Wednesday, 2 November 2011
Dáil Éireann Debate
Deputy Barry Cowen: From 2000 to 2010, when resources were available, Fianna Fáil tripled social welfare expenditure. It now continues to emphasise the need for a safety net for the most vulnerable in society and those affected by the economic crisis. In meeting our targets under the EU-IMF programme of financial support, the advances Fianna Fáil made across social welfare programmes should be protected, especially given the potential for EU support for our bank recapitalisation.
In July at a summer school in County Donegal, the Minister for Social Protection, Deputy Joan Burton referred to the huge advancements over the past ten years in social welfare rates for pensioners, unemployment benefits, child benefit, care and medicine schemes, improvements to capital and servicing the disability sector, supplementary allowances, back-to-school and education advancements. She said Fianna Fáil was cynical in increasing benefits and rates for electoral gain. The same Minister, however, referring to pension increases, claimed:
On increases in fuel allowances, she once said, “I welcome the increase in the fuel allowance of €4 to the princely sum of €18 a week. It is approximately the cost of a bag of coal and half a packet of firelighters but welcome for all that”. It is a pity then, since assuming office, the Minister has cut the fuel allowance, the electricity and gas allowances for the elderly, for the most needy, the most deserving and those, as she said herself, who made this country.
Allied to this we have the constant threat since assuming office of this Government not being able, prepared or principled enough to take advantage of changed financial circumstances which have since evolved that would allow it to honour its commitments. This motion is necessary, as it will offer the opportunity for facts to be laid bare and for markers to be finally put down.
The most vulnerable in society can no longer be left worried and frightened by the threat of cuts to social welfare rates. Those very people voted in their numbers for a change of Government. They were mindful of election promises and commitments. The Labour Party, for example, promised to overturn last year’s budgetary cuts of 4%, cuts that continued the heavy lifting of the previous Government. These were necessary cuts taken in the face of an oncoming election, when no amount of populist rhetoric, grandstanding or politics of anger could change or alter the necessary adjustments of over €6 billion then required to stabilise public finances.
That initial promise to overturn those cuts evaporated on the formation of the Government because the post-election commitment was to maintain rates rather than overturn them. This was re-affirmed by the Taoiseach and Tánaiste and Minister for Foreign Affairs and Trade after 100 days in office. The Tánaiste and Minister for Foreign Affairs, Deputy Gilmore, said the entire range of commitments in the programme for Government remain the Government’s policy. He further re-affirmed his commitment in The Irish Times on September 7. Not to be outdone, the Taoiseach recently told the same newspaper on September 20, “The Minister for Social Protection ... has expressed the Government’s interest in keeping headline rates of social welfare intact”.
When I saw the successful Labour by-election candidate, Deputy Nulty, celebrating his election win with the Plough and the Stars flag rather than a rose-tinted red one, I was heartened that he too would reaffirm the commitments given to his Dublin West constituents. On the plinth today, in the company of the Tánaiste and the Minister for Foreign Affairs and Trade, that commitment was given by Deputy Nulty.
This motion offers a definitive opportunity to the Minister for Social Protection to finally agree with her colleagues and assure this House rather than the media outside that this commitment stands, that her colleagues in the Labour Party cannot be forced back to their constituencies with a U-turn of this magnitude. I would expect it from the far right of Fine Gael. Has the Plough and the Stars been defamed, however? Is the red rose to wilt so quickly after it blossomed for Michael D. Higgins over the weekend?
Constitutional republicanism is a virtue paramount to our democracy. It was defamed for too long by a terrible substitute called militant republicanism. One does not have to look too far in the Chamber to see its exponents. Improvements to the lot of the poor, underprivileged, sick, disabled and carers is and should be awarded with electoral success because that is what politics is all about, the essence of constitutional republicanism.
We make no apologies for the advancements made in social welfare by Fianna Fáil Governments. The only apology emanating from this debate will be from the Fine Gael-Labour Government when it should apologise to the electorate for making promises in this area that it did not need to and, more importantly, the irresponsibility of playing on feelings of a fearful electorate.
As stated earlier, the social welfare budget has increased substantially. Pension levels increased since 2000 by 130%, unemployment benefits by 130% and child payments by 330%. The changed European context and prospects for EU support for bank recapitalisation means that we should save money on the banks that we can use to protect those affected by the crisis. Self-employed people should not be penalised from social welfare supports after taking the risk in setting up a business. The Government’s emphasis should be placed upon further anti-fraud savings and job creation to reduce social expenditure while reaching a new agreement with the EU to ensure we have financial support for our bank recapitalisation. Money saved on this should be used to alleviate pressure on the unemployed.
Fianna Fáil introduced several measures that the Minister, Deputy Burton, is claiming credit for in the drive to exact greater savings from curbing social welfare fraud. Despite the fanfare surrounding this anti-fraud drive, the Minister’s measures are the same actions introduced over the past several years. For example, in 2009 the Department reviewed 750,000 people. In 2011, that target has been increased to a whopping 780,000. Welfare fraud savings in 2007 came to €447 million, €476 million in 2008, €484 million in 2009 and €483 million in 2010. This year’s target is €540 million while for 2012 it is €625 million. Based upon answers to parliamentary questions I received two weeks ago, I am not convinced this year’s target will be met. Laughably, earlier this year when listening to the Minister answer questions in this House, it could be construed that maintaining welfare rates was dependent on savings in her Department such as this.
Social welfare forms a major part of the income support of 2.1 million people and is a substantial generator of economic activity. Despite the soft hints from certain quarters and the accusations of unfortunate recipients having made lifestyle choices, Ireland does not spend a disproportionately high amount on social welfare given its unemployment numbers.
Social welfare acts as an automatic economic stabiliser. Some commentators have suggested that we should apologise for the cost of bringing our percentage expenditure of GDP on social welfare from 10% in 2000 to 20% in 2009, which is below that of France, Finland, Germany and Austria and on a par with that of Italy, Belgium and the Netherlands. The eurozone average is 19%. Having built up significant social welfare supports, Fianna Fáil undertook a progressive budget of fiscal consolidation in light of the economic crisis. It is ironic that the Government is now accepting praise from the troika for implementing measures they voted against at the end of last year.
