Thursday, 15 December 2005
Social Welfare Bill 2005: Second Stage.
I am very pleased to introduce this, the first of two Bills intended to implement the €1.12 billion social welfare package announced in the budget. This substantial investment represents an almost 28% increase on the 2005 package of €874 million. It brings the projected level of social welfare expenditure in 2006 to more than €13.5 billion, which is double what was spent in 2000. Behind the expenditure statistics are the men, women and children for whom the welfare benefits and supports can be a financial lifeline during vulnerable and difficult times. Around 1.5 million people will benefit from the significant increases and improvements in the budget that will protect and improve the living standards of social welfare recipients.
The Department of Social and Family Affairs has a pivotal role to play in ensuring that the fruits of our economic growth benefit all, especially those who are most vulnerable. I am happy to have secured a substantial increase in the social welfare budget this year, which underlines the Government's commitment to those for whom the support of the State is vital. By any standard this is a ground-breaking budget, which is reflected in the Bill.
The facts speak for themselves. Some €800 million is allotted to substantial increases in allowances, pensions and entitlements and a further €300 million specifically for a range of social policy reform measures. Social welfare payments have been increased by almost four times the expected rate of inflation; the lowest rate of social welfare has been increased by an unprecedented €17 a week, to a new level of €165.80, with proportionate increases in the qualified adult allowance. Means-tested old age pensions have been increased by €16 a week to €182 and contributory pensions by €14 to more than €193 a week. A wide ranging reform programme will boost the entitlements of older people, alleviate poverty, support activation and recognise carers. Fuel allowances are being increased by €5 a week as part of a major fuel poverty relief package costing more than €42 million. The carer's allowance is being increased by more than €26 a week with the result that the top rate will now stand at €200 a week. In addition, a range of measures costing €28 million will promote activation by improving income disregards and tapered payments for people with disabilities. Maternity benefit is being increased to 80% of reckonable weekly earnings and the duration of both maternity and adoptive benefit is being extended by four weeks in 2006 and a further four weeks in 2007.
In the past year I have been laying out, with the support of the Government, a strong new social reform agenda and now major funding of more than €300 million is available to underpin and give tangible effect to these important, and necessary, reforms. The reforms, which I have discussed in the Seanad before, while protecting the disadvantaged amongst us, will also strive to get behind the welfare payments and tackle the social issues involved.
It is a well established fact that the best route out of poverty is through employment. That is why, through these reforms, I want to create the changes and opportunities that will bring people from welfare dependency to financial independence by providing the stepping stones to a better standard of living and income.
Overall, the budget and this Bill are a clear demonstration of the commitment to vigorously addressing, in particular, the needs of older people, making further progress towards alleviating poverty, especially child poverty and pensioner poverty, the development of a range of supports and opportunities for lone parents and recognising and enhancing supports for carers.
I will outline briefly the key benefits of budget 2006 for each of these customer groups. We have a booming economy and it is only right that the people who helped lay the foundations for our current prosperity should be able to enjoy the fruits of the tremendous strides which the country has made over the past decade or so. The Government has delivered record increases in pensions since taking office in 1997. In fact, pensions have increased by over 80% since then which is well ahead of the increase in the consumer price index and gross earnings over the same period.
In addition to the significant weekly increases, this budget makes provision for a number of very important measures which are designed to target resources at particular groups of older people including: combining all non-contributory payments for people over 66 years of age, other than the carer's allowance, into one standard enhanced non-contributory pension scheme with a greatly improved means test that will lift some 34,000 pensioners onto higher or full pensions; increasing the amount of means disregarded from €7.60 to €20 per week for this standard pension; providing a special earnings disregard of €100 per week; and increasing the additional allowance paid to those over 80 years of age by €3.60 to €10 per week which will help 100,000 pensioners, including 33,000 receiving widow's and widower's pensions.
As I have said a number of times, I am determined that everyone in this country should be entitled to a decent pension and to security and dignity in their later years. Central to achieving this aspiration is the need to bring about widespread increases in occupational and private pensions coverage. I have received a very comprehensive report from the Pensions Board on the current situation and proposals for measures we might take in the future. This report is currently before the Cabinet for consideration and when this is completed, it will be published which I hope to do in January. I want to see this report engender a national debate on the future of our pensions system when published.
On many occasions, I have identified child poverty as one of the key challenges for this Government and society in general. The long-term cost of poverty in childhood for individual children, their families and communities and, indeed, for society at large, demands that we address this issue as a priority. In the context of budget 2006, I have taken a number of measures to alleviate child poverty, in addition to substantially increasing the lower income weekly rates by €17. The investment of over €100 million in increases in child benefit will lift payment rates to €150 for the first two children and €185 for the third and each subsequent child. These increases will benefit over 540,000 families in respect of over 1 million children and fully honour the Government's commitment on child benefit.
When taken together with the Government's child care package where all families with children under six years will benefit from the new child care payment, this brings the total annual cash support for children to at least €2,800 per annum. When it comes to practical, targeted and concentrated measures to tackle poverty, then the family income supplement, FIS, has an increasingly important role to play. That is why this year I have made major changes to the support scheme, making it particularly beneficial to larger families, and increased funding by a further €25 million.
As Senators will be aware, the FIS is paid to parents in low-income employment with the objective of directing more resources to larger families. Under the changes that are now being introduced, FIS payments will make further significant contributions to incomes in thousands of low-income homes. As a result of the improvements, it is estimated that over 5,000 additional families will become eligible for the payment next year. From FIS alone, depending on the size of the family, weekly increases will range from over €11 to €169 a week. For example, a family with four children could see its FIS payment rise by up to €64.80 a week while the increase for a family of six children could rise by nearly €117 a week.
The family income supplement can contribute significantly to boosting child support incomes. For example, a family with earnings from employment of €20,000 and with two children under six years, would qualify for €3,900 in family income supplement payment annually. When one adds to that the €2,000 in child care payment and €3,600 in child benefit then that family has an annual tax free child welfare income support of €9,500. A family with an income of €20,000 will get an extra €9,500 in child support. For a family on the same income of €20,000 but with four children, two of whom are aged under six years, the annual FIS support payment amounts to €7,644, giving the family a total child support package of €17,684 a year. That is €17,684 on top of the income of €20,000. At €30,000 income from employment, the same family would still qualify for total child support income of €11,694 annually.
For thousands of families on low incomes, another important support is the back to school clothing and footwear payment. This payment is being substantially increased this year by €40 per child and entitlement to it is being extended. I am making a further €2 million available to the school meals programme which makes a valuable contribution to the quality of life and the educational opportunities of children in low-income families. Over €10 million is now earmarked for the various school meals initiatives next year.
We are increasing the fuel allowance by €5 bringing it to €14 per week payable with effect from January 2006. I am also availing of the opportunity to remove the current anomaly whereby residents in some local authority flat complexes with communal heating systems were ineligible for the fuel allowance. Such residents will now be able to qualify for the allowance if they meet the other conditions of the scheme. In all, over €125 million will be spent on fuel allowances next year benefiting nearly 275,000 households.
Most Senators will be aware that the National Economic and Social Council, NESC, has been analysing the issues and developing proposals on child income support and, in particular, the possibility of merging the FIS and child dependant allowance into a second tier child income support, which would avoid the disincentives inherent in the child dependant allowance. My priorities for 2006 will include how best we can pursue the proposals arising from the NESC report.
Central to effectively tackling and alleviating child poverty are improvements in incomes and supports for lone parents. As research released earlier this week by the Central Statistics Office clearly demonstrates, the social category deemed to be at the highest risk of consistent poverty were lone parent households. The Department provides income support to about 80,000 lone parents through the one-parent family payment at a total cost this year of over €760 million. I have repeatedly stressed the importance of reforms in this area and of the need to deliver a better standard of living for lone parents and their children with policies that are directed at the breaking down of existing obstacles to employment, increasing access to career enhancing education and training opportunities and the transforming of lives through targeted supports and enlightened social policies.
As many in this House may know, there has been no change to the income limits applying to the one-parent family payment since the scheme was introduced in 1997. I want to give lone parents an opportunity to continue to increase their earnings without raising their fears about losing their entitlement to the payment. In recognition of this, we propose to increase the upper income limit for the one-parent family payment from €293 to €375 per week. This substantial increase will encourage employment. Lone parents working over 19 hours per week can also claim the family income supplement, about which I spoke.
