Willie O'Dea (Limerick City, Fianna Fail) | Oireachtas source

The intention of section 6 of the Bill, which introduces the so-called family dividend, is to create an incentive to move from welfare to work by attempting to widen the gap between an individual's disposable income when working, as opposed to what it was while he or she was on welfare. I welcome that provision in principle but we must dispel the myth that poverty is a lifestyle choice for most Irish people. The people in this country who are below the poverty line or at risk of poverty include a substantial number who are in low wage employment. The phenomenon called the replacement rate describes the percentage of one's disposable income from social welfare as opposed to work income. When the replacement rate exceeds 70%, people tend to be increasingly disincentivised to work. Statistics from Ireland indicate that replacement rates of 70% or higher only apply to approximately 20% of the population. At the height of the boom, long-term unemployment dropped to 1.3%. That clearly shows that most Irish people want to work and that a majority of them have an incentive to do so.

If I understand the Bill correctly, there is a fundamental contradiction at its heart. On the one hand we are introducing the family dividend to make it more profitable for people to work while, on the other, we are making lone parents less well off if they enter education or work. Section 4 provides for a transitional jobseeker's allowance for lone parents of children aged seven to 14 years. On the face of it, the provision offers an incentive because it means that lone parents with children turning seven years old after 2 July who move to the jobseeker category will not have to fulfil all the requirements that jobseekers must meet in the normal course of events. The most important of these is that they will not have to prove they are available for or actively seeking work. This is understandable given that they are looking after children who are just over the age of seven years. However, the reason the section is in the Bill is because the Minister intends to trigger a change on 2 July that will remove all lone parents with children over the age of seven years from the category of lone parent. Despite what she has said this evening, in respect of which she advanced no figures or examples to support her assertions, this change will have devastating consequences for the 30,000 or more people who are transitioning. All one has to do is speak to them, read their e-mails or listen to what they are saying. When they came before the Joint Committee on Education and Social Protection two weeks ago, we had the opportunity to meet them and hear their stories. None of them would agree with a word of what the Minister has said about their positions being improved as a result of the changes she introduced since she took office, including those changes she is proposing to make on 2 July.

If one set out to target a section of the population for further cuts and deprivations, the last group any reasonable person would focus on are lone parents. The latest CSO figures show that the consistent poverty rate among one-parent families has increased to 23% from 17.4% in 2012. That is a staggering increase. Other figures show that the deprivation rate has increased to a staggering 63.2%. We can bandy around sociological terms like deprivation rates but, to put it in plain English, a person who suffers from deprivation is going without two or more of the basic necessities of life, such as food, clothing or heating. The CSO statistics show that two out of three lone parents are going without at least two of these three basic necessities.

The changes that the Minister proposes to make on 2 July will entrench lone parents in an underclass. All of the organisations representing lone parents, as well as individuals who have offered to help them on a voluntary basis, have outlined to us figures that take into account the effect of the family dividend. As the Minister will be aware, most lone parents can only work part-time because they cannot afford child care.

However, those figures show that universally lone parents working fewer than 19 hours per week who are not entitled to FIS and who are earning the princely sum in addition to the lone parent's allowance of €150 per week will lose an additional €24 per week on 2 July. It might not be significant to any of us here, but it is quite significant to them. It doubles the punitive loss they are suffering from the changes introduced since the Minister took office to €54 per week. The figures also show that lone parents working for more than 19 hours per week who are entitled to FIS will lose an average of €60 to €70 per week. It is easy to work it out. They may get FIS if they are not on it already, but if they are on FIS, that will increase while they will lose their lone parent's allowance. Because of the way the FIS system operates, the compensation factor will be 60%. They will lose the lone parent's allowance and get back 60% of it. It does not require mathematical genius to work out the implications of that.

I welcome the change the Minister announced she will make on Committee Stage regarding carers. It was an obvious travesty. Many carers have approached me, quite a few in my own constituency, to say that people in that position suffered great anxiety and distress for a long time while we pounded the Minister with representations to make this change. While it is better late than never, those people should not have been put through that.

