Wednesday, 22 March 2000
Dáil Eireann Debate
“20.–The Minister shall consider the feasibility of paying a uniform rate of child dependant allowance by increasing the different rate to the maximum rate and also the issue of extending child dependant allowances to recipients of unemployment benefit and other short-term payments in respect of children aged between 18 and 22 years who are attending full-time education and not later than 6 months from the passing of this Act shall prepare and lay a report on same before both Houses of the Oireachtas.”.
There are three different rates of child dependant allowance. The first issue in the amendment concerns amalgamating the rates and increasing the two lower rates to the top rate so that there would be one rate of child dependant allowance. The second issue concerns extending child dependant allowance to recipients of unemployment benefit and other short-term payments in respect of children aged between 18 and 22 who are attending full-time education. This is a serious issue. If they are the children of those in receipt  of unemployment assistance, child dependant allowance is payable but it is not if they are the children of those in receipt of unemployment benefit. This is considered to be unfair by those in receipt of unemployment benefit who believe they are being discriminated against. They have made their contributions and have the huge additional expense of keeping their children in third level education. I can vouch for the expenses that apply for children in that category.
The third issue arises under amendment No. 33. This concerns the general level of child dependant allowance which has not been increased for a number of years. The perceived wisdom over the past eight or nine years is that any changes in child support should be concentrated on child benefit. As a consequence, with the broad agreement of all parties, there have not been increases in the child dependant allowance. That would be fine if child benefit had been sufficiently increased. Child dependant allowances should be looked at again in the context of our changed economic circumstances. There may be a case to resume increases in the child dependant allowance. I have spoken to people who I regard as experts in this area and they say the matter should be reopened.
Those are the three reasonable requests we in Opposition are making in these two amendments. If the Minister cannot accept these amendments, I would be reasonably satisfied if he looked at them in the context of changes to be made later in the year. The suggestions are valid and I hope the Minister will respond positively.
Mr. McGrath: It is important to outline what is involved in these amendments. Regarding child dependant allowance, there is a different regime for children in different families. For example, an unemployed person receives £13.20 per week for a child, a lone parent receives £15 per week and someone in receipt of invalidity benefit receives £17. This raises the question of equality in the eyes of the Department of Social, Community and Family Affairs and the Government. How can the Minister for Social, Community and Family Affairs preside over a situation where those children are treated differently? There is quite a difference in the minimum and maximum payments of £13.20 and £17, respectively. This represents a huge amount of weekly household income. If two children are involved, it is £8 per week which is £400 a year. This is a great deal of money lost to the families concerned. The Minister will say it is too expensive to change the system and there are better ways of doing it. The reality is that it is unjust that children in different families should be treated differently. The Minister must address this.
I do not want to hear again that there were 17 different rates of child dependant payments which have now been reduced to three and we  are doing quite well, thank you very much. That is history – we do not want to hear about it. I want to hear of a fair way to treat all children equally. The way to do this is to have the same level of payments. I know the political difficulties the Minister would face if he said he was going to standardise the payments at a rate of £13.20 or £15. However, it would be reasonable if he could do it gradually by increasing it from £13.20 to £15 and then to £17. I hope the Minister will consider doing this.
The Minister is a sensible man who is in touch with his constituency. I am sure he receives the same complaints as I do from people on unemployment benefit who do not receive the child dependant allowance when their children go on to higher education and do not understand how someone on UA whose child goes on to third level qualifies. Someone on UB will say they are drawing stamps and they have paid into the system for years yet their neighbour who has been drawing UA for a long time receives the additional payment. This cannot be justified and the Minister must do something about it.
Mr. McGrath: Yes there is. If a lawyer was brave enough to take a case, there would be grave embarrassment and the Government would again be faced with making huge repayments to families, backdated over a long period. Perhaps the Minister is the one who can do something about it. A great deal of our recent legislation has related to equal status and treating immigrants properly. Yet, our Government is treating people differently. We raised a similar issue regarding FIS and the self-employed earlier.
