Friday, 27 April 2012
Social Welfare and Pensions Bill 2012: Second Stage
The Bill, which has been referred to the Seanad by Dáil Éireann, is very important. As Minister for Social Protection, the needs of the people who depend on social welfare for vital support are foremost in my mind. However, I am also very conscious of the harsh economic environment within which the country now operates. Spending on social protection cannot be viewed in isolation. It takes place in the wider context of overall Government income and expenditure. My Department currently accounts for approximately 40% of all current Government expenditure. This means €4 in every €10 that the Government spends is spent on social protection. Some €20.5 billion will be spent by the Government on social welfare provision in 2012. The adjustment in social protection expenditure this year will be limited to €475 million, or just over 2% of the Department's expenditure.
Balancing the needs of the people dependent on social welfare against the money available is extremely difficult in the current economic environment. However, protecting the most vulnerable people, those in poverty and those at risk of poverty still remains a primary priority of the Government. In addition to supporting the direct recipients and their dependants, social welfare spending sustains economic activity. It benefits workers, businesses, and the overall community. Individuals such as Professor Joseph Stiglitz have long recognised that social welfare expenditure in western Europe is a very important form of economic stimulus in the Keynesian sense.
The Social Welfare Bill will give legislative effect to certain social welfare measures announced in the Budget Statement of December 2011 which are due to come into effect this year, in addition to a number of miscellaneous amendments to the social welfare code. I am introducing a number of amendments to occupational pension provision in this Bill. Encouraging, empowering and enabling people to participate in work is essential if we are to achieve the goal of a more active and inclusive society. The process of moving from welfare dependence to paid employment can be challenging for the persons concerned and their families. Despite this, it is through paid employment that people have the greatest chance of moving out of poverty and providing better lives and opportunities for their children. While remaining dependent on social welfare payments, they will remain at risk of poverty, poor health and reduced life chances.
I was very struck by the ESRI's study, published yesterday by Dorothy Watson, Bertrand Maître and Chris Whelan, that showed the children most at risk are those of lone parents who did not continue in education. It is quite remarkable that where the education level of parents is higher, the economic outcomes for their children and the likelihood of avoiding poverty are much greater. In general, the best route out of poverty is through paid employment. A large proportion of lone-parent families have much higher rates of poverty and a much greater risk thereof than other working-age adults. This was at the core of yesterday's report by the ESRI. This is in spite of significant spending on payments and supports to lone parents. The EU SILC figures of 2011 show that, in 2010, some 9.3% of lone parents in Ireland were experiencing consistent poverty, which is 50% more than the population as a whole. In general, the best route out of poverty is through paid employment. We recognise that work, especially full-time work, may not be an option for parents of very young children, but we believe supporting parents in participating in the labour market once their children have reached an appropriate age will improve their and their families' economic circumstances and well-being.
Changes to the one-parent family payment were introduced in 2010 to make payment until the youngest child reached 14. I am now introducing further changes so that, for new recipients, from May 2012 a one-parent family payment will be made until the youngest child reaches the age of 12. From January 2013, it will be made until the age of ten, and from 2014 it will be made until the age of seven. For existing recipients, there will be a tapered phasing-out period to enable them to gain access to education and training and prepare them for their return to the labour market. The current age is 18 to 22 if the child is in full-time education. Over time that will be reduced when the changes come into effect in 2015 and 2016. If a parent is still in need of income support when the youngest child reaches the age of seven, he or she may be able to claim jobseeker's allowance or another appropriate income support payment, or, if in employment, family income supplement. There are special transitional arrangements for parents with a child with a disability or parents who go back to education or training.
I recognise the possible effects of these changes on the need of parents to access affordable, quality child care facilities where they are required to work to supplement income. I am also aware that many lone parents will need access to education, training and enabling services such as child care provision to acquire the skills they will need to gain employment. A wide range of education and training opportunities are available through my Department and the Department of Education and Skills for lone parents to strengthen their qualifications and skills base and accordingly maximise their chances of gaining employment. I have committed to bringing forward further legislation in a future social welfare Bill to introduce later implementation dates if more time is needed to ensure the required level of services are in place.
I am confident this will succeed. In the 1960s, we introduced free secondary education which many people thought impossible at the time. In the 1970s, on the advice of the OECD, we introduced a system of regional technical education which now makes up the institutes of technology system. At the time many critics felt it also could not be done. In the 1990s, I was involved with the then Fianna Fáil-Labour Government's initiative to introduce mass access to third level education through the fees initiative and the Early Start programme in primary school for preschool education. Although we may be in economic difficulties, in the past we have shown the striking capacity to expend the education base with enormous economic, as well as social and educational, returns.
I will be engaging with the Minister for Children and Youth Affairs and the Minister for Education and Skills to achieve a co-ordinated, cross-departmental approach to ensuring the required level of services are in place to support lone parents as their youngest child reaches the relevant age thresholds. One of the most progressive statements by the Government was the appointment of a full Minister for children.
Inevitably, an initiative such as this takes time to bear fruit but is an important and radical step.
I am also bringing forward several other important changes to the social welfare system in this Bill. The Bill will apply restrictions on the payment of mortgage interest supplement to provide that it will not be payable for a person in the first 12 months of the mortgage arrears resolution process, as set out in the code of conduct on mortgage arrears applying to mortgage lenders. The intention is that the financial institution would provide at least 12 months forbearance to borrowers in respect of their mortgage obligations and only after this 12 month period would mortgage interest supplement be available. It is important that borrowers who are experiencing difficulties with their mortgage obligations engage with their lender as soon as the difficulty arises. In this way, they can work together to put in place a solution for both parties.
There are two categories of people who will be affected by this change. The first category comprises people whose mortgage difficulty is resolved within the first 12 months, for example, when they return to work, and potential claimants who will no longer qualify for a payment until they have received 12 months forbearance from their lender. This year, the Department will spend at least €50 million on mortgage interest supplement supports which, of course, goes to the banks. Having listened to one mortgage difficulty case on the media this morning, it must be agreed that the supplement will have to be used in a way that compels lenders to engage with customers in a meaningful way rather than being a payment the banks can pick up automatically. The code of conduct on mortgage arrears makes specific provision for forbearance and all lenders are obliged to sign up to it. MABS, the Money Advice and Budgeting Service, gives detailed advice to people with complex debt situations. It is important all our efforts go on stabilising family debt problems over time with the agreement of the lenders. This will be included in the legislation on which the Minister for Justice and Equality, Deputy Shatter, is working. It is particularly complex due to certain constitutional problems that may arise.
I will also be introducing several measures designed to tackle fraud and abuse of the social welfare system. Welfare fraud is a serious crime and the Department of Social Protection is doing all it can to crack down on people who abuse the system. When high-risk areas are identified, targeted control measures are put in place to reduce the risk of fraud and abuse of the system. Over the past year, Senators raised various concerns with me in the House about welfare fraud and I believe these are reflected in this Bill.
My Department has begun the phased introduction of the public services card with key security features, including a photograph and signature, which will be used to authenticate identity of individuals. One of the advantages of the public services card is that it will help to reduce fraud and error which result from the incorrect identification of claimants. We have a growing problem in the system of claimants using multiple identities. Under the existing legislative provisions there is no mandatory requirement for a person to allow for his or her photograph and signature to be captured and reproduced in electronic format for purposes of a personal public service number, PPSN, allocation, public services card and claims for social welfare benefits. I will be proposing a change to provide for the introduction of a new condition for any new claim for social welfare payment that the claimant must satisfy the Department as to his or her identity, including allowing for electronic capture of photograph and signature. I will also be strengthening the powers of social welfare inspectors to make inquiries in various circumstances at ports and airports, a point often raised here and in the Dáil. Inspectors will have powers to make inquiries with landlords in connection with rent supplement claims, obviously for the purpose of determining that the people availing of the accommodation are those in receipt of the rent supplement. These powers will strengthen the interagency operations between the Garda, customs, Revenue and social welfare inspectors against social welfare fraud giving them the appropriate powers to inquire in cases of suspected fraud.