The Government should not slam on the brakes too hard and jeopardise economic recovery by undermining domestic demand. Despite statements to the contrary from several Government members, the troika has agreed that a balance must be struck between fiscal consolidation and pro-growth strategies. Several colleagues and I recently met with representatives of the troika and were relieved to hear their views in this regard. They recognise that decisions in this budget are a matter for the Government. They acknowledge that the means by which savings are made are a matter for the Government.
Deputy Barry Cowen: They also indicated their awareness that these decisions will be difficult politically. They noted that this is a coalition Government and that agreement, while difficult, must shortly be made. This tallied with the Minister, Deputy Noonan’s, comments after his meeting with troika that any decrease in social welfare rates would be a matter for the Government to decide at budget time. Crucially, he added that the troika has no difficulty with the Government “substituting one fiscal measure for another one of equal value”.
The discovery of an accounting error amounting to €3.66 billion alleviates some of the long-term burden on the State’s finances, with overall debt now standing 2.3% lower than previously thought. This reprieve should be used to ease the onerous burden of reducing social welfare expenditure. The new eurozone plan for bank recapitalisation offers the Government an opportunity to extract EU financial support for our bank recapitalisation. Ireland should not be unfairly penalised for having taken the initiative in tackling the bank crisis rather than kicking the can down the road. Part of the rate reduction on our bailout repayments, which was achieved by accident rather than design, should be used to ease the burden of reducing social welfare expenditure.
Deputy Barry Cowen: Self-employed people are an integral part of the Irish economy. Those who take the initiative and risk in setting up a business and creating jobs should be facilitated and encouraged, not penalised in our social welfare system. There are approximately 268,000 self-employed people in Ireland. Small and medium-sized enterprises, SMEs, directly support 700,000 jobs throughout the State, and Ireland has a higher proportion of SMEs in comparison with the EU average. Given the high unemployment rate, there is a pressing need to develop a strong social protection safety net in order to encourage and foster entrepreneurship and thus stimulate job creation in the SME sector.
The Government should live up to its promises in the programme for Government to establish supports along the lines of those available under various international welfare systems, such as Denmark, which offer immediate support to self-employed individuals who encounter income difficulties as a result of business closures and slowdowns. The Irish Small and Medium Enterprise Association has outlined the disparity in treatment as between employees and the self-employed under the social welfare system. Employees have an immediate entitlement to benefits; are not subject to a means test; their personal savings, other income and cohabitee income are not assessed; the value of their property is not taken into account; and they are covered for invalidity and disability benefit. By contrast, the self-employed have no immediate entitlement to benefits; are subject to a full means test; all savings, other income and cohabitee income are fully assessed, the value of their property is fully reckonable; and they have no invalidity or disability cover.
The Government’s defence in implementing reductions in social welfare expenditure will undoubtedly be that they are an unavoidable consequence of the recklessness of previous Governments. Despite all the advancements made by the previous Administration in the areas of social welfare and protection, Opposition Members constantly complained that there was not enough being done, that the country was awash with money and so on. As a member of a local authority during the 1990s and 2000s, I am well aware that these arguments were repeated in county councils throughout the State.
A brief look at the election manifestos of the Labour Party and Fine Gael in 2007 shows they had little thought for restraint. Observing that the broad macro-economic outlook for the Irish economy was good, the Labour Party promised a two-point reduction in the standard tax rate, from 20% to 18%; 2,300 more hospital beds; five half-days of free preschool education for all children; the abolition of the means test for carers; and an increase in the number of community gardaí to 1,500. Fine Gael, in the same boom-time election campaign, promised to cut the standard tax rate, increase the State pension to €300 per week by 2012, provide a laptop for every school child, introduce free GP visits for every child under 16 and continue the public sector benchmarking process. Given these examples of their own election promises, neither party is in a position to criticise as fiscally irresponsible the investment made by Fianna Fáil in social welfare and other areas in the past decade.
Labour Party and Fine Gael candidates travelled around their constituencies between November 2010 and February of this year making many promises. In the case of the Labour Party, they promised to overturn rate cuts of 4% in the previous budget, before agreeing, upon entering government, to accept those reductions. We accept this was a compromise reached with their partners in government. However, they have continued to reiterate that commitment right up until lunchtime today, but always outside the House. It is always when they are talking to journalists from The Irish Times or radio news channels that they make this claim, or when they were standing on the Leinster House plinth to mark their 100th day in office. Now is their chance to put this matter to bed in this House, in the company of their peers. The great socialist flag, the plough and stars, was waved on Friday last in Dublin West. The rose was blooming in Dublin Castle on Saturday as Michael D. Higgins celebrated his fine election win. I hope we will not be left to dine on pink salmon this evening.
Deputy Éamon Ó Cuív: Ba mhaith liom chomhghairdeas a dhéanamh le mo chomhghleacaithe — tá an bheirt againn as Gaillimh — atá ina Uachtarán ar Éirinn. Ba mhaith liom chuile rath a ghuí air sa phost nua atá aige. Tá mé cinnte go ndéanfaidh sé jab an-mhaith. Tá aithne mhaith agam ar Michael D. le fada. Bhí sé mar chomhghleacaithe agam sa dáilcheantar. Tá mé cinnte go bhfuil na buanna aige don jab.
At Leaders’ Questions recently we debated the promise made by this Government not to reduce social welfare payments. The Tánaiste was quick to state that my party in government had built cuts in the total social welfare budget into the four-year plan. He chose to ignore that this plan outlined our hierarchy of choices as to how these savings should be achieved. The last choice, the one to be avoided if at all possible, was rate cuts. Moreover, we spelt out what needed to be done in order to ensure that option was not necessary. The first one we identified was control measures — while the Minister keeps talking about it, I do not know what she is doing about it. Listening to the Minister one would think the issue of control and reducing wrong payments was one she invented. In fact it was laid out quite clearly in the four year plan. This year’s figures are smaller than they were last year because the figures last year only related to ten months owing to the industrial action which did not stop the work but stopped the counting. What new control measures has the Minister introduced?