The Minister must bite the bullet on this issue. He must give a commitment. We will accept it if he says he cannot do it this year but he should give a commitment that something will be done in the next two or three budgets. Perhaps it will be a radical move but in the long-term the Minister will be seen as not having served the families who need support most if he does not address the blatant anomalies in the child dependant allowance. I ask the Minister to review the matter and give us a commitment.
Minister for Social, Community and Family Affairs (Mr. D. Ahern): I thank the Deputies for raising this issue, which I explained on Committee Stage. When I first became Minister, during one of my first Question Times, Deputy De Rossa, my immediate predecessor, thoroughly questioned me on whether I would continue the policy direction taken by his Government regarding the freezing of CDA and the concentration of  resources on increases in child benefit. I gave an undertaking to examine the position and having done so, in consultation with my officials, I considered the policy enunciated by the previous Government and supported by the then Minister, Deputy De Rossa, as correct. A great deal had been done by previous Governments to rationalise CDA and as the previous speakers said, I reduced it from 17 rates of payment to three. In the early 1990s, CDA was frozen at a particular rate and all the moneys available for child support was put into child benefit. The rationale was that the loss of CDA acts as a disincentive to people returning to work whereas CB is not a disincentive because people receive it irrespective of whether they are in work. To bring all the payments up to the top rate would cost £44.5 million.
In 1994, child benefit represented 29% of the CB and CDA payment for a four child family. It currently represents 41% and from September of this year that will rise to 47%. Having discussed this with my officials, I consider this policy direction correct and we will continue in that vein. An examination must be carried out with regard to the rationalisation of all child related payments.
Deputy McGrath asked about its legality. It is open to anybody to challenge it. There are plenty of lawyers who would chase a few court cases as, to a certain extent, some of them would chase ambulances. Nobody has done so yet. One could extend the logic of the Deputy's argument about different rates to the entire social welfare system. There are personal rates, QAA rates and so forth. It is the same logic. There always have been different rates of payment depending on circumstances. I doubt there ever will be a situation where that will not exist.
However, there should be a desire to rationalise the system and make it as simple as possible. That is why 17 different rates were reduced to three in this instance. That is also the reason I rationalised the pre-1953 issue and the rate bands in this budget. I cannot accept the amendment.
Mr. McGrath: I do not accept the Minister's argument that it is a disincentive to returning to work. It might have been a disincentive in the past but when people who have been on social welfare for some time go back to work, they receive the back to work allowance. The child dependant allowance makes up a substantial part of that. The Minister cannot use that argument any more. This is something the Minister will have to review again. There is a serious anomaly there.
Mr. J. O'Keeffe: I am disappointed with the Minister's response. There are two issues involved. One is general child dependant allowances. I thought the Minister would be open to the new thinking about them. I accepted and ple aded for a concentration on child benefit instead of child dependant allowances because of the circumstances that applied at the time. However, circumstances have changed and we should look again at whether a higher rate of child dependant allowance should be paid.
There is no answer to the point made by my colleague. It makes no sense to have three rates of child dependant allowance. How does one value a child? A child in one category is as expensive to rear as a child in another. One is, therefore, depriving the children in the two lower categories. The same applies to children in higher education whose parents are on UB. That is unfair. It should have been changed but was not. We have only received promises about it.
“27.–The Minister shall, within 3 months of the passing of this Act, lay before Dáil Éireann a report on the implications of enabling part-time workers who have been in receipt of unemployment benefit for the prescribed period to continue to receive unemployment benefit payments based on their continued payment of PRSI since first commencing part-time work.”.
This matter was raised on Committee Stage. The amendment would affect many women who are in receipt of short-term benefit from the Department of Social, Community and Family Affairs. It arises from a query from a number of women who, having worked full time for a number of years, were put on short-time work in their place of employment. Working three days a week they were entitled to draw their stamps for three days a week. Their entitlement, which arose from many years of contributions, meant they could draw for 390 days. The 390 days at three days a week gave them 130 weeks of additional payments under the UB scheme.
