Joan Burton (Dublin West, Labour)

I am conscious that, as we speak, momentous events are taking place in Europe, particularly within the eurozone, which will have enormous economic consequences for everyone. The impact of those consequences will probably far exceed that of the measures contained in the Social Welfare Bill 2011.

The Bill, which has been referred to the Seanad by Dáil Éireann, is an important item of legislation. It directly affects more than 1 million people who currently rely on social welfare payments that enable them to live their lives with a modicum of financial stability. It is also an important measure for everyone else in our community, including those whose PRSI contributions and taxes fund the system. The latter may not be beneficiaries at present but they could be at some point in the future. It is in their interests that the social protection system be developed on the basis of sound principles and be financially sustainable in order that it will be available to them in the future if they need to access it. In the meantime, social welfare spending sustains economic activity at a higher level than would otherwise be possible. This benefits workers and businesses and makes society more cohesive for the good of all.

Spending on social protection cannot be viewed in isolation. It takes place in the wider context of overall Government income and expenditure. As Senators are well aware, there is a gross imbalance or structural deficit in Government finances at present. That structural deficit is the single biggest threat to the continued provision of social welfare services on the scale and at the level that has been possible up to now. Reducing the deficit is the key challenge facing this country. We must bridge the gap between Government expenditure and revenue that is currently filled by borrowing. There is a shortfall of €16 billion in the Government's finances at present. Unless the rate of borrowing is reduced, the burden of debt servicing will take up an increasing proportion of tax revenue.

The deficit is being addressed through various measures, including those designed to reduce expenditure on social welfare. In 2012, the deficit will be lower than it has been since the current economic downturn began. However, it will still be unsustainably large next year and the following year. As the Department of Social Protection accounts for approximately 40% of all Government expenditure, its schemes and services cannot be exempted from measures to reduce the deficit. Given that it is the biggest spending Department, it must play its part in that adjustment. I take this opportunity to stress that next year that Department will spend €20.5 billion which, compared to the figure for the current year, represents a reduction in spending of 2.2%. When I became Minister, I inherited a requirement for a budgetary adjustment in respect of social protection which was almost twice that of the figure, €475 million, which has emerged as the final adjustment. My Department's spend of €20.5 billion is both significant and important, not just in the context of the individuals and families concerned but also to every town, community and shop throughout the country.

In considering how best to make the adjustment to which I refer, the Government made three important policy decisions. First, we decided to limit the adjustment in social protection expenditure to €475 million, or just over 2% of the Department's spend. This compares very favourably with the reduction of €810 million in 2010 and the reduction of €515 million in 2009, when the previous Government was in power.

This was a particularly good outcome given that current expenditure was reduced by €1.45 billion in Budget 2012. Less than one third of that reduction is coming from the Department of Social Protection, although it accounts for 40% of the expenditure of Government.

Second, we preserved the primary weekly rates of payment. This is the first time in three years there was no cut in weekly payment rates. In the past two years, the amount paid to couples fell by more than €27 per week and the amount paid to single people fell by more than €16 per week. That is a cumulative reduction of 8%. I am proud of the fact that there was no across-the-board cut this year on people who had already lost so much. They have certainty regarding their core primary income in respect of this year.

Third, where possible I have brought forward changes which are required as part of the wider reform of the social welfare system and which also generate savings in 2012 and later years.

It is simply impossible to reduce spending on social welfare without reducing entitlements for some people. Having protected the basic weekly rates, the burden had to fall in three areas — expenditures other than payments to individuals; payments to people who have income from employment; and additional payments over and above the primary weekly payment. I have no desire whatsoever to make such cuts and if there was a way of reducing expenditure without bringing forward such measures, I would gladly have opted for any such alternatives. We have minimised, in so far as is possible, the spending reduction in the Department and within that, we have targeted the reductions on additional payments over and above the primary weekly rates. I recognise that every reduction will be felt by those affected. However, the alternative was an across-the-board cut in payments to people who have no other income apart from their primary weekly social welfare payment, including pensioners, and I was not prepared to do that.

The budgetary measures that directly affect child related payments are measured and the rates of payment continue to ensure the needs of families are met. The standard rate of child benefit will remain unchanged at €140. There will be no reduction in child benefit for the first and second child.

I find it amazing that Sinn Féin is so critical of this measure when one considers child benefit in the North is just €67.70 a month for the second and all other children. We will still be paying €148 a month——