Tuesday, 13 December 2011
Seanad Éireann Debate
Minister for Social Protection (Deputy Joan Burton): I am conscious that, as we speak, momentous events are taking place in Europe, particularly within the eurozone, which will have enormous economic consequences for everyone. The impact of those consequences will probably far exceed that of the measures contained in the Social Welfare Bill 2011.
The Bill, which has been referred to the Seanad by Dáil Éireann, is an important item of legislation. It directly affects more than 1 million people who currently rely on social welfare payments that enable them to live their lives with a modicum of financial stability. It is also an important measure for everyone else in our community, including those whose PRSI contributions and taxes fund the system. The latter may not be beneficiaries at present but they could be at some point in the future. It is in their interests that the social protection system be developed on the basis of sound principles and be financially sustainable in order that it will be available to them in the future if they need to access it. In the meantime, social welfare spending sustains economic activity at a higher level than would otherwise be possible. This benefits workers and businesses and makes society more cohesive for the good of all.
Spending on social protection cannot be viewed in isolation. It takes place in the wider context of overall Government income and expenditure. As Senators are well aware, there is a gross imbalance or structural deficit in Government finances. That structural deficit is the single biggest threat to the continued provision of social welfare services on the scale and at the level that has been possible up to now. Reducing the deficit is the key challenge facing this country. We must bridge the gap between Government expenditure and revenue that is currently filled by borrowing. There is a shortfall of €16 billion in the Government’s finances. Unless the rate of borrowing is reduced, the burden of debt servicing will take up an increasing proportion of tax revenue.
The deficit is being addressed through various measures, including those designed to reduce expenditure on social welfare. In 2012, the deficit will be lower than it has been since the current economic downturn began. However, it will still be unsustainably large next year and the following year. As the Department of Social Protection accounts for approximately 40% of all Government expenditure, its schemes and services cannot be exempted from measures to reduce the deficit. Given that it is the biggest spending Department, it must play its part in that adjustment. I take this opportunity to stress that next year that Department will spend €20.5 billion which, compared to the figure for the current year, represents a reduction in spending of 2.2%. When I became Minister, I inherited a requirement for a budgetary adjustment in respect of social protection which was almost twice that of the figure, €475 million, which has emerged as the final adjustment. My Department’s spend of €20.5 billion is both significant and important, not just in the context of the individuals and families concerned but also to every town, community and shop throughout the country.
In considering how best to make the adjustment to which I refer, the Government made three important policy decisions. First, we decided to limit the adjustment in social protection expenditure to €475 million, or just over 2% of the Department’s spend. This compares very favourably with the reduction of €810 million in 2010 and the reduction of €515 million in 2009, when the previous Government was in power. This was a particularly good outcome given that current expenditure was reduced by €1.45 billion in Budget 2012. Less than one third of that reduction is coming from the Department of Social Protection, although it accounts for 40% of the expenditure of Government.
Second, we preserved the primary weekly rates of payment. This is the first time in three years there was no cut in weekly payment rates. In the past two years, the amount paid to couples fell by more than €27 per week and the amount paid to single people fell by more than €16 per week. That is a cumulative reduction of 8%. I am proud of the fact that there was no across the board cut this year for people who had already lost so much. They have certainty regarding their core primary income this year.
It is simply impossible to reduce spending on social welfare without reducing entitlements for some people. Having protected the basic weekly rates, the burden had to fall in three areas — expenditures other than payments to individuals; payments to people who have income from employment; and additional payments over and above the primary weekly payment. I have no desire whatsoever to make such cuts and if there was a way of reducing expenditure without bringing forward such measures, I would gladly have opted for any such alternatives. We have minimised, in so far as is possible, the spending reduction in the Department and within that, we have targeted the reductions on additional payments over and above the primary weekly rates. I recognise that every reduction will be felt by those affected. However, the alternative was an across the board cut in payments to people who have no other income apart from their primary weekly social welfare payment, including pensioners, and I was not prepared to do that.
The budgetary measures that directly affect child related payments are measured and the rates of payment continue to ensure the needs of families are met. The standard rate of child benefit will remain unchanged at €140. There will be no reduction in child benefit for the first and second child.
I find it amazing that Sinn Féin is so critical of this measure when one considers child benefit in the North is just €67.70 a month for the second and all other children. We will still be paying €148 a month——
Deputy Joan Burton: ——even after this budget, and things look set to get much tougher in the North where it is estimated that the loss to people on social welfare benefits in the North is likely to be as much as €700 million a year by 2014.
Deputy Joan Burton: On the savings from the five specific measures, first, I am reducing from 60% to 15% the rebate for companies which make staff redundant. Second, the fuel allowance in future will be payable for 26 weeks, a reduction of six weeks. The level of the allowance and its duration has greatly increased in the past ten years. The scheme is unsustainable, given the increase in the numbers of people. People sometimes believe fuel allowance goes only to pensioners and people on invalidity or disability benefit. It also goes to people who are long-term unemployed and to all lone parents. It goes to a significant number of people, therefore, and it is expensive. It is important but it is expensive. We will be paying the fuel allowance for the coldest six months of the year, namely, mid-October to mid-April. It always has been the case, and will continue to be the case, that a person in difficulty with fuel or energy costs can go to their community welfare service. That service has now been integrated into my Department, and the community welfare service is ready to assist people in difficulty.
Third, I am reducing child benefit to €148 for the third child, while the rate for the fourth child is reduced to €160. In addition to generating savings, this will facilitate a planned reform of the overall system of child income supports which will include a standard universal payment for each child, supplemented by a further payment for low-income families, regardless of whether they are in employment.
Fourth, I am increasing the minimum contribution to rent or mortgage interest supplement by €6 a week for a single person and €11 a week for a couple. I am determined to try to get value for the €500 million the Department is spending on rent supplement each year. I also intend to reduce rent limits, where appropriate, to ensure state support for rent supplement tenants does not give rise to inflated rental prices.
Fifth, the amount of earnings disregarded for the purposes of the one parent family means test will be reduced from €146.50 per week to €130 per week next year. I recognise that this will be difficult for the people parenting on their own who are affected by this measure. However, given the choices before me, it is appropriate to target savings from those lone parents who have employment income of more than €130 per week in addition to their social welfare payment. Those with employment income of less than €130 per week, and their social welfare payment, and those with no employment who are relying solely on their social welfare payment are not affected.
It is not just about saving money. The changes must be also consistent with moves to reform the social welfare system to make it more responsive to modern conditions and to make it financially sustainable. We inherited a social welfare system on independence from the British poor law system and, largely, we have continued with that rather than having fundamental changes which examine people’s opportunities and options throughout their life and use the State resources to maximise what people can do with income support.
A core principle of sustainable social protection systems in advanced economies is that citizens receive benefits in proportion to their contributions. Some of the changes I am introducing today in the area of pensions put this principle into practice. Another principle is that we should gradually move towards a system where everyone would have an entitlement to one weekly income support payment only, with no special arrangements or top-ups for particular groups. It is no longer possible to have a social welfare system where some people get more than one primary weekly payment if we want to avoid reducing the level of weekly payments generally. We have delivered on our promise to retain core rates, but we are discontinuing entitlements to certain concurrent or additional payments.
Since coming into office my priority has been to ensure that job readiness for the unemployed and keeping people in employment is at the top of the agenda. The introduction of the national internship scheme, JobBridge, was a key step in providing new pathways to employment or re-employment and more than 3,000 people are now on the scheme. The Department will be spending €977 million on employment supports, including community employment schemes, in 2012. That is up from €882 million in 2011.
For the information of Senators, the FÁS labour services and the community employment schemes will come within the remit of the Department from 1 January next. We will receive the budget for next year but we do not have operational control over the community employment schemes until 1 January.
As Senators are aware, I will be introducing changes to community employment schemes to make them more effective and efficient. I recognise, and I know from my own work, as I am sure do many Senators, that community employment schemes provide an important and valued contribution to social employment and training for unemployed people, and to delivering services to communities throughout the country. The Government is fully committed to the protection and development of community and social employment initiatives. We will seek value for money reviews of schemes emphasising good outcomes and experience for participants. The national training fund will provide €4.2 million for training on community employment schemes in 2012. In addition, SOLAS will continue to provide access to its training programmes for CE scheme participants. SOLAS is the education side of FÁS and will start operations from 1 January. I am happy to say that an extra €20 million has been allocated for activation, which will play a very important role for both community employment schemes and in the education sector.
I want to focus attention on the particular measures that are contained in the Bill. The Bill will give legislative effect to some of the social welfare measures announced in the Budget Statement of 5 December 2011, which are due to come into effect from 1 January 2012. The budget announcement included a number of other measures which are not provided for in this Bill. Some of these measures relate to non-statutory schemes and do not require legislative amendments. Other measures will be implemented through regulations and through legislation to be brought forward early in 2012.
I would now like to outline the main provisions in the Bill. Section 3 provides for the abolition of entitlement to payment of disablement benefit in the case of assessments of loss of faculty amounting to less than 15%, with effect from the beginning of January 2012. This is for new cases. Existing recipients of disablement benefit, who have qualified for payment before 1 January 2012 on the basis of assessments of less than 15%, will be protected.
Section 4 provides for discontinuing the current entitlement to the payment of a half-rate qualified child increase, where the spouse, civil partner or cohabitant of the beneficiary has weekly income in excess of a prescribed amount of €400 per week in the case of new claimants of carer’s benefit, contributory State pension, transition State pension and invalidity pension, with effect from the beginning of July 2012. This section also extends the reference to the spouse of the beneficiary, in the case of similar provisions applying to the incapacity supplement scheme, to include a reference also to the civil partner or cohabitant of the beneficiary. Existing claimants in receipt of the half-rate QCI will not be affected.
Section 5 provides that the implementation of certain provisions of Schedule 6 to the Social Welfare Consolidation Act 2005, relating to changes in the entitlement conditions for contributory State pension and transition State pension with effect from 6 April 2012, will not apply to existing recipients of those pensions. Paragraph 3 of Schedule 6 provides for the increase in the minimum number of paid employment or self-employment contributions required to qualify for the contributory State pension and the transition State pension from 260 to 520, with effect from 6 April 2012.
Section 6 provides for increasing the number of qualifying contributions required to qualify for the widow’s, widower’s and surviving civil partner’s contributory pension. Existing pensioners will not be affected by these changes. I will be proposing an amendment on Committee Stage to change the section to increase the number of paid PRSI contributions required to qualify for these pensions from 156 to 260 from December 2013.
Section 7 provides for the discontinuance, with effect from January 2012, of the transitional measures which enable the one-parent family payment to continue to be paid for a period of up to six months where a claimant’s weekly earnings exceed €425. Existing one-parent family payment recipients who are benefiting from these transitional measures at the beginning of January 2012 will continue to receive the transitional payment for the unexpired balance of the six-month period.
Section 8 provides for the discontinuance of the payment of the grant for multiple births under the child benefit scheme, with effect from 1 January 2012. This section also provides for the phased alignment of the different rates of monthly child benefit payable according to the family size into a single rate. The rates payable to the third and subsequent qualified children will be reduced with effect from 1 January 2012 and further reduced from 1 January 2013, when there will be a single rate of €140 for each qualified child. That compares with the UK, where the rate for the first child is €100 and the rate for the second and all subsequent children is €67 per month.
Section 9 reduces the period for backdating claims to long-term contributory pensions such as the State pensions, the widow’s, widower’s and surviving civil partner’s pension schemes and the guardian’s payment, from up to 12 months before the claim was made to six months. The new backdating arrangements will apply to claims for such payments made from the beginning of April 2012.