They continued working for the two and a half years which brought them to the 130 weeks. When the UB ran out, they felt they were entitled to draw on the contributions they had made during the 130 weeks and to continue to receive some payment. The rules of the scheme provide that if a person has a certain number of stamps in the governing tax year, one is entitled to the benefit.
However, there is one exception, effectively a clawback by the Department, which states that the person must also have suffered a substantial reduction in payment. This is the clause which affects these women. They have been working three days a week and have been receiving social  welfare at the same time. However, if they wish to continue to work for the three days, they cannot qualify for social welfare at the end of that period, even though they have the stamps, because they will not suffer a substantial loss in earnings.
I believe that clause was inserted to exclude those people. They meet the requirements in every other way but the Department wants to stop them getting their payment. Who does it affect? It affects women who, for whatever reason, had to reduce the amount of work they were doing. They will say, correctly, that by working three days a week they are giving other people the opportunity to work three days a week as well. They are giving them an opportunity to earn a few pounds and at the same time make a valuable contribution to the economy.
This matter should be given serious consideration by the Department. It is unfair that the clause should exclude these women. I believe it is a case of discrimination against women. I have not encountered any men affected by it. Women believe they are being got at, as it were, simply because they are women and their work was reduced from full time to part time. The Minister should undertake to review this and do something about it in the longer term.
Mr. D. Ahern: This arose as a result of social insurance being extended to part-time workers. The social insurance system was extended to anybody earning £25 per week or more. About 27,000 part-time workers were included in the system for the first time. It meant, in effect, that they would be insured for pensions and other benefits.
As a result, changes had to be made to a number of schemes, particularly unemployment benefit. The objective of UB is to provide a replacement income for people who have lost their full-time jobs. As so many part-time workers, some of whom normally work only one or two days a week, were covered by social insurance, it was necessary to review the conditions of UB to ensure they were in line with the scheme's objective. The new arrangements required the claimant to have suffered a loss of employment in order to qualify for benefit.
At first, the regulations provided that employment lost had to be at least two days for persons normally working four or more days in the week and one day's loss for persons normally employed from one to three days. In 1993 this requirement was reduced to one day in all cases, and subsequently with effect from September 1994, casual workers were exempted altogether from the substantial loss of employment rule. However, it still applies in some cases, but it arises because part-time workers are now in the scheme. It could lead to a situation where people could qualify for UB who would not in effect be entitled to it  because they could perhaps use the system for their own benefit. The matter will be kept under review but I cannot promise that we will change it because once part-time workers are included in the system it will be very difficult to police it to ensure that people would not abuse it by working some days while also claiming UB.
There are anecdotal stories to the effect that people in full-time employment use the UB system to get an advantage over other workers. I have met people in my clinic who have complained that the system has been used in this way while those who genuinely work full-time and do not look to the social welfare system for support must put up with it. The issue will be kept under review but I cannot promise anything.
Mr. D. Ahern: According to my brief the figure was 27,000 part-time workers. That may include the people brought into the scheme at that time, but there are altogether 277,000 part-time workers at present.
“29.–Not less than 3 months from the passing of this Act, the Minister shall prepare and lay before both Houses of the Oireachtas a report on restrictions in the back to education allowance scheme applying to those on Community Employment or FÁS Schemes.”.
We briefly debated this on Committee Stage when the Minister conceded that the present situation gives rise to anomalies and could encourage people to return to the live register solely for the purpose of gaining access to the scheme. Has the Minister any further views on this and can he advance his thinking on it? The purpose of the amendment is to try to get rid of the anomalies.
Mr. D. Ahern: On Committee Stage I undertook to have the matter looked at further. I have not had the opportunity since then to do that but I will undertake to have the matter looked at before next year.
We are concerned here with the proposed changes to the social insurance fund and these three amendments deal with what effectively amounts to a licence to steal from the fund. Section 29 provides that payments made out of general taxation will in future be taken from the fund.
