvantage to which the Deputy referred.

I do not accept Deputy O'Keeffe's criticism of my commitment and that of this Government to child benefit and the payment of it to families. Only three years ago in 1997, the Deputy's party was part of a Government which gave £1 to the first two children and £5 for each subsequent child. That was the easy option – £1. It could have given £2 and £4 but it gave £1 and £5. The Deputy should not criticise me. Three years later, we gave £8 and £10, the highest increase in child benefit in the history of the State – £106 million. It is a 25% increase on last year's budget so the Deputy should not criticise me.

This Government is committed and has agreed with the social partners to increase and move towards the sum of £100 for child benefit per month for the third and subsequent child. This has been agreed in the Programme for Prosperity and Fairness. At the end of my tenure as Minister, we will be well on the way to achieving that figure. I would say to any independent commentator that my tenure and that of this Government will see the most substantial rise in child related benefits in the history of the State.

Mr. McGrath: Information on Paul McGrath  Zoom on Paul McGrath  The Minister is going down the route he went down on Committee Stage of talking about the figures by which he increased child benefit. When the figures for child benefit are taken as percentages, the percentage increase in the three budgets from 1994-97 introduced by the Government the Minister criticised so much was 50% compared with the 42% increase over the period of the three Social Welfare Bills he introduced.

Mr. D. Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  Much larger amounts are involved.

Mr. J. O'Keeffe: Information on Jim O'Keeffe  Zoom on Jim O'Keeffe  There is much more money in the Exchequer.

[829]Mr. McGrath: Information on Paul McGrath  Zoom on Paul McGrath  The Minister can use figures to suit himself. Percentage increases are based on the base rate figure and the amount of the increase. The Minister voted against the high increases proposed in one of the previous Government's Social Welfare Bills. He is working from a higher base and, therefore, the figures are higher. That is what percentages are about. As my colleague pointed out, the economic situation is much better on this occasion. The opportunity to do something worthwhile by introducing substantial increases in child benefit has been lost.

Why should a higher rate of benefit apply in respect of the third and subsequent children? Most couples nowadays do not have large families. Why should the first and second child be discriminated against in terms of child benefit? There is no reason the rate of child benefit for the first and second child should not be the same as the rate for the third and fourth child. The Minister and his predecessors have discriminated against the first and second child. All children should be treated equally.

Three different rates of child dependant allowance apply. A child dependant allowance of £13.20 a week is payable in respect of the child of an unemployed person, £15 a week is payable in respect of the child of persons in receipt of lone parent allowance and £17 a week is payable in respect of the child of a person in receipt of an invalidity pension. We talk about equal rights and opportunities and equality legislation, yet child dependant allowance is paid at different rates in respect of children in the same economic circumstances. That does not make sense. That same argument applies to child benefit for the third and subsequent children, yet the Minister is adamant he is doing a tremendous job.

Matters are progressing and we are moving in the right direction, but not enough of the surplus money in the Exchequer is filtering down to the less well off. That will be demonstrated clearly in April. A number of people in the lower income category have contacted me recently about their tax free allowances. The tax free allowance certificates they received this year are identical to those they received last year. When they receive their wage packets in April, they will not benefit from the bonanza that was supposed to accrue from tax allowances. This Bill presents the Minister with an ideal opportunity to make further increases in child benefit. As he said, it is a good way to ensure the money is spent on children. It is usually the female spouse who receives child benefit and statistics show that money is spent on the children. I ask the Minister to consider what more can be done to make improvements in this area. I ask him to reconsider the amendment tabled by Deputy O'Keeffe and me and the one tabled by Deputy Broughan, as there is merit in them. The Minister might not be able to accept them this year, but I am sure we would be satisfied if he gave a commitment to move towards those figures in next year's Social Welfare Bill.

[830] Amendment put and declared lost.