Section 10 amends the rules relating to the assessment of means for certain social assistance payments, including the abolition of the income disregard for income from employment by the HSE as a home help in the case of all social assistance payment schemes, and increasing the proportion of income from farming and fishing assessed as means from 70% to 85%, for the purposes of the farm assist and jobseeker’s allowance schemes. These amendments apply to both new and existing claimants of the relevant schemes, with effect from 1 January 2012.
Section 11 provides that for the purposes of calculating means for the one-parent family payment, the weekly earnings disregard is being decreased from €146.50 to €60 over a five-year period, commencing from 1 January 2012. The annual reductions in the weekly disregard will apply to both new and existing one-parent family payment claimants.
Section 12 discontinues, for new claimants, entitlement to receive a weekly social welfare payment where a person is also participating on a community employment scheme. With effect from January, new entrants who participate in the community employment scheme will no longer be entitled to receive simultaneously both a community employment allowance and a proportion or all of their social welfare assistance payment. The introduction of this measure is part of the move towards the introduction of a single working age assistance payment, as it removes discrepancies in the existing system which enables individuals in receipt of certain social welfare payments to retain all or a proportion of these payments, while simultaneously receiving the community employment allowance.
Section 13 provides for changes to PRSI by extension of liability to share-based remuneration. In the last budget, share-based remuneration was brought within the charge of PRSI. The effect of the changes is that share-based remuneration is subject to employee PRSI only.
Section 14 provides for the abolition of employer PRSI relief on employee occupational pension contributions, with effect from 1 January 2012. Employer relief in respect of employee pension contributions had been reduced to 50% in the last budget and we are now bringing that to 100%.
It is vital that the Government secures economic recovery in the country. It is not possible to stabilise and reduce public spending without reductions in social welfare spending. If we do not make these changes now, we risk making the economic situation far worse for everyone, including social welfare recipients in the long term. Each measure that reduces the support we can give to those in need is difficult to make. When we need to consider the future of our children and the long-term economic prosperity of the country, these hard choices unfortunately have to be made. We have done our best to protect the most vulnerable members of our society by maintaining the primary weekly social welfare rates. This is a momentous achievement in the current climate.
Even after these savings, this Government will spend €20.5 billion on social protection in 2012. In the future that €20.5 billion will be spent on developing a culture of enablement. In that way, those who find themselves having to rely on social welfare, particularly during their working lives — roughly from leaving secondary school to retirement — will find a suite of options in education, training and work experience which will ultimately help them to become fully financially independent. That will fulfil the social contract underlying the welfare state — that people of working age contribute in order that we can provide an income to support children, retired older people and those of working age who fall ill or lose their jobs. We must utilise the €20.5 billion to do positive things, thus enhancing the social welfare state and emerging from this difficult recession during which hundreds of thousands have lost their jobs. We will emerge enhanced and more robust, with better economic opportunities to ensure people’s economic independence. In addition, we will provide strong support for those who need to rely on the Department of Social Protection.
Senator Paschal Mooney: Cuirim fáilte roimh an Aire. I compliment the Minister, as I would any Minister, who is fighting at the Cabinet table for her departmental Estimates and the public expenditure proposals leading up to and including the budget proposals. I commend her for successfully negotiating a considerable reduction in a cut of almost €1 billion originally being provided for. That is the good news.
I know it is the convention to say the Minister looks forward to hearing views on the measures contained in the Bill, but is the Government listening? It is somewhat ironic that, on the one hand, the Minister for Social Protection has commended the measures to both Houses and, on the other, her recently elected constituency colleague who has only been here for six weeks did not at least see fit to give her the courtesy of supporting her very first Social Welfare Bill. There are obviously some questions to be asked of the Labour Party’s ideological approach to the Bill. As someone who canvassed in the Dublin West by-election, I was told on the doorsteps that “If that fellow Nulty gets in, he will be gone off the ship within weeks.” At the time we thought it was a joke, but the joke is on the electorate of Dublin West.
Senator Paschal Mooney: The reality involves cuts to disability allowance for young people, fuel allowance, child benefit, jobseeker’s benefit, back-to-school allowance, one-parent family allowance and pension eligibility. In addition, the farm assist scheme has been hit and the redundancy rebate reduced.
Senator Paschal Mooney: The comment has been made that this is inherently an anti-rural budget, both specifically and generally. I want to focus particularly on community employment schemes. A colleague in County Meath, Councillor Nick Killian, has written to the Minister of State, Deputy Shane McEntee, and Deputy Halligan about a cut from €1,500 to €500 to the employee’s allowance for training and maintenance. Councillor Killian’s letter states: “For our child care community employment participants who were studying level five FETAC certified child care courses, which is now obligatory, FÁS will not have sufficient funding to pay for these courses”. He was also informed that FÁS had advised the manager of the scheme that further recruitment was banned until further notice. As someone with a long interest and who has had active involvement in child care and currently holds the post of chairman of the County Leitrim child care committee, I am very much aware of how the proposed cuts will impact. I am concerned that it is Government policy, as outlined by the Minister of State in the Department of Children and Youth Affairs, that staff working in child care should be suitably qualified. As regards implementation of this measure, it is particularly sad that those who undertake the level five FETAC certified child care course, in the main, find gainful employment. In the context of trying to create jobs, therefore, it seems this is one area in which the Minister is denying people employment opportunities.
So much material has come in during the past week from people who are telling their individual stories. In the overall context of budgetary analysis and economics, it is how it impacts on the citizen that resonates throughout the debate. A gentleman on a community employment scheme trained a class of 16 on the European Computer Driving Licence course funded by the Department of Social Protection. He is currently teaching two children how to use the Adobe suite for graphic design work. Three weeks before Christmas he has been left unsure if his centre will reopen in the new year. He is absolutely certain that the assistance for the IT tutor’s training he is receiving will be cut.
Some 65% of the country’s poorest children live in one parent families. A cut of an additional €6 is impacting adversely on them concerning rent supplement. A minority of one parent families with three or more children will suffer a loss of fuel allowance. New community employment scheme applicants will no longer be able to retain the one parent family payment and their salary from participating in such schemes.
Does the Minister have any observations to make on the ESRI report mentioned in this morning’s newspapers which addresses the issue of one parent families? The conclusion seems to be that it is acting as a disincentive to returning to the workforce. That is a rather sensitive issue and, admittedly, it was a newspaper take on the report. I would like to have read the report in its entirety, but I am sure the Minister is up to speed on the matter and may have some comments to make in that regard.
There were question marks over people who were cohabiting who, under the civil partnership legislation passed by the Oireachtas last year, may find themselves in an anomalous position. They may be in dire financial straits as a result of being unaware that under the civil partnership legislation, cohabiting couples must go before the courts in order to share out their assets. By continuing to cohabit, if they come under the terms of the legislation, they may find themselves without redress to the courts. This morning’s newspapers reported a new dimension on the matter which suggested cohabiting couples would need to address their own situation.
The Minister made great play of the VAT hike. Senator David Cullinane took umbrage at Sinn Féin being mentioned, yet again, in the House as regards its involvement in Northern Ireland. The Minister said: “The mother of the child from Dundalk will still be getting a lot more in child benefit than the mother of the child in Newry, after this cut.” I argue that the standard of living in Northern Ireland and the United Kingdom generally is much lower in relative terms than in this country. This is still one of the most expensive countries in Europe, especially in the context of the proposed hike in VAT from 21% to 23%. I know it is not within the Minister’s purview, but the impact will be felt by the very people she is seeking to support. Some may feel, as the Minister for Finance, Deputy Michael Noonan, pointed out, it would not necessarily hit poor families. I presume, therefore, the Government believes poor families, or those who are economically challenged, do not buy toilet rolls, toothpaste, towels, soap, shampoo, detergents, pet food, children’s toys, exam papers, cooking foil, fruit juices, spectacles, false teeth or even — I hate to say this — coffins. All these items will be affected by the VAT rise from 21% to 23%. If the Minister was living in a Border area, as I am, she would know that retailers are shivering in their boots. It is not from the weather but from the prospect of the cupboard being bare in the immediate aftermath of Christmas and the new year, when these VAT hikes come in, particularly in Border counties.
The Minister will be aware of the various submissions made but in passing I should at least acknowledge them, including that from the Society of St. Vincent de Paul. I hope the country will support them in their efforts to increase resources this year among others. The Society of St. Vincent de Paul refers to lone parents, arguing that until the national employment and entitlements service and SOLAS are in place, prioritising the needs of lone parents, the status quo for the age limit with regard to the one parent family payment, the earnings disregards and the position of lone parents who undertake community employment schemes must be maintained. The society made other references regarding the budget and various measures.
I am pleased the Taoiseach referred to what he termed as “pausing” the proposed disability allowance cut for those aged between 16 and 18, and he has kicked it to a committee. The Minister is aware that my colleague in the other House, Deputy Cowen, raised this issue and was very trenchant in his opposition to it, as I am. Others are also concerned that it should be kicked to the Civil Service to decide on a very sensitive area. I would have thought the Minister could make the decision and it was a little like a re-run of Fianna Fáil’s debacle in withdrawing the medical cards. At least we had the good grace to reverse the decision within a number of days. This seems to be only extending the pain on this issue.
Senator Fidelma Healy Eames: The Minister is welcome. We must face up to the reality and we all knew the 2012 budget would be very tough. I do not know how we could expect the Department of Social Protection to escape having to make cuts while other Departments would implement them. I compliment the Minister on being as fair as she can while acknowledging that adjustments must be made in the area of disability. I understand the overall budget cut is €475 million, or approximately 2.2%.
We must start with an overarching philosophy when we consider social protection. We must be fair and equitable, protecting the vulnerable and ensuring there is an incentive to work and to contribute. I am delighted to hear one statement from the Minister, which is the way forward, and that is that the Department of Social Protection must move towards a culture of enablement in the future and fulfil its social contract; it is there not to give hand-outs but to give a hand to people when they need it. Of course, it should also protect the vulnerable, who may never be able to work. That is the way forward.
Having said this, there are some anomalies and other issues I would like to raise for clarification. The key point in the Minister’s announcements is that there will be no cut in rates to primary or basic weekly social welfare payments, which is significant. What must be clarified for the public is the difference between primary and supplementary payments. Supplementary payments had become the norm and people still see them as primary, or basic, payments. The Minister is making that distinction but it should be teased out further as some cuts have been described as sneaky. The Minister has clearly indicated that primary rates would not be cut and that must be acknowledged as positive. In the programme for Government we promised that we would maintain primary payments.
We can consider other measures, such as child benefit, which has been maintained. I would be the first to argue that all children should be equal. I have two children and receive child benefit for them. If I had three or four children I would not expect any more for the others. For parents, the major costs are taken on board with the first child and not necessarily the third or fourth child. That move was correct. I am delighted that the Minister has maintained the carers’ allowance as carers, like home help, work for that welfare payment. It is very important.
Some issues have been raised with me with regard to the carers’ benefit being means tested against the family income supplement. As I understand it, the home help payment is in a similar position. Will the Minister clarify whether the home help payment is also being means tested against the family income supplement? I know of one case which pulled at my heart strings until I considered the specifics. It involves a family with six children, aged from 17.5 years to 15 months, with the mother a full-time carer of a four-year-old with Down’s syndrome. The case was shared with the Minister in the Dáil. The mother is outraged because the care of the four-year-old is being means tested against the family income supplement and she is losing €153 per week. I examined the case because the woman was very upset and was crying on the phone; she felt she was being penalised for having a four year old disabled child. Her overall welfare payments were in the region of €49,000 and they are now at €41,000.