I am introducing a number of amendments to the occupational pension provision in the Bill. The amendments provide for a requirement for defined benefit pension schemes to hold a risk reserve in addition to the funding standard requirements set out in the Pensions Act. The sustainability of pensions in the longer term is a critical issue. As the House will be aware, the OECD is looking at the direction of Irish pensions policy for the future. The purpose of the amendments is to further underpin the legislative provision applying to defined benefit schemes generally and which is to help provide a secure pension for the members of defined benefits schemes in the future and ensure the sustainability of defined benefit pensions. Defined benefit pension schemes are an important element of pension provision in Ireland. However, the number of defined benefit schemes has been gradually reducing over many years. At the end of 2010 there were over 1,000 such schemes with 222,000 active members, down from 1,500 schemes in 2003 and just over 2,500 in 1991. Many defined benefit schemes are mature schemes and closed to new members.
Following the downturn in the financial markets, the previous Minister and the Regulator had the funding standard suspended in late 2008 to allow the trustees of pension schemes to assess the impact of historically high volatility in the financial markets and the significant losses experienced. This suspension was extended on a number of occasions to allow for changes to the Pensions Act in 2009 and 2010 to assist trustees to respond to the funding difficulties facing many pension schemes. A consultation process also took place on proposals for a new defined benefits model which would address the persistent difficulties being experienced by defined benefit schemes and support their sustainability in the future. The amendments I am introducing facilitate the reintroduction of the funding standard and the full regulatory structure. The proposal in the Bill to introduce a risk reserve reflects the outcome of the consultation process. The introduction of a risk reserve will provide a buffer to assist schemes to absorb financial shocks in the future and in this regard will enhance the protection of the pension entitlements of scheme members against future volatility in the markets.
It is recognised that many defined benefits pension schemes are in deficit and will need time to recover their funding position. It is, therefore, intended to introduce the risk reserve requirement over an extended time period. The funding standard will be introduced initially and from 1 January 2016 pension schemes will be required to hold a risk reserve. However, schemes will be given up to 11 years from the re introduction of the funding standard to satisfy the risk reserve requirement. It is estimated that the risk reserve will increase the liabilities of a defined benefits scheme. However, this will depend on the investment profile of each scheme. Changes to the funding standard guidelines will give credit to schemes that reduce their equity risk and assist schemes to satisfy their funding requirements.
Scheme trustees have options in this regard. Legislation has been introduced to provide for sovereign annuities. The Pensions Board published guidelines to assist potential providers with the development of sovereign annuity products. As part of this initiative, the NTMA will issue, subject to market yields, sovereign bonds of a long duration that will allow pension schemes to better match their assets to their liabilities. This initiative provides pension schemes with an option which was not previously available. Irish pension schemes have the majority of their assets invested outside Ireland and as well as being a mechanism for more prudent investment, the initiative has the potential to attract pension fund investments into the economy. There is in excess of €70 billion in various pension fund products in Ireland, but most of this money is invested abroad. There has been a great deal of work done to develop the sovereign annuity product in the Irish market. The Pensions Board is also giving consideration to the provision of an enforceable employer guarantee to meet the risk reserve requirements.
I am aware that many trustees and sponsors of defined benefit schemes have been working hard to enhance the sustainability of their schemes and making difficult decisions in that regard. It is important in addressing current deficits in a pension scheme that the trustees are aware of changes to the defined benefits model in order that they can bring forward funding proposals which will meet the future requirements. The amendments and the reintroduction of the funding standard will give trustees the certainty they need in preparing realistic funding proposals for submission to the Pensions Board.
I am also introducing a technical change to ensure the revaluation rate required in respect of deferred members of a pension scheme does not put them in a more favourable position than active members. This change will track the annual consumer price index rate and keep any adjustment to preserved benefits more in line with changes in the wage-salary rate. The amendments are designed to make defined benefits pension provision more sustainable, stable and secure in the future.
I will now outline the main provisions of the Bill. Section 1 provides for the Short Title, construction and any necessary commencements. Section 2 provides for the definition of certain common terms used throughout this Part of the Bill.
Section 3 provides for an increase in the minimum number of paid PRSI contributions required to be eligible to become a voluntary contributor from 260 to 520. This affects no more than 1,000 persons who are special voluntary contributors. There was some confusion that this provision had general application. It is to meet a particular special voluntary contributor category.
Sections 4 and 5 make a number of amendments to the one-parent family payment to provide for the phased reduction in the age limit that applies to the youngest child in the family for qualification purposes from 14 years to seven. The age limit for the youngest child is being reduced in three steps: from 14 years to 12 from May 2012, from 12 years to ten from January 2013; and from ten years to seven from January 2014. For those already in the system, these changes will take effect from 2015 and 2016. The arrangements to which I referred apply to new recipients and there are transitional arrangements for others.
Section 6 amends and extends the list of bodies specified in the Social Welfare Consolidation Act 2005 as being authorised to use the personal public service number, PPSN, for the purposes of carrying out transactions with members of the public, for sharing personal data and information among themselves for the purposes of carrying out relevant transactions, and for exchanging data. The Office of the Pensions Ombudsman is now included, while VECs are specified for the purposes of sections 262 to 270, inclusive, of the Act. They are currently specified for the purposes of section 266 only.
Section 7 provides for an extension to the list of social welfare payments excluded from the disqualification of concurrent receipt of a weekly social welfare payment where a person is also participating in a community employment scheme. It is now being extended to include all weekly and monthly supplements payable under the supplementary welfare allowance scheme, that is, in addition to the current exclusion of rent supplement, mortgage interest supplement and diet supplement are also being excluded. That is to ensure those participating in community employment schemes who would qualify for these payments can continue to qualify for and receive them.
Part 3 of the Bill provides for the amendments to the Pensions Act 1990 necessary to give effect to the Government's decision to introduce a risk reserve to the funding standard. The funding standard needs to be met by defined benefits pension schemes to ensure a pension scheme can live up to its pension promise. This is intended to improve the sustainability of pension schemes and the security of members' benefits and provide a buffer against the volatility of financial markets. The measure will allow pension schemes a long lead-in time to develop the required level of risk reserve. The level of risk reserve will be linked with the level of risk the pension scheme is carrying in its investment strategy.
Part 3 and sections 20 to 40 provide for amendments to the Pensions Act 1990. Sections 20 and 21 provide for the definition of the principal Act for the purposes of Part 3. Section 22 amends section 7A of the Act to provide that guidance issued by the Pensions Board or any other person specified by regulation under this Act cannot be changed without the prior consent of the Minister for Social Protection. Section 23 amends section 33 of the Pensions Act to provide for a change to how the preserved benefits of deferred scheme members - former employees - are re-valued in line with the consumer price index. Section 24 amends section 34 of the Act to clarify that the Pensions Board can issue guidance on the calculation of the transfer value of pension rights.
Sections 25 to 37 amend the funding standard to require schemes to hold a risk reserve. The proposed amendment to the funding standard will require a defined benefit pension scheme to hold a funding reserve in addition to the level of funding required under the funding standard at present. The existing funding standard provisions in Part IV of the Act, which require pension schemes to maintain sufficient assets to meet the liabilities of a scheme, will be extended to require pension schemes to hold a risk reserve. The trustees of pension schemes are currently required to submit an actuarial funding certificate to the Pensions Board to indicate whether the scheme satisfies the funding standard. If it does not satisfy the standard, the trustees are required to submit a funding proposal to the board to restore scheme funding. The amendments to the Pensions Act will, in addition to the submission of an actuarial funding certificate, now require the trustees of a pension scheme to submit an actuarial funding reserve certificate. If either certificate indicates that the scheme does not satisfy the funding requirements the scheme must, except in certain circumstances, submit a funding proposal to the Pensions Board to restore funding by the next funding certificate date. The Pensions Board will have discretion to extend this period. The provisions relating to the failure to comply with the funding requirement are also being strengthened. Section 25 inserts definitions for the purpose of this Part IV of the Act.