Mr. Broughan: Information on Thomas P. Broughan  Zoom on Thomas P. Broughan  I move amendment No. 12:

In page 7, between lines 6 and 7, to insert the following:

“(2) The Minister shall as soon as may be after the passing of the Act prepare and lay before both Houses of the Oireachtas a report on bringing child benefit for multiple births of 2 children in line with the multiple births of 3 or more children.”.

This amendment was tabled in response to the continuous urgings of a number of groups who consider that the parents of twins should be treated in the same way as the parents of three or more children. Like other Deputies, I am sure the Minister has met constituents who believe that having two babies in a house is similar to having three or more. One agency has been in constant contact with the Minister and it asked him to reconsider this proposal. Perhaps he might introduce a measure in this regard in next year's budget. As he stated on Committee Stage, before the 1997 general election he gave a commitment in respect of child benefit to multiple birth parents, which to a large extent we support, but he might address the gap in this area.

Mr. J. O'Keeffe: Information on Jim O'Keeffe  Zoom on Jim O'Keeffe  Before I support Deputy Broughan, I should declare an interest in this matter as I am the father of twins.

Mr. D. Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  Surely they no longer qualify for benefit.

Mr. J. O'Keeffe: Information on Jim O'Keeffe  Zoom on Jim O'Keeffe  They do.

Mr. D. Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  The Deputy is still claiming benefit for them.

Mr. J. O'Keeffe: Information on Jim O'Keeffe  Zoom on Jim O'Keeffe  They are still very expensive and likely to be more so.

A consistent campaign has been launched on behalf of the parents of twins as opposed to multiple birth parents. Their sense of grievance and discrimination has been put strongly to many of us by the organisers of the campaign. If resources are available to meet their proposal and the Minister accepts an injustice is being done, it would not be very costly to rectify it. This issue does not affect a large number people. Perhaps now is the time to deal with the matter.

Mr. D. Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  Deputy Broughan said we made considerable progress on a commitment we gave prior to the last general election, we delivered on that commitment in our first budget. We gave a commitment to provide a 50% increase in child benefit for twins and we did that in the first Social Welfare Bill I introduced. I got a letter from one of the leaders of the campaign on 21 October 1997 calling on me, in conjunction with the Minister for Finance, Deputy McCreevy, to honour a firm commitment given by the Minister, Deputy [831] Woods, when he was Opposition spokesperson on this area, on behalf of the Fianna Fáil Party in June that year to give a 50% increase in the monthly payments to parents of twins in receipt of child benefit on budget day, 3 December 1997. We did that. We fulfilled that commitment given prior to the last general election. At that time, I made compensatory changes for multiple birth parents. We also made other commitments as a political party and as a Government that have yet to be fulfilled. Although we are very near it, we have yet to fulfil our commitment to reach £100 for old age pensioners by 2002. In effect we will do that next year. We are also committed to bringing non-contributory pensioners to £100 by 2002, something we did not promise two and a half years ago. Those commitments will cost money. We made commitments in relation to child benefit and other issues in the Programme for Prosperity and Fairness. Those commitments, in conjunction with others, are primary.

The issue raised by the Deputy will be on my agenda as long as I am Minister for Social, Community and Family Affairs and if money is available in the next or in the following budget I might be able to bring it to 100%; it cost about £5.5 million in benefits for 12,500 twin births. We will do our best. However, at this time, I have fulfilled the commitments made prior to the election in this area. There are other commitments to be delivered on and we will try to address those before we come back to this area.

Mr. Broughan: Information on Thomas P. Broughan  Zoom on Thomas P. Broughan  I welcome the Minister's comments. Given that it is just £5.5 million for 12,500 twin births, doubling the benefit is something he could look at, given the extra costs and stress involved for parents.

Amendment, by leave, withdrawn.

Mr. Broughan: Information on Thomas P. Broughan  Zoom on Thomas P. Broughan  I move amendment No. 13:

In page 7, between lines 6 and 7, to insert the following:

“(2) The Minister shall, not later than 3 months after the passing of this Act, prepare and lay before both Houses of the Oireachtas a report on the effects of introducing a Parental Payment of £20 per week for under 5's and £10 for 6 to 14 year olds.”.