Arising from this we must consider what we, as a country and nation, owe our citizens. People need to be clear on this. In the case I mentioned, the father in the family is working, and his hours are down to 34 hours a week, which is close enough to full time. He earns €400 per week. I contacted Social Justice Ireland to see if this woman was threatened by poverty. I learned that the poverty line figure for this family would be €42,000. Taking in the welfare payments currently available and the additional income, the woman and her family are protected. They are not at risk of poverty. I will put her question to the Minister. Does she feel the disabled child is being unfairly treated as the carers’ payment is being means tested against the family income supplement?
I am delighted to see that the old-age pensioner has been protected, although it is regrettable there has been a six-week reduction in fuel allowance. Nevertheless, many measures have been protected, such as free travel, which means so much to pensioners. I have been told as much. There is also a free television licence and a living alone allowance. We have also protected elder care and social alarms etc. in the environment budget.
I am concerned about the redundancy payment measure. How will it be monitored with regard to the employer? On 1 January this will be introduced and the redundancy rebate will decrease from 60% to 15%. If an employer is worried about the bills for next year, would he or she be likely to let go people before then? How does the Minister plan to monitor the measure? There is a reduction of €1,000 in the training grant for the community employment scheme but will that threaten the legality of the scheme? Will people still be able to afford to pay PRSI? It has been suggested that the cut is threatening the schemes.
I will express some disappointment. I expected to hear an announcement in the budget relating to the long-term unemployed and the part-time jobs programme which Fr. Séan Healy shared with us. He indicated we could take 100,000 off the register for €150 million through a form of community employment or internship scheme. Will the Minister comment on this as it relates to the culture of enablement about which we have spoken?
I am delighted the decision on the disability issue is being reversed for those aged 18 to 25, as like was not being compared with like. A disabled person is not equal to a young unemployed person without any disability. I would be happy to see the full payment go to the parent. I have a 17-year-old child who is not disabled but I would not like to see him with a weekly income. I have relatives who have someone in the family with a disability and the parent found that threatening too. When one has a child with a mild learning difficulty, he or she is well able to get on with life in many respects, but I am not sure about taking responsibility.
The Minister is reducing disability benefit and a doctor must assess that there is at least 15% incapacity. How will this assessment figure be reached? I worked in the field of education and disability. Is the Minister referring only to physical disability?
Senator Fidelma Healy Eames: That is an important clarification. I accept the Minister will attend the House again on Thursday when we will be able to iron out some more anomalies. I would be delighted if she responded to my question on redundancies from community employment schemes and what we owe in terms of payments. I refer to the family that is very concerned.
Senator Mary Ann O’Brien: I thank the Minister for coming to the House. I do not believe for one moment that she has done her best to protect the most vulnerable members of society. The Government had two choices when looking at the making of cuts in the recent budget. The first was to cut services to the fragile and the poor, the very group with the weakest voice. The second was to cut public sector pay or pensions and improve services to the poor and the weak. We know in which direction we chose to go. However, I must move on. I forgot that we should not mention the Croke Park agreement. I am not allowed to mention it——
Senator Mary Ann O’Brien: The Government is allowing the payment of increments to continue, at a cost of approximately €250 million. Since 2007 they have amounted to €1.26 billion. I assure the Minister that in the private sector I am not aware of any increments being paid.
Regarding the Minister’s proposed changes to disability allowance, previously the word “pause” was used. That word makes me feel very nervous because if a machine in my factory pauses, I have engineers to fix it and it will move again and everything will go back to normal. In respect of the events of the last week, I would have much preferred if we had used words such as “absolute”——
Senator Mary Ann O’Brien: ——”gone”, “finished”, “Sorry, made a bit of a mistake.” We should tear up the budget, put it in the wastepaper bin and move forward because we should not have touched any of the people mentioned. However, I agree with the Minister’s proposal to make the age of payment 18 years rather than 16 because, like Senator Fidelma Healy Eames, I do not believe it is correct to give 16 year olds €188 a week, but I strongly urge the Minister to compensate families for the loss of income that such a change to the age of entitlement will cause. The amount involved, approximately €70, is a lot of money and should be given to the parents.
I am strongly opposed to the blanket cut proposed for the 18 to 24 year age group. The Minister is using too blunt an instrument to save a relatively small amount of money — approximately €7 million. Such a cut makes no provision for differing levels of ability or dependency within the age group. Perhaps the Minister might explain the rationale to us. Let us consider the variations in disability. For example, I could be completely blind — I know I am not supposed to use those words — and need a dog to walk around, as opposed to needing a book with big print, or I could be severely developmentally delayed. It is difficult for me to use the latter term; however, because I had a little boy who was severely handicapped, they are the words I use. He had the same entitlements as someone who was mildly developmentally delayed. We need to stop adopting a blanket approach in looking at the issue and start seeing how we can pick out the more vulnerable. I, therefore, strongly encourage the Minister to examine the vast array of people covered by disability allowance and thus the huge variations in ability and dependency.
We were told that the changes were designed to bring the age category into line with that for jobseeker’s allowance, which I love; it is wonderful. Why are young, disabled people in receipt of disability allowance prevented from taking up places on any of the labour activation programmes announced by the Government to date such as JobBridge? If one has a disability, one is not allowed to apply for a place under the JobBridge programme. If one wants to go back to college, one is not allowed to avail of the Springboard programme. Why are we discriminating against people with a disability?
I wish to bring the case of the Ryan family in Tipperary to the attention of the Minister. In brief, the details are as follows. This is a family with a four year old boy suffering from quadriplegic cerebral palsy. He is profoundly deaf, unable to speak and was born with a hole in his heart. He is set to lose €9,152 a year because of hidden budget cuts to family income supplement. The Irish Examiner has highlighted the story of this little boy who is still being looked after by the Jack & Jill Foundation because the Health Service Executive which was supposed to take the babies from us after they reached four years of age will not provide a small amount of money to provide the care that he needs —€300 a week — despite numerous letters to it from the family. If the Minister knew the people in question, she would realise that even to get the time and the strength to write a letter is nearly beyond them. They can secure no action, despite letters and having had four meetings with the HSE. The Ombudsman is now involved. I have never heard of the Ombudsman becoming involved before. The boy’s father is a porter in an hotel in Limerick. I am sorry to give personal details, but I will not name him. He is epileptic and as such cannot even drive to work. He has to get the bus. I nearly went berserk when I heard that he could not even get a travel card. I provide these details in order to explain to the Minister what we are doing to vulnerable people. Their income is down by nearly €10,000 because of the cuts made in the recent budget. I appeal to her to move back to the word “pause”; let us throw out the budget and give everyone a Christmas present. She should go back to the Dáil and tell us not to bother setting up a committee and wasting time but to put the people concerned back where they belong. If she sees the Minister for Health, Deputy James Reilly, and has any influence on the HSE, she should please hear us out.
I have one last word to say as an employer. This is only a small point because I am shaking because of what I feel for people with a disability. People in business are strong. Things are not great in the private sector; we are having a tough time. I built a new little factory last May and was hoping to take on a few new people next year but the rebate figure that will apply to payments paid to employees is decreasing from 60% to 15%. That provided such an incentive. I accept it sounds difficult, but if I was going to take on people and things did not go well with my new factory and the airlines did not take my desserts and if I had to put the poor souls back into the dole queue, at least I would have a rebate of 60%. Therefore, the proposed change is a mistake and it will not help to create new jobs. It will make employers even more frightened than they already are.
Senator Marie Moloney: I thank the Minister for coming to the House to debate the Social Welfare Bill. I have no doubt that she must have the most difficult job at the Cabinet table. The country has suffered the greatest economic crisis in living memory; therefore, the budget was never going to be easy. There is no hiding from the fact that the country and the Government must take and have taken very difficult decisions. Delivering such decisions is not an easy task, one I know that was not taken on lightly. The core aims of job creation and introducing reforms, fairness and balance were at the forefront when trying to make cutbacks.
I am very much aware, as are most people in the country, of the pressures on the social welfare budget. We must take into consideration that 40% of the overall Exchequer budget allocation goes on social welfare. By its nature, social welfare assistance is provided to help those in need. Therefore, no matter where cuts are made, someone is going to be hurt. Even though the cuts may amount to slightly over 2% of the social welfare budget they will have an effect on many people.
I am delighted the Minister was able to deliver on the commitment in the programme for Government not to cut primary social welfare payments. Many people were waiting with bated breath, afraid she would not be in a position to honour that commitment.
I am also pleased the Minister did not cut child benefit for every child across the board. The Government favoured targeting support at low income groups through other measures, such as family income supplement. A value for money report carried out by the Department of Social Protection argued that better outcomes could be attained by rationalising current programmes in favour of providing more consistent assistance to lower income families. In the last budget, the Fianna Fáil-led Government made €873 million worth of cuts to social welfare spending, including a €10 cut to child benefit across the board. Fianna Fáil also proposed to slash social welfare spending by an additional €665 in 2012. The current Government was unwilling to impose such a devastating level of cutbacks at a time of such economic difficulty. The Government limited the adjustment to social protection spending to €475 million, which is slightly over 2% of the Department’s spend in 2012.
The broader question of reform of child income support is being considered by the advisory group on tax and social welfare, which will report early next year. I know Sinn Féin will complain about cuts to child benefit. I ask Senators to note the level of child benefit under a coalition which includes Sinn Féin in Northern Ireland. It is much lower than ours.
While many cuts have been made in social welfare payments, we must also focus on the positive aspects of the Bill. One is that no cuts have been made to the carer’s payment. The carer’s rate will be maintained and the half-rate carer’s allowance will continue to be paid to people who are full-time carers and are receiving another social welfare payment. This is positive. It shows the Minister values carers and recognises the invaluable contribution they make to society. Were it not for carers many people would be in institutions or long-term care facilities, and this would have a profound effect on the budget of the Department of Health.
New applicants for carer’s allowance will be disappointed by the removal of the household benefits package. However, if cuts had to be made to carers’ payments I am glad they were made in this area rather than in the basic rate of payment or to the respite care grant of €1,700, which is invaluable to a carer after a long year of caring. I had hoped the Minister could have looked at the possibility of retaining the free telephone rental allowance for carers. The telephone is essential for communication between a carer and the person being cared for, where they do not live together. I hope the Minister will revisit this area when times get better and the country is back on its feet, with a view to putting that allowance back in place. It is time a carers' strategy was put in place. Whle this is not the responsibility of the Minister, I ask her to use her influence to speed up the introduction of such a strategy.
I note the change in jobseeker’s benefit, which will be based on a five-day week from July 2012. This will have an effect on seasonal and part-time workers. It is regrettable that the Minister had to resort to this measure. I know cuts must be made and I am glad she was able to retain the basic rate at €188 per week. By reducing the number of days from six to five, the basic rate of €188 is now divided by five which gives a higher daily rate of pay. Therefore, the loss may not be as great as jobseekers feared. We must take into consideration the huge jump in the number of people working in casual and part-time employment and claiming jobseeker’s payment in recent years, which obviously puts an increased demand on the payment.
I am pleased the Minister listened to people and heard what they were saying about the disability allowance. She is a Minister of compassion and is big enough and brave enough to admit that this was a wrong decision. She is dealing with the issue and helping people who are most in need. In this House we had cross-party agreement that this was a retrograde step and many of us had grave concerns with regard to people with profound, severe, multiple and ongoing disabilities being affected by the change announced in the budget last week.
