Joan Collins (Dublin South Central, Independents 4 Change) | Oireachtas source

Everybody welcomes the once-off payments. They are a help to people. I will concentrate on the core social protection payments. I will read the Age Action analysis because the work done by Age Action on this is second to none. It strongly urges the Minister to reconsider increasing the social welfare basic payments by €20 rather than €12. The Minister can do that. Age Action states that despite the united call across most civil society organisations for a €20 increase in core welfare rates, the Government got it wrong on welfare in budget 2023 even though it has the resources to protect those on the lowest incomes who have the least resilience in the face of the cost-of-living crisis. However, there is still time to fix the problem and raise core social protection incomes by at least €20 in the Social Welfare Bill 2022, rather than by €12 as announced on budget day. This would cost an additional €600 million at a time when tax revenue is buoyant from multiple sources, not just corporation tax.

For older people the loss of spending power makes all the difference in terms of being able to afford to keep their homes warm, make essential car journeys or have a nutritious protein-rich diet. Older persons do not have the means to supplement their incomes. With private pensions and savings also losing value in terms of spending power, the State pension is the bedrock on which people rely to make ends meet. Most older people will not receive all the emergency lump sums and will not receive a higher pension until January. It is not uncommon for Finance Bills or Social Welfare Bills to contain measures that were not included in the Ministers’ speeches on budget day. The final decision rests with Dáil Éireann which must vote on the Social Welfare Bill that will set next year’s welfare rates. Age Action is calling for Deputies and Senators to support that proposed increase.

Based on information to date and the Government’s projected rate of inflation for 2022 and 2023, working age welfare payments will have lost €32.37 per week in spending power by the end of 2023. The State pension will have lost €42.54 per week despite the additional €12 from January onwards. The loss of spending power is so extreme because of the cumulative affect of inflation. A nominal €10 in December 2023 will allow a person to afford only what €7.76 would have bought in December 2020. By the end of 2023, a working age welfare payment of €220 will buy 15.9% less than €203 would have bought in December 2020. The €265.30 State pension income will buy 17.1% less than the sum of €248.30 bought in December 2020. Raising welfare by €20 in January 2023 will not erase most of this lost spending power but it is the least that must be done to limit the inevitable increase in poverty and deprivation next year.

Age Action provides a table giving nominal rates of disability allowance and contributory State pension compared with spending power in 2023. It states that working age welfare payments in December 2023 will see a loss of spending power of €32.37. Over the year, that amounts to €1,688. For the contributory State pension, in December 2023 the weekly loss of spending power will be €42.54 and it will be €2,218 for the year.

Age Action notes that the data demonstrate that core welfare rates are falling further behind inflation which reduces recipients’ capacity to purchase essentials such as food, fuel and transport. The cumulative loss of annual spending power despite the recent increases of €5 in 2022 and €12 in 2023 means welfare is being cut in real terms. Once-off energy emergency payments will further reduce the gap but many of these payments will not reach all households on welfare and will not compensate for the long-term effect of losing weekly spending power. For example, a person on a working age payment of €220 would need €1,688 in lump-sum payments by the end of 2023 to compensate for his or her lost spending power despite the €12 increase in weekly income. A person on the contributory State pension would need €2,218. Most households do not receive the full range of emergency lump payments and in every case the amount received falls short of the loss of spending power.

In his budget speech, the Minister for Public Expenditure and Reform, Deputy McGrath, claimed that an older person living alone on fuel allowance would gain €2,375 between budget day and the end of 2023. This does not apply to many older persons, according to Age Action. Its report states that about 61% of older persons will fully benefit from the €600 electricity credits. The rest will share the benefit with others in their household or will not receive it. Approximately 31% of older persons of more than 66 years of age will receive the €200 living alone lump sum. Older persons living with siblings or other adults obviously do not receive it. A maximum of 40% of older persons receive fuel allowance and will benefit from the €400 fuel allowance lump sum. The expanded eligibility criteria will not apply until January 2023. New recipients will not receive that lump sum, or perhaps they will. I ask the Minister to clarify whether new recipients will receive that lump sum on a pro rata basis.

Only two thirds of State pension recipients get the full rate. This means that one third will receive less than the extra €12 per week.

Regarding the €253.30 bonus State pension, 100% of State pension recipients would obviously benefit from the extra week's payment in October, which would be paid at the existing rate. Only two thirds will get the full amount. However, some 58,000 people will turn 66 after October and into next year and they will not gain the full sum.

Age Action goes on to make a few other points. In particular, it states that tax revenues for September 2022 were €12 billion higher than in September 2021, an increase of 26%, with corporation tax accounting for less than half of the extra revenue available, VAT accounting for €2.8 billion and income tax accounting for €2.9 billion. In addition, up to the end of June 2022, the Social Insurance Fund was running a current account surplus of €721 million compared to a deficit of €1.1 billion at the same time in 2021.

The Central Bank has noted that welfare increases are a targeted measure whereas other decisions such as electricity credits for all households are among €2 billion of budget 2023 measures that were not targeted. In August 2022, the International Monetary Fund, IMF, advised the State that European countries should protect the poorest households from energy price rises and that putting in place relief measures to support low-income households, who have the least means to cope with a spike in energy prices, is, therefore, a priority. It stated that policymakers should shift decisively away from broad-based measures to targeted relief policies, including income support for the most vulnerable. For example, fully offsetting the increased cost of living for the bottom 20% of households would cost the Government 0.4% of GDP on average for the whole of 2022, and it would cost 0.9% of GDP to fully compensate the bottom 40%.

Age Action makes the point that despite recommendations from the Pensions Commission report to benchmark and index link welfare payments, the Government continues to ignore the social justice and business benefits of welfare indexation, which will stabilise the incomes of those who rely on the State for low and fixed incomes. That is from Age Action, a worthy organisation which has done a lot of research. I ask the Minister to consider the points it is making. I will put down an amendment to the Bill to ask for a report on that.

My last point is about community welfare officers, an issue I have been raising with the Minister for a long time. I suggest they are put back in the community either full-time or part-time. It was back in the 1970s that Brendan Corish introduced the community welfare officers and they were called that because they were actually embedded in the community. The idea was that people could go for emergency payments for electricity and so on. Given the fact it is taking up to six weeks for some of those emergency payments to come through, it is very important that we bring these officers back into the community for even two or three days a week so people have access to them.

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