Dáil debates

Tuesday, 21 February 2006

Social Welfare Law Reform and Pensions Bill 2006: Second Stage.

 

5:00 pm

Photo of Séamus BrennanSéamus Brennan (Dublin South, Fianna Fail)
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I move: "That the Bill be now read a Second Time."

I am very pleased to introduce this, the second of two Bills intended to implement the €1.12 billion social welfare package announced last December in the budget for 2006. This substantial investment represents a €246 million, or almost 28%, increase on the 2005 package of €874 million. It brings the projected level of social welfare expenditure in 2006 to more than €13.5 billion, which is double what was spent in 2000.

Overall, Ireland is now making solid and steady progress in tackling the core issues that can blight people's lives and, too often, leave them vulnerable and marginalised in society. More than €13 billion on welfare supports and entitlements is a huge investment of taxpayers' money. It means that investment in welfare now accounts for €1 in every €3 the State will spend this year. Spending on this scale will have a significantly positive impact on the day-to-day lives of hundreds of thousands of men, women and children who are largely dependent on the safety net that welfare payments provide.

As I have said many times in this House, payments alone will not solve our social problems. That is the reason we must tackle the causes that trigger the need for the payments in the first place and the reason that reform is the common theme running through this Bill which represents another important milestone in a wide-ranging programme of reforms of social policy in this country. These reforms are about liberating, empowering, balancing rights and responsibilities, activation and encouragement and, above all else, striving to ensure that the potential of any individual is not overlooked and that no one's contribution is written off.

The reforms are to help many of the 80,000 lone parents, caring for 130,000 children, who want to escape from welfare traps and start out on the paths to training, education and work. These reforms will help to confront the unacceptable blemish of child poverty in the Ireland of the 21st century, an Ireland of exceptional wealth. Child poverty is unacceptable and we must strive to banish it for good. It is about reforms that will help us to meet the impending pensions challenge, which brings with it threats of pensioner poverty, and to lay the foundations that will allow all citizens have a decent pension and dignity in their later years. It is about recognising the valued and valuable role of carers in society and rewarding their compassion and often their sacrifice with adequate supports and entitlements.

This Bill gives legislative effect to a range of reforms, improvements, incentives and increases and also includes an important number of measures to reinforce protection and extend investigative powers in the area of pensions. The welfare and social policy provisions and reforms in this Bill include the introduction of a standard and enhanced non-contributory pension scheme that will lift some 34,000 pensioners onto higher or full pensions; increased supports and entitlements for lone parents, carers and widows; changes to scheme names as part of a modernisation programme so that they more accurately reflect modern society and also the underlying purpose of the entitlements; increased emphasis on employment activation measures to ensure that every individual's potential and contribution is recognised; and the establishment of the legal structure for the payment of the early child care supplement, beginning later this year, to 260,000 families in respect of 350,000 children under the age of six.

There are new measures to strengthen protection for members' pension schemes as a way of further strengthening public confidence in the pensions industry. The measures include provision for the Pensions Board to impose a fine as an alternative to the prosecution of an offence; allowing the Pensions Ombudsman to bypass the internal dispute resolution procedure in cases where there is clearly nothing to be gained from this process; and powers to make regulations requiring a scheme actuary to have his or her work reviewed to ensure it complies with the provisions of the Pensions Act.

The Department of Social and Family Affairs has a pivotal role to play in ensuring that the fruits of our economic growth benefit all, particularly those who are most in need of supports, encouragement and life-enhancing opportunities and solutions. Central to this is ensuring that older people, especially those who are most vulnerable, have decent pensions and security in their later years. It is also important that those reaching pension age who wish to continue work should be encouraged to do so. While pensions to older people have increased by almost 100% in less than a decade, significantly ahead of increases in the consumer price index and gross earnings over the same period, further significant improvements are now being introduced.

In addition to significant weekly increases announced in the budget for 2006, this Bill provides for a number of important new measures which are designed to target resources at particular groups of older people aged 66 or over. These measures include combining non-contributory payments for people over 66 years of age, other than carer's allowance, into one standard and enhanced non-contributory pension scheme with a greatly improved means test that will lift some 34,000 pensioners onto higher or full pensions. The means disregard for this standard pension is being increased from €7.60 to €20 per week. To allow pensioners earn more income without having the value of their pension affected, a special earnings disregard of €100 per week will be introduced.

The weekly disregard of €20 ensures that a single person with no other means will be able to have up to €35,000 in capital and still qualify for a pension at the maximum rate. This rises to €70,000 in the case of a pensioner couple. The Bill also provides for the extension of the enhanced earnings arrangement in the new State non-contributory pension to particular persons aged under 66 years in receipt of widow or widower's pension, deserted wife's allowance, and prisoner's wife's allowance. This will introduce a special earnings disregard of €100 per week. It is estimated that this improvement will benefit more than 3,000 recipients of these payments.

On many occasions, I have identified child poverty as one of the key challenges of this Government and of society in general. The long-term cost of poverty in childhood for individual children, their families and communities and for society at large demands that we address this issue. The investment of more than €100 million in increases in child benefit will bring payment rates to €150 for the first two children and €185 for the third and each subsequent child. These increases will benefit more than 540,000 families in respect of more than 1 million children and fully honour the Government's commitment on child benefit.

The early child care supplement announced in the budget for 2006 and which will be payable to parents of children who are under six years of age, will also contribute significantly to assisting in the raising of children. Some 260,000 families receiving child benefit will be paid the supplement in respect of approximately 350,000 children under the age of six. This is equal to about 50% of all families receiving child benefit and some 33% of all children for whom payment of child benefit is being made. The rate of payment is €1,000 per annum paid over four quarters, with three payments being made in 2006.

In general, payments will issue early in the month following the end of each quarter. It is the intention to issue the first payment in August 2006 for the quarter April-June, with further payments in October for the quarter July-September. Every effort will be made to make payments for the last quarter of 2006 in December. It is expected that similar payment arrangements will apply in 2007.

Payments will issue for full quarters only and that means a full quarter payment will be made in respect of an eligible child born during a quarter or a child reaching six years of age during a quarter. The estimated expenditure on early child care supplement payments in 2006 is €265 million and the estimated full-year expenditure in 2007 is €357 million.

The scheme for childminding relief was announced by the Minister for Finance in budget 2006 and the legislative approach will be underwritten as part of the Finance Bill. The scheme will exempt from taxation the childminding income of an individual who, subject to certain conditions, minds up to three children in his or her home, subject to a maximum income from child-minding of €10,000 per annum. This Bill deals with the social insurance aspects of this measure.

To ensure that all those who participate in this scheme are afforded the opportunity to build up a social insurance record which can, in turn and in time, have important advantages for benefits such as pensions and maternity benefit, the Bill will require that an annual PRSI contribution, at a rate of €253, is made in respect of this childminding income. This is in keeping with the Government's recognised policies of making every effort to encourage the extension of pension coverage, particularly to women who have emerged as especially vulnerable because of their lack of any, or adequate, pensions.

I am committed to significant reforms that deliver a better standard of living and fresh opportunities for lone parents and their children, with policies that are directed at the breaking down of existing obstacles to employment, increasing access to career enhancing education and training opportunities through targeted supports and enlightened social policies.

At present, income support is provided through the one-parent family payment to more than 80,000 lone parents at an estimated cost of more than €847 million in 2006. There has been no change to the income limits applying to the payment since it was introduced in 1997. The Bill includes changes that will give lone parents an opportunity to continue to increase their earnings without raising fears about entitlement to the payment. A provision in the Bill substantially increases the upper income limit for the one-parent family payment from €293 to €375 per week. This should allow many lone parents to access employment and, in addition, lone parents working more than 19 hours per week may also be eligible for the family income supplement. Deputies will recall that the weekly income thresholds of that scheme were increased substantially from January this year.

In late 2004, the senior officials group on social inclusion was mandated to examine obstacles to employment for lone parents and to report back to the Cabinet sub-committee on social inclusion with specific proposals. As part of this work, my Department established a working group that undertook to look closely at income supports and how they can be adjusted better to address the social problems that can arise for those who receive these payments, including the cohabitation rule and the fact that the payment can act as a disincentive to the formation of partnerships.

I will publish the findings of both working groups in the near future and intend to engage in a consultation process with interested parties. It is my intention that the outcome of these reviews, together with initiatives already in place in my Department, will contribute to the development of proposals designed better to support and encourage both lone parents and those seeking work in achieving a better standard of living, employment and education opportunities, and a better future for themselves and their children.

Recognition of and support for carers must be at the core of a caring society. In recognition of the valued and valuable work of carers, the Bill makes provision for increasing the rate of the annual respite care grant by €200 to €1,200 from June. In 2005, more than 36,000 grants were awarded and it is expected that the number of beneficiaries will increase further this year.