In addition, I am providing additional funding in the budget to the Family Support Agency and Money Advice and Budgeting Service, MABS, so they too can further develop the services they provide to vulnerable families. The additional funding of €3 million to the Family Support Agency will enable the establishment of 12 new family resource centres around the country and increase the level of grant assistance that the agency provides to marriage and family counselling agencies, among other initiatives. The additional funding of €1.5 million I am providing for MABS includes provision for the further development of the service as well as specific funding for the establishment of a national helpline.
As Senators will know, I have initiated a major review of the one-parent family payment in order to assess how best we can support lone parents in their efforts to improve their own lives and those of their children. That review is now being finalised and I will be bringing it to Cabinet in January with a view to publication and wide consultation.
As Senators will be aware, the provision of recognition and supports to carers is one of my principal priorities and I am happy to announce that this budget provides for a range of measures which will benefit carers including increasing the rate of carer's benefit by €17.00 to €180.70 per week, the rate of carer's allowance will increase by €26.40 to €180 per week for a carer under age 66, and the rate for carers over age 66 will increase by €30.20 to €200 per week, making it the single largest welfare entitlement apart from over 80s pensioners which is significant. These represent increases of 17% for recipients of the carer's allowance and will serve to acknowledge and support the invaluable work of our family carers.
I am also increasing the rate of the respite care grant by 25%, from €1,000 to €1,200, from June next year. The number of hours which a person can work and still receive a carer's allowance will be increased, carer's benefit or respite care grant will increase from ten to 15 hours per week and there will be an increase in the income disregards for the means test for carer's allowance to €290 for a single person and €580 for a couple. This fulfils the commitment in An Agreed Programme for Government to enable all those earning up to average industrial earnings to qualify for carer's allowance. There will be an extension in the duration of the carer's benefit scheme to two years per care recipient from May 2006.
This is the most significant budget for carers ever introduced, not only in terms of expenditure on income supports from my Department but also in the realisation of the Government's commitment to the proper recognition of carers and the delivery of the necessary structures and supports for carers and the people for whom they care.
Resources in this budget will be targeted on helping those most in need, not alone to raise their level of income and standard of living, but to ensure everyone is a valued citizen who can make an individual contribution to society regardless of his or her circumstances.
I will now outline the main provisions of the Bill. Sections 2 and 3 reaffirm the commitment to supporting pensioners and together with the Schedules to the Bill provide for increases in the rates of social welfare payments, including an increase of €14 per week for persons in receipt of the old age contributory pension and for recipients of the widow's or widower's contributory pension and deserted wife's benefit who are over age 66 and for recipients of a retirement or invalidity pension aged 65 and over, bringing the weekly payment to €193.30. Provision is also made for an increase of €16 in the weekly personal rate of the old age non-contributory pension, and this increase also applies to the blind pension, widow's and widower's non-contributory pension and one-parent family payment where the recipient is aged over 66 years.
In line with my particular focus on supporting carers, I have made provision for a special increase of €30.20 per week for persons in receipt of the carer's allowance who are over age 66. A special increase of €26.40 is provided for recipients of the carer's allowance who are under 66 years.
An increase of €17 per week is provided for in all other social insurance and social assistance payments where the recipient is under 66 and for recipients of an invalidity pension for those under 66. Section 2 provides for increases in the social insurance-based payments and for increases in respect of qualified adults of recipients of those payments. An increase of €10.80 per week is being provided in respect of qualified adults of recipients of an invalidity pension, where the qualified adult is aged 66 years or over. An increase of €10.80 per week is also being provided for qualified adults aged 66 years and over where their spouse or partner is receiving an old age contributory pension or is receiving a retirement pension, with pro rata increases for those on certain reduced rates.
In addition to providing for the increases in social assistance payments, section 3 provides for increases in respect of the qualified adults of those payments. For example, the weekly over 66 qualified adult allowance rate is increased by €10.60 in the case of old age non-contributory pensioners and by €11.30 for the qualified adults aged under 66 of blind pensioners. Proportionate increases will be applied where persons are in receipt of reduced rate qualified adult allowance payments.
As I have stated, I am also conscious of the needs of other vulnerable groups in society. Accordingly, by providing for a weekly increase of €17 in the personal rates of a range of payments, those in receipt of unemployment benefit, unemployment assistance, one-parent family payment, supplementary welfare allowance and farm assist will receive a maximum personal weekly rate of €165.80.
The social welfare budget increases included in this Bill will become payable from the first pay day in January 2006. Increases for recipients of the short-term payments such as unemployment benefit assistance, disability-maternity benefit, family income supplement, farm assist and supplementary welfare allowance will be paid from the first pay day in January 2006.
Recipients, both long and short term, who are paid by means of electronic funds transfer, will receive their increases from the first pay day in January 2006. Due to the lead-in times involved in the production of personal payable orders for certain long-term payments such as pensions, it will not be possible for budgetary increases to be paid immediately, in such cases, from January next. Some 211,000 recipients of, for example, widow's, widower's, one-parent family and invalidity payments, will receive their new order books in mid-February 2006. This group will receive six weeks' arrears of their budget increase which will be included in the first order of the new book and the weekly increase will be incorporated in their normal weekly payment thereafter.
Certain other long-term recipients such as old age pensioners and disability allowance recipients — some 256,000 people — will receive new pension order books at the beginning of April 2006. This group will receive a special once-off payment in mid-February representing 12 weeks of their budgetary increase. This will cover retrospection of the increase to January plus an advance payment of the increase to the end of March 2006. From the book renewal date at the end of March, the increase will be incorporated in the normal weekly payment.
Section 4 provides for increases in the weekly income thresholds applied in determining entitlement to family income supplement, with effect from 5 January 2006. The new thresholds will range from €465 to €905 with the weekly FIS payments increasing by varying amounts from €11.40 in the case of a family with one child, to €169.20 for families with eight or more children. For example, the FIS payment to a family with four children will increase by €64.80 per week.
Sections 5 and 6 provide for changes in PRSI. The earnings ceiling for employee's social insurance contributions is being increased, in section 5, by €2,420 from €44,180 to €46,600 per annum with effect from 1 January 2006. In addition, this section provides for an increase in the limit of weekly earnings, below which PRSI is not payable, from €287 to €300. Section 6 provides for an increase in the income ceiling, from €44,180 to €46,600 for optional social insurance contributions. This section also comes into operation on 1 January 2006.
Section 7 provides for an increase in the percentage of reckonable weekly earnings referred to in calculating the rate of payment under the maternity benefit scheme. This provision increases the rate from 75% to 80% and fulfils the commitment under Sustaining Progress to raise the limit to 80% of average weekly earnings during the life of the agreement. The measure will benefit the majority of recipients of the scheme and will take effect from January 2006. In addition, the section provides for the necessary amendments to extend the duration of maternity benefit, from 18 to 22 weeks, consequential on the extension of paid and unpaid maternity leave as announced in the budget last week. This measure takes effect from next March.
With regard to the increases in the duration of the maternity and adoptive leave periods, my colleague, the Minister for Justice, Equality and Law Reform, has transmitted the heads of draft orders implementing the increases to the Attorney General for formal early drafting. Section 7 also allows for the extension of the period after birth, by two weeks to 24 weeks, within which a father can claim maternity benefit following the death of the mother, provided that he satisfies the contribution conditions of the scheme.
Section 8 provides for improvements to the adoptive benefit scheme by providing that, subject to certain conditions which will be prescribed in regulations, in the event of the hospitalisation of a child in respect of whom adoptive benefit is payable, the continuous payment of benefit may be postponed. This mirrors the current provisions of the maternity benefit scheme. The section also provides for the necessary amendments to adoptive benefit consequential on the extension of paid adoptive leave by four weeks, due to take effect from March 2006. The section further provides for an increase from 75% to 80% in the percentage of reckonable weekly earnings referred to in calculating the rate of adoptive benefit. This measure will come into effect from 1 January 2006.
Section 9 provides for the making of regulations to determine the manner in which gross weekly earnings are calculated for the purposes of the one-parent family payment scheme. The introduction of the one-parent family payment in 1997 provided for payments to be made to parents rearing children alone, and subsumed the various schemes which had until then provided for families in these circumstances. Special provision was made for recipients of deserted wife's benefit to ensure they continued to receive payment for the duration of their continuous entitlement to the scheme, provided that the person's income was below a specified limit. Section 10 contains a technical amendment to the scheme to provide for the making of regulations previously associated with the scheme.
Section 11 provides for the payment of the over age 80 allowance to recipients of the carer's allowance from January 2006. At present, for the purposes of the rent or mortgage interest supplement payable in accordance with the supplementary welfare allowance scheme, an amount of up to €60 of gross income from earnings from employment may be disregarded. Section 12 contains an improvement to the scheme by providing for the disregard of up to €60, together with half the gross weekly earnings between €60 and €90.