Section 26 amends section 41 of the Act to disapply the risk reserve requirement to regulatory own funds scheme as those reserve requirements are dealt with in Part IVB of the Act. Section 27 amends section 42 of the Act to require relevant schemes to submit an actuarial funding reserve certificate to indicate whether the scheme satisfies the risk reserve requirement. Section 28 amends section 43 of the Act to specify the date on which the assets and liabilities of the scheme for the purpose of preparing an actuarial funding reserve certificate are assessed and the timeframe for submission of the actuarial funding reserve certificate to the Pensions Board.
Section 29 amends section 44 of the Act to set the level of reserve required to be maintained by relevant schemes. The reserve will be the aggregate of two amounts. The first is 15% of the amount of the funding standard liabilities less the value of EU bonds and cash and any other prescribed assets held. The other is the amount by which the funding standard liabilities would increase on the effective date of the certificate if there was a 0.5% fall in interest rates. The Minister for Social Protection will have the power to prescribe a higher or lower percentage. Section 30 amends section 45 of the Act to change the reference from section 44 to section 44(1). This is consequential to the insertion of section 44(2) by section 16.
Section 31 amends section 46 of the Act to specify the matters to which an actuary must have regard when completing an actuarial funding reserve certificate just as the actuary is already required to do when completing an actuarial funding certificate under that section. Section 32 amends section 47 of the Act to ensure there is no doubt as to the power of the Minister for Social Protection to prescribe different requirements for different calculations for the purposes of Part IV of the Act. Section 33 amends section 48 to clarify the scheme liabilities which must be discharged before any resources can be returned to an employer on the wind-up of a scheme and to clarify the benefits to which the purchase of an annuity with fixed rate increases can apply.
Section 34 extends section 49 of the Act to require the trustees of a pension scheme to submit a funding proposal to the Pensions Board where a pension scheme fails to satisfy the funding standard reserve requirements. Pension schemes will be required to restore funding by the date of the next funding reserve certificate. The Pensions Board will issue prescribed guidance setting out the requirements for a funding proposal and will have discretion to extend the date by which scheme funding must be restored.
Section 35 amends section 50 of the Act to include failure to submit a funding standard reserve certificate as an additional circumstance under which the Pensions Board may issue a notice under section 50 to reduce scheme benefits. Section 50 is also amended to oblige trustees to implement the benefit reductions proposed to the Pensions Board and to comply within the time limit for implementation of the proposal specified in the notice under that section. Failure to comply could result in a prosecution. A new subsection (4) is being inserted in section 50 of the Act to empower the Minister for Social Protection to prescribe the guidance of the Pensions Board as regards the form and detailed requirements of an application by scheme trustees to reduce scheme benefits.
Section 36 extends section 51A of the Act to include the completion of funding standard reserve certificates in the responsibilities of actuaries in relation to pension schemes. Section 37 amends section 53E of the Act by deleting the definition of "funding standard liabilities" which is being inserted in section 40 of the Act by section 12 of this Bill.
Section 38 amends section 55 of the Act to require the trustees of a pension scheme to include a statement in the annual report indicating whether the scheme satisfies the funding standard reserve requirements. If it does not it must notify the Pensions Board within a time limit which may be prescribed by the Minister for Social Protection. Section 39 amends section 59G of the Act to require the consent of the trustees to an application for early retirement under the rules of the scheme where the actuary is not satisfied that the scheme would satisfy the funding standard reserve requirements at the date of the commencement of retirement. Section 40 amends Part B of the Second Schedule to the Pensions Act and is consequential to the change to the revaluation of benefits at section 23 above. Part B is amended to clarify the reference point for the revaluation of scheme benefits.
In addition to the aforementioned sections, Part 2 of the Bill contains 12 other sections which make various changes in other areas of the social welfare code. Sections 8 to 11, inclusive, relate to the PRSI system. Section 12 limits entitlements to mortgage interest supplement. Section 13 relates to the use of the PPS number in the education sector. Sections 15, 16 and 17 give additional powers to inspectors for the control of fraud. Social welfare inspectors will have powers to question people at ports and airports and make inquiries with landlords regarding rent supplement. Section 18 is a technical amendment on the financing of the social insurance fund.
We have to ensure that the neediest in society are protected and supported in these difficult economic times. In particular, we must ensure for the sake of those who have contributed to the system, such as pensioners, that sufficient people of working age are employed to provide for retirees and young children. All of us aspire to a good social welfare system which supports young people, children and pensioners in particular. To make such a system sustainable, however, we must ensure people of working age, in so far as is possible, are contributors.
The Government will invest €20.6 billion this year in social protection for its citizens. One of the greatest tasks I face is how to reform the system to ensure some of that spend is leveraged as an investment in people and to ensure that investment has consequences for our economy, where the people in whom we invest are in a position to contribute as workers to the economy and, thus, return to the system the investment in them. Social welfare is a particularly western European concept which was developed more than 100 years ago, but in the context of the frailty and turmoil of financial markets nowadays, we must see how we can look upon this figure as an important spending stimulus in the Keynesian sense. American economists recognise that western Europe has a unique form of stimulus, which is its investment in widescale social welfare payments to people in different categories. We must try to leverage that investment to help our economy to recover and grow, particularly in regard to people of working age in order that they will find work and become contributors in due course.
Our friends in the troika take a detailed interest in social welfare. Sometimes they pore over expenditure in this area and they seem extraordinarily knowledgeable about the 50 to 60 schemes, categories of people and stages of life that social welfare covers. They were satisfied with their current visit and presumably that means their continued approval of the country committing so much expenditure to social welfare, in particular to support people who are finding these times difficult. My objective is to continue to do that with the support of the House and to leverage the expenditure in interesting ways to support the return to economic health of our economy.
I welcome the Minister. I also welcome the introduction of the Bill. The Minister will have realised since she took up office that Fianna Fáil was most innovative with social welfare schemes. Fianna Fáil Governments brought forward the most enlightened social welfare provision of any Government in the State. I acknowledge we were in government for a long time.
However, every Fianna Fáil Minister with responsibility for social welfare introduced more schemes than Ministers from other parties. We will challenge any party on that because we will not stand for history being rewritten. We introduced the schemes for lone parents, carers and the free fuel, television licence and travel schemes.
I agree with her statement on 18 April that "seven is too young for anyone to seriously contemplate any of these things without there being a system of safe, affordable and accessible child care in place". She must be proud of her inheritance from Frank Cluskey. I knew him well having served in the Dáil with him. He was an extremely good Minister and parliamentarian.
With regard to the Bill, the Minister should be open to amendments from this House. The time limit is tight but there are experienced Members in this House, particularly in the child care area. It is not beyond the capability of the Lower House to consider amendments from this House. I served as Minister of State and I accepted many amendments from this House because I found it always put forward enlightened views on legislation and pointed out provisions that needed amendment. Though she stated it was unacceptable to lower the age limit of the youngest child to seven to qualify for the lone parent's allowance, she has provided for this in the legislation. There is no need to include the provision, "7 years in respect of any claim for one-parent family payments relating to any day occurring on or after 2 January 2014". Her views are aspirational. She wanted to put pressure on the Government to bring in better schemes in order that she would not have to implement this. She rightly wants the Government to change its policy on child care facilities, yet she has the power to remove this provision from this Bill. She did not secure Government approval in this regard. Fine Gael is the majority party and it obviously was not prepared to give in on this. The cut affects mothers who comprise the majority of one-parent families. According to last year's census, one in eight people live in one-parent families, equating to 567,000 citizens in a population of 4.5 million. That is why Fianna Fáil has a particular interest in this area, as the Minister's proposal is contrary to our policy. I compliment the staff of the House for ensuring the updated Bill was printed and available this morning. I expected the Minister to have made an amendment in this regard.
With regard to the amendment to pension provisions, the Minister said that in the case of a person who becomes a voluntary contributor paying contributions under the relevant chapter before 6 April 2013, the number of contributory weeks will change from 260 to 520. What effect will this have? How many people will be affected by this serious change? It will affect people's entitlement to a contributory pension.
The total number of people affected is approximately 1,000, and this includes Members of the Oireachtas who may make voluntary contributions even though they receive no entitlements. It is a small distinct group, most of whom have lived abroad or have returned to Ireland from abroad. I will provide a note to the Deputy.
