Tuesday, 15 December 2009
Social Welfare Cuts: Motion
That Dáil Éireann calls on the Government to reverse the unjust cuts directly affecting carers, the blind and the disabled.
With the agreement of the House, I wish to share my time with Deputies Crawford, Connaughton, Joe Carey and Doyle.
The motion calls on the Government to reverse the unjust cuts directly affecting carers, the blind and the persons with disabilities.
The argument made here last week by Members on the Government side was that there was no alternative to the cuts to these vulnerable groups in our society. That is just not the case. For example, a constituent of mine, John, is a single parent and full-time carer of his 16 year old son, Seán, who is autistic and requires 24/7 supervision. If John turns his back on Seán, his son can pull down the kettle on top of himself; he must be managed on an ongoing basis. So difficult was Seán to manage that his mother, John's wife, just up and left. She could not cope with Seán's difficulties. John, whose application for the half-rate carer's allowance is being appealed, has seen his one-parent family payment cut by €8.30. Seán's disability allowance payment has been cut by a further €8.30 and Seán's child benefit has been cut by €3.70 a week. In total, this family has lost €1,000 or a 5% cut, even without the consideration of the Christmas bonus, which is another 2%. Those cuts are well in excess of inflation, which is currently running at 2.8%.
I read some of the media commentary last week after the budget and one article really got me thinking. It was an article in the Irish Independent on Ms Helen McGee and her son Martin who live in Clondalkin. Martin is Down's Syndrome and has severe cardiac problems. She is out of pocket, along with Martin, €16.80 a week in household income and on top of that, they will pay approximately €5 a month in additional prescription charges. The most damning indictment of the system that we have created in this country and the impact of the budget on real lives was her comment, "The only thing I can cut back on now is heating because I've cut back on everything else over the last while." Anyone who has any understanding of carers of persons with a disability, the work they do and the role they play in a home, will know the impact cutting back on heating will have on that individual. The decision of that parent to cut back on heating to save money does not do any of us here proud and is a damning indictment of the system we have created. Never mind the direct cuts, there are also stealth charges such as the increase in the cost of petrol and the prescription charges that I mentioned earlier.
It is not just about the financial impact, but about what this says of our society. The Taoiseach highlighted this quite recently when he stated that budgets are not simply about balancing books, as we all would agree, but about acknowledging what we all see as important in our society. Carers are important in our society. The average full-time carer in Ireland saves the State approximately €40,000 each year, but the budget ignored the value of carers. The Government's stated policy is to keep people in their own homes for as long as possible, but by cutting the carer's allowance and disability payments the Government is ignoring that policy. The National Carer's Strategy, which was to have been published two years ago, has been shelved.
In my constituency, home care package supports have been withdrawn because of the need to carry out the swine flu vaccination programme. In the "fair deal" scheme of nursing home packages where people are forced to go into nursing homes, the HSE is not processing those applications and is forcing many to remain in acute hospital settings at a cost of more than €1,000 a day. Some 64% of people with intellectual disabilities remain in their own homes being provided with full-time care by their relatives, which saves the State an estimated €70,000 per annum. The announcement in the budget does not acknowledge this.
In the Department of Health and Children, front-line services are being cut back. There is a €50 million cut in spending on disability services provided through the voluntary organisations. The Department of Community, Rural and Gaeltacht Affairs earlier this year withdrew the community supports for older persons. In the Department of Education and Science, we see the fight to get basic services provided to children and the delays in processing applications through the system denying children with intellectual disabilities the supports they require within the education system. The cuts to the disability allowance and to the blind pension will have a devastating effect on persons with disabilities who already find it difficult to make ends meet on a daily basis. This sector already has much higher levels of poverty than other groups in our population. People with disabilities already have a higher cost of living, particular for heating, housing and transport.
We were told here last week that the Government has no choice but to proceed with the cutbacks outlined. The Labour Party put forward a set of proposals that the Government could have considered, Sinn Féin put forward a set of proposals the Government could have considered and Fine Gael put forward extremely detailed and costed proposals the Government could have implemented. The objective behind my party's proposals was to create jobs and to protect carers, persons with disabilities and the blind. The best way to make savings in the social welfare budget is to get people back to work. Instead, the Government is planning for an extra 75,000 job losses next year at a cost of an additional €676 million in the social welfare budget - six times the cost of reinstating the payments to those who cannot work and those who care for them. Jobs and the restoration of hope for our future should have been the focus of the Government's budget statement. If that were the case there would have been no need to penalise carers and persons with disabilities.
Fine Gael is the only party that has put forward a credible job stimulation package that will take people off social welfare and get them back into employment, further education and training. My party's policies, which were launched in the past year, would protect more than 250,000 jobs and training opportunities in the Irish economy and would have seen 50,000 people taken off the live register in 2010, but that could not be entertained by the Government because it would acknowledge the work done by the Opposition. Instead, the Government is cutting the supports to those who cannot help themselves.
I was asked at the weekend by a carer why he must pay €8.30 a week to get the Government out of the mess that it created when the bank manager down the road on more than €250,000 has not been asked to contribute €1? How can the Government justify cuts to the blind, carers and people with disabilities when bankers are getting away scot-free? How is this fair? In the Fine Gael budget proposals we wanted the top earners to pay more. By capping the tax relief on pensions for top earners - the issue was within the Minister's competency but it was not looked at - as well as shutting down tax shelters we could have saved €170 million, far in excess of the moneys needed to protect the most vulnerable in our communities.
As I stated here last week, the Minister could have made significant savings in the rent supplement scheme. She projects savings of €20 million next year. Rent supplement is supposed to be a short-term support but people are on it for years instead of being moved to the rental accommodation scheme, which is a good deal more cost effective and better for tenants. Savings could have been made to reflect the market rate for the price of accommodation. Further savings could be made by transferring people to the rental accommodation scheme. A further €7 million could be saved through reform of the rent supplement and the deposit retention scheme. If we had scrapped the long-term leasing arrangements of the Minister of State, Deputy Michael Finneran, we could have saved an additional €20 million. The difficulty is the lack of joined-up thinking between Departments which is costly and causes considerable waste across several Departments.
Fine Gael has outlined where it can cut back on some of the bureaucracy in respect of FÁS, the HSE and CIE and through the elimination of up to 150 Government quangos, by cutting back on third party procurement costs and by programme reductions as outlined in the McCarthy report. Instead, the Government is soft on bankers and the Minister, Deputy Mary Hanafin, is soft on fraud. On 8 April in this House, the Minister stated that her first priority was to save as much as possible by reducing the incidence of social welfare fraud. The Minister set out a target in respect of social welfare fraud but how much has she saved? Not one cent has been saved in respect of the April fraud targets. As a result carers, people with disabilities and the blind are left to pay the price.