The duration of the carer's benefit scheme has been extended from 15 months to two years for each care recipient. In addition, regulations will provide for increasing the number of hours a person can work while still receiving a carer's allowance, carer's benefit or respite care grant from ten to 15 hours per week. The Bill also contains the necessary amendments to the Carer's Leave Act 2001 to provide for the extension of the duration of a carer's leave from 15 months to two years.

Few people will disagree that Irish society is changing rapidly. At the same time, attitudes and expectations concerning welfare schemes and entitlements are also changing. To keep pace with that change and as part of a general welfare modernisation programme, the Bill makes provision for the titles of some schemes to be changed so that they more accurately reflect modem society. An example is the old age contributory and non-contributory pensions, first introduced in 1908 by Lloyd George, which are to be changed to the State pension. The old age pension reflected a time in history when life expectancy was in the early 70s. Today, the vast majority of people reaching pension age at 66 do not consider themselves old and regard the term "old age" to be outdated and sometimes demeaning for people in their later years.

There has been widespread consultation with the relevant organisations and representative bodies in advance of decisions being made on these changes. The scheme name changes provided for in the Bill are:

Current Name New Name
Old age (contributory) pension State pension (contributory)
Old age (non-contributory) pension State pension (non-contributory)
Retirement pension State pension (transition)
Unemployment benefit Jobseeker's benefit
Unemployment assistance Jobseeker's allowance
Unemployability supplement Incapacity supplement
Disability benefit Illness benefit
Orphan's (contributory) allowance Guardian's payment (contributory)
Orphan's (non-contributory) pension Guardian's payment (non-contributory)

If Ireland is to adequately address the major challenge of meeting the projected employment demands of a surging economy over the next decade and further into the future, then a wide range of reforms and initiatives is required as part of an overall employment activation strategy. Ireland is now close to full employment. However, at a time when the Central Statistics Office forecast that this country will require up to 50,000 immigrant workers per year for the next decade, in addition to home produced workers, to maintain our current levels of economic growth, Irish people remain on the live register, or elsewhere, who may not have had their talent and full employment potential properly assessed.

The Bill includes provision for the phasing out over the coming decade of the pre-retirement allowance, PRETA, scheme in view of the changed labour market condition since the introduction of the scheme in 1990 at a time of extremely high unemployment. It was introduced originally for long-term recipients of unemployment assistance who were aged 55 years and over and who had effectively retired from actively seeking employment. PRETA numbers have decreased from a high of almost 15,300 in 1994 to 11,000 at the end of 2005.

The Bill proposes that no new person will join the scheme, from a specified date, and that as a result the scheme will be phased out without impacting on any of the existing recipients. This would mean that those currently on the live register aged 55 to 66 who might have transferred to PRETA, will no longer be able to do so. As a result, this will lead in the short term to an increase of about 2,000 on the live register. However, this increase should, in time, be offset by the inclusion of the over 55s for intervention and support in the Government's employment action plan. In addition, my Department and other agencies have developed a wide range of employment support payments, services and initiatives to assist jobseekers and others who may feel vulnerable, to return to employment, education or training.

I will now outline the main provisions of the Bill, which include new measures and amends the Social Welfare Consolidation Act 2005, the Pensions Act 1990 and a small number of other Acts. I am making amendments to the social welfare code as follows. In the area of child income support, the Government's policy is to concentrate resources on enhancing the child benefit scheme. Child benefit now accounts for some 67% of child income support, while in 1994 it constituted less than 30%. There are sound reasons for this policy. Child benefit is both neutral vis-a-vis the employment status of the child's parents and it does not contribute to poverty traps. As a near universal payment, child benefit is not taxable, is not assessed as means for other secondary benefits and is payable to the primary carer, usually the mother. When account is taken of these aspects of payment, child benefit is a most effective child income support mechanism. Expenditure on the child benefit scheme in 2006 is expected to be more than €2 billion.

Section 3 provides for increases in the monthly rates of child benefit as announced in the budget for 2006. The lower rate of benefit, payable in respect of each of the first two children, is being increased by €8.40 per month from €141.60 to €150. The rate for the third and each subsequent child is being increased by €7.70 per month, bringing the rate from €177.30 to €185. These increases come into effect from 1 April 2006.

As part of the wider objectives of making the social welfare system more accessible, modernising the social welfare code further and reflecting a more contemporary outlook, changed societal expectations of social welfare schemes and, to a greater extent, their underlying purpose, I am providing in section 4 and Schedule 1 to the Bill for changes to the titles of certain social welfare payments.

Deputies will be aware of the measures relating to childminding announced by the Minister for Finance in the Budget Statement. Income of €10,000 per year will be disregarded in the assessment of liability to income tax where an individual minds up to three children who are not his or her own in his or her home. In keeping with the Government's policy of extending pension coverage, especially among women who are less likely to have pension provision, I am providing in sections 5 and 6 that where this relief is claimed on income earned by the self-employed home childminder, it will be liable for a social insurance contribution of €253 per annum. This will allow the childminder to build up a social insurance record which can in turn have important implications for benefits such as pensions and maternity benefit.

As outlined earlier, carer's benefit is payable for a maximum period of 15 months. Section 7 provides for the extension of the payment period to two years and provides that this improvement takes effect from budget day, December 7 last. This means that any carer who was in receipt of carer's benefit on or after 7 December 2005 will be entitled to receive an additional 39 weeks' of carer's benefit, subject to the carer continuing to fulfil the qualifying conditions. To minimise any disruption to carers affected by this measure, I am also making arrangements to commence the payment of the additional weeks as quickly as possible so that carers whose 65 weeks' payment expires prior to the enactment of this Bill will not suffer an interruption in their payment.

Sections 9 and 13 provide for the calculation of a daily rate to facilitate the payment of old age contributory pension and retirement pension from the actual date the customer attains 66 or 65 years respectively. These pensions are paid from the pension payday after the relevant age is reached. In addition, sections 11 and 12 provide for the automatic transfer from invalidity pension or retirement pension to old age contributory pension, or the State contributory pension as it will now be known, when the recipient reaches the age of 66.

Section 15 provides for the phasing out of the pre-retirement allowance scheme, the reasons for which I outlined. Section 16 provides the legislative basis for the establishment of the non-contributory State pension scheme from September 2006. Section 17 and Schedules 2 and 3 provide for a number of consequential amendments required on foot of the establishment of this pension.

As a consequence of the introduction of the non-contributory State pension for persons aged 66 years and over, the blind pension, widow's and widower's pension and one-parent family payment will no longer be payable after age 66. Accordingly, sections 20, 21, and 22 provide for consequential amendments to those schemes. Similar provision is made in section 23 for the purposes of those who have continued entitlement to the deserted wife's allowance and prisoner's wife's allowance schemes.

Section 24 and Schedule 4 contain the rules governing the means test which will apply to the non-contributory State pension. In addition, certain amendments are required with regard to the provisions governing existing long-term payments. Section 25 and Schedule 5 provide for the collation of the rules governing the means test for those long-term schemes applicable to customers under pension age, including those in receipt of blind, widow's, widower's and orphan's non-contributory pensions, one-parent family payments and carer's allowance. Schedule 5 also contains a provision to disregard €100 per week from earnings in respect of recipients of widow's and widower's non-contributory pensions and those in receipt of deserted wife's and prisoner's wife's allowances who are aged under 66 years.

Section 27 provides for an increase in the upper earnings threshold for one-parent family payment from €293 to €375 per week. Sections 28, 29 and Schedule 6 provide the legislative basis for the introduction of the early child care supplement. On behalf of the office of the Minister of State with responsibility for children, my Department will administer the scheme which comes into operation on April 1.

Section 30 provides for an increase in the annual respite care grant paid to carers in June of each year from €1,000 to €1,200. Section 31 provides for the disregard of the amount of any contributions to personal retirement savings accounts for the purposes of the income thresholds applicable to the family income supplement scheme. Section 32 provides that a person who qualifies for an Irish invalidity pension under EU regulations will not suffer a reduction of pension if he or she subsequently becomes entitled under the EU regulations to a survivor's pension or a retirement pension from another EU member state.

Section 33 provides for amendments to the definitions contained in Schedule 3 to the Social Welfare Consolidation Act 2005 which contains the rules applied in assessing means for the purposes of certain social welfare schemes. This section further provides for the exclusion from the means test of certain payments such as the early child care supplement, the home care grant and home tuition scheme. Section 34 provides for the alignment from May 2006 of the treatment of benefit and privilege in respect of supplementary welfare allowance, where the person is living with parents, to that applying to other means-tested schemes.

Section 35 provides for the inclusion of the National Council of Special Education, the Teaching Council, the Private Security Authority and the Commission for Taxi Regulation in the list of specified bodies authorised by legislation to use the personal public service or PPS number as a public service identifier.

