Éamon Ó Cuív (Galway West, Fianna Fail) | Oireachtas source

Tá áthas orm deis a bheith agam labhairt ar an mBille. There are many things that need to be addressed. One of the disappointing features of the recent budget has been the lack of basic reform. There had been talk of introducing a working-age payment whereby, rather than having a myriad of schemes, there would be one working-age payment. That seems to have died a death. There was also the concept of partial capacity, which was partially introduced. The idea was that it is unhealthy for people to be idle when they could do some work. There are many in receipt of disability payments, the disability allowance or the invalidity pension – long-term disability payments – who could do some work. The idea was to encourage as many people as possible to get work, even if it was not paying a lot of money. That is why one has to leave the welfare in place. It is well proven medically that idleness leads to more morbidity, higher mortality and more frequent visits to the doctor. I am disappointed that there seems to be no wide vision. There are some small changes but there does not seem to be a wide vision in terms of the reform of social welfare.

The way people who claimed illness benefit in recent months were treated was terrible. It is fine to say there was only a certain amount and that there was only a few hundred euro or whatever but I am referring to when people are depending on a weekly payment and have very little else. A couple approached me recently about this. The man had a small farm and a job in a factory but got seriously ill. The payments came erratically but the bills do not come erratically. One has to keep paying the bills. In the old days, one would have gone to the local community welfare officer and got the payment made up, and then one would have paid it back. To go to a community welfare officer now, one has to fill out an eight-page form. It takes two weeks to proceed so one is still caught. The old days of instant solutions in the circumstances in question are gone.

The idea of a basic wage has a great attraction, that is, one pays a basic amount to everybody and if people earn money beyond that it is taxed. There is a completely linked-in system that does not have many crinkles in it. From the minute somebody starts earning money he or she gets money to take home. Our system is based to an extraordinary degree on a Victorian model of social welfare, that is, we will only pay somebody the money if the person is available for work but does not work. If I earn €200,000 per year the maximum tax is approximately 55% if I am self-employed. In PAYE employment it is 4% for PRSI, 40% for tax and 7% for USC over €100,000. That is 52%. We will call it 50%, give or take. It is 50% if I am on €200,000 per year and if I earn another €100,000 I get to keep the guts of 50% of it.

However, because our attitude towards welfare is that we are generous to people on welfare and that people are sitting with their hands out rather than not being able to get a job for one reason or another, we take a totally different approach under the social welfare code. Depending on the scheme somebody is on, a person can be penalised up to 100%. Some 100% of everything somebody earns can be taken in a means test. If a couple falls beneath the threshold of €300 per week and one person earns €100 per week, the Department takes €100 away. That is the highest tax rate in the country if one considers taking money a form of taxation. As it is a reduction in one's welfare it is not seen that way, but when somebody's money is taken away he or she does not care about the guise under which it is taken. All the person knows is that he or she sweated to earn €100 and somebody just came along and took it.

Farm assist is considered a generous scheme, but 70% of everything the farmer earns on the little farm in Connemara or on the hills of County Wicklow is taken away. The person on €200,000 does not pay 70% of everything he or she earns. Then we wonder why these people do not have an incentive. That is why I am attracted to the basic wage. Under that system people get their payment and when they earn money they pay tax at the same rate as everybody else. As they earn more, they pay more tax. However, they would not find that when they fall beneath the magic threshold of the social welfare rate suddenly the effective tax rate, called a means test and a reduction in the payment, becomes 50%, 70% or 100%. That is not the experience of many people. Most people who have had PAYE jobs never face this. They go on illness benefit or jobseeker's benefit for nine months and, if they are lucky, they get back into the system before they get caught in the jobseeker's allowance. However, for many people in many areas in this city and in places such as Connemara, east Galway and Wicklow, this is the wall they face, and we appear to make no progress.

There are two ways of tackling this without jumping to a basic wage. Going to a basic wage immediately would be a big step that is probably too radical for the system. Let us start with a basic premise of what can be done to reform the system. First, one could state that no means test reduction will be at a rate of higher than 50%, that is, no matter what one earns one always gets to keep 50% of it. That would still be equivalent to the highest rate of tax, including PRSI and USC. That incentive, given where people are now, would be a great leap forward. One could justify it being 20% but let us start with 50%. One has to move forward in slow steps because the system and particularly the Department of Public Expenditure and Reform do not get these concepts. One must lead them by the hand, show that the sky will not fall in and that it is just and fair.

I wish to discuss the new change the Minister introduced for those who got caught by the decision made by the then Minister, Deputy Burton, to reduce the payments for those who had a low average amount of contributions paid or credited to entitle them to the State pension. Before doing so I will address an issue that also causes many problems for people, namely, how capital is assessed. I will spell out how capital is assessed in the social welfare system. In most schemes it is quite simple, although there are exceptions such as the carer's allowance which is much more generous. The first €20,000 of savings are ignored. That is not too bad. The next €10,000 count as income of €10 per week, which one can live with. With the next €10,000 the system says the person is earning €20 per week, which is €1,000 per year plus two weeks. It is €1,040, to be precise, on that €10,000 in the bank. If somebody has savings of €50,000 the last €10,000 is assessed at €40 per week on that amount. That is an interest rate of over 20%. Please tell me what bank in Ireland is paying 20% interest rates on deposits these days. One might say it is a large amount of money to have in the bank. I know people who live in very poor circumstances who save money. They work very hard and spend very little. I have seen people living in very poor circumstances but, unfortunately, I could not persuade them to do up the house and get rid of the money so they could get a proper social welfare payment. That is the reality.