The second one was labour activation measures. It had been my objective to roll our labour activation measures so that all of those who are long-term unemployed would get an opportunity to be involved in some gainful way in society, which I accept it will take time to roll out. I know of very few people who are unemployed who would not take work even on a scheme as opposed to being unemployed. I also accept that activation measures allow us to deal with the issue of those who are drawing and working, who represent a minority but a very expensive minority.
The third was structural reform. We all agree on the need for structural reform within the social welfare system. The final one is the creation of employment. For every 1,000 jobs created the State saves approximately €25 million in the social welfare budget between payments to the unemployed and the income that now comes in directly to the Department from PRSI. It is considerably handier for the new Minister because there is no longer a sharing of that with the health levy and it can be very accurately assessed now. Through all these measures it should be possible to make the €600 million saving without touching headline payments.
What has the Minister done since she came to office? Since one of the biggest customers, effectively, of the ESB was the Department of Social Protection, I had made a proposal that a saving could be made to the Exchequer by demanding a better deal from the people supplying the free electricity to the customer. What did the Minister do? She did it with the private sector with telephone suppliers, but she failed to force change on the electricity companies — the main one being the ESB which has by far the biggest number of pensioner customers and at the time had an inflated electricity price because of the regulator’s ruling. She failed to make the saving there and instead reduced the number of free units to people in receipt of free electricity from 2,400 units to 1,800.
She might say there were difficulties. When the departmental officials told me about the difficulties I said muna féidir liom é a fháil ar bhealach amháin, gheobhaidh mé ar bhealach eile é and the second way was very simple. If we could not get a bulk discount — even though we are the best payers on time all the time and they need to spend nothing collecting this money — I said that there is a very easy answer and that is that we could make the saving by demanding an extra dividend from Bord Gáis Éireann and the ESB if all else fails. Just as the Minister did not cut the free telephone rental allowance, in no way was it ever intended that a saving would be made by cutting the free electricity allowance to people.
When I left the Department we had proposals on mortgage interest supplement at an advanced stage of development. One of those was to abolish the 30-hour rule. In many cases because two household incomes have been reduced to one there is still a partner working for more than 30 hours which automatically disqualifies people from mortgage interest supplement. A document that was left for the Minister of which I have a copy, proposed the abolition of that provision and many other improvements to mortgage interest supplement. Listed in the document prepared by Department of Social Protection officials was to introduce a Bill in spring 2011 to abolish the 30-hour rule. I asked them to give me a timescale in which these things could be done. I have the document they gave me and the timescales were their timescales. Obviously I wanted it done as quickly as possible and they suggested a Bill in spring.
I got an answer to a parliamentary question today which stated the Department had put all that back, indicating that it was not really concerned about people being unable to pay mortgages. It suggested they could wait while we have another committee to consider it all over again and come up with different solutions. The Minister should consider all the people she could have helped if she had been willing to make the simple changes — which are often the best ones — in the mortgage interest supplement for which we had provided when we were in government.
Regarding control measures, I ask the Minister for an update on the PPS card which was ready to roll and how many she has issued since she came into office. The Minister never tires of telling us about the fundamental reform she will introduce into the social welfare system and how she will change it all. I hope she does so because we had already laid out the menu of changes and had already introduced some legislative changes. I will now spell them out. We passed a law relating to partial capacity, which allowed people in receipt of invalidity pension depending on the extent of their incapacity, to retain part or all of their payment and engage in long-term gainful employment. This was a very human proposal because it gave certainty to people rather than the present system which grants an exemption for a year and perhaps for one further year but the person will never get fully commercial employment because of his or her disability and often winds up having to go back on social welfare full-time. We had passed the law and were drawing up the regulations to introduce it. Having made that very important first step for those with disabilities, I wonder where the impetus has disappeared.
In the four year plan we had also provided for an integrated child income support system replacing the child dependant allowances and child benefit with a universal payment and a top-up payment depending on a person’s income. The advantage of that was that it would introduce a single system and eliminate wrinkles in the existing system that can create poverty traps. We had also outlined the need for the development of a single social welfare assistance payment rather than the myriad of payments that create so many difficulties at the moment.
I have heard the Minister talk generically about the need to reform the system as if she had invented the entire idea of reforming the Department. I have never heard her spell out those reforms in detail. Many of those reforms were already in train when the previous Government left office. As the Minister knows it takes time between the conception of an idea and its delivery, but there was considerable work going on that would make it a much better system, focused on the people rather than being focused on the schemes. At the moment our system, like many systems, is based on the concept that a person fits into the scheme. The social welfare of the future should be such that the scheme fits the person’s requirements and is tailored around those needs. Considerable work had been done.
I hope the Minister can confirm tonight that there will be no change in social welfare rates and that the cut in the free electricity allowance will be reversed. I hope also that she will outline in detail the structural changes of which she spoke and what structural changes already in place she will implement.
Deputy John Browne: I welcome the motion which gives us an opportunity to address social welfare issues in general. Like previous speakers, I hope Fine Gael and the Labour Party, who promised so much prior to the election, will deliver on their promises and that there will not be in the forthcoming budget cuts in social welfare payments or tax increases for people currently living barely above the breadline.
Given some of the recent speeches of the Minister for Finance there is concern that the forthcoming budget will introduce cuts in social welfare for pensioners, people on disability allowances and other social welfare recipients. As has been said, the social welfare budget increased from €6.7 billion in 2000 to €20.9 billion in 2010. Pension levies increased by 130%, unemployment benefits increased by 130% and child payments increased by 330%, which is as it should be. Given the ready availability of money during the boom times it was important the less well off in our society were protected. At that time, unemployment was 4.4% and 2 million people were in employment. The latter figure has now reduced to 1.7 to 1.8 million people working. Each week, 1.4 million people receive a social welfare payment, with 2.1 million people benefiting from weekly payments. A huge amount of money is being paid out but people are deserving of this money. It is important this continues into the future.