As I have said on many occasions, there are no quick-fix solutions to the fact that almost half the country's current workforce of two million people do not have personal pensions and face a retirement in which their main source of income will be the State pension. As the House is aware, last month I launched the national pensions review, the comprehensive report produced by the Pensions Board to review the progress being made on our overall pensions strategy and targets. The report sets out our current position, the challenges we face and a range of measures we can consider for the future. In summary, the main recommendations of the report were for a State incentive for contributions to personal retirement savings accounts of a matching contribution, similar to the SSIA-type arrangements, tax relief at the higher rate for all personal pension contributions and an option to defer the State pension.

The measures announced by the Minister for Finance in the recently published Finance Bill to incentivise the transfer of SSIA funds into pensions show how seriously the Government is taking pensions and demonstrate its commitment to developing pension policy that will address critical issues facing this country on pensions coverage and adequacy. By paying a bonus of €1 for every €3 transferred directly into a pension account of SSIA holders who are taxed at 20% and, significantly, in the case of those who are not in the tax net to begin with, up to a maximum of €2,500, the Government is creating an ideal opportunity for thousands of people on middle and low incomes to improve their pensions position as it allows for a maximum once off contribution of up to €10,000. I urge people to avail of this opportunity as a way of investing in securing a decent income for their later years.

While the Pensions Board is in favour of a continuation of the existing voluntary system for supplementary pensions, the report has also highlighted the need for further consideration of mandatory pension provision, State-sponsored annuities and the introduction of a pension protection fund. I want this report to be considered and debated throughout society. In the weeks ahead I will call together all interested parties to a national forum to debate the central issues.

The main measures I am introducing in this Bill with regard to the Pensions Act will further enhance the regulatory regime governing supplementary pensions. Section 39 introduces an alternative so-called "pay-up and remedy or be fined" regime similar to that set out in the Company Law Enforcement Act. Under the new provision the Pensions Board may notify a person in writing that it is alleged that an offence has been committed and that if, within 21 days of the notice, the person has remedied the offence to the satisfaction of the board and paid the appropriate fine, a prosecution will not be instituted. Section 39 also provides that certain documentary evidence submitted in a prosecution is admissible without the attendance of the Pensions Board officer in court. The board believes this is a more economic and efficient approach.

Section 40 provides that as Minister, I may, in consultation with the Minister for Finance, indemnify Pensions Board members and the staff of the board against liability for damages or costs where they have discharged their functions in good faith. This is similar to legislation introduced in recent years establishing other boards.

Section 42 allows for regulations to be made requiring a scheme actuary's work to be reviewed to ensure it complies with the provisions of the Pensions Act 1990 and any professional guidance issued by the Society of Actuaries in Ireland. I recently met representatives of the society to discuss this issue. The matters to be prescribed in the regulations include the appointment of a reviewing actuary, the frequency of reviews and the timeframe for reviews.

In his annual report the Pensions Ombudsman highlighted areas of concern relating to the operation of the internal dispute resolution procedure. Section 43 of the Bill addresses these concerns. It provides that the Pensions Ombudsman may now bypass this procedure and investigate complaints in cases where there is clearly nothing to be gained from the process. An example of this would be where the complaint lies against the employer rather than the trustees of a scheme.

Section 44 and Schedule 8 to the Bill also provide for a number of miscellaneous amendments to the Pensions Act 1990 that are technical in nature. The Bill provides for a small number of amendments to other Acts. Section 45 contains an amendment to the Combat Poverty Agency Act 1986 to provide for an extension from three years to five years to the term of office for new appointments to the board of that agency. This will ensure the expertise developed by board members will be retained for a longer period, thereby making a more valuable contribution to the agency.

Section 46 amends the Freedom of Information Act 1997 to exclude for the purposes of that Act a secrecy clause in the Pensions Act 1990 in relation to the functions of the Pensions Ombudsman and a similar clause in the Comhairle Act 2000 relating to that agency's functions. Section 47 provides for an amendment to the Taxes Consolidation Act 1997 to exempt the early child care supplement from being reckonable as income for income tax purposes. Section 48 and Schedule 9 contain the necessary amendments to the Carer's Leave Act 2001 to provide for the extension of the duration of carer's leave from 15 months to two years.

The Social Welfare Law Reform and Pensions Bill 2006 builds further on the development of social inclusion measures adopted by the Government in recent years. It safeguards the living standards of those who rely on social welfare income and other supports and prioritises the allocation of resources in favour of those most in need. Resources will continue to be targeted on helping those most in need, not only to raise standards of living but to ensure everyone is a valued citizen and can make his or her own individual contribution to society regardless of his or her particular circumstances.

However, the significant social issues we face can be eased but not solved by welfare and support payments alone. The easy route is to salve our conscience by signing the cheques and hoping the problems will go away. The honest route is to get behind the payments and confront the problems. It is vitally important that we do not view welfare as permanent. That is why a one size fits all system will not provide the answers. Welfare support systems must be tailored to the specific needs of individuals and should be seen as stepping stones to achieving a better quality of life.

Achieving the changes in social policy that reflect the needs of the Ireland of the 21st century will call for courageous reforms. The window of opportunity is there and, through this Bill and further changes planned over the coming months and years, we will shape the reforms that will introduce more enlightened and progressive social policies in a number of key areas. This Bill is an important milestone in that regard. I commend the Bill to the House and look forward to a constructive discussion.

6:00 pm

Photo of David StantonDavid Stanton (Cork East, Fine Gael)
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I thank the Minister's officials for giving us a briefing today. That is always useful, welcome and informative. However, I am sure the Minister is aware from previous comments that we on this side of the House are not pleased with the very short lead-in time we have had to study the Bill. I am informed this is not the Minister's fault, but if he is looking forward to a constructive debate, which is the style of those on this side of the House, particularly from Deputies Penrose, Boyle, me and others, it is difficult to be constructive when you have very little time to study what is put before you.

The Bill was published at lunch time yesterday. Given that I had other commitments today and needed to travel here, it was quite difficult to go through the Bill in any detail and to do it the justice it probably deserves. In future, will the Minister ensure we get a couple of days at least to study Bills and get advice on them to have a constructive debate on important matters, as the Minister has suggested? If the Government insists on behaving in this way, it is unfair to us and on the people we represent. As others said, the Government is treating Members of the House with contempt if it does not give us time to study important legislation such as this, legislation on which we want to be positive and constructive. I feel strongly about this matter. From the Minister's comments, it seems he agrees. This is not the way to do business. It is indefensible and I urge that it does not happen again.

I apologise to the House for not being able to make as detailed a contribution as I would like as I did not have sufficient time to prepare. There are good measures in this Bill and I welcome them. Increases voted by the Oireachtas and made available by the Government to people in need are extremely welcome. In this day and age when so many resources are available to us, it is only right that we do what we can to improve the lot of everybody.

I took note of a number of comments in the Minister's speech. He stated: "As I have stated many times in this House, payments alone will not solve our social problems." I agree with that. Part of the Minister's conclusion was folksy and reminded me of Ronald Reagan speak. He stated:

To achieve the changes in social policy that reflect the needs of the Ireland of the 21st century will call for courageous reforms. The window of opportunity is there. . . .

It is fair that the names of schemes will be changed by the Bill but it is not what one would call courageous reform. The Bill does not indicate what the Minister means by courageous reforms.

I welcome the increase in payments, which are badly needed. The Combat Poverty Agency maintains "relative to our EU counterparts, Ireland has among the lowest levels of social expenditure as a proportion of national income." It also maintains that Ireland spends relatively small sums in areas such as old age expenditure and family services. It states: "Social expenditure should be increased where appropriate over the coming years to rectify the current deficits."

Before entering the House today, Deputy Penrose and I attended the Joint Committee on Social and Family Affairs, appearing before which was Dr. Maureen Gaffney. We needed to abandon the committee and come here because this Bill was introduced so urgently and we did not get a chance to go through business as we would have liked. Dr. Gaffney spoke about the need for a totally new paradigm and way of thinking where older people are concerned. The NESF's report on the care of older people includes some courageous ideas but, unfortunately, I do not see them reflected in this Bill. It has no ground-breaking measures.

The Minister has talked for a long time about courageous ideas but we have not seen them. He keeps referring to the issue of child poverty, but not much is happening. For example, in his budget speech in December 2004, the Minister announced the development of a targeted payment based on need to help combat child poverty. He stated: "As part of the Sustaining Progress special initiative on ending child poverty, the National Economic and Social Council has been asked to undertake an in-depth examination of child income support arrangements with a view to developing a second tier payment targeted at low income families which, by combining family income supplement and CDAs, would have a neutral impact on employment options." We have still not seen this payment.

In other statements on the second tier payment, the Minister pondered — he is good at pondering — the possibility of including the back to school clothing and footwear allowance. However, as this was increased in this year's budget, it appears the Minister is no longer pondering the matter. We do not know. Despite referring to the new second tier payment at numerous stages in speeches and interviews with the media throughout 2005, the Minister has taken no action to introduce it.