Large sums of money are involved here – up to approximately £80 million per year. An adequate explanation has not been offered as to why these moneys should be raided from the social insurance fund. Now that the fund is in surplus we should be prepared to develop and invest in it for the future in case there is an economic down-turn and substantial draw-downs are required. There is a need, therefore, to safeguard it.
There is sleight of hand in transferring responsibilities to the fund which heretofore have been met by the Exchequer. As a cautious businessman and lawyer it is contrary to my general way of thinking. Neither the Minster nor the Minister for Finance has give an adequate explanation for this course of action. It raises concerns for me, hence these amendments.
Mr. D. Ahern: A number of issues arise here. I do not accept this is underhand. It has been well targeted. Deputy Broughan suggested it was done since the budget to rewrite matters or get some of my Cabinet colleagues off the hook on other issues generally related to the budget. That is not the case and I suggested to him that he should look at the abridged Estimates published last November where some of these changes were indicated.
This situation did not arise up to now because the social insurance fund had not ever been in surplus. Now that it is in surplus it is logical that any schemes referable to social insurance should be paid for out of the social insurance fund if there is money in the fund to meet them. Any free schemes or any other schemes related to social assistance should also be payable concurrently by the Exchequer.
We are trying to rationalise matters. Any funding for things like the free schemes which are relevant to social insurance payments comes out of the social insurance fund and any payment in respect of free schemes, for example, with regard to social assistance schemes, should be paid by the Exchequer. It is logical that we should do that.
 On Committee Stage Deputy O'Keeffe asked who manages the surplus and I indicated it was the Minister for Finance. That is laid down in the Social Welfare (Consolidation) Act, 1993. Any surplus would be invested in an Exchequer note for nine months from 10 February of this year with the National Treasury Management Agency. The remainder of the social insurance fund surpluses are invested overnight in the SIF investment account in the Central Bank. When cash flow requirements permit, it is expected that further tranches of the surplus will be put into an Exchequer note with the NTMA. The Minister for Finance has total say over the investment of the fund.
Deputies may wish to note that under the NTMA (Amendment) Bill, currently with the parliamentary draftsman, it is proposed to give it a formal investment management role which will enable it to manage Government funds when the relevant Minister requires such a service. This will increase the available options in the management of investment funds, such as the social insurance fund.
Some Deputies suggest that that the social insurance board arose from the talks on the Partnership for Prosperity and Fairness, which is not the case. In its general election manifesto my party promised to introduce a social insurance fund and we said we would create a new board to supervise the financing and operation of the fund. The fund is the workers' guarantee that their benefits will be there for them when needed without interference or means testing. Board members will include representatives of employers, employees, self employed people, retired people and other interested groups. An actuarial assessment of the fund and its future needs was to be placed before Dáil Éireann every three years, but I introduced legislation to provide for actuarial reviews every five years because that was the strong advice of my Department.
The Programme for Prosperity and Fairness proposes to establish a new board and that will be introduced. We will obviously have to wait until the programme is put together but, once that happens, moves will then take place to put the new social insurance board into being.
Mr. J. O'Keeffe: The Minister raises more questions in his reply than heretofore existed. He raises the question of the social insurance fund. Will we have a debate in the House on the social insurance fund? What mandate will its managers have? What type of investments will they be able to make? Will they be restricted to gilts or will they be able to invest in equities? If long-term investments are to be made, what type of approach will be adopted? Will it be a conservative and cautious approach? Will the fund mangers have the type of discretion investment man agers in financial houses have? I raise these as questions at this stage.
Mr. J. O'Keeffe: I hope it will develop as a fund in a substantial fashion. Now that there is a surplus in the social insurance fund and a chance it might remain in coming years, the issue of the fund should be debated. I do not oppose the fund but I am interested to ensure that it is safe and secure and that an investment approach will be adopted to maximise the available funds so that they will be available to workers in future when they want to draw down their social welfare contributory pension, invalidity pension or whatever.