Many parents to whom I spoke were in favour of the domiciliary care allowance being extended to the age of 18, at which stage their child becomes an adult, and at that stage being assessed for an income in their own right. Many children with mild and moderate disabilities are going through mainstream education, and I am delighted about that fact. Many parents do not want to see their children, at 16 or 17, being considered disabled. They know they have a disability, but they would like their children to be treated with equality and in the same way as any other able-bodied person without a disability. Many young adults with a mild disability will go on to carve out careers for themselves. They will go on to third level education and will be treated as equal to everybody else. This however is not the case for those people with profound disabilities. They will never go out to work, never marry and never have children of their own.
While I know that the disability issue is under review, this measure has been removed from the Bill, and I hope it will not return. I implore the Minister to make no cuts to the disability allowance to people with profound disabilities.
The previous Government started the process to bring the one-parent family payment in line with those of other countries and the Minister has continued with this measure. However, the level of child care in other countries is more enhanced than in Ireland. I ask the Minister to invest in child care facilities. If that were done, returning to the workforce would not be such a daunting issue for people with young children. Many lone parents are looking to their future and are probably feeling quite scared that they will not be able to afford child care. Many are not aware of the community child care subvention scheme. That should be highlighted to make lone parents aware of it.
Due to the change to the redundancy rebate scheme many people are now worried that they will not get their redundancy payment, as some employers may say they cannot pay it. Some small businesses are very worried that when they have to reduce their staff they will find it very difficult to pay 85% of the redundancy payment. I appreciate that the Minister is trying to deter large multinational companies transferring their business to other countries. We were paying for companies to move their jobs out of this country. I trust this measure will be a deterrent to large companies moving their business to another country, thus keeping jobs and employment in this country. What looks like a bad measure may end up being a good measure which will save and retain jobs in this country.
I am disappointed the Bill does not contain a measure to help self-employed people. I had hoped the Minister might give them the opportunity to pay a full PRSI contribution, which would entitle them to benefit, because things are extremely hard for the self-employed.
Senator David Norris: I think it more appropriate to extend sympathy to the Minister than to welcome her to the House, although I accept that she has fought a sterling battle in this area. The title of her Department is a misnomer. It has not acted in terms of social protection but in terms of social devastation. I am reminded of the United Nations designation of areas as “safe zones” during the Balkan war. Inside those, so called, safe zones lives were destroyed and people were killed on an extraordinary scale. I am afraid this is what is happening here. I do not blame the Minister personally for this.
The Bill must be seen in the full economic context, but that is where the problem is. Governments all over Europe, including ours, are once again putting the protection and preservation of the system above the welfare of the people, and that is the wrong way around. This will continue to be the system, as I have said many times in the last number of years.
The Minister said, “A core principle of sustainable social protection systems in advanced economies is that citizens receive benefits in proportion to their contributions.” What happened to socialism? Is the Minister a member of the Labour Party? I understood the socialist principle was, “from each according to his capacity and to each according to his need”. What the Minister said seems to reverse that principle. It is an extraordinary statement for a Labour Party Minister to make and puts the entire thing in context.
For many years I have fought when there have been conflicts around different entitlements. I remember raising an Adjournment matter in the House on the issue of a very gifted blind student whose blind pension was reduced because he was receiving a university grant while doing a PhD. I thought that was Dickensian in its stinginess, but it is the kind of principle that runs right through this Bill. I sympathise with the Minister. In many ways we are lucky to have her in her position, because she has achieved quite a lot. However, the entire system is completely and utterly corrupt.
Too often, it is easy to lose sight of the human aspect of these issues due to the technical language used when dealing with this area. However, the Minister has the capacity to deal with such issues. Thank God, people such as Senator Mary Ann O’Brien, who can speak from the heart on these issues, have been appointed to the Seanad. She is someone who has been successful in business, even in difficult times. She also understands, through her own tragic experience and through the Jack and Jill Children’s Foundation, how these changes impact on families and extends that understanding to the wider community. Barnardos has pointed out that this budget will push many more children into poverty and TASC has stated that any measures that further reduce the living standards of low income groups will not only have an adverse impact on individual households, but that such measures will also reduce people’s spending power in the local economy.
We cannot slash, tax and cut our way out of a recession. Every economist knows this, yet we are still doing this, at the behest of the European Union which got us into this mess. We are also repaying the French and German banks. This Bill is the human impact of the appalling mistakes that have been made. One of the people centrally involved in this is now being rewarded with a 50% increase in his salary, through being appointed in Europe against the wishes of many Irish representatives. I would like to pay tribute to that courageous woman, Nessa Childers, for pointing this out.
Demand for the services of Focus Ireland has gone up by 18% this year. What does this tell the Minister? The Society of St. Vincent de Paul has seen a similar increase in demand. The most common presenting issues between 2008 and 2011 have been requests for help with food, fuel, education and housing costs. These are basic requirements. Forget about cherishing all the children of the nation equally; allow them to survive. I found somebody who had lost employment building a tent in my basement. On the issue of access to social welfare, we hear of many cases where bogus excuses are being used locally to deprive people and I am dealing with one such case.
I urge the Minister to review the situation with regard to people with disabilities. It has been claimed that the People with Disabilities in Ireland budget was not fully spent, but that is a misunderstanding of the situation. I do not have time to go into detail, but I will send a submission to the Minister with the details. The organisation has done extraordinary work in rectifying injustice. It has a new website, galwaypwdi.ie, the first in Europe. I do not have time to refer to its document, but it illustrates many cases where the organisation has assisted people.
People are feeling the pinch from these cuts and I look forward to the debate on Committee Stage of this Bill. I hope that debate will not be guillotined, because that is where we can tease out the issues. We are just establishing principles here. I have been fair and have not personally attacked or abused the Minister. However, I urge her, for God’s sake, not to introduce the red herring of attacking Sinn Féin over the discrepancy between the North and the South, because we all know bloody well that these budgets are not set in Ireland at all, but in the United Kingdom. The Government is bashing a dead horse when it attacks Sinn Féin and is only doing it for party advantage and I do not like seeing it in this House. Nobody can accuse me of being a supporter of Sinn Féin or of being anything other than independent, but I do not like political point scoring when we are dealing with people who are being driven to the edge of poverty. It is a credit to the Seanad that mild and well mannered though the questions were that came from that side, they were well targeted and were done respectfully.
I am very glad of what my colleague, the previous speaker, said. What about the self-employed? I have spoken from a socialist point of view, but it is appalling that when people who start and run businesses go bust, they get absolutely nothing, while their employees are protected. Business people who go bust are left stranded and that is not equal citizenship. The Government should strive for equal citizenship in these desperate times. We have an opportunity to do that now, because we have the European Union in a very delicate place with the current negotiations. We are part of the euro, unlike the British, and we can and should squeeze to get out of the promissory notes in order that we can look after our own people.
Senator Feargal Quinn: People going on stage are advised never to share a stage with animals or children, because they cannot win against them. One should never stand up to speak after Senator Norris because one cannot win, as he speaks with such emphasis and clarity. I had planned to speak about the Society of St. Vincent de Paul, Barnados and Focus Ireland, because we have been approached by all three and they have made a clear case for recognition of the problems they face and the great work they are doing.
I too am delighted that the Minister for Social Protection is Deputy Burton. I was not sure initially that she was the right person for the job, but she has clearly taken on the challenge, which is significant. The challenge is to ensure that if we are to spend money on social protection that we earn that money and to find a way to do that. We cannot do it by cuts alone, but cuts must be part of how we do it.
Unemployment has risen from 14.2% to 14.4%, which is serious. If we look back 26 years to 1985, unemployment stood at 17.3% then. The good news is that while we had 1.1 million people working in 1985, we now have 1.8 million people working, an extra 700,000 people. The Minister looks like she questions that, but that is the figure I have. We have a significant number of people working, compared to the number we had working in the past. What we must do is to take up the challenge of ensuring we create more employment. The more we increase taxes in order to pay social welfare or other debts, the less likely we are to achieve that.
I believe there is no long-term plan with regard to the social welfare budget. We should have a discussion on what is meant by the “social welfare state”. However, it seems that is a taboo subject which we do not want to discuss. We simply cannot afford social welfare and should look at this issue more closely in the effort to design a new kind of Ireland. We must consider whether we should plan for the future or deal with it piecemeal as time goes on. One of the challenges we face is that many people who are suffering enormously, while others are not suffering. Take, for example, child benefit. I have a problem with regard to how inefficiently this operates. Surely, there must be some system which can ensure we do not automatically pay child allowances to people not in need.
Senator Feargal Quinn: We should either centralise the means test or tax the allowance. I think it should be taxed and gather that such a tax would bring in approximately €500 million annually. We face a challenge in this regard and must be willing to take on that challenge to ensure that if we are limited on the amount available, we increase what is available by only providing social protection to those who need it.
Senator Paul Bradford: As my time is limited to five minutes, I will not be able to do justice to a Bill as complex as this one. I thank the Minister for her presentation and, not being patronising, I commiserate with her with regard to the difficulties she faced last week. It was a Government budget, not the budget of the Minister, Deputy Burton. I understand that the economic management committee of the Cabinet and the Minister for Public Expenditure and Reform finalised the amounts available to each Department and that the Minister had then to cut her cloth accordingly. I congratulate her on her effort to do a good job with limited resources.
I want to mention briefly some of the measures outlined by the Minister. I concur with Senator Norris that we need substantive Committee Stage debate on the legislation. I understand it is planned to provide three or four hours, which is more than was provided in the Dáil. However, I hope the debate will be open-ended because it is as we go through the Bill that the anomalies, difficulties and opportunities will come to light. We have a Minister who will be willing to take recommendations on board.
I recall the debate and furore at the time of the Minister’s appointment about whether it was the appropriate job. It is one of the largest Departments of State with a budget of billions of euro. We must set aside and protect a block of money for the elderly, the young and the disabled. Outside of that, billions of euro are being spent on unemployment payments, rent allowance, disability schemes, etc. The question we must ask — it will not be solved in one or perhaps even in five budgets — is how we use the many billions of euro available to the Minister’s Department to re-energise the economy and get people back to work. Indeed, this is a question for every Department. How does each Department use the maximum amount of resources available to it to re-energise the economy and get people back to work?
Payments, such as family income supplement, the back to work allowance, the back to education allowance and so on can be used more effectively to get people back to work. Senator Quinn mentioned the Ireland of the 1980s and the huge unemployment rate. The Governments and the politicians of the time, probably from all political parties, may have been a bit more far-seeing. Schemes, such as social employment schemes, community employment schemes, house improvement grant schemes and so on were all brought forward at a time when money was scarce but thinking was broader. The Minister will have to look anew at the possibility of using some of the schemes and resources in her Department to support, encourage and create employment and to try to change the mindset of those people on the jobseeker’s allowance, in particular.
Senator Paul Bradford: Lifestyle choice. I thank my Sinn Féin colleague for being so helpful in bringing the phrase to my lips. While Sinn Féin is on the sidelines criticising, the Minister is in the Department trying to make a difference.
We all know there is a minority of people for whom work is something their families never experienced. It is almost a generational thing. We must ask how we use our budgets and schemes to try to get these people to see work rather than welfare as a way forward.
I note what the Minister said about the redundancy payment scheme. If there is an immediate cut from 60% to 15% rather than a tapered cut, is there the prospect of firms, which might be thinking of placing workers on notice, doing so now when the 60% grant is available rather than waiting six or 12 months when it will be 15%? It was suggested to me that perhaps the Minister should consider tapering it over six to ten months from perhaps 60% to 50% to 40% to 15% rather than one cut from 60% to 15%.
