Leo Varadkar (Dublin West, Fine Gael) | Oireachtas source

I propose to respond to this amendment, which calls for reports to be laid before the Houses following reviews of the homemaker and FIS schemes, by speaking about the two schemes in turn. I am always happy to discuss these issues in the course of these debates and on other occasions inside and outside the Oireachtas.

The homemaker scheme has been discussed previously in the Oireachtas. This Government and previous Governments have outlined the background to the scheme and explained why it has not been backdated. The contributory State pension is based on contributions paid into the Social Insurance Fund, which in turn finances contributory benefits on a pay-as-you-go basis. The State pension, the widow's and widower's contributory pension and the State contributory pension are the three main pensions paid by the Department of Social Protection to people over the age of 66. Prior to the introduction of the homemaker scheme in 1994, there was no provision for the recognition of periods of homemaking. It is estimated that the net cost to the Exchequer of applying the homemaker scheme to periods of homemaking prior to 1994 would be €290 million in 2017. This would increase annually. It is clear that the introduction of such a change would not have left any room for increases in the basic State pension this year and very little room for measures to support other groups. The increase we announced in the recent budget will benefit all pensioners over the age of 66, regardless of their PRSI records.

The current yearly average system is due to be replaced by the total contributions approach from around 2020. I would certainly like to do it sooner than 2020 if that is at all possible. The position of homemaker credits will be considered carefully in the context of that reform and will have to feature in it. While the Department of Social Protection will keep the homemaker scheme under review, any improvements to the current system which could result in further costs for the Exchequer will have to be considered in a budgetary context. I want to consider such improvements in the context of budget 2018. I do not think it would be possible to make all of the changes, or address all of the anomalies, in one budget. I would like to show form in 2018 by doing something to show some progress in this area.

This amendment also calls for a review of the operation of FIS to see how it could be improved to encourage and facilitate people in re-entering the workforce. As part of A Programme for a Partnership Government, the Department is examining the effectiveness of FIS and a range of other supports that are provided to jobseekers and people in employment with a view to developing a new working family payment. This payment will seek to ensure working families have an incentive to make the transition from welfare to employment. The overall aim of FIS is to encourage employment among low-income workers with children. More specifically, FIS seeks to minimise labour market disincentives for parents who take up work, to prevent in-work poverty among households with children and to tackle child poverty through income support to children in low-income working households. The objectives of FIS have remained intact since it was introduced in 1984. Like all Department of Social Protection schemes, it has been consistently reviewed and has been the subject of some significant changes over the years. The eligibility criteria relating to the number of hours worked have been amended, the basis for assessing income increases and thresholds has been changed and there has been a reduction in the FIS multiplier.

The number of families receiving FIS doubled between 2008 and 2015 from approximately 28,000 to approximately 56,000. A number of factors, including demographic and labour market trends, income reductions, increases in the thresholds, information improvements and changes in the tax and welfare systems, have led to the increase in the takeup of FIS. One of the main benefits of FIS is the security of the payment. When the level of FIS is determined, it continues to be payable at that level for a year, regardless of any change in family circumstances, such as an increase or decrease in earnings, as long as the person continues to be employed. This aspect of the scheme ensures income stability and minimises administrative effort. One of the best ways to tackle child poverty is to enable parents to get into work. The family income supplement and back-to-work family dividend payments will continue to support parents in taking up and remaining in employment, especially those furthest from the labour market. The Department is currently examining the effectiveness of FIS and a range of other supports for jobseekers and people in employment in the context of the development of the new working family payment. I hope this payment will be a centrepiece of the 2018 budget.Considerable work and analysis needs to be done to develop the payment. Work undertaken to develop the new payment will be guided by two principles. First, it should ensure that work pays and that no family is better off on welfare than at work, and, second, though equally important, it should have a positive effect on child poverty.

Making work pay cannot just be about welfare payments and top-ups; it must also be about higher pay. The Government also commits to supporting an increase in the national minimum wage, including a modest increase from 1 January 2017. The Government will also strengthen the role of the Low Pay Commission to examine the gender pay gap and strengthen regulations on precarious work. Once the analysis and the design of the working family payment has been completed, I will bring it to the joint committee for a detailed discussion.