That is my basic thinking and I am now faced with what amounts to a raid on the fund. The first approach of the Government to the surplus of the fund is to use part of it as a substitute for Exchequer funding. I am alarmed at that thinking on the part of the Government towards the fund. Can I have a guarantee that we will have a full and proper debate in the House on the future of the fund? Will there be legislation for the fund and, if not, will the Minister ensure some paper is laid before the House so that we can debate it and make some contribution as legislators to what could be a very important issue in future?
Mr. McGrath: I agree wholeheartedly with my colleague, Deputy O'Keeffe. This fund has been established in a haphazard way. We are unclear what it is to be used for in future. There are no strict guidelines and rules on how it is to be used and controlled. It is open to abuse and being raided by Governments of whatever hue which might be formed in future. For that reason, the requests of Deputy O'Keeffe are reasonable and there should be a logical and open debate on the fund in the House at some stage.
Mr. D. Carey: I would like to be associated with the remarks of my colleagues. The Minister, in establishing this fund, should have outlined the guidelines for the drawdown. I understood to begin with that this matter only concerned the future of old age pensions which arose because of the demographic problem of the projected substantial increase in the number of old people. This projected increase necessitated the State to create a special fund to draw on in case bad times returned. I am disappointed the Minister and the Minister for Finance did not formulate definite guidelines for this fund when presenting it to the House. Substantial amounts of money are involved so it is very important.
Mr. D. Ahern: There is some confusion about this fund. The social insurance fund was established in 1952. I am dealing with the social insurance fund as it exists. It has gone into surplus in recent years for the first time. Under existing  legislation which has been in place for a number of years, it is the Minister for Finance who has complete say as to the investment of that fund. That is done through the National Treasury Management Agency.
Regarding a discussion in the House on that, there is a commitment in the Programme for Prosperity and Fairness to bring forward a social insurance board to oversee and advise on the future of the fund. That is a commitment with the social partners and legislation will be brought forward to the House which will allow us to have a debate on that area. Discussions will begin with the social partners immediately following the agreement of the programme so that we can set that in train.
Regarding the issue Deputy Carey raised, that is, the reserve fund, the Government gave a commitment to establish such a fund to pre-fund future social welfare pensions. Moneys we have at present will be invested in this reserve fund to pay for future pensions. The Minister for Finance has already taken on board the recommendations in the Pensions Board report which said that this should be done. An interdepartmental working group is examining the legislative and operational issues relating to the creation of such a fund. The role and supervisory structures of a social insurance board will, therefore, need to be considered in the context of the legislative arrangements, including the supervisory structures which will be put in place in respect of the new reserve fund. My colleague, the Minister for Finance, will introduce legislative proposals to set up this fund in the coming months.
It will not be a slush fund. He said, and it is the Government's decision and position, that this reserve fund will not be open to being raided by this or any future Governments for other issues not related to social welfare pensions. No matter how bad other Exchequer resources might be, this reserve fund cannot be touched to make up a shortfall in the Exchequer. It is being put aside in an exponential way with a substantial first downpayment from the Telecom Éireann sale proceeds and with a commitment to fund it on an incremental basis over coming years. That is the fund to which Deputy Carey referred and I assure him it is not and will not be a slush fund for any future Governments.
I ask the Deputies to accept that the issue of the social insurance fund being in surplus is a new phenomenon. There is no sleight of hand in what we are doing. We are not gaining any advantage from this. It is merely a transfer of proper money from one fund to another. Until now, it did not make any difference because the social insurance fund was in the red and any money which had to be expended had to come from the Exchequer.
Mr. J. O'Keeffe: I am prepared to a degree to take the Minister on trust on these issues. I accept  that legislation will be published and the issues I raised I will raise again in the context of that legislation. I am very anxious that the social insurance fund and the reserve fund be managed to the best possible extent for workers who will avail of them in future. I would like a discussion on that and the opportunity will arise when the legislation is published and I accept that.
