Martin Cullen (Waterford, Fianna Fail)

I move: "That the Bill be now read a Second Time."

I am pleased to introduce this, the first of two Bills that will implement the social welfare package of €900 million announced last week in budget 2008. This generous package, representing nearly half of all additional current Government spending announced in last week's budget, brings total expenditure on social welfare in 2008 to just under €17 billion.

At a time of moderate growth, our first priority must be to ensure that the less well-off in society are protected. The budget announced last week provides significant resources to allow us to address the needs of the most disadvantaged in society. The schemes and other supports that the Department of Social and Family Affairs administers will benefit more than 1.5 million people. Families also receive child benefit for almost 1.2 million children.

The 2008 social welfare budget package makes significant progress towards achieving the Government's target rate for social welfare contributory pensions. In addition, it greatly enhances the position of the spouses and partners of contributory pensioners who receive the qualified adult allowance. The framework of supports for family carers has been strengthened and the budget package ensures that the real value of all social welfare payments is maintained and safeguarded.

The social welfare budget package ensures that decisive steps are being taken to implement commitments in the programme for Government, Towards 2016, and the national action plan for social inclusion.

The Government is committed to achieving a pension of at least €300 per week by 2012. As a first step towards achieving this target I am increasing the contributory State pension by €14 a week to €223.30 per week. The non-contributory State pension is being increased by €12 to €212 per week. Much of the debate on pensions focuses on the challenges to be met in the decades ahead as our population ages. These are major issues for our society and ones that must be faced. We must not, however, forget those who live on pensions and the need to ensure that today's pensioners have a decent income in retirement.

The increases in pensions over many years have been one of the major achievements of the Government. Since 2002, the level of the contributory State pension has increased by over 50% from €147.30 to €223.30 following this budget. This level of improvement has had a marked impact on the living standards of older people, enabling them to face the future with security and dignity.

This improvement is shown clearly in the numbers of older people deemed to be at risk of poverty, measured on a relative income basis. The most up-to-date figures from the EU survey on income and living conditions, which were published recently, have confirmed the steady improvements of recent years. The risk of poverty rate for older people has fallen from just under 30% in 2003 to 13.6% in 2006. The fall last year was 6.5 percentage points from the previous year, before the substantial improvements in social welfare pensions in 2007 and 2008 are taken into account.

The Government is also committed to increasing the pensioner qualified adult allowance to the level of the non-contributory State pension and the number of people eligible for this payment. I am pleased that it has been possible to take a major step forward in this regard in this year's budget. The Bill provides for an increase of €27 per week in the qualified adult rate which brings it to €200 per week or 94% of the target. This measure will benefit all qualified adults aged 66 and over, including those on reduced rates of payment who will benefit on a proportionate basis. This increase will be of particular benefit to women who do not have an entitlement to a contributory pension in their own right because of home responsibilities in the past.

As a result of these changes in the personal pension rate and the qualified adult rate, the household income of more than 42,000 pensioner couples will increase by up to €41 a week or nearly 11% next year. The total social welfare support provided for a contributory pensioner couple receiving the fuel allowance will exceed €23,000, an increase of almost €2,200 over their pre-budget position.

I have also lengthened the fuel season, in respect of which the fuel allowance of €18 a week is paid, by one week, to 30 weeks with effect from April next year. This measure will be of particular benefit to older people.

The Government has concerns for the long-term future of our pension system despite the major improvements for pensioners in recent years. Given our experience of the past ten years, it is appropriate that we review our overall approach so that we have in place a pension system that is sustainable in the long term and that will deliver an adequate retirement income to all retired people.

On 17 October last I published a Green Paper on Pensions. It addresses the challenges we face in the pensions area and puts forward a number of options to tackle them. The purpose of the Green Paper is to set out the situation and the economic and social implications of the various suggested courses of action.

Progress has been slow in ensuring that those in employment have an occupational or private pension. The national pensions review target is to ensure that 70% of those aged over 30 in employment have such a pension, but we are still at 62%. There are also concerns that the contributions being made by individuals into their pension schemes may be too low.

Women continue to have a lower coverage rate than men, although the gap is narrowing, and certain sectors of the economy such as hotels and restaurants, agriculture and retail continue to be extremely difficult to reach. Upwards of 1 million people will rely exclusively on social welfare provision for their retirement income unless action is taken, despite our progress.