In response to Questions Nos. 42, 55 and 67 on 9 February 2006 the Minister stated:

While the solutions to the problem of child poverty cover a wide range of measures, including income supports and services, I am committed to reviewing the role of child income supports in this regard. This includes examining the feasibility of merging the family income supplement and child dependant allowance into a second tier child income support taking account of an examination being carried out in this area by the National Economic and Social Council [NESC].

The NESC is currently considering its draft report and I look forward to receiving a finalised report which will be of significant assistance in informing the future direction of child income support policy.

I draw the attention of the House to what the Combat Poverty Agency states in its submission on a new national partnership agreement. It suggests significant improvements in the levels of support for second tier, means-tested child income support with a recommended medium-term move towards an employment neutral child benefit supplement to replace child dependant allowance and family income supplement.

The Minister has stated that child poverty is an unacceptable blemish on modern society. Such language is too mild as child poverty in this era is a disgrace. Some suggest 150,000 children live in poverty while other measures suggest up to 350,000 children are at risk of poverty. We must see some imaginative changes to tackle this matter. Time is running out as this Bill represents the last opportunity this year. It would be useful if the Minister implemented ground-breaking measures to tackle child poverty. We need joined-up government and the Minister is correct in stating that courageous moves are needed. As yet we have not seen them and the window of opportunity, to which the Minister referred, is closing very quickly.

I welcome the improvements to several schemes. For many constituents social welfare benefits are like a maze. The ordinary person finds it difficult to understand his or her entitlements. Two low-income families have come to my attention who did not know of the existence of the family income supplement, despite being entitled to receive it. These families approached me because they were in dire straits. One man with a low income was not certain if he was entitled to a medical card. His child, who had not been able to breathe, spent four nights in hospital and he received a bill of €60 per night. He was under pressure as he could not pay the money on his low income. After assessing his income, I informed him he was entitled to a medical card and the family income supplement. He was very pleased when I told him that if he applied for the family income supplement, he would receive it.

It is incumbent on the Government to ensure people entitled to and in need of these supports are aware of them and receive assistance in accessing them. Application forms and methods of application should be made as simple as possible. The concept of the working poor and work poor households is coming to the fore. An increasing number of families can be classified in this way, highlighting the increasing inequality in Ireland. We referred to this during Question Time recently.

The Combat Poverty Agency informs us that indirect taxation accounts for 50% of Exchequer revenue and is a more dominant form of taxation. Such taxes are generally regressive, hitting the poor the hardest, and must be addressed. Politicians see increasing numbers of people at clinics, some of whom must be referred to the Society of St. Vincent de Paul as there is no other option if people cannot buy food for their children. With so much money available, this should not be happening.

I challenge the Minister to set a target to eliminate consistent poverty. We could all work to ensure that by 2010, consistent poverty would be eliminated in this country. This objective can be achieved and the Minister could announce his intention to do this in his next press release.

The Minister has said we should not only pay out money but should also set targets in education, health, housing, employment and community. It was a mistake to separate responsibility for the community from the Minister for Social and Family Affairs. Family and community are inextricably linked and assigning responsibility for these areas to two Departments was a mistake. According to the Combat Poverty Agency, families and communities are central to tackling the cumulative and inter-generational dimensions of poverty, and a proactive policy supporting families and community development can contribute to this. It is more difficult to address this if the responsibility is divided between two Departments.

I referred to those living in poverty despite being in employment. The Combat Poverty Agency states that the rate of in-work poverty has doubled to 9%, affecting 157,000 people, the second largest market category after those with home duties and greater than those in poverty who are unemployed and ill. In New Zealand, a payment similar to the family income supplement has an uptake of 92% compared with 30-40% in Ireland. Much work must be done to increase this figure.

It is believed that 6.8% of the population or 270,000 people live in consistent poverty. Groups at high risk of poverty include children, adults and children in lone parent households. The issue of lone parents has been discussed on many occasions in this House and the Minister has referred to the residency clause. I refer to a family comprising two parents and two children aged three years and four months. All four live in one room of the children's grandmother's house. If the husband were to move out, the family would be eligible to receive the one-parent family payment but they do not wish to do so. There is pressure on the family to separate as the husband has a low income job. The temptation is to draw down the one-parent family supplement and pretend the parents have separated, which brings terrible pressure on a family. The Minister has referred to such cases and this area must be examined, with the Minister bringing forward courageous and imaginative ideas to deal with this problem. I am sure colleagues on all sides of the House have examples of this situation.

I welcome the changes the Bill brings to carer's benefit and carer's leave. It increases the time limit for both from 15 months to two years. I also welcome the increase in the number of hours a carer can work from ten to 15. However, this should rise to 18 hours to reflect the average part-time job of half the full working week of 39 or 40 hours.

Regarding the issue of improving community care services for older people in particular, the House is agreed that a key part of a care strategy is to allow as many elderly people as possible to remain in home-based community care. At this afternoon's meeting of the Oireachtas Joint Committee on Social and Family Affairs, the National Economic and Social Forum, NESF, chairperson, Dr. Gaffney, put forward models that the NESF has identified in other countries, particularly in the Netherlands.

A number of us travelled to Denmark recently to examine care for older people there. They are way ahead of us. They stopped building nursing homes in 1997 because home care is better. The extent of support available there means that approximately 92% of older people die in their own homes. Home care visits take place as often as necessary. It was also stated by Dr. Gaffney that in the long run it is less expensive for the State to provide community and home care for people than it is to provide nursing home and institutional care. The State makes a profit by doing the right thing.

We provide an increasing number of tax incentives to build nursing homes. In Denmark, they stopped building nursing homes. When a person can no longer stay in his or her own home, he or she moves into a type of sheltered accommodation apartment. We visited some of them. We were not allowed into the apartment because it was the private residence of an older person who had his or her own possessions and familiar objects.

It was also stated at the committee meeting that if an older person can be sustained, encouraged and helped to live in his or her environment for as long as possible, that person will maintain both physical and mental health for longer. The danger is that older people will decline if they become dependent, and that is revealing. If any of us visit nursing homes, we see that people there are in decline. They are dependent and lose their get up and go, so to speak. We are told that we will all live longer so it is incumbent on us to ensure that the models in place now will be best for all of us. We have a vested interest in doing the right thing.

I suggest there is an anomaly and contradiction in Government policy. We build nursing homes, which in many cases are institutions and impersonal. We also state that we should have community and home support. We must make up our minds as to which way we want to go. We are not giving anything like the level of support necessary to community and home-based care. Improving family care services for older people is important and we should continue it.

I agree with the Minister on changing the old age pension. He referred to 1908 speech of David Lloyd George and stated it was time we moved on from there. I certainly agree with that. I suppose it was forward thinking at the time. Perhaps the Minister for Social and Family Affairs, Deputy Brennan, is the Lloyd George of today.

I have an issue with the term "State pension". The word "State" has connotations of eastern Europe. Perhaps "national pension" would be a better term. "State" implies one receives something from the State. If we called it a "national pension" instead of a "State pension" it might be a little less harsh. It is just a suggestion.

I like the idea of changing the name of "unemployment benefit" to "jobseeker's benefit". That is positive. Instead of a person being unemployed and dependent, it gives the impression of someone who is active and seeking a job. The word "job" is old-fashioned. Perhaps we could call it a "work-seekers benefit". In a thesaurus, "work" is a broader term than "job". Perhaps we can examine that on Committee Stage.

I was also struck by the term "illness benefit". It was called "disability benefit". I know from my work in the disability sector that people with disabilities often state that while they have a disability, they are not ill. Perhaps we also need to examine that. I know that disability benefit is payable by the Department to those aged under 66 years who are incapable of work because of illness and who have enough social insurance contributions.

I understand employment legislation does not exist on the issue of sick pay or sick leave. This means that a person on sick leave from employment, with or without a medical certificate, is not automatically entitled to pay. Instead, it is at the discretion of the employer to decide policy on sick pay and sick leave, subject to the employment contract and terms and conditions. If the terms and conditions of employment do not include entitlement to paid sick leave, the employee may apply for disability benefit if he or she has enough social insurance contributions. Perhaps we should examine that area and debate it.

The Bill makes significant changes to the pension system in operation in this country. It brings all the pensions together in a new non-contributory pension for those aged over 66. I support that measure. The new pension will have an increased means disregard of €20, an increase from €7.60. That has not been increased for a considerable length of time. It is envisaged this new charge will mean approximately 34,000 pensioners will receive a higher pension or a full pension. The increase in the means disregard will mean a single person with no other means will be able to have capital of €35,000 and still qualify for a full rate pension.

The Minister stated the rules governing secondary benefits such as fuel allowance and the household benefits package will not be changed. Will he elaborate on how capital and income from work will affect these entitlements? We should examine that. There will be a new earnings disregard of €100 per week for all those in receipt of the new pension. It is hoped this will encourage people over the age of 66 who would like to remain in the workforce to do so. I believe that is the intention. Remaining in work can provide many older people with an opportunity for social interaction, especially if they live alone. I welcome any move to facilitate those who wish to remain in employment.

