Jan O'Sullivan (Limerick East, Labour)
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Question 67: To ask the Minister for Social and Family Affairs her plans to reinstate the Christmas bonus for December 2009. [40718/09]

Mary Hanafin (Dún Laoghaire, Fianna Fail)
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Promoting social inclusion, protecting the most vulnerable and recognising the contribution that older people have made to this country have always been major priorities for this Government. When we could, we provided unprecedented increases in welfare payments and ensured, for example, that the value of the State contributory pension more than doubled over the past ten years from just €113 per week to more than €230 per week. Even through the economic difficulties of the past two years, the Government has done its best to prioritise social welfare.

The October 2008 budget provided for increases of between 3% and 3.8% in the basic payment rates at a time when inflation for 2009 was expected to be 2.5%. Prices have actually dropped considerably this year. In framing the April supplementary budget, very tough decisions had to be made across the range of Government expenditure. In that context, the provision of €21.3 billion for social welfare services in 2009 - 20% more than the amount spent in 2008 – was a clear demonstration of our commitment to protecting the most vulnerable people in Irish society.

Both tax rates and borrowing had to be increased to fund this extra expenditure on social welfare. Providing a 100% Christmas bonus this year would have added another €223 million to the bill, money which, unfortunately, the State does not have. In seeking to contain the increased welfare budget to €21.3 billion, there were no easy options, and I assure Deputies that the decision not to pay the Christmas bonus was not taken lightly.

The increases provided for in the October budget were taken into account, as were the April forecasts for price deflation this year. The decision not to pay the bonus was announced in April so that people would have nine months' notice.

I appreciate that non-payment of the Christmas bonus effectively amounted to a 2% cut in the annual social welfare basic payments to those affected. However, it is important to recall that basic welfare payments were increased last January and that by September 2009 the consumer price index, CPI, had fallen by 6.5%. The average decrease in the CPI is now expected to be between 4% and 5% this year.

Given that tax revenue has deteriorated even further since April, putting increased pressure on the public finances as a whole, I regret that it will definitely not be possible to pay a Christmas bonus this year, as the Taoiseach already outlined this morning. I know that any welfare cuts are hard for people to cope with but if the Government does not take steps now to reduce overall public expenditure and restore stability to the public finances, we risk making the economic position far worse for everyone, including welfare recipients, in the long term.

Róisín Shortall (Dublin North West, Labour)
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At the outset I ask the Minister to stop using the 6.5% drop in the CPI as a figure in any way relevant to what is happening to people depending on social welfare. Those dependent on social welfare rarely have mortgages or significant foreign travel, and those two elements account for approximately half of the reduction in the CPI. It is not a relevant figure. The decision to cut the Christmas bonus will result in a real loss of 2% for people dependent on social welfare.

I do not know if the Minister saw the material produced by Barnardo's yesterday which showed the growing level of child poverty among families dependent on social welfare. Many of those families are already in serious difficulties in putting food on the table, paying for education, heating homes or clothing children.

These people are hurting and the Government's decision on the Christmas bonus will greatly exacerbate the hardship that those families are experiencing. It will mean that they will not have a Christmas. The same applies to pensioners and people with disabilities. It is an entirely heartless decision, especially where the Government had obvious choices to increase taxes.

Mary Hanafin (Dún Laoghaire, Fianna Fail)
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If a choice had been available to continue to pay the Christmas bonus, we would of course have done so. It was undoubtedly one of the most difficult decisions that the Government had to make in the earlier part of this year. I accept that not everybody on social welfare has a mortgage or engages in foreign travel, but it is also fair to say that in more recent months other elements of the CPI, including the price of food and clothing, have dropped significantly as well. In making the decision in April, we had to have regard to the fact that we had given an increase in January, which was factored into the decision not to pay the Christmas bonus.

I know how difficult this is and there would be nothing nicer than to be able to turn around to people and say that we can pay it, but the money is just not there, unfortunately. The Exchequer is already spending at a rate which is far above what we are taking in. As everybody knows, there is a gap of €22 billion between what is coming in and going out. Whether it is a household or individual budget or the State budget, the message is the same: one cannot spend what one does not have. I regret that we cannot pay it this year.

Denis Naughten (Roscommon-South Leitrim, Fine Gael)
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It is a 2% cut across the board for payments but it is taken from people's income at a time of the year when they are most vulnerable. It will lead to moneylenders having a field day coming up to Christmas. There has already been significant pressure on families in the run up to September because of the increase in the cost of going to school and delays in processing the back-to-school clothing and footwear allowance. That has put massive pressure on families and at Christmas this decision will put significant additional pressure on families when they need income the most.

Mary Hanafin (Dún Laoghaire, Fianna Fail)
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The increases given in January were of the order of 3.3% to 3.8%. Although I accept the loss of the bonus is a 2% drop, even if there had not been a change in inflation there would have been an increase over the year. It is a difficult time of year for pensioners who like to give to others despite needing to look after themselves and for families who need to buy for their children.

To return to Deputy Shortall's comments, Barnardo's yesterday acknowledged the discernible and real decline in child poverty.

Róisín Shortall (Dublin North West, Labour)
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That is up to this year. They are dealing with it.

Mary Hanafin (Dún Laoghaire, Fianna Fail)
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Nothing has happened in this year which they say will have an impact on that. It has been acknowledged and the statistics show it. We are trying not to row back on advances which have been made. Deputy Naughten mentioned the back-to-school clothing and footwear allowance. All those payments made in September were on time where people applied on time.

Denis Naughten (Roscommon-South Leitrim, Fine Gael)
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That is not true. In some parts of the country they were late.

Mary Hanafin (Dún Laoghaire, Fianna Fail)
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One part of the country had a particular difficulty but for the rest of the country there was a significant increase in the number of people who applied for it. It is a substantial payment and we correctly increased the amount of money that people could get for uniforms and other clothes.

Martin Ferris (Kerry North, Sinn Fein)
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Any cut to the income of the most vulnerable in our society and communities is bad but this is made worse at Christmas, as we are talking about people on the lowest income who are barely surviving. They are not living, they are just surviving. As Deputy Naughten said, families who want some kind of Christmas will be driven to moneylenders as a consequence. It also has a knock-on effect of taking money from the local economy, which will affect small retailers and inevitably lead to job losses.

Low income families and people on social welfare spend every ha'penny in their economy. We could proceed differently by taking this small amount of money from the higher income avenues. That would protect the most vulnerable in our society.

Mary Hanafin (Dún Laoghaire, Fianna Fail)
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The rates of all the social welfare payments were increased by anything up to €7 last January. The amount of the fuel allowance was increased along with the number of weeks that people avail of it, yet the price of fuel has fallen since. The amount of money given for the back-to-school allowance has also been increased and the number of people who can qualify for various payments was also increased. Every effort has been made all year to protect people, including the most vulnerable. That was at a time when the country's economy was very bad.

It would be a complete disaster for us to have found ourselves turning around this month to people and indicating that we could not pay the Christmas bonus. I know it is a difficult decision to make at any time but by saying it in April, we were at least giving people some advance notice. I appreciate that it is a really difficult time and that it is a very sensitive issue for people. I hope people will not turn to moneylenders. People who are in dire circumstances can contact their local community welfare officers. The Money Advice and Budgeting Service is there to support people as they plan their budgets on the basis of their household incomes. Tough decisions are having to be made, unfortunately.