Seanad debates

Wednesday, 29 April 2009

Social Welfare and Pensions Bill 2009: Second Stage

 

2:00 pm

Photo of Mary HanafinMary Hanafin (Dún Laoghaire, Fianna Fail)

I thank Senators for their contributions and for the informed debate we have had. Everybody recognises this has been the most difficult budget for many years. The decisions made were not taken lightly as we were very conscious of their impact on people and their families throughout the country. However, we have had to increase taxes and borrowing to pay for social welfare. It is sad that because of the large numbers of people losing their jobs, we needed to increase the provision for the social welfare budget, which is now over €21 billion.

The best way to reduce the need for this is to get people back into work, remove them from social welfare and ensure they are contributing again to the economy through work and taxes. However, until that happens, we need to make provision for them. It is not sustainable for us to spend €6 out of every €10 on social welfare when demand is so great on health, education, infrastructure and across all sections of society. For that reason, it was important when making provision in the budget to increase social welfare to examine how money could be saved in the Department and we did that at the absolute minimum.

Reference has been made to the ESRI. The ESRI recognises that the Government is taking measures to deal with the deterioration in the public finances and acknowledges that the measures taken are appropriate. Until we get the public finances in order, we will not be in a position to improve services and financial provision for those on welfare. Our overall aim is to keep people at work and to support them and their families. I accept that this is a difficult time for people. It is difficult for people who lose jobs or take a drop in income and for young people who cannot find jobs. As politicians, we know how distressing it is in our clinics to hear the despair of people who come in for advice. When we get our public finances back in order through the measures we have taken - the guarantee to the banks, capitalisation, nationalisation of Anglo Irish Bank, the agreements reached with the banks, the setting up of NAMA and removal of toxic assets so that the banks can free up money to professionals and businesses and offer credit and loans - it will help regenerate the economy. I understand it is difficult to see the link between the big banks and the small businessman, but the big banks are currently so busy servicing their big debts that they are not looking after small businesses. That is the reason the Government has taken the measures it has taken.

In the meantime, we have had to take decisions that have impacted severely on people. I know how difficult that is for them. One of the most difficult decisions we made related to the Christmas bonus. It would have been unthinkable to cut the weekly rates of assistance because far more people are being paid social welfare every week than receive the Christmas bonus. It is bad enough for people to lose their jobs and to be told they will only receive €204.30 a week without suddenly turning to them and telling them that will be cut also. That would have been extremely difficult for far too many people. Out of all the cuts, the Christmas bonus is the one the Government would most like to be able to restore. That will depend on whether we have some windfall or whether we are able to make additional savings. However, the full benefit of the Christmas bonus costs €223 million, and that amount is not found easily. Notwithstanding the fact that cutting the Christmas bonus was a difficult decision and is very tough on people, every effort will be made to try to restore it. However, the warning must go out that it is a significant amount of money.

The introduction of the early child care pre-school provision has been generally welcomed. It is, undoubtedly, a far better way of utilising the money than by making direct payments. Ultimately, the children will benefit most. Children who go into early child care and education will gain long-term benefits for their education and future lives. Senators have asked how the scheme will work. It will operate under the Office of the Minister for Children and will ensure equality of opportunity for all children. Community and private pre-school services that meet the requirements of the scheme will be invited to register by the end of May 2009. Then parents will choose a facility in their local area to which they want to send their child.

The children enrolled in playschools will receive free pre-school provision of three hours per day, five days a week over a 38-week year. This equates to a weekly capitation grant of €64.50 and there will be no charge to the parent. Where children are enrolled in full-time or part-time child care services, which receive free pre-school provision of two hours and 15 minutes per day five days a week over a 50-week period, the weekly capitation grant will be €48.50, with parents paying for their child care net of that amount. The financial benefit of the scheme for a single child is worth over €2,400. All children aged between three years and three months and four years and six months in September each year will be eligible and parents can enrol their child in the participating service of their choice. The provision comes into effect in January 2010. It is a very good example of how, with fewer resources, we can make better use of the money available.