The earnings disregard will also be extended to widows under the age of 66. We had that debate in the House recently. It was raised with the Minister two weeks ago and I am pleased he took it on board. There is a need to introduce a similar earnings disregard for people in receipt of a contributory pension as it would enable them to work after reaching 66 years of age. Any income they have from employment is added to their State and occupational pension and the entire amount is then taxed. We should examine that.

I understand this is also the case for widows in receipt of a contributory pension. They have any income from work added to their pension and the entire amount is liable for tax, in addition to any child dependent allowance they receive. Section 47 in Part 4 amends the Taxes Consolidation Act 1997 to exempt the early childhood supplement from being reckoned for income tax purposes. Can a similar exemption be introduced for widows?

I welcome any move the Government makes to ensure that pension schemes are compliant with pensions legislation. Recently we saw some worrying reports regarding abuses in this area. The changes the Minister is making whereby the Pensions Ombudsman can bypass internal dispute resolution procedures is a welcome move. If it is in the opinion of the Pensions Ombudsman that no internal dispute resolution procedure exists, he is unable to investigate a complaint regarding pension entitlements. This would appear to make the Pensions Act unworkable as all an employer would need to do to frustrate the Act would be to refuse to establish an internal dispute resolution procedure and thereby deny a citizen his or her right of appeal to the Pensions Ombudsman.

Wherever the internal dispute resolution exists there must be clear guidelines on how it operates and that it is not used to frustrate an inquiry by an ombudsman. I apologise for my contribution being disjointed. I did not have as much time to gather my thoughts as I would have liked. As we have two weeks before Committee Stage I may be able to make a better contribution then. I urge the Minister to give the Opposition a little time to get our heads around important legislation. We want to contribute in a positive way to it and do not have the same professional back-up or time as the Minister. He has had a number of months to prepare this while we have had a few hours.

Photo of Willie PenroseWillie Penrose (Westmeath, Labour)
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I am always glad to contribute on social welfare, particularly on reform and improvements to help people dependent on social welfare in all its forms. I regret that I must begin on a sour note. I am disappointed at the arrogant and contemptuous way the Government treats the Opposition spokespersons. The Government thinks the Opposition exists to rubber-stamp any legislation that emanates from its great mind and script writers, but that is not the way to do business. The hallmark of arrogance and contempt is to use the House to rubber-stamp a proposal. That is doormat treatment. We are not entitled to behave in that way. We are sent here by the people to scrutinise legislation with great care. Many people say we are parish pump politicians. It is difficult to change that view and portray a view that we are here to represent strongly and forcefully the interests of the people who elected us and to make suggestions and proposals that improve legislation. The Government is not the sole font of wisdom on this. We have something to offer and the Opposition has always done that on a constructive basis.

The Labour Party is eager, particularly in this area, to help. We endorse a European model of social protection and the Lisbon Agenda, which focuses on high employment participation and social inclusion. We have focused increasingly on the Government's drift towards the Boston model. We have accentuated the importance of its being closer to the Lisbon model. That has found expression from us on the issue of how the proportion of national income devoted to social protection has fallen over the years despite the money available. Ireland's social welfare expenditure is much lower as a proportion of national income than the rest of Europe where the norm is for wealthy countries, such as Ireland, to spend proportionally more on social protection than poorer countries. According to last year's EUROSTAT data, the EU average spend on social protection was over 25% while Ireland's was approximately 17% to 17.5%. At the other extreme Sweden spent over 31%. That is why those countries are more progressive on looking after their young and the elderly. Child poverty is no longer a problem in those countries.

Because of the way this Bill was introduced, Opposition Deputies could not question Professor Maureen Gaffney, chairman of the National Economic and Social Forum, at today's meeting of the Joint Committee on Social and Family Affairs. We had to let her go and come in here. We needed to explore that excellent NESF report on care of the elderly and provision for older people. Professor Gaffney spoke on the "wrap-around" model, by which instead of putting people into institutional care we should provide adequate supports and facilities at home and ensure that those people remain at home. The only way to do that is to increase the proportion of our income devoted to social protection. That will take a sea change in attitude.

The Labour Party strongly supports this and that distinguishes us from the other parties. That is why I am so rigid on the care issue and why the abolition of the means test is of critical importance. It recognises those who provide care 24 hours a day, seven days a week, 52 weeks a year and who get a small amount of respite. It is welcome that the Minister at least recognises that, and it is to be acknowledged and applauded. It is important in the context of the care they provide.

Ireland is over-reliant on means tests, which can be degrading and complex, and trap people in poverty and unemployment. They are an example of an administrative burden and are costly. Our complex social welfare system remains a barrier to a rights-based approach to social inclusion. Fundamental reforms must be introduced to give people free access to social welfare. The universality of those payments is important. If the rich do not want to take them, so be it. It is important that the means test for the carers allowance is abolished. It is a fundamental of Labour Party policy and we will not pull back from it. It will cost only approximately €140 million or €150 million and it would be money well spent. We waste money on PPARS, electronic voting and other electronic gadgetry which is not required by the people and which makes no input into human endeavour, protection and enhancement. If the Labour Party ever goes into government this will be a fundamental objective and will not be up for negotiation in any circumstance.

As Deputy Stanton said, we would have liked the opportunity to analyse the issues in this Bill. I thank the Minister's officials, who are some of the best on the country and who do their best. It is not fair to them to have to talk Opposition Members through Bills. Without their help and elucidation we would know much less and I thank the Minister for their help.

I draw the Minister's attention to the Title of the Bill — Social Welfare, Law Reform and Pensions Bill 2006. The Bill does not live up to that grandiose title. I deal with law reform. There are some minor changes in the Bill, as announced in the budget, but it also includes semantic changes which the Minister thinks constitute reform. Changing the names of unemployment benefit and assistance does not change their substance. Why must we slavishly follow the United Kingdom in these name changes? Does anyone think that referring to people as "jobseekers" rather than "unemployed" improves their situation? The objective must be to improve their situation and the only way we can do that, to reduce the large number of people in poverty and eliminate child poverty, is to devote a significant amount of the income we generate to social protection. Instead of doing that we tinker at the edges, add little bits and feel smug and self-satisfied. That is not enough to eliminate the poverty traps, child poverty and homelessness.

While we tinker at the edges and feel we have achieved satisfaction they will always remain with us. We must radically tackle those issues. Is this renaming of the unemployed as "jobseekers" a triumph of spin over substance? It proved meaningless in the UK when similar changes were made approximately ten years ago and will prove meaningless here. Whatever they are called unemployed people are losing an entitlement in this Bill. They are losing the right to regard themselves as retired from the age of 55, and no spin or word change can disguise that.

I took a phone call today from a person in Dublin North-Central who was very angry and disturbed at the proposal to abolish the pre-retirement allowance. It is unfair. Why should people in this age group, vulnerable people who never had the chance to enjoy free education be focused upon? Very often their health is not taken into consideration. Why should they not have a certain level of protection and get social assistance when they are sick? This person, who is self-employed, reminded me of the words of James Connolly, one of the founders of the Labour Party. He said the poor never made laws and had no one to listen to them when they were being made. This man said this was a pre-emptive strike, a fait accompli, with no discussion. Why should such people be harassed? They are already means tested. He made a valid point in asking whether this was part of the social partnership involving the trade union movement. Have the unions bought into this concept? Why focus on this group? That was a person on the street just ringing in.

Name changes were proposed. NESC proposed making all nine social assistance schemes into a participation scheme or income support. It clearly rejected the concept and affirmed the continued negative fixation on the use of contingencies to label people. Why is that done? In differentiating between jobseekers and illnesses, what is the Minister trying to achieve? Is it trying to differentiate between deserving and non-deserving? It is somewhat ironic that 90 years after the Easter Rising we are trying to copy the British, ten years later, in terms of the term "jobseekers". They introduced it as a proxy for workfare and greater conditionality. Is this what is intended or are we playing with language and pretending to reform?

I perused this Bill for two hours until one o'clock last night and I returned to it again this morning. I dislike intensely some of the changes made in Britain. There is no Labour Government in Britain, it is a quasi-Conservative Government. Members should be in no doubt about that. I know because many members of my family live there. The Government there purports to be Labour while exercising and implementing Conservative policies. I would have no truck with that. Is this what we are doing in Ireland?

These questions must be asked because they are relevant. It is our job to raise these issues and seek the answers. On the other hand the UK Government's Green Paper proposes to abolish the language of incapacity benefit and focus on positive language about enabling ability and participation. It is ironic that we introduce it when they are about to change it, and we are referring to it as modernisation. Who do we believe we are codding?

As regards substance, spin and camouflage, I have no objection to renaming the old age pension as a State pension. Deputy Stanton has other views on this. Where is the sense in calling the retirement pension the State pension transition? Why does the Minister not go for real reform and remove the retirement condition from this payment?. On the one hand he is introducing a small incentive to work for those over 66 who receive a non-contributory pension while retaining a major disincentive for those aged 65 to 66. The incentive he is introducing is tiny. Most older people now qualify for a contributory pension so it is irrelevant for them. However, €100 a week would allow people to work for 12 hours maximum or thereabouts on the minimum wage.

