Róisín Shortall (Dublin North West, Labour)

In the time available to me I wish to concentrate on the social welfare aspects of the budget. I assure the Minister of State that I will not take any of these facts out of context so maybe he will listen to what I have to say. His bombast seems to indicate that he thinks there are no problems. Yesterday's budget, however, is the latest in a litany of budgets that have completely ignored child poverty. I am referring to the poorest children whose parents depend on social welfare. Currently, the official recognition of such children's situation is the qualified child allowance, which amounts to €22 per week. Clearly, somebody in government came to the view that this payment was inadequate and that it needed to be increased. Having been static for many years, it was increased yesterday by the princely sum of €2 per week, bringing the qualified child allowance to a total of €24 per week.

Leaving aside child benefit, to which every child is entitled, the only social welfare payment available for children of adults who are dependent on social welfare is the qualified child allowance, amounting to €24 a week, or €3.43 per day. Will the Minister of State explain how on earth a parent can feed and clothe a child, as well as meeting all the other expenses, on €3.43 per day? That figure is an indictment of this Government. It is a disgraceful response to the problem of child poverty.

The sum of €2, which is the cost of a sliced pan, truly represents crumbs from the rich man's table. I am genuinely concerned that there is failure to recognise the problem of child poverty at political or official level. We are a staggeringly unequal society. Some 96,000 children under the age of 14 are living in consistent poverty — that is, in a low-income household that is unable to afford adequate heat, clothing, substantial meals or other key basic necessities.

Child poverty is increasing. In addition, policy in this area is based on outdated research and perhaps proves that the whole area is over-researched. I would like any academic, social partner, civil servant or Cabinet Minister to show me the value of deliberately keeping the qualified child payment so low. What policy benefit can it possibly have? Has it stopped parents taking up employment? I do not think it has but, if so, where is the proof?

The reality is that one in nine children live in consistent poverty and it is undoubtedly related to this policy. The situation is far worse than those statistics suggest. The basic indicators do not include any measure of key indicators of poverty, such as lack of space to do homework, no washing facilities and foregoing medical visits. From now on the indicators will not even include debt problems, which should suit the Government nicely given that this area has been completely ignored in recent years.

Whatever measure one chooses, how can such a level of deprivation be acceptable, given the amount of State resources at the Government's disposal over the past ten years? I am not suggesting that income support is the only solution to the problem of child poverty but it is one of the principal ones. Welfare improvements for pensioners in recent budgets have shown what can happen when income maintenance measures are directed at specific groups. We should now place the same focus on children.

Budget 2008 has been found wanting on several other issues affecting children also. The rate of increase in child benefit in respect of the first two children is less than the current rate of inflation. The improvements in the back to school clothing and footwear allowance were paltry. They show a complete disregard for the costs faced by low-income families. Even within available resources, surely it would have been possible to match the qualifying criteria to that of the family income supplement. Is it any wonder that so many low-income children drop out of school early when such little support is available to them? Teenage children may eat like adults and the cost of clothing them is the same as clothing adults, yet a mere €3.43 is being provided per day. This puts pressure on teenage children in low-income families to leave school early to earn a living.

Paternity benefit was not mentioned in the Budget Statement despite promises to do something on that front. Like so many other promises in the programme for Government, it seems as if nothing will come of this proposal. The increase in the early child care supplement does nothing to make up for the fact that the boom is over and we have no State-funded preschool services.

Budget 2008 also fails to tackle the critical issue of refundable tax credits. This is a critical policy area in respect of taking low-income families out of poverty. It is an instrument that could be used to good effect, given our system of tax credits, but it has been ignored by the Government. The move to calculating income tax on a tax credit basis instead of a tax allowance basis has made no appreciable difference to workers. The standard rating of some tax credits could have been done quite easily under the old system. The Government has basically changed the method of calculating income tax rather than changing the calculation itself.

