Leo Varadkar (Dublin West, Fine Gael) | Oireachtas source

I thank the committee for the invitation to be here and I look forward to working constructively with it in the months and years ahead. With me from the Department are Mr. John Conlon, Mr. Denis Moynihan, Ms Roshin Sen and Mr. Tony Crean.

As requested, my statement will be relatively short and will outline my priorities in the Department of Social Protection, particularly in a budgetary context. However, I am also very keen to listen to, and understand, the views of committee members on what they see as the key social protection issues in the years ahead.

It is useful in the first instance to outline the scope and scale of the Department’s expenditure and its importance for millions of citizens in our country. Our budgetary allocation for this year is €19.625 billion. This represents 38% of gross current Government expenditure. We also have a capital budget, but this is very small. Expenditure to the end of August was just short of €13 billion and is very close to target for the year to date. We more or less expect to come in on budget. Each week, approximately 1.37 million people, including pensioners, people with disabilities, people on sick leave, those on maternity leave - and, since this week, paternity leave - as well as carers and jobseekers, receive a payment from the Department. In addition to this, more than 625,000 families receive child benefit each month for almost 1.2 million children.

Committee members are no doubt aware there is a misconception that most welfare payments go to the unemployed. This is not the case; in fact, it is far from it. The biggest single block of expenditure in 2016 will be on pensions, which will amount to €7 billion, or 36% of overall expenditure.

Expenditure on working age income supports includes jobseeker's benefit, one-parent family payment and maternity and paternity benefit. It will account for €4 billion, or 20%, of overall expenditure. The expenditure provision for illness, disability and carers will amount to €3.5 billion, or 18%, of expenditure. The expenditure on children and families will account for 13%, or approximately €2.6 billion, of which €410 million will be spent on the family income supplement paid to low income working families. Expenditure on employment supports includes community employment schemes, Gateway, Tús, back to education, back to enterprise and all of the other various employment programmes which amounts to €1.1 billion, or 6%, of the Department's budget. Expenditure on supplement payments like rent supplement, agencies like the Money Advice & Budgeting Service, MABS, and the Citizens Information Board and miscellaneous services accounts for €867 million, or 4%, of the budget. The main supplementary payments, as Members will be aware, are rent supplement, the household benefits package, the fuel allowance and free travel.

The primary focus of the last Government was to repair the economy and save Ireland from national bankruptcy. Unemployment reached a crisis peak of over 15% but CSO data now show that the latest monthly unemployment rate is 8.3%. Long-term unemployment, that is, people who have been unemployed for more than a year, stands at 4.4% and represents a reduction of over 50,000 people in the past two years. There are now more than 2 million people in employment for the first time in almost a decade, with an additional 56,200 people in work over the past year. At the end of August, there were nearly 43,000 fewer people on the live register than the same time last year and 82,000 fewer people than this time two years ago. The live register peaked at 470,000 in mid-2011, which was shortly after the change of Government. We are on track for the live register to go below 300,000 in the next couple of months. The figure remains too high but it is worth noting that the last time the figure was below 300,000 was in December 2008, which was before the financial crisis or just as it was starting to unfold.

The ongoing fall in the live register is freeing up resources that we need to meet additional demand in other areas such as pensions, people with disabilities and carers. We estimate that we will need another €200 million in 2017 to cover the cost of an increasing number of pensioners, and that is before any increase in rates.

The question that will arise in the coming weeks is how to build a sustainable budget that will benefit all of our people, young and old, rural and urban, in the workforce and not in the workforce, and to do so in such a way that does not spread scarce resources so thinly as to not make much of a difference.

There have been a number of important developments in 2016 which I will touch on. First, I have honoured the Fianna Fáil-Fine Gael agreement and the programme for Government commitment to increase rent supplement limits. The new measure is in place since 1 July and means maximum rent limits have increased in every part of Ireland. I know that rents are back to what they were at peak or higher and so is rent supplements. They vary from county to county and from household type to household type but they have been restored, in most cases, to where they were at rent peak, or higher still. The extent of the increase reflects the rise in rents in each location for each household type. For example, there has been a 25% average increase in Laois and Roscommon; a 21% average increase in Leitrim, Cork city, Longford and Galway city; a 29% average increase in Dublin; a 19% average increase in Westmeath, Kildare and Louth; and a 15% average increase in Cavan and Donegal. This varies according to household size, as do market rents. In some cases, there are variations within counties. Kildare is a county that has two very different rental markets - one is located very close Dublin and the other is quite different.

Provision remains in place for discretionary increases on a case-by-case basis. For example, where somebody needs a higher rent supplement than the limit in order to remain in his or her house, Department officials can grant a discretionary increase. As many as 10,000 discretionary increases have been granted in total. Since the increase in rent supplements, the number of people who have come looking for a discretionary increase, and needed it, has been pretty minimal. There has been a more than 90% reduction in the need for discretionary increases. On one level that demonstrates the case that other parties may have made that rent supplement should have been increased sooner but it also indicates now that the problem is less the rent supplement limit than finding somewhere to rent. The major issue now is supply.