We have choices, as set out in the Green Paper, in how to address the many issues that arise. At EU level several common approaches to the pension challenge are emerging, including supporting longer working lives and active ageing; balancing contributions and benefits in an appropriate and socially fair manner; and promoting the affordability and security of funded and private schemes.

We can apply some or all of these principles but it would not be appropriate however for me, or the Government, to champion any particular approach at this stage as this would drive the debate in one direction and diminish the consultation process. We must be clear, however, that good pension provision is costly, whether it is achieved through personal contributions to private pension schemes or through the State by way of PRSI contributions or taxes.

Pensions policy is of major importance and should be of interest to everyone. Given that it will grow in significance, it is important that we have an informed public discussion and debate on the subject. The Green Paper is a key part of that process.

This concerns not only our pensions system but also our priorities as individuals and as a society, including how long we live, our expectations for retirement and the prospects for our children. It is relevant to anyone with an interest in the shape of society in the decades ahead.

Our ambition must be to create a pension system that can be financially, economically and socially sustainable in the face of demographic change which entails a significant challenge and some difficult choices.

The establishment of the National Pensions Reserve Fund was a judicious and far-sighted initiative. The fund, which has a market value of €21 billion, will go some way towards easing future funding concerns.

The challenges outlined in the Green Paper are not unique to Ireland. They are at the heart of the debate on pension reform in many countries, particularly where the pace of demographic change is more advanced. The good news is that because our demographics will remain relatively favourable for some time, we have a reasonable, but by no means indefinite period, in which to learn from the experiences of other countries and to decide how best to address them. The consultation process will allow all interested parties the opportunity to contribute towards shaping a framework for addressing the pensions agenda in the long term. It will be important that all stakeholders participate constructively in this process as we work towards the achievement of a pensions system that can meet the needs of those currently in retirement and those of future generations. I look forward to moving the debate forward in this very important area in the coming year.

Carers play a critical role in ensuring our older people, people with disabilities and those who are seriously ill can remain in their own homes for as long as possible. Supporting and recognising carers in society is a priority of the Government and has been since 1997. During that period weekly payment rates to carers have been greatly increased, qualifying conditions for the carer's allowance have been significantly eased, coverage of the scheme has been extended and new schemes such as carer's benefit and the respite care grant have been introduced and extended. Recent reforms of the scheme allow persons in receipt of certain social welfare payments who are also providing full-time care and attention for a person to retain their main social welfare payment and receive a half rate carer's allowance. The amount paid varies depending on the person's means. As a result of these improvements, there are now over 34,000 carers in receipt of either carer's allowance or carer's benefit. These carers also receive a respite care grant, as do almost 10,000 other carers who do not qualify for weekly carer payments. The numbers availing of these schemes continue to increase.

The improvements to the carer's scheme have been made in the context of continued developments in areas such as needs assessment and home care packages which are also designed to facilitate the care of people in their own homes for as long as possible. One of the key Government commitments in the national partnership agreement, Towards 2016, is the development of a national carers' strategy. This commitment is reiterated in the programme for Government. One of the recommendations of the Joint Oireachtas Committee on Social and Family Affairs in its "Report on the Position of Full Time Carers" was that such a strategy should be developed. I am very pleased that we are in a position to act on that recommendation. The strategy will focus on supporting informal and family carers in the community. While social welfare supports for carers will clearly be a key issue in the strategy, other issues such as access to respite care, health and other services, education, training and employment will also feature strongly. Co-operation between relevant Departments and agencies is essential if the provision of services, supports and entitlements for carers is to be fully addressed. For that reason all relevant Departments and agencies will be involved in the strategy and there will be appropriate consultation with the social partners. An interdepartmental working group, chaired by the Department of the Taoiseach, is being established to draw up the strategy and to manage the consultation process. I expect the strategy to be completed by the summer of 2008.

The development of a national carers' strategy provides us with an opportunity to build further on the improvements made to the scheme to date and consider other areas where further progress can be made. I am delighted to provide in the Bill for further improvements to the income supports available to carers which build on the significant improvements made in recent years. As in previous years, I am increasing the rates of payments for carers in order that, with effect from January, carer's allowance will increase by €14, bringing the rate for carers over age 66 years to €232 a week and the payment for carers under 66 to €214 per week. I am also increasing the rate of carer's benefit by €14 to €214.70 per week. In addition, I am pleased to provide for an increase of €200 in the rate of the respite care grant to €1,700 from June 2008. This will allow over 48,000 carers next year to have a well deserved break from their caring duties and is a positive step towards the achievement of our commitment to increase the respite care grant to €3,000 per year over the lifetime of the Government.

