Martin Mansergh (Fianna Fail)

I welcome the Minister and his officials. In defence of Senator Terry, she was present for and contributed to the debate. I expected to hear a voice from the Labour Party before making my contribution but perhaps its absence is an eloquent statement on the quality of the Bill. I congratulate the Minister on the size of the social welfare package, the largest in the history of the State, for which I am sure he had to fight hard.

This is the first social welfare package to be unreservedly welcomed by CORI. Some years ago, around the time of the rainbow coalition's final budget, Fr. Seán Healy denounced the package produced by the then Minister for Finance, Deputy Quinn, to the extent that I felt a little sorry for the Minister. I happened to meet Fr. Healy and asked him whether he had approved of any budget during the previous ten years, to which he replied he would need notice of the question. At last we have legislation which satisfies him.

We read reports and see statistics about the level of inequality in our society, most of which is relative because we have made significant progress in reducing absolute inequality. Debate on this issue takes place in every country in western Europe. The left wing of the Labour Party in Britain denounces the Government of Prime Minister Tony Blair for widening the poverty gap. In Germany, despite the fact that the Social Democrats and Greens govern together, opponents of what are probably necessary reforms of the country's social welfare system make the same point. Ireland is not alone in having this type of argument.

Under the Bill, increases in social welfare benefits will range from 7% to 10% in nominal terms, well ahead of an expected inflation rate of 2% to 2.5%. While such increases have been a feature of budgets for several years, from the early 1990s through to 1997 social welfare increases, with the exception of unemployment assistance, closely tracked the rate of inflation and during much of the 1980s they trailed it. I recall the then Minister for Finance, Mr. Alan Dukes, for whom I have the highest respect, stating that people should not expect social welfare increases every year. We have moved far beyond that position, partly due to the quality of economic management. An unemployment rate of only 4% to 5% gives us the opportunity to do more for those who need the welfare net or have reached an age at which they require a pension.

The Government is a model in western Europe in the area of pensions to the extent that it concentrates on making provision for future pensions by allocating 1% of annual GNP to the national pensions reserve fund and encourages people to improve their position through private effort. None of us is under any illusion that the State pension can provide anything other than a modest standard of living. Although it has been much improved, those in employment who want to live in a degree of comfort have a duty to make some pension provision for themselves.

As an energetic and reforming member of Cabinet, I ask the Minister to examine the individualisation of social welfare payments. This issue has different connotations from individualisation in the taxation system and has few downsides from any ideological viewpoint. We are entering an era in which both spouses in a relationship will probably have worked when they reach retirement age and will, therefore, expect to be treated in their own right rather than as a spouse dependent. For this reason, individualisation would be a desirable reform.

In the area of private pensions evidence has emerged of defined benefit schemes running into difficulties. I have personal experience of this from work I do with institutions on a charitable basis. The problem is evident in the private and semi-State sectors and causes a great deal of unhappiness.

The Minister placed considerable emphasis on further increases in child benefit and the advantages and efficiencies of the payment. A Government decision was taken four or five years ago that child benefit would be the main vehicle for addressing the cost of child care. I am sure the Minister will closely study my view, which is shared by other Senators on this side, that we need to reconsider whether that strategic decision is sufficient. A child tax allowance was administered here until its abolition 20 years ago by the then Minister for Finance, Mr. Alan Dukes. Its value was gradually eroded until it was worth only €100 per annum or thereabouts and it was then abolished in exchange for a marginal increase in child benefit. I am not sure this was the correct decision. The British Chancellor of the Exchequer, Mr. Gordon Brown, is very proud of a child tax credit scheme applied across the water — I do not hold it out as the model — under which those earning below a certain threshold of approximately £56,000 receive tax credits. It ceases to apply to those with earnings above the threshold. One of the messages coming though on the doorsteps in counties Kildare and Meath is that child benefit on its own is not a satisfactory final solution.

I will briefly address the issue of social welfare for immigrants. As part of the enlargement package, Ireland, to an even greater degree than Britain, adopted the most liberal, open employment regime of the existing 15 member states for immigrants from the new accession states. On the whole, the system appears to be working well. However, I heard a report on radio this morning concerning a group of about ten Poles who travelled to County Sligo for employment only to discover that the work they were offered was not available. Fortunately, word travelled quickly, alternative offers were made and the matter is apparently being sorted out. In another recent case an immigrant woman living on the streets had her legs amputated. Some kind of safety net, not necessarily the conventional social welfare model, must be in place so that people are not utterly without cover. I have listened to the Minister's reflections on single parents. There are cases, when a child is beyond a certain age, where the mother is encouraged through the provision of child care facilities to go back to work. However, single mothers should not be compelled to go back to work with the threat of losing their social welfare benefits. We would not compel anyone else in society in such a way.