I am delighted that the Paternity Leave and Benefit Act was enacted over the summer. The legislation was brought through the Dáil and Seanad by my colleagues, the Tánaiste and Minister for Justice and Equality, Deputy Fitzgerald, and the Minister of State at the Department of Justice and Equality, Deputy David Stanton.

My Department starts making paternity benefit payments this month to social insurance contributors, including the self-employed. This is an example of the social insurance system adapting and responding to the changing needs and wishes of families in this country as well as changes in the labour market. My Department is currently undertaking an awareness campaign for the scheme to ensure that eligible parents take it up. I would appreciate the committee's assistance in directing anyone with queries to the Department’s website, where there is detailed information on how to apply. More information can be found at welfare.ie/paternitybenefit.

As was the case in 2014 and 2015, when the Christmas bonus was paid, there is currently no provision for a Christmas bonus in the Department’s allocation for 2016. In 2014 and 2015, the Government was ultimately in a position to pay the bonus given the continuing improvement in the State’s financial position. The State’s financial position is improving again in 2016 and I will, therefore, be seeking approval from my Government colleagues in the coming months for the payment of a Christmas bonus once again this year. Any announcement will have to be made on budget day in October.

Looking ahead, the programme for Government contains a number of commitments on social protection. These include increasing pensions and the living alone allowance, protecting free travel for pensioners and people with disabilities and a rate increase for people with disabilities and carers. The programme also outlines the Government’s commitment to the development of a new working family payment to reduce child poverty and make work pay, ensuring that no family is better off on welfare than in work. This is, of course, a five year programme and everything cannot be done in one or two budgets. However, they will be done.

The benefits and pensions that social welfare recipients receive are funded by both PRSI contributions through the Social Insurance Fund and general taxation through the Exchequer Vote. As a result, I believe we need a strong consensus across society on the importance of a comprehensive social welfare system, whereby the PRSI contributions and taxation paid by all workers, including the self-employed, provide adequate, sustainable and appropriate benefits when required. I want a welfare system and, in particular, a social insurance system which responds to life’s risks such as losing one's job, long-term illness and parenting. None of us knows when we might require the support of these schemes or the services operated by the Department. However, what we all know is that we want those supports to be available if we, or loved ones, families or friends need them.

I want to reinforce the contributory principle by strengthening the social insurance system. I want to enhance the treatments available under the treatment benefit scheme, which was significantly cut back during the austerity years. This includes dental and optical benefits. As Members will be aware, I want to extend the level of social insurance coverage available to the self-employed. This is a personal priority for me and I have requested that the Department carry out a major survey of the self-employed to find out what new benefits they would most like to receive from social insurance reforms planned in future budgets. The deadline for the survey was 31 August and there was a very good response to it. The results are currently being analysed and I will share them with the committee in the coming weeks. These plans form part of the Government’s new deal for the self-employed, which will encompass tax, welfare changes and greater supports for entrepreneurship.

I should point out that this year, for the first time in many years, the Social Insurance Fund will be in surplus, having been in deficit for a number of years. That has happened for two reasons. First, the economy has been recovering. The second reason is the reforms, some of which were unpopular but necessary, made by the previous Government and my forebearer, the then Minister, Deputy Joan Burton. Now we are in a strong economic period, it is important that we keep that fund in surplus and run surpluses so that there is a surplus available when the next recession comes, which it surely will. We need to ensure that any changes we make to social insurance are sustainable and are based on contributions because without contributions going in, nothing can come out on the other side.

The summer economic statement outlined that there will be approximately €1 billion of fiscal space available for new initiatives across all Departments in budget 2017. Roughly one third will provide for tax reductions and two thirds for additional spending. Clearly, if we were to do all that we would like to do, big Departments like mine and the Departments with responsibility for health or housing could spend it all on their own, but that would not be right or fair. Therefore, choices will have to be made; everything cannot be done in one year.

On 22 July, I hosted the Department's annual pre-budget forum, during which I listened to the views of representatives from 40 non-governmental organisations, NGOs, and advocacy and representative organisations. The forum was extremely useful and it provided me and my officials with a much greater insight into the competing priorities within the sector. Bearing this in mind, rather than a shopping list of items that cannot be purchased, what I would welcome from the committee is input on what it believes should be the two or three main priorities for me in the budget talks. I will then provide the committee with the cost of and knock-on effects in that regard. Anything that is changed in social protection has a knock-on effect somewhere else. There are things that I can take up in the budget talks and I look forward to receipt of the committee's advice in that regard.