The tragic irony is that if the Government had met its own social welfare fraud target, it would have saved more than the money needed to protect payments to the most vulnerable, carers, people with disabilities and the visually impaired. Any fair minded individual who witnessed the exposure of fraud to the tune of €2 billion from the Department of Social and Family Affairs would be incensed to find out that because of the Minister, Deputy Hanafin's failure to deliver on her commitment in the April budget, money must now be raised by cutting payments to the most vulnerable in our society, including people who cannot work and those who care for such people seven days a week, 365 days per year. In April, the Minister announced additional controls to combat fraud with planned savings of €82 million in 2009 and €125 million in 2010. These savings were to come from the areas of jobseekers' payments and child benefit. Not one cent of that target has been achieved and, as a result, an additional €108 million must be raised by cutting payments to 48,000 people in receipt of carers' payments and those with a disability.
The scale of social welfare fraud revealed by "Prime Time Investigates" programme beggars belief. In the past two years, the Government set a target of €1 billion in fraud savings and the €2 billion referred to in the "Prime Time Investigates" programme may be short of the mark. With fraud running at an estimated €4,000 per minute, surely this was the area on which the focus should have been for the Department of Social and Family Affairs and the Minister.
The Comptroller and Auditor General has suggested that in four out of five cases of fraud the information was already available to the Department. The issue is the lack of staff and inspections to carry out fraud detection. The "Prime Time Investigates" report highlighted the fact that people can be in receipt of a jobseekers' payment while at the same time pay PRSI to the Department of Social Welfare as a result of work. Surely such a situation should not arise. It would make much more sense to bring staff surplus to requirements in other Departments into the Department of Social and Family Affairs to deal with the matter. In the Department of Agriculture, Fisheries and Food, there is one official for every 30 farmers, but in the Department of Social and Family Affairs there is only one official for every 350 claimants. In recent days, some media have reported on a vet and two officials from the Department of the Environment, Heritage and Local Government running after a stag in County Meath twice a week. It would make more sense for these officials to be involved in fraud detection than running after a stag.
Fianna Fáil and Green Party Deputies have deluded themselves by claiming there is no alternative to cutting social welfare for the blind, carers and people with disabilities by 6%. That is a complete untruth. Despite the outburst of Deputy Gogarty last Friday, he can now prove himself and prove that he has the courage of his convictions by backing the Fine Gael motion to protect the most vulnerable in our society. Fine Gael has already set out concrete alternative proposals to save money without hurting those who need support most from the State.
The Minister and the Government had a choice. They could have punished fraud, tackled inefficiency and thereby protected the vulnerable. The Minister, Deputy Hanafin, has proved that she is soft on fraud but tough on carers and people with disabilities. She chose not to do this and punish the weak instead. I commend the motion to the House.
I welcome the opportunity to speak on this important motion and I congratulate my colleague on introducing it. It is difficult to believe that the blind, the disabled, carers and widows are among those who must carry the can for the bankers, builders and developers. It should be remembered that the €4 billion that had to be saved in the budget corresponds directly to the first amount paid to Anglo Irish Bank. We are all aware that support to that bank is by no means finished as of yet and it will never serve a purpose for this country.
There has been much bluff and bluster by various people in the House concerning the various things that had to be done in this budget, one of which was the carbon tax. It was suggested that it would save the world, but it has only served to create another form of taxation that will cost the disabled, widows and carers more money. The price of petrol has risen by 3.5%, diesel by 4.5%, natural gas by 6%, coal by 11.1% and so on. However, no relief has been granted by way of an increase in the fuel allowance. We were told that when the carbon tax was introduced, it would be used solely to improve the green image. However, the reality is those at the bottom will suffer most once again.
We know that changes regarding marked oil will not be introduced until 1 May. However, it will not qualify under the fuel allowance scheme and householders will require further support under the fuel allowance scheme in any case. It will cost a good deal more and old and disabled people require more heat than the rest of us. I note a comment from Rehab to the effect that disabled groups are especially concerned about the impact of these cuts. According to independent research, not Fine Gael research, it takes at least €40 per week more on average to support a disabled person. However, disability benefit is being cut by €8.30 per week in this budget.
The drug payment scheme is a brilliant idea. It has been in operation in the UK and Northern Ireland. However, Northern Ireland has stated that it will no longer run the scheme because it has not been the success that was originally anticipated. It is strange that we have followed the UK in the medical field and the Minister, Deputy Mary Harney, has proceeded with destroying small hospitals and so on. Although the UK is planning to change, we plan to implement its former position.
There are 1.4 million medical card holders. The possible cost to an individual is up to €120 per year. It could mean more in the case of some people suffering from depression and mental illness. They are allowed only a small number of tablets, perhaps a week's worth, must go more often and obviously will have a higher amount to pay. A disabled person will lose at least €450 and as much as €550 per year, depending on the amount of medication used.
I ask the Minister to look again at this situation. There are alternatives. She could save up to €300 million by implementing the use of generic drugs. Some drugs cost ten times more in this country than they do in the United Kingdom. How can that be justified? Drugs that cost €2 in the UK cost €20 here and yet we will not use generic drugs. I ask the Minister, for God's sake, to use the mechanisms available to us rather than take the money from those who can afford it least. My colleague, Deputy James Reilly, the Fine Gael spokesperson on health and a doctor by trade, has spelled this out clearly and specifically named the drugs that can be dealt with in this way. It is not pie in the sky.
It is a serious situation, however, for the lady in Bailieborough who is taking a serious quantity of drugs for diabetes, heart disease and depression. She telephoned me the other day when she heard this charge was to be imposed. A sum of 50 cents may sound very little to the Minister but when one multiplies it by the number of drugs this person takes it means she will have to pay the maximum every week. This is an extremely serious situation. I cannot understand why the Minister cannot take the sensible way out and buy the generic drugs available rather than force this charge on the disabled, people with depression and others.
Then there is deflation. We had a lecture from the Minister for Finance the other night about how good the budget was, that deflation was 6.5% and the disabled, the widows and the carers were to have cuts of only 4.1%. Of course, the consumer price index, CPI, figure of 6.5% includes mortgage holders. How many of the disabled, the blind or the carers are paying mortgages? They are not and so a completely false structure has been put on this to make out these people are not doing so badly. In one way I do not mind something being cut but putting such a spin on it and making out it is not a cut is a completely different affair. I urge the Minister for Finance to look again at his comments in that area.
That night I mentioned the situation of a widow and her three children. I know the Minister will return to this later and try to make out it was not an issue but I can tell her that when a lady leaves the bedroom of her 49 year old husband, goes down to get him a drink and comes back up to find him dead-----
-----with three children in another room, it is an issue. This lady was told she will not suffer because of this cut but it will mean €1,000 per year to her between the cut in her pension and those in the other areas. I fully appreciate when the Minister comes through and I do not make light of that story.
I am talking about an individual who has to have a car and is not eligible for a medical card so must pay the inflated school bus rates. She must pay for everything. It is a problem and should not be made light of.
