Seanad debates

Friday, 23 March 2007

Tax and Social Welfare Codes

 

2:00 pm

Photo of Joe O'TooleJoe O'Toole (Independent)
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I encountered this issue recently and I presume that, of all Ministers, a Progressive Democrats Minister of State will sympathise. I do not want to go into detail, but I will read my Adjournment debate into the record. It reads:

The need for the Minister for Social and Family Affairs to correct the anomaly which penalises a person who chooses to work in a low paid job rather than claim Social Welfare payments. This penalisation arises when the person is deemed ineligible for a Back to Education Allowance should they wish to participate in Third Level Education.

I am talking about a simple and human situation. I will use two people in my example. A man asked me whether he was naive to work while preparing to return to education and whether he would have been better off going on social welfare. I said he would not have been, but I was appalled by the facts and figures he outlined. The current structuring of the student support system leads to one student receiving €71,600 in direct Government support during the course of a degree and another student, who may be sitting next to the first, receiving under €12,000.

The Minister of State's reply will not matter because he and I know it will not deal with the issue. The two people in question are returning to education, which we want them to do, sitting side by side and studying for the same degree at university level. What is wrong? The gap in direct Government support between the students, who are required to produce the same work to earn their degrees, is almost €60,000. The only difference between the students is that one was in receipt of a minimum of €16,000 per year in social welfare payments while the other was in a low income job earning less than €16,000 per year.

The Minister of State shares my opinion. This situation makes me angry because we are trying to stop it occurring. In my years in the trade union movement, we were trying to make it sensible for people to move from social welfare payments or work to college. The man, who was earning €16,000 per year, decided to continue working until going to college so that he could make his contribution, but he was penalised to the extent of €60,000 as a result.

I do not claim to understand the details, but they are factual. In the course of a year, the student who was in receipt of social welfare payments gets the back to education allowance of almost €10,000, rent support of almost €7,000 and a special rate of maintenance grant of almost €3,000. The student also gets a European social fund grant and a student support grant. We should examine the six or seven elements of support for the student in question. However, I am not knocking them, as one must qualify for each. The other student doing the same course and paying the same rent does not get the back to education allowance, rent support allowance or special rate of maintenance grant. In the course of a year, that student receives €3,900 and loses out on almost €20,000, which is wrong and unfair.

I get involved in social welfare issues rarely, but this issue energises and angers me because the Minister of State and I have often debated it and agreed or disagreed on the importance of returning people to and raising the level of education. Last week, the Minister for Enterprise, Trade and Employment, Deputy Martin, spoke about people studying at master and doctorate levels and bringing people who understand and worked in the private sector into the education system to determine what they can contribute, but it is not taking place.

The Minister of State's answer will give me little comfort and annoy me further, but I want him to consider the two students doing the same degree course and paying the same money, one is in receipt of €20,000 per year less than the other because he or she was working in a low-paid job of less than €16,000 per year and was not on social welfare. If he or she had chosen to jack in the job two years earlier and gone on social welfare, he or she would be receiving an additional €20,000 per year. Where is the incentive, motivation, sense or logic and what is it we are trying to do?

I have a long script on our approach, but the Government should examine the back to education allowance and include workers earning less than €16,000 per year before going to college full-time. I am also referring to the rent support grant and special rate of maintenance grant.

I could talk for another hour and go through the bits and pieces of the social welfare system, which are listed for me here, but I would like to give hope to a young man who has taken it upon himself to return to college. He represents hundreds of others in the same situation. The Minister of State's reply will make a great deal of sense, but can we make some changes? It is a busy time for him and the man in question is not his constituent, although he could be given that he is a Maynooth student, but will the Minister of State write someone a letter to get an answer as to why this is happening? I look forward to his answer, but I would like to hear from someone who will take the matter in hand and try to correct this unacceptable anomaly.

Tom Parlon (Laois-Offaly, Progressive Democrats)
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I am sorry that Senator O'Toole is so dismissive of the very good statement that has been prepared.

Photo of Joe O'TooleJoe O'Toole (Independent)
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I hope to be surprised.