Let us take an example which I believe is a major issue in the Minister's constituency of Dublin South. A grandparent who is minding grandchildren may be able to get €10,000 tax free, but €4,800 of that will be taken into account if he or she is on a non-contributory pension. Why then does the Minister not allow an earnings disregard of at least €10,000 a year, equivalent to the amount enjoyed by childminders?

In the minimum time available I am trying to do my job as a legislator on behalf of the Labour Party, to point out the issues and identify where another trap may be created under the guise of an aura of reform. It is no more that. The Minister has talked at length about addressing the problems of family income support, but where is the law reform in that area? There has been some minor tinkering with a dysfunctional system but no real reform.

I am delighted to see the introduction of the early child care supplement. That is one of the reasons I did not kick up a bigger row about the Social Welfare Bill. It was nicely tailored in and I did not want to raise objections in the circumstances because I am aware that everyone is being harassed in terms of the amount of money they are paying for child care. Only the other day a young woman asked me when it was to be introduced. However, why was it not simply part of child benefit? It is a universal non-means test payment, just like child benefit, for every child over six years of age. Why are we introducing a separate administrative arrangement when it might easily be incorporated into child benefit? Is a turf war going on between the Ministers or does the Government want all the country's parents to remember Fianna Fáil once every quarter? Are we reintroducing the concept of the quarter days, only this time for the bestowal of Government bounty in the hope of electoral return? I have to ask those questions. That is my duty.

The increases in child benefit in section 3(1) are very welcome, but do nothing to challenge high rates of child poverty. Deputy Stanton referred to 150,000 children in this regard. The Minister disputes that figure and says it might be 60,000 to 90,000 depending on the measurement parameters. What is missing, however, are increases in the child dependant allowance which have been frozen since 1994. There is no compensatory alternative reform to bring in a second-tier supplement aimed at low income and poor families. NESC gave the Minister a proposal some months ago on which he is moving, I understand. Nonetheless, people are extremely disappointed that it failed to see the light of day either in the budget or in this Bill.

Those are some of the issues that I have had a chance to look at. Section 27, which deals with the lone parent's allowance disregard is welcome, but that has remained frozen since its introduction in the 1990s. The increase, of course, does not fully restore previous value.

Why not index such disregards in the legislation so that this does not happen in the future? I will be gone and so will the Minister. Let whoever has the cheek to remove such a provision then attempt to do so. Indexing will help to protect the value of that benefit. Too many benefits in Ireland have remained at the same level at which they were introduced in 1994 or 1997. They have remained at that level without indexation so that their real value has collapsed virtually to zero. They are absolutely of no use. They need to be doubled or trebled to bring them up to current value and this should be enshrined in legislation. The Minister of the day should have no choice but to ensure that this is implemented to maintain its real value.

I welcome the changes in the pensions area that relate to women, the homemaker status and the PRSI payments for home-based child minders. This is important and I welcome this excellent move. There have been too many people with no contribution records who have dropped out of the system. This is one of the issues I intended to pursue with the Minister but, in fairness to him, he pre-empted me in this regard. This is an excellent move.

I do not see Ms Vaughan, who deals with pensions, among the Minister's officials this evening. She is aware of my views on the average rule, especially in regard to Irish people who went abroad. The Minister probably knows what is coming — I warned Ms Vaughan to tell him. To be forewarned is to be forearmed. I am sure he does not even have to write a note on this matter. The system by which one's entitlement to a full contributory old age pension is set is illogical and inequitable. One man contacted me, among others, to say that the changes made by successive Ministers have only succeeded in creating further anomalies.

Let us be clear, people were forced out of this country in the 1950s. They had no choice but to go as there was nothing for them here. They sent billions home and kept this country going. Many of us would not have a shirt on our backs without their contributions back home. Why are they not given credits when they return for the periods which they were forced to spend in exile? We are penalising them for having had to go. We forced them out. We gave them one-way tickets. We put them on the mail boats and sometimes on cattle boats. We sent them out to make their living elsewhere and said to make sure to send home a few bob to the old sod and sing "Kevin Barry" on a Friday or Saturday night in the Crown. I was there so I know a bit about it.

When these people come home and apply for the pension we say they were missing for 20 or 25 years. Do not talk to me about pro rata contributions and so on. Some of those people were on the lump, they did not pay contributions and the few bob they sent home were the only savings they ever had. Why do we not recognise them for what they did and give them credit for their pensions?

I have details from people that outline the injustice of the average rule. It must be replaced by a more equitable method of assessment that will entitle people to a full contributory pension. This issue will not go away. The system is inequitable. Many returning emigrants were trained in new skills and on their return played a major role in developing new industries. They also passed on their skills to others so we gained on the treble.

Many people speak about emigration but the Labour Party, through the good offices of the party leader, Deputy Rabbitte, and Deputy Stagg, brought it to the floor of this House and recognised these people for the first time. We are proud of this fact. It is no use just raising issues, we must pursue them, be it for free travel or the beaming of television programmes to the UK.

I received correspondence from a man who said that many of the people who are legislating now probably left this country with a J1 visa in their pockets to work only until it was time to return to college where they continued their studies on Government grants. That is a good point. He stated that he and many others paid their way while in exile and returned to a State which penalised them for emigrating. My recommendation is that we should give all returned emigrants credit for their years spent abroad, compensate them for the deductions in their pensions to date and provide homes in Ireland for those who did not do so well abroad and who are now deserving of help as they end their days. I echo and support every sentiment expressed in this letter. It is important that we acknowledge these matters.

Another issue which we tried to raise as best we could was the clawback policy by the State from the estates of the deceased of non-contributory pensions where the assets were accrued exclusively or partly from savings for pensions. Something will have to be done in this regard. Mr. Matt Moran from Waterfall in County Cork made a detailed case to the Oireachtas Joint Committee on Social and Family Affairs. Some of the answers given to him were not very clear. He proved this because he won his case in the Department's appeals system. There must have been some validity to his case when he won his appeal. This is a core issue. If somebody has money which they accumulated through a pension, which is clearly identifiable, it is inequitable and unfair for this money to be reclassified for the purposes of the State getting back money. This matter must be examined.

In the case of the 93 year old retired farmer, savings had accrued from his pension over 27 years but the Department would not entertain that argument. In this instance the Department ignored his funeral expenses in evaluating his case. This issue will not go away. We must examine it. We are capable of doing everything nowadays. The Revenue Commissioners are introducing computers that can almost point out where we are by satellite. The PPS system, which is being extended today, automatically applies to everybody. It should not be beyond the bounds of ingenuity of the Department officials to construct a system whereby the clawback would not arise, particularly in regard to money which has already been subjected to a means test because it is from a non-contributory pension. Much of this money has been saved by people who have been prudent and frugal, who have grown their own vegetables. Many of them are bachelors living on their own and their only outing may be one trip a week into the local village. This issue must be examined.

Another category of concern is self-employed people in receipt of the carer's allowance who are looking after ill spouses. Some of them have been forced to give up their business to do so. Another dreaded gap arises in these people's social welfare contributions because they are not in a position financially to make contributions. In one particular case, the person does not have the income to make a contribution and he is suffering a penalty for having undertaken the important role of providing care for his wife who is suffering from motor neurone disease.

The qualifying level for carer's allowance has been increased from ten hours to 15 hours. Calculated on the basis of 24 hours a day, seven days a week, 52 weeks of the year, these people get less than a euro an hour or one eighth of the minimum wage. Why can we not ensure that carers who provide the required number of hours would not also qualify for a carer's credit so they will not be penalised when they reach pension age in terms of their contribution record, especially in view of the dreaded averaging which I outlined of their overall contributions whereby under the current system they will find themselves receiving a significantly reduced pension? A carer's credit would help solve this issue. This should be considered in the interests of equity and fairness and in recognition of the important work these people do in looking after their loved ones.

I wish to raise a couple of other issues. I had some communication from people about lone parents trying to change their situation by participation in community educational issues. The moving on programme for young mothers in County Carlow has been very successful in engaging with its target group over the past nine years. It has helped participants to move from dependence on social welfare to sustainable employment. The programme takes a holistic approach, supports and values parenting and provides developmental child care. However, the real issue is rent supplement. For the first time in nine years, the training allowance is being assessed for rent supplement. A disregard of €60 is now being applied following a departmental circular issued in January 2005 and implemented locally following a second circular in autumn 2005. The Department is very busy issuing these circulars. In the 2005 budget, a 50% disregard of €68 was added. After this, it was decreased from the rent supplement euro for euro.

