Brian Cowen (Laois-Offaly, Fianna Fail)

In the pre-budget outlook, the Government had to take a position on social welfare spending reductions, a spend of over €22 billion against just €32 billion coming into the coffers. That is not a sustainable position.

The rate of savings identified meant all areas of expenditure had to be examined, including social welfare. The Government sought to carefully consider the matter and ensure that the level of reduction or contribution from various blocs of public expenditure was least in the social welfare area.

That being said, I recognise that any reduction in social welfare rates is a disappointment to their recipients. We made this decision out of the necessity of ensuring that we have a social welfare code going into the future which we can sustain. On the one hand, we cannot agree that a €4 billion adjustment needs to be made while, on the other, suggest there are easier ways for it to be found. It is a difficult exercise but one which had to be undertaken by the Government in a considered way.

While there has been a cut on average of €8.30 on all working payments for those under 66 years, excluding dependants of pensioners over 66 years, the cost of living is back at February 2007 levels. Welfare payments, even after these cuts, will still be at 2008 levels. At 2003 revenue levels, social welfare rates would have been 50% lower than they are today.

The issue is how can savings in the social welfare code be ensured. We all understand the cuts affect recipients but they have been introduced in such a way as to protect them to the greatest extent possible. There has been a reduction in the cost of living. The increase of 3% in welfare rates in the 2009 budget means there is a net effect of 1.1% considering the consumer price index and the cost of living impact on welfare recipients.

Others have been protected such as the 475,000 old age pensioners and the 430,000 children in low-income or welfare-dependent families. We had to focus the savings wherever we could. Unfortunately, it was not possible to construct a budget without a contribution from the social welfare budget. We had to make those decisions. That the cost of living came down this year helped us maintain people's living standards despite the cuts made.

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