We also had interesting discussions with the Minister on sick pay. It has not been finalised in this budget. I started out from a position completely contrary to that of the Minister. However, following her discussions with us in which she outlined what has happened at European level and internationally, it challenged us to look at what she said. We will have to reflect on it.
We could speak all day on child benefit, and we have spoken many times about it. It is inexplicable that we have been told we cannot put a scheme in place where the Department of Social Protection and the Revenue Commissioners can combine their resources so there is some degree of means-testing, taxation or whatever. There are generous people in this country who recognise that those with reasonable incomes should not take from those with lower incomes. The child benefit scheme is a prime example of where we could save a lot through taxation or means-testing and target more resources at those at the lower end of the economic spectrum. We will come back to all of that on Committee Stage.
I thank the Minister for her contribution and look forward to working with her on Committee Stage. She has the vision and breadth of knowledge to accept that the Bill is not perfect and that we can make improvements to it.
Senator Darragh O’Brien: I welcome the Minister. There is no doubt in this instance and in the current budgetary environment that she has a very difficult job. I appreciate that. It is never easy trying to strike a balance between saving money in the social welfare field and being fair.
Members of this and the other House raised the proposed cuts to disability allowance payments, and I commend the Minister in this regard. She was right to freeze those cuts but she should go further and say these cuts to disability allowance payments to young adults will not proceed. In every budget, things — I will not call them mistakes — get through, although not as originally proposed. We had experience of that in the previous Government. All of us would agree that any cuts to disability allowance payments for young adults cannot happen. Is it the Government’s position that this cut will not go ahead? I know it is being reviewed but the Minister should give a commitment that she does not propose to cut anything from disability allowance payments.
One of the hidden things, which is part of the Social Welfare Bill, is the changes to the eligibility conditions in a number of areas, in particular for pensions and the widow’s pension. The changes the Government has made, in particular the number of stamps required for one to be eligible to receive some allowances, will not really come to light until further down the road. When one is trying to walk a tight robe of saying one will not cut the headline payments in any of these areas, one will look for savings in terms of eligibility.
The Minister will know that already this year, we have seen the pace of granting payments to people slow down substantially. I am not just talking about the back to education allowance but about all allowances. All of us have received complaints from people waiting for months for decisions. Is it a conscious decision by the Department to slow up the payments or what is the position? With the eligibility changes in this budget, it will become more difficult.
I am very concerned and would like to know the rationale behind the proposed cuts to community employment schemes, in particular when we saw the figures yesterday in regard to the increase in the number of long-term unemployed. These schemes keep people at work and, in many instances, provide extremely important experience for people, in particular the long-term unemployed. To cut the training allowance per person from €1,500 to €500 is a retrograde step.
The fuel allowance has been cut by 20%, or by six weeks. At a time when, unfortunately, energy prices have risen substantially and will probably rise further, it will make it increasingly difficult for people in receipt of fuel allowances, many of whom are elderly. I welcome the fact the Government has maintained the old age pension, as did the previous Government. However, the Government needs to be very aware of the other costs, including fuel and electricity costs, the household charge and so on. All these things add up. What is the Government’s view on the very substantial cut to the one-parent family allowance to reduce the period to seven years?
I am trying to be constructive and I watched the debate on the Bill in the Dáil. How can we marry the social welfare system to retraining people and returning them to the workforce? The relationship has been less than perfect over the years and I would support the Minister if she tried to achieve connectivity between what people needed from their allowances and returning them to training and employment.
Senator Darragh O’Brien: Exactly. I will provide an example. There are various opinions about JobBridge and it contains a number of anomalies. I know of an individual who is engaged in voluntary scientific work in one of the State’s fully sanctioned laboratories. The person has been told to give up that work because the job is not a voluntary one. The person must sign on again and apply to JobBridge. I will provide the Minister with the details.
I will conclude on retraining, a field in which the Minister has experience. The past two or three years have seen a considerable increase in unemployment. From my investigations with the Committee of Public Accounts during my previous life, I have vast experience of FÁS. We could make substantial savings if we retrained and returned people to work. All Governments to date have been at fault in this regard. We should view people as individuals, not as numbers or claimants. We should recognise their needs and marry social welfare with FÁS, SOLAS and JobBridge.
Senator John Kelly: He rightly acknowledged that tough decisions needed to be made to clean up the mess of previous Governments. Since he struggles to use up his eight minutes, he uses three of them to crack jokes and make jibes at the Government side of the House.
The Senator referred to the difference in the cost of living in the North compared with the South as a result of the 2% VAT rate increase. Last week, a radio report told of a survey of the Northern and Southern prices of groceries and clothing following the rate increase. The survey proved that shopping south of the Border was cheaper.
I thank the Minister for taking on board all of my pre-budget remarks to her regarding the carer’s allowance and the half-rate carer’s allowance. No financial gain would have accrued from cutting them.
I am concerned about redundancy payments, an issue to which other Senators referred. Last week, I received a call from an employer of 93 people in my area who believes he may need to press the eject button before Christmas to avail of the current redundancy package. He has been hanging on by a thread for a long time in the hope that the situation will improve, but he has the threat of the new arrangements hanging over his head.
I have referred to the proposed cuts to the disability allowance. I have always had a problem with someone going to second level and college, getting a qualification and gaining employment while in receipt of a social welfare payment that suggests he or she will never work a day. This matter needs to be examined. I acknowledge the sizable difference between severe and mild disabilities, but some people with mild depression are in receipt of disability allowance and their spouses are in receipt of carer’s allowance for taking care of them despite the fact that they are working nixers on the side. Senator Mary Ann O’Brien referred to an epileptic man who is working whereas many other epilepsy sufferers are in receipt of the disability allowance. There is every possibility that people with disabilities are able to work.
I agree with other Senators about it being time to consider instituting a cap over which people cannot receive child benefit payments without those payments being brought into the tax net. Senator Healy Eames was right, in that the first child costs the most. I welcome the measures that the Minister has introduced in this regard. Every Senator would agree that buggies and so forth must be bought for the first child. In recent years, the mentality was that all one needed to do was to visit a community welfare officer to get a buggy and, if one moved to Dublin in three years time, one could leave the buggy in County Roscommon and get another from the community welfare officer in Dublin. All of these issues must be examined.
I am concerned about the proposed increase in the number of stamps that widows must pay to qualify for a widow’s pension. The Minister is probably trying to address situations in which people have multiple pensions. However, the 156 contributions by a lady who is only in receipt of the widow’s pension should remain unchanged. The Minister should examine situations in which, for example, teachers receive pensions as well as contributory widow’s pensions.
I have raised the issue of the self-employed numerous times. It is time for them to be treated in the same way as the ordinary taxpayer. They should be allowed to pay voluntary contributions so that, in their time of need, they can get something in return from the State.
In recent years I have raised another matter, both in the Seanad and at our party meetings. It costs an average of €21,000 per year to keep someone on social welfare. If the Department of Social Protection was to offer employers €10,000 per year to take people off social welfare, employing 100,000 people in this way would save the State €1.1 billion and additional income taxes would accrue. Those people would be worth the guts of €2 billion to the economy.
The community employment schemes pose a significant issue. The Minister has offered them some hope, but they remain concerned. They do great work, particularly in rural Ireland. In some small villages, the only employment activity is that engaged in by community employment workers. I attended a meeting last night. The cuts will devastate the community employment schemes of which I am aware and many others. They cannot afford a reduction in their material grants from €1,500 to €500. The €500 is supposed to be a loan for training purposes and the €1,000 is supposed to be for materials and other supports. They want to know what the Minister will do for them. They had no idea at my meeting last night. Every year, they must draw up and submit business plans to FÁS, SOLAS or whatever. If they submit a business plan in future, will they receive the funding they require? It is not a great deal of money, but it has a large return for rural Ireland, as evidenced by the good work done by tidy town committees. As a result of community employment scheme involvement, each committee’s marks rise every year. We must consider the bigger picture, in that we are trying to sell the country as a tourism product. Tourists will visit south Kerry, Roscommon and so on if local involvement portrays those areas in a good light. I ask the Minister to consider this matter.
Senator David Cullinane: I welcome the Minister to the House. I acknowledge that the Government inherited a mess, difficult decisions needed to be made, budgets needed to be balanced and choices were available. The Minister must accept that her party in opposition opposed four austerity budgets, rightly so. The Labour Party opposed the budgets because of cuts to child benefit, cuts to the Christmas payment to people in receipt of social welfare benefits and the dreaded universal social charge, which has been adjusted slightly, but not reversed.
The Minister referred to a number of items and interesting words, including “pride”. She mentioned that this was a momentous achievement for her and, possibly, the Labour Party. However, I do not know of many families who will see what has happened in recent weeks as a momentous achievement. The half rate allowance has been cut in respect of the qualified child increase for those in receipt of invalidity pension and carers.
I refer to entitlement to one parent family payments. The organisation One Family have provided Members with figures such as that 65% of the country’s poorest children live in one parent families and that one is four times more likely to live in consistent poverty in such a family. Those parenting alone were most affected by the previous budget. Lone parents will suffer and the financial impact will be as follows. They will have to pay an additional €6 a week towards rent and there is the loss of €120 a year in fuel allowance. If they have three or more children, they will lose €220 a year, while a family with four children will lose €432. They will lose €50 per primary school child and €55 per secondary school child as a result of cuts under the back-to-school clothing and footwear allowance scheme. They will also suffer because of VAT increases, increases in fuel costs, school transport costs and cuts to school capitation grants. They will lose €29.80 per child a week because of the cut to qualified child increases.
Many lone parents participating in community employment schemes will be affected, including new applicants. Many single parents, especially women, participate in community employment schemes and receive partial payments which cover their child care costs. The payment has allowed them to participate in such schemes, but the Minister has made it more difficult for them to do so and provide for their children.
The Minister talks about rates that have not been cut such as standard social welfare rates, but all of the secondary benefits that have been cut have an impact on most, if not all, those in receipt of social welfare payments. The cuts to rent supplement are an example. Many of the cuts made in the budget will have an impact across the board on many individuals.
Changes to redundancy arrangements are part of the ministerial order that will be signed by the Minister. These are bad for small employers and will make matters more difficult for them. Many companies do their best to try to give generous redundancy payments to workers and were able to recoup a figure of 60% through the rebate in respect of statutory entitlements. This meant that they were able to give four or five weeks pay per year of service. How many companies will give this redundancy payment when they will not be able to claw back 60%? There will be a difficulty for many who potentially will lose their jobs.
The cruel part is that there was nothing in the budget to get people back to work. I talked about cuts to community employment schemes which do not just apply to one parent families but also to people with disabilities and whose partial payment will be cut if they are taking part in a community employment scheme. The resource and training grants available to those participating in such schemes have been cut from €1,500 to €500. This will have a major impact on community and voluntary organisations which employ people participating in community employment schemes. Such organisations are trying to ensure people will have a start, that they can provide caretaking work, meals on wheels services or engage in work on drugs projects. They do very good work in the community, yet they will suffer as a consequence of the budget.
It is interesting that the Minister came into the Chamber with a speech in which she made reference to only one political party, Sinn Féin. That point was made in the context of child benefit. However, the record was set straight by Senator David Norris. The rates are set by Mr. David Cameron who this week opted out of the European deal. Is Sinn Féin responsible for this? No, it is not. The rates of child benefit are set at Westminster. If the Minister is so concerned, she could pick up the telephone to talk to Mr. Cameron and tell him she believes child benefit rates in the North should be higher. She could work with us to get the fiscal powers we need to be in position to set the rates. She should not waltz into this House with a prepared speech——
Senator David Cullinane: We have lobbied the British Government every day of the week. Senator Ivana Bacik’s party does not have a single vote in the North because it will not put up candidates. It does not care about the North, yet she comes in here and attacks Sinn Féin.