I am more reluctant to accept the Minister's assurances about section 29. I am not entirely happy but I am not in a position to change it at this stage. It is not a good precedent to have the first surplus in the social insurance fund drawn down to cover payments heretofore paid by the Exchequer. As I am in a trustful frame of mind, I accept the Minister's assurances on that and withdraw the amendment.
Mr. D. Ahern: I accept the amendment. This is a technical amendment which makes sense. The extension of data sharing provisions was sought by the Department of Education and Science in order to provide a legislative basis for the use of PBSN as a unique student identifier at all levels of the education system. That information supplied by the Department of Education and Science for the purpose of the section omitted references to the Regional Technical Colleges Act, 1999. The amendment proposed by Deputy Shortall would rectify this omission. The Department of Education and Science has indicated that this amendment should be accepted and I am happy to accept it.
“34.–The Minister shall, as soon as may be after the passing of this Act, prepare and lay before both Houses of the Oireachtas a report on the implications of extending fuel allowances for pensioners from April to October.”.
This is an old chestnut. The amendment seeks to extend the free fuel scheme to the months of the year to which it does not apply. We must bear in mind that when this scheme was first introduced  people's standards and expectations were lower than they are now and few people had central heating in their homes. We now accept central heating as standard in our homes and we frequently use it during the months of April to October. Given our changeable weather, it is not unusual to need heat in our homes during April, May and September. For that reason I suggest that the allowance should be extended to recipients during those months.
People are also living longer so we have more elderly people. They have difficulty moving from one place to another so they tend to sit a great deal of the time which means they get cold easily. I urge the Minister to consider improving the fuel allowance scheme on an incremental basis.
Mr. J. O'Keeffe: Deputy Shortall has made a reasonable case. We should bear in mind that there has not been an increase in the free fuel allowance since 1986. Whether the improvements should be along the basis suggested by Deputy Shortall whereby the payment is extended throughout the year or by increasing the figure since it has not been increased for 15 years is a moot point. It is a valuable amendment in that it focuses our minds on an issue which should be reviewed and improved.
Mr. D. Ahern: Extending the free fuel scheme to all recipients by one week would cost approximately £1.8 million and £46.4 million for a full year. I know the Deputy is not asking for that. It is estimated the payment of the allowance for a full year to all persons over 66 who currently qualify would cost in the region of £17 million. Expenditure on this scheme has increased by approximately 20% in the past six years from £37.5 million in 1993 to £44.9 million in 1998. The sum of £46.4 million has been provided in the Estimates for the scheme in the 1999-2000 fuel season.
I have examined this issue and I accept I have made few changes. One change I made was to introduce a disregard of £30 after the committee on social affairs requested me to introduce a disregard of £25 in one budget. I have not raised the rate of £5. Some CPI figures suggest that fuel has not increased by much over a period. I put those figures on the record during Question Time.
I accept that all public representatives receive representations from the public and criticism about the free fuel scheme. I examined it in the past three budgets and on each occasion I came to the conclusion that it is better to give a higher increase in old age pensions for 52 weeks of the year than to increase the free fuel allowance for 26 weeks of the year. I could have diverted some money from old age pensions and increased the free fuel allowance. However, I made the case to the Department of Finance that it is better to give people an extra pound of two for 52 weeks of the  year rather than for 26 weeks of the year. That view was confirmed in the review of the free fuel scheme, which is available in the Oireachtas Library, which suggested it would be better to give increases in the primary payments. In the past three budgets the primary payments have increased by £18 per week which is substantial. I accept it is an issue I might examine before I leave office.
Ms Shortall: I welcome the Minister's final remarks. We are not suggesting the Minister should increase the fuel allowance at the expense of the pension rates. There is nothing stopping him from doing both. He cannot claim he cannot afford to do both this year.
“34.–The Minister shall, as soon as may be after the passing of this Act, prepare and lay before both Houses of the Oireachtas a report on the implications of ensuring a right of formal appeal against all social welfare decisions from which an appeal does not at present lie.”.
