Willie Penrose (Longford-Westmeath, Labour) | Oireachtas source

I am glad to have the opportunity to contribute to the debate on the Social Welfare (No. 2) Bill on behalf of the Labour Party. The principal objective of any budget is to, as far as possible, reallocate resources to ensure the most vulnerable people living in our society are protected. There are important provisions in this Bill for which I want to compliment the Minister on achieving. It would be churlish of me, as Labour Party spokesperson in this area, not to acknowledge this. There will be approximately €21.2 billion available for spending on social welfare benefits next year, but, of course, how it is spent is critical.

In the most recent budget we found that the largest cohort of social welfare payments would remain as they were in 2019, which means that there will be no increase for the recipients of those social welfare payments in 2020. This will automatically leads to a real reduction in spending power when the rate of inflation that will apply in 2020, approximately 1.3% or 1.5%, is factored in. The result of Brexit is still to be finalised, but one thing we know for sure is that there will be an increase in the price of food. We all support the planned carbon tax increases to try to deal with carbon reduction and climate change issues, but they are likely to mean increased charges for public and private transport. The only thing we can say with absolute certainty is that in 2020 recipients of the main or core social welfare payments will experience their standard of living falling significantly. If over time social welfare rates fall significantly behind average earnings, poverty is inevitable. It is in that context that I stated, immediately after the Budget Statement made by the Minister, that if Brexit was solved, or softer than originally anticipated, the approximately €339 million the Minister prudently provided in her budget allocation to deal with a significant anticipated increase in unemployment as a result of a hard Brexit should be reallocated in 2020 by way of a supplementary budget to ensure appropriate increases in the basic rates of social welfare payments denied in the most recent budget would be forthcoming.

The changes in maternity benefit in respect of stillborn babies are extremely welcome. They are structured and critical.

The changes in the jobseeker's allowance for 18 to 24 year olds living independently and the ending of the reduced rate for those aged 25 are also welcome. The increased living alone allowance is certainly something I salute, as well as the increased fuel allowance. They are the increases that assist low income and vulnerable people and groups in society, particularly in rural areas. The ultimate aim is to restore a proportional relationship between welfare rates and average earnings.

I welcome the provision of an additional €4 million in funding to extend the hot school meal scheme nationwide next year. That will mean that another 35,000 children or thereabouts in disadvantaged areas will receive a payment. I know that the Minister focused on schools under the delivering equality of opportunity in schools, DEIS, scheme and this is probably my last opportunity to make the case for a school in my area where I went to school, St. Brigid's national school in Ballynacarrigy, to be considered favourably for inclusion in the hot school meal scheme. I hope the Minister will write it down because it is one of the long-standing DEIS schools having been designated as such in 1994. There are socioeconomic indicators in the area that are important. The school has a modern new principal. They are doing their best and there are good achievements and outcomes at that school.

I hope the Minister will commit to a timeline for abolishing the remainder of the reduced rates. It is difficult to conceive why there has been no increase in core social welfare rates because, as I have said, those on fixed incomes will face increased living costs in 2020 with nothing to offset them. In recent years some costs have gone down, while others have gone up, but we are now experiencing net inflation to a greater extent. As I said, an inflation rate of approximately 1.5% next year would mean that the real income of carers, pensioner couples and people with disabilities would effectively be less than this year. In the real world the lack of an increase is a cut in all but name. It represents a slap in the face for vulnerable persons in society. It must also be a setback for Fianna Fáil and the confidence and supply agreement. Fianna Fáil claimed it would gain concessions from Fine Gael in exchange for supporting the budget.

The kind of Brexit being pursued by Prime Minister Johnson is also likely to result in the various issues to which I have referred. Budget 2020 was meant to prepare the country for a potential Brexit, but it failed to protect those whose living standards would be most affected.