The level of the income disregards for carer's allowance has been increased to €332.50 per week for a single person and €665 per week for a couple. This means that a couple can earn up to €60,150 per annum and still receive a reduced rate of carer's allowance, as well as the associated free travel and household benefits. This measure surpasses the commitment in Towards 2016 to ensure those on average industrial earnings can continue to qualify for a full carer's allowance. Similarly, the income threshold for carer's benefit has been increased to €332.50 per week. These improvements in the income supports available from the Department of Social and Family Affairs, together with the improvements in home care and related services in recent years, represent a further realisation of the Government's vision of a co-ordinated approach to services and supports for carers in the community.

One of my priority concerns is to maintain the value of the lowest social welfare rates in keeping with the commitments in the programme for Government and the national action plan for social inclusion 2007 to 2016. The rates of payments to people with disabilities, the unemployed, widows and those parenting alone, to mention just a few of the groups to benefit, have increased by €12 or approximately 6.5%. The value of the qualified adult allowance for these payments is also being increased by €8 a week. As a result of the budget, a couple dependent on jobseeker's allowance, with no other earnings, will be over €1,000 better off next year, while a single unemployed person will gain by over €650. These increases are ahead of projected increases in both prices and earnings. Thus, for the fifth year in a row, social welfare rates will have grown faster than prices and earnings. In fact, since 2004, the lowest social welfare rates have increased by 58% compared to cumulative price increases of 15% in the same period. In 2004 the lowest social welfare rate of payment equated to 24% of gross average industrial earnings; it will now stand at 30%. These are significant achievements and the Government is determined to consolidate them and continue to make further progress.

I am particularly pleased to provide in the Bill for an increase of €2,000 in the widowed parent grant to a level of €6,000. This is an important measure for the families concerned, giving them a timely financial boost at a time of bereavement and great personal loss, which, frequently, is also compounded by economic uncertainty and concerns about the future.

The social welfare budget package sets aside nearly €148 million, or €194 million when the early child care supplement is included, to improve the range of supports provided for children. Budget 2008 has provided for increases of 6% or above in overall child income support through a combination of child benefit, qualified child increases, back to school clothing and footwear allowance and the early child care supplement. The impact of these measures is best illustrated by way of an example. Take the case of a social welfare dependent family with three children, one of whom is under six years of age and another over 12. As a result of the budget, the combined value of child support payments to that family will increase by €718 in a full year, bringing total child income support to over €12,000 next year. This equates to an income support payment of €77 per child per week and represents an increase of over 6% in the value of current payments.

The Bill provides for payment of an additional €2 per week in the qualified child allowance, formerly called the child dependent allowance, which is paid to all social welfare recipients with children. It also provides for increases in the threshold for family income supplement by €10 per week for each child, which will result in payments increasing by €6 a week per child. These improvements will benefit some 26,500 existing families and entitle a further 2,700 to the payment.

Adequate income support is only part of the solution for people and families living in poverty. They need a lasting solution to their difficulties and the necessary supports to help them make their way to a more promising future. That is why activation and participation in employment, education, training and personal development opportunities have become an increasingly important part of my Department's activities. As a way of improving the effectiveness of these measures, it has been decided to amalgamate two initiatives run by the Department and significantly increase the funding provided for them. The revamped activation and family support programme will have a budget of €6.5 million next year. It will provide funding for projects run by third parties to assist welfare recipients and members of their families to enhance their employability through education, training and personal development. It will also provide, or co-fund, training and development programmes for particularly disadvantaged social welfare customers and their families, including very young lone mothers, other parents rearing children without the support of a partner, carers, the Traveller community and people with disabilities.

Provision has been made in the Department's administrative budget for the deployment of an additional 30 facilitators with clerical support staff next year as the first stage in a radical development of activation supports provided by the Department. This programme which is being funded under the national development plan will provide for the individual case management of all social welfare customers of working age who are not progressing into employment or accessing training or employment opportunities.