Section 13 provides for an increase in the health levy exemption thresholds from €400 to €440 per week and from €20,800 to €22,880 per annum. This measure will take effect from 1 January 2006.
This Social Welfare Bill, the first of two instalments, builds further on the progression of social inclusion measures adopted by this Government in recent years. It safeguards the living standards of those who rely on social welfare income and other supports, prioritises the allocation of resources in favour of those most in need and progresses the reform package which I have already discussed in this House. I commend the Bill to the House and look forward to a constructive debate.
I welcome many of the provisions in this Bill and compliment the Minister on providing the necessary increases. It is a good budget which, I hope, will address many of the inequalities in our society that force people to live in poverty. We will have to wait to determine the impact, if any, of these increases. Before addressing specific provisions, I want to discuss the extent to which social expenditure is eliminating poverty in this country and whether this Government's policies are enhancing people's living standards and social participation. Are the policies reducing inequality in our society?
To date, Ireland has had a very low rate of social expenditure, which comprises spending on health and education as well as social welfare payments because these areas also impact on people living in poverty. We have spoken in this House of studies which revealed that, out of 15 OECD countries, Ireland had the lowest net total social expenditure in 1997, after Japan, South Korea and New Zealand. I will await the opinion of economists on how this budget can influence and, hopefully, change that situation.
Given our economic growth over past years, the Government's low level of social expenditure is unacceptable. The gap between rich and poor has continued to grow. Income poverty particularly affects the elderly, people with disabilities, lone parents and households with no one in employment.
Studies show a strong correlation between social expenditure and income inequality and that countries with higher levels of social spending tend to have lower levels of inequality. It has often been argued here that Ireland's good economic growth and low unemployment occurred because it has neither invested excessively in social protection nor prioritised income equality. However, competitiveness and high employment levels are not irreconcilable with higher social expenditure and greater income equality. Many high spending countries in the EU have also achieved very healthy economic indicators, such as, low unemployment, high economic growth rates, low levels of debt and strong competitiveness. That demonstrates that other countries can do it.
Social expenditure benefits not only the less well-off but also impacts on the wider society and economy. Lessons are to be learned, for example, from recent events in France because we do not want to repeat the mistakes made there, which arose from the isolation of people and communities. Low levels of expenditure in one area can result in higher spending in areas such as prisons and law enforcement.
The high levels of income inequality in Ireland are first and foremost the result of an increase in the gap between the incomes of those in employment and those on benefits and pensions. In order to reduce inequality in Ireland, this gap will have to be narrowed. It is questionable whether relative poverty can be successfully and consistently prevented in systems which rely strongly on means-tested and non-indexed flat rate payments, such as Ireland's social security benefits.
A basic prerequisite for preventing relative poverty among those outside the labour force is a linkage between benefits and payments on the one hand, and prices and wages. This would ensure that those deriving their incomes from benefits can keep up with wage earners, rather than fall behind in terms of income distribution, as has happened in Ireland. While all benefit incomes should be adjusted to ensure they keep up with increases in incomes from work, the incomes of lone parents and older people are particularly urgent priorities as these groups suffer disproportionately from income poverty. I accept that the Minister has taken steps to address that gap.
Money will be required if greater equity is to be achieved. I welcome the provisions made by the Minister for Finance in the budget to deal with tax exemptions. We need to see an assessment of the extent and impact of tax exemptions in the tax and welfare system. A value for money audit by the Comptroller and Auditor General is urgently required so we can determine what is happening. We must change the way we manage tax exemptions because some people are benefitting to an unacceptable extent. Any savings made from tax exemptions should be directed to the less well-off.
The Minister will be aware that officials from his Department and the Department of Finance and members of the Pensions Board attended a recent meeting of the Joint Committee on Social and Family Affairs. Many of the questions put by committee members at that meeting were left unanswered by the officials, which is not acceptable. I have forwarded the Minister some of these questions and he has acknowledged his receipt of them. If we, as parliamentarians, cannot get answers to questions but can read the relevant information in newspapers, something is wrong. How can newspapers get information when we cannot? That issue needs to be addressed because it is not right.
I welcome all the provisions of the Bill, although some could be improved upon. We always want and need more but, by addressing these issues, we will reduce the gap between rich and poor. I welcome the €14 per week for people receiving old-age contributory pensions and for recipients of widow's or widower's contributory pensions or deserted wife's benefits who are over the age of 66. I also welcome the €16 increase in the weekly personal rate of the old age non-contributory pension, blind pension, widow's and widower's non-contributory pension and the one-parent family payment.
I asked the Minister to make the relevant payments directly to the qualified adult on a mandatory basis and I am disappointed he has not done so. To make it optional does not provide for independence for many women. Older women suffer particularly from poverty and that could have been dealt with. I will table an amendment to the Bill on Committee Stage and hope the Minister will be able to take it on board. It arose as an amendment in the Dáil and I am not sure whether the Minister accepted it there. The National Women's Council of Ireland also requested it and sees it as a help to women in that situation.
On the carer's allowance, 150,000 carers will receive the same amount of money —€27 million — as was conceded in a betting tax cut. As we depend on carers, without whom it would cost the State much more to provide the necessary care, that figure should have been greater. While I welcome the increase in the respite grant, for many carers, particularly in Dublin and the eastern region, this would cover only one week of respite care. The budget did not address the shortage of respite beds, which must be tackled if we want to help the carers, a wonderful group of people who must be supported in every way possible. I realise this is not in the Minister's remit.
The family income supplement is important and I welcome the increase. I am concerned that not more people than mentioned will achieve it and that people are not aware of the supplement. We have received information that the take-up is low because people do not have the information. We have spoken on this before. Whatever the Minister can do to tell people the supplement is available is important.
I welcome the one-parent family payment, the carer's allowance, the supplementary welfare allowance and the child benefit changes. It is dreadful to hear, as we did in many of the pre-budget submissions and meetings, of so many children still living in poverty, not having one hot meal a day and not having a new pair of shoes or a warm coat. That is unacceptable. The benefits in this budget should help these families but, as the Minister has said, while a lot has been done there is a lot more to do.
I welcome the Minister and am delighted to speak on the Social Welfare Bill. I draw the Minister's mind back to 15 December 2004 when we discussed social welfare here and I suggested that if a person is caring for three of four children in his or her home perhaps a disregard could be introduced. I welcome that provision in the budget.
We also discussed social welfare in March this year. I spoke to the Minister about child benefit, highlighting that child benefit was not recognised as something that addressed child care costs and the importance of introducing something different that would be recognised as a payment towards child care. I think the Minister agreed with this view. I compliment the Government on the introduction of the child care payment of €1,000 for children under six years. It was an innovative and smart measure that will make a significant difference to the lives of many people, regardless of whether both or only one parent is working. It is a sizeable amount of money that is made payable in every quarter, and for which people can make plans. It is very welcome. This House has commented on child benefit and child care costs going back to at least the year 2000 and I am pleased they have now been heeded.
The House recently discussed the phased extension of maternity leave with the Minister for Justice, Equality and Law Reform, Deputy McDowell, and I welcome the extension of maternity leave by four weeks. As the measure is not to be implemented until March, pregnant women whose babies are due before that may feel aggrieved that their due dates do not fit into the Minister's schedule. Increases in tax on petrol and alcohol used to be implemented at midnight on the night of the budget. Changes such as the extension to maternity benefit should be introduced from the day of the budget so that anywoman who goes on maternity leave from the day the budget is announced gets the benefit of those extra four weeks. Not many families are affected but it would have a substantial impact on those parents and children. They cannot change their due dates.
The purpose of a child care policy is to focus on the child and the family. Anybody who has started maternity leave since the budget has another 12 or 14 weeks to go, so it would not be too difficult to extend it. Perhaps this is not possible but we should examine it. No matter how difficult it is for employers to deal with vacancies as a result of maternity leave, they would recognise the benefit of the extension to the family and the child.
I will never support calls for child benefit to be taxed or means tested but given that the additional payment of €1,000 for every child under the age of six years of age is a separate payment, I suggest that we look at whether it is important to means test or tax it, or the annual increases that will accrue. We could examine net pay involving situations where both people are working, one person is very well paid, child care is not the household's biggest cost or where child care costs can be afforded. It is easy to develop a means-testing system that recognises net pay less mortgage repayments, child care costs, transport costs and a measure of necessary disposable income as a percentage of income that reflects the differing needs and lifestyles of people with different income levels. When young families need this payment so much, it should not be eaten up because it is given to people without any measurement of need, particularly when the amount is so significant.