Senators have also raised the issue of clamping down on fraud, which has been a priority for me since I took up my position. Senators will be well aware of the initiatives we took last July to ensure people collect their money every week at the post office. This is a control measure as the money does not automatically go into accounts through electronic transfer. This measure has been strengthened further by requiring that claimants have photo ID when collecting payments because there was evidence - not only anecdotal evidence - that the wrong people were collecting payments or that people were returning to the country to collect them. To counteract this, we have officers working with the immigration bureau at the airport so as to catch people who are solely welfare tourists. We have also made a serious attempt to clamp down on cross-Border welfare tourism and fraud and our multi-agency checks on the Border have been very successful. Our inspectors have also increased the number of house visits made. In some cases they found people at an address who were not resident there or sometimes far too many people who claimed to be resident, all of whom were claiming social welfare.

Our child benefit controls are very strict. We made significant savings in that area last year. The European wide situation is that people working in one country whose children are in another can receive child benefit - in Ireland this applies to the early child care supplement also even though the children are not resident here. However, in recent months, because of the downturn in the economy, many people who had been making a very good contribution to this economy have lost their jobs and gone home. We must ensure they do not still claim the child benefit and we have been successful in clamping down on that.

There is evidence, as mentioned by Senators, of an increase in the black economy. It is just as important that we clamp down on people who are claiming jobseeker's benefit when they are not genuinely seeking work. We must also clamp down on people who are claiming other benefits under false pretences, such as disability allowance. There is huge pressure on our staff to ensure we investigate these areas.

The public has been especially helpful, given the 500% increase in the number of notifications by the public last year. Each instance is investigated without any reference to the complainant who does not need to give information on him or herself. We investigate irrespective of how or to whom the complaint is made. As it is a serious and time-consuming element of the Department's work, staffing is an issue in that we must ensure there are no undue delays in processing jobseeker's payment applications. Through the public service system, we have been able to get approximately 260 additional staff but we have requested and expect more. They must be trained and placed to protect the processing side of the applications, which must be dealt with speedily, while handling fraud matters.

People have mentioned the Bill's rent supplement provisions. Rents are decreasing throughout the country. People in private accommodation who are still working and are not in receipt of rent supplement payments are negotiating reductions with their landlords. It would be unthinkable that a State client could determine the limit on rent. Landlords have become realistic because they know that the rent supplement is a regular income from the State via tenants. Elsewhere, many people who have lost their jobs or accepted income cuts are finding it difficult to meet their payments. As such, it is important we make these reductions.

Regarding 18 and 19 year olds, it is welcome that Senators recognise the importance of the incentives in the Bill. The number of places in courses in the Department of Education and Science and FÁS has been increased. There are sufficient places but young people must be given incentives to take them up. In a number of pilot projects, young people were sent on training courses instead of being given their jobseeker's payments. The projects did not work because the young people knew they did not need to do them and could get the money while sitting at home. I am not implying that every 18 or 19 year old who is signing on does so willingly but there is a cohort of intergenerational welfare dependants who must be guided in the right direction early. This is the best incentive to do so.

The other major consideration in the Bill is the pensions provision which is complex and important. The number of insolvent companies has doubled in the past year and the number of pension funds winding up has increased significantly in recent months. The Bill tries to give an added benefit to the workers involved. It is unfair that someone who retired last month can not only get a guaranteed pension, but an increase as well, whereas the worker who is still contributing to the fund might not get any entitlement owing to its being in deficit.

The industry has been making a good profit on the purchase of annuities. Where a fund is in deficit, the money in question could be going to the workers. The relevant provisions in the Bill, namely, those that change the order of priorities on post-retirement increases where a fund is being restructured or wound up and those regarding the new pensions insolvency payment scheme, PIPS, as opposed to market annuities, will give workers extra money. We were anxious to include these provisions as quickly as possible since companies are becoming insolvent or, having already taken the decision to wind up their funds, are working to meet their liabilities. The provision is limited to pension funds in deficit where a company is insolvent because we must be conscious of state aid and competition issues. We cannot be seen to be distorting the market or favouring certain undertakings, goods or supports.

It is correct to have a three-year review period if we are to determine how the scheme works. We will keep a close eye on how it benefits workers and supports companies. I appreciate that these significant and complex changes are being made late in the consideration of the Bill but they are intended to support as many workers as possible while protecting current pensions.

The Department's overall aim is to support families and people. Today's debate saw a conflict. On the one hand, we were saying that we should be more generous and do more to look after carers and the unemployed, which I accept. On the other, an example was provided in a letter which outlined that a family's members were better off on welfare than at work. We can never allow a situation to develop in which someone is better off not working.

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