The changes the Minister proposes specifically on 2 July do not just relate to the incomes of lone parents. The Minister said in her speech that her objective is to encourage lone parents to work and to encourage them to enter the education system to better themselves. Let us look at what will happen to someone who has a child over the age of seven. The position will be that lone parents with children over the age of seven may transfer to the back to education allowance, but that is not guaranteed. They will have to be assessed. However, if a person transfers to the back to education allowance, he or she will lose the fuel allowance and the student maintenance grant. The fuel allowance is €520 per annum while the student maintenance grant for a person living within 45 km of his or her place of education is €2,375 per annum. That results in a weekly loss of €55.67 per week. A particular aspect of this which has not sufficiently been focused on in the debate surrounding the introduction of the Bill to date is that this will affect those in midstream. I refer to those who came into the system and had an expectation, budgeting accordingly, that the entitlements they had would last during the course of their education or training. Suddenly, it is being whipped away midstream. Many of these people are communicating with me to tell me that they have no choice but to pull out. I am talking about people who are within 45 km of their places of education. If one is more than 45 km away, which is to talk about those in remote rural areas, the loss will be a staggering €123 per week. How could a person in that situation afford to stay in the education system?

I will go through a sample of those who have contacted us about the issue. One lady contacted me from Tullamore. She says:

Until the changes, a single parent could return to full-time education, retain her single parent allowance and receive the maintenance grant. Such parents took on their courses on the basis of the supports existing at that time. They had worked out that the grant would make it possible to cover the costs relating to their return to education, such as travel, books, accommodation and child care. They had a legitimate expectation that these supports would not be pulled once the course had started. Under the changes being proposed by the Minister, single parents already in full-time education whose child is seven or older in July 2015 must change their single parent allowance to the back to education allowance, the same amount, but they can no longer receive the student grant, or they can keep the grant but lose their other payment. I became aware of this accidentally from a visit to my local citizens' information centre. I will lose my grant after July 2015. Subsequently, it was suggested to me on the telephone by a local social welfare official that the way to retain my payments was to have another child as I would then have a child under the age of seven and not be affected by the new rules.

It is disgraceful behaviour from any official from any Department, including one in the Department of Social Protection. I received another e-mail from a lady outlining a variant of this situation. She says:

I am at the end of my tether. I have no way to make up the difference in income. If I try to get a pay rise or go back to court for more maintenance, any increase will be deducted from my FIS making very little impact on the enormity of the cut. It is affecting my dignity as a person and my inadequacy as a mother. I truly hope something can be done as quickly as possible to restore the situation before its loss bankrupts me and my child.

That e-mail was from a lady who occupies the same parish as her local Deputy, who is none other than the Taoiseach, Deputy Enda Kenny. I could go on quoting correspondence all evening, but time does not permit it.

We received a document from FLAC this morning which suggests that a social impact assessment should have been done to work out the impact of these changes on lone parents in different situations. Of course, that has not been done. What we are left with is a lot of baloney about people being better off if they increase their hours of work. It is self evident that if one gets a job, one will be better off. We are told that if one increases one's hours of work, one could be better off as if someone can click his or her fingers and suddenly get more work. It is to suggest that someone can bring about a situation where he or she can take on more work notwithstanding his or her child care responsibilities. This change is being introduced despite a promise made by the Minister in the House on 18 April 2012 that she would not trigger the change until we had a Scandinavian-style child care system. She knows better than I do that we do not have a Scandinavian child care system in this country. She is flagrantly and blatantly going back on her promise not to trigger these pernicious changes without that system being in place. What is happening here is a cruel, callous, cynical and, while one might hesitate to say it, sadistic assault on one of the most deprived and vulnerable groups in our society. I urge the Minister not to proceed with that change. She can show us she will not by dropping section 4 of the Bill, as it will not then be needed.

