Éamon Ó Cuív (Galway West, Fianna Fail)

Senator Buttimer raised a number of issues. I apologise for leaving the Second Stage debate but I had to speak in the Dail. I have two Bills going through the Houses simultaneously. I would not have left otherwise because I believe in listening to what people have to say.

I should explain how I approached all of this. As I stated earlier, the Department represents approximately 40% of the spend. The idea that one could save money and ignore the big spending Departments is nonsense. It would just not have been possible to do so and make adjustments of the type we had to make. The three big spending departments are the Departments of Education and Skills, Health and Children, and Social Protection. In making cuts in education one has a demographic going against one, along with the fact that the vast bulk of expenditure on education relates to public service wages and therefore relates to various agreements on public service wages. In health, a saving of €600 million is being made and in my Department, which is by far the largest Department, savings of €875 million are being made.

In looking to how I could make these savings, €100 million worth of savings were made through the national employment action programme. Fine Gael keeps telling me that €2 billion worth of fraud is occurring. I have respect for "Prime Time" but I think its figures are grossly exaggerated or, to put it another way, we are doing everything we can in every way we can to try to reduce any payments going to people who are not entitled to them and we have made steady progress. However, if I came in here with an inflated figure of what savings I might make from elimination of fraud or the prevention of it, which is much more important, the Opposition would be telling me it was totally ridiculous and unreal and that I would not be able to deliver the savings. We pencilled in €100 million savings related to the activation of the national employment action programme.

We also pencilled in €60 million in savings through reform of the rent supplement. Most people accept that the rent supplement programme is open to all types of problems. It should not be a long-term programme and I am discussing this with the Minister of State, Deputy Finneran. We will bring in radical reform. In other places, I have outlined the type of steps we will take in this regard.

Before I ever came to the Department I had figured out savings of €30 million were achievable with regard to the money being paid to utilities for the provision of the free telephone and free electricity allowances. This will not in any way affect the people in receipt of the allowance as they will still receive 2,400 units a year. We must be the best paying customer that the electricity companies have because we pay on time every time and 36% of people in receipt of the free electricity allowance never use the full allowance, which means this bill is always paid in full but there is no collection cost. We believe a saving can be made there and we pencilled it in.

We pencilled in a further €50 million saving through a number of steps the Department wants to take with regard to better systems and analysis. This comes back to ensuring those who receive payments should do so. I decided not to reintroduce the treatment benefits, which saved €77 million because it had been due to recommence.

When all of this was done, savings of €533 million still needed to be made. As Senators know, debates were held and consensus was reached on this. From the very beginning, the problem was whether to hit everyone for a little bit. Whatever the sum involved, the matter of principle was whether to make the adjustment through a shallow cut across the board or to exclude large sections and make deeper cuts. This was a hard call to make. Senators might remember earlier in the year when I had not been at the Department for a month I caused a furore throughout the country and startled some of my colleagues with regard to whether it would be better to make the cut across a wide swathe of people or to exclude groups and make higher cuts to get the same amount of money. It is a simple mathematical certainty. I thought it was an issue on which I should at least spend time reflecting. Having examined the matter and listening to the debate that ensued, there seemed to be national consensus that people over the age of 66 should be excluded from the cuts. There seemed to be general consensus that this should be so and I have heard only one Fine Gael Deputy question whether it was the right policy

I was very keen, and I hope people will support me on it, to exclude parents in receipt of domiciliary care allowance. The money was not significant so I removed them. So far so good, but this is where I ran into a problem.

My next inclination would have been to exempt people with disabilities. I would not exempt those on illness benefit because that is a short-term payment. One could get the flu and collect illness benefit. I would be inclined to exempt those on invalidity pensions or on disability allowance. The problem is that this broadens it out too much and if I was to add in carers and widows it would get even wider and would amount to approximately 260,000 people. The effect of exempting all these would have been that to save the same amount, I would have had to have added another third to the amount of money I would have had to have taken from the jobseeker's allowance, but jobseekers are entitled to live too. This is the problem. No matter what number one decides on when one must reduce rates, the more groups that are exempted, the greater the payment that must be taken from the remainder.

This was not an easy decision. We looked at the issue from every angle. I said earlier that we need a new approach to disability and a new approach will be proposed in the partial capacity Bill. Let us leave politics out of the issue and look honestly at the problem for whoever is in this job next year. Perhaps I will be lucky and I will be here to see this through. The 150,000 who will be affected by the cuts range across a wide spectrum, from those on jobseeker's allowance right across to the very seriously disabled. If I had some way of separating the more disabled, I could have graduated the cut or made no cut to those, but when dealing with 150,000 people, that meant shifting too much of a burden onto the jobseeker's allowance. That was my problem. There was also an issue that people on the margins transfer from one scheme to another.

