Martin Mansergh (Tipperary South, Fianna Fail)

Even in good times, social welfare is always important for people, who for one reason or another fall into the safety net, or older people who are no longer earning. It is even more important in difficult times, especially in the current economic context in which unemployment is rising rapidly. Much of this debate has been devoid of the overall budgetary and financial context. It is important to emphasise that approximately €20 billion will be paid on social welfare next year, a 15.5% increase. Taking account of social insurance fund expenditure, it comes to 17.7%. There is no other substantial area of Government expenditure that is showing this type of increase.

I congratulate both the Minister for Social and Family Affairs and the Government for protecting the social welfare system and ensuring it can continue to function in providing a safety net. I do not perceive any cuts that are substantial, let alone savage. There has been a flood of rhetoric from various quarters which does not stand up to any serious examination.

I am proud of what the State has achieved in social welfare over the past 40 years. In the mid-1960s the social welfare system existed but was very Spartan. I do not wish in any sense to claim that social welfare is luxuriant today. It is difficult to live on social welfare alone at any time. However, there have been large improvements since the 1960s. I am proud of what my party has been able to contribute in this area. I also acknowledge the contribution of Opposition parties when in Government. Former Deputies, such as the late Frank Cluskey and Proinsias De Rossa, come to mind. Proinsias De Rossa began the increase in child benefit in the mid-1990s which has been carried on and greatly amplified under Fianna Fáil.

The social welfare increases of between 3% and 3.8% are well above the predicted inflation rate for next year. There are different measures of inflation which range from 2% to 2.5%. All Members know that prices in many areas are falling sharply. Living standards are, by and large, being protected. We must also keep at the back of our minds the fact that there is a serious global financial and economic situation. Next year's State borrowing, equivalent to 6.5% of GDP, is the limit to what is prudent. The European Commission is querying that figure which, in all probability, will be the highest borrowing level of any EU member state.

Inevitably, there has to be some trimming in certain areas of expenditure. I am glad, however, we have been able to give pensioners an extra €7 per week. In an ideal world, there would be no trimming. We have shown in the past several years what we can do when the resources are available. I recall in the mid-1980s a former Minister for Finance warned that social welfare recipients could not necessarily expect an increase every year. The draft 1987 budget, before Fine Gael went out of office, stated increases would only begin in November of that year. Even in much better times, in 1995 the increase for old age pensioners was only 2.5%. In this context, I believe we have done well. As the Minister pointed out, the lowest social welfare payments are now over €200.

The child dependant payment, stopped for over ten years, has been resumed. In 1996 a Government study argued the payment was increasing the poverty trap. Circumstances have changed since and, therefore, the policy. Child benefit and the early child allowance have only been trimmed at the edges. The majority of children are now in school by the age of five and a half years. The burden of child care payments for small children should have eased off at that point. Extending child benefit beyond the age of 18 years might have been desirable. It will be continued in a transitional way for those on the lowest incomes. That is something we perhaps cannot afford in the current circumstances. Undoubtedly there is a tightening in the system and individuals and families will in specific instances be adversely affected. However, the whole point of the budget is to protect our ability to pay for social services in the future, and if we do not address that problem we will be in deep difficulty.

I was impressed by an article I saw last Saturday in The Irish Times by former Taoiseach and Deputy Garret FitzGerald, which ended by asking whether it was possible to have a serious economic and financial debate in this country. The Opposition parties have been adopting an approach of making hay while the sun shines. For them, cuts are savage and the young and old are being hit. Deputy Gilmore never talks about the medical card situation except in terms of taking medical cards from old age pensioners, and he says that without any qualification whatsoever. However, it is up to the Government to take responsibility and, if necessary, to bear unpopularity. If the Opposition parties simply want to adopt a populist approach, so be it. That is their right.

There has been little mention of the disability payment, probably because the problem has been sorted out. The Minister was correct to adjust the payment. There were well-founded reasons for bringing in the change she wanted to make but there were also counter-arguments and, in the end, the counter-arguments prevailed. Last week I launched the new edition of the Tipperary Historical Journal, which is published in the Minister's home town of Thurles. It contains the wonderful story of a 91-year-old veteran of the Peninsular War who fought under the Duke of Wellington. One of the things the veteran told to the person who wrote down the story was the maxim, "A good retreat is better than a bad stand". That has particular relevance to this issue.

The MABS system is important and valuable and will retain its identity, although in co-ordination with the Citizens Information Board. I pay tribute to the work of the Combat Poverty Agency over the past 20 years and more. It has made a valuable contribution to public debate. At the same time, however, it is the job of the Government and, more particularly, the Department of Social and Family Affairs to combat poverty. I hope the intellectual resources of the agency will be well used. It is nonsense to say there is now no independent critic in this area. The ESRI does great work in the area of poverty and income distribution and has often been critical of the Government. It will continue outside the public sphere altogether, and agencies such as CORI will not lose their voices. I do not think the fears are justified in this regard.

I noted with interest figures from the OECD which show that Ireland stands in the middle among countries with regard to income distribution. We have not done too badly. The paradox is that the so-called gap between rich and poor, which ignores the fact that many people are middle class, narrows in recessionary times and tends to expand in good times. Therefore, those figures will probably improve in the current circumstances. This does not mean, of course, that real poverty will not increase at the same time.

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