As did my colleague, Deputy Naughten, I shall comment on the fair deal. We were told this would be a fair budget and we all appreciate that €4 billion in savings had to be achieved to meet the bank debts and all the rest of it. However, this is no more a fair budget than the fair deal was fair. The fair deal was to come in February two years ago. Eventually it was to come last October and a limited budget allowed for it. As Deputy Naughten and I understand it, it still has not been sorted out. It is time fairness was shown by the Government to those who are worst off. The carers and the elderly deserve better. Carers' hours have been cut back. A person who looks after drugs for young people in Monaghan found the job cut back the other day despite people saying there will be no cutbacks. I ask the Minister to reconsider the word "fairness" and ensure that it operates.
I ask the Acting Chairman to alert me when I have a minute left. I am delighted to have this opportunity to say directly to the Minister for Social and Family Affairs, Deputy Mary Hanafin, that I am surprised by her at a personal level because I always believed there was an element of fairness in everything she did. However, on this occasion, she and the Government have got it wrong.
A week ago, everybody in the House believed and accepted we had to achieve €4 billion in savings and we all put out our various stalls. Naturally, I believe what Fine Gael did was properly costed. I shall put it to the Minister in this way. We had to achieve €4 billion in savings but one can contrast what €108 million is - I am long enough in the House to remember when that was a great deal of money - against €4 billion. What did we get for that €108 million? We crucified the carers, the blind, the disabled and the widows. It was the first time I saw a Government putting its hand into the pockets of blind people, literally, to rob them. Shame on the Government. There are certain disabilities that, unfortunately, are of such a scale there is no real future for a great number of people who suffer from them. For the life of me, I could not understand why the Government had to do that. It got a lesson and a half last year with the pensioners and did not touch them this time. However, it will get another big lesson from this cohort.
In the few seconds at my disposal, I point out the way the business was jigged. The minute I heard the Minister for Finance say that everybody who worked, even those who earned less than €30,000, would be hit by a 5% cut, I knew there would be big trouble. I do not have time to explain the Fine Gael proposal but we had a way around this. Now that we have the cut there is nothing we can do about it because all sorts of deals were made last week with backbenchers and Independent Deputies and obviously they will all weld in together for another while. The electorate will catch up with them at the finish but that is another story.
It was most unfair to clap a 5% cut on anybody who earned less than €30,000. When the Government interfered with child benefit, it had no alternative but to transfer some of that amount back to mothers whose children would be affected. It did so by increasing the child dependant allowance, as I used call it. There is nothing wrong with that except for the fact that no Government since 1994 thought about increasing the child dependant allowance until last year or the year before. Something was added to the allowance in the past two years and this will create another poverty trap. People in that category who are entitled to this payment, which should not have been taken from them in the first place, will find that there are many jobs they will be unable to take up.
Another element I would like the Minister to examine is the method of assessment for jobseeker's allowance and farm assist for people who are self-employed. I mentioned this matter previously and, in fairness, some efforts were made to address it, but an impasse has been reached now in that, for whatever reason, the method of calculation is wrong for somebody who was previously self-employed, is now unemployed, has no money in the bank and nothing to live on but who has some type of property. I ask the Minister to examine that quickly because it is out of order.
On the fair deal scheme, I saw a circular from a nursing home which suggested that because of the introduction of that scheme on 1 February, it would be entitled to charge €750 per week as opposed to the current fee of €650 per week. Someone should examine that to find out how that could be the case.
I join with my colleagues in telling the Minister that the Government got the budget wrong. The biggest challenge facing this country is the number of people who are unemployed. This Government conceded last week that another 75,000 people will end up on the dole queues next year and that is the biggest problem with the budget. The Government made no effort to deal with that problem. This slash and burn budget targets the people who are vulnerable such as carers, people on disability benefit and the blind. Imposing a cut of €8 is a massive blow for people who are dependent on their payment.
As we end this decade, one of the more memorable images is that of the current Minister for Social and Family Affairs, Deputy Mary Hanafin, the then Minister for Finance and current Taoiseach, Deputy Brian Cowen, and the former Taoiseach, Deputy Bertie Ahern, strolling along the beach in Inchydoney with their sandals in their hands and their coats thrown over their shoulders. They had been converted to socialism and were thinking about the people who were vulnerable, having received a presentation from Fr. Seán Healy at the think-in there.
In terms of Fr. Seán Healy's reflection on the budget, he said it is an unfair and unjust budget which fails the vulnerable and damages the economy. He further stated that budget 2010 lacks vision, fails to provide leadership and raises serious questions concerning competence. I agree wholeheartedly with that statement.
Many people were shocked by the recent "Prime Time Investigates" programme which focused on social welfare fraud. It showed PPS scams using false identities and a person falsely claiming the pension of a woman who had been dead for four years. It also showed child benefit fraud being committed by non-nationals. In total, the programme focused on nine people who have defrauded this State to the tune of €1 million, but that is only the tip of the iceberg. The same programme claimed that between 10% and 15% of all social welfare claims are fraudulent. When one considers that the total budget for social welfare is €22 billion, 10% of that - a proven estimate - is a saving that could be made of €2.2 billion. If the Minister, Deputy Hanafin, was doing her job right the carers, the people on disability payments and the blind would not have to take the burden of her cuts. I agree with Deputy Denis Naughten. The Minister is soft on fraud but she has been very hard on people who are on the margins.
The Minister for Finance had choices. Fine Gael produced an alternative budget that was much fairer than what was presented last week. Why did the Minister not take that on board? Why did the Government put down the challenge to Fine Gael and to other parties in this Dáil and blatantly ignore them? Why did it ignore the interest groups? Why did it ignore people like Caring for Carers and the disability support groups and cut their payments?
I recall some years ago one of the terrible twins - I do not know if it was Dempsey or Cullen - saying that €100 million was only a drop in the ocean. They should say that to the people whose payments have been cut by €108 million, which will hurt them.
Last week, in a type of rallying call, the Minister for Finance said we have turned the corner. Last year, he said it was no more than a call to patriotic duty but we have turned the corner away from Inchydoney, as Deputy Carey mentioned, and the mirage that was Fianna Fáil's social conscience because it brought in a budget that sought to take €108 million from people who have to work, as is the case with carers. There is no need for carers, like other people in receipt of social welfare, to sign on anywhere because they do not have time to sign on. I am regularly scheduled to meet two or three people in Wicklow but on occasions somebody does not turn up because they cannot get anybody to cover for them for an hour to allow them express what they do to a public representative. That is the reality these people live with every day, yet we have sought to take €108 million out of their pockets.