I sought clarification on the number affected but I am not sure whether it will have a greater effect than that. That is the Minister's calculation at this stage.
The Minister stated that the Department has begun a phased introduction of a social public service card with key security features, including photographs and signatures. I do not see why she could not provide for that in this legislation because it would not be before time. The previous Minister's work on this was at an advanced stage. It seems pretty logical to have a card with details including a photograph and signature. That would eliminate much of the fraud that is taking place in the Department. I do not understand the reason for the delay.
There is a very obvious approach in this regard and I do not believe there is any objection from anyone in receipt of social welfare. The small smart card has been introduced for medical card holders and again that should have a photograph, but that is a detail. The technology exists and it is not rocket science to introduce those changes as quickly as possible.
Regarding social welfare fraud, there has been an increase in the number of people sending in requests and information, some of it not very accurate. I know the social welfare officers would be aware that some people would be concerned about their neighbours' well-being and have submitted complaints. The Minister has certainly received many complaints and requests in this regard, which is a reasonable point of view. The principle of the social welfare system is that no one is entitled to claim social welfare without being entitled to it. I am delighted with the clarifications in this regard. Some people who have contacted me are deeply concerned about the contributory situation and the average system. The proposal was that there would be a change in 2020 such that all contributions would be considered.
Many people are entitled to British social welfare but are not claiming it, a matter I have raised previously. They may have worked in Britain for ten years, for instance, and may be entitled to claim. They may have included that in their claim for contributory Irish pension working in close collaboration with the British system, which is fair enough. However, a number of people are not in receipt of a pension from the British Government. I ask the Minister to update the position. I have brought it to people's attention and while the amounts have not been great some people have received an extra small contribution from Britain for the work they did. I believe the same applies to the United States. The British system is very streamlined as is the Irish system.
I compliment the Minister, her Department and previous Ministers, in particular Dr. Michael Woods who introduced quite an innovation with computerisation. The system is very effective and the system for Oireachtas support, which the Minister introduced, is working very well. It is very public-friendly and I commend the Minister on that. It is important to get a speedy assessment of social welfare. I believe the Minister is saying that whatever is proposed in this House on Committee Stage in order to make the system fair and effective is worthy of consideration.
I return to the issue of reducing the age limit to seven. I believe she will change that provision in the future because it is not practical to have it as low as seven. There is time to work on that in the meantime and we will table amendments on Committee Stage.
I thank the Minister for taking the time to listen to us. She has a very important portfolio given that social welfare represents the bridge to work and also a bridge to education. At times of recession it is arguably the most important portfolio. The social welfare system is inherently essential in a democratic society. It is an essential tool in aiding those who are struggling most. The welfare is available to help the most struggling so that they do not fall into poverty. It acknowledges how tough times are for many people. However, the social welfare system must - I know the Minister is grappling with this - be a mechanism to incentivise work, to empower those receiving payments and encourage them to actively seek and gain work. I say work as opposed to employment. The difficulty is that we have educated for employment as opposed to educating to be employers. This will be a very big change in mindset. If we only educate to become an employee when there is a recession and jobs go everyone is stuck. We need to educate to become self-employed and to provide a backup system for them. It is wrong that when employers, who created the jobs, fall on hard times, they have no social welfare system at all. I ask the Minister to address that in her closing speech today. How is she advancing that issue because I know she was considering a social insurance fund for self-employed people?
Another significant problem Ireland shares with the rest of Europe is youth unemployment, which is causing considerable fear - Hitler's rise to power came in such conditions. We must tackle the issue head on and get our young people, who represent the future of the country, back to work - not just in employment - and towards a regular working life. Social welfare exists for many people to get support if needed but they should not depend on these payments for a lifetime. While we all agree with that, somehow the reality is that we do not accept that. We create a culture that can at times be a dependency culture.
I wish to discuss one-parent families, the Minister's work on fraud, the amendments to the Pensions Act, the entitlement to mortgage income supplement, the voluntary PRSI contributions and how the review is getting on. The literature indicates that a person who lives in a dependency culture for 15 years becomes embedded in that culture. At the moment a parent is entitled to claim the one-parent family allowance until the youngest child is 14, which I believe is too long. For a woman who becomes a mother today in the knowledge that she will have this one-parent family allowance for 14 years, there is no incentive to consider changing her circumstances and help herself. I commend the Minister on reducing that upper age limit - with conditionality. I take my hat off to lone parents who are doing a very difficult job. Sometimes I feel that my husband is a lone parent, when I am here in Dublin. When he is not there I wonder how we cope without each other's help.
The two-year lead-in time is critical. It is important to poverty-proof it and continually monitor it as the Minister has promised. The most important thing is that each lone parent is given a facilitator. I know a mother who after 17 years and with the help of a person from the Galway resource centre has given up all social welfare assistance including her house. How did she do it? She had depression etc. and only managed it because of the help of a facilitator. The fundamental question is whether the decision we make today in reducing the child age limit to seven years for one-parent families will increase poverty and social problems or empower the lone parent to think ahead, plan the future for himself or herself and his or her children. Fundamentally, will the over-dependency on it create a structural problem? I believe we need to monitor it carefully. I have done work on early school leaving and it is critical that child care support is in place, as the Minister stated, that the parent is supported with a facilitator and that at-risk families are watched. In her speech the Minister mentioned families at risk of dropping out of education. I know my fellow Senators are concerned about the fact this is not written into the Bill. We have between now and Monday to look at ways to do so.
With regard to the change affecting jobseeker's payments the Minister proposes to base it on a five day week as opposed to a six day week. May I ask why it was a six day week benefit.
I listened to Senator Leyden speak about all of the schemes Fianna Fáil introduced. Its doing so is part of the problem because new structural difficulties in society were created as was overdependency. I have been told in post offices that one of the 64 or 65 social welfare payments is for a washing machine and that everyone in the country is applying for it because it is a €300 payment that is easy to get. This definitely needs to be examined because it has been pointed out to me by people working in post offices that it is being abused.
I compliment the Minister on her work on social welfare inspectors because we must follow fraud. Senator Leyden raised the issue of e-signatures and photographs. I apologise for having intervened when he was speaking but I spent Monday and Tuesday at a European meeting about this in Copenhagen. It is quite difficult to introduce e-signatures because we must ensure they are secure and cannot be hacked. How advanced are we in ensuring it will be a secure method? At present the largest area of growth throughout the EU is the digital single market. However, it is the slowest area to introduce because of the structural change required for it to work effectively.
It is mad that a person can live in another country and claim social welfare benefits here. I know EU rules about this exist. Is it now the case that child benefit can be claimed while the child is living abroad if one parent is working here?
Child benefit should be claimed only if the child is here and going to school, in a notified crèche or in the ECCE scheme. This needs serious consideration. I understand the European rules but we have national authority here and it is possible to change this.
With regard to the changes to the Pensions Act 1990 the idea of requiring 11 years to satisfy the risk reserve of the scheme is very good. Has the Minister assessed the various pension funds which cannot meet their commitments? Have they been informed? Do their employees know? In the event they still cannot fund pensions and the reserve risk is not met what is the fallback position for the people involved? Everyone works and contributes with a view to retirement. A baby born today could live to 100 years of age. People live longer.
I am concerned about the fact that people cannot avail of mortgage income supplement for the first 12 months. Is the point that the bank must give the person a holiday? If so, that is fair enough. We must move on the Keane report and the split mortgage proposal so a person is facilitated to pay back the bit he or she can while the other part is parked.
I have found an anomaly with regard to voluntary contributions. Prior to the changes being introduced a set of twins was about to qualify for the transitional pension and knew the application date was approaching. One of the twins was late applying because of a family illness and therefore did not qualify. This is dreadful. She will now require 510 contributions which she does not have. This is very hard and the case is with the Department at present. It is under appeal but only after incredible pressure.
How is the independent review body doing? I made a submission to it but I have not yet received a response. I have called for consideration of a movement away from individual schemes towards capping family social welfare income. I am not stating this would not be without difficulty but I wonder how it is going.
