Dáil debates

Wednesday, 2 April 2008

Priority Questions

Anti-Poverty Strategy.

2:30 pm

Photo of Róisín ShortallRóisín Shortall (Dublin North West, Labour)
Link to this: Individually | In context

Question 77: To ask the Minister for Social and Family Affairs the steps he is taking to address the growing phenomenon of the working poor; and if he will make a statement on the matter. [12463/08]

Photo of Martin CullenMartin Cullen (Waterford, Fianna Fail)
Link to this: Individually | In context

There is a constant balance to be maintained in ensuring that social welfare programmes are developed in ways that are sufficiently responsive to various contingencies, while simultaneously providing opportunities to assist people to become less welfare dependent. In this context, a number of measures have been introduced in recent years to remove disincentives to taking up employment and to assist in the transition from welfare to work.

These include the easing of means tests through income disregards, a more gradual withdrawal of benefits as earnings increase and the introduction of employment support schemes such as the back to work programme. In addition, enhanced disregards of earnings were introduced in 2007 for the rent allowance scheme which complement the rental accommodation scheme that was introduced in 2004.

As recently as last September, I introduced reforms which improved the methods by which a person's earnings from employment, or the earnings of a partner, are assessed to facilitate persons in increasing their levels of employment and income. These changes are designed in particular to be progressive for women, who currently make up the majority of qualified adults in the social welfare system, rewarding increased labour market participation and encouraging qualified adults to move beyond long-term part-time employment. They also benefit many other part-time workers, but particularly those with children. In addition to jobseeker's allowance, the new arrangements also apply to the disability allowance, farm assist and pre-retirement allowance schemes.

A number of further measures are also in place to encourage increased participation in employment. For instance, the part-time job incentive scheme is available to those who were previously on a jobseeker's payment for 15 months or more and who are now working under 24 hours per week while seeking full-time employment. This payment is not means-tested. Farm assist is a weekly means-tested payment for low income farmers, including those who may have off-farm employment or self-employment. Recipients of various social welfare schemes may also qualify for a transitional payment under the back to work programme, which provides for a phased level of income support over a number of years when taking up employment or self-employment. This payment is not means-tested, with more relaxed qualification criteria for people aged 50 or older.

Additional information not given on the floor of the House.

Family income supplement provides support for people in low-income employment with children, even where they have not previously been in receipt of a social welfare payment, preserving the incentive to remain in employment.

It is important to ensure that work pays and a number of policy instruments crossing a range of Departments are used as a way of alleviating poverty among people in low wage employment. In addition to those already mentioned, these include changes to the taxation system, the introduction of the national minimum wage, provision of training and access to lifelong learning opportunities and assistance with job search.

Photo of Róisín ShortallRóisín Shortall (Dublin North West, Labour)
Link to this: Individually | In context

The Minister has frequently said that a job is the best way out of poverty for people and in most cases that is true. However, does he accept there is a cohort of people in employment who find it extremely difficult to survive? I am not only referring to the early stages when transitional arrangements are required. In many ways the welfare system operates on an all or nothing basis. Given that many people are on a low level of income, especially those employed on the minimum wage who have children, that cohort find it difficult to survive. I am referring in particular to families who need to pay rent in the private sector, which might be quite high, and people who have child care costs. Those who are in employment and living in consistent poverty number some 30,000. This is not a temporary phenomenon. The money they earn every week from their employment is not sufficient to pay their overheads. Does the Minister accept the existence of this cohort of people? The CSO put that figure at 1.6% of the working population, which accounts for approximately 30,000 people. They live in consistent poverty. What steps is the Minister taking to lift those people out of poverty and to provide supports for them on an ongoing basis to enable them to keep their heads above water?

Photo of Martin CullenMartin Cullen (Waterford, Fianna Fail)
Link to this: Individually | In context

The group the Deputy identified of people at work but living in consistent poverty had fallen to 1.6% of the working population in 2006——

3:00 pm

Photo of Róisín ShortallRóisín Shortall (Dublin North West, Labour)
Link to this: Individually | In context

To 1.7%.

