Phil Prendergast (Labour)

I welcome the Minister and thank her for her attendance. The Government has a track record of not understanding the theory of unintended consequences, and that is being charitable. Each time the Government introduces a budget, there are implications it fails to consider. This has disastrous results for the Government's accounting and, more importantly, for the people who are affected. In due course I will refer to the weaknesses in the Bill and propose amendments. With regard to how people are affected, I read the letter in the Irish Independent a couple of weeks ago in which a gentleman outlined in clear detail how he was better off being supported by the State due to the effects of the budget.

First, however, I will reflect on the effects of this Bill for the wider economy. The Bill is part of a wide range of policies introduced in response to the recession. There must be economic activity to get out of the recession. The Government appears to have overlooked the fact that the people targeted by this Bill are spenders. All their income goes into shop tills and to commercial service providers. The measures in the Bill are aimed at saving approximately €150 million but they will make more people unemployed and reduce the spending power of recipients of welfare payments. That fact appears to have been overlooked.

In fact, it is not even understood when one considers the remarks of the Minister for Finance in the Dáil last week. He said that when one takes the 3% increase provided for this year with the 5% drop in the cost of living, it is a real increase in social welfare provision of 8%. It is alarming that the Minister should think that way. He betrays a lack of understanding of low income family budgeting. These households have differing spending requirements and the consumer price index does not reflect that. It does not know the make-up of households. Many people on social welfare, for example, do not have a car or a mortgage so falling fuel costs and mortgage repayments are not relevant to them. Most of their money goes on food, which has been increasing in price.

The Minister, Deputy Brian Lenihan, is correct in one sense about real increases but they are not in spending power but in costs. This Bill increases the cost of putting a roof over one's head if one is on rent allowance. There is no deflation in accommodation costs for those people. I refer to Focus Ireland's comment in that regard. It stated that young people in transitional accommodation currently contribute €18 per week to their rent, but under changes to the rent supplement scheme this will increase to €24 per week. The reduction in jobseeker's allowance means these young people will experience a combined weekly reduction of at least €110, leaving them with €76 per week after paying rent. This will create serious financial difficulty for those people. There is a similar impact on people on rent allowance.

Rents might be falling in Dublin but not in places such as Clonmel. For people on rent supplement living in accommodation in Clonmel there is no change in rent. In fact, rents are increasing because landlords' costs are increasing. Additional pressure is being put on people on rent allowance and it is definitely having a very serious effect. I recently received a telephone call from a distressed single gentleman of 68 years of age. He is very happy in his rental accommodation. He is getting on extraordinarily well in so far as he knows his neighbours and the locality and he lives near the church and the shop. All his needs are being met in the rent supplement scheme. He is frequently called in to have his needs reassessed in the context of offering him a house that he does not want. He is very happy where he is. Now he is worried the increases will affect him and that he will not be able to afford them. This reflects the worry of thousands of people in this situation.

Thousands have fallen on hard times and this Bill brings no comfort for them. The cut in rent allowance was based on the premise that landlords would accordingly reduce the rent charged. That might not be the reality. I do not wish to tar all landlords with the same brush because some are genuinely delighted with their tenants and will not use this as an opportunity to put them further into hardship. However, there are others who are, in a business sense, suffering "the pain" and they would have no qualms about increasing the top-up that people might have to pay.

Where is the basis for the claim of an 8% real increase for those relying on social welfare? It is an illusion or delusion; it is not real, as the Minister, Deputy Brian Lenihan, claims. The people who will be victims of this deluded thinking are not those who caused the recession but those who were victims of the Celtic tiger. Many of the people who paid market rates for houses in 2007 could find themselves homeless. This will cause an increase in costs for the Department. That is an example of how the Bill represents false economy. The Bill reflects a Government that is not in touch. It does not target the people who gained most during the boom but has a very negative effect on the people who were floating along nicely but are really hurting now. The negative effect of reducing mortgage interest supplement to seven years will affect thousands of families and will be a significant additional hardship.

The era of Government under Deputy Bertie Ahern and Deputy Brian Cowen saw hyper inflation in the housing market. That was well flagged by all sides of the House. Many people were encouraged to buy houses for huge sums, yet there were massive tax incentives for landlords. Ordinary people were offered mortgages beyond their wildest dreams and were encouraged to buy into the dream of having it all and having it now. I accept that this says something about ourselves, our willingness to listen to the advertisements and fall into the cosy idea that we could have everything now and pay in the long term. As a result, the recession is having a far worse effect. They were given mortgages without any plan or conditions attached that could have offered solace when this major spiral began. We are still in that spiral. The struggle to pay those mortgages has been made even more difficult because the banks, which the Government guaranteed on behalf of this country, are not passing on all the interest rate cuts.

I am delighted with the provision in the Bill of one year's free child care because that was one of our policies but it should not be a back door to cutting the early child care supplement.

Cutting the Christmas bonus to all social welfare recipients, for whatever reason, is a dreadful act at a time of high expense. In some cases Christmas starts here before Hallowe'en, which is appalling. If shops did not display Christmas decorations until 1 December it would make far more sense economically and might reduce the long lead in and the associated hype that goes with Christmas and the worry people experience. It might also restore some semblance of the meaning of Christmas. Taking this bonus from people at a time of greatly increased need is a callous act and will considerably increase the hardship of older people. As the Labour Party spokesperson on older people I am already getting a great deal of contact from worried older people.

Cutting the jobseeker's allowance for those under 20 is another unwelcome decision as opportunities for graduates diminish and places become scarcer. Will those who wish to continue to stay in training or education be able to do so?

The Bill does not offer much hope to many people and I am interested in hearing the Minister's responses. I have tabled some amendments which will be dealt with later. I thank the Minister for the offer of a briefing on pensions.