I am greatly concerned about whether the Minister's sick leave proposals would hurt employers who create jobs. I would like to see employees take responsibility for sick leave after a certain period of time. How is the Minister doing with regard to social insurance for self-employed people? I look forward to hearing the Minister's response.
I appreciate that. Her role as Minister for Social Protection is critical and difficult. She has already engaged in extensive debate on the Bill with our colleagues in the Dáil and I listened very carefully to her speeches and her responses to the concerns and criticisms of Deputies. What I heard which is positive and imaginative in the words of the Minister is that we should have a system of safe, affordable and accessible child care in place, similar to what is found in the Scandinavian countries; that we will have a reformed education and training system that takes a case management approach for each individual as outlined in Pathways to Work; that the Minister cares very deeply about these issues and was involved in designing some of the progressive social welfare schemes in the past; and that what is most critical is to provide access to training, education and employment for all of those out of work but with particular reference to effective solutions for lone parents. In her wrap-up speech in the Dáil the Minister stated we can make the next gain and the next step forward and that with a joined-up, cross-departmental approach with the Ministries of Social Protection, Children and Education and Skills we can open wider, better horizons for people who are parenting in Ireland.
Please tell the Minister I am inspired by these words and I want to support her in implementing the reform necessary to realise this vision. She knows I have worked for many years with people, especially women, parenting on their own in the social context of poverty, and these are precisely the kinds of reforms we need to support people to break the intergenerational cycle of poverty, and to turn the tide of unemployment, inequality, poverty and child poverty that hundreds of thousands of Irish people find themselves in today.
It is because of this work and experience that I and other Independent Senators will offer amendments to some of the sections of the Bill, which I hope are passed, and why I decided to chair the press conference "Seven is too Young" to demonstrate my support for the analysis that OPEN, the National Women's Council and Barnardo's has offered on the Bill. After all the public and political debate I am convinced the Bill as it stands, coupled with section 11 of the Social Welfare and Pensions Act 2011, will have the effect of erecting barriers against lone parents working. It will not support their movement towards a greater quality of life for themselves and their children through well-paid and meaningful work, which will increase the number of children who are poor. The impact of these two pieces of legislation could be to legalise an increase in poverty.
The relationship between welfare and work is crucial during a time of recession. Our welfare system is complex, but one of its strengths is how it operates to allow people to take up part-time work and to retain a portion of their social welfare payments. In this climate, well-paid jobs are difficult to find, as the Minister of State, Deputy Perry, knows. A system that encourages people to take up any kind of work must be a good one. The social welfare Bill the Minister wishes to pass and the legislation that was enacted prior to Christmas disincentivise lone parents from taking up work because the earnings disregard for their type of payment has been lowered and the stated conditions regarding the availability of child care to implement measures to reduce the youngest age of the child are not part of the Bill before the House. They should form part of the law in some way so they can be honoured. Are we to proceed to pass laws based on trust rather than certainty? The combination of these two legal changes - the lowering of the age of the youngest child to seven years without adequate child care and the lowering of the earnings disregard to €60 - moves us in the opposite direction as envisioned by the Minister.
I will address the proposed change on lowering the age of the youngest child to seven years by 2014 regardless of when lone parents entered the payments system. The one-parent family payment ceases after that age. If the lone parent still requires social welfare assistance, she or he will move on to the jobseeker's allowance, which requires people to be available for work and to be unemployed for three out of every six days. The earnings disregard in this respect has also been lowered. A jobseeker can only work three days part-time. If he or she happens to get a part-time cleaning job for two hours per day and five days per week, he or she will not be eligible for any support. The law states that one must be unemployed. Technically, a person forgos unemployed status if he or she does any work on any day.
The Minister has indicated that the lowering of the age of the youngest child will only affect a small portion of the 92,000 lone parents in receipt of the payment. I received calculations from her Department stating that reducing the maximum age from 14 years to seven years progressively during the period 2012 to 2014 would impact on 170 lone parents in 2012, 765 in 2013, 2,210 in 2014 and 4,510 in 2015. I was not given the methodology for these calculations. I am still wondering what it is. The changes contained in the Bill will affect all new lone parents. Although we do no know their numbers, the birth rate is increasing. Undoubtedly, the number of people affected by the change will be significant. For such a parent, he or she can only access the payment from 3 May if his or her youngest child is less than 12 years of age and from January 2013 if his or her youngest child is less than ten years of age.
The Minister has also stated that these changes will only go ahead if she gets a credible and bankable commitment from the Government on the delivery of a Scandinavian-type system of child care by the time of this year's budget. The Minister and the Minister of State know we do not have such a system. We failed families during the boom years when we had the resources to introduce such a system. We no longer have those resources because we are in the age of austerity. Given this reality, the Minister's promise to obtain a bankable commitment from the Government - the dictionary defines "bankable" as "acceptable to a bank" - is not adequate.
Are we to believe resources will be located within the next budget? From where will they come? Those who no longer qualify for the one-parent family payment will seek the jobseeker's allowance if they are fit for work. If a single parent claims that he or she is only looking for part-time work because of child care costs, it is likely he or she will be refused payment. Assurances that claimants will be treated sensitively are not good enough.
We are deeply concerned about the changes introduced through the Social Welfare Act 2011, including the lowering of the earnings disregard in respect of the one-parent family payment. It is at €130 this year and will continue to decrease to €60 by January 2016. We wish to recall the rationale for the introduction of the payment in 1997. It gave recognition to the greater practical financial burden faced by lone parents when trying to access employment and raise children, namely, the cost of child care. A greater income disregard was afforded to one-parent families who engaged in employment, usually part-time, so that they might retain part of their social welfare payment. With the reduction of that disregard and an inadequate affordable child care system, single parents are disincentivised to take up part-time work, even if they want to, and are genuinely unavailable for full-time work. This change increases the chances of ongoing poverty.
In a simple exercise, I compared a couple in receipt of jobseeker's allowance with a person in receipt of the one-parent family payment where both households took up part-time work for €160 per week. Each family had a three year old child. In 2016, the one-parent household will have €18 more income than the two-parent household. This money is spent on child care, amounting to €60 to €80 per week. If the single parent has two children, he or she will still only have €18 more. Does this reform sit with the vision of our Minister?
We are trying to submit an amendment to oppose the Bill's changes in respect of the mortgage interest supplement. We will argue that the relevant section should be deleted and that no proposals to limit the supplement further should be enacted until an overall package of supports is available to ensure the protection of borrowers who have the capacity to remain in their homes with appropriate targeted support. Without such supports, the proposed changes will undoubtedly have the effect of abolishing the mortgage interest supplement in everything but name.
I welcome the Minister of State, Deputy Perry. He is becoming a regular visitor and we are always glad to see him. I am disappointed the Minister for Social Protection needed to leave, but she will return for Committee Stage.
It would be great for social welfare purposes if no one ever got old or sick, was ever made redundant or was left to raise a family on his or her own. Unfortunately, real life is not like that and we continue to need social welfare. Every Senator agrees the Department of Social Protection has the greatest spend, at 40% of the overall Exchequer budget. Therefore, due to the economic climate in which we find ourselves, cutbacks need to be made and savings need to be found within the Department. It is the Minister's job to bring about these changes while imposing the least negative impact on people as possible. I do not envy her her task. Once cuts are made to social welfare, someone will always get hurt.
The Minister has made a number of changes. Some are small, but others will have a major impact on people. One of the most contentious changes she is about to make is the amendment to the one-parent family payment to provide for the phased reduction in the age limit applied in respect of the youngest child in the family. I have raised this matter with the Minister several times. I see where she is coming from and I know her intentions are honourable. I appreciate she is considering the issue of women's social progression. I say "women" because it is predominantly women who are lone parents, even though more men are becoming lone parents. Like many Senators, I have been approached by women who are finishing their terms on the one-parent family payment. They really are lost. They do not know where to turn, what income they will have or what they will do for the rest of their lives.
The Minister is introducing these changes because the best route out of poverty and reliance on social welfare is through paid employment. We need to eliminate child poverty in particular. The Minister wants to prepare single parents to return to the workforce. That time will come regardless. Currently, it comes when a parent's child is 18 or 22 years of age, whichever the case may be. It will now arrive a little earlier in the parent's life.