Photo of Martin CullenMartin Cullen (Waterford, Fianna Fail)
Link to this: Individually | In context

——from 1.7% previously. They are real people and their circumstances concern me and the Government. As I stated in my reply, there are a multiplicity of issues we try to achieve to lift those people out of poverty. There are a number of obvious areas, one being the family income support scheme, which supports those families, members of which are at work but who are still at risk of poverty, directly based on the number of children. Those supports have increased. The number in receipt of family income supplement, FIS, has almost doubled from 12,000 to 23,000 and I expect that figure to reach 30,000 this year. We are on course to reach the full cohort of people who require these types of supports. Likewise, the back to school clothing and footwear allowance is of significant benefit to low-income families in need of support.

It is important that we entirely eliminate consistent poverty, which stands at 1.6%. The best way to do this is to enhance employment and educational opportunities in terms of the career paths available to people. In addition, we must make it much easier for people to move from the social welfare system into employment. In particular, we must be careful not to penalise those at the lower end of the income scale by removing all their social welfare benefits. The welfare system has become far more flexible and amenable in this regard. We will continue to target resources in this area so as to improve the situation for the 1.6% of the population living in consistent poverty.

Photo of Róisín ShortallRóisín Shortall (Dublin North West, Labour)
Link to this: Individually | In context

Does the Minister accept there is a serious difficulty with the tax system in that people on the minimum wage, being out of the tax net, do not benefit from the tax improvements generally arising for most people out of the annual budget? The way to tackle this is to introduce a system of refundable tax credits. What is the position of the Minister and his Department in regard to the working group on refundable tax credits?

Photo of Martin CullenMartin Cullen (Waterford, Fianna Fail)
Link to this: Individually | In context

This is the dilemma that arises. We have probably been the most successful country in Europe in removing workers on low incomes from the tax net. One of the consequences of this is that benefits arising to workers based on the tax system will not benefit those who are not liable to pay tax. In compensation for that, however, we have greatly improved the benefits available to such persons in recent years.

Photo of Róisín ShortallRóisín Shortall (Dublin North West, Labour)
Link to this: Individually | In context

However, those benefits are of limited value where the persons concerned are in employment.

Photo of Martin CullenMartin Cullen (Waterford, Fianna Fail)
Link to this: Individually | In context

It is the Government's intention to continue to ensure that workers do not enter the taxation system until they achieve a good level of income. This is a laudable and important target and one towards which we have made significant strides in recent years. I understand approximately 750,000 members of the workforce are outside the tax net.

Photo of Róisín ShortallRóisín Shortall (Dublin North West, Labour)
Link to this: Individually | In context

Yes. These workers derive no benefit from taxation changes in the budget.

Photo of Martin CullenMartin Cullen (Waterford, Fianna Fail)
Link to this: Individually | In context

They receive direct benefit in that they are not paying tax in the first place. This is the correct approach. We must allow such workers to retain as much as possible of their income while simultaneously seeking to improve other benefits.

Photo of Róisín ShortallRóisín Shortall (Dublin North West, Labour)
Link to this: Individually | In context

Does the Minister have a view on refundable tax credits?

Photo of Martin CullenMartin Cullen (Waterford, Fianna Fail)
Link to this: Individually | In context

I do not intend to discuss it with the Deputy. It is a matter for the Department of Finance. I will express my views in discussions with that Department on the issue.

Photo of Olwyn EnrightOlwyn Enright (Laois-Offaly, Fine Gael)
Link to this: Individually | In context

This is Question Time.

Photo of Róisín ShortallRóisín Shortall (Dublin North West, Labour)
Link to this: Individually | In context

The Department of Social and Family Affairs has a role to play on this issue. Does the Minister have a view on refundable tax credits?

Photo of Martin CullenMartin Cullen (Waterford, Fianna Fail)
Link to this: Individually | In context

Of course.

Photo of Róisín ShortallRóisín Shortall (Dublin North West, Labour)
Link to this: Individually | In context

Will he share it?

Photo of Olwyn EnrightOlwyn Enright (Laois-Offaly, Fine Gael)
Link to this: Individually | In context

It is a secret view.

Photo of Martin CullenMartin Cullen (Waterford, Fianna Fail)
Link to this: Individually | In context

It is not a secret view.

Photo of Brendan HowlinBrendan Howlin (Wexford, Labour)
Link to this: Individually | In context

Deputies may raise this issue via another parliamentary question. The time for Priority Questions has expired.