Seán Sherlock (Cork East, Labour)

The Government is attempting to create a necessary framework that seeks to reform and evolve the social protection code. I would like to address my comments to the budgetary measures introduced. If I stray from the exact contents of the Social Welfare Bill 2011, I do so because I want to comment on it in a wider context.

We must consider the Social Welfare Bill 2011 in the wider budgetary context. There are thousands of workers who are not in receipt of any type of social protection measure. There is, therefore, a strongly held view that reform of the social protection code is necessary. I take on board the views espoused by those speakers who preceded me. We must have due regard to the extraordinary fiscal pressures we are under in terms of the deficit reduction target to which we are aligned.

To be fair, the Minister for Social Protection, Deputy Burton, has genuinely sought to address the disability payment issue. The Government has listened to what has been said by all sides of the House on that matter and has moved to address it. Some of us are only in government a relatively short time and we openly acknowledge that there are issues in the budget which need to be addressed. We acknowledge the statements made by Members on the opposite side in relation to that matter.

The Minister for Finance, Deputy Noonan, stated that the pressures on our social welfare budget are enormous. The financial allocation for jobseekers' payments increased from €1.4 billion in 2007 to €3.9 billion this year, an increase of 176%. The provision for State pensions has increased from €3.75 billion in 2007 to €4.7 billion this year. We will need to increase this financial allocation year-on-year owing to the demographic profile. An additional allocation of €1.75 million will be required in 2012. The Minister, Deputy Burton, is honouring the Government's commitment not to cut welfare rates, increase income tax on working people, to protect carers and to standardise child benefit payments. The social protection measures in this Bill signal a move by Government to move our country closer to economic recovery and towards the restoration of our sovereignty. Some €4.2 million will be provided for training on CE through the national training fund. In addition, SOLAS will continue to provide access by CE participants to its training programmes. The Department will spend €977 million on employment supports in 2012, up from €882 million in 2011. It is in that context that reforms of labour market activation and supports funding and management are being examined, as well as funding received from other sources, including statutory organisations. We must reform our welfare and training systems so that people who lose their jobs do not drift into long-term unemployment. This is committed to in the budget. The need to shift from a passive welfare system to a far more active approach is vital. I am sure we would all subscribe to that philosophy regardless of our own political ideological views.

The Government will publish Pathways to Work, which will outline its approach to deepening the labour market activation policy area. In my view, the social protection budget needs to be viewed holistically. Capital spending on job creating programmes will be increased in 2012. My Department and its agencies will be able to continue current levels of spending on job creation, to increase the scope for some crucial programmes and to implement some new measures. In my area of responsibility, research and innovation, there is an allocation of €370 million for 2012, although that is a slight decrease at only 98% of last year's provision. However, it allows us to continue to support the collaboration between research and industry. It will enable us to support Irish companies to gain capacity to develop innovative products and services, which are vital for survival and growth, and will strengthen Ireland's capacity to attract high quality foreign direct investment companies and to embed them here as a consequence of our cutting edge innovative profile, the ultimate aim being the creation of jobs and to move people back to work or into upskilling and away from the social protection measures on which they rely. We know that companies that invested in research and innovation and ensured their products or services have a competitive edge have held or grown market share or employment.

The increased capital budget in 2012 will allow for a 4% increase in the Enterprise Ireland capital budget, maintenance of the IDA and County Enterprise Boards capital budgets, delivery of the partial loan guarantee scheme and microfinance loan fund, an €18 million spend on innovation fund Ireland to further improve the Irish venture capital industry and, specifically, in the area of research and innovation, it will enable new technology centres in cloud, e-learning and financial services to be commenced. There is also a 20% increase in the number of innovation partnerships, support for the Science Foundation Ireland research community of more than 3,000 researchers, including research teams working with more than 500 industry partners. The programme for research in third level institutions will be also maintained. The number of technology innovation development awards will be doubled to 200. We are also improving R&D tax credits. The first €100,000 of companies' expenditure on research and development will be allowed, on a volume basis, for the purpose of the R&D tax credit. The outsourcing arrangements for R&D purposes will be improved in a targeted manner to allow the greater of the existing percentage arrangement or €100,000. Companies will have the option of using some portion of the R&D to reward key employees who have been involved in research and development. All of this will ensure companies can grow, create employment and move people, in particular research funded graduates, into workplaces, thus reducing people's dependency on social protection measures.

The future for business lies in remaining competitive and maintaining an innovative edge over our competitors. The initiatives on R&D tax credits announced in the budget will send a clear signal to businesses that this Government is supporting their efforts to develop new products and processes and to assist them in winning new markets in the current challenging environment and, ultimately to create jobs. During the next two years, the Government will commit approximately €1 billion in enterprise capital supports. The enterprise capital budget is not alone being largely maintained, the capital provision is receiving a small increase in 2012, its highest level ever. In the context of total capital cuts of €750 million in 2012, this represents a major statement of Government priorities.

The Government has chosen to prioritise jobs and enterprise. The budget announcements this week are a tangible result of that choice. The budget provision of €20 million will assist this process and the measures are designed to ensure that the Government aids recovery in order that those on the live register can take up the work that is being created as a result of these initiatives. The Government has delivered on the commitment in the programme for Government not to cut primary social welfare payments. Child benefit rates for the first two children remain unchanged at €140 per month. The Government is unwilling to impose the level of cuts to social welfare spending espoused by the previous Government, that is, by an additional €665 million in 2012. Instead, it is limiting the adjustment in social protection spending to €475 million or slightly more than 2% of the Department's spend in 2012.

The primary weekly social welfare payments are fully protected. For example, jobseeker's allowance and jobseeker's benefit remain unchanged at €188 per week, while the child benefit rate for the third child will be reduced to €148 and for the fourth and subsequent children to €160 from 2012. If one compares this with Northern Ireland-----

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