Senator David Cullinane: Sinn Féin is the party which is standing up for working people. We should remember the time when the Labour Party was in opposition and having a go at the previous Minister for Finance. It made a point about previous austerity budgets——
The Minister is welcome to the Chamber. Reform of the social welfare system is of paramount importance. In the Minister’s first Social Welfare Bill she has set about reforming the system, removing discrepancies and acting in a fair manner at all times. The decisions taken in the budget were signed off on by the Government and, despite what one reads in the newspapers, the Government parties, Fine Gael and the Labour Party, are at one in pursuing the objectives of the budget. Members have differences as to how we can reach the targets set, but the Government makes decisions in the interests of the country, unlike the previous Government. It is not easy to shave €475 million off the social welfare budget, but, as the Minister pointed out, €20.5 billion is provided for the Department of Social Protection. The change to the universal social charge will affect over 300,000 on low incomes. Senator David Cullinane believes this is insignificant, but others will benefit as a result of the change and will welcome it.
After I was made redundant a number of years ago, after the company for which I worked went into receivership, I worked as a supervisor on a community employment scheme with the Carers Association. I saw at first hand the unbelievable work done by carers in every parish. I commend the Minister on retaining the allowances for the schemes. I welcome the statement that the Government is fully committed to the protection and development of community and social employment initiatives which provide vital community services. The Minister has directed a review of community employment schemes to commence immediately and stated that no scheme will close pending the outcome of the review. The Minister is a caring member of a caring Government. No Government wants to make cuts that will affect the living standards of our citizens.
I do not believe households earning more than €100,000 should receive child benefit. The Minister has an advisory group looking at the means testing of child benefit and the links between tax and the social welfare system. If we cannot means test social welfare, we should cut it completely for households that have an income of more than €100,000. The majority of fair-minded people would believe that should pertain.
Senator Mary Moran: I also welcome the Minister and thank her for coming into the Seanad today. Before I start, I would like to pick up on the point raised by Senator Mooney, where he talked about the mother in Newry, where the cost of living is lower. As a mother who lives in Dundalk, relative costs are not so different and many mothers from Newry often travel to enjoy the facilities, including socialising and filling their cars with petrol.
I commend the Minister for her brave decision to re-examine the proposed changes to the disability allowance for young people until the commission on social welfare and taxation has published its report. Can the Minister give us a timeframe for that review?
Since the budget announcements last week, I have been inundated with calls, e-mails and letters from disability groups, parents and individuals who would have been grossly affected by any cuts to the allowance. Last night I met representatives from the Irish Wheelchair Association and SNAP, which is short for “Special Needs, Active Parents”, a very active group in the Louth-Meath and Cavan-Monaghan areas. I was delighted to meet them and to listen to their concerns. I hope to discuss them in detail with the Minister.
I fully appreciate, as the Minister pointed out last week, that the proposed changes would have affected people under 16 and not those who are already in receipt of disability allowance. I urge the Minister, however, to communicate as part of this review and to consult not only disability groups but parents and those who are at the coalface is living with those with a disability. Parents and families are the main voice for those with a disability.
As a parent and as Seanad spokesman on disability, after the announcements last week, I immediately raised my concerns on the proposed cuts with the Tánaiste and the Minister for Social Protection and I was delighted with the quick response there was to my concerns and at the cross-party response to the proposed changes.
While I am aware there are huge problems with entitlements in the social welfare system, I urge the Minister to protect the most vulnerable in society. She has said that is her intention, because these people are the most vulnerable.
The problem is that a person must understand disability before making far-reaching decisions on it. It is impossible to put all people with a disability into the one box; there cannot be one rule for everyone, just as we do not have the same rules for those who do not have the misfortune to suffer from a disability. It has been said here today that those on disability allowance may suffer from a condition that will not encroach on their full independence or ability to find some sort of employment but we cannot compare those people with those who have a severe physical or mental disability who will never be fortunate or capable enough to have any sort of employment or independence.
The present rate of €188 per week does not even come close to the actual day to day living costs for a person who is over 18 who might need 24 hour supervision and care. Although I hate to say it, people must pay for baby-sitting, physio and occupational therapy, swimming and perhaps the Special Olympics. These all cost a lot more than €188. Private psychological assessments cost between €500 and €700. These are not privileges and should be in place for those who need them most.
Senator Brian Ó Domhnaill: I welcome the opportunity to speak on the Social Welfare Bill and all of the cuts in it. Much was said about protecting the most vulnerable but this budget did not do that. The social welfare element of the budget attacked the most vulnerable. Whatever way we look at it, while frontline weekly payments might be protected, the individual groups that are the most vulnerable in society were clearly attacked; there is no question about that. Whether it was the community employment schemes, the disabled, young people or any of the other areas such as lone parents, mothers, families or the elderly, they were all hit. The elderly will lose at least €120 under the fuel allowance.
The Minister for Finance indicated consultations were entered into with the disability organisations on the changes proposed to the disability allowance that have since been reversed, or perceived to be reversed. To what extent did consultations take place and who took part in them? To attack young people who due to a disability cannot undertake a training course or work, often with reduced mobility and who are isolated and vulnerable, was a move too far. The pressure put on by the Opposition, and picked up on by the Fianna Fáil finance spokesman Deputy Michael McGrath, on budget day at least led to a perceived U-turn.
The other issues that change the disability criteria relate to the decision to redefine the criteria for the disabled person’s allowance. Applicants must now have a 15% disability to qualify. Is that being reversed as well?
Other elements of the budget hit families very hard which is a major concern. The chief executive of Barnardos said it would be wholly inappropriate to reduce the child benefit this year particularly for low-income families as a result of previous cuts. However, yet again child benefit payments for the most vulnerable and poorest people in society are being reduced. Perhaps those earning in excess of €100,000 in receipt of child benefit should have been targeted instead of targeting low-income earners. Mothers were also affected in the budget. The contributions for the contributory widow’s pension were increased from 104 contributions up to approximately 520 contributions——
The reduction in the qualifying period for fuel allowance from 32 to 26 weeks will effectively result in a cut of approximately €120 for people who are in receipt of the fuel allowance. This is at a time when the cost of heating homes is increasing — the price of oil and other fuels is increasing. These same people are expected to pay the household charge of an additional €100, meaning that the net loss in each of those households will be at least €220. Those with a septic tank will need to find another €50 to register. This means a cut of approximately €300 on the old and those who are in receipt of fuel allowance.
The other cut which came into effect in the budget was the cut to the community employment schemes and the proposed saving of €41.5 million, involving a reduction from €1,500 to €500 for the materials and training element of the community employment contribution to the sponsor organisations. This will effectively result in finishing community employment schemes in rural areas unless the change is reversed. I appeal to the Minister to reconsider the issue and reinstate the €1,500 contribution that has been available to community employment organisations heretofore. These are organisations which provide crèche and pre-school care, and facilities for local GAA clubs.
Senator Brian Ó Domhnaill: Sponsor organisations’ funding has been cut by one third and they will not be able to provide the training and resources for community employment participants unless these changes are reversed. It goes a long way from the commitment in the Fine Gael and Labour Party programme for Government to protect and enhance community employment schemes. This is in stark contrast to the commitment given before the general election.
Senator Aideen Hayden: I also welcome the Minister to the House. We appreciate the difficulty she has with the current budget and the efforts she has made to be as fair as she can possibly be. She has also very eloquently highlighted that we need to change the social welfare system. We have a social welfare system, which like the layers of the onion has come upon us over a number of decades and is no longer fit for purpose. The cumulative effect of the changes introduced in the budget show the need for change and also show the need to be careful in how we implement change.
A number of other speakers talked about the implications of the budget for lone-parent families. As has been mentioned, two thirds of the country’s poorest children live in one-parent families. When we make changes, as the Minister has, it is sometimes very difficult to ensure that the cumulative changes on one particular group do not lead to unintended consequences for that group. It is not often understood that in more than 50% of all lone-parent families, the lone parent is working outside the home. However, most lone parents who work outside the home work in low paid and low skilled jobs, many of which involve unsocial hours. In recent years we have failed to provide adequate good quality child care to enable lone parents to work outside the home. Some of the budget measures that particularly impact on lone parent families need to be kept under review if we are to prevent the level of poverty experienced by children in Ireland increasing further. In 2010 half of one-parent families had to go without essentials such as adequate heating for the home, substantial meals, clothing and footwear because they were unable to afford them. It is common knowledge that the best way to lift children out of poverty is to enable their parents to engage in good quality work. The issue we face is the quality of work in which lone parents engage. We need to consider measures to sit side by side with this budget to allow lone parents back into good quality work.
Rent supplement particularly impacts on single people and lone parents. I agree with the Minister that we should be aiming to get better bang for our buck — better value for the money the State expends — with more than €500 million being spent on rent supplement. She has indicated that she also intends to cut the rent supplement rates as well as increasing the personal contribution. It is well recognised that some of the previous cuts have led to a very comprehensive system of topping up — in other words where the rent supplement recipient actually pays out of his or her social welfare payment rather than receiving a cut from the landlord. Topping up has become so prevalent that it is no longer unusual for rent supplement recipients to top up their rent supplement payments. Certain legalities make it very difficult for people in receipt of rent supplement just to achieve an across the board cut. For example, most community welfare officers now require tenants to have leases which lock them into 12 month agreements. In other words, if my rent is down as €1,000 a month, as my rent supplement has been reduced by the Department of Social Protection, I am not in a position to grant an across the board cut. The Residential Tenancies Act 2004 stipulates that rents can only be reviewed once annually. Therefore, in the timing of any of these measures it is very important not to put vulnerable people in a situation where rather than their landlord taking the cut they themselves are effectively topping up out of scarce social welfare payments.
I welcome the transfer of the rent supplement payment to the Department of the Environment, Community and Local Government. However, when reviewing this measure I ask the Minister to consider that there are certain aspects of the rental market where an across the board cut will not only put vulnerable people at risk but will also not achieve the result the Minister hopes.
Senator Ivana Bacik: I welcome the Minister to the House. I had not quite anticipated that there would be no Opposition speaker between Senator Hayden and me. I am delighted to have the opportunity to speak about the Bill. I listened very carefully to the debate, including the Minister’s earlier speech, which was very strong. She is to be commended on preserving the basic rates of benefit in the face of such an enormous economic crisis. As other speakers have said, we face an unprecedented crisis and in the face of that it is a significant achievement to have preserved basic rates and to have taken less out of the Department of Social Protection budget than had been anticipated. I am grateful to Senator Moloney who pointed out that Fianna Fáil proposed to slash social welfare spending by an additional €665 million in 2012 compared with the €475 million adjustment in the budget.
As the Minister has pointed out, the Fianna Fáil-led Government made cuts in the last budget to social welfare spending worth €873 million, which is a great deal more than is being cut in this budget. It must be said, the Minister said it herself, that no Minister and no Labour Party Minister in particular has any desire to make the cuts she was obliged to make. Moreover, when introducing his statement to the Dáil last week, the Minister for Public Expenditure and Reform, Deputy Howlin, stated that as a Labour Party Minister, he found it hard to make the speech he made. However, in the face of the economic crisis and under the constraints within which the Government is operating with regard to the IMF-EU-ECB deal, it is conscious it must try to preserve basic rates and must try to ensure certainty for families in receipt of welfare benefits that the basic rates will remain the same. Moreover, the Government must try to protect, in so far as it can, the most vulnerable and those who are most disadvantaged in society, which is what it has done. While many Members personally would have preferred a different balance between taxation and cuts, the compromise reached in the budget reflects the balance in the Government and, in particular, reflects the numbers we of the Labour Party have in the Cabinet. Given the economic constraints, it has been a remarkable achievement to keep the cuts in social welfare to the level announced, to retain the present rates and to preserve the basic rate of child benefit.