The increase in the FÁS training allowance from €85 to €95 in January 2006 does not benefit young mothers. Just over one third of the training allowance is being taken off the rent supplement. The programme's target group is three times more at risk of poverty than any other group in Ireland, according to the latest EU figures. While the figure might be small, it has significant financial implication for people on low budgets. The €20 which is now being deducted from rent supplement translates into more juggling of money and less heat, food and nappies. It wipes away the index-linked increase in the FÁS training allowance. The implications for the programme are serious. To date, it has been able to tell prospective participants that their benefits will not be affected by participation in the programme. It has been an effective tool in engaging with a group which is difficult to reach. The Minister should examine the matter.

The Minister should introduce an income disregard in respect of family income supplement when applying the means test to the spouse's income for the household benefits scheme. He should also ensure that parents on book benefit payments claim their final child benefit book payments, address the anomaly whereby having dependent children older than 22 years in full-time education prevents parental qualification for free schemes and establish a statutory process of reciprocal welfare arrangements with other EU states. He should also address the anomaly whereby if a carer looks after a spouse who is receiving social assistance and works ten hours per week, the spouse's payment is reduced. He should clarify the impact of the additional €100 per week in September on secondary benefits of people with the non-contributory old age pension. If fuel allowance thresholds are unchanged, many people could take up employment only to find that their entitlement to fuel allowance is affected. I ask the Minister to take note of these issues, which I will revisit on Committee Stage. I am glad to have had the opportunity to make a contribution to the debate on this Bill, even under current stringent circumstances.

Paudge Connolly (Cavan-Monaghan, Independent)
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I propose to share time with Deputies Boyle and Crowe.

This Bill, which provides for a number of changes in social welfare arising out of the budget, arrived in my office yesterday morning. It should have been circulated a number of weeks ago, which would have given Deputies a reasonable amount of time to digest its contents and the implications for social welfare and those receiving social welfare payments. The fact that the Dáil is expected to debate this Bill within a few hours between now and Thursday afternoon is grossly inadequate. We should have been given a reasonable amount of time to examine the Bill. Deputies have only been given approximately 24 hours to consider and assemble their thoughts on what amounts to major and complex legislation with far-reaching consequences.

It is almost three months since the measures in this Bill were announced in the budget. The fact that this Bill has not been distributed sooner to Deputies, giving them greater time for reflection, means that the Dáil is being taken for granted. Such legislation should have been circulated to Deputies at least two months ago to allow them to subject the Bill to proper scrutiny and some form of analysis. Bringing this legislation before the House only 24 hours after it was circulated demonstrates an indifference to Deputies, who are expected to consider the Bill's various elements more or less ex tempore. What of the Government's previous commitment to the provision of adequate notice to the Dáil, from the Bill's publication to the point when the various Stages are taken? We have experienced such a situation before, where we were not given sufficient time to reflect on the legislation about which we were expected to comment.

One of the principal features of this Bill is the new early child care supplement of €1,000. This measure was welcomed, although I understand it will not now be paid until possibly September 2006. There are always delays in paying people but there are no apparent delays in respect of money coming the other way. The cost of formal child care is prohibitively expensive. Informal child care is estimated to account for upwards of 50% of all child care. In general, informal child care is provided by the extended family, neighbours or individuals undertaking it for additional money and plays a major role in keeping many people at work.

The cost of child care can rise to a staggering €250 per week in some of the major cities. For those lucky enough to live in a small town or in the country where travelling times are not so significant, it can be as low as €100 but that is rare. Some parents pay much more than that, particularly for childminders who tend to be even more expensive than the expensive crèches. There are probably advantages to hiring childminders in that the child is cared for in his or her own home.

A supplement of €1,000 per child is helpful but a grant of less than €20 is hardly sufficient to put a dent in one's overall child care expenses. Many parents with two children are deeply resentful of the cost since some crèches discount the cost of caring for a second child by upwards of 10% but many others do not provide discounts. It is a large financial burden on parents. While the €1,000 supplement is welcome, the cut-off of six years is rather arbitrary. I hope the fact that the supplement has been introduced means that both it and the cut-off age will be increased in the future. We will certainly look forward to increases in future budgets.

Prior to now, the greatest expense borne by most families would have been a mortgage. However, for many parents, child care costs have become even more expensive than their mortgage. This explosion in the cost of child care has only come about in recent years. Most people must work to afford a home, but the knock-on effect is high child care costs. Some child care providers have expressed the view that the Government should provide a financial subsidy to parents to assist with their child care expenses. Many other suggestions have been made to cut the cost of child care, including the formation of co-operative groups of parents who would look after children on a rotational basis, thereby cutting down on their spiralling child care costs. This would be infinitely preferable to an annual Government subsidy of €1,000. It would be preferable if people could establish and finance child care co-operatives. The subsidy merely chips away at the overall expense, which can sometimes run to upwards of €16,000 per annum.

There are also income tax considerations for childminders, who may be taxed if their total income exceeds the €10,000 limit. If a childminder's income exceeds €10,000, his or her entire income will be taxable, which is totally at variance with the Government's declared intention of providing incentives for childminders to provide quality child care in their own homes. The €10,000 limit should be re-examined and further consideration should be given to keeping the first €10,000 tax free.

Over the years, rising child care costs have outstripped the rise in annual inflation, forcing many parents to take the ultimate step of giving up work outside the home to make ends meet. Many women are forced to give up work leading to a major loss of talent. Women will frequently forego promotion or take time out to rear their families which affects their promotional prospects. This is why many top jobs, including those in the public service, are not held by women. A more realistic level of child care supplement should be paid to parents, together with child care tax credits. Parents throughout our EU counterparts are only required to pay an average of 30% of their total child care costs, while our Celtic tiger economy has displayed a breathtaking indifference to the plight of parents.

Séamus Pattison (Carlow-Kilkenny, Labour)
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Will the Deputy move the adjournment?

Photo of Dan BoyleDan Boyle (Cork South Central, Green Party)
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The Order of Business allows the opening speakers to finish before Private Member's business begins.

Séamus Pattison (Carlow-Kilkenny, Labour)
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Deputy Connolly may proceed.

Paudge Connolly (Cavan-Monaghan, Independent)
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On the BTEA and the BTWEA, the changes which bring the qualifying period for both allowances back to two years is to be welcomed. This has had the effect of undoing some of the drastic cuts that were made in 2002, even though I would regard the revised limit as a halfway house towards the provisional limit of one year and 15 months, respectively.

Many unemployed people will be enabled to avail of employment opportunities and perhaps even start their own business. I am happy to note that there has been a change in criteria so that the time in receipt of supplementary welfare allowance can be counted towards the qualification requirements for both the BTEA and BTWEA payments. The income limit threshold of €317 per week for the retention of secondary benefits has not been increased in this year's budget and this was the 12th budget in a row without an increase in the limit.

Inflation forces in the interim have warranted a considerable increase in this limit, which is long overdue. Relative income poverty or the "at risk of poverty" indicator identifies those on an income of less than 60% of the median income threshold for society as a whole as at risk of poverty. Some 19.4% of the population was at risk of poverty in 2004, which was a slight reduction from the 2003 level of 19.7%. Households most at risk of poverty include lone parent households, large families, people living alone and people in rented accommodation. The first three of these groups are among those experiencing the highest levels of consistent poverty. It is clear that the social welfare transfers have the effect of halving the at risk of poverty rate from 39% to 19%. The importance of social transfers for the 65 plus age group can be seen in that such transfers have reduced their risk of poverty from 87% to27%.

I hope the additional powers that will allow the Pensions Ombudsman to investigate pension schemes on their own initiative will result in those firms who are acting fraudulently being exposed. The Minister referred earlier to building firms not getting public contracts, which is important. It is up to public representatives to monitor this.

Photo of Dan BoyleDan Boyle (Cork South Central, Green Party)
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There are few certainties in life but death and taxes are supposed to be on that list. In this House, we can be sure there will be a Finance Bill and two Social Welfare Bills. We may not be certain when the Bill will be published or when those of us on this side of the House can consider it, but the Bill is here and the criticisms of the delay have already been made.

The first Social Welfare Bill gives effect to the changes in rates that must come into force on 1 January each year. The second Bill allows for rates that come into effect at a later date, usually on 1 April. At one time it was June and sometimes it was October. We must acknowledge that the year has been streamlined in social welfare terms. The second Social Welfare Bill, with great imagination but a little degree of honesty, was often referred to as the Social Welfare (No. 2) Bill. When the Bills Office was less disenchanted with its lot, it might call it the Social Welfare (Miscellaneous Provisions) Bill. This year it is called the Social Welfare Law Reform and Pensions Bill, which sounds portentous and significant, but it is not the case. It seeks to bring about some change which must be acknowledged. However, in terms of its build-up and the media manipulation which is part and parcel of politics, it fails to deliver on what was promised over recent months.

The first significant section in the Bill relates to the increases in child benefit, which is the Government playing catch-up. The promise of 2001 has now largely been met. However, if one takes the three yearly increases and index link them from 2001, the Government is €5 a month short on the first and second child and €7 a month short on the second, third and subsequent children. If it is eventually to catch up, the Government must take this into account when introducing what I hope will be its final budget, but that is up to the electorate to decide.