To date, there has been no obligation on people to engage in or seek employment or to seek education or training. Consequently, people who have been in receipt of the one-parent family payment have not had a good outcome. However, we must be careful not to throw the baby out with the bath water. While we are conscious of providing for the person who has left the payment and is returning to the work environment, we do not want to leave parents at the other end of the spectrum feeling vulnerable. By dropping the age to seven years, we are making people vulnerable. At that age, one cannot leave a child on his or her own after school or to get himself or herself off to school in the morning unless - this has been and will be stated in the Chamber time and again - the State puts in place proper, safe, affordable and accessible child care. I welcome the Minister's decision not to reduce the age limit unless such facilities are in place. I know that she is working on the issue with the Minister for Children and Youth Affairs, Deputy Frances Fitzgerald, who is dedicated to providing child care services.
I come from a rural area and, as such, wish to raise the issue of child care services in these areas with the Minister. In the main, child care services are provided in urban areas. While some rural schools have fantastic preschools, play schools and so on, not many of them provide after school facilities.
I thank the Minister of State. It would be impossible for a parent working in an urban area which could be miles from the school his or her child is attending - I sent my children to a rural school which was many miles from where I was working - to leave work to collect the child from school and take him or her to a child care facility and return to work. The Government must, therefore, address the issue of rural child care services.
Parents who are recipients of jobseeker's allowance and so on must be available for work. This requirement should not be applied as stringently to lone parents. I have discussed this issue with the Minister. Unless proper child care services are in place, in particular after school services, in rural areas, the reduction in the age limit to seven years will not work. The Kerry Diocesan Youth Service provides a fantastic service for parents in Tralee. Children are picked up from school, taken to their centre and provided with assistance in doing homework which is followed by activities. Funding will have to be provided to develop services such as these.
I appreciate that the Minister is looking at the relevant age limit applying to one-parent family schemes in other countries. However, we must treat like with like. Child care services are far more readily available in other countries.
I have spoken on several occasions to the Minister about the one-parent family payment and how hard life is for such families. I know that she is working towards providing a model which will make it easier for lone parents to work while providing for their children. It is almost impossible for them to juggle working and rearing a family outside school hours. It is welcome that the one-parent family payment in respect of children in receipt of domiciliary care allowance will remain in place until the youngest child reaches 16 years of age, at which time he or she can in his or her own right claim disability allowance.
I congratulate the Minister on being the first to tackle fraud in a vibrant manner. I commend her for giving social welfare inspectors more powers to combat social welfare fraud and abuse at ports and airports and make inquiries of landlords. Many might question the reason we are giving inspectors powers to make inquiries of landlords, but I am aware of people who are claiming rent allowance which never makes its way to the landlord. Some people who have left the country are still in receipt of the allowance because there is no link-up with CWOs.
Yes. Previously, that was the case. I do not know the reason it was changed. Perhaps we should revert to the old system which would, at least, ensure rent was paid and a roof kept over a person's head.
It is also welcome that the Minister is extending the list of social welfare payments excluded from the general disqualification for receipt of a weekly social welfare payment where a person is participating in a community employment scheme and providing for a risk requirement which will help to protect pension scheme members' benefits against future volatility in the markets.
Senator Terry Leyden spoke about the social services card. While I agree with him that we must accelerate its introduction, I remind him that we are still waiting for the driving licence card promised 15 years ago by Fianna Fáil. It is to be hoped it will not take as long to introduce the social services card.
The provision in respect of mortgage interest supplement will make life hard for many. While negotiating with the banks might be okay for some, for others it is tough. Some people do not have good negotiating skills and find doing this hard.
I am glad to hear the banks are engaging with people. It is to be hoped we are moving towards a situation where they will take into consideration people's financial circumstances and listen to what they have to say and act accordingly.
All of these matters will be discussed in more detail during the next few hours and coming days.
I welcome the Minister of State, Deputy John Perry. While, like others, I would like to have the ear of the Minister for Social Protection, Deputy Joan Burton, I am glad the Minister of State is present.
I welcome the Minister's reforms, in particular the new methods of tackling fraud. There is a need for a frank discussion on the amount of money we are spending on social welfare payments. The Government is borrowing €127 million every month to top up the funding required for social welfare payments. It is estimated that to make these payments €3.32 billion was borrowed in 2010 and 2011 and that a further €1.3 billion will be borrowed this year. There is, therefore, a need for a debate on the seriousness of this issue.
I have looked at what other countries are doing. The Minister of State and I share a background in the retail sector. During a trip to San Paulo in Brazil I visited a beautiful supermarket which was the biggest I had ever seen. When I commented to the owner that I was surprised by the number of men shopping there - it was an up-market supermarket - he told me they were chauffeurs who were shopping for their bosses.
We learn from what others are doing.
I find it interesting that the fifth review by the IMF states the social welfare system generates poverty traps for some groups and provides less targeted supports for others, an issue that has been much talked about this morning. Potential reform options include moving towards a means-tested and integrated system of social welfare payments. I am not sure, however, that is what we are doing and wonder how much of this message the Minister is taking on board and how she is overcoming the obstacles in the way of a means-tested system.
There was an idea from Senator Noone, which we heard again today, detailing the issuing of a social welfare payment by means of a debit card which would only be usable in Ireland. That would also include setting a fixed amount that can be withdrawn in a given week by using that card. To add to this, I believe some other European countries have a card that can be used to withdraw cash from ATMs and Dutch banks only. Although not completely ideal, this may be a straightforward solution to reducing fraud. They use the system in Holland.
In the United States, food stamps cannot be used to purchase alcohol or tobacco. We pay child benefit in this country, but there is no control over how the money is spent. We are aware that some people, on the day the child benefit is paid, commit abuses of the system. The United States uses the food stamps system to implement control, so should we have more of a say on where social welfare payments are spent? This also links to fighting childhood obesity which is costing the State millions of euro and which cost is rising every year. There is much debate about it.
What is the Minister's view on countries like the Netherlands, where social welfare is calculated on the applicant's average salary in the last tax year and how long the unemployed person has been working? The issue of whether people should have to work after a particular length of time on social welfare should be raised again. Many people say they would prefer to be doing something to help their community rather than just stay at home doing nothing. In some European countries, following receipt of social welfare for 12 months, a person is required by the Government to take up a job. That might be painting a local school or cleaning the floors of a local hospital, and it would be done in exchange for social welfare payments. Many people would prefer to do this rather than be at home doing nothing, but is the issue taboo? Could we have a mature discussion on it, as it is a worthy topic?
In the United Kingdom, the Conservative-Liberal Democrat coalition Government introduced a work programme based on social welfare reform similar to that introduced by President Clinton in the United States. There is a payment for results and a contract with the private sector. More than 500 businesses and voluntary organisations in Britain have signed up to get people back to work who have claimed unemployment for up to a year. These contractors are only paid when the worker has held down the job for a certain period. Mr. Chris Grayling, MP, is the UK Minister of State at the Department of Work and Pensions, and he has argued that this will transform the lives of millions of people as well as representing good value for the taxpayer because payments to contractors are dependent on results. Much of the money is awarded to providers only when the jobseeker is placed in sustainable employment. Mr. Grayling has indicated a Birmingham programme placed its 1,000th person in a job at the end of last year. That is just one of the steps taken.
In one centre set up in the UK and run by a private contractor, there has been an attempt to replicate workplaces. Local firms can set up a shop in employment centres to test employees, which could be very useful. Trade skills like plumbing and basic contracting skills are taught. In classrooms, the jobseekers - known as clients, which I like - learn how to use the Internet and personal networks to find jobs.
I will touch on another aspect for combating social welfare fraud with an interesting example from the Netherlands. Local authorities have begun using social networking sites such as Twitter, Facebook and LinkedIn to hunt social welfare cheats in the first anti-fraud campaign of its kind in the world. We cannot just look at ideas from other countries and adopt them but we can learn from them.