Fine Gael proposed, among other measures, that the rental accommodation scheme should be the priority as opposed to keeping people in receipt of rent supplement for longer than is necessary. Rent supplement is inefficient and is not as traceable as the rental allowance scheme which, among other things, places an onus on the landlord to be tax compliant with annual returns made every year. Any building that is sub-divided must have planning permission and meet building energy regulation standards. In all aspects, it is better value, a better all-round standard, and the market reality is reflected in the rent. Also, it is illegal for the landlord to charge the tenant anything other than the agreed price. At a cost of €500 million, that is a saving of a conservative figure of 10%.
Regarding people with disabilities, a person came to see me who needs €15,000 worth of home adaptation works. The application was declined by the local authority because it had no money to pay it. That person has taken out a credit union loan to fund that home adaptation. This is for an adult; I am not talking about the cost for a child. That person is approximately €12 a week poorer as a result of this budget when extra costs in prescriptions, fuel and the actual cuts in the payments are taken into account. That is almost €1,000 a year. That is the bulk of the repayment that person had set aside to make the necessary adjustments to their house to allow them live in relative comfort.
In 2004, the National Disability Authority estimated that it costs a person with a disability an extra €40 a week to live. The Government amendment to our Bill states that after budget 2010, the payments will be ahead of 2006 levels. The extra cost of €40 per week is still valid because that is what it costs a person with a disability to live on compared to a person without a disability, yet the Minister has engaged in a slash and burn exercise. She has not addressed inefficiencies in the system, fraud or the possibility of moving to a rental accommodation scheme. It is the same as when the Government was announcing increases in every sector and was providing good news on a continual basis. It did not perform either a cost-benefit analysis or an evaluation and now, on the way back down, the chickens are coming home to roost.
I move amendment No. 1:
To delete all of the words after "Dáil Éireann" and substitute the following:
"recognises the significant improvements made in recent years in supports for people with disabilities and their carers, including:
— substantial increases between 1997 and 2009 in the weekly rates of payment to people with disabilities and carers and such increases have been a multiple of the increase in the cost of living over that period;
— greatly increased eligibility for income support payments as a result of significant easing of the means tests, with much higher income disregards;
— a fivefold increase in expenditure on the disability allowance since 1997;
— a fourteenfold increase in expenditure by the Department of Social and Family Affairs on supports for carers since 1997;
— the introduction in 2007 of the half-rate carer's allowance which provides significant additional support for carers in receipt of social welfare payments;
— an increase in the value of the respite care grant from just €254 in 1997 to €1,700 in 2009 and enabling it to be paid to people who are not in receipt of carer's allowance or carer's benefit; and
— improvements in the additional supports that many people with disabilities and their carers receive, including the household benefits package of free television licence, electricity and telephone, as well as free travel;
notes that after budget 2010, the weekly rate of payment for the disability allowance and carer's allowance will still be almost 20% higher next year than in 2006; and
welcomes the Government's decision to retain the half-rate carer's allowance and the respite care grant and to avoid any cuts in the weekly rate of carer's allowance paid to carers aged over 66."
At the outset, I wish to state that as Minister for Social and Family Affairs, I absolutely appreciate that any cut in welfare payments is not easy for people. I also understand that even a cut of €8.50 has an impact on people. However, I also understand the particular challenges that people with disabilities face in their daily lives and the sacrifices that family carers make to look after their loved ones. I note that the motion tabled this evening referred to the aforementioned two groups of people. Moreover, two Members spoke sympathetically in the Chamber this evening about widows. However, as Fine Gael's own proposals involved cutting the widow's allowance, there is not much point in crying about them in the House this evening.
The Government is acutely conscious of the vital supports that the welfare system provides to a range of groups in our society. It was for precisely this reason that when resources were available, the Government invested heavily in improving social welfare rates and services for all those who are reliant on the State for income support. I assure the House that the decision to reduce social welfare rates was not taken lightly and that every possible step has been taken to protect the most vulnerable in society.
However, the Government was faced in this budget with a stark choice. The major improvements in welfare payments in recent years were made possible by increases in the amount of money the State was taking in from taxes.
This year, however, tax receipts have fallen dramatically. As a result, Ireland is now borrowing €400 million every week, mainly to pay for welfare, health and education. Unless we reduce our loans as a country, not only will we be obliged to pay substantial interest in the future, we will face the real prospect that international banks will not lend us any more money, on foot of which it then would be necessary to make other decisions. The Government's choice, therefore, was either to cut spending by a relatively small amount now and get borrowing under control or to risk being in a far worse position next year and then to be obliged to make much harsher cuts in welfare payments. This was not an easy choice and was not a decision that any member of the Government took lightly. However, they knew that were the Government to shirk its responsibility to take the necessary but painful steps required to reduce the level of public expenditure, it would be putting at risk all the gains achieved in recent years.
The budget set out that the Government's major priority is to get people back to work. I accept this is the best way in which to reduce the social welfare budget. This is the reason that, proportionately, Ireland has the largest capital programme of any country in Europe. It will keep 60,000 to 70,000 people working in the construction industry. In addition, measures that were included in the budget, such as the retrofitting programme, investment in tourism and the food industry, the enterprise stabilisation fund and the PRSI exemption for employers, constitute a jobs stimulus. Hopefully, they will serve to reduce the social welfare budget even further next year.
Nevertheless, the Government was forced to make reductions and Members will be aware of the main areas in which reductions are being made. Within such reductions, the Government sought to protect as many people as possible. While child benefit is being cut by €16 per child per month for all children, full compensation is being provided to more than 420,000 children in families who are dependent on welfare payments or who are in receipt of the family income supplement. The weekly rates of payment to those aged under 66 are being reduced by approximately 4.1%, or an average of €8.30 per week. The reduced rates of payments will apply to new jobseeker's allowance claimants aged 24 and under who are not in training or education. Reduced rates will also apply to jobseekers of any age who unreasonably refuse offers of training or education or who turn down a job. The treatment benefit scheme is also being limited in 2010 to free dental and optical examinations and the medical and surgical appliances scheme only.
While I will return later to the subject of fraud, additional fraud and control savings of €33.3 million or a total of €533 million, are being targeted for 2010 through enhanced targeting of particular schemes and the introduction of the new anti-fraud powers provided for in the Bill debated in the House last week. In addition, savings of €20 million are expected to result from reductions in the maximum rent levels for new or renewed rent supplement tenancies. While this issue was raised in the Chamber this evening, Members should not be under any illusion but that the RAS scheme also costs the Exchequer money.
Savings of €2 million are being made through a restructuring of the regional support agencies that work with the family resource centres.
As for the reductions in weekly payments to people with disabilities and carers, I accept these are highly sensitive areas. However, they should be seen in the context of the huge improvements that have been made in recent years. Welfare rates were increased in 2007, 2008 and 2009 by 12.1%, 6.5% and 3.3%, respectively. As a result, even with the reductions provided for in last week's budget, the weekly rate of payment for the disability allowance and carer's allowance still will be almost 20% higher next year than in 2006. Disability allowance will be more than 130% higher than in 1997, while carer's allowance is more than 147% higher than it was in the same period.