I have already raised with the Minister the fact that the income disregard for carer's allowance is too restrictive and has not changed in years. I am disappointed that she did not use the opportunity provided by the Bill to address the matter. In the budget the number of hours a carer could work outside the home was raised from 15 to 18.5 per week. I agree with this change. It was long overdue and a significant piece of the review carried out by the Minister's Department in July or August. It is a change that had not been given effect since 2006; let us be clear, therefore, that we have all been remiss, but let us not start pointing fingers. When the finger points backwards, it means that I am also a part of the problem. What is wrong is that there is no increase in the income disregard for carer's allowance to match the changes in the working allowance. The Government has created a potential poverty trap. Carers who work the extra hours might see their carer's allowance reduced. We know that only one in four carers actually receives an allowance owing to stringent means testing. The income disregard for carer's allowance has not been increased since 2008. The Minister has said it is a very generous threshold, especially for a single person, for whom €332.50 of gross weekly income is not taken into account. The Labour Party and groups that advocate for carers were looking for the threshold to be increased to €450 and for the threshold for couples to be increased from €665 to €900. I hope the matter will be reconsidered because the Department's figures should show how many carers will have their allowance reduced because of the increase in the number of hours that can be worked.

This issue will ultimately have to be tackled. I am strongly of the view that complete abolition of the means test for carer's allowance could be ground breaking and game changing. The Minister might ask how that would happen. There are so many people who could be cared for within the home environment. There are approximately 350,000 carers in Ireland, approximately 87,000 of whom are receipt of carer's allowance, while 35,000 who do not qualify for carer's allowance are in receipt of the respite care grant. They are persons who have clearly been adjudicated to be just above the income eligibility threshold. The individuals for whom they are caring have clearly been deemed to be in need of care under social welfare legislation.

It would be a positive signal to relax the income assessment procedure for this cohort of people. Even if it costs €1.2 billion, ultimately, it will be money well spent. I have always advocated the abolition of means tests. I would have loved to have been in a Government that had money. This would have been a core project of mine in such circumstances. People might argue that rich people would gain if such a measure were introduced, but rich people are already able to benefit in this way. I refuted this argument in 1995 when the then Minister for Education was abolishing tuition fees at third level. People were saying it was an awful measure because it would benefit rich people, but it benefited ESB workers and OPW workers who were doing a little overtime to get an extra £20. As an accountant, the Ceann Comhairle will recall that people got nothing if they exceeded the thresholds by 20p. Very wealthy people like Mr. Desmond and Mr. Smurfit could avail of a covenant scheme at the time. As I recall, that was costing us approximately £35 million a year. One can always make an argument to stop something, but it is how one facilitates something that is the important thing. It is time we looked at carer's allowance. I hope that someone in a future Government - I will be watching from afar - will take action in this regard and thereby become the equivalent of Deputy O'Dea's colleague, the late Donogh O'Malley. There is no doubt that this will be something for the Deputy to think about in the future, when he may be somewhere else.

I was surprised on budget day that there was no mention in the Minister for Finance's speech of the date on which the increase in the minimum wage will come into force. I strongly support the Low Pay Commission, which was a Labour Party initiative. We fought for its establishment when we were in government. A former Deputy, Senator Ged Nash, was to the fore in that campaign. The commission recommended that the minimum wage should be increased by 30 cent an hour from €9.80 to €10.10. The Minister for Finance failed to announce when this recommendation will be implemented. It is unacceptable that people on the lowest rate of pay must wait for a modest inflation-proofed increase in their earnings. It was leaked the day before the budget. Every budget is leaked nowadays. I suppose Phil Hogan must be looking on in amusement from afar. He resigned after he leaked a few lousy bits and pieces from the Department of Finance. We all knew what was coming because it was leaked. I suppose Mr. Hogan was fed up of everyone knowing, so he decided to get out ahead of everyone else. He was not sacked; he had to resign.