In so far as the family dividend aspect of the Bill is concerned, it only kicks in when somebody gives up social welfare and takes up work after 5 January 2015. Is that correct? This gives rise to a problem. A former lone parent or someone from the general community of the unemployed with the same family circumstances could end up working side by side with the same incomes. One will be entitled to social welfare while the other will not, simply because the former entered the workplace after 5 January whereas the other was unlucky enough to have got work between Christmas and 5 January. I do not know financially what the solution to that problem is, but it is undesirable. One could also have two people in that position where the less well-off person is not entitled to social welfare whereas someone with a higher wage might be able to continue to draw social welfare in the shape of child allowance for a year, with 50% for the subsequent year.

Section 5 provides that for jobseekers the right to receive the child dependant allowance for 13 weeks is being discontinued, which I can understand.

For those who come into that category the effect of the incentive is reduced by about 25%. I note that this Bill does not provide for a means test. I can understand that many people who move from welfare to work would be moving into a relatively low paid job and it is only right that they should be encouraged. However, there are examples of high-fliers who, unfortunately, were casualties during the recession and have now found employment. Such a person could become a manager of a factory or managing director of a company or chief executive on from €70,000 to €90,000 a year and still be entitled to the child dependant allowance. I do not think that is a reasonable proposition.

Entitlement to the family dividend will cease if the spouse, civil partner or cohabitant - which is not defined, incidentally - is in receipt of a social welfare payment or participates in an education or training course, the exception being the 36 day illness or injury benefit claim which can be made. For example, if a person qualifies for the dividend and his or her partner has a low paid employment and that partner gets sick for a period in excess of 36 days, as a consequence, the dividend is automatically withdrawn, even though the illness benefit which the partner is drawing could be less than what he or she was earning while able to work. The circumstances could have disimproved but yet, the incentive is withdrawn. This will need to be re-examined on Committee Stage. Apparently, the family dividend payment will also be withdrawn if the child participates in an education, training or work placement scheme. Surely this is a disincentive if the child wishes to improve his or her prospects. If the child starts to receive social welfare payment in his or her own right, the family income dividend incentive is withdrawn. I do not understand why this is so.

I understand the economics of why these payments can only be given for a limited period but in my conversations with a number of lone parents in recent weeks, one or two parents who have one child said to me that they would not bother their barney availing of it, even though they are working, the reason being that it is a temporary measure, they would become used to having €30 extra per week and after a year that would be reduced to €15 and reduced to nothing after a further year. That is one of the unexpected downside consequences.

I welcome the change that the Minister has flagged with regard to carers. In my view, persons who have spent a good part of their time as carers and who are transitioning to work should be given some assistance in that transition. The family dividend should apply to carers in such cases.

I note the change relating to entitlement to carer's allowance. The Minister has flagged that she will introduce further changes on Committee Stage. However, if I read it correctly, section 3(1)(a) states, "For the purposes of the definition of 'relevant person' in this Chapter, a person shall not be regarded as requiring full-time care and attention unless...". In my view that seems to create a presumption that a person is not entitled to carer's allowance, a presumption which the person has to discharge. In my experience, this is the first time in social welfare law that a benefit is given together with a presumption that the person who is applying for it is not entitled to it unless he or she meets conditions as stipulated. I ask the Minister to look carefully at the wording of that section of the Bill.

I recently dealt with an applicant for carer's allowance, an experience familiar to many of my colleagues but perhaps not as dramatic as this case. A chap applied for carer's allowance for looking after his elderly mother in a housing estate in Limerick. The predictable reply from the Department was that she was not bad enough or sick enough and that she did not warrant carer's allowance. Unfortunately, the poor woman died ten days later. Last week a lady in a wheelchair was brought to my clinic. She is unable to walk and barely able to talk or to breathe. She was brandishing a letter from the Department of Social Protection which stated that she was not bad enough to qualify for carer's allowance. The letter was written by someone who had never seen the woman and who did not have the opportunity to examine her medically. As it was, there would have been no need for a medical examination because the sight of her would be sufficient.