Without applying tax credits on a refundable basis, the move to tax credits has been largely meaningless. Without a refundable tax credit system, people outside the tax net, typically those on low wages in part-time, seasonal or term-time work, lose out on every euro in tax relief available to those inside the tax net.

Taking minimum wage earners and low-paid workers out of the tax net is not enough. Figures published last week show that 30% of all households at risk of poverty today are headed by a person with a job. The working poor need and deserve State assistance and the absence of a refundable tax credit system is preventing that from happening.

Tax credits are not the only elements of this budget that deserve our attention. Budget 2008 proves, for the few left who doubted it, that Fianna Fáil's 2007 election manifesto was a complete con job. Having had in its possession a detailed report on the social insurance fund, which clearly showed that the surplus was running out fast, it promised €645 million worth of cuts in PRSI rates and up to €2 billion worth of spending on contributory pensions. Those two promises simply could not be kept and, of course, they were not. What really should be happening on PRSI is tackling the poverty traps for low-paid workers. The Minister should be using some of the money gained from increasing the earning ceiling to introduce far better tapering arrangements for low earners, as suggested by the Combat Poverty Agency.

Budget 2008 represents another missed opportunity regarding supplementary pensions. This issue was not mentioned once in the budget, indicating an alarming lack of urgency on the Government's part. In spite of all the talk and hype about the pensions time-bomb, it is quite incredible that there was no reference at all to pensions in yesterday's Budget Statement. The Government published the Green Paper in October. Many of the issues raised in that paper warrant detailed consideration but there are some issues that require urgent reform. Chief among these is the rich man-poor man approach to pensions policy, whereby the more one contributes to one's pension, the more the State gives one back.

The Government should have indicated clearly in the Budget Statement that, from next year, the pension tax relief system would be replaced with whatever is proposed at the end of the Green Paper process. Considering this budget is supposed to be concerned with securing our future, it is astonishing that pension provision does not deserve one mention.

Figures on RACs and PRSAs released to me in response to a recent Dáil question suggest there is a great pension divide. Of those earners who availed of tax deductions on their pensions in 2004, the top 17% took 64% of the tax relief available. The very highest earners gained 33 times more than those on average wages. On average, top earners reduced their tax bill in 2004 by more than €20,000, which is more than the value of two full State pensions. By contrast, the average worker reduced his tax bill by a mere €627. This system is completely unfair. It makes no sense in respect of either fiscal prudence or tax equity.

If the basic aim of pensions policy is to ensure that everyone has enough income during his retirement, why are we spending so much Exchequer funding on those who need it least? Current pension policy over-relies on tax relief. The Government should not be sponsoring a system that affords more help to a Michael O'Leary or a Seán Quinn than to the average taxpayer. Budget 2008 should have sent a clear signal that the system of tax relief would be replaced by much fairer arrangements. Unfortunately, it failed to do so.

Social welfare rates have generally been increased by €12 which, perhaps unsurprisingly, is only approximately half of the increase provided for in budget 2007. I cannot agree with the Government or the social partners that benchmarking the lowest social welfare rates to 30% of gross average industrial earnings is in any way sufficient. To do so is to suggest that €197.80 is enough to live on if one is single, suffers from a disability or is otherwise out of the workforce. It quite simply is not enough. In an Ireland in which grocery inflation rests at 4.4% and fuel costs are rising at a rate of 17% per annum, and in which the average electricity bill is approximately €150, it is simply not enough to expect one to survive on less than €200 per week. Could any of us in this Chamber really envisage being able to live on that sum?

I welcome the increase in the qualified adult allowance for pensioner spouses. This is an important issue and I acknowledge the generosity of the increase. However, the general increase in pension rates is much lower than expected. It seems the Government has ignored pleas from groups representing the elderly to front-load the promised rate increase. If the increase were to be spread evenly over five years, it would amount to €18.14 this year. In other words, the Government has short-changed pensioners by more than €4 per week.