Amendment put and declared lost.

Acting Chairman:  Amendment No. 14 is in the name of Deputies O'Keeffe and McGrath. Amendment No. 15 is related. Is it agreed to take amendments Nos. 14 and 15 together? Agreed.

Mr. J. O'Keeffe: Information on Jim O'Keeffe  Zoom on Jim O'Keeffe  I move amendment No. 14:

In page 7, between lines 7 and 8, to insert the following:

“7. – The Minister shall, within 3 months of the passing of this Act, lay before Dáil [832] Éireann a detailed report on the implications of the extension of family income supplement to the families of persons who are self-employed.”.

The real issue here is why the Government continues to persist in discriminating against the self-employed. Family income supplement is available to those in salaried employment, but the Government consistently refuses to accept the principle of extending it to the self-employed, and has given no reason other than cost. If there is a system in place which benefits some of our people and this benefit is denied to others, those others are effectively penalised to the extent of the amount being saved by not extending the scheme to them.

I do not accept that the question of cost is a legitimate factor here. We are talking about £47 million if farmers are excluded, but I see no reason for excluding farmers. There are small farmers who need to be helped as well. We are talking about a figure of about £80 million if farmers are included.

Let me make it clear that I am talking about all the self-employed. Looking at the self-employed generally, at what I might loosely call the merchant class, some of them are very well off and more power to them. They will not be looking for this assistance. There are also those running very small businesses and trying to raise a family on the income from those businesses. Why should we discriminate against them? They are, in many ways, the backbone of the country and yet there is continuing discrimination in not allowing them access to the family income supplement, even if they have very large families. Why? Is this another anti-family measure?

The same principle applies to farmers. When I raised this issue with the Minister previously, he had a separate category of costs if farmers were included rather than excluded. Why does the Minister discriminate against farmers? There are small farmers with large families who are very poorly off. If that is their situation, why should they not get the same assistance that is available to everybody else? Why should they not have access to the family income supplement?

We had a scheme which was trumpeted by the Minister last year—

Mr. D. Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  And by Tom Parlon.

Mr. J. O'Keeffe: Information on Jim O'Keeffe  Zoom on Jim O'Keeffe  —that was to be the saving of small farmers – the farm assist scheme.

Mr. McGrath: Information on Paul McGrath  Zoom on Paul McGrath  He is not saying that now.

Mr. J. O'Keeffe: Information on Jim O'Keeffe  Zoom on Jim O'Keeffe  He pulled the wool over the eyes of the IFA and the ICMSA and all the farm organisations when he introduced the farm assist scheme. Fair play to the Minister for convincing the farm organisations as to the benefit of the scheme. I am one of the few people in the country who stood up and said that the scheme was a cod [833] and that many farmers would regret its introduction.

Mr. D. Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  That is not the case.

Mr. J. O'Keeffe: Information on Jim O'Keeffe  Zoom on Jim O'Keeffe  I hate to have to say “I told you so” but there are over 1,000 farm families from the poorer section of the farming community who have cause to rue the introduction of the farm assist scheme because their benefit has been cut off or cut down. That is what the Minister has done for some of the poorest agricultural families in the country. The fact that the IFA backs something does not automatically mean it has my support. I totally rejected the farm assist approach. There are already indications, in the Minister's modifications to it in this year's Bill, that he accepts my criticism. He is already trying to improve the system because he knows it has caused hardship.

Let me return to the family income supplement. Is there any coherent explanation why those who are in a small way of business, whether farming, shopkeeping, plumbing or anything else, and trying to rear a family should be discriminated against because they are on a self-employed rather than a salaried basis? The Minister has never confronted that issue. That is why I have pressed very strongly, since I took over this portfolio a year or two ago, for the inclusion of such people under the provisions of the family income supplement. There is no defence in logic, in theory, in practice, for the Government continuing to discriminate against the self-employed. The Minister should put his hands in the air and admit that he has made a mistake and that it is time to look at it again and ensure that the small people who are in business, in shops, in the service industry, on farms and so on are given the same benefits from the family income supplement as those in salaried employment.