The four year plan introduced in November aimed to achieve savings in social welfare expenditure through a combination of control measures, labour activation, structural reforms, further reductions in rates, as necessary, and in a fall in the liver register. However, it is important to note that the fall in the liver register has not occurred and that the figure in respect of unemployment, as of September 2011, is 14.3%, which is a considerable increase on the 13.9% figure when this Government took office. Despite the Government’s introduction of the jobs and other initiatives the number of people working has not increased. The Minister might, when replying, comment on that issue.
I would like to raise a number of issues with the Minister. There is much talk on radio and reference in media reports to tackling fraud. While it is important fraud is tackled, it is also important that people on social welfare are not labelled criminals. Much of this talk would lead people to believe that the only people engaged in fraud are social welfare recipients. The percentage of fraud in this country is minuscule. While it is right to stamp this out we must ensure we do not go over board. In this regard, huge numbers of people in receipt of disability allowance and invalidity pension are having their allowances withdrawn. These are seriously ill people. We have all been visited at our clinics by disabled people and by people with serious problems whose allowances are being withdrawn, causing consternation and severe hardship.
Most people appeal these decisions. I have attended social welfare appeals with many constituents. Generally, following a nine or 12 month wait for an appeal, the independent appeals officer restores a disability allowance or invalidity pension. I do not know what type of medical personnel are undertaking these assessments but some of the decisions to withdraw invalidity pension or disability allowances are not in the best interests of the client. The Minister should take a serious look at this area. The long delays and the waste of the time of appeals officers in having to travel to places such as Wexford to engage with seriously ill people in respect of having their payment restored is not good enough. The issue needs to be examined by the Department.
Many long term unemployed people are seeking places on what are currently termed “activation schemes”. In my earlier days in politics these were known as FÁS and CE schemes. There is demand for places on such schemes. However, a person who has been in receipt of social welfare during the previous year may only take up a place on the scheme for one year. This needs to be re-examined. People want to remain on these schemes rather than return to claiming unemployment benefit. They want to contribute to their communities, be it the GAA or soccer club, tidy towns or so on. It is a waste of talent and manpower to have such people return to claiming social welfare benefit, the amount of which is often akin to what they would get while on the scheme. It is ridiculous that these people are being returned to the unemployment register when they could remain on these schemes.
When in office, former Minister for Social Protection, Deputy Ó Cuív, announced he had employed extra appeals officers. However, it can still take up to nine months before an appeal is heard. Perhaps the Minister will when replying will tell us how many extra appeals officers are now in the system and why it is taking nine months to a year for appeals to be heard, which is the case in my constituency. It should be possible to speed up this system.
Another issue of concern, as highlighted by Deputy Cowen, is self employed people, many of whom, through no fault of their own, lost their business and income, in particular in the construction sector. These people are being put through the ringer when they go to claim supplementary or job seeker’s allowances. Most times, they are refused, following which there is a cumbersome appeals system. In fairness, it should be easier for these people, who have worked all their lives and have never claimed social welfare payments, to get help when they need it. After all, they have contributed to the State and should not be abandoned by it, as is currently the case. It is not good enough.
My final point relates to part-time workers who take up short term work for, say, two or three months or, seasonal work. People in receipt of jobseeker’s allowance will not take up short term opportunities owing to difficulties in the system in terms of reclaiming jobseeker’s allowance. I believe anyone engaged in part time work for a minimum of three or six months, be it in strawberry picking, as is common in my constituency, should be automatically returned to jobseeker’s allowance when that work finishes. They should not have to make a claim, have it refused and then engage in the appeals system. These issues need to be addressed. While I accept the need to combat fraud, the genuine person should not be penalised. There should be in place an easier system which allows people who take up part time work to reclaim jobseeker’s allowance when that work finishes.
There are other issues I could raise, including the free fuel and back-to-education allowances. Perhaps the Minister will, when replying, tell us the number of people awaiting payment of the back-to-education allowance. Many people in my constituency have still not received their allowance. I am aware the Minister has done her best to speed up the process and that the problem is one of increased numbers of claimants. However, people are dependant on the allowance, the processing of which should be speeded up further.
I am interested and intrigued by the fact that Fianna Fáil has finally raised the issue of social welfare in this motion. However, it is deeply hypocritical that the very party that did so much to bring this country to the point of collapse by its reckless spending should now seek to bring forward such a motion. When we came into Government and did the maths, we quickly realised that the country could not afford the bill that Fianna Fáil had left us. We realised we needed to put the funding of our social welfare system on a more sustainable footing. The alternative would be to leave the country where Fianna Fáil had left it, bankrupt and dependent on others for financial support.
This Government wants to restore our national sovereignty. We want to be in control of our own destiny by the time we celebrate the 100th anniversary of the 1916 Rising in 2016. We want to be financially independent and to pay our own way but we have a way to go before our income matches our expenditure.
As the House is all too aware, the social protection budget grew in a particularly dramatic fashion over the past decade when Fianna Fáil was in power. In 2001, spending on social protection stood at €7.84 billion; by last year this had grown to €20.85 billion, an increase of 266%. To put that in context, inflation increased by around 30% during the same period. Some of the social welfare spending increases are down to the dramatic rise in unemployment since 2007, but the most significant factor is a surge in both rates and the number and size of schemes over a very long period of Fianna Fáil governance. Frankly, the increases in social protection payments were often cynically and very effectively timed to help Fianna Fáil win elections and this is certainly what happened. The party showed little or no regard as to whether the State could continue to afford to meet these Fianna Fáil promises.
The fact that these schemes were funded from unsustainable revenues caused by the housing boom appears to have been lost on the previous Government. As a result, we have inherited a level of social expenditure that is completely out of sync with the funding base of the State. Worse, even in the good times, Fianna Fáil distinguished itself by a wilful lack of ambition for the people who turned to the State for protection. I find it very difficult to remember that Fianna Fáil characterised so many people as being unemployable as well as unemployed. In its “spend it, when you have it” way, Fianna Fáil threw money around like confetti at a wedding. They doled it out without regard to the needs of their clients, many of whom would have benefited more from help with a job, education or training. As a result, our social welfare system has taken a largely passive approach. These are not my words but the words of a number of international commentators and of recent national reports. We allow people to receive certain benefits indefinitely. Under Fianna Fáil, there were only very limited sanctions for those who refused offers of work or training and often there were very few offers of work, training, back to education or work experience.