Deputy Broughan discussed this issue at some length on Committee Stage and he identified a number of situations where there is no access to an appeal system. This should be standard practice across the social welfare system. Has the Minister had an opportunity to consider this matter further?
Mr. D. Ahern: My experience is that it is better not to set up a formal structure of appeal for non-statutory schemes because it gives some flexibility. If a deciding officer has to implement the legislation in place for a scheme such as the back to education scheme, although it is an administrative scheme, the letter of the law would be implemented. There is some flexibility in having  a non-statutory system. Establishing a system of appeals would tie people's hands.
The system in operation at present provides for the right of review by a more senior officer over and above the original decision. That system has worked reasonably well, therefore we should not endeavour to fix it. Under the back to education scheme people do not qualify because they are a couple of days out of the system. In some cases they qualify because of flexibility in the system.
“34.–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 the implications of the local authority financial contributions scheme for the social assistance entitlements and secondary benefits of scheme participants.”.
This is one of the most important amendments tabled by the Labour Party. There is a serious housing crisis in Dublin and the corporation has taken an innovative approach which has proved very successful with senior citizens who are concerned about the size of the houses they are trying to manage as they get on in years and about security, which is very relevant in Dublin. The local authority is in desperate need of family houses and is offering a contribution scheme so that senior citizens can move to more appropriate housing in their own area which they can manage and which is safe and secure. This is a very popular scheme which is a win win situation for local authorities which obtain family houses which they can relet to families on housing waiting lists.
However, an obstacle to the successful implementation of this scheme for people in receipt of social assistance payments is that they end up with a lump sum which is taken into account as regards their welfare entitlements. Dublin Deputies strongly feel that there is a need for a disregard for people who avail of the contribution scheme. I hope the Minister does not give the typical response that housing is not his responsibility and that he is only interested in social welfare issues. This calls for a broader approach across a number of Departments which need to be pragmatic and sensible about this issue and come up with a proposal and a solution which will tackle the real problem which hampers Dublin Corporation in particular from addressing the housing problem and facilitating elderly people. I look forward to a positive response from the Minister.
Mr. J. O'Keeffe: I was impressed by the case made by Deputy Broughan on Committee Stage  and by Deputy Shortall. It seems in accord with national policy objectives that the senior citizens surrender scheme should be encouraged in every possible way. Deputy Shortall's point is correct in that while the Minister does not have a direct involvement in this scheme, which is more a matter for the Department of the Environment and Local Government, indirectly he has a crucial role to play. In so far as the means test operates as an obstacle to this scheme, the appropriate amendment should be made taking into account the narrow scope of the capital which will arise. There is a pay back of some of the capital for the alternative, smaller accommodation supplied and a provision could be built into the means test that any capital sourced from this scheme could be disregarded. The overall national policy objective would dictate such an approach and I am happy to support this amendment.
Mr. McGrath: This is a worthy amendment. Even though we are coming to the end of Report Stage this issue should be given serious consideration. Pensioners who bought a three bedroom house from the local authority, who are prepared to surrender the house to the authority for a payment and move into smaller accommodation, are freeing up that house to help ease the housing crisis which is particularly bad in Dublin, due to land shortages and so on.
The Minister would need to co-ordinate such an approach with the Minister for the Environment and Local Government and, perhaps, other Ministers to introduce a scheme whereby money sourced by the surrender of a house does not affect the schemes for which pensioners qualify. There is a precedent for such a policy. During the debate on this Bill we talked about disincentives to work and other things. There are disincentives for people to avail of the seniors buy out package because of the clawback of, perhaps, losing a medical card, the free fuel allowance or other means tested schemes. However, the benefits for society of a large take up for this scheme would far outweigh any disadvantages which might accrue from offering such incentives.
I hope the Minister will bring this matter to Cabinet soon. He will need the support of other Ministers but it is a worthwhile proposal. A previous enlightened Government introduced a provision whereby, if someone took a job under the back to work scheme, they would not lose social welfare benefits. So there is a precedent for what is being proposed.