The scheme in the Netherlands is being operated on a trial basis by ten local authorities, including Amsterdam and the Hague. The aim is to stamp out fraudulent claims which in 2010 cost the Government there approximately €120 million. The councils are working with a specialist Amsterdam research firm, using the type of computer software previously deployed only in counter-terrorism. They monitor Internet traffic for key words and cross-reference those words with computerised lists of social welfare recipients. The giveaway terms are "holiday" and "new car" and if the software matches those terms and somebody claiming social welfare, the information is passed to investigators who gather substantive real evidence.
Money is being wasted because of social welfare fraud, although people do not want to talk about it or argue that it is a minor amount compared with other issues. It is substantial and steps could be taken to fight it. The Dutch system would point the authorities in the correct direction and ensure detection resources were used as effectively as possible. If people ask whether we can afford such a system, I would ask if we can afford not to do it. I would be interested in the Minister of State's thoughts on it.
The measures in this Bill may be perceived as harsh, and some of them are, but we must take a long-term view and learn from tried and tested examples of how to get people off social welfare. In general, the majority of those on social welfare would prefer to be working and I am sure the numbers of those who do not want to work and have no intention of doing so is minor. We should encourage people back to work. It has been interesting to listen to today's debate and hear that we tend to train people to be employees. As Senator Healy Eames noted, we should be encouraging entrepreneurs and people to become employers. In doing so, we can attempt to get people off social welfare by creating more jobs. I welcome this debate and the steps being taken, which are in the right direction. We should continue that work.
I welcome the Minister of State, Deputy Perry, and compliment the Minister, Deputy Burton, on a very fine job in a difficult time for the country. Deputy Burton is a reforming Minister and I know she is very determined to reform many aspects of the social welfare system and protect the most vulnerable in our society. She is managing significant spending in her Department of more than €20 billion per annum. Not only did this Government inherit a bankrupt country a little over 12 months ago but we also inherited a scenario where the previous two elections were cynically bought using the social welfare budget to attract electoral support. We all remember the famous €1,000 early childhood payment which had to be discontinued pretty quickly because it was not sustainable.
To the credit of the Minister, she has protected the basic rates of social welfare and pensions and is determined to target resources where they are most needed. Like other speakers I very much welcome the attempt to tackle social welfare fraud, which is a major challenge. There is anecdotal evidence of significant social welfare abuses in some areas, and the efforts to tackle claims by people outside the country though additional social welfare inspectors at ports and airports is to be welcomed. The Minister's decision to appoint additional inspectors to examine rent supplement abuses is also to be welcomed. I have reason to believe there are abuses in this area, with some people unfortunately finding themselves in very poor accommodation because they are afraid to highlight problems in case they lose their rent supplement.
Our scarce resources must be protected for the most vulnerable in our society, as well as the new poor. There are very many people dependent on social welfare who never claimed for anything before in their lives. For these people it is their first time to sign on and they are in a difficult position. They are anxious that social welfare is only a temporary arrangement. The Government needs to examine the black economy. Many people on social welfare are also self-employed and put legitimate businesses under severe pressure because they can undercut legitimate operators. They are claiming social welfare and carrying on a cash business on the side. The Government must tackle this.
I hope the Minister for Social Protection and the Government make it easier to transition from social welfare to work and from work to social welfare. There is no incentive for people to take up part-time or seasonal employment. I met a contractor at a briefing across the road by the Professional Agricultural Contractors Association of Ireland. He told me he had 20 short-term jobs for a major contract that he could not fill. People would not take up the jobs because, if they did, they would lose their medical cards and other social welfare benefits. We must make it easier for people to make the transition to part-time work. If someone takes up short-term work, it takes far too long to receive benefits. Given the IT systems in the Department, people should be able to sign off and sign on quickly.
There has been much debate about one-parent family benefits and the proposal to reduce the age limit to seven years over a period. I agree with Senator Quinn that we should look at this in a different way so that it is means tested. The structure of the payment is a disincentive to stable relationships and marriage. Many children would benefit from more stable relationships if this payment was structured in a way that did not provide a disincentive to people entering long-term, stable relationships.
The recent report by the Oireachtas Joint Committee on Jobs, Social Protection and Education highlighted reservations about the Department's proposal. With some adjustments, it would be a move in the right direction. Someone in receipt of a disability payment will lose the payment when he or she takes part in a community employment scheme. People with disabilities should be able to keep a small portion of the payment because of additional costs in travelling to work as a result of the disability.
I stress the importance of continuing community employment schemes. They are doing valuable work in our communities and provide people with an opportunity to play a part in communities. They are involved in tidy towns, sporting organisations, social services and care of the elderly. Resources must be provided to these schemes.
Members of the Lower House referred to the exceptional needs payments. There are abuses in that area and we must examine it.
Other speakers referred to a culture of entitlement and dependency. We need to change that, which will only be done by investing in education and providing opportunities for these people to return to the workplace. We must invest in proper child care and make it easier to transition from unemployment to work. Our social welfare system is reasonably generous and is designed to support the most vulnerable but it also has design flaws that are not easily fixed. Significant amounts of money are going into households yet the children can be described as deprived and neglected. Factors include poor parenting, bad money management and drink and addiction problems. These areas must be addressed. Like Senator Quinn, I raised the issue of part payment through clothing and food vouchers at a recent Oireachtas committee meeting and I was lambasted by Social Justice Ireland.
I welcome the Minister of State. Fianna Fáil is opposing this Bill for several reasons. Senator Leyden touched on some of them and Senator Mooney will deal with others.
I will deal specifically with section 4 and its impact on lone parents. The section is particularly ill thought out and unjust. Senator Zappone highlighted the following point in her eloquent contribution. In the absence of both employment opportunities and adequate child care, this measure will force lone parents onto a jobseeker's payment. Senator Zappone gave a good example of the lower earnings disregards and the fact that eligibility for jobseeker's benefit depends on the number of days, rather than hours, worked. A cleaner on low income who decides to work two hours over four days will not receive a payment whereas someone working full-time over two days will receive payment. This policy has not been thought out and, rather than helping, it will make lone parents more dependent on the State and increase poverty among an already vulnerable group. Whatever about short-term savings the Government claims it will make, there is a risk it will cost more by making people who are working, bringing in a private income and moving towards an independent lifestyle more dependent on the State in the long term. I am dubious about the claim about short-term savings because most people will move from one payment to another.
From an activation point of view, the one-parent family payment has had considerable success. Most lone parents work outside the home which is good for them and their families. The system needs reform even though it has worked in some respects. For that reason, the last Government undertook a major exercise of examining best practice in other countries, taking suggestions from various groups and setting up a better system to examine income thresholds, the disincentive to work that exists for some people and the cohabitation restriction. We must find a sensible way of doing that, which touches on Senator Mullins's point about helping people to set up new families and new relationships. The current system penalises people and we must find a sensible way of addressing it. Rather than treating lone parents the same as everyone else and dumping them onto the dole, we need a more nuanced and sensible approach.
There are many good suggestions on what can be done. If the Minister and her colleagues had the decency and common sense to consult groups such as OPEN, Barnados, the National Women's Council of Ireland or One Family, she would have found a source of positive and constructive proposals. I understand that not did not happen before the budget and the change was landed on them. At national and local level, the groups are far from being in favour of passive income support. When looking to reform the payments, there was general agreement that 22 years was too old. A few years ago, someone did not have to work until the child was 22 years of age. There was concern among all groups that the parents could be too distant from the labour market in the long term. There was cognisance of the need to deal with cohabitation restrictions and to find better ways to support people in forming stable family relationships. A recurring concern is the lack of training and education programmes, particularly during school hours, to give people a real opportunity to upskill and find work. The last Government, having done all of that work and worked with lone parent groups, specifically chose 12 years in recognition of the child care challenges encountered. Reform was in train; the late Séamus Brennan had put reform plans in place, but instead of continuing with these, the Government has decided to completely derail them.
The Minister for Social Protection has stressed the Government's desire to move people from long-term welfare dependency and passive support. The lone parent payment is the least passive of all. There are incentives to work which most parents take up. For those who do not work, it is disingenuous to blame this on passivity when we are all aware that there are obstacles in terms of job flexibility and finding employment that will allow them to work the hours that suit the school day and avail of affordable child care services. Those on a low income might find it would cost more to have a child cared for after school than they could earn.