Tom Parlon (Laois-Offaly, Progressive Democrats)
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I am replying on behalf of my colleague, the Minister for Social and Family Affairs, Deputy Brennan. I thank Senator O'Toole for raising this issue.

The Department of Social and Family Affairs administers a range of back to education programmes under the umbrella of its social and family support services. The programmes encourage and facilitate unemployed people, lone parents and people with disabilities to return to work through the acquisition and improvement of skills and academic qualifications which will enable them to compete more successfully for employment. The programmes, which range from basic literacy courses to certain postgraduate courses of study, include the back to education allowance scheme, the fundamental aim of which is to assist people who are unable to access the labour market because of their lack of qualifications or education. I refer to people who are caught in a cycle of unemployment and disadvantage. The scheme has given many people who left school at a young age a second chance for education. It has improved their prospects of getting employment in our buoyant labour market.

The back to education allowance is a social welfare replacement income. It is paid in place of the relevant social welfare payment that qualifies the applicant for participation in the scheme. Essentially, an individual who is in receipt of the back to education allowance is paid at a standard weekly rate that is equivalent to the maximum payment under that scheme. To qualify for the back to education allowance an applicant must be, inter alia, in receipt of a relevant social welfare payment for at least six months in the case of people wishing to complete a second level course, or 12 months in the case of people wishing to pursue third level qualifications. The 12-month requirement is reduced to a nine-month requirement in the case of people who wish to attend a third level course who are participating in the national employment action plan process.

The back to education allowance scheme was established to help people who have been out of the workforce for some time and whose employment opportunities would be enhanced by their participation in the scheme. The requirement to be in receipt of a relevant social welfare payment for a minimum period has always been a feature of the scheme. It is considered necessary to ensure that the limited resources are directed at those who are most in need. People who are already in employment are not considered to be in the target group for the back to education allowance scheme.

People in employment who pay tuition fees in respect of third level education to an approved college in respect of an approved course may be eligible for tax relief. Tax relief is also available in respect of fees paid by individuals for certain training courses in foreign languages and information technology. Those who want to obtain information about the relief available should contact their regional tax offices. People in low-paid employment who have families may be eligible for the family income supplement scheme from the Department of Social and Family Affairs. Family income supplement is a weekly payment for members of families, including one-parent families, who are working on low pay.

The Minister for Social and Family Affairs is satisfied that the current arrangements relating to the back to education allowance scheme ensure that it continues to support those who are most distant from the labour market. There are no plans to abolish or modify the existing qualifying criteria for participation in the scheme to include people who are not in receipt of a social welfare payment.

Photo of Joe O'TooleJoe O'Toole (Independent)
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I accept that the Minister of State has to go through his script. Does he agree that the effect of the current regulations is that people with low-paid jobs who want to go back to college will be looked after better if they go the dole for a year beforehand? What are we doing? People laugh at politicians when they find out we are creating problems of this nature. The Minister of State said that people who go back to education may be eligible for tax relief, but the person to whom I referred is outside the tax net, or barely inside it. The Minister of State's suggestion does not apply to this person in question because he has a low-paid job. I ask the Minister of State to send a letter to somebody about this matter, which needs to be addressed. He should tell the relevant authorities to be sensible about these regulations. I accept that they were originally intended to encourage people on social welfare to go back to college. There is nothing wrong with that aim because it makes sense. However, this assistance should also apply to people who are in lower-paid employment.

Tom Parlon (Laois-Offaly, Progressive Democrats)
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I will take the matter up with the Minister.

Photo of Joe O'TooleJoe O'Toole (Independent)
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I thank the Minister of State.

Tom Parlon (Laois-Offaly, Progressive Democrats)
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I appreciate the point the Deputy has made. Tax relief is not of any benefit to somebody who is earning less than €16,000 per annum.

Photo of Joe O'TooleJoe O'Toole (Independent)
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That is right.

Tom Parlon (Laois-Offaly, Progressive Democrats)
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I accept the point that has been made by Senator O'Toole. I will take it up with the Minister.

Photo of Joe O'TooleJoe O'Toole (Independent)
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I appreciate that.