Over the past decade, most OECD countries have successfully introduced such policies while in Ireland there has been hardly any movement in this area. More is the pity, for the OECD has estimated that we would have entered the recession with 100,000 fewer people on the live register if Fianna Fáil governments had introduced such policies during the good times. When the recession hit, Fianna Fáil was the first to hit the low-paid workers with a cynical reduction in the minimum wage, which this Government immediately reversed upon taking office. I introduced the motion to reverse this decision.
As we all know, overall Government spending in 2011 will be roughly €18 billion more than this year’s overall Government income. The Government will get €42 billion from tax and PRSI this year. My Department alone is expected to spend over €20 billion of this. One of the core commitments in the programme for Government is the restoration of financial stability. For that reason, the transition to a more balanced budgetary position simply cannot be made without affecting social welfare spending.
The EU-IMF agreement, signed by Fianna Fáil, commits the Government to a further adjustment of at least €3.6 billion in budget 2012, including a reduction in expenditure of €2.1 billion. The Department of Social Protection has a major contribution to make in achieving a more balanced budget, as it accounts for 39% of expenditure or about 13% of GDP. Most Deputies know that this 13% of GDP is of vital importance to many local economies and regions. The EU-IMF agreement also commits the Department to reforms that can better support people on lower incomes while also ensuring that for welfare recipients, work pays. Despite these severe constraints, the Government is determined to do its utmost to protect the most vulnerable people in Irish society. I recognise that the people who turn to my Department for protection generally had no role in causing this economic crisis and should therefore be shielded from the worst of its consequences.
There are considerable challenges ahead, including the need to safeguard, as far as possible, the key income supports and services operated by my Department. I recognise the severe impact on families, individuals and communities as a result of this economic collapse and we are determined to protect them from the worst consequences of this very deep recession.
I wish to speak about reform and transformation of social protection. The transformation and reforming of our system of social protection is key to preserving our way of life in this country. While our social protection system is successful in providing a basic level of income support and a threshold of decency, it does not sufficiently enable people to get themselves back on track, into work, or, in the absence of jobs, to go back to education or training, and ultimately to achieve their full potential and financial independence for themselves and their families. Internationally, a number of features of our system are outliers. I refer to the emphasis on universal child cash benefits where other countries place emphasis on child care and preschool education. In our system it is possible for a small number of people to remain indefinitely on jobseeker’s allowance. The system has also had very limited success to date in what is known as activation, assisting people in getting back to work, education or training as soon as possible, by providing advice, placement and training referral services. Given the significant increases in rates over the past decade, the so-called replacement rate, or the proportion of their former wages that unemployed people receive in benefits, has increased in the case of some recipients to levels where it may discourage them from seeking work.
The troika is asking very hard questions about the extent to which we can preserve such benefits that are considerably in excess of what is provided to citizens of the countries that are funding our State. Strong systems of social protection are at the heart of some of the world’s most successful and dynamic economies. Countries such as Denmark, Sweden, Finland and the Netherlands, some of which are comparable in size to ours, have over time developed systems that enable citizens to cope with the economic risks of modern life. They provide sufficient income to deal with unexpected circumstances like unemployment, illness or disability or support for particular stages of life like childhood, the birth of a child and, in particular, when people become older and retire.
These countries view social security as a social contract between the state and the citizen. Like all contracts it imposes duties and obligations on both parties. When we compare our system of social protection to the social contract that exists in the Nordic countries we see they require the recipients of state assistance to do something in return, whereas we rarely do. I welcome Deputy Browne’s reference to his desire to see more places available to people. I believe many people wish to be active and assist their community. They wish to be contributors, in the broadest sense, even if at this time of recession they find it extremely difficult to get a job.
The key element of our transformation from a passive system of income support to a more proactive model is the establishment of the new National Employment and Entitlements Service, NEES. This is effectively a public employment services policy. The service will merge FÁS employment services and community employment programmes, along with community welfare, into the Department of Social Protection. The idea is to create an integrated service providing a one-stop shop for people seeking to establish their benefit entitlements. The service will engage with people on the live register in a different way so that we can help to get more people back to work.
I reiterate my concern that our social protection system does not ensure the outcomes that children who are in poor families deserve to have. Many poor children in poor families in this country grow up to be poor adults. I would like to see emphasis put on more and better preschools and on early education rather than simply on cash transfers to families. That has been done very successfully in many countries and as a society we need to think about it.
Many contributors spoke about the issue of fraud. Most people on social welfare get what they are entitled to, no more and no less. Most people involved in social welfare are honest. They regard it as a mark of honour to treat with the State honestly. However, there are people who abuse the system. The difficulty with fraud and abuse in the system is not simply the money this costs but the undermining of the integrity of the system. Those people who pay into the system see people benefiting, perhaps within or near their own community. They work in the black economy or are scamming and ripping off the system in other ways. They are small in number but are very significant in terms of undermining the system. We have adopted a new approach based on targeted approaches by social welfare squads, integrated squads working with the Revenue Commissioners, Customs and the Garda to tackle social welfare fraud. There are also “feet on the street”, inspectors who visit employers to ensure all their employees are registered for PRSI. They visit people in their homes to check they are genuinely what they claim to be and are receiving the benefits to which they are entitled, no more and no less.
There is another important point. At present we are taking in approximately €7 billion in terms of social insurance contributions but are spending approximately €9 billion. The gap is €1.9 billion. Most Deputies, regardless of our political difficulties, want to see us having a strong, high-quality system of social protection. However, the deficit between what we take in in social insurance contributions and what we spend is €1.9 billion and we must address it. During the bubble in the construction sector it was filled by the enormous tax revenues the Government generated but the deficit is now €1.9 billion.