These increases have led to real improvements in the day-to-day lives of people affected by illness and disability. Tomorrow evening, my colleague, the Minister of State at the Department of Health and Children, Deputy John Moloney, will outline the improvements made from the perspective of his Department. In addition to improving payment rates, the Government also has enabled more people with disabilities to qualify for the disability allowance by introducing progressive changes to the means test and putting in place generous disregards for people who are able to take up rehabilitative employment. In 2007, the Government increased the capital disregard in the means test for disability allowance from €20,000 to €50,000.
In another important change to the disability allowance and blind person's pension schemes, the Government reformed the assessment of the earnings of spouses or partners in 2007 to ensure that a family will always be better off when a spouse or partner is earning. With effect from September 2007, some €20 per day of earnings, subject to a maximum of three days per week, is now disregarded and the balance assessed at 60%. The arrangements whereby people with disabilities can engage in rehabilitative employment have also been reformed and improved. Prior to June 2006, once earnings exceeded the disregard threshold of €120, any additional income was fully assessed. This was changed in order that any income between €120 and €350 was now subject to a 50% tapered withdrawal rate. The result is that some claimants can earn up to €430 per week before the disability allowance or blind person's pension is withdrawn fully.
Almost one in ten claimants of disability allowance, more than 9,000 people, are engaged in work or are on community employment schemes. Notwithstanding the pressures on services arising from the increases in unemployment, efforts continue to improve the activation of people with disabilities and get them into work, training or education. The disability activation project, which is based in the midlands and supported by the European Social Fund, is testing a multi-agency approach to activation by bringing together agencies such as the HSE, FÁS and the VEC. The work involved can be extremely resource-intensive since in many instances, people will be at the very margins of the labour market and will need much help, including with social skills, before they can take up a job successfully. Between the commencement of the disability activation project and the end of June 2009, some 481 illness payment recipients were invited to attend for interview. Of these, 209 people have met project staff on a one-to-one basis to complete personal progression plans. In addition, training programmes, targeted specifically at people on illness or disability payments in the region, have been held in conjunction with the VEC. As part of this process, key personnel in other agencies were met on an individual basis by the project facilitator to initiate and develop local working relationships and co-operation.
The extent of the Government's commitment to improving the position of people with disabilities in our society can be seen in one simple fact. Taken together, the increase in numbers availing of the disability allowance and sustained increases in the rates of payment, means that even after this budget, expenditure on this scheme will be almost five times greater than it was in 1997. Expenditure on other schemes for people affected by illness and disability, such as illness benefit and invalidity pension, also will have increased by approximately 290% and 170%, respectively, in the same period.
The Government has also dramatically improved the supports provided to carers. It is acutely aware and appreciative of the contribution made by carers to people needing ongoing care and support and is determined to help them as much as possible with this vital role.
The Department of Social and Family Affairs has three payments specifically for carers, that is, the means tested carer's allowance, the social insurance-based carer's benefit and the universal respite care grant. In order to qualify for any of these payments, the applicant must be providing full-time care and attention to a person in need of such care.
A person may engage in employment, self-employment, education or training outside the home for up to 15 hours per week and still be considered to be providing full-time care and attention. The person being cared for must need full-time care and attention and must not normally live in a hospital, convalescent home or other similar institution. Payment rates for carers are 8% more than jobseekers allowance and, in addition, they receive household benefits, free travel, the respite care grant and a more generous means test than for other schemes.
For carers under 66 years of age, the budget in 2007 increased the rate of carer's allowance and benefit by 11.1% to €200 per week. In the budget in 2008, the rate was increased to €214, an increase of 7%. The budget in 2009 increased it to €220.50, an increase of over 3%. In 2010, the rate of carer's allowance for someone aged under 66 is being reduced by 3.85% to €212, which will be just €2 less than it was in 2008. Where people are caring for more than one person, they receive a higher payment which equates to the personal rate for a person with the same means who is caring for one person, plus 50% of the maximum personal rate. Recipients with children also receive a qualified child increase in respect of each child. Therefore, such people have been protected from any cuts in child benefit.
Recipients of carer's allowance are also eligible for household benefits and free travel, which are unaffected by the budget for 2010. This is worth the equivalent of €40.70 per month for electricity or gas, which is €43.60 with the rural standing charge, €26 per month for telephone and €160 per year for a television licence. All carers providing full-time care and attention to a person in need of such care, regardless of their means or social insurance contributions, will continue to receive the annual respite care grant of €1,700 for each care recipient. It is worth remembering that ten years ago the respite care grant was €254 and was only available for recipients of carer's allowance.
Over the years the means test for carer's allowance has been significantly eased and is now one of the most generous means tests in the social welfare system, most notably with regard to a spouse's earnings. Since April 2008, the income disregard has been €332.50 per week for a single person and €665 per week for a couple. This means that a couple with two children can earn in the region of €37,200 and qualify for the maximum rate of carer's allowance, as well as the associated free travel and household benefits package. A couple with an income in the region of €60,400 can still qualify for a minimum payment, as well as free travel and household benefits. These levels surpass the Towards 2016 commitment to ensure that those on average industrial earnings continue to qualify for a full carer's allowance.
Other improvements made for carers in recent years include the extension of the duration of carer's benefit and carer's leave from 15 to 24 months and the approval of almost €1.5 million in funding for training for carers to help reduce the risk of injury to the carer and help them cope with the emotional and psychological aspects of their role. Twelve groups were approved for funding under this measure including the Carers Association, which will provide locally-based training programmes for about 10,000 family carers, which will start in January 2010 and run until mid-2011. Caring for Carers Ireland has 95 courses for 1,000 carers. Crosscare provides targeted training in Dublin and the Alzheimer Society of Ireland runs 28 courses for 800 carers.
The budget in 2007 provided for new arrangements whereby people in receipt of a social welfare payment, other than carer's allowance or benefit, who are also providing someone with full-time care and attention can retain their main welfare payment and receive a half-rate carer's allowance. Recipients of half-rate carer's allowance are also eligible for the household benefits package, free travel and the annual respite care grant. This provision has been retained in the budget for 2010 and will continue to be paid next year.
The cost of the half-rate carer's allowance is estimated at €90 million in a full year. At the end of October last, 18,903 carers were benefiting from this measure. This represents about 40% of those in receipt of carer's allowance. Of the almost 19,000 persons in receipt of the half-rate carer's allowance, more than 7,500 are in receipt of a State pension, which was not affected by the budget, or invalidity pension. Some 2,000 people are in receipt of a disability payment and 3,500 are in receipt of the one parent family payment. The carer's allowance rates for carers over 66 years of age have not been changed and remain at €239.
It is estimated that the combined expenditure on carer's allowance, carer's benefit, the respite care grant and half-rate carer's allowance will be €650 million in 2009, compared to the €50 million spent on carers by the Department of Social and Family Affairs in 1997. The supports provided for carers in Ireland are among the most generous in the world because we value the work they do. The payment rate for carer's allowance in Ireland for those under 66 will be €212 next year, which is almost four times that which is available in the UK.
