Dr. Nat O'Connor:

I thank members for the opportunity to present to the committee. Age Action regularly caries out surveys and focus groups on older persons and many of them are concerned about means tests such as, for example, the means tests for the non-contributory State pension, the over-70s medical card, local authority housing grants, social housing, housing assistance payments, fuel allowance and the telephone allowance, as well as for a person's spouse or partner to receive an income such as the increase for qualified adults and the means test to access the nursing home support scheme. Ireland uses means-testing for more than a fifth of spending on social protection, that, is, 21.3% or twice the EU average of 10.9%. Inflation has cut the real value of income, meaning that eligibility for many welfare schemes and other supports is far stricter now than it was just four years ago. Most means tests have not changed since before 2020 despite cumulative inflation projected by the Government to be over 20% in the period from 2020 to the end of this year. There is no cross-departmental co-ordination even when the Department of Social Protection indicates likely changes to the weekly welfare rates. There is no process to automatically adjust means tests in other Departments. When welfare goes up without changes to means tests, hundreds if not thousands of people lose eligibility for vital supports.

There are cliff edges in the rules where a person who is €1 a week over the eligibility threshold gets nothing whereas somebody on €1 less per week may get a supplement or a service that is worth far more than the €52 that separates their income from the person who got nothing. There is a need for partial rates for supports like the fuel allowance to reduce these cliff-edge scenarios. People living alone who often are women have more than half of the costs faced by couples and while poverty is concentrated among older people living alone, means tests often do not provide a more generous eligibility criteria for them. We sent a detailed submission to the committee on the means test for qualified adults to the State pension known as the IQA. In that submission we argued that the whole concept of an adult dependant is flawed. In 90% of cases this involves women being financially dependent on men, which exacerbates gender inequality. Ireland has obligations to treat men and women equally under the 1979 EU directive on equal treatment in social security. Despite this obligation, the IQA treats many women as second-class citizens. The IQA rules often penalise women, sometimes leaving them with no income at all, such as in the case of one man I spoke to. He was 79 and worried about his health. He converted his savings account into a joint account with his wife in order that she would have ready access to money should something happen. As a result of this prudent and largely technical change, his wife lost her weekly IQA income. In another case, a man who was turning 80 was upset because he will get an extra €10 per week once he is over 80 but this is denied to his wife, who is on the IQA. We made seven recommendations to the committee on the means test for the IQA payment, including abolishing IQA and giving all current recipients a State pension in their own name and indexing the means test with inflation.

Means-testing causes stress and worry for older persons. Every year, people who are worried they will lose their medical card or some other support phone Age Action because the pension rate might go up by a few euro. For example a man in his 80s lost his medical card after his social protection payments increased by €10 per week. He now pays €80 per month more in medical costs and he had to pay €1,000 to replace a hearing aid that would have been free of charge on the medical card. This happens because income thresholds and eligibility criteria for means tests are not linked to inflation or to welfare rates and it happens all the time. The Department of Social Protection has been carrying out a wider review of means tests. Age Action recently sent a submission to the Department and we have sent a copy of that to the committee as well. We made nine recommendations, including publishing a detailed rationale for Ireland’s high reliance on means-testing, indexing means tests against inflation and average earnings, making changes to increase fairness and to remove poverty traps and improving cross-departmental co-ordination.

The whole concept of means-testing is problematic, however. The wider context for any review of Ireland’s tradition of means-testing is that there are alternative welfare models across Europe, including countries that use means-testing far less often than we do. Major changes are possible for Ireland when viewed from a medium to long-term perspective; not least when considering how other small European open economies provide for high levels of productivity and competitiveness while also providing greater social security, greater gender equality and a greater level of economic equality than is achieved in Ireland. Three alternatives to means testing include universalism, whereby we could simply make more payments and schemes available to everyone and then use general taxation both to fund them and to recoup any excess income that someone might get from a social protection scheme. Indeed the State pensions are taxable. We could use credited social insurance whereby we could expand the giving of PRSI credits for caring, parenting and other unpaid work in order that more people can access full welfare payments. Finally, we could target payments based on other eligibility criteria, not just income or savings, such as, for example, once again giving a medical card to everyone aged 70 and older based on age and not on income.

To conclude, I would like to read one older woman’s words, which captures what many people are feeling about our system of means tests, to members. She said, “It’s that meanness isn't it, about the little allowance that is making life slightly easier for you but at the slightest thing, they feel they can just take it away from you again.”