The Minister gave a commitment in the Dáil that the reduction in the age limit to seven years would not proceed unless a child care service was available. I wish I could believe Ireland will go from where we are in respect of child care provision to the Scandinavian model. If the Minister can do this, I will be the first person to congratulate her. I fully support that strategy, but she must understand the reasons people are sceptical about this and how, far from providing them with the certainty they need to know they can move towards an independent lifestyle, making crazy commitments that no one is sure we can meet increases fear and uncertainty for the families that need our support.
This policy is based on a negative and inaccurate view of lone parents. It is based on language the Minister has used such as "passivity" and "welfare dependency", and victimisation of a group, the members of which are already working and doing their best to be active. It is based on an irrational understanding of how the system works because a person is being moved from a payment that incentivises the taking up of work to a payment which offers no such incentive. It creates a long-term welfare trap that will act against all the positive work that has been done in the last few years in this area. I, therefore, urge the Minister to stop this now, consult and listen to the advocacy groups to come up with workable proposals and come back in a few months time. We can all work together on this issue and if the Minister's goal is to give people a leg up, she would find the groups involved have sensible proposals to make. We should not ignore the good work done and take a leap into the dark that will result in more children being pushed into poverty.
I welcome the Minister of State. It is a pleasure for me to speak after the eloquent and expert spokesperson on social welfare, Senator Marie Maloney. I will address a couple of the points raised during the debate.
The Minister for Social Welfare highlighted the importance of the spend on social protection. Some 40% of all current Government spending, €20 billion, goes on social protection payments. The other point the Minister has made is that the spend is not only an outflow from the Government but also acts as a driver of growth and a stimulus in the economy. She should be recognised as a reforming Minister who brings a progressive impetus to the Department of Social Protection. She does not lose sight of the need for social protection to protect the neediest in society but also for social protection spending to be seen as part of a stimulus.
I take issue with much of what Senator Averil Power said. She has misrepresented the reforms the Minister is seeking to introduce. Other speakers have pointed out that the vast majority of those in receipt of lone-parent allowance are women. As a feminist, like the Minister, we must ensure the outcomes for those in receipt of the allowance are not discriminatory but effective. The Minister has put it clearly that the outcomes of the spend on lone-parent allowance remain poor because lone parents and their families are at a disproportionate risk of poverty. We must address this issue.
I also take issue with Senator Averil Power's suggestion that lone parents are being denigrated or described as passive recipients. Far from it; we must all pay enormous tribute to them in facing the difficulties they encounter in raising children without a partner. Senator Fidelma Healy-Eames has mentioned that her husband sometimes feels like a lone parent with a partner involved in politics, but the reality is lone parents do a great job and need and deserve our support and praise.
The Minister is looking at how best to reform the payment of lone-parent allowance to achieve better outcomes for loan parents and ensure they are not discriminated against in terms of access to education or employment, the best route out of poverty. The reforms are in line with changes made elsewhere where we see a better system of supports for lone parents. In the Netherlands there is a work obligation on lone parents when the youngest child reaches five years of age, while in Scandinavian countries the age limit is even younger, at three or four years of age. The Minister has recognised that in Ireland it is not feasible to move to a younger age, unless adequate supports are made available. That commitment is critical.
The Minister has given a commitment to progressively reform the system to ensure better outcomes for lone parents and their families and that she will not bring forward the key reform in respect of the reduction in the age limit, unless the necessary supports are provided.
We would all say access to safe, affordable and accessible child care is critical. The Irish model of child care has been traditionally based on a private, for-profit industry model, but we can change this and there is a commitment at Government level, not just from the Minister for Social Protection but also the Minister for Children and Youth Affairs, to make that change.
The Minister has outlined the significant changes made at second and third levels in the past. To be fair, the early childhood care and education scheme marks an important change.
The transition is critical. I have met groups such as SPARK and One Family which support in principle the idea behind a progressive change to lone-parent allowance and the idea that the State should not intrude into the relationship between parents or base payments for children on the status of their parents' relationships but on whether a child is at risk of poverty and needs the money. The critical points the groups made and which I support concerned access to preschool and after school child care services. They also made the important point that there was a need to ensure adequate transitional supports would be provided. Other Senators have pointed out that 47% of single parents are working and that lone-parent allowance lets them to continue doing so. It is critical in the transition to jobseeker's allowance single parents who are working and in receipt of lone-parent allowance retain that right.
There has been a general welcome for the additional measures included in the Bill to tackle fraud and abuse. There is also a welcome for some of the changes to pension schemes such as introducing a buffer for defined benefit schemes and to ensure greater sustainability of pension schemes. The sustainability of pension schemes is one of the ticking time bombs of which we are all conscious. I am very encouraged by the changes to ensure the economy is made more attractive for investment by pension funds. We would all want to see this happen. I welcome the Minister of State and thank him for his attention.
I welcome the Minister of State to the House. I acknowledge the helpfulness and professionalism of civil servants in the Department of Social Protection in the lead-up to this debate. I rise to speak with an extremely heavy heart and a sense of foreboding. Together with my colleague, Senator Zappone, I will be trying to persuade the Minister and Minister of State that section 4 should be reconsidered and should not be part of the Bill.
I know the motion for earlier signature is tabled for Monday. There is no motion to recall the Dáil so I wonder why I rise to make this point. Is this scrutiny at its best, when we do not have an opportunity to change the legislation? I regret that there is no intention to change the legislation.
I want to flag my concerns on the State contributory pension. I recognise it is only one element in this Bill, but I have received conflicting information about the effect of the increased number of voluntary PRSI contributions voluntary contributors must pay to be entitled to a full contributory State pension. I will be looking for additional information and clarification so that we can iron this out on Committee Stage. There needs to be a more proactive approach on the part of the Minister to provide public information about these changes. There is confusion among older people. It would be useful to clarify matters during this debate.
I wish to focus on the one-parent family payment. I have made it clear since the publication of the Bill and the announcement in the Budget Statement that I will oppose section 4. I recognise the acknowledgement by the Minister that lone parents should not lose the one-parent payment when the youngest child reaches seven years unless a comprehensive system of Scandinavian style child care is in place. For far too many years our concept of child care provision looked at the status of the parent and was focused on getting mothers into the workplace. The introduction of the free preschool year changed the focus, because it is about providing care for children regardless of the status of the parent and the financial circumstances of the family. This means child care is provided equally to all children, which is a good way to start. The proposal in the Bill will be a return to the old style of child care provision. I cannot believe we are debating a measure that is so regressive, counter-productive and detrimental to the well-being of children of lone parents. The Minister for Social Protection, Deputy Joan Burton, noted yesterday's ESRI report. I will read the first line of Paul Cullen's article in The Irish Times today: "Children are bearing the brunt of the recession, with close to a third affected by some form of deprivation, according to a new report."
In the lead-in to this debate, I have been appalled by some of the arguments on lone parents, especially that people choose to be lone parents. At the end of 2011, 90,000 people were in receipt of the one-parent family payment. More than 90,000 people, the majority women, did not choose to belong to a family unit group most at risk of poverty in society. The contention is not only deeply insulting to those who have become lone parents, having left dysfunctional and unhealthy relationships or who have been deserted by their partners or who have been bereaved, it is also dangerous because it feeds into a notion that lone parents are a legitimate or worthy target of welfare cuts. It incorrectly focuses the debate on the adult, when it is the impact on the estimated 149,000 children of lone parents that is of critical concern.
Charles Dickens said:
It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness,
This expresses how I feel this week. We have had a really excellent week for the Children's Rights Alliance. The ending of the detention of children in St Patrick's Institution will start next Tuesday. The heads of a Bill have been produced on Children First, and there is legislation on the withholding of information on crimes against children. We have made great strides and the rhetoric of the past has been overturned. Despite this, we are looking at an amendment to the Social Welfare and Pensions Bill that has the potential to deny children their most basic needs, including food, clothing and shelter. One-parent families are the unit group in society that are most