The child care issue we have not dealt with appropriately is support for employers. As we move into partnership discussions, we must examine supports for companies to introduce family friendly initiatives. We have committed a substantial sum over the next five years for the supply of child care places. We should take some of that money and put it into a separate grant support scheme to support organisations to put structures in place to introduce flexible hours and part-time work. A small company may not find it financially feasible to pay for a broadband connection to a worker's home and install a computer if all the structures are in place in their own business. By supporting such companies, however, we could eliminate the need for a place in a crèche and a parent could work at home while caring for the child. We are using the same money, it does not cost any more, we are just looking at it differently. The Minister may not be aware of the fine reports in the The Irish Times, Irish Examiner and on "Morning Ireland" on differing child care needs. The conclusion to all of these reports was that there is no single solution, it is a complex issue that requires joined-up thinking.
No one has recognised the change in structure where the Minister of State at the Department of Health and Children, Deputy Brian Lenihan, has been given a much wider-ranging portfolio for children, with responsibility being removed from the Department of Justice, Equality and Law Reform, which makes sense. The €1,000 grant for children under six should form part of the Minister of State's budget. I also compliment the Minister for maintaining our commitment on child benefit —€670 for four children per month from March will make a significant difference.
Paid parental leave must form part of the partnership discussions. We are fooling ourselves if we do not recognise that parental leave at present is for those who have plenty of money who can afford to take a 14 week break from work. It is unfair on those who do not earn enough. We must introduce paid parental leave on a staggered basis, with an initial period of perhaps four weeks.
This is a great budget for social welfare and the Minister should be proud of it. An increase of €1.5 billion in spending on social welfare on top of a budget of €12 billion is a significant contribution to the less well off and will provide the social structures we want. I welcome the increase in the income disregard for carers. I apologise for annoying the Minister by saying this repeatedly but widows and widowers, particularly widows, who are in receipt of a widow's pension and who are caring for someone, because of the rule about not receiving two payments from the Department of Social and Family Affairs, are losing out because the spouse is dead. There is no equity in that system. I plead with the Minister to make this a priority.
Could the Minister reflect on the rent allowance system in the course of the next year? It is a scandal that we spend so much taxpayers' money to pay private landlords in rent allowance while they make huge profits. If we took on a pilot basis 25% of the rent allowance budget and gave it to local authorities to buy houses at the best possible price, the rent paid would pay the mortgages on those houses which would then be State assets and not assets for developers and landlords making money from them. Everyone is entitled to make money but we must stop the continuing payment of vast sums of money until social housing is addressed.
People said that the Minister was not happy when he was given this portfolio but he has demonstrated his commitment to it. He has introduced tremendous changes and fought hard for the increases we are giving to people. I am proud of the changes in the social welfare budget and I commend the Bill to the House.
I welcome the Minister to the House. I have failed to find the ubiquitous Fr. Healy during the week to explain to him one of the basics of negotiation — the day a person gets what he asks for is the day he should resign. For those of us who have dealt with Fr. Seán this is a moment to be treasured. Much as I love him dearly, he called it wrong this time.
I have spoken many times about the need to extend maternity leave and I welcomed that provision on the night of the budget. It is an important decision that has been universally greeted. We must now look at the issue of paid paternity leave. It is seldom recognised in commentary that the State requires a high birth rate so there must be pro-natal policies, even if only for self-preservation. If this will encourage people to have more children, it is good for society.
From a selfish perspective, it means that if the Minister and I live long enough, there will be somebody to pay our pensions. It is for these reasons we must ensure these measures are developed.
I wrote to the Minister for Finance before the budget on the question of support for blind persons and those with sight disabilities. I do not refer to the blind pension but to the fact that such persons do not have access to certain areas of support. One of these relates to car ownership. Before the introduction of the carer's allowance, no consideration was given, for obvious reasons, to a blind person owning a car. Now, however, blind people may have carers to drive their cars for them, but there is no support in this regard. The numbers involved are small and it would not be subject to abuse.
Will the Minister give careful consideration to providing a level of support to blind persons with cars driven by their carers, similar to the support given to those with other disabilities who are able to drive themselves? This would be a helpful measure. From my discussions with concerned parties, I understand the demand would not be very high and it is only fair that it should be provided.
This issue has only come onto the radar because people have more money as a consequence of the Celtic tiger. We now live in a more enlightened society where people with disabilities can contribute more and, thankfully, earn more. The only way to deal with the additional cost burden endured by blind persons who wish to use their cars is the provision of support via either carers, reductions in duty and excise or similar measures. I do not expect the Minister to get back to me on this today but I hope he is positive about developing such a system.
The Minister called again, as he does every time he comes to this House, for a national debate on the future of our pensions system. On the last occasion we discussed this matter in the House, I told the Minister of my consistent support for his views on pensions for everyone. I argued that for every year worked, there should be a year's pension contributions. Will the Minister include this issue in next week's partnership discussions? Representatives of all sides will be as difficult as each other in this regard. Nobody will be jumping up and down but the Minister should challenge everybody on this issue. There is no ethical argument that can undermine the idea of a year's pension contributions for a year's pay.
A major complexity is engendered by moving in this direction, however. I have observed the Minister's struggles to bring people along on this issue. After we last spoke on this, I considered whether there is an easy way of approaching it. I am not sure there is but I will offer a simplistic view. One of the great difficulties is in attaining some level of complementarity between different types of pensions, including considerations of whether particular types fit in snugly with others. In this context, I considered the situation that arose in Chile after the assassination of Salvador Allende. The entire pensions system effectively collapsed through the Pinochet years and there was no fund for state pensions. As a result, a private pension scheme was developed under the aegis of the state but administered by private pension funds. Under this system, workers' contributions are deducted on a weekly or monthly basis and placed in their personal funds. This is a concept we understand.
Chilean workers are informed on an annual basis of how much their fund has increased in the preceding year and are given the names of the company and the individual fund managers looking after their pensions. Moreover, information is also given on the other six companies that manage pension funds and how they have performed in the past 12 months. Workers need only tick a box to indicate their desire to change to a different fund manager. This works very well in so far as I have described it. I do not contend that it creates a huge pension for the individual; we are all aware that pension growth is very slow. However, the Chilean authorities have at least ensured that people contribute to their own pension funds under the aegis of the state. There is a certain level of regulation and people are given, on an annual basis, the opportunity to switch to a different fund manager.
How might such a system work here? If we were to start from scratch and have people make contributions on that basis, we would immediately encounter difficulties in regard to arrangements on maturity and how this scheme would relate to other pensions, PRSI and so on. The only way such a system could be implemented successfully is as some type of standalone operation with a significant disregard in the outcome of it. Workers would be attracted to such a scheme, which would grow during their years of work and in respect of which there would be a significant disregard of the earning, yield or capital arising from the pension fund.
It is a system worthy of consideration. I fully support what the Minister is trying to achieve and it is all the better if he can do it internally. However, the difficulty will arise from the complexities it creates. Is it possible to devise a simple approach to this matter? I am interested in the Minister's views on this. It is a challenge he has thrown out on at least three occasions. I ask him to target the social partners one at a time in this regard. I presume he will have an opportunity to make his case when the partnership talks begin. He should put this proposal to all the parties. IBEC will have immediate objections and the ICTU, my own group, will not be far behind. I have fought within the unions to move this issue forward. Furthermore, the Government will be slow to support the Minister.
The Minister should, however, begin by at least lobbing in the ball. If other parties choose to ignore the penalty spot and do something mad with the ball, there is nothing more to do. However, people will at least be challenged to respond and organise their arguments. Even if they ultimately decide they cannot support such measures, the Minister will have started at the leading edge to wear away some of the opposition. All parties, including the Government, employers, farmers, business, trade unions and voluntary organisations, will be forced to listen to each other. This is one of the great values of social partnership. There will be many on all sides who oppose new developments in this area and the chances are they will be rejected. However, a debate will be facilitated that has not yet taken place. It is only happening within the groups; there is no engagement between them. The time is right for such an engagement.
If the social partnership process is to continue, something new must come out of the latest discussions. Some issues must be tackled, including legislative measures regarding union recognition, about which I am aware the Minister is not keen. They must be dealt with, however. The strong words the Minister used on "Questions and Answers" during the week was a reassurance to many people who are unsure of the Government's objectives. We must ensure our dearly won conditions of service — at all levels, not only in regard to workers — are not eroded. Earlier in the week, I raised the idea of workers being paid €2 per hour due to a "miscommunication". We can deal with all these matters as we go along. I compliment the Minister on what he has done. It has been a very good budget in his area and I ask him to put some energy into the pensions debate yet again.