For the 14th year in a row, the living alone allowance has not been increased. Traditionally pitched at around 7% of the maximum State pension, it is now at less than half of this. If it had have kept pace, the weekly payment would now be approximately €15.50, or roughly double the current rate. Claimants are effectively losing out on almost €8 per week in addition as a result of an unspoken, hidden Government policy. Almost 160,000 people receive the living alone allowance. Their costs are substantially higher than those for couples because the same heating, maintenance and electricity bills must be paid from one income instead of two. The Government has abandoned its policy in this regard by stealth and has abandoned the affected individuals in the process. It is long past time this issue was put back on the agenda.

In the programme for Government, Fianna Fáil and the Green Party promised to award the over-80s allowance to pensioner spouses. The cost of this is minuscule, and amounts to less than €3 million per year. However, the Government has failed to deliver on that promise in budget 2008. It is yet another broken promise.

The lack of progress in providing supports for lone parents is equally disappointing. The recent EU-SILC statistics show that one in three households in consistent poverty is a lone-parent household and that the level of poverty among this group is rising. Members of lone parent families have the highest deprivation levels, at almost 65%, and almost 41% of lone-parent households have experienced problems with debt.

While the Labour Party has some concerns about the Government's proposals on supporting lone parents, it supports their general thrust. We want to see activation measures for lone parents and a tougher line on maintenance payments. We also want key support services put in place so it will be possible for lone parents to move from welfare to work. To this end, there is a need for much-improved mentoring services involving key workers who would facilitate lone parents in their transition to training and education and in gaining employment. This latter area is particularly under-funded and nothing more than lip service is being paid to it at present.

Crucially, the Labour Party wants to see an end to the cohabitation rule. It makes no sense for the State to be actively encouraging parents to live apart. The Minister will be introducing a Bill in the Dáil next week to deal with budget changes and there is no reason he cannot tackle this issue in the process. Lone parents should be encouraged to move towards family formations that will be more supportive and helpful to their children. At present, ridiculous circumstances obtain whereby parents are penalised financially through the tax and welfare system if they choose to live together or get married. I am concerned over the lack of progress regarding training and child care services. The Minister talks frequently about pilot programmes but it is over 18 months since the Government's proposals on supporting lone parents were published. It is not good enough that lone parents have had to wait so long and it seems they will have to wait until well into next year before any improvements are made.

Why does the Government continue to drag its heels regarding rent supplement? Government policy is to transfer claimants from the rent supplement scheme to the rental accommodation scheme, but there are already massive waiting lists for the latter scheme. Dublin City Council tells me 1,200 people are already waiting, while another 5,500 individuals may meet the eligibility criteria. Therefore, individuals will be stuck on rent supplement for quite a while. Some 33% of current claimants have claimed for longer than 18 months, so they are entitled. It is only the Government's foot-dragging that has prevented them from being taken out of the poverty trap in which they find themselves.

The situation of carers is only very marginally improved by this budget. Carers are still waiting for the great leap forward. The Government has already reneged on a commitment to publish a national carers' strategy by the end of this year. If carers truly were a priority for the Government and the Minister, then why has it not acted sooner?

The recent figures produced by the CSO highlighted a number of issues in regard to carers which are not currently being addressed by income maintenance policies or by services. I call on the Minister to introduce that promised strategy as soon as possible. I do not know whether any work has been done on it, but there is no sign of it being produced.

A number of carer issues have not been addressed, such as carers who care for two people and who continue to be discriminated against. The means test for the back to school allowance counts carers allowance as part of the qualifying material whereas FIS does not count in the same calculation. People who move to carers allowance are not awarded credits on that allowance.

The central message from this budget is that the poor must wait. As usual the poor will face the brunt of the downturn in the economy. I very much regret that during a time of plenty over the past ten years, the Government missed the opportunity to end poverty for good, particularly child poverty. It seems the poorest of the poor will pay the price for the Government's ineptitude.

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