Carers in the UK do not receive the household benefits packages, including free television licences, electricity and telephones. They do not receive free travel or a respite care grant of €1,700 per year to be used at the discretion of the carer. We also have greater flexibility in the qualifying criteria for carer's allowance. This Government is committed to supporting care in the community to the maximum extent possible. The proof of this lies in the supports we have introduced and developed over the years. It is a record of which the Government and the whole country can be proud.
In evaluating the actual impact the reductions in the weekly rates of payment to people with disabilities and carers in the budget are likely to have on the people concerned, it is important to consider the overall position with regard to falling prices. Prices have dropped considerably this year. By November 2009 prices, as measured by the consumer price index, had fallen by approximately 5.5%. I appreciate that people with disabilities may face extra costs and many of them would not have benefited from the decrease in the cost of mortgages, but they would also benefit from the drop in the price of basic items. On a year-on-year basis, food is down 6%, energy by 11 % and clothing and footwear by 13%.
People have expressed concern about the carbon tax. Alleviating measure will be introduced to ensure that people do not suffer from fuel poverty as a result of the tax. Its impact will come into effect in September next year, which gives us ample time to introduce measures to help those who will be affected. The consumer price index is expected to fall by another 0.8% in 2010.
The issue of fraud was raised during the debate. I want to take the opportunity to highlight again the measures we are taking to tackle welfare fraud. Welfare fraud is theft. It is a serious crime and the Department of Social and Family Affairs is doing everything it can to crack down on people who abuse the system. It is an issue we have taken very seriously. There are more than 600 staff working in areas related to the control of fraud and abuse of the welfare system. In recent months, more than 350 staff, many of whom worked in the Department of Agriculture, Fisheries and Food, have come into the Department of Social and Family Affairs from other Departments.
In this year alone, 600,000 individual claims were reviewed. In April, we added additional targets which we hoped to reach in our efforts at fraud control. The original target was €500 million, which was increased. It is better to increase the targets than cut social welfare payments which was, in effect, the option. We have increased and exceeded the number of claims we have reviewed, something which we did not anticipate. The amount of money we have saved has not been as high as we hoped, given the number of reviews we conducted. We reviewed all the different schemes in place.
The reality is there is no basis to substantiate the figure of 10% fraud, as alleged in a recent television programme. The Comptroller and Auditor General and the joint committee accepted that. The level of fraud on most schemes is very low. If Deputies say there is 10% fraud across all scheme, they are saying 10% of pensioners, people on disability or carers are defrauding the system. They are not and the levels of fraud in such schemes is very low. The percentage fraud identified in the fraud and error surveys was 0% for pensioners, 0.1% for illness benefit, 0.8% for family income supplement, 1.8% for child benefit and 2.3% for the disability allowance.
However, there are some groups within some schemes and there are some groups of claimants who present a much higher risk than others and that is why we have made changes in that regard, including requiring people to collect their money in person when they sign on to ensure that they have not left the State, for example. There is increased use of the requirement for photographic proof of identity - next year we will roll out the PPS card, which will contain the photograph and the signature. That will be an important part in combating fraud.
A number of people are now complaining to us about the number of times we are writing to them to certify that their child is here in the country and attending school. We have made substantial savings in the child benefit budget by finding people who were no longer in the country and were not entitled to claim it. Across all different sectors, various targeted control measures are working. We will improve that next year. We shall exceed the target this year and we exceeded it last year. We have sent cases to the Chief State Solicitor. It is interesting that in the nine cases the Deputy mentioned that featured in the television programme, every one of the individuals had been caught. They were all people who had been prosecuted or had been found. That proves the system works. The public have been very helpful to us - we have received 1,000 reports from members of the public, all of which are followed up.
Our cross-Border operations have meant that the number of people signing on in offices in the Border region has decreased substantially. Our fraud detection system, working across the other Departments, is much more successful than it was in the past. The new measures we introduced in the Bill will help us in this regard also. It is a matter we take really seriously. We are very tough on fraud and are clamping down on it. Unfortunately, that in itself was not enough to avoid us having to make cuts in the budget. Next year, we envisage spending €676 million more on social welfare than we did this year. It will be an increase of 3.3% despite the fact that we have had to introduce these cuts. Some €21.1 billion will be spent next year.
I know it is a difficult and sensitive area, but I also know we need to get the economy back on track. We need to ensure that we make the decisions that will save money. I did not want a situation where we had to cut social welfare. I equally did not want a situation where if we left untouched any one of the three sectors - public sector pay, social welfare or services - that the other two would need to bear the burden. We did it in as balanced and fair a way as we could by protecting pensioners and children in vulnerable situations, and by trying to minimise the cuts. Had we take the option Fine Gael is suggesting of excluding particular groups, it would have placed an even greater burden on others of the same age. Those were some of the difficult decisions.
I believe we have shown our commitment in recent years with the large increases in rates and the extensive supports we have given to people with a disability and carers. It is a difficult budget and we have tried to minimise the impact. When I met the groups - I do not accept that we ignored them - the carers made it quite clear that their priority was to hold on the half-rate carer's payment and to hold on to the respite care grant. It might have been easier not to cut the rate, but to halve the respite care grant, as the McCarthy report suggested. Had we done that, it would have taken considerably more money from the pockets of many more people, including those who provide care on a full-time basis but do not get a carer's allowance. It was a very careful balancing act, bearing in mind particularly what is happening in health with more money going into home care packages. Those have been difficult decisions, but when considered in the overall context in doing what is in the best interests of the country, hopefully we will never again find ourselves in this situation. That is why, unfortunately, we had to make these decisions.
We all accept that last week's budget was a difficult one. It was framed in a period when we are experiencing the worst economic recession in living memory. However, as the saying goes, this too will pass and there will be sunshine after the rain. In delivering the budget, it was important that it be fair. I accept everyone's perception of fairness is different. However, difficult choices needed to be made and I believe they were the right choices. At the end of the day, we must ensure that our economy in the future will be sustainable and we must also ensure that it is in good order for the generation coming after us. No one on this side of the House could or would take any pleasure in delivering the bad news of reducing people's benefits. We would all like to be popular and deliver good news by announcing increased benefits and rates of payments. However, this is not a popularity contest; this is about making the right choices and doing the right thing.
I would like to focus on the treatment benefit scheme. While it has been limited in 2010 subject to a yearly review, the dental and optical examination will still be available under the scheme. The hearing aid scheme will be retained as it stands. Almost 2 million insured people will continue to be covered for their annual free examinations and their hearing aids. Some 400,000 people will get a dental examination and 200,000 people will get an optical examination. People on low incomes who require treatment and hold a medical card will have access to both free dental and optical treatment. Since 1996, the social insurance fund, which pays treatment benefits to insured people, showed a surplus. However, the surplus position began to change last year and it is regrettable that the kitty is expected to be completely empty by the beginning of 2010. This, coupled with increased demand on jobseeker's benefit and the ageing nature of population, is another factor leading to increased expenditure on the State pension contributory and State pension transition.
