Ivana Bacik (Independent)

Everyone acknowledges that we are facing into an unprecedented economic crisis. The ESRI published a report earlier today which states that we are set for the sharpest fall in economic growth experienced by any industrialised country since the Great Depression. In light of this extraordinary and deeply depressing prognosis, we all acknowledge the need to make savings. I wish to be fair-minded in assessing the Bill. In that context, there are some aspects of it which I welcome, particularly the move that will herald the introduction of a new provision in respect of child care. The latter is overdue. However, there are many aspects of the Bill which are deeply regrettable. In that regard, there are certain savings that could be made elsewhere and I am sure that imaginative solutions could have been found to deal with particular matters.

The Minister stated that there will be an increase of 8.7% on the amount originally provided in respect of welfare services for this year. However, she proceeded to state that this additional expenditure arises mainly as a result of increases in unemployment and indicated that the expected average live register figure for 2009 will be adjusted upwards. From what the ESRI is predicting and from what we know from members of our families and our friends who are receiving news of redundancies on a daily basis, we are aware that the figure for unemployment will increase by even more than the Minister is projecting. As a result, spending on social welfare will increase accordingly. We must, therefore, consider the introduction of more radical adjustments to the social welfare system.

The decision not to pay the Christmas bonus is deeply regrettable, particularly as those who need this money will be most affected. There will also be a severe knock-on effect on the retail sector in that people's spending power will be reduced at a time of the year when a large number of businesses rely on increased spending. This decision will have an unwelcome effect in that it will ensure that the market for consumer goods will contract even further. We will see evidence of this when people make adjustments to their spending in the run-up to Christmas.

Imaginative approaches have been taken in other jurisdictions in respect of social welfare. I refer, in particular, to Germany, where the system has been adjusted to take account of the needs of people who live in regions that have a major reliance on the automobile industry. In light of the decline in consumer demand for new cars, that industry has taken a huge hit. With the change to the social welfare system in Germany - I am sure the Minister is aware of this - the state now pays automobile companies to top up the wages of workers who would otherwise be made redundant. Effectively, those workers have been placed on short-term work. Something similar is happening in the private sector in this country. Rather than making two out of ten employees redundant, employers are placing all ten on short-term work. This is being done in a low-key way and it is an extremely creative solution. Most people take the hit on their wages so that their colleagues can remain in work.

In Germany, however, the state is stepping in on a larger scale and is topping up the pay that employees receive from their private sector employers. This means that businesses can remain solvent and that they will still have highly skilled labour available to them when the upturn occurs, which one hopes will happen quickly. The idea is that people can be kept off the live register. While the state essentially subsidises the private sector under this model, there is potential for it to make great savings. A mechanism of that imaginative nature would have been of great assistance in a Bill such as the one we are discussing. Instead, we have been presented with a slash-and-burn approach.

During the debate in the Dáil, Deputy Burton pointed out that people who need to make savings in the context of their household incomes do not merely cut everything, they target their cuts. Those of us in opposition want the Government to take a more targeted approach in respect of cutting public spending. The consequences of such an approach must be thought through. We must ensure that what we do does not have an extremely negative impact on the entire economy.

With regard to pensions, I welcome any changes that make people more secure in their retirement. In that context, the fact that there will be some protection for workers who are members of pension schemes is a good development. However, the Bill does not go far enough in the context of providing sufficient protection. The future for workers at Waterford Glass is dreadfully uncertain because their pension schemes are insolvent and they do not know whether they will receive the payments they are due upon retirement. This has a knock-on effect on the economy because it stops people from spending. People who are five or ten years from retirement are looking to the future with uncertainty and, as a result, are less likely to spend.

We require further information on what will replace child care supplement. The supplement, which involves the payment of €1,000 per year, was always a blunt instrument. I have a personal interest in this regard because I am in receipt of the payment. As stated, it is a blunt instrument which comes nowhere near offsetting the real cost of paying for private crèche care. To remind those who are not aware, out of one's net income it costs at least €1,000 per month per child to secure such crèche care or to place one's child in a pre-school group.