That is one of the issues we in this House must look at with regard to how we build a sustainable social welfare system that protects, in particular, our older and retired people who through their work and effort helped to build up this country. In my focus in approaching the budget, I want as far as possible to ensure the protection of the primary social welfare rates but also to see that social welfare expenditure is targeted at the people who need it most. In regard to older people, for example, we spend a great deal of money on fuel allowances. We might be far better off spending more of that money insulating older people’s homes. Instead of having heat going out through single-pane windows and going up the chimney in badly insulated and poorly repaired homes we would save on fuel allowances.
These changes of emphasis are very important in terms of getting the kind of society we believe is appropriate. If one is dependent on a social welfare income the State offers support but equally, if one is of working age, the State expects one to work during one’s working life and be a contributor.
Deputy Patrick O’Donovan: I acknowledge the presence of the Minister for Social Protection, Deputy Burton. Having listened for the past ten or 15 minutes, it is refreshing to hear the Minister speak as she did, referring to the need for restructuring the social protection system and focusing on outcome rather than cold figures.
I also agree with much of what Deputy Cowen said concerning reform, how things might be done differently, and the importance of the social protection schemes. It is a pity that during the previous 14 years that same level of empathy with people was not seen in the previous Government. To borrow a phrase from someone else, “We are where we are”, and it is not a very good place. As the Minister observed, more than €20 billion is being spent currently on social protection as a direct result of the economic collapse the country has endured. That is a story for another day.
The most important aspect of the Minister’s speech concerned the vital need to protect the needy, those people who are reliant on social protection payments to get from Monday to Sunday. One cannot underestimate the importance of this when one is sitting in one’s constituency office and a person comes in who is almost embarrassed to be looking for assistance with the completion of a form. I am sure every Member in the Chamber has seen this. The individual does not want to be in this position but he or she has no alternative. People tell me the indignity of losing their job is one matter but it is compounded by having to go through a system which in many cases does not treat them with the dignity and respect they deserve, having lost their job and being put into this position. I was at a committee meeting recently when the issue of the quantity of PPS numbers was raised. Some of them are way out there in space. God only knows who is responsible for them, or what actual purpose they have. I am concerned about the number of PPS numbers, what is happening with them and how they correlate with the needs of the country at this time. Deputy Browne spoke about the access to social protection of the self-employed when they fall on difficult times and the use by some people of the social welfare system to compete with the self-employed. Such issues need to be highlighted. The Minister alluded to social welfare fraud earlier. I raised the use of PPS numbers in the House previously. It should be possible for them to be accessed by officials working in housing, motor tax, the HSE and all other aspects of public expenditure. Passenger records are transferred between Ireland and other jurisdictions so we have details of those moving in and out of this country. However, we are unable to provide that level of information to the Department of Social Protection.
As the Minister said, social welfare fraud is not an attack on a particular individual, but an attack on the State as a whole. A small minority of people are ripping the State off. This Government has made substantial savings in this regard, as did the previous Government, in fairness to Mary Coughlan. I wonder if further savings can be made in this area. We all know of people in every town and village in this country who have no visible signs of income but are enjoying the life of Riley. They are small in number but, as the Minister said, they cause questions to be asked among taxpayers, people who pay into the social welfare system and other legitimate service users. They want to know how they can be in their positions when people who have never worked a day in their lives have the life of Riley. I wish the Minister well in her endeavours. I congratulate the Opposition on introducing this motion and giving us a chance to inject a decent amount of fact into this debate.
Deputy Colm Keaveney: Like the previous speaker, I am delighted to speak on this motion. I welcome some of the comments that have been made. Good ideas are emerging as part of the reform agenda, particularly from members of the Opposition. Fianna Fáil has left us with a level of social expenditure that is completely out of sync with the State’s capacity to meet the social welfare needs that exist. That is a consequence of 14 years of giveaway Fianna Fáil budgets that brought the country to near ruination. When the Government came to power earlier this year, it quickly realised that the country could not afford the bill that Fianna Fáil had left it. We realised that we needed to place the funding of the social welfare system on a more sustainable footing.
One of the core commitments in the programme for Government is restoration of this country’s fiscal stability and economic sovereignty. As Deputies know, overall expenditure under this year’s budget will be approximately €18 billion more than this year’s overall Government income. The Government will get €42 billion from tax and PRSI this year. The Department of Social Protection is expected to spend €20 billion this year. Therefore, a transition to a more balanced budgetary position cannot be made without affecting the delivery of social services. The EU-IMF agreement commits the Government to a further adjustment of €3.6 billion in the 2012 budget. The Deputies opposite signed off on that agreement when they were in government.
The Department of Social Protection has a major contribution to make in achieving a more balanced budget, as it accounts for almost 39% of expenditure. The EU-IMF agreement commits the Department to reforms that can better support families with lower incomes, while ensuring that work pays and that welfare recipients receive adequate support. The Department accounts for 39% of gross current expenditure, which is equivalent to 13% of GDP. Most of the Department’s expenditure, including associated administrative costs, can be divided into a number of broad areas.
A wide range of supports for people of working age account for approximately 50% of the Department’s overall expenditure, or nearly €12 billion. Jobseeker’s allowance and jobseeker’s benefit account for €3.6 billion. Just over €1.1 billion is spent on one-parent family payments. Carers receive nearly €750 million. Pensions and other supports for retired and older people account for nearly 29% of the Department’s overall expenditure, or nearly €6.1 billion. Almost 60% of that, or over €3.6 billion, goes on the State contributory pension, which is the single biggest social welfare scheme. A further €951 million is required for the State non-contributory pension and €920 million is required for the widow’s and widower’s non-contributory pensions. Support for children and families accounts for almost 12% of expenditure, or nearly €4 billion. It is estimated that almost €669 million is spent on qualified child increases while €199 million is spent on family income supplement.
The manner in which the service is delivered is critically important to this debate. The service provided by the Department affects the lives of almost everyone in the State. In 2010, the Department processed approximately 2 million claims and made over 84 million payment transactions. Over 6 million telephone calls were received at the headquarters section. Almost 1 million reviews were conducted by the Department last year. In 2011, an average of 1.4 million people will receive a social welfare payment each week. When qualified adults and children are included, a total of more than 2 million people will benefit from weekly payments. In addition, child benefit payments will reach nearly 600,000 families, with nearly 1.1 million children affected positively every month.