The point I make to the Minister is that it is difficult enough to get carer's allowance without including legislative presumptions that people are not entitled to the allowance in the first place. I refer to the submission from FLAC to my party which recommended that section 342A of the Social Welfare Consolidation Act 2005 which is modified or changed somewhat in this legislation should be repealed. I agree with that view. This section provides that a person is entitled to a repayment from the Department because he or she has been underpaid but if, on the other hand, the person owes the Department more money, he or she cannot offset what is owed to him or her against what he or she owes the Department, if the overpayment results from fraud. I have no objection to that provision in principle but I have always assumed that a person is not guilty of fraud, which is a serious criminal offence in this country, until he or she has been found guilty by the courts process. The change being introduced in this Bill means that this will apply to a person who, in the opinion of an official of the Department of Social Protection, has committed a fraud. In my view this is bordering on the unconstitutional, particularly in view of the fact that many people who are notified of an overpayment do not bother to appeal it. They try to make some arrangement to pay it over a period of time. In many cases they are not aware that the Department has determined that the overpayment arose due to fraud because this is not stated specifically in the letter which simply refers to a section of a certain Act, which is double Dutch to most of the recipients. This provision should be changed.

The FLAC submission also makes a very good recommendation which we will include in an amendment. The debt recovery system in the Department of Social Protection should be changed to ensure that a family income does not fall below the basic rate of supplementary welfare allowance for the family in question. In my view this is a very reasonable proposition.

We are dealing with incentives and disincentives. The system is riddled with poverty traps. There have been one or two attempts to tackle some of these traps. I refer to the changeover from rent supplement to HAP as an example but HAP is effectively the differential rent scheme operated by the local authorities, therefore, extra income means the payment of extra rent. Therefore, an element of disincentive remains in that system.

The three-day rule for payment of jobseeker's benefit is a powerful disincentive to those wishing to take up employment and it leads to an anomalous situation where two people with comparable needs, working the same number of hours, can find themselves in very different situations, depending on their work patterns. For example, a person working 15 hours per week over three days, might receive a fairly significant jobseeker's payment whereas another person who is working 15 hours over five days, is entitled to nothing. The system should be replaced as it is outdated and outmoded, to be replaced by a system based simply on earnings, in order, if nothing else, to recognise the reality of the modern labour market. The FIS is a good scheme and it will be discussed at more length tomorrow at the committee's Estimates meeting. I will have a few questions which I will ask the Minister tomorrow. The FIS scheme contains disincentives. For example, in order to qualify for FIS, a person must work at least 38 hours per fortnight. Therefore, a person working 100 hours per week under the FIS threshold for his or her family size, will receive an income support payment of €60 per week, which is 60% of the difference between his or her income and the threshold if beneath it. However, a person in exactly the same family circumstances and with a smaller income, and therefore with greater need for income support, working 37 and a half hours per fortnight, will be entitled to nothing.

That is a serious anomaly in the provisions of this legislation.

As I said at the outset, I welcome any move to make work pay. That has always been my philosophy. However, the scheme the Minister has introduced is hedged in by some very serious restrictions. There are important questions in that regard which will have to be teased out on Committee Stage. My principal objection to the Bill is the contradiction at its heart whereby a family dividend is being introduced to encourage people to work by making it worth their while to do so, but, in the case of lone parents, the form that encouragement takes is by penalising them. That is a contradiction I would to see the Minister give an undertaking to resolve before Committee Stage. The best way to do so would be to agree, at the very minimum, to postpone the proposed change on 2 July pending an impact assessment on the effect it will have on single-parent families from one end of this country to the other. The claim in the Minister's opening statement that thousands of lone parents will be better off as a result of the change is absolute nonsense and totally discounted by the figures.

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