Mr. McGrath: Information on Paul McGrath  Zoom on Paul McGrath  At the heart of this amendment is that two families with similar commitments are treated differently under this scheme. One family is headed by a worker working for, say, the local authority, and his net income is £10,000 per annum. The other is headed by someone who is self-employed, running a small post office, a shop or a farm, and his net income is £10,000. They each have a wife and three dependent children. To help to maintain the PAYE worker and his family, the State gives them about £60 a week for which they qualify under the family income supplement scheme.

This tremendous scheme is worthwhile and they deserve to qualify under it. However, the neighbouring family who have the same income, commitments and responsibilities will not qualify. There is no justification for this, but I suspect the Minister, at the prompting of his Department or from his experience, is suspicious of the self-employed. This became evident on Committee Stage when he said the self-employed are self-[834] assessed for tax purposes. He let the cat out of the bag in that comment, because what he is really saying is that anybody who is self-assessed for tax purposes is under suspicion. He does not trust them and he does not think they are playing the game fairly or laying their cards on the table. The Minister is casting a slur on the many people who are self-employed, their accountants and those who make their returns for them.

Mr. D. Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  Been there, done that. I was one.

Mr. McGrath: Information on Paul McGrath  Zoom on Paul McGrath  So the Minister knows the situation. Is he speaking from experience?

Mr. D. Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  I know it from both sides.

Mr. McGrath: Information on Paul McGrath  Zoom on Paul McGrath  Having been somebody who assessed his income, is he suggesting that he knows the loopholes and possible ways out? I doubt that is the case. He could not have taken on his portfolio with that type of suspicion hanging over his head. I assume, therefore, that he will want to withdraw the slur he cast on the self-employed on Committee Stage and he will have an opportunity to do so shortly.

The self-employed submit their figures, which must be sanctioned, to the Revenue, but the Minister is saying the Department still will not accept them. Two limbs of Government are involved, the Department of Social, Community and Family Affairs and the Department of Finance. The Department of Finance is happy that people are submitting proper accounts and it agrees that their income is a certain amount for the year. However, when those figures are sent to the Department of Social, Community and Family Affairs, it will not accept them because it thinks the people concerned are on the fiddle. It thinks they are not being up front and it will not give them anything. It is outrageous that one arm of Government is treating the other so suspiciously and this must be corrected.

The experience of our near neighbour is often quoted in relation to how various things should be done and how the system should work. However, in Britain and Northern Ireland, the equivalent of family income supplement is payable to the self-employed if they come within the income limits. If such a system operates satisfactorily there, why can it not be done here?

The Acting Chairman, Deputy Coughlan, will recall the discussions at the former Committee on the Family some time ago in relation to family income supplement. A strong case was made by the Acting Chairman's colleague, the Minister of State, Deputy Mary Wallace, that there was no reason the self-employed should be excluded from family income supplement. One of the recommendations of that all-party committee was that the family income supplement should be extended to the self-employed. The Acting Chair[835] man will recall that she was a member of that committee and that she supported that move.

Mr. D. Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  Who was in Government then?

Mr. McGrath: Information on Paul McGrath  Zoom on Paul McGrath  We were in Government. It was towards the end of our time in office and it was not implemented. However, that Government was wrong not to implement it because there is an unanswerable case. When a division is called on this amendment shortly, I hope the Acting Chairman will remember the stance she took at that time. I hope she will not sweep it under the carpet and change her mind. I also hope the Minister of State, Deputy Mary Wallace, will not forget how vociferously she made the case on that occasion and that she will support the Opposition. This would show that she has not thrown out everything she said in the past and that she is prepared to stand up and be counted.