I thank Senator O'Toole for sharing time with me. I very much welcome the changes the Minister has managed to achieve for those in his charge. The increases are very welcome. Having been obliged to deal with the Department of Social and Family Affairs and its predecessors for many years, I welcome the attitude of those officials who have worked there in recent years. There is a total change in how the people who must live on social welfare pensions are now treated. This is welcome.
The increase in the income disregards is an extremely good idea. This means not only that older people can earn some more money but can also maintain an interest in something. This is extraordinarily important in allowing them to maintain some level of independent existence.
The Minister will be aware that I have been involved with lone parents for many years. I always hoped they would not have to be dependent on social welfare. Increasing the amount they can earn before they lose their benefits is an extremely good idea because it will give them a taste of independence. A great number of lone parents are very demoralised, therefore, it is important to give them independence and show them what they can do.
The carer's allowance must also be welcomed because carers are doing a magnificent job, often to the detriment of their health, economic situation and the possibility of going back into whatever employment they had. The €1,200 for respite care should have been further increased. This amount will only pay for approximately one week in a nursing home, which is not a great deal of respite for someone who is looking after a person for the whole year. It would be wonderful if this amount was doubled next year.
On child poverty, the Minister was correct to address the under six age group, which is the most important grouping. All the research indicates that this is the most important time to address child poverty. Of course, much more is needed which I hope will happen next year. There has been criticism that the child benefit scheme is not means tested. I would not criticise this because one never knows how much money a mother is receiving to bring up her children. If there is a problem about means testing in the future, the Minister can decide to tax it. However, I would prefer he left it alone.
The extension in maternity leave is to be welcomed. I often cite in the House my experience of having children when there was no maternity leave. One could easily lose one's job if one did not get back to work after having a baby. Going back to work two days after I had my second child was not a good idea.
Senator O'Toole said that we should encourage people to have more children. I agree that we should do so, not because we need them to pay tax in future but because we need someone to look after us. It will be pretty miserable if there is no one to look after us. This country now has a fertility rate of 2.1 and Italy is down to 1.6, even though it has a lot of immigrants and taking into account that Italians have large families. Italy is now starting to pay low-income women with a crisis pregnancy a considerable amount of money to encourage them to maintain the pregnancy. It reckons that at least 10% to 15% of abortions take place for economic reasons. If one examines the Crisis Pregnancy Agency reports, one will see that women who had abortions often did so for economic reasons. This is an area the Minister might examine in the future. It could be called a fertility allowance or something like that.
I was pleased to see the increases in family income support but I would like it to be publicised more. The Family Support Agency also received an increase in funding. When I worked in the Rotunda Hospital, I frequently found that people were not aware of family income support. I do not know how this happened, but social workers were constantly pointing it out to people who were more than eligible for it. It would be a help if there was more publicity about this scheme.
I would like the Minister to reply to two matters at the end of the debate. At present an adult child can only give a parent €3,000 a year as a gift, which could be extraordinarily useful, without the parent having to pay tax. I have written to the Minister for Finance on several occasions proposing an increase in this amount of money, because the child has already paid tax on it. Why could this not be done if it would help the parent to stay at home? Perhaps the parent could employ someone to help him or her. Will the Minister raise with the Minister for Finance the fact that a child can only give an elderly parent €3,000 tax free, even though this money is already taxed?
I spoke recently to a woman who was very annoyed. Her husband who died recently had paid PRSI. While she is currently working and paying PRSI, she thought that she would get a widow's pension and a pension of her own. Both of them paid PRSI, however, I am repeatedly told that people cannot receive two State pensions. As they both paid PRSI, could the Minister explain the rationale behind this? I congratulate him on all he managed to do in the budget.
I welcome the Minister and his officials to the House. I congratulate him warmly on his part in the budget. Like last year, he, together with the Minister for Finance, the Taoiseach and the rest of the Government contributed to a significant gear shift since 1997, when the concentration was on having an efficient, dynamic economy. The accent in the past couple of years, in particular, has been on ensuring that the benefits are shared and that there is social equity and inclusion. For example, there was an article on 12 December from Mr. Tim Callan of the ESRI stating that the budget should prove to be the fairest in years.
The organisation CORI used to be extraordinarily critical at budget time. After Deputy Quinn's last budget, CORI issued a fairly excoriating critique of it, which I felt went beyond the party line. I asked Fr. Healy if he approved of any budget in the past ten years to which he replied, "I would need notice of that question". It is good that we are now in a situation where the critique refers to major progress on inclusion and significant developments on the fairness agenda. Obviously, there is always more to be done.
However, if one thinks back to 15 or 20 years ago, unemployment assistance increased by 2% or 3% and if one was lucky, these increases were paid in July. The child benefit increase announced in the budget might be paid in November. The full benefit would be paid in the following calendar year. We have moved on enormously, which is to be welcomed.
There are one or two changes which I especially like. On pensions, we have gone far beyond whether the changes reflect the rate of inflation in the past 12 months or in the 12 months to come, which was a topic of discussion under the Fine Gael-Labour Party coalition of the 1980s. Given what the Minister said, the changes are well ahead of the increase in the CPI and gross earnings over the same period. A particularly welcome measure is the special earnings disregard of €100 a week for people on non-contributory pensions. It would be very difficult if it were just old people who had no means of supplementing their income without loss. For many people, the opportunity to earn something, be active and contribute to the community means a great deal. This is a most humane and enlightened measure on which I congratulate the Minister.
The Minister dealt with the EU survey on income and living conditions in Ireland. I did not like the line carried in Independent Newspapers a few mornings ago which tried to rubbish the social side of the budget by saying that it was increasing poverty traps. It is a wonderful way of making out that the writers or the newspaper organ are concerned about those on social welfare but actually believe the Government is being too generous and that a rigorous and Spartan approach would be better if it did not increase the level of poverty.
I am not denying the reality of poverty traps. I had a debate with Deputy Healy on local radio about the question of child dependant allowance and why it had not been increased. There are two points to that question, one of principle and one of pragmatism. The pragmatic money aspect of the matter is that if a woman gets €1,000 into her hand she will not worry too much about whether it is called child dependant allowance, child benefit or a supplementary allowance.
The reason there ceased to be an increase in the allowance goes back to the time of an interdepartmental group established under the rainbow coalition when Proinsias De Rossa, MEP, was Minister for Social Welfare. That group was of the view that increasing child dependant allowance as opposed to other child payments contribute to poverty traps. It is not a good idea to have payments that will be promptly taken away the moment a recipient takes up work. I calculated that the €1,000 payment for children under the age of six is the equivalent of a 140% increase in child dependant allowance. Those measures are bound to have a significant impact on child poverty.
I have reservations about means testing in regard to payments. Apart from anything else, means testing involves bureaucracy, it has been related to tax and was reviewed when Albert Reynolds was Minister for Finance when there was some furore about it. There is considerable merit in the making of universal payments, particularly in regard to children.
I am sure the Minister is constantly on the look-out for small anomalies where the money factor is not a significant consideration. I had representations on behalf of priests temporarily back on holidays from the missions. An administrative decision was taken they should no longer receive the old age pension when they are back here. I have been in correspondence with the Minister about that and he might consider it.
A long-term unemployed young person will not receive the back to work allowance if he or she decides to improve his or her skills and go into an apprenticeship. That is an anomaly that should be addressed. It is a disincentive that should not be there and is not socially useful. Overall, however, I warmly congratulate the Minister on an excellent budget. It contains an excellent social dimension.
I welcome the Minister, Deputy Brennan, and his officials to the House and commend them on the effort they put into preparing this Bill. We often raise issues on this side of the House which might not be perceived to be at the level at which they are. As I have said during many debates, it is important when there is an opportunity to praise a Bill as we pass it that we should do so. I will not found wanting in that regard.
It is important that we acknowledge the increases for what they are. We need to be mindful that the country can afford to make these changes. The Minister effected real increases in a number of areas, on a number of which I will touch. Such changes mean a great deal to many people, particularly those on the margins of society who are dependent on such payments. This issue is close to the heart of the Labour Party and has been very much part of our philosophy. Various representatives of the party have been in the Department and we have always intended to effect change there. We have been endeared to this Department as a caring Department. We have always strove to ensure that people on the margins are properly looked after by the State. It is important to make that point, and I believe the Minister, Deputy Brennan, takes the same line.