Another positive consequence to which the Minister referred is her commitment to reform of social welfare and the principles thereof, which is of huge importance. The move from a dependency culture to a culture of enablement and empowerment is something of which everyone in the Labour Party and everyone on the left should be strongly supportive. This budget commences an attempt to streamline allowances, to move towards a one person-one payment position and to align different rates of payments to ensure consistency. This is something to be supported and all Members must regret it did not happen during the boom years, when more money was available to do it. For example, other colleagues already have spoken about the one-parent family payment and I have received correspondence in this regard from organisations such as OPEN and the Irish Feminist Network, the aims of which I fully support. However, over the years in which it has been in operation, the one-parent family payment has not had the desired effect of tackling poverty and social exclusion for single parent families. It is time this payment was examined and efforts made to reform it.
I note that under the previous Government, the age up to which the payment was made already had been altered. Until 27 April 2011, the payment had been given until children were aged 18 or until 22 if in full-time education and that had come down to 14. The proposal in this budget is to reduce progressively in phases the maximum age from 14 to seven between now and 2014. The idea behind this measure is that the best route out of poverty for lone-parent families, as for anyone else in receipt of welfare benefits, is through paid employment. This is a very important principle that Members must support. In addition, the effect of the one-parent family payment has been negative in a couple of other ways. First, by stereotyping parents and children into a particular compartment or box in society and, second, it has had the extremely negative effect in some cases of keeping fathers away from children and keeping people in a one-parent family when they might otherwise have moved to a two-parent unit. This has had highly negative social consequences and is a matter of which we on the left must be conscious when seeking reform. However, one must ensure that supports are available for single parents who are affected by this budget. In particular, as other colleagues have noted, one must ensure that supports are available in respect of child care provision. This country has always been very poor in respect of securing adequate child care provision for parents and families.
While there is plenty more to be said, Members will have an opportunity to speak further on the budget during the extended Committee Stage debate next Thursday. I again thank the Minister and look forward to the Committee Stage debate next Thursday.
Senator Susan O’Keeffe: I thank the Minister for coming to the House. I also echo the words of my fellow Senators in commending the Minister’s capacity to keep the cuts to a minimum, albeit that, as she and others have noted, no one wants to cut. In this regard, she was the Minister who was to be damned in this budget because whatever she did and wherever she went to find the money, there would be a queue of criticism and, inevitably, it is difficult to find a way around that. I welcome that there will be a review of the disability cuts and the community enterprise scheme, which has enormous value but can always be improved on and always can be targeted better to achieve more. However, I reiterate it has enormous value in communities and like most of my fellow Senators, I have met and talked to people on community enterprise schemes and to those who run them and I know their value, particularly to individuals. Consequently, it is important that the scheme be strengthened and retained.
I understand the Government has managed to keep the cuts to just 2% and that in a period of austerity, it is difficult to find places in which to cut. However, as we move into 2012, which will also be encompassed by the austerity programme, the Minister should indicate that consideration will again be given to placing a cap on higher salaries in the public sector and in political life and to cutting some of the tax reliefs that are still of great benefit to those who earn the most. In addition, the use of consultants and advisers and how much they are paid should be examined. These people are often introduced into public life for short periods on maximum pay and there is scope for payment across all Departments in the use of consultants and personal advisers.
I believe the area on which the Department of Social Protection must really concentrate in respect of reform is the use of technology or the lack thereof. The Minister has mentioned this in the past. For example, I refer to the targeting of back-to-school payments, fuel payments or child benefit payments at those who specifically need them and to finding a way to use smart technology in the 21st century to ensure that money given to someone goes to the purpose for which it was intended. While the Minister is keen on such goals, there inevitably will be a lag as she tries to find both the means and the way to introduce the correct technology to achieve these aims. Yesterday, I met third-year BA students in child care and social policy in the Institute of Technology, Sligo, who were holding an exhibition and one of the teams there had developed a project on smart cards for child benefit. In the past, we had no choice but to give sums of money to people because the technology to do otherwise was not available. However, the idea that we would carry on doing this in the 21st century appears to be utterly absurd. This must be one of the most important reforms, which would then allow the Minister to begin the other area of reform relating to targeting and to bringing the payments towards a one-payment system. However, the Minister’s hands are tied by the technology until this can be achieved. I would like to believe Members will see evidence of such changes coming through within the next year.
If we are prepared as a society, as we currently are, to give €20.5 billion of our total budget to social welfare payments in the next year, perhaps when there is discussion on where cuts should be made, there should be a wider debate on whether that is a fair proportion or whether it should be more. If it is more, this debate should take place earlier, rather than waiting for the budget when, as I stated earlier, everyone lines up to damn the Minister for whatever she did. If people wish to ensure that those in the community who are in most need of support have such support, this debate should be had now. People should state they seek a social welfare budget of €21 billion or €22 billion and that they want to be part of that debate, instead of queueing up to damn with negativity and too late, thereby leaving everyone in confusion. The energy spent at this end of the argument would be much better spent at the creative end, which pertains to discussing how much of the budget, that is, how much taxpayers’ money one wishes to give in support of one’s friends, neighbours and families in society. If it is going to be more than €20.5 billion next year, let us have that conversation.
Senator Tom Sheahan: I have been monitoring the debate up to now and there is one point I wish to raise with the Minister. I refer to the reduction — from 60% to 15% — in the rebate for employers in respect of redundancy payments. There should be an exemption in this regard for sole traders and self-employed persons whose staff complements do not exceed 20. I appreciate what the goal was when this provision was framed, particularly in the light of what occurred in the case of Talk Talk and other large companies which, on foot of decisions taken by their shareholders, decided to move their operations to countries in which it costs less to employ people. Such companies left the country after making massive profits and the State was obliged to pay a rebate of 60% to them in respect of each redundancy payment made. I completely agree with the ultimate goal of the provision, but I must plead with the Minister on behalf of sole traders and small business interests.
What will be the ramifications of this development for those to whom I refer? Let us consider the case of a sole trader who employs 15 or 20 staff and goes out of business. During the years that person would have, on behalf of the Government, deducted PAYE and PRSI contributions from his or her employees’ wages and also paid his or her employer’s contributions. When a business ceases trading, its owner is not entitled to claim social welfare payments for approximately 18 months. However, his or her former staff — as is their entitlement — can make social welfare claims immediately and be paid from the week following the closure of the business. When a self-employed person’s business goes to the wall, he or she must endure the rigamarole of going to the community welfare officer, even though he or she has no entitlement to social welfare payments. Despite the fact that self-employed persons do not have incomes when their businesses cease trading, they are not entitled to social welfare payments because they do not make A class contributions. I previously requested that they be allowed to make such contributions, but the system has not been changed and they continue to make S class contributions. If a sole trader’s business ceases trading and he or she is obliged to let his or her staff of 15 or 20 go, will the Government go after his or her family home in order to ensure redundancy payments are made?
As stated, I understand the impetus behind the relevant provision which is, after all, designed to combat the activity of large, profitable companies which decide to relocate their operations elsewhere. However, we will be doing a great disservice to sole traders and small businesses which are the backbone of our society if the provision, as it stands, is implemented. I have spoken to young entrepreneurs who are considering establishing businesses. What is envisaged will put another barrier or layer of bureaucracy in place and those with whom I have discussed the matter have indicated that it would discourage them from setting up in business. When people are establishing businesses, they tend to be excited. They are more interested in making their operations successful than in considering the consequences of failure.
I plead with the Minister to examine the possibility of introducing an exemption for sole traders or self-employed persons who employ up to 15 or 20 staff. These individuals should not be obliged to contribute 85% towards the cost of redundancy payments. I am genuinely of the view that there will be difficulties in passing the Social Welfare Bill unless action is taken in respect of this provision. The Minister should consider the matter and make contact with the owners of small business interests in order that they might communicate their concerns to her. As stated, the proposed measure is extremely off-putting for those who are examining the possibility of setting up businesses.
Minister for Social Protection (Deputy Joan Burton): I thank the Senators who spoke and made such detailed and thoughtful contributions. I appreciate that people from all political parties have acknowledged the reality of the very difficult financial situation in which the country finds itself. As stated earlier, events in the eurozone may make the difficulties with which we must deal even more intense.
It is not generally well known but Senators will appreciate that the process by which the Government arrived at decisions on both the spending and taxation aspects of the budget involved carrying out a comprehensive review of expenditure. This is the first occasion on which such a review has been engaged in. Reviews of this nature have been carried out in the United Kingdom, Canada and Holland and involve examining all items of expenditure and tabling options for each of them. The options for the three big spending Departments, namely, the Departments of Social Protection, Health and Education and Skills, which account for over 80% of Government spending, were not focused on increasing expenditure but rather on reducing it. These options have been published on the websites of the various Departments and if people have the time, they should take the opportunity to peruse them.
In the context of the available options, not everyone appreciates the importance of free travel to retired individuals. The options tabled and the additional options suggested by the Department of Finance were, in many ways, very difficult to contemplate. Those who do not work in the area of social welfare do not often appreciate the importance of respite allowances or carer’s allowance. I went home on many evenings during the past 12 weeks and sat and thought about how we might reduce the level of cuts as much as possible from the original figure of over €800 million. There was a need examine this matter, not so much from the perspective of the individuals for whom the incomes to which I refer are so important but rather from that of an economist or someone who works in the Department of Finance. I focused, therefore, on the importance of the spend of my Department to the economy. I was eventually able to persuade the officials from the Departments of Finance and Public Expenditure and Reform that the economy might benefit if we reduced the proposed level of cuts. I emphasised to them the fact that the money provided by my Department in the form of social welfare payments was extremely important to every town and village, shop and business throughout the country. The spending power of pensioners is, for example, extremely important to small shops.
I made a strong economic argument for reducing the level of the cuts proposed and appreciate the robust, personal arguments made by all of the Senators who contributed on the importance of social welfare payments. It would be of great assistance to the Dáil, the Seanad and the various committees — a number of Senators referred to this — if the options to which I refer were published very early on in order that people might gain a sense of the ballpark figures involved and also an indication of the likely levels of expenditure and tax receipts.
It must be borne in mind that there is a particular equation which influences the social welfare system, namely, that there are people at work who pay tax and PRSI and that there are others who depend — body and soul — on the incomes made available to them by my Department. We must consider, in the context of this equation, how a balance might be achieved and how reform might proceed. In the future it would be of assistance to everyone if information on the options to which I refer was made available. I am sure the people in the Bundestag who got the information about the budget discussions in Ireland were scratching their heads when they heard that was not available in advance to Irish parliamentarians. In any reform of the Dáil and Seanad we should have capacity to debate the options.
In the budget, and since I became Minister, I have been conscious of low income people who are in work but not in receipt of social welfare payments. I remind Senators that we had a long debate here, supported by every Member, to raise the minimum wage. We also had in this budget a reduction in the universal social charge as it affects the lowest levels of income, which is important. It is important to keep those two positives in perspective as we examine what were difficult choices in the social welfare budget.