The Minister must consider this matter carefully. I am disappointed that in the programme for Government, the Programme for Prosperity and Fairness, the farming organisations in particular did not take a stand on this matter. The Minister mentioned that Mr. Parlon of the IFA had welcomed the farm assist scheme. He welcomed it at the time and I compliment the Minister and his officials on the greatest con job of all time. People talk about buying or selling a dummy, but somebody bought a pig in a bag on that occasion. A man announced on the six o'clock news that he had secured a tremendous deal for farmers, but many of them are giving out about it at AGMs which are being held at present.

Mr. D. Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  They are the well-heeled Fine Gael farmers, of whom there are many.

Mr. McGrath: Information on Paul McGrath  Zoom on Paul McGrath  Farmers who received a small amount on the dole are not too happy.

Mr. J. O'Keeffe: Information on Jim O'Keeffe  Zoom on Jim O'Keeffe  If the thousands who lost out were not Fine Gael supporters before, they and their families are now.

Mr. D. Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  Fine Gael supporters who are farmers do not need social welfare.

Mr. McGrath: Information on Paul McGrath  Zoom on Paul McGrath  We attract support across the board from well off farmers, poor farmers, the self-employed, PAYE workers and people on social welfare. Many of them still vote for Fine Gael because they recognise that we are hung up on the idea of fairness and equality.

Mr. D. Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  It is what you say, not what you do.

Mr. McGrath: Information on Paul McGrath  Zoom on Paul McGrath  People should be treated equally. In the example I gave of the two families living side by side, each with dependent children and the same income, how can the Minister justify paying £3,000 a year to one family because they are in the PAYE sector and nothing to their [836] neighbours because they are self-employed? It cannot be justified and I ask the Minister to try to defend it because it is impossible in the context of equality and fairness.

Mr. Broughan: Information on Thomas P. Broughan  Zoom on Thomas P. Broughan  The chief concern of amendment No. 15 relates to people who were unemployed, participated in the back to work scheme and have established businesses. The business may be struggling but is surviving its difficult early years. Such businesses can reach a critical phase after the fourth year in the partnership areas when the supports are removed. I have encountered such examples during my work in the network of enterprise supports for start up and small businesses on the north side of Dublin. This phase can be critical for some businesses and I have received many representations from people involved in new businesses that the family income supplement might be one way of supplementing their income.

As I said on Committee Stage, it takes an heroic effort to go from being unemployed to running a small business. It has become easier in recent years but up to three or four years ago, it was a colossal achievement. The supports available through the back to work scheme and the social welfare system are valuable, but one reaches a stage where there is no support. Family income supplement could be a means of giving extra help to the people concerned. This was one of key demands of people who left the unemployment register and went into employment which was noted in a study carried out by the Labour Party on the back to work scheme a couple of years ago. These people had survived but they still needed some help after three or four years. I ask the Minister to consider this aspect.

The Minister said on Committee Stage that he could not accede to my amendment because he would have to address the broader issue referred to by my Fine Gael colleagues. Obviously, there are considerable advantages for those on self-assessment vis-à-vis those in the PAYE sector. We can clearly ascertain what moneys were received and paid by those in the PAYE sector in the 1970s, 1980s and 1990s, but serious allegations have been made against a particular segment of the self-employed sector to the effect that considerable funds were not put at the country's disposal, possibly by illegal means.

I attended the recent launch of former Minister and European Commissioner, Mr. Ray MacSharry's book which was co-authored by Mr. Padraic White, former head of the IDA, on the development of the Celtic tiger. The book is a very interesting read. I always felt that the questions posed by Mr. MacSharry when he was a Minister in the mid to late 1980s were the wrong questions to which the wrong answers were arrived at. The people I represent, particularly the unemployed and those in the PAYE sector, experienced a great deal of needless suffering at that time. We had sufficient funds in this country in the 1970s and 1980s to establish the necessary State [837] schemes and social welfare system. We all know there was money in the country. We underwent a phoney fiscal crisis and retrenchment but the suffering of the people represented by the Labour Party and others was very real. They carried the can for those who failed to make their contribution to the kitty. That is unforgivable. That is the background against which we should measure the proposals in the amendment.