It is startling that it is estimated that there will be only two workers for every pensioner here in 2050 compared to six today. The McCarthy report, on which we have had considerable debate on in this House, took the view that given the significant pressures placed on the social insurance fund, continuation of the scheme is no longer affordable. It also noted that the scheme may have contributed to higher prices for dental and optical benefits. I believe the changes will lead to an increase in competition on the fees charged by professionals.
Over the past 12 years we have witnessed major changes in the social welfare system. The Government has delivered significant and unprecedented increases. Jobseeker's allowance has increased by 130%. The disability allowance increased by 130% and the carer's allowance has increased by 150%. The one-parent family payment has increased by 130%. Those are not insignificant increases by any stretch of the imagination. Even though we are more constrained in recent times, the Government has made every effort to protect the most vulnerable. In framing the budget, the Government took into consideration the reduction in prices. Last month's CPI indicated a 5% reduction in prices. Given that prices have reduced, by reducing welfare payments the Government has, in reality, not diminished people's spending power. People are seeking and getting value for their money. Even after the changes in the budget, we are retaining the relative value of the lowest social welfare rate in 2007, a period when we were experiencing the boom.
Like any household, the Government needs to maintain its finances. We cannot continue to spend more than we take in. As the Minister said, as we are borrowing approximately €400 million per week for day-to-day spending, the brakes need to be put on spending. We need to cut our cloth according to our measure. A country that ends up insolvent and unable to provide the valuable and much needed supports to those who need it most would be in a much worse position. That is what could happen if we did not take this action. Standing still was not an option and it is foolhardy to think that adjustments could be made without adjusting social welfare payments given that they contribute to one third of all day-to-day spending.
There are aspects of the social welfare budget that were not touched such as the State pension and the medical card guidelines. When carers' representatives met the Minister, they asked her not to abolish the half-rate carer's allowance and she acceded. There was increased funding for home care packages, which are very important to people who want to live independently at home with some level of support. There was mention of the prescription charges. I agree wholeheartedly with imposing a prescription charge. I have met and spoken to people who regularly go to the pharmacist to collect tablets. They are prescribed those tablets even though they do not necessarily need them; they may have a press full of them at home, but because they are entitled to them they go in and get them. I absolutely agree with the introduction of this charge.
None of us on this side of the House set out to hurt anyone or cause undue hardship. These measures had to be taken. I commend the Minister on her efforts in tackling fraud. She has done well in this area and her efforts will continue to bear fruit. I would prefer if it were not necessary to touch social welfare; unfortunately, that is not the position we are in. The Minister was sympathetic. She listened carefully to all the groups she met and made decisions based on the contributions she heard. As I said, everybody is feeling some pain, but it is short-term pain for long-term gain.
I wish to talk about the influence of the Irish Business and Employers' Confederation, IBEC, and the Small Firms Association, SFA. Both of these groups, as well as other business lobby groups, appear to have had a considerable influence on the budget. The reason I am singling them out is that they were prominent in the pre-budget debate and they hold a particular ideology about how the Government should approach the budget that has essentially won the argument and now holds sway in the media and elsewhere. The cuts in public sector pay and social welfare sought by IBEC and the SFA in the budget were delivered. The SFA, in its pre-budget submission, stated:
A tough budget is vital to restoring confidence... We are simply no longer capable of generating the tax revenues necessary to maintain the scale of the public sector that we now have, or the generous social welfare rates that are prevalent... We are advocating that the €4bn cuts are shared three ways; namely one-third from a reduction in the unit cost of the provision of public services (through decreases in real public sector pay and radically altering the public sector pension provision, rather than simply cutting numbers and services), one-third through a reduction in the social welfare bill, and one-third through efficiency gains across the broader current public expenditure heads. The McCarthy report should serve as the basis for these cuts.
Similarly, IBEC recommended in its pre-budget submission that the €4 billion saving in current expenditure should comprise €1.4 billion in public sector pay cuts; a €1.3 billion cut in the cost of social welfare; and a reduction of €1.3 billion in the delivery of services. I noticed the prominence of these two organisations in the pre-budget debate and I do not recall this being the case previously. I am old enough to remember the last recession and I do not remember business lobby groups telling the Government how to deal with public sector pay and social welfare. There used to be a much more prominent voice in defence of social welfare entitlements. I am aware that a coalition of groups have come together to form The Poor Can't Pay, but we used to have a very strong body, the Combat Poverty Agency, whose voice the Government has taken away.
What is the motivation of IBEC and the SFA? Why do they not concentrate on their own side of things or on suggesting practical things that can be done to help the businesses they represent? They have done this to a certain extent, but their emphasis was really on public sector pay and social welfare cuts. When the Government was in negotiations with the trade unions, I received e-mails from people advocating that the Government should not accept the deal involving unpaid leave and should pull out of the talks. Many of those people were associated in some way with IBEC.
I do not know whether IBEC and the SFA are driving this ideology or are merely buying into it, but the important point is that they are mistaken. The changes they called for in the budget did no favours to the people they represent - that is, the business community. The net effect is that a large portion of the customer base of the businesses they represent have been left worse off. People on social welfare and those on low and medium incomes in the public sector have less money because of the budget.
IBEC has been complaining about cross-Border shopping. It recently issued a statement entitled "November cross-border shopping to cost 1700 jobs". What does it expect people to do when their incomes have been reduced and they are struggling to make ends meet? The SFA issued a "Christmas Spend" press release urging all sections of Irish society to make a special effort to buy Irish this Christmas. It states:
Consumer spending over the Christmas season will reach €1.6bn, down from €4.46bn in 2008... it is essential that Irish business should seek as much as possible of this money to be spent on Irish produced goods... If everyone spent just €10 extra on Irish products the result would be an extra spend of over €20 million on Irish made products during Christmas.
If the SFA wanted Irish people to spend more in Irish businesses, why did it not ask for the reinstatement of the Christmas bonus for social welfare recipients? That would have cost around €200 million, if I have my facts right-----
-----but much of this would have been put back into the economy by being spent in shops at Christmas. There is much credible thought, going back to the 1930s and 1940s, to the effect that the people who spend are those on lower and middle incomes, and if we want to stimulate the economy we must give social welfare recipients more, not less. It is one thing for the Government to be mistaken - it is the continuation of an ideology that has been implemented over the past 12 years - but I do not know what the SFA and IBEC were thinking when they sought cuts in social welfare. They have left people with less money to spend, and the very people who would have bought things in their members' shops at Christmas will now need to cut back further. People on social welfare or in receipt of public sector pay, who would have spent money in the new year by getting work done about the house or buying things they need, will now think again because of their reduced incomes.
