Mary Hanafin (Dún Laoghaire, Fianna Fail)

The Bill will give legislative effect to the relevant measures announced in the 2010 Budget Statement. As Minister for Social and Family Affairs, I am very conscious of the needs of the more than 400,000 people on the live register. I also fully understand a wide range of other groups such as people with disabilities, carers and pensioners depend on the welfare budget for vital support. The Government, in a very tough budgetary environment, has done its utmost to protect the most vulnerable in Irish society.

Next year €21.1 billion will be spent on social welfare, which is €676 million or 3.3% more than the expected final expenditure figure of €20.4 billion for 2009. I appreciate that the cuts being made in the welfare area will not be easy for people, but I genuinely believe that if the Government does not take steps now to reduce overall public expenditure and avoid excessive borrowing, we risk making the economic position far worse for everyone, including welfare recipients, in the long term. The Government has avoided making cuts in the State pension and we have also fully protected more than 420,000 children in welfare dependent and low income families from cuts in child benefit. We have ensured cuts in weekly rates for those aged under 66 years are lower than the decreases in prices in the past year; therefore, their income has been protected in real terms.

Before I detail the areas where changes are being made, I would like to outline the supports being maintained at their current levels so as to provide reassurance for those who had been concerned that they might be cut. As I mentioned, pensions and other payments to people aged over 66 years, including payments for pensioners' dependent spouses who are aged under 66 years, are not being cut. This means that over 474,000 people aged over 66 years are being fully protected in the budget. Extra allowances paid to pensioners who live alone and those aged over 80 years will continue at their current rates.

The household benefits package which includes the free television licence and the electricity, gas and telephone allowance is also being fully maintained, as are the fuel allowances and the free travel scheme. The half-rate carer's allowance scheme is staying in place. The half-rate illness benefit and jobseeker's benefit payments for widows or lone parents will also remain. The additional payments for lone parents and people with a disability who participate in community employment schemes are also being retained. The domiciliary care allowance, paid to parents and guardians of severely disabled or ill children under 16 years of age, is not being cut. The value of the respite care grant is being maintained at €1,700 per annum, as is funding for the 107 family resource centres, with grants for counselling and mediation programmes.

The main areas where reductions are being made are as follows. Child benefit is being cut by €16 per child per month for all children, with full compensation being provided for families dependent on welfare payments or receiving the family income supplement. The weekly rates of payment to those aged under 66 years are being reduced by approximately 4.1%, or an average of €8.30 per week. Reduced rates of payments will apply to new jobseeker's allowance claimants 24 years and under not in training or education. Reduced rates will also apply to jobseekers of any age who unreasonably refuse offers of training, education or 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. 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. 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 savings of €2 million are being made through a restructuring of the regional support agencies which work with the family resource centres.

I will now outline the details of these measures, starting with the changes being made to child benefit. As Senators will be aware, between 2000 and 2009 the monthly rates of payment for child benefit increased from just €53.96 for the first child and €71.11 for the third and subsequent children to €166 and €203, respectively. In the same period overall expenditure on child benefit grew from just €638 million to approximately €2.5 billion per year. As a result, approximately 12% of gross social welfare spending in 2009 is on child benefit. Currently, almost 600,000 households receive child benefit in respect of 1.1 million children. A family with four children currently receives €738 per month, or €8,856 per year, in child benefit, regardless of how high the parents' earnings from employment are. The Government is proud to have been able to deliver such significant increases in payments to families when the resources were available. However, in the current economic environment we simply cannot afford to keep spending at the same level as we did when tax revenue was much higher. In that context, we decided to reduce overall expenditure on child benefit.

In considering the various options for making savings in this area we were conscious that the payment could be an important source of income for all families for different reasons. Some families rely on it to buy basics such as food and clothes. For many women, it makes it possible for them to work outside the home by helping with child care costs. Even for women in high income families, it may be the only money paid directly to them. The Government, therefore, decided against withdrawing child benefit completely from any family and we also decided against taxing the payment. Apart from the significant administrative complexities taxing child benefit would involve, it also has the major drawback that it would lead to a cut of up to 20% in the child benefit payment for tax units on the standard tax rate and up to 41% in the payment for tax units on the higher tax rate. A 10% cut across the board is a fairer way to achieve the required savings while protecting families dependent on welfare or in low income employment.

To this end, the lower rate of child benefit, paid in respect of the first and second child, is being reduced by €16 to €150 per child per month. The higher rate of child benefit, paid in respect of the third and subsequent children, is also being reduced by €16 to €187 per child per month.

Notice taken that 12 Members were not present; House counted and 12 Members being present,