Mary Hanafin (Dún Laoghaire, Fianna Fail)

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

This Bill will give legislative effect to the social welfare elements of the supplementary budget introduced earlier this month. In the context of the current economic circumstances, it has been necessary for the Government to take steps to reduce overall public expenditure to restore order and stability in the public finances. In light of extremely difficult decisions having to be made in respect of the entire range of Government expenditures, social welfare was prioritised in the supplementary budget. Almost €21.3 billion is being provided for welfare services in 2009. This represents an increase of €1.7 billion, or 8.7%, on the amount originally provided for this year in the previous budget and is €3.6 billion, or approximately 20%, higher than the actual amount spent in 2008. This additional expenditure arises mainly as a result of increases in unemployment, with the expected average live register figure for 2009 having been adjusted upwards, unfortunately, from 290,000 to 440,000 between the October and April budgets. The extra cost in this regard will be €1.97 billion.

Significant additional expenditure also arises as a result of the cost of the improvements announced in the October budget, which provided for increases of between 3% and 3.8% in basic social welfare payment rates. At that point, the expected rate of inflation for 2009 was 2.5%. This forecast has, however, not been realised. Instead, deflation of almost 4% is now anticipated. With social welfare recipients receiving between 3% and 3.8% more in their weekly payments and with prices having fallen in recent months, their living standards, therefore, have been protected.

In the aftermath of this month's budget, total gross spending on social welfare is expected to account for 29% of gross total Government expenditure in 2009. Leaving aside borrowing, the social welfare expenditure provided in the budget is expected to account for 60% of the Exchequer's anticipated current revenue from tax and other sources. At a time when Government expenditure must be controlled as much as possible, this significant investment in social welfare is a clear demonstration of the Government's commitment to protecting the vulnerable and helping those who rely on the State for their basic income.

The Bill provides for certain amendments to the social welfare code, as announced in the Minister for Finance's Budget Statement of 7 April 2009. I wish to detail the main changes to the House.

The Bill provides for the changes in the rent supplement scheme that were announced in the supplementary budget. The purpose of the rent supplement scheme is to deal with emergencies and short-term needs that arise when a person suffers a change in circumstances - for example, when a tenant becomes unemployed and can no longer afford his or her rent. There are currently almost 84,000 people in receipt of rent supplement, an increase of 40% since the end of December 2007. The supplementary budget provides for a net increase of €29 million in rent supplement. This consists of an increase of €77 million for additional claims arising from the increase in the live register and a saving of €48 million in 2009 - €75 million in 2010 - as a result of the a number of measures.

From the end of this month rent supplement will be restricted to individuals who have been existing tenants for six months. Individuals who have not been tenants for six months or who are forming new households must have been placed on a local authority housing list following a full housing assessment before they will become eligible for a rent supplement payment. These measures will apply to all new applicants for rent supplement. Exemptions will apply where a housing authority designates that a person is homeless or where he or she has been already identified by a housing authority as having a housing need, where the person is a tenant of a voluntary housing body - capital assistance scheme tenants - or where he or she is aged over 65 or is in receipt of a disability-type payment. These exemptions will ensure that young people coming out of residential care settings, such as foster homes, will be protected. Rent supplement will continue to provide support where housing authorities are not in a position to respond within a reasonable timeframe and where a person is at risk of experiencing homelessness or hardship.

The second change being made to the rent supplement is an increase in the minimum contribution that individuals and families make towards their rent. This is being increased by €6 to €24 from 1 June 2009, which will align the rent supplement more closely with the rents that local authority tenants are obliged to pay. In Dublin city, these tenants must pay a minimum of €25.80 per week and the average is approximately €59 per week. One of the reported impediments to the transfer of rent supplement claimants to the rental accommodation scheme, RAS, is the significant difference between the contribution which is required of the tenant under the rent supplement scheme and the contribution which they are required to pay through the differential rent scheme.

The third rent supplement change is a reduction in the maximum level of rent supplement payable by the State in respect of all new tenancies or on renewals of tenancies. The limits will be reduced by 6% to 7% on average, ranging up to 10%, depending on the geographical area and household size and by reference to an analysis of rent supplement and Private Residential Tenancies Board rent data, as well as downward trends in private rents as published by the Central Statistics Office.

As Deputies will be aware, trends in the private rent sector indicate that rents have fallen considerably during the past 12 months. This is evident from data available from the Private Residential Tenancies Board and the Daft property website. I am sure Members will agree it is vital that taxpayers' money should not be used to pay landlords inflated rental prices. This change will help to ensure that this will not be the case in respect of new rent supplement tenancies. However, with more than €490 million being spent by the State on the rent supplement, we need to make sure that landlords of existing tenants do not charge too much. To this end, from 1 June 2009 the rent supplements for all existing tenancies will be reduced by €6 to reflect their additional contribution towards their rent and by a further 8% to reflect the impact of the new rent supplement limits. While tenants are contractually obliged to pay the rent agreed to in their lease, we expect landlords to decrease the rent in recognition of the fact that rents have fallen generally and that there are now a large number of vacant rental properties nationally. I urge all Deputies to support us in this and help us to send a clear message to landlords that tenants supported by the State will not be overcharged. On a positive note, agreement has been reached with the Department of the Environment, Heritage and Local Government on 1,000 transfers from rent supplement to the longer-term rental accommodation scheme in 2009. This will bring the total number of such transfers to 9,000 this year.

The next area where legislative changes are required on foot of the budget is the early child care supplement. The Government appreciates that the supplement has been a significant support to families with young children and we were glad to have been able to introduce it when funding allowed in 2006. However, in the current economic climate, very difficult decisions had to be made in the budget and there were no easy options in reducing expenditure. The early child care supplement cost €480 million in 2008. We need to achieve better results with fewer resources.

In the supplementary budget, it was announced that the monthly ECS payment will be halved to €41.50 per child from 1 May 2009 and that it will be abolished in full at the end of 2009. It will be replaced in January 2010 with a free pre-school year of early childhood care and education for all children between the ages of three years three months and four years six months.

The recent report of the National Competitiveness Council on education and training stated that "pre-primary education is a key determinant of student performance at all levels of education, as it leads to improvements in students' skills levels, motivation and the propensity to learn, which in turn raises the private and social returns from all future investments in their education".

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