We knew in advance of last month's budget that the increase in the minimum wage would be delayed until March, even if this is not permitted under existing legislation. Under the minimum wage legislation, the Low Pay Commission must make an annual report to the Minister for Employment Affairs and Social Protection. Within three months of the date of receipt of that report, the Minister must by order declare a new minimum wage on the terms recommended by the commission or on other terms, or must announce that he or she intends to decline to make an order. If the Minister declines to make an order, he or she must publish a statement setting out his or her reasons for doing so. On 9 October last, the Minister, Deputy Regina Doherty, made a short statement setting out her reasons for declining to make an order declaring a national minimum hourly rate of pay. The dates are important because I was proved right in my argument from a legal perspective. That is why the Minister is here tonight. According to her statement, she is declining to make an order declaring a national minimum hourly rate of pay until the situation with regard to Brexit becomes clearer.

The reality is that she has not just postponed a decision on the date of implementation; she has invoked her statutory power to decline to make any order. To be clear, the legislation as it stands gives the Minister a three-month window in which to respond, but it does not permit her to postpone a decision beyond that period. Her failure to decide within three months means that no decision can be made for another year. Under the current legal framework, she has effectively cancelled the increase in the national minimum wage. I knew she was going to come with this. I raised it with her in October and two or three weeks ago. Now she is seeking to amend the Social Welfare Acts to allow her to reverse her earlier decision if Brexit does not happen in early 2020. That is what this is about. The Labour Party has serious concerns about her proposed amendment to the Social Welfare Acts, as outlined in Part 3. There is a danger that this amendment will undermine the functions of the independent Low Pay Commission. A Minister might be able to come in at any time and utilise this section to say, "Stall the horse there". That is why I am concerned.

I want to make it clear that if the amendment to the Social Welfare Acts being proposed by the Minister is passed, the amended section 10D of National Minimum Wage Act 2000 will provide that within three months of the receipt of a July report from the Low Pay Commission, the Minister of the day must by order declare a new national minimum wage as recommended by the Low Pay Commission or in other terms, or decline to make an order. If the Minister declines to make an order declaring a new national minimum wage, he or she will have to lay before both Houses a statement of his or her reasons for doing so. This has been done for this year. In fairness to the Minister, she has complied with the law. The new section that she proposes to introduce provides that even though the Minister of the day has received a report and has declined to make an order, and has laid before the Houses a statement of reasons for declining to make an order, he or she "may by order declare a national minimum hourly rate of pay in the terms recommended by the Commission or in other terms". The power to reverse position and implement a recommendation, having initially declined to do so, will be exhausted when a new report comes from the commission the following July.

According to the explanatory memorandum, the amendment the Minister proposes provides that "where the recommendation of the Low Pay Commission has not been implemented, the Minister may nonetheless subsequently issue an Order". The explanatory memorandum clarifies that "the amendment is designed to cater for situations such as the current uncertainty surrounding the timing and effects of Brexit". This means that the Minister of the day must, as at present, decide whether to implement a recommendation within the statutory two-month period but can then, without any change of circumstances, ignore his or her own previous decision and do the opposite. The way it is drafted means that it is not so much a delaying power as a change-of-mind power. It is easy to see how this power could be abused over time. It could totally undermine the independent role of the Low Pay Commission. The setting of the minimum wage is too important to allow it to be a matter of political goodwill. I have concerns in this regard.

When the House debated a motion proposed by one of my Sinn Féin colleagues on 15 October last, the Minister told the Dáil "that the Government has accepted the recommendations of the Low Pay Commission in their entirety and that the minimum wage will be increased by 30 cent to €10.10, as announced in budget 2020". I put it to her that all the Government had decided to do was to defer the date of the implementation of the commission's recommendation. She made no reference to the legal effect of what she had done and failed to do. She made no reference to the need for an amendment to the law to help her out of the dead end she had reversed herself into. In my contribution to that debate, I pointed out precisely what she had done. I made it clear that the suggestion that the Government could hold off on making a decision while it awaited a decision on Brexit was not provided for by law. The law is clear. I reiterate that the Minister had three months from the receipt of the recommendations to make a decision. The recommendations of the Low Pay Commission were sent in July 2019. Within three months, she had to declare a new minimum wage in the terms recommended by the commission or in other terms, or decline to make an order. If she declined to make an order, she had to publish a statement of her reasons for doing so.