The programme for Government states that the most positive way of reducing social welfare expenditure is to facilitate the maximum number of unemployed people to take up employment or self-employment. The Government’s jobs initiative has already started that process. The rate of employer’s PRSI in respect of employees on the national minimum wage has been halved from 8.5% to 4.25%. VAT has been reduced from 13.5% to 9% on a range of tourism related products and services. The introduction of the national internship scheme, JobBridge, gives work experience to unemployed people in the form of placements of between six and nine months.
JobBridge has assisted in breaking the cycle whereby jobseekers were unable to get jobs without having experience, either as new entrants in the labour market after education or training or as unemployed workers wishing to learn new skills. The scheme gives people a real opportunity to gain valuable experience to bridge the gap between study and beginning work. JobBridge and the national internship scheme are part of the Government’s job initiative and were launched on 1 July this year. Claimants continue to receive their primary social welfare payment as well as a €50 additional payment for participating in the scheme. As of Thursday, 27 October, a total of 2,508 internship opportunities with host organisations were available on the Department’s website. Some 2,185 interns have commenced internships under the JobBridge scheme to date. Some 630 of them have converted from work placements.
JobBridge exists to assist individuals to bridge the gap between unemployment and the world of work. It aims to assist individuals of all levels of skill, ranging from those who left school early to highly qualified graduates. It is a unique opportunity to develop new skills and earn valuable experience. Feedback on the scheme has revealed that many excellent internships have been offered to non-graduates in the retail and catering sectors. Participants are learning new skills, staying in touch with the labour market and putting themselves in a better position for full-time employment. The JobBridge scheme contains a number of measures to minimise displacement. Host organisations must declare that none of their participants is displacing an employee. The JobBridge team checks applications, where possible, to ensure vacancies advertised on the FÁS Jobs Ireland website do not involve displacement. If displacement is an issue, the inspection team ensures there is liaison between FÁS and management and can intervene.
Under the advisory groups on tax and social welfare, we are harnessing the type of experience needed to examine the operation and interaction of tax and social protection. Recommendations will be made on the most cost-effective solutions and how employment can be incentivised and improved and better poverty outcomes achieved, especially in the area of child poverty, by identifying specific, practical administrative improvements in their operation.
This is a very important debate. The programme for Government clearly sets out the Government’s determination to do its utmost to protect the most vulnerable. The country faces a significant challenge in safeguarding, in as far as possible, the key income supports and services operated by the Department of Social Protection. We must recognise the severe impact of the economic collapse on families, individuals and communities.
The motion before us is slightly bizarre. Having used its final few budgets in government to target social welfare recipients, the Fianna Fáil Party has a brass neck proposing the motion and pretending to care about them.
Deputy Aengus Ó Snodaigh: The party’s attack of conscience is a little rich and a little late. If it is genuine and sustainable, it is welcome but I must wait and see if that is the case. Between 2008 and early 2011, Fianna Fáil imposed unnecessary, counter-productive and draconian cuts to social welfare payments which affected the lives of many people. They targeted jobseekers, carers, people with disabilities, pensioners, children and lone parents. The cuts were introduced to protect the wealthy and the money saved was ploughed into the black hole of bank bondholders, an issue the House discussed earlier, and used, in the main, to pay off rich German and French gamblers.
The social welfare cuts introduced by the previous Government have had a depressing impact on local economies, the result of which has been more job losses. We continue to see the horrendous effects of cuts, such as the abolition last year of the Christmas bonus, on those directly affected, whereas their effects on local retailers and manufacturers have not been fully quantified. Many shops closed and many jobs were lost as a consequence of this measure. Rather than protecting the Christmas bonus and using it as a stimulus mechanism, as Sinn Féin advocated, the previous Government chose to abolish it.
As to the impact of the cuts, a couple with two children who were struggling to survive on social welfare had their allowances cut by nearly 10% between 2009 and 2011. Over the same period, a lone parent with a three year old child had her allowances cut by €43, while carers and people with disabilities suffered similar reductions in income. While it was depressing enough to go through that period under the Fianna Fáil-Green Party Government, the new Government, which was elected on a platform that included a commitment not to cut social welfare, a commitment it repeated in the programme for Government, has proceeded to implement one of the most serious cuts to date. I refer to the decision it took in July to cut the household benefits package and fuel allowance, which will be a matter of life and death for many people.
The Fine Gael-Labour Party Government is pursuing a depressingly familiar approach. Between 1,500 and 2,000 avoidable deaths occur every year as a result of cold. The recent cuts in fuel allowance will undoubtedly increase this figure. The Sinn Féin amendment calls for their reversal before they seriously impact on health, specifically the health of pensioners and those who live alone or in substandard accommodation. The consequences of proposed cuts must be examined before they are implemented. This was not done in this case. Sinn Féin proposed an alternative to the Minister for Social Protection. Rather than impose cuts on the fuel allowance, she should have imposed cuts on energy suppliers such as the ESB before contemplating any other cut. She chose not to do so until after the cuts were introduced and has still not managed to address the issue in the ESB. The cut which was introduced in July and took effect in September must be reversed immediately.
Recently, at the launch of new research, Eamon Timmins of Age Action described the cuts in the fuel allowance as “literally a life and death issue for hundreds of older people who will struggle to heat their homes to a safe level over the coming months”. The research shows that during the winter of 2006-07, there were 1,281 excess winter deaths, of whom the vast majority were older people. The figure has increased in the meantime. I guarantee that the exceptionally cold conditions of last winter and the abolition of the Christmas bonus resulted in many more people being forced to leave lighting and heating switched off. The consequences for many will have been death or admission to an accident and emergency department.
Age Action sent out a questionnaire to a large number of people. Almost one quarter of respondents stated their homes were too cold. Even more startling was the finding that 51% of respondents went without other necessities such as food and clothing to pay their fuel bills. Anyone who canvassed in the recent presidential election or the general election in February will have noticed homes where lights were not switched on and the interior was almost as cold as the outside temperature. This was not because people want to live in such conditions but because they cannot afford to switch on their lighting or heating. At the very time the Minister was imposing changes to the household benefits package, the ESB and Bord Gáis were increasing their prices by between 20% and 25%. This is an additional factor.
