Dan Boyle (Green Party)

We have to understand where we stand on social welfare payments which now account for 40% or more of public expenditure. On whether we are raising the money through tax receipts or borrowing, the amount being spent accounts for more than two thirds of all the taxes collected. There has been some discussion of the fact that the social insurance fund has recently moved into deficit having been in surplus for many years. That has always been a conceit because it has been in deficit for many years and social welfare payments have been largely met from taxation receipts. When the Minister for Finance presents the budget in December and adopts a dual track approach to taxation in amalgamating levies and having a set rate of social insurance, we will begin to see the reality all the more clearly. That said, the proposal to cut the level of social welfare expenditure in last year's budget was obviously politically unpopular, although necessary in the context of controlling public expenditure. This Bill considers the areas in which we need to make decisions in that regard, how they should be informed by principles and how we can address the effects of the decisions made in the last budget.

The issue flagged in the Bill is that of lone-parent payments. When a comparison is made with processes and procedures in other countries, one comes across surprising examples, in particular in the Scandinavian model. In Sweden which has long been identified as having the social welfare model we should consider a lone parent is transferred to a jobseeker's payment when the child reaches three years. I understand this happens in Norway and Denmark when the child reaches the age of ten years. Under the Bill it is proposed to do this here when the child reaches the age of 14 years.

We need to consider the social provision for which we can provide, how it compares with that made in other countries and how it meets the level of social protection which needs to be offered. When we examine the budget for next year, we will need to make a distinction in the general rates of social welfare benefits and the need to restore particular payments at a faster rate. Payments to persons with a disability and or who are blind should be increased ahead of other payments. We should send this signal which I hope will be given active consideration when we come to examine the budget. There is a need for a very clear signal that the rates of all social welfare payments, following the decreases in last year's budget, will be frozen. If there are savings to be achieved - they would still be unwelcome - they should be made in secondary benefits, through the qualifying criteria for receipt of social welfare payments and merging and amalgamating payments. We cannot send a further signal that social welfare rates are likely to decrease, particularly now when we have started to see signs of economic growth earlier than anticipated. The signal has to be that when the economy grows, the first ones to benefit will be those in society who have least.

In the long term we need to consider the social welfare model we should use. It is not good enough that in 2010 we are still using a largely Victorian model of social welfare, in which people have to prove they are living in poverty or have a disability to guarantee receipt of a particular payment. I see hope in the provision included in the programme for Government at the request of the Green Party under which there will be integration of the tax and social welfare systems. One example is the proposal made by Social Justice Ireland regarding tax credits for the working poor and the lower paid. It is a simple idea. It is suggested those who gain maximum benefit from tax credits are those on relatively high incomes. Those on low incomes may not benefit at all. Where this is the case there should be a refund in order that the lower paid would gain to the same extent from tax credits as the higher paid. It is a simple concept that has been unnecessarily opposed by the Department of Finance. It can be easily accommodated within our tax and social welfare systems and I hope it receives active consideration given it is included in the programme for Government.

The other side of the integration of the tax and social welfare systems is that a social welfare payment which is part of an overall income should be liable for tax. This is a balancing mechanism and, while it would probably be subject to strong political opinion, it is not unusual in other jurisdictions. In the Swedish system, which is upheld as a model of social protection, all income is taxable. Even though most Irish income earners cannot avail of tax credits, they are not caught by the tax net until a higher level than most other European countries. The tax rate in Britain starts at £10,000, whereas it is €30,000 here. The tax rate starts at zero in Sweden. If we are to integrate the tax and social welfare system, we have to proceed on the basis that all income is taxable and all welfare payments, whether paid directly or in the form of tax credits, apply to everyone equally.

We need to have this debate if we are to understand the idea of universality and allowing people to benefit according to their means. These issues arose to a certain extent in last year's debate on child benefit. The chosen budgetary mechanism of graduated cuts at certain income levels was based on legal advice. I remain convinced that the best way to deal with child benefit would be to make it taxable. The argument has been made that most of the direct beneficiaries are women and many are not in the tax net but I do not see this as a problem if they are issued with tax credits. The likelihood is that the tax return would be small but the benefit to women and children would be more direct. This is a more honest way of dealing with the problem.

In considering the measures in this Bill, we need to decide where the debate should proceed.