On 9 October last, she made a short statement on her reasons for declining to make an order declaring the new minimum wage. It is clear that the decision which was made was not a decision to postpone the increase; in law, it was a decision to cancel the increase. As the law does not permit her to postpone a decision beyond three months, her failure to make an order within that period means that, as the law stands, the statutory function of the Minister in respect of this report is now spent. She did not respond to the argument I made during the 15 October debate. This is part of the problem with debates in the House. Ten minutes should be provided at the end to enable Ministers to respond to the arguments that have been made. If a Minister believes that an argument is poppycock or is no good, he or she can say that.

The Minister has refused to come clean and admit what she has done. Instead, this legislation is being used to make a belated amendment to the National Minimum Wage Acts. This proposal is a once-off measure to cover her predicament. It is being brought forward as a proposed permanent amendment to the law.

I want to signal clearly that I intend to table an amendment to ensure the power being conferred here can be used once and only once. I will accept its use in the current circumstances to allow the Minister to reposition herself. No self-respecting Administration could maintain such an absurd provision as a permanent part of its law. I have said on the record for a long time that the minimum wage should not be a political football. When a recommendation is made in respect of the minimum wage, it should not lead to argy-bargy in the Chamber. We should accept it and move on. As a matter of fact, we have gone beyond the concept of a minimum wage. We are now in living wage territory. That is where we are at. I know the living wage is critical in urban areas, but it has now reached out as far as country areas as well. Workers in urban areas have some access to transport, but workers in rural areas are stuck. They might have cars, but if the Minister for Transport, Tourism and Sport, Deputy Ross, keeps going, we will have no cars. He does not want people in rural areas to have anything. If one is to get from A to B to work in a job that pays €10 or €11 an hour, one must have some transport. If I want to travel from my own area of Sonna to Mullingar to get a job, I have to travel six miles.

There are not too many hopping around on bicycles, as was the case some years ago. I do not want this issue to become a political football. The State is directed by the Constitution to ensure that citizens - men and women equally - can meet their reasonable needs through paid work. Most Deputies will agree that a good job is the best route out of poverty. We want to achieve that, but there are people who need support, and social protection moneys are a vital crutch for those in dire need. If we wish to build a fair and equal society, we must ensure that work remains an attractive option because jobs are the best way out of poverty. We cannot have people living to work. We must reverse that and ensure people are working to live and get a decent payment such that they can look after their family. That is why the Labour Party sought to ensure that minimum wage was based on evidence and introduced the National Minimum Wage (Low Pay Commission) Act 2015, which established the Low Pay Commission. Its role is to consider evidence and make a recommendation on the level of the minimum wage. The essential aim behind the creation of that body was to remove the discretion of the Minister of the day to ignore evidence when setting the minimum wage. The Bill will have the effect of putting a flip-flop Minister centre stage again in respect of the minimum wage and that is why that section cannot be allowed to become a permanent part of law. As I signalled to the Minister, my party intends to draft an appropriate amendment that would limit the change to being utilised on a once-off basis. If such an amendment is not agreed to, it would open an appalling vista for low-wage workers and facilitate political interference to undermine the Low Pay Commission which the Labour Party strongly fought to have established while we were in government. Our job is to ensure the independence of the commission is sacrosanct.

I acknowledge that some of the changes the Bill will make in other areas are significant. Some are technical changes, which tidy up other legislation, such as the provision regarding payments after death. That measure will be brought into being, as will others in similar areas. I also acknowledge the measures in section 15 in respect of social insurance benefits and the increase in the earnings disregard for those in receipt of the one-parent family payment. That is the one area of which the Labour Party made a mess and I put my hands up in that regard. One-parent families and carers are the two main areas of social protection that need to be addressed and focused on.

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