The Minister stated that social welfare payments here are higher than in other countries. One of the reasons for this is that the cost of living here, including the price of fuel and other necessities, is higher than in other countries. For this reason, current social welfare rates must be retained to enable people to survive.
The Minister went further than anyone else in her efforts to demonise people on social welfare when she described unemployment as a “lifestyle choice”. Attacking the unemployed for being out of work allows the Government to shift on to others the blame for the state of the economy. Rather than accept responsibility for not having a job creation strategy and refusing to bail out the banks, it is pursuing easy targets, namely, the hundreds and thousands of people who rely on the little they receive from the State to get by. It is possible to tackle the annual budget deficit without cutting spending on social welfare but a political decision must be made to do so. While I support measures to address social welfare fraud and reduce the bureaucratic and human error which leads to overpayment, I will not accept any demonisation of those who are dependent on social welfare.
Contrary to what the previous speaker stated, jobs are not available and retraining and educational opportunities are limited for those who are living a soul-destroying life on the dole.  What we need are real sustainable jobs. These jobs are even harder to come by for people who are disabled, people with child care responsibilities and people aged 50 or over.
We need a change, but the Government does not seem to be bringing about that change. Hopefully, the amendment I am putting forward will be accepted. At the least, I hope it will be read by the Minister when considering any cuts to the social welfare rates in the forthcoming budget. Any cut will mean that people will be left to suffer the consequences, which may, as we know already, mean death.
Social welfare levels should ensure that people have sufficient income to live with dignity. They should also be designed to ensure the existence of effective pathways to education, training and employment, including access to quality and affordable child care and after school care for parents. The cuts to payments reduce peoples’ capacity to participate fully in society. For many, the cuts impact on their ability to heat their homes to a sufficient level and to provide adequately for themselves and their families For those who are unemployed, the cuts reduce their capacity to interact in a way which opens up training and employment opportunities. This results in negative physical and mental health outcomes, including depression, for many people.
The cuts also have a wider negative impact on disadvantaged communities. From a purely economic perspective, social welfare cuts also reduce spending in the economy, as those on low incomes need to spend all their money to survive day to day. Therefore, a cut to welfare levels takes money out of the economy, has a deflationary effect and cannot be seen as a euro for euro saving for the Exchequer. The decisions the Government makes regarding social welfare payments are its decisions and cannot be blamed on the ghost of governments past. On 9 March when I first spoke in this House, I reminded the incoming Taoiseach of the late Declan Costello and his Just Society document. Never before or since have the aspirations of the just and fair society been called into question. I again remind Members of this Government of this document. Never in the history of this State has there been a time when the least well off have been seen to be paying for the sins of the speculators. It is time we put our people first and ensured that their needs are a priority.
I appreciate fully that a person of the immense personal wealth of the Minister for Social Protection will find it hard to appreciate the hardship of a person or family living on benefits after a lifetime of living on immense salaries and drowning in personal wealth. It is very hard for a person like that to understand or comprehend why people will go cold this winter or why it was such a horrible decision to cut back on the fuel allowance, particularly considering the winter we had last year and the winter we possibly face this year. The Minister will certainly not go cold, but the people she and I and other Deputies represent will go cold. A significant number of them will go cold, but if one is drowned in personal wealth, one finds it hard to understand that.
It is a poor thing if the best any Minister can come up with is to look back on previous Governments and attack them. This Government has the ball in its hands and it is running the country. It is time it gave up this nonsense of looking back at the past. It must shoulder its responsibilities. It is running the country and it has its say now. It makes the decisions and can decide where cuts will be made. It must give up the nonsense of looking back all the time, because we are getting sick of that.
Deputy Seamus Healy: I agree with Deputy Healy-Rae. I am delighted to have the opportunity to say a few words on this issue. I condemn out of hand the conduct of the Government and its shameful attacks on elderly people. These shameful attacks will mean not just that the safety of elderly people is at risk, but that their lives are at risk. The actions of the Government and of the so-called Labour Party Minister for Social Protection in cutting back on heating, electricity and gas allowances will have a huge effect on elderly people over the coming winter. The cuts will not only affect their health, but unfortunately, elderly people will die as a result of the cutbacks. James Connolly and Jim Larkin must be turning in their graves when somebody who claims them as her predecessors will implement these savage and shameful cuts to allowances for ordinary elderly people.
The Age Action Ireland organisation recently set up a petition on its website which asks how low the Government can go. It states that hundreds of older people die each year in winter here because they cannot afford to keep themselves warm and that lives could be saved if the Government reversed its decision to cut their electricity and gas units. It goes on to call on the Government to reverse the cuts to the free gas and electricity units available under the household benefits package, given the increased hardship they will cause for older people on low incomes. Age Action Ireland believes that deaths will arise as a result of the savage cutbacks to allowances to elderly people.
Age Action Ireland goes on to say that this is a life and death issue for hundreds of older people who will struggle to heat their homes to safe levels over the coming months. The organisation has indicated that research which will be published in the next fortnight or three weeks by the Institute of Public Health and the Dublin Institute of Technology will show that during the winter of 2006-07, some 1,281 excess winter deaths occurred. Of these, the majority were deaths of older people. Some 1,216 were aged over 65. Age Action Ireland says that these people are dying because they cannot afford to heat their homes to a safe level. It is concerned, in particular, about older people who live alone on low incomes in older, poorly insulated houses and who are often in poor health or suffer with a physical disability.
These cuts are outrageous, particularly in the context of the €770 million the Government paid over to faceless and anonymous speculators in Anglo Irish Bank today. The choice was to pay these bondholders, speculators and bankers. The Government paid them, yet it imposed cuts on the fuel, electricity and gas allowances of elderly people. These cuts will have a serious impact on the health of these people and will cause deaths this winter. These cutbacks come at a time when gas and electricity prices have increased by 20% and 25%.
I call on the Minister, who is a Labour Party Minister, to reverse these cuts and to ensure that ordinary elderly people who had no hand, act or part in creating the recession are decently treated by the Government.
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