I understand the comments made by Deputies O'Keeffe and McGrath to the effect that low paid private sector employees deserve additional assistance and that families could be treated very unfairly. The Minister stated on Committee Stage that the application of the tax credit system to everyone, whether self-employed or in the PAYE net, might provide a way forward. That would probably be a fair and transparent way of ensuring that those who deserve additional assistance would receive it through the taxation system. I urge the Minister to consider my amendment favourably in regard to providing some additional assistance to those who come off the live register, establish a business and struggle to make it work.

Mr. Perry: Information on John Perry  Zoom on John Perry  The majority of self-employed people work 40 hour weekends rather than 40 hour weeks and receive little, if any, support. I support Deputy McGrath's point in regard to the inequity which exists between self-employed people and PAYE earners. Although some small businesses may employ one or two members of staff, some of them make no net profit whatsoever once they have paid wages and running costs. If people have audited accounts which show that they are entitled to income support, that support should be provided, as happens in Northern Ireland.

Many self-employed people are quite poor and they should be assessed and supported when their need is established. Some people are self-employed by virtue of their backgrounds and they should be encouraged where they wish to remain self-employed. Huge supports are available to assist people starting up their own businesses but those supports are withdrawn after two years in some cases and people can get into difficulties. Income-based assessments should be carried out to determine people's eligibility to supports.

Mr. Crawford: Information on Seymour Crawford  Zoom on Seymour Crawford  The Minister and the Government have done a fantastic job in selling a pup to farmers, one which has produced absolutely nothing. The IFA and the other representative organisations seem to have fallen for the farm assist scheme, although the reasons for that are not yet clear. The scheme has been in operation for almost 12 months now but it has not produced one brass penny. It has not cost the Government anything worth talking about to change to the farm assist scheme.

The slur cast on the self-employed by the Minister is extremely serious. He basically said that the accounts provided by people in self-assess[838] ment situations cannot be taken seriously. Deputy Broughan referred to former Commissioner and Minister, Mr. Ray MacSharry. Now that he has taken to writing books, I hope he will write one about the rise and fall of deer farming, outlining his ideas on how the serious situation in which many deer farmers find themselves could be rectified. Some of these farmers would not be seeking assistance at all were it not for the manner in which they were let down by former Minister, Mr. MacSharry, and others, namely, former Taoiseach, Mr. Charles J. Haughey, and the current Minister for Agriculture, Food and Rural Development, Deputy Walsh, who was very committed to and supportive of the Galtee Deer enterprise.

This morning I was contacted by a person who experienced difficulties obtaining the farm assist payment and he asked me whether farmers would receive a better deal from the Taxing Master than the social welfare officers. This is a very serious matter. When small farmers produce detailed accounts containing receipts and so on, only to eventually gain £30 in a quasi-appeal, they can feel very upset that the accounts for which they paid are neither accepted nor deemed acceptable by social welfare officers.

There is no way around this problem but for the Minister to accept that if self-employed people, whether corner-shopkeepers or small builders, who may be advancing in years and may be unable to keep pace with a changing industry but who are entitled to live out their remaining years with a reasonable level of dignity, produce accounts and documentation, they should be entitled, like their colleagues across the Border, to have those accounts accepted for the determination of their eligibility to family income supplement in the same way as a PAYE earner.

I do not ask the Minister to defend his position, as others have done – I ask him to remedy the problem by realising that the Minister, the IFA and everyone involved have made a major blunder. The self-employed deserve the same rights as everyone else.

Debate adjourned.

Sitting suspended at 1.30 p.m. and resumed at 2.30 p.m.


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