Joan Burton (Dublin West, Labour) | Oireachtas source

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

The main purpose of the Bill is to give effect to some of the measures announced in the Budget Statement last week. Our twin objectives in the budget have been to ensure those in most need of the support of the Department of Social Protection are protected the most and that the Department does everything it can to get people back to work. That is why we are transforming the Department from being a mere provider of income support to an effective and engaged public employment service that assists people on the live register or otherwise far from the labour market to start their progression back to work, training or a job placement. That is why we will be providing 10,000 new places on employment schemes next year and opening many new Intreo offices.

Fianna Fáil's utter failure to introduce meaningful reforms to the social welfare system to encourage work was highlighted today in the ESRI research on jobless households. Fianna Fáil's toxic legacy is writ large in every damning finding of the ESRI, not least the astonishing fact that between 2004 and 2007, at the height of the boom, the share of households defined as jobless recorded a double digit increase to reach 15% of all households. The average across the eurozone in 2007 was just below 10%. Therefore, during the period of economic expansion from 2004 to 2007 Ireland was one of the few countries in the European Union to experience an increase in the proportion of jobless households. This occurred despite Ireland recording the highest rate of employment growth in the European Union over the previous decade. At the same time, the tendency of jobless households to be in poverty was reduced owing to very significant increases in welfare rates. Members will recall that the then Taoiseach, Bertie Ahern, former Minister Mary Harney and others in the then Government travelled the world inviting workers to come to Ireland to work. The only places they did not visit were the local social welfare and FÁS offices. Doing so would have given employment opportunities to people on the live register. This, in a nutshell, was Fianna Fáil's approach. There was no problem to which the solution was not to spend more money. Instead of Fianna Fáil introducing the kinds of reforms introduced in other European countries to change from passive to active welfare states, including job search assistance, education, training, skills development and work support services such as child care, it had no ambition whatsoever for the unemployed. The Government has greater ambition for those citizens who are unfortunate enough to be unemployed. It views each individual on the live register or otherwise distant from the labour market as an untapped resource and a future employee who will participate in the rebuilding of the country and its economic recovery. That is why we are moving from a passive to an active welfare state.

As Deputies are all too well aware, Fianna Fáil's largesse in everything means the State has been spending far in excess of its revenues for several years, but it cannot continue to do so indefinitely. Deficits must be financed through borrowing – currently at a rate of approximately €46 million per day – but there is no queue of lenders willing to lend to Ireland in the quantities needed or at anything approaching a reasonable interest rate. Even when Ireland returns fully to the markets, deficits will add to the stock of debt owed by the State. Increasing debt will increase the interest we must pay now and in the future, thereby reducing the amount of money available for public services and productive investment.

In 2012 the deficit will be more than €13 billion, equivalent to more than 8% of GDP. With the single exception of Spain, which has a similar level of deficit but a lower stock of debt, no other EU state is adding to its debt more quickly than Ireland, despite the huge efforts that have been made so far. Discussions are continuing in relation to the promissory notes and other aspects of the banking debts imposed on the State by Fianna Fáil. I am confident that a positive outcome will be achieved that will contribute to achieving these aims and reducing the burden on the taxpayer.

This is the background against which the Government has had to frame the 2013 budget. It has been necessary both to increase tax and other revenues and to reduce expenditure. Spending on social protection accounts for nearly 37% of current Government spending and given the background I have outlined, it is simply not possible to exclude social protection schemes and services from consideration when it comes to cutting back on expenditure, nor is it possible to exclude PRSI from consideration when it comes to raising badly-needed revenue.

I fully realise that nobody in this House would want to cut social welfare and I certainly do not wish to cut child benefit, the respite care grant or the duration of jobseeker's benefit. We are all aware of people who are struggling to make ends meet, pay bills and put food on the table. The social protection system is an expression of solidarity with those who are less well off than ourselves. It supports social cohesion but it also sustains economic activity by maintaining incomes in times of recession. Securing the long-term viability of the social protection system is a vital goal that serves the interests of society as a whole, and not just those who directly benefit from social welfare payments.

I have long been of the view that the burden of resolving the financial crisis should not fall disproportionately on those who are dependent on social welfare for their income, whether they be pensioners, parents, children, the unemployed or people on a disability payment. People rely on social welfare as a safety net when they become parents, retire or become ill or injured. The unemployed rely on the social welfare system both as a safety net while they are unemployed and as a springboard to help them get back to work, education or training when they have been unlucky enough to lose their jobs. I also believe that social protection spending acts as a very important stimulus, as the money we pay out is recycled back into the economy. People spend their social welfare payments on themselves and their families. The money they spend supports shops and other businesses in their communities.

The comprehensive expenditure review, published last year for the period 2012 to 2014, provided for a reduction of a further €540 million in expenditure by the Department of Social Protection in 2013 as its contribution to the reduction in current expenditure of €1.7 billion envisaged at that time. However, the Government has decided that the adjustment to social welfare spending will be €150 million less than previously agreed. This means I am introducing savings measures of €390 million next year compared with the original figure of €540 million announced this time last year.

As I mentioned earlier, it is not possible to entirely avoid cuts in social protection this year. However, while social protection accounts for almost 37% of spending, it will account for less than a fifth of the total savings in current expenditure in 2013. This has allowed me again to preserve the core weekly payment rates while at the same time providing for the increasing numbers of pensioners, who represent a real demographic bonus to Ireland. We have more older people and they are living longer. That is something we as a society should celebrate, but it has a cost in terms of the social welfare budget. While I understand the disquiet felt by those affected by the measures in this Bill, it is also fair to point to the large numbers of social welfare recipients whose incomes are entirely unaffected by the budget because their payments have been preserved. For the second year in a row, there has been no across-the-board cut in weekly payments, which is a considerable achievement. This can be compared to the €16.30 per week cut which Fianna Fáil imposed on carers and people with a disability as well as jobseekers.

People can continue to rely on their basic weekly payment, which is essential in order that they can have a sense of security regarding their income. Pensioners and all those under the age of 66, such as people with disabilities and jobseekers, will have their weekly payments fully maintained. As a result, spending on social protection will again be more than €20 billion in 2013. Fianna Fáil's proposal for 2013 in its national programme for recovery was a spend of €18.5 billion - that is, additional cuts of a further €1.5 billion over what the Government has unfortunately had to face.

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