Deputy Joan Burton: Regarding lone parents, who Senator Mooney and a large number of Senators mentioned, the ESRI published a report last night which is referred to in the newspapers today. Senator Bacik raised this question also. The lone parents structure was changed forever in Ireland by the work done by Frank Cluskey, a former leader of the Labour Party, in the early 1970s when he introduced what was then called an unmarried mothers allowance. Within the next ten years, most of the institutions in which children were brought up because the mother on her own had no income had closed. That is an episode in our history which changes in social welfare addressed in a positive way, and they were continued by all parties in government. A concern about supporting parents and children in low income families is important.
Society has changed, and that is what the ESRI report today states, namely, that the one-parent family payment may — I emphasise the word “may”— have a disincentive effect on partnership, that is, somebody in a cohabiting marriage or other partnership arrangement in which both parents are publicly acknowledged as living with their children. It states that there may be a disincentive that would not arise with a more couple friendly system of family income support. That is something worth debating and examining. I would like to see us reaching a reform process that acknowledges both the mother and the father, and in which we talk about children. In many Scandinavian countries the specific status regarding parenting on one’s own is when one’s child is very young and one gets additional supports, particularly supports to return to education.
The question we must ask ourselves about the lone parents structure is why are outcomes so bad for some families. The one indicator we have on that is that if a lone parent who is parenting on his or her own stopped education at a very early age or was restricted in building up an educational qualification that is now required to get a decent job in society, the predictions in terms of their child growing up in a poor household and becoming a poor adult are much stronger than if that parent goes back to education. That is a critical reform.
That is something on which we will all have to work, and organisations are correctly concerned about the poverty that loan parents and their children are experiencing in some cases. This would be an appropriate area to discuss and investigate to see if we can make the outcomes better. Today’s ESRI report, which this House might have an opportunity to examine separately, is a good contribution to the debate.
On the redundancy payments, we spent €1.1 billion on redundancy payments to employers in the past three years. I acknowledge the concern regarding small employments but Dell spent €12 million on redundancy payments to people in respect of jobs in Limerick that went overseas. That was in what was otherwise a fairly profitable position at plant level. In SR Technics in my constituency, 1,000 qualified aircraft engineers — the best in the world — were made redundant at short notice and all of the jobs went back to Switzerland. The State paid nearly €14 million to the company to transfer good, profitable jobs to Switzerland. We must consider that.
In Germany, employers who are in difficulty are incentivised to retain jobs. We should try to turn this around here but we must consider how we can incentivise the retention of jobs where, in the type of circumstances referred to by a number of Senators, employment is marginal and in great difficulty. This is the only country in Europe which retains incentives to redundancy but in a time of economic difficulty and depression, it may be necessary to switch the incentives to retaining employment rather than incentivising redundancy. That is an issue to which we will return.
I recognise and accept what many Senators on both sides of the House said, including Senator O’Keeffe, about taxing or means testing child benefit. Means testing might require an army of means testers. People who have assisted people with student grants, for instance, know how difficult and time consuming that is with appeals and so on. If we can address this issue through the taxation system or through refundable tax credits, which is the mechanism suggested for many years by people like Fr. Seán Healy, that would be a more attractive option than straightforward taxation.
I expect to have a report from the advisory group working on this issue by the end of March, and I will bring that report to the House for discussion. We should examine all of the options in such a debate. One option suggested before the budget by the Institute of Taxation has much merit, namely, that people with an income over a certain threshold, say €100,000, should make a tax return. If they were making a tax return that might facilitate the suggestions made by a number of Senators to the effect that people earning over €100,000 might pay tax on their child benefit. There are many complications constitutionally about child benefit but if a tax return was required, that would be a mechanism whereby child benefit could be declared in terms of the income of the child or the caring parent.
I apologise to any family who felt upset by the proposals on disability. I accept what was said regarding children with a profound disability. I worked for many years, almost since they were established, with the centres for independent living where people with a high level of disability carry out important and satisfying jobs but with a high level of support and personal assistance. I have been influenced over many years by their approach which is that we should enable an ability-focused and not simply a disability-focused approach.
There are two issues in the proposals, and to clarify for Senators, they have been dropped from the Bill, that merit consideration in the future. First, should a child of 16 or 17 years of age be in receipt of a social welfare payment directly or should its parents receive the money in terms of the authority of the parent? My view is that the payment should go to the parent. Second, I believe that we should have an encouragement in the system in order that the child receiving €188 per week can be encouraged to stay in school or in training. Young adults receive lower jobseeker’s payments, and this system was introduced by the former Minister, Mary Hanafin. I supported her at the time, if people care to check the record. People get the full payment if they are engaged in education, training or any activity that helps them achieve their full potential, whatever that is. There have been previous discussions about introducing a partial capacity payment. I hope that by the end of January, we will be in a position to advance some of the proposals that have been made.
Widows currently qualify for a widow’s pension on a contributory basis after three years of contributions. From December 2013, there will be a requirement for five years of contributions. This is because the contribution requirements for the old age pension have gone up and we will be looking for five years of contributions at the end of another two years. Someone who has three years will have another two years to build up five years of contributions, based on either that person’s own contributions or the spouse’s contributions. A person with three years of contributions to the social welfare system currently receives a full widow’s pension. Most widows are widowed later in life, which is why the contribution threshold is set at a very low level. That is the change proposed.
A number of questions were asked about community employment schemes. I am slightly constrained on this as the Minister for Social Protection, for the simple reason that community employment schemes do not come within the remit of the Department of Social Protection until 1 January. Therefore, I ask for some understanding on that point. I have asked the 700 staff from FÁS who are joining the Department on 1 January that a review be carried out, on a rolling basis, of all the community employment schemes, with a view to examining the good outcomes of the service delivered to a particular group or community, the outcomes for the participants of the community employment schemes and suggestions to improve them, and whether we can get better value for money. Some community employment schemes are spending a lot of money on insurance and small schemes, while others spend a lot of money on audit fees. We want to find out if we can get value for money by bringing some of the cost structures together.
There will be no immediate changes to community employment schemes until the review process has been completed. That process will be undertaken on an ongoing basis after 1 January. I want to ensure that more people get an opportunity to take part in community employment schemes, and that we get better value for the €900 million that we will spend on employment supports next year. We also have some additional funds in the budget that will be made available to people participating in community employment schemes. We have a training fund of €4.2 million and an extra activation fund of €20 million for training.
Senator O’Brien said that he had much experience of looking at FÁS and at uneven qualities in the training provided. In the new structure under SOLAS, we hope to work much closer with the VECs and with other established education providers, whether in the public or the private sector, to provide better quality training and education.
We are spending over €500 million on rent supplement. In some cases, we need to review the rent levels. I am aware that the extra contribution is difficult, but we should remember that those adults on social welfare or other income and who are on a traditional local authority tenancy or on the RAS, are contributing to the local authority rent. However, in respect of the rent supplement, only the person and his or her spouse who receive the supplement have been contributing. If we are to transfer to the local authorities — which is what I would like to see happen with rent supplement — then the two rent treatments need to come together. All of the studies show that rent supplement is the most serious disincentive to taking up work. If people are on rent supplement and they take up a lot of work, they lose that supplement, which could be up to €1,200 per month, depending on the family size. If we transfer the rent supplement to the local authorities, people who are getting it would then be on a differential rent and if they are taking up work, they would have some guarantee that their rent might be somewhere between 11% and 16% of their income and they could therefore calculate how much is at stake and how much extra they could gain from working.
Senator O’Keeffe referred to social welfare being a bit like an onion and that we have to keep peeling in order to figure out the complexities of the system. It is worth working towards that reform. It is also worth bearing in mind that of the 95,000 people on rent supplement, most are single people. The number of large families on rent supplement is relatively small. We make up about 50% of the private rental market and we certainly need to get better value.
Deputy Joan Burton: If somebody has significant other income and additional social welfare payments are being made, the problem with the social welfare budget is that, given that we only have €20.5 billion to spend, if we are to be able to live within that budget we must find savings in some areas.
The most important issue in social welfare is that we build a modern welfare state. The values of a welfare state are important, including the notion that we protect children and make provision for them on a universal basis through education and child benefit. It is also important to look after older people and that they should have security about their income levels. For those of working age — from school leavers to persons of retirement age in their 60s — it is most important to maintain the concept of a contributory system where people are encouraged and enabled to find work. If, in this difficult recession, they do not have access to easy employment, they should be encouraged to go back to school, training and education to qualify for the jobs that are available.
On 1 January 2012, when the FÁS labour services come into my Department, I hope we will build a strong connection with employers. Senator O’Keeffe spoke about technology, and the Revenue on-line services have revolutionised how many self-employed people present tax returns. I hope we will move to a situation where if employers are seeking somebody for a short or, I hope, a longer period, it will be possible to suspend somebody’s social welfare payment fairly easily without having to go to the back of the queue if the employment does not last. It is more than possible to do that. In addition, employers will be able to make rapid contact with the Department of Social Protection where they have vacancies. They will then get information about people with relevant qualifications for the type of job they are interested in filling. That is absolutely essential.
Every year, even in the current recession, about 130,000 people change jobs. There are many people who are successful in finding work. Those who are unsuccessful are people whose educational qualifications may be limited, or may not have a network to know where the vacancies are and where their skills may be of specific use. We also know from employers in the IT sector that they have to take people from abroad because they do not have enough qualified people in Ireland for the kind of jobs they offer.
I am very impressed by organisations like FIT, Fast Into Technology, who train people in conjunction with employers for technology vacancies that arise. If we can get a good relationship between employers and the Department of Social Protection when the changes come in on 1 January 2012, we could offer many more opportunities to people. I have been impressed that, so far, more than 5,000 employers have offered places on JobBridge. I suspect that is because many employers are interested in taking additional people on and JobBridge or interning gives them an opportunity to do so over a period. There are 3,000 people plus now on JobBridge and the feedback is positive. There are 2,000 people currently on Tús, while there were none seven months ago. In a nine-month period, we have had an extra 5,000 people between JobBridge and Tús. Those vacancies have been filled by a new co-operation agreement between the Department of Social Protection and the old FÁS; therefore, the omens are good.
Social welfare staff have taken enormous increases in the numbers of people applying. They have also accepted huge change with the community welfare officers coming into the Department of Social Protection, as well as the FÁS staff. We have plenty of opportunities to reform our social welfare system in a positive way while maintaining a welfare state that is fair and just but enables people to be contributors. At the end of the day, they will be economically independent for themselves and their children.
|Bacik, Ivana.||Bradford, Paul.|
|Brennan, Terry.||Burke, Colm.|
|Clune, Deirdre.||Coghlan, Paul.|
|Comiskey, Michael.||Conway, Martin.|
|Cummins, Maurice.||D’Arcy, Jim.|
|D’Arcy, Michael.||Gilroy, John.|
|Harte, Jimmy.||Hayden, Aideen.|
|Healy Eames, Fidelma.||Heffernan, James.|
|Henry, Imelda.||Higgins, Lorraine.|
|Keane, Cáit.||Kelly, John.|
|Moloney, Marie.||Moran, Mary.|
|Mulcahy, Tony.||Mullins, Michael.|
|Noone, Catherine.||O’Keeffe, Susan.|
|O’Neill, Pat.||Sheahan, Tom.|
|Byrne, Thomas.||Cullinane, David.|
|Daly, Mark.||Leyden, Terry.|
|Mac Conghail, Fiach.||Mooney, Paschal.|
|Mullen, Rónán.||Norris, David.|
|Ó Clochartaigh, Trevor.||Ó Domhnaill, Brian.|
|O’Brien, Darragh.||O’Donnell, Marie-Louise.|
|O’Donovan, Denis.||Power, Averil.|
|Quinn, Feargal.||Reilly, Kathryn.|
|Walsh, Jim.||Wilson, Diarmuid.|
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