I wish to deal with the one-parent family payment for people who take up holiday or occasional work. The Minister made a change in this respect. The income disregard meant that people would lose their benefits if they took up occasional or holiday work. That resulted in such people losing out and Department officials had to spend time dealing with re-applications for such benefit. That was bureaucratic, involved further administration and a cost. The Minister rightly examined this measure, weighed up the pros and cons and recognised the benefit in terms of the change he introduced is more worthwhile than allowing the status quo to remain. It is important to make that point.
If a strict interpretative line had been taken on this measure, it would not have been helpful to the Department from a cost of point of view in terms of dealing with re-applications. Nor would it have been helpful to the applicant who would lose out on his or her payment, suffer distress because of it and bear the unnecessary burden of re-applying for the benefit. It is welcome that the Minister has dealt with this measure and I commend him on it.
The duration of the carer's benefit is being extended by nine months. We must understand there is resistance to that from some quarters. The Minister and the Department have rightly resisted that opposition and have taken a brave decision. A recipient of the carer's allowance being able to work 15 hours a week may not seem significant to many people but it is important to those who can avail of such care. When one considers the vested interests in the sector which would be affected by this change, the strong lobbying power some people have and that some employers will be unhappy about the change, it must be recognised as an innovative and welcome measure taken in the face of some resistance and opposition. Such resistance might not be visible on the surface but it exists.
We have a buoyant economy. In recent times we have heard the term that the country is awash with money. Once upon a time Ministers in Departments did not have money to make the changes or increases they wished to make and that led to difficulties. We had a high unemployment rate, a high level of emigration and interest rates were sky high. It was a very different economy from today. It is important to make the point that the fact that money is available means we can at least introduce real meaningful changes. Not so many budgets ago money was not available to do what needed to be done.
However, we need to be mindful that the proportion of national income we spend on social protection ranks as one of the lowest in European terms. EUROSTAT 2004 data show that the EU average spend on social protection is approximately 25%. Sweden is at the top end of the scale with a spend of 31% while we, unfortunately, languish at the bottom end with a spend of 15% to 18%. While numerically that is a considerable amount, we need to be mindful that other member states rank higher than us on that scale.
Equality and anti-poverty measures form the hallmark of our philosophy in this area. Reflecting on the level of Exchequer returns and the huge economic success we have experienced, we should not forget that many people have not been brought along with the rising tide and, therefore, have not benefited in the same way as others. For example, extremely rich people benefited from tax breaks in recent times but we need to be clear about the fact that many people on the margins did not share in our economic prosperity. Such people have every right to share in it. We should not allow just one section of the community to benefit from tax incentive schemes which are designed to advance projects like hotels and nursing homes. Other members of the community — I refer to the ordinary customers of the Department of Social and Family Affairs — should be assisted too.
A great deal of change continues to be required in the administration of social welfare schemes. Women are sometimes not treated equally by the Department of Social and Family Affairs. The mindset of departmental officials, who tend to assume that the main breadwinner in a family unit is always male, needs to change dramatically. Gender equality demands that women should have equal access to opportunities not only in the jobs market, but also in this area. It is very important that the point I have made should be taken on board. The participation of women in employment is a key factor in eliminating child poverty. We need to bear in mind that of all household types, households with lone parents are at the highest risk of falling into the poverty trap. The social welfare code needs to be changed to reflect greater equality. We need equality for everyone, rather than just for people in one sector of the community.
I would like to conclude by raising two issues. A man in his mid-20s in my locality who recently applied for an allowance under the important and innovative back to education scheme when he was starting a postgraduate course in UCC found that he was disqualified, in administrative terms, after the course title was changed. He was trying to better himself and promote himself by returning to university to acquire another skill. The Exchequer receives a return from such people when they return to the workforce and pay tax at the higher rate. The man in question was distressed to learn that the change in the course title meant he did not qualify for the back to education scheme. It made the difference between him being able to take the course and him not being able to do so. I communicated the details of the case to the Department of Social and Family Affairs, which made the necessary changes, thankfully, to ensure that the man now qualifies for the scheme. The Department's intervention has made a huge difference to the individual in question. I thank the departmental officials for the interest they showed in the case. It is right that the application was dealt with by the Department in such a manner because it was beyond the control of the student.
I spoke about disability benefit and disability allowance the last time the Minister, Deputy Brennan, was in the House. I do not think the case I wish to raise is unique or rare because it is likely there are many other such cases throughout the country. The case in question involves an individual who suffers from chronic depression, to the extent that he cannot leave his home. He is receiving good care and protection from his family, he is on good medication and he has a good general practitioner. When he was ready to come back out and beat the illness in question, he applied for disability allowance and disability benefit, only to find that he qualified for neither. He appealed that decision, by which time he had recovered sufficiently from his medical condition.
In the course of the appeal the man in question was seen by a doctor from the Department who could have been more Christian in dealing with the applicant, who felt aggrieved about the manner in which he was treated. It is important to remember every now and then that it does not cost anything to be nice. The doctor in question should have used some sensitivity and discretion, which are required in some circumstances in dealing with applicants. The doctor rejected the man's appeal on the basis that he had recovered because he looked well and seemed fine. The matter is now being dealt with at a further level. I have raised this case with the Department of Social and Family Affairs, with the appeals office and in the House.
We need to be very careful in instances like the one I have raised. The man in question was genuinely ill. He was certified as suffering from a horrible illness and he had medical documentation to support that. The manner in which the rules and regulations of the Department of Social and Family Affairs were applied as he made his case within the system ensured that he was kept out of the loop, which is not ideal.
We need to be very careful about the nature of the dreadful illness in question. The man had to be helped to apply for the schemes, but he now feels vilified as he deals with rejection. It was not very nice for him to have such an experience after he had beaten an illness of this nature. I appreciate that there is an issue in terms of contributions — the man in question might qualify in January. If the Department is to be caring in its dealings with people who are suffering from an illness or left out of the loop, changes need to be made so that people like the man in question are provided for.
I accept there is a need for checks and balances to ensure that the system is not abused, but we need to be more humane in how we deal with certain cases. The Department's doctor did not treat the applicant in this instance in a very good manner. I hope something can be done to ensure that people who suffer from an illness like depression are not rejected by an arm of the State when they try to avail of the system. The manner in which the man in question was dealt with was not ideal.
I welcome the increases which are provided for in this Bill. It is important, in a parliamentary democracy, that we meet our duty to admit that a good deal is being offered and that the increases are meaningful. I would like to see much more, however. There is an ongoing political debate about the other areas in which change can be effected. Many people will be better off as a result of this legislation.
I thank the Minister for Social and Family Affairs and his officials for the time and effort they have put into the compilation of this Bill. It is worthwhile to note that the Minister has taken on board some of the points which were made in previous debates in this House, the result of which is reflected in this legislation.
Every budget belongs to the people, but this budget can particularly be described as the people's budget because it provides for substantial social policy reforms, which are being enacted in the Social Welfare Bill 2005. It can be described as a family budget because it offers significant increases to the elderly, people on benefit and people in receipt of child care payments. As a result of this budget, a family with three children, one of whom is under the age of six, will receive approximately €6,000 in child benefit each year. By contrast, the average income in Poland is approximately €5,500, or just €3,700 after tax. It is natural that one cannot compare the levels of purchasing power in Poland and Ireland, but this country is a beacon for countries like Poland. I am not surprised that these measures have been introduced by a Fianna Fáil-led Government.
I am proud of the significant changes which have been made in the area of child care, such as the decision to make an annual payment of €1,000 in respect of each child under the age of six. Child benefit payments have been increased and an additional 50,000 child care places will be provided. The parents of this country's 350,000 children under the age of six will benefit from direct financial support of over €50 per week. The delivery of quality child care will be boosted by improved training arrangements. Some 17,000 child care workers will be trained every five years. When I finished second level education in the late 1970s and started to work in the 1980s, I never thought this country would ever be in a position to provide such benefits. It is said that the past is a different country, but in this instance it is a different world.
A new package of measures worth €150 million is being introduced to improve the care of the elderly. Under the new home care packages which are being put in place, the provision of home help support, day care assistance and palliative care will increase substantially. The weekly rate of carer's allowance in respect of people aged 66 or over will be increased from €169.80 to €200. The weekly rate in respect of those under the age of 66 will be increased by €27 to €180. The respite care grant payment will be increased by €200 to €1,200. The changes made in the budget are so significant that every party in the House should lay claim to them as a national achievement. I am particularly proud of them. The weekly old age pension rate will increase by €14 in 2006, to over €193. The contributory old age pension has increased by 93% since 1997.
Also of benefit to older people is the increase in the rate of fuel allowance from €9 to €14 per week. The fuel allowance has been supplemented by the reduction in the rate of tax payable on kerosene and gas, again assisting people in conjunction with the reduction in prices at the pumps. These are three whammies for those depending on fuel. It will be a significant and ongoing benefit.