Let us consider another scenario. Due to the change made by Deputy Burton when she was Minister, many people depend on the increase for a qualified adult, IQA, or what was the adult dependant allowance. In other words, the person gets the State pension based on his or her spouse's or partner's contributions. When one is considered a dependant adult one's income cannot be greater than €100 per week. That looks fine until one encounters certain scenarios. One is where a person works in the public service all his or her life, ends up on a finishing salary of €80,000, does not read the rules of the Department of Employment Affairs and Social Protection and retires and gets the lump sum of one and a half times his or her salary, which is €120,000. In the first scenario the person puts it in the joint bank account of the person and the spouse. In that case, the person has just disqualified the person and the spouse from the adult dependant allowance because when one works the magic formula one finds it is over €100 per week. The person will not get the full adult dependant allowance. That applies even if the couple has no other savings.

However, in the second scenario the person read the small print on the tin and knew not to put it into a joint account but into a personal account. Since it was the personal money the person had earned, not the spouse's, the couple will legitimately get the full adult dependant allowance.

This is reality. I have cases of people who are getting caught in this. Consider the couple who always had joint bank accounts. If they have any extra property over and above, even if it was totally paid for by the one working income and not the dependant's income, and if they are stupid enough to put it into two names thinking they were being very wise and doing what the State has always said to do which is to put everything in both names, they will suddenly find the Department of Employment Affairs and Social Protection writing to them asking them what they have in the bank. If they knew to put it just into the one name of the person who had earned it then they could not be touched. It is quite farcical. The whole way of assessing capital needs to be reformed.

I will move on to JobPath. I believe JobPath is a total waste of money, and I say that as someone who has had the advantage of employing people in the past. I do not know why we keep following these schemes that come in. It used to be said "Tá na Francaigh ag teacht thar sáile, arsa an tSeanbhean Bhocht", but what we have nowadays is "Tá na scéimeanna ag teacht thar sáile, arsa an tSeanbhean Bhocht". The schemes are all coming in and we look at somebody, but we never analyse whether it is in anyway sensible or not or whether it actually does anything. I ask Members to think about this. If there is an employer out there, and if there are people who are very employable, then I can guarantee those people will get employed, but without JobPath. Obviously, if they are forced onto JobPath they will go onto JobPath and then JobPath will claim that it got them the jobs. That, however, has not been my experience and I am interested to hear Deputy Fitzmaurice's comments because he too has worked in the real world and has employed people. I do not know if he goes to JobPath or through CVs or if he finds out through interviews or some other method where a good and likely person is to give him or her a job. One looks for someone who will get the job done. In my previous life as a co-op manager I had a fair number of people working, and some of them have since become hugely successful in their own private lives. Some of them did not get many educational chances, but they had the magic factors: hard work, a good personality and drive.

I do not believe that JobPath is doing what it is supposed to be cracked up to do. It is driving a lot of people around the twist in the way it is rigidly applied. Companies only get paid by putting on the churn so even if a person does not need them he or she is forced into them. Even if the companies are doing nothing for the JobPath people they are forced into them. Even if a person is never going to get a job he or she is forced into them. I know plenty of people who were called into them and they went along because their payments would have been stopped otherwise. They were put to doing things that they were convinced would never serve them on any great path. The reality is that the normal problem with unemployment is that there are more people than jobs. There is another aspect that we seem absolutely reluctant to admit exists, namely there are some people who will never get commercial jobs. I stress that there is nothing wrong with them, except that they will never get a competitive commercial job no matter how long one is at it, just as I could never be taught music. I hope nobody faults me for that. I just cannot do it. This is a reality that we seem absolutely blind to.

This leads me to the scheme jobs. We are so cruel and mean, because there are people who will never get commercial employment. All they ask of us is the opportunity to go on a scheme and to stay on a scheme. They keep doing the Tidy Towns and the janitorial work in local halls. They perform a whole lot of services that we urgently need in our communities and they do so for a minimal cost to the State. Tús placements cost in the region of €5,000 or €6,000 per year. When people are earning in that way it does not take into account all the other intangible benefits to the State, including on the health service, of a person getting up in the morning and going out to work. What we say to these people is you get a year and then it is good luck. This is in a situation where we cannot fill the Tús places. Recently I asked for the figure, and I will check it, but I believe we now have some 100,000 people who have been long-term unemployed for more than one year. Yet, we will not allow those people to stay in the Tús scheme where there are no other people who are eligible, especially in rural communities, to continue to provide the very necessary services we all enjoy. In the Aviva Stadium on Lansdowne Road or in Croke Park, people are paid to keep those places and the dressing rooms spick and span and they will get wages. In rural Ireland our other Croke Parks are fantastic sporting facilities. There are also fantastically well maintained community centres. I doubt any other country has the sporting facilities in as many rural areas as we have. We have fantastic dressing rooms and everything kept as Croke Park is kept with regard to goalposts, lines, grass cut and the whole lot. That is all being done by people working on schemes. Do we not think this is important work? Our kids have the great luxury these days of growing up and finding these well run and well organised facilities, but we do not think this is important. I find this absolutely extraordinary.

When I introduced the Tús scheme I had never intended for it to be a one year scheme. The Department of Finance at the end of 2010 said I could either take the scheme with that codicil, which I did not agree with, or have no scheme. So I took it and I am still glad that I took it because now at least there is the Tús scheme on which to build. It was supposed to be the match of the then rural social scheme that has been madly and meanly cut in various ways, including a means test. The Tús scheme was supposed to be the match of that where urban people, or non-farmers in rural areas, could get onto a scheme and stay on it for a lifetime if they never got anything better, and they could continue to do the useful work we all need done.

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