Áine Brady (Kildare North, Fianna Fail)

I thank Senators for contributing to the Second Stage debate on the Bill and take the opportunity to respond to some of the main issues raised.

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 situation far worse for everyone, including welfare recipients, in the long term.

The Government has avoided making cuts in the State pension. 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 during the past year; therefore, their income has been protected in real terms.

Several Senators have stated people with disabilities, those on illness payments and carers should have been excluded from the reductions in weekly welfare payments. While I can completely understand this sentiment, the reality is that there are more than 280,000 people on these schemes and the reduction in payments to these recipients accounts for more than €125 million of the savings being provided for in the welfare budget. If we were to exclude these schemes from the general 4.1% reduction, much greater cuts would have to be made in payments to other claimants aged under 66 years, namely, jobseekers, lone parents and widows. Instead of reducing these payments by €8.30 per week, we would have to reduce them by about €11.50 per week.

It should also be acknowledged that, even with the changes in the budget, supports for carers and people with disabilities are still far better than they were a few years ago. The rate of payment for disability allowance, for instance, has been increased significantly since the scheme was introduced in 1996. The rate has gone from the equivalent of €85.70 in 1997 to €204.30 in 2009, an increase of about 130%.

In addition to improving payment rates, we have also enabled more people with disabilities to qualify for the allowance by significantly improving the means test and putting in place generous disregards for those who are able to take up rehabilitative employment. Prior to June 2006, once earnings exceeded the disregard threshold of €120, additional income was fully assessed. Now income from rehabilitative employment greater than €120 but less than €350 is subject to a 50% tapered withdrawal rate, meaning that such claimants can earn up to €430 a week before the allowance is fully withdrawn. Almost one in ten claimants of disability allowance, or more than 9,000 claimants, are engaged in work or participating in community employment schemes.

In 2007 the assessment of a spouse's or partner's earnings for disability allowance and other working age schemes was reformed to ensure a family would always be better off where a spouse or partner was earning. With effect from September 2007, €20 per day of earnings, subject to a maximum of three days a week, is disregarded and the balance assessed at 60%. In 2007 changes were also introduced to the capital disregard in the means test for disability allowance which was increased from €20,000 to €50,000.

Taken together, the increase in numbers availing of the disability allowance and sustained increases in the rates of payment have meant that even after this budget, expenditure on the scheme will be almost five times what it was in 1997. Expenditure on illness benefit and invalidity pension will also have increased by about 290% and 170%, respectively, in the same period.

For carers under 66 years of age, in budget 2007, the rate of carer's allowance and benefit was increased by 11.1 % to €200 per week. In the 2008 budget the rate was increased to €214, an increase of 7%. In budget 2009 the rate was increased to €220.50, an increase of more than 3%. That is the context in which we should view the reduction proposed in budget 2010. The rate of carer's allowance for carers under 66 years of age will be €212, a reduction of 3.85%. This brings the rate back to just €2 less than what it was in 2008. Carer's allowance rates for carers over 66 years of age have not been changed and remain at €239.

The Government is acutely aware and appreciative of the contribution made by carers to people needing ongoing care and support. Despite the difficult budgetary situation, the Government continues to provide significant supports for carers. Carers make a considerable contribution to society which is reflected in the additional supports they receive compared with other recipients of social assistance. Payment rates for carers are 8% more than the jobseeker's allowance and, in addition, they have household benefits, free travel and can avail of the respite care grant.

During the years the means test for carer's allowance has also been significantly eased and is now one of the most generous in the social welfare system, most notably with regard to spouse's earnings. Since April 2008, the income disregard has been €332.50 per week for a single person and €665 per week for a couple. This means that a couple with two children can earn in the region of €37,200 and qualify for the maximum rate of carer's allowance as well as the associated free travel and household benefits package. A couple with an income in the region of €60,400 can still qualify for a minimum payment, as well as free travel and household benefits. These levels surpass the Towards 2016 commitment to ensure those on average industrial earnings continue to qualify for a full carer's allowance.

Budget 2007 provided for new arrangements, whereby those in receipt of a social welfare payment, other than carer's allowance or benefit, who were also providing someone with full-time care and attention could retain their main welfare payment and receive a half-rate carer's allowance. The need to retain the half-rate carer's allowance was the main issue raised with me by carers in recent months and the Government has left this payment in place. We have also maintained the value of the annual respite care grant at €1,700 for each care recipient. All carers providing full-time care and attention for a person in need of such care, regardless of their means or social insurance contributions, will continue to receive it. It is worth remembering that ten years ago the respite care grant was only €254 and available to recipients of carer's allowance. The domiciliary care allowance, paid to parents and guardians of severely disabled or ill children under 16 years of age, is also being maintained at the current level.

It is estimated that the combined expenditure on carer's allowance, carer's benefit, the respite care grant and half-rate carer's allowance will be €650 million in 2009. That compares with a total expenditure of just €46 million in 1997. Therefore, while I regret that we had to cut the weekly rates for carers in this budget it is only fair to acknowledge the significant improvements that have been made in recent years.

Senator McFadden asked a number of questions about section 15, which deals with the habitual residence conditions. She asked if the legislation would be retrospective. The answer is it will not. It will apply to claims decided following on the enactment of the Bill. She also inquired whether section 15 would have implications for schemes other than child benefit. That section will apply to all the social assistance schemes as well as child benefit.

Senator Norris inquired about reduced rate jobseeker's payments to people who unreasonably refuse offers of training or education. That measure is not provided for in the Bill but it will be included in the next social welfare Bill which will be introduced next year.

Senator Quinn inquired about employer's PRSI. A new job stimulus programme is being introduced in 2010 under the employer jobs PRSI incentive scheme. Where an employer creates a new job and takes on a person who has been unemployed for six months or more, the employer will be fully exempted from the liability to pay PRSI for the first year of that employment. That will give employers an 8% to 10% saving on employment costs for each new job created. Full details will be announced early in 2010.

Even with the changes provided for in the Bill, €21.1 billion will be spent on social welfare in 2010 - €676 million or 3.3% more than the expected final expenditure figure of €20.4 billion for 2009. We have avoided making any cuts in the State pension. We have also fully protected more than 420,000 children in welfare-dependent and low-income families from cuts in child benefit. In addition, we have ensured that cuts in weekly rates for those aged under 66 are lower than the decreases in prices over the past year. The Government appreciates that reductions in rates will be difficult for people but we also know that if action is not taken now we will put social welfare payments at greater risk in future.

Question put.