The non-contributory pension has been increased by €16 bringing the rate to €182. As many non-contributory pensioners want to work beyond retirement age but are prevented from doing so because of the means test, the non-contributory pension is being changed in order that earnings from employment of up to €100 per week will be disregarded for means test purposes.
In addition to increases in pensions, fuel allowance, child benefit, and carer's allowance there is a package for child poverty. The earnings threshold for family income supplement, which provides cash support for workers on low earnings, has been significantly increased by amounts ranging from €19, bringing the rate to €282 per week and targeted, in particular, at larger families. There is a new drive to increase opportunities for lone parents. The upper earning limit income for the one-parent family payment has been substantially increased by €82 per week to a new limit of €375. Of the 80,000 lone parents in receipt of the payment, it is estimated that 60% are in full or part-time employment. I have a particular interest here because when so much is given it is important to look at the few areas we need to improve on.
Education is the key at all times. We need to ensure that lone parents, through the child care system and the welfare system, can upskill and play an even greater role in society. On top of the generous increases there are new enhanced support schemes that promote activation and opportunities and choices to welfare recipients, in particular the unemployed, so as to ensure that the potential contribution of each and every individual is recognised and not neglected.
I congratulate the Minister on his efforts. The changes introduced make this an excellent budget. As I said earlier, it is the people's budget.
I welcome the Minister to the House and welcome in broad terms his budgetary proposals. In the Budget Statement in the other House last week the Minister for Finance, Deputy Cowen, indicated that in future years he would like to set down some formula whereby, well in advance of the budget, there would be a broad debate across and between the parties on the various options open to Government. If that transpires to be the case it would be a positive move.
In regard to the Department of Social and Family Affairs and its planning for annual changes by way of budgetary increases, it would be helpful if there was a debate at the Joint Committee on Social and Family Affairs and a debate between the Minister and the various Opposition spokespersons on social and family affairs on the many issues addressed each year in the budget from the point of view of social welfare entitlements. On most of these issues there is no difference of opinion between the parties but there are many anomalies that require to be resolved year in year out and sometimes we do not get around to them. More dialogue between the parties in advance of the Minister's annual statement each year would help resolve some of the issues.
In regard to the Minister's earlier statement and the budget announcements on social welfare, obviously the increases have to be welcomed. We are speaking of social welfare expenditure of almost €14 billion but in the context of the national budgetary situation those who depend on social welfare entitlements and, in particular, the elderly, on whose labours this country was built, deserve every euro awarded to them. We welcome the increases but as one would expect there are areas where we had hoped for further provision.
Down the years there was always a debate on the timing of payment of increases. Admittedly, the Budget Statement was in January and some increases were paid in June and July and sometimes later. I note that the payment of increases is more streamlined. However, I read in the documentation received last week that some of the increases take effect in January, which is welcome, while the increased payments for other schemes will run from February to June in some cases. In the course of the next few years we should aspire to streamline the increases and ensure that whatever increases are granted on the social welfare front would be paid simultaneously, if only from the point of view of avoiding confusion. In the long run most of these increases taking effect in March, April, May or June will be backdated. It would be a positive move if they could be introduced in a more streamlined fashion.
The main topic of conversation arising from the budget was the improvements provided to child benefit and child care and at the other end of the age spectrum the elderly. I have spoken here, on many occasions, and elsewhere on the issue of the carer's allowance. I welcome the recognition the Minister has given it by ensuring that from an individual perspective the carer's allowance is the social welfare scheme that provides the largest rate of payment. That is as it should be. I appeal to the Minister to give serious consideration to examining the means testing of the carer's allowance payment. I concede the income disregard has increased substantially and that will allow the carer's allowance to be paid to a greater number of people.
However, the care of thousands of elderly could be transformed if the means test was abolished for carer's allowance. As a society we should aspire, from a public policy perspective, to have the maximum possible number of people looked after for as long as possible in their own home. The carer's allowance plays a key role in that regard and I welcome the improvements wholeheartedly. Nevertheless, while the means test continues to exist there will be many who will not qualify.
We could have the same debate about child benefit and whether it should have been means tested when it was introduced 40, 50 or 80 years ago. Thankfully, it was not and will not be means tested. At the other end of the age spectrum we recognise the importance of helping the elderly to remain in their own community. If the Minister was to abolish the means test for carer's allowance he would leave a marvellous legacy in terms of his period as Minister. During the course of the next few months I ask him to set up a task force or review group to look at that issue. The cost benefit analysis shows that removal of the means test would lead to a dramatic increase in the numbers obtaining carer's allowance. That would be an excellent move for the elderly in our society.
Senator McCarthy spoke about a particular care in his constituency on disability allowance and the difficulties arising with the application procedure. I wish to raise a similar type case but in a sense it is unfair to draw individual cases to the Minister's attention. I have one particular case in my constituency of a man in his early 20s who, because of a phobia or some type of depression, is unwilling to leave his own house. He is so fearful of leaving his own house that he physically will not do so. He cannot be considered for a disability allowance because he cannot turn up for the medical examination.
It is clear that on medical grounds the young man in question is unable to work and will possibly remain so for the rest of his life. That is tragic. From the point of view of the family's finances a disability allowance should be awarded and would certainly be awarded on means grounds. On the basis that he is unable to turn up for the medical examination he is being refused the allowance. I would be grateful if the Minister should look at cases such as this where a person cannot physically attend at a medical centre for a medical examination or consider putting some other system in place. Perhaps I might be permitted to bring the individual case to the Minister's attention for his consideration in the next day or so.
Sometimes daft suggestions are made in this House and perhaps the Minister will include the one I am about to make on his list of strange ideas. However, quite a few elderly people have told me that they dislike the term "old age pension" and believe it is something that should be reviewed.
When the old age pension was introduced in the early part of the last century we had a very different concept of what it meant to be elderly and of the constraints on older people. Old age meant something very different 100 years ago. People at 65 or 66 are described as old age contributory or non-contributory pensioners but in many cases they are beginning a new phase of life. They are very active, fit and involved in their communities and they certainly would not classify themselves as being old. Perhaps the Minister might reflect on a new title for that pension, although it has served the country well for over 100 years. We have a so-called retirement pension for a certain category of people but perhaps we could have a "senior citizen's pension" or some other term, which would be a variation on the original theme. The term "old age" is one that should be reviewed, as it is a little outdated.
However, notwithstanding the title, I welcome the increase in the old age pension and the other increases for the elderly contained in the budget. Those increases are deserved because the elderly are the people who made this country. We speak of the Celtic tiger and of how the world has changed since 1987 but were it not for the contribution made by those who now qualify for social welfare pensions, our country would be a much poorer place, economically and socially. Every cent and euro spent on the elderly in our community through the budget is a way of returning to them what they have given us, tenfold, over the generations. We need more of the same recipe from all future Ministers for Social and Family Affairs. I am thankful for what the current Minister has been able to do and hope he will take on board some of the suggestions he has heard from this side of the House and work on them.
I also add my voice to the welcome. I am grateful for the opportunity to contribute to the Second Stage debate on the Social Welfare Bill.
As we all know, money is not everything but for some families, particularly at this time of the year, it can dominate their thoughts and wishes. That is a great source of worry for me. In last week's budget, we received details of a €1.12 billion social welfare package. This is a tremendous amount of money and the Government must be commended for holding firm to its commitment to help the most vulnerable. It has long been argued by the Progressive Democrats that we do not want economic progress for its own sake. We want to use the fruits of progress to help those in need and in trouble and we are working in Government to do just that. It is hard to believe that social welfare expenditure in 2006 is expected to be more than €13.5 billion. That is double what was spent in 2002 and is proof that our policies are working and are correct.
The Bill before us is the first of two legislative instruments needed to implement the impressive social welfare package to which I referred earlier. Sections 2 and 3 are of particular interest to me as they deal with support for pensioners. Along with the Schedule to the Bill, these sections provide for increases in the rates of social welfare payments, including the €14 per week increase for those in receipt of old age contributory pensions, increases for recipients of widow's or widower's contributory pensions, deserted wives' benefits for those aged over 66 and retirement and invalidity pensions for those aged 65 and over. These pension increases will bring weekly payments to €193.30 and I commend the Government for these developments.
Much debate on carers followed the publication of the budget. The Bill reflects the determination of the Government, and the Tánaiste in particular, to support carers. The legislation provides for a special increase of €30.20 per week for those in receipt of the carer's allowance aged 66 or over, while an increase of €26.40 is provided for those under 66. I welcome this section and commend the Bill to this House.