The Fine Gael motion concentrates on particular sectors, but it is a much bigger issue than that. The cuts in social welfare will mean more people in poverty, while some people in the public sector may end up needing social welfare top-ups through the family income supplement because their pay has been reduced. According to Irish research, the people at greatest risk of consistent poverty are those who are unemployed. The Government has taken money away from those people, yet the rich have been unscathed. Unless one is a public sector worker, one's situation is not much different after the budget. The carbon taxes and so on will not affect the very rich, but they will affect people who have had their social welfare or public sector income cut.
This was a time at which the Government could have tried to do more for people in poverty. There are many people who are poor but do not claim the benefits they are entitled to. The number of people claiming family income supplement has gone down, and one of the reasons given for this by the research team in the Oireachtas Library is that people who were low-paid have lost their jobs.
The Government should have looked at many issues in this budget such as helping people who have mortgage payments, who would normally require assistance, to become eligible for family income supplement. Given that their incomes are so low, they should be qualifying for family income supplement. This was an opportunity to move away from the ideology of the past 12 years, the philosophy of the Progressive Democrats, to the effect that inequality is a good thing in society, an idea which IBEC and the Small Firms Association have bought into. Instead we could have begun to change things. We should be trying to bring about more income equality. We should have kept social welfare payments where they were at least and done more about redistributing the incomes of the highly paid. Such people have done really well out of the Celtic tiger and have not paid their fair share of tax.
That is the way we should have gone, rather than down the road the Government has brought us, where it is basically being cheer-led by organisations such as the Small Firms Association and IBEC.
Gabháilim mo bhuíochas do Pháirtí an Lucht Oibre as deis a thabhairt dom labhairt ar an rún rí-thábhactach seo ag déileáil le na laghduithe ar thaobh leasa shóisialaigh.
Ar dtús báire ba mhaith liom déileáil le iarracht a dhein mise leasú a dhéanamh ar leasú an Rialtais. Fuair mé litir ón Oifig an Cheann Comhairle ag rá nach bfhuil sé ag glacadh faoi na rialacha de thoisc, mar a deireann sé:
...on the grounds that it is an alternative amendment and is the equivalent to a direct negative. The purpose of the amendment can be achieved by opposing the Government Amendment when the Question is put.
Ins an leasú a bhí mé ag cur chun tosaigh, ghlac mé leis go raibh dul chun cinn déanta ó thaobh cúrsaí leasa shóisialaigh. An rud a dúirt mé ins an leasú ná:
-----recognises the overdue improvements made in recent years.
I went further in the amendment to repeat essentially what was in the Fine Gael motion. That is probably why I overstepped the rule, which is slightly at odds, however, with practice over the years. The end of my proposed amendment stated:
-----notes that after budget 2010 the weekly rate of payment for the disability allowance and the carer's allowance will be 6.1% less when the withdrawal of the Christmas bonus is taken into account...
This needs to be borne in mind as well because it is not just about the cut announced last week. I believe, as the Deputies on this side of the House have said, that the cut in social welfare should be reversed. There was an alternative, and we have put forward ways of funding social welfare payments. This is one of the key issues in all of this debate and if it is not addressed, we will be back in the House discussing it again next year. Given the record of the Government, it will be coming back with further cuts. However, I am not sure that Fine Gael, if it was in power, would not be coming back with social welfare cuts also. We need to be careful in that regard too.
The reason I say we will return to this next year is that it is inevitable in the absence of a stimulus package that has some type of logical approach to the creation of employment. The creation of employment will give rise to taxation and funding for the Exchequer to deal with those unfortunate enough to have to depend on social welfare. Some of last week's cuts will lead to further unemployment and, in fact, some of the cuts relating to this motion will also lead to that inevitability.
I do not believe social welfare payments needed to be touched. The Government could have taken many alternate measures to make certain the money flowed and ensure that we had the ability to reduce the deficit without hurting the most vulnerable, those dependent on social welfare and those living in poverty in many cases.
A third tax rate could have been introduced and the PRSI ceiling could have been abolished. The tax breaks, which have been abused for many years by high earners, could have been abolished. A new wealth tax could have been introduced and the Government could have stopped public money being pumped into private health care. Those options are not new. They were included in our pre-budget submission this year, as some of them were in previous years. It is not as if the Government did not have time and effort at its disposal and that these proposals were sprung on it at the last moment. It had well over a year in which to consider such options and it did not do so. Instead, it took a decision not to introduce the initiatives Sinn Féin proposed. Other parties and organisations outside the House came up with further suggestions. The fact that the Government refused to adopt them meant that it took a conscious decision to attack social welfare recipients in particular. It paid no heed to the fact that many of those dependent on social welfare were waiting months even to get their entitlements. That is also a living disgrace.
The option taken by the Government is self-defeating because it will have an impact in terms deflating locally economies, because, effectively, it is taking the money out of people's pockets. The people in question do not hoard money, but rather spend it immediately. If they had more, they would spend more, because most of them are in debt. They spend it in the local economy on the services they purchase and the goods they need. The goods in question are food and heating in the main, as well as clothes for their backs. They do not save, unlike the well off, who were encouraged through SSIAs and the likes, as well as private pension schemes where the State has forgone enormous amounts of taxation by encouraging the rich to take out private pensions.
This budget will, in fact, cause poverty and impact on local shops and services, hitting the real economy. I believe this cut and many like it will lead to further unemployment. As I said, the Government should have invested in a stimulus package, and I do not believe it has done enough in this regard. Social welfare and the pay of low to middle earners should have remained untouched and this budget will, I believe, perpetuate the recession cycle. The problem is the economy, not the deficit. It has treated the deficit but has not dealt with the problems in the economy, which is a crucial consideration and what we should be addressing.
The Minister for Finance, Deputy Brian Lenihan, at the start of the budget last week, told the country that the worst was over. I do not believe this for a minute and neither do the carers. Unless these cuts are reversed within the next year, family carers across the country will be hammered. They are outraged and bitterly disappointed at the Government's introduction of a 4.1% blanket cut on all social welfare payments. This equates, I believe, to €8.80 per week or €470 per annum for carers in receipt of the carer's allowance. We should bear in mind that these are the only social welfare recipients who have to work for their payment. They are providing full-time care in the home for the elderly, sick and disabled. Carers had already suffered a 2% decrease in welfare payments due to the abolition of the Christmas bonus this year.
The Minister, Deputy Martin Cullen, the former Minister for Social and Family Affairs, stated when he introduced the half-rate carer's allowance that the Government was committed to supporting carers and facilitating older people and those with disabilities to remain in their own homes as long as possible. He said that carers played a very valuable and much valued role in our society. After last week, I do not believe there is any recognition on the Government benches of the valuable and much valued role they play, because family carers already save the State more than €2.5 billion and provide more than 3.7 million hours of care in the home every year.