I have huge sympathy for people with disabilities. I have always been involved in working with disability groups and wish there was a way of grading the cuts. However, I would point out that people in receipt of disability get benefits that jobseekers do not get, namely, the free household package and a free transport pass. The household package is worth approximately €996 a year, roughly €20 a week. Therefore, people on disability who are in receipt of the household benefits package get approximately €20 more than people on jobseeker's allowance. The question I must ask therefore, is how hard I should hit those on jobseeker's allowance. I could, perhaps, separate the 150,000 into three groups: disabled, more disabled and most disabled, or into those with the capacity to work and so on. This has been done in other countries, but it is complicated and takes time. If we decided to do it, we could then decide to grade the payment, which would give a much better result. That would be somewhat akin to a costed disability allowance. Members are familiar with the different levels of disability that present in their clinics, and therein lies the problem.

With regard to carer's allowance, I am fully aware of what carers do. Like every family in the country, I have a close relative who is being cared for and I know the work involved. We should take a look at the position now and what we have preserved. The normal payment for a single person on social welfare is €188 while the carer's allowance is €204. Therefore, it is a better payment and it remains proportionately better. Carers also receive the respite grant, which I decided not to cut. The respite grant is €1,700 a year, which if divided by 52 is more than €30 a week. Therefore, in monetary terms carer's allowance amounts to €204 plus €30, which is €234. Also, carers, whether the caree lives with the carer or not, are entitled to the household benefits package, even if the carer has a working partner. This is worth approximately another €20 a week. While I do now wish to be mercenary about the allowances, we should spell out the provisions I tried to preserve. Carers over the age of 66 get the full rate of payment and suffer no cut.

With regard to carers under 66 years, approximately 28% of them are on half rate carer's allowance, which means they are receiving an underlying social welfare payment on top of which they get the half rate carer's allowance. I believe that is fair, although some members of the public service feel they should not get double social welfare payments. I retained all the half rate payments, including the half rate carer's payment. This was important for them because if I abolished the half rate and left the headline rate the same, I would have hurt those people more. We also have a situation where people caring for two people get an extra payment. Again, I could have cut that payment and left the carer on the headline rate. However, that would have been unfair because there is more work involved in caring for two. The carer's scheme is the scheme with the best disregards in terms of a partner who is working and may include income or property one has. The disregard for a single person to get the full rate is more than €300 and is more than €600 for a couple. Again, I believe it would be unfair to change this.

One might ask why I took the approach I did. The McCarthy report recommended we get rid of all double payments, but I thought that was wrong. My focus has been on keeping the architecture of the schemes and on keeping and maintaining the significant ancillary benefits. If, on the other hand, I had started exempting carers, I would then have had to have exempted those on disability, widow's and the blind pensions. That was my €300,000 and then I would have had to have hit the jobseekers. I believe that would have tipped it too much against jobseekers, many of who had employment and commitments but have now hit very hard times. That was my concern. I am not asking people to applaud me or say I am right. All I want to do is to explain in detail the ideas and analysis behind my decisions and why, allowing that I had to make savings, I believed that on balance the decision I made was the better one to make.

I read the Fine Gael proposal with interest but feel it was somewhat optimistic with regard to the savings it could make from tackling fraud. The Department is fairly effective in that area and some of the schemes are virtually fraud proof. There is virtually no fraud with regard to contributory old age pensions. Fine Gael took a different approach from me. That party said that over four years it would hit jobseeker's allowance by €18. I would not like to make a move like that so quickly. Such a move should be avoided. I believe cutting the allowance to €178 for a single person living alone with no other supports such as free electricity or telephone should be avoided at all costs.

We have increased expenditure on carers by 600% at a time of 30% inflation, and rightly so. These measures will not reduce it that much because we have added the respite grant, which is universal and is paid to all carers. I know people who are involved in caring who do not have a huge income but who do not get a carer's allowance. However, the fact we pay the respite grant and half rates has upped our costs. If we really want to bring the cost down, that is what we must hit but we will thereby affect many more people than the approach I took. The equation I applied was the result of months of analysis - I could keep Senators here all day discussing it - which persuaded me that I had to make this adjustment rather than the narrow and deep cut that would otherwise have been necessary.