I welcome the Minister to the House. He always makes an impact when he comes here and on a previous occasion, he gained the everlasting admiration of 99.9% of Senators present.
The projected figure for spending on social welfare next year of €13.5 billion is one which I cannot even imagine. It is a phenomenal amount of money. Some have said that money would be available no matter who was in Government but I do not believe that for a second. As Senator Walsh has just said, good planning and good government contributes to the coffers, as do good taxation policies.
The Minister has a lot of money to spend in his Department. Having read the budget, the Minister's speech and the Social Welfare Bill, I believe the Minister has managed to spend that money wisely. He has used the money at his disposal to help the greatest number of people possible. Anybody can pick a hole in a Bill such as this and ask why the Minister did not help person X more, but he has to divide the money as best he can. I am pleased the Minister has placed special emphasis on the elderly and made a point of doing so.
As I said in last night's debate on the same subject, if one gets up in the morning to find a baby on one's doorstep, one will mind it, care for it or have it adopted. However, if it is an old person on one's doorstep, one is not so keen to help. Thousands of elderly people have been abandoned by their families and are living alone with nobody to mind them. The Society of St. Vincent de Paul does a great job in that regard, but these people need as much help from the State as they can get. These are people who have put their lives into this State, as the Minister said in his speech. It does not matter what job they had, they have all done something, whether it be caring in the home, raising a family or working here and abroad. All of them have given something for 60 or 65 years. They are entitled to something back and the Minister has done his best in that regard in this budget.
The raising of the limits for the old age contributory and non-contributory pension is welcome. So too is the Minister's commitment to giving people a decent pension. Other aspects, including alleviating poverty, increasing fuel allowances and so forth, are very important. If one is not poor or old, one does not realise what such a life is like. However, I visit some of these people and every increase they get from the Minister is much appreciated. We would like to give everybody €1,000 per week but that is not possible or practical. However, the Minister's commitment to increase the pension to €200 per week is a laudable one and we are almost there. I believe the pension will reach that figure under the Minister's tenure.
The Minister has often spoken of his commitment to decent pensions. However, people should not have to retire at 65 and the Government is coming around to this point of view. I have seen many people who have had to retire at 65, policemen have to do so at 57, despite their enormous talent and a lifetime of experience and expertise. They turn 65 and the following day they have no job. They get a pension, retire, travel around and so forth but their expertise is lost to the State.
There is so much talent that could be tapped into. People who were engineers, teachers and so on, have learned something and their expertise does not disappear just because they have reached a certain age. The idea, introduced by a German emperor some time ago when life expectancy was very poor, that we should retire at a certain age has been pooh-poohed. If one looks at the number of people who have got on in life and succeeded, one will find that as they grew older, their faculties did not diminish. Judges do not have to retire until they are 75 though some seem to have retired earlier. The Minister should consider availing of the talent that people have even as they pass the age of 65 years.
I do not want to speak for very long for two reasons. First, the Bill is flawless and I compliment the Minister on it. Second, I have a good lunch waiting and it would be wrong to delay it further. I commend the Bill to the House.
I will not detain the Senators for too long. I thank Senators for responding to my request for a constructive debate and I value being in Seanad Éireann to listen to the discussions. I formed the view when I started this job that if I wanted experts in social welfare I needed not look much further than Members of Dáil Éireann, Seanad Éireann and councillors, because public representatives have a special knowledge of this area. With all due respect to my experts and my own experience the amount of expertise they offer is staggering.
The budget the Minister for Finance, Deputy Cowen, and I announced last week reflects what was said in this House. During last year's debates here, in the Dáil and in meetings of my parliamentary party I took copious notes. I read them this morning and found that we managed to include in the budget not all but most of what was raised. It is a cheap source of advice for me and I wish to acknowledge it because I take Senators' contributions seriously. There are many research and study groups which are valuable and bring a professional overlay to the process but I enjoy hearing Senators and Deputies raise individual cases from their clinics from which I can extrapolate a policy position.
Senator Terry asked about the percentage of GDP we spend on social services. I will not go into detail now but there are half a dozen reasons the gap between Ireland and the higher spenders is more apparent than real, when a number of factors are taken into account. We spend a third of all taxpayers' funds on just one Department, my own. If the spend on the Departments of Health and Children and Education and Science is included the total is 90% on just three Departments. We keep approximately 10% for everything else so anybody who says this country does not invest in social services is wrong. That money comes from the taxpayer. I have never regarded it as Government money, party money or the Cabinet's money so the taxpayer has made a significant investment in this area.
Senator Terry also spoke about high relative poverty. I will not start a debate now but I am unimpressed by that measure. The finding that 20% of Irish people are in poverty is not reality. The consistent poverty measure, which is approximately 6.8%, is much more sensible. We need to be careful about somewhat academic measures of poverty, some of which are from the EU. They are valuable as a contribution to the discussion but I must focus resources on 5% or 6% of people, not 20%.
The Senator also referred to questions submitted to my Department but not dealt with. I will examine that because it should not be the case. She and Senator Henry, among others, complimented our officials for being more than helpful and supportive, which has always been the approach. All officials approach every case on the basis of trying to find a solution to a problem rather than bureaucratically saying something is not possible, as may have been the case some years ago. I will take the cases up if she gives me more information on them.
Senator Terry also asked about qualified adult allowances being paid directly and expressed disappointment it was not in the budget. I deal with structural and financial issues in the budget so it does not have to be included. I am reviewing the situation and have had a number of meetings with the Department, from which a number of issues arose. For example, it would mean paying 70% of an allowance directly to the woman. It is voluntary at the moment and is available if people want to take it up but very few have done so. There may be different reasons for it but there is a good case for mandatorily paying it separately, which I will pursue once the budget and the social welfare Bills are completed.
The Senator also called for a greater take-up of family income supplement, FIS, and she is right. The take-up last year was disappointing and a major campaign is planned to improve it. We have changed its criteria this year to benefit larger families, which will make a huge difference. A family with two children can receive up to €3,900. A family with two children under six and earnings of €20,000 would get a further €3,900, bringing their total child support to €9,500, which is significant and well-targeted. She also raised the question of carers, which I acknowledge.
I do not want to go through what all the Senators mentioned but will reply to those still in the House. Senator Kate Walsh also talked about carers. The Tánaiste and Minister for Health and Children and I have been working hard on the care for the elderly package. We discussed the Mercer report and we will discuss further changes in Cabinet in January. The Tánaiste introduced an excellent €150 million package recently and we discussed on many occasions how the support for carers from my Department can be co-ordinated with support for the elderly from hers, to produce joined-up thinking. It is critical we work together.
Senator Lydon also mentioned the elderly and complimented the Society of St. Vincent de Paul. I learn a lot from organisations like that. They knock on as many as 800,000 or 900,000 doors every year and when they tell me about problems that exist I must listen. I echo the Senator's compliments to that and similar organisations.
The budget makes good structural reforms for the benefit of the elderly. Senator Mansergh made a particularly relevant point and I wanted to make sure that when people reach 66 and qualify for a pension they should not be suddenly told they cannot work any more. Accordingly, I have introduced a large disregard which effectively allows them to take up employment, perhaps on a part-time basis, because it is daft to tell people over 66 years old they must stay at home on a pension or have the pension taken away from them if they earn more than €7. That is not good social policy.
I have listened carefully to what Senators have said. I am particularly excited about this budget and the changes in it, not so much with regard to the €800 million for improving the cashflow of so many people, valuable as that is, as the €300 million which has gone into structural reforms and activation to move people from welfare dependency to financial independence. It liberates lone parents to earn more money before we touch their income. It also allows pensioners earn more money before we touch their income, lets carers earn more money and makes the carer's payment the highest in the land. Those are the sorts of matters we are activating and the structural reforms we are creating. Similarly, we are allowing people to hold on to the disability allowance while being retrained and perhaps receiving additional education, and finding new ways of earning some funds.
I am particularly excited about one aspect, on which most Senators commented. For that I thank them. At the core of this budget is something I have been working on all year, namely, getting behind the payments to tackle the social issue beyond them. It is not just a question of making the payment. We will make it, but more importantly we deal with the issue behind it. We move people to better places so that welfare is an active rather than a passive mechanism, locking people in poverty traps. I am thrilled that we have managed to get that philosophy into the heart of this social welfare budget and I thank all sides of the House for that.
I have learned so much from listening to so many people on all sides of the House, and in the Dáil, in the past year. The budget was nearly written for me when I looked through the notes I had taken from the debates. I thank the Senators and commend the Bill to the House.