The real changes are in section 4 where the Minister introduces some name changes to several social welfare payments. From where did the demand for these changes come? As a result of these name changes, the Minister may become known as the Minister who got rid of the old age pension. As a result of what he is proposing, there will no longer be an old age pension. My concern is that name changes of this type are an attempt to take attention away from more important issues. Playing around with language is almost Orwellian when there has not been a debate on whether these payments had appropriate titles.

I welcome the minimum €253 PRSI contribution for those who avail of the child care services relief. It remains to be seen whether the tax disregard of €10,000 is sufficient or appropriate. I suspect it will not be because it resigns people who offer child care services to a potential wage of less than the average industrial wage or the minimum wage. I am not sure whether we should legislate for this.

The Minister places a great deal of emphasis on the fact that the carer's benefit is increasing from 65 weeks to two years and that the respite grant is increasing to €1,200. However, this ignores many of the changes that need to be made in regard to carers in general. The reality is that the majority of those who qualify for either carer's benefit or carer's assistance do so under the carer's assistance category. Those who qualify at all are a significant minority of those involved in caring, given that more than 50% of people over the age of 55 are engaged in caring for older people. I would have thought that Bills such as this would provide an opportunity to address this inconsistency in our legislation and policies.

The Minister decided to discontinue the pre-retirement allowance. I have not heard much of a fight against this in other contributions because the reality is that the economic circumstances which brought about its introduction no longer exist. However, given that the Minister has decided not to specify the date from which the allowance will be phased out, the cynic in me might think that this is a decision that might be made after a general election. We will wait and see. However, the ministerial order will be examined with great interest.

In terms of bringing about a greater consolidation of social welfare payments, the Minister will have the support of my party. While he could have gone further and bolder decisions could have been made in that area, it is a step in the right direction. The Minister's Department being used as an incubator for the early childhood support payment is something we can comment on here, even though he has no policy responsibility in this area. While it is an additional sum and criticisms have been made that it should have been tied to child benefit, it will be welcomed by some people. The question is why this amount was chosen and why the payment will be discontinued once the child reaches six years of age. It is just a half a loaf approach to the child care issue. If the Government is considering child care in its wider sense, it should take a more holistic approach to child care needs. This measure does not go as far as it should.

The largest elements of the Bill relate to technical changes only in regard to pension provisions. There is a need for the debate to which the Minister referred, in which my party will gladly participate. However, we already had the report by the Pensions Board. There appears to be an ongoing review by the new Pensions Board of its long-term vision for pensions. The introduction of the PRSA legislation by the Minister's predecessor means politics has been sold a pup in regard to private pensions. The first step we must take in terms of meeting the basic needs of our citizens in later years is to ensure the basic State pension is as substantial as possible. After that, we must consider how private pensions can augment this basic provision.

The Minister has inherited policy in this area from his predecessor and it seems the Government is committed to providing a meagre State pension. As a percentage of average incomes, Irish pensions are among the lowest in Europe. The Government must be bold and abandon the gimmicks involved in setting the State pension at £100 or €200 a week. The objective should be to link pensions to average incomes at a level of at least 30%. Annual budgetary increments are required to bring about the provision of an adequate basic income for those citizens who have given most to society. There is no evidence that such an approach will be taken.

There are concerns in regard to the operation of personal retirement savings accounts, PRSAs, which are structured so that funds cannot be accessed for a long period. Those who need the benefit of the additional augmented income find they are prevented from availing of it while those who sold these packages — the pension companies and intermediaries — can take 1% in every year a fund is in existence, perhaps as much as a 25% stake. There is a major dichotomy between what the Government says is its policy in regard to the uptake of PRSAs by those on low and middle incomes and the types of tax reliefs given to the richest members of society. The State now gives more in terms of tax foregone for private pensions than it pays in basic pensions. The Government's policies will ensure this gap grows ever wider. It is not something in which the Government or the Minister can take a great deal of pride.

I am disappointed the Government has played ducks and drakes with the lone parents issue. The new income threshold is welcome but the ongoing review means lone parents and the organisations which represent them are living in a state of anticipation that negative changes are in the offing. Decisions could have been made in regard to cohabitation in this Bill. It could also have dealt with issues relating to further education by enabling people to improve their lot and that of their families. Perhaps it is too close to an election for the Government to take such bold initiatives. This Bill represents a missed opportunity and so far into the life of a Government, it disappoints.

Photo of Seán CroweSeán Crowe (Dublin South West, Sinn Fein)
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I join other Opposition speakers in expressing my disappointment that this Bill is being rushed through the House. We are not being given adequate time to respond to the detail of the legislation. That said, I thank the Minister and his officials for the briefing they provided earlier today.

l welcome some aspects of the Bill. For instance, the increase in the child benefit monthly rates to €150 for the first two children and €185 for the third and subsequent children is welcome. The Government must proceed to increase child benefit progressively and in line with inflation. I also commend the progress in regard to child care in sections 5 and 6, which provide that income earned by a self-employed home childminder will be liable for a social insurance contribution of €253 per annum. Thankfully, the Government has listened to the urgings of the National Women's Council of Ireland in this regard.

This State is presided over by a Government awash with taxpayers' money but it is one of the most unequal countries in the so-called developed world. Inequality seeps through all areas. In health care we see a gross two-tier system where people are treated according to their ability to pay rather than need. In education, students from disadvantaged schools are less likely to make it through the unfair system into well paid employment. The careers of lawyers and doctors remain very much the reserve of the wealthy. A recent NESC report pointed out that the richest 20% of the working age population earn 12 times as much as the poorest 20%. Shamefully, this is one of the highest levels of market inequality among OECD countries.

The Minister describes the Bill as reforming social welfare policy but it does not achieve this end. While I welcome the increased supports that lift 34,000 pensioners onto higher pensions and the other increased entitlements, particularly the early child care supplement, the reality is that the Government still does not have an adequate child care strategy.

There have been major increases in electricity and gas prices. Fuel vouchers were already only a small contribution to these costs. This month, households across the State face substantially increased fuel bills that will eat into the promised social welfare increases. In addition, the Minister has not addressed the inefficiency of the social welfare appeals office, with some appeals taking more than three months to be resolved while vulnerable citizens wait in financial limbo. In a time of unprecedented wealth, this Government has failed the needy. To modernise the social welfare system, the Minister must do significantly more than change the titles of benefits. To modernise society, he should ensure the most vulnerable are looked after, most notably children, the disabled and the elderly.

It is right that the guardian's payment has been renamed but when will the Minister move to recognise that many guardians are the grandparents, aunts and uncles of children whose parents have succumbed to drug addiction and the accompanying misery and disease? Such children exist in a limbo where grandparents and extended families, often living on limited resources and low incomes, take up their care while the State refuses to trigger payment of allowances due because of unworkable criteria regarding parental abandonment. I raised the issue of grandparents caring for children with the Minister in October 2004 and I have encountered many such cases in the meantime. The reality of grandparents being forced to care for their children's children with little or no resources available to them is shameful.

Another area of concern is pensions. The crux of the matter is whether a rich, so-called developed country should look after its citizens in old age. Some 50% of the existing workforce of 2 million are without a personal pension. Most young people in our rip-off Republic are more concerned with living in the present and using their money to pay for exorbitant mortgages and to maintain the general high cost of living. Many are living beyond their means. While pension savings have been boosted as higher paid employed and self-employed people take advantage of generous tax incentives to provide themselves with a tax-friendly stream of income in retirement, social inequality has simultaneously increased. Many workers have no second pillar coverage and will face old age relying solely on their social welfare pensions.

Further fuelling inequality is the fact that pension coverage is highest amongst top income earners. Those without second pillar cover are the marginalised and vulnerable — the unemployed, the lower paid and women. PRSAs were designed to increase pension coverage among a significant segment of the workforce but few employers and workers have made contributions to date. Employees are unlikely to contribute when employers are not obliged to do so.

Latest Central Statistics Office figures indicate pension cover is at a mere 51.5%. There are considerable tax incentives for pensions savings but not for the unemployed, those changing jobs or the many women who opt out of paid work during their child-rearing years. Pension tax relief is worthless for many of these people. The most efficient and cost-effective way of increasing income for those without pension cover is to increase social welfare provisions, reduce tax relief and redistribute State expenditure currently devoted to tax reliefs. That would result in greater fairness, ensuring that the well-off do not benefit disproportionately from pension tax reliefs.

Sadly, the Bill does not address the problem of not enough people choosing PRSAs. Rather than the Minister introducing some form of mandatory provision to ensure people make adequate provision for their retirement, the Government should simply use the social welfare pension, the existing mandatory pension. With a growing percentage of the population reaching retirement age in the next two to three decades, this problem is set to get worse, yet there is no urgency to the Government response to any of these pensions issues. Time is literally running out.

Debate adjourned.