The approach will be specifically directed towards those who, because of their personal or family circumstances, face particular difficulties in engaging with the labour market. The budget makes provision for other measures designed to assist people in the progression from welfare to work. These include an increase in the upper income threshold for entitlement to one-parent family payment and a reform of the method of assessing earnings for that scheme by disregarding social insurance and other employment related contributions.

I will now outline the main provisions of the Bill. Sections 2 and 3, together with Schedules 1 and 2, provide for increases in the rates of social welfare payments, including an increase of €14 per week for recipients of the contributory State pension and for recipients of the contributory widow's or widower's pension and deserted wives benefit who are aged over 66, and for recipients of the transitional State pension or invalidity pension aged 65 and over, bringing the weekly payment to €223.30. Recipients of carer's benefit will also receive an increase of €14 per week, bringing their new weekly payment to €214.70. The Bill also provides for an increase of €14 per week for both categories of persons in receipt of carer's allowance — those aged over 66 and under 66. These increases will bring the weekly rate of carer's allowance to €232 for recipients aged over 66 and to €214 for those under 66 years of age.

Provision is made for an increase of €12 in the weekly personal rate of the non-contributory State pension, giving a new rate of €212. The rate for the non-contributory widow's and widower's pensions is being increased to €197.80. An increase of €12 is also provided in the personal rates of illness benefit, jobseeker's benefit, injury benefit and health and safety benefit, bringing the weekly rate to €197.80. An increase of €12 per week is provided for in all other social insurance and social assistance payments where the recipient is aged under 66 and for recipients of invalidity pension aged under 65. The personal rates of jobseeker's allowance, pre-retirement allowance, farm assist and disability allowance are being increased to €197.80.

An increase of €27 per week is provided in respect of qualified adults of recipients of invalidity pension, where the qualified adult is aged 66 years or over. An increase of €27 per week is also being provided for qualified adults aged 66 years and over where their spouse or partner is receiving a contributory or transitional State pension, with pro rata increases for those on certain reduced rates.

In the case of contributory and transitional State pension recipients, the increase is €9.30 where the qualified adult is aged under 66. For those in receipt of invalidity pensions, the increase is €8.60 where the qualified adult is aged under 66. In the case of non-contributory State pensions, the increase is €7.90 where the qualified adult is aged under 66. An increase of €8 per week is provided for all other qualified adult payments. The rate payable in respect of a qualified child is being increased by €2 per week to €24 per week. These increases will take effect from the first week in January 2008.

Section 4 provides for increases in the weekly income thresholds used to determine entitlement to family income supplement. The new thresholds range from €490 in the case of a family with one child to €1,170 in the case of a family with eight or more children. This measure will take effect from 3 January 2008.

Section 5 provides for an increase from €48,800 to €50,700 in the annual earnings ceiling up to which social insurance contributions are payable by employees. The section further provides for an increase in the amount of weekly earnings below which PRSI is not payable, from €339 to €352. These provisions come into effect on 1 January 2008.

Section 6 provides for an increase in the earnings ceiling up to which social insurance contributions are payable by optional contributors, from €48,800 to €50,700, with effect from 1 January 2008.

Section 7 provides for a €2,000 increase in the widowed parent grant, bringing it to €6,000. This increase is effective from budget day, 5 December 2007.

Section 8 provides for an increase in the health levy exemption thresholds from €480 to €500 per week and from €24,960 to €26,000 per annum. This measure will take effect from 1 January 2008.

Pensioners who are paid by electronic methods will receive their increase in full from January 2008. Increases for recipients of jobseeker's benefit or allowance, illness or maternity benefit, one-parent family payment, family income supplement, farm assist and supplementary welfare allowance will be paid in full from January 2008.

As has been the case previously, because of the lead-in time involved in the production of personal payable orders, recipients of certain long-term payments such as pensions, carer's allowance and invalidity pension will receive their increase in mid-February, backdated to January, along with their new payable order books. Increases for certain other long-term payments such as State pensions and disability allowance will be paid by a special once-off payment in mid-February, to cover 12 weeks' payment to the end of March when new payable order books will be issued.

This Social Welfare Bill, the first of two instalments, safeguards the living standards of those who rely on social welfare income and other supports and targets the allocation of resources towards those most in need. I commend the Bill to the House and look forward to a constructive debate.

See this speech in context