Mr. McGrath: There seem to be major deficiencies in the Minister's recollection of certain periods, particularly when Fianna Fáil was not in Government. This may be because of the Minister's approach in Opposition when he objected to everything and voted against Social Welfare Bills, no matter what they contained.
Mr. McGrath: The Minister was blinded with the result that much of the history of those periods has been blanked out. This is a serious deficiency in his reputation as an enlightened Minister. The precedent is there for accepting proposals which are worthwhile and it is worthwhile having senior citizens avail of the buy out scheme. We should reward them for doing so by ensuring that it does not affect any of the benefits to which they are entitled, such as the medical card, free fuel, telephone rental and so on. I hope the Minister will take this issue on board. It could become one of his good news announcements in the coming months for which we will not claim responsibility.
Mr. D. Ahern: The back to work allowance scheme and the carer's allowance were such schemes and I would like to think that I will go down in history as bringing forward the carer's benefit as a new scheme.
Mr. D. Ahern: I thank Deputies Shortall and Broughan for tabling this amendment. This issue was thoroughly discussed at a Fianna Fáil parliamentary party meeting some months ago when Deputy Noel Ahern led the charge. Having listened to the arguments at that meeting I gathered that many of the issues related to the loss of the medical card rather than social welfare entitlements.
This is an enlightened scheme operated by Dublin Corporation whereby, if a person arranges to sell their house to the corporation or on the open market and is then housed by the corporation in a senior citizens type accommodation, a proportion of the proceeds of the sale of the property is retained by the owner. The applicant may sell the house themselves or it may  be bought by the corporation and the applicant is then housed, usually in a senior citizen's flat. The applicant must make a contribution to the corporation. This contribution will be one third, one quarter or one fifth of the proceeds of the sale of the house.
The sale of residence provisions under my portfolio have been in effect since October 1991. These allow a person aged 66 or over who is in receipt of a means tested payment from my Department to sell his or her residence and either buy or rent alternative accommodation, or move into a private nursing home, with the balance of the gross proceeds being exempt from the means test subject to a ceiling of £75,000 – a substantial amount. The person would be entitled to retain up to £75,000 without the means tested payment being touched.
In view of increased house prices, particularly in Dublin, we have undertaken a review of the sale of residence provisions and it is nearly complete. Recommendations will be made to me in the near future. Once those recommendations are brought forward I might be able to do something in this area. There is currently a disregard of £75,000 and, hopefully, the recommendation will be to increase that. I changed the capital assessment regulations recently and that will also allow people an entitlement to capital without it being taken into account in the means tested payments.
The system is reasonably good and the review will probably recommend that we raise the £75,000 limit. The main bone of contention is not necessarily in my remit – it could be the loss of a medical card once a person receives a substantial amount of money. The Ministers, Deputy Martin and Deputy Dempsey, and I undertook to consider the matter after it was raised at a meeting of the parliamentary party.
Ms Shortall: I am somewhat surprised by what the Minister has said. Are the staff in the Department aware of those provisions? I have come across constituents who have been given advice which is contrary to that.
Ms Shortall: Yes. I welcome the commitment to a review of the upper limit in view of the rise in house prices. The health board has been pragmatic in its approach to medical cards, with those over 70 who have a medical card retaining it, regardless of any change in circumstances. It would helpful if we could have the same flexibility in all Departments.
“34.–The Minister shall, as soon as may be after the passing of this Act, prepare and lay before both Houses of the Oireachtas a report on the implications of relaxing the rule that a recipient of a carer's allowance cannot claim another social welfare payment at the same time in circumstances where the recipient incurs additional expenses for example as a carer or lone parent.”.
Minister for Social, Community and Family Affairs (Mr. D. Ahern): I thank the Ceann Comhairle and the Leas-Cheann Comhairle for their guidance and the Opposition Deputies for their constructive criticisms and suggestions. This side of the House does not have the monopoly on changes in social welfare. I also thank my staff who have been excellent in providing information to the House and to me. I look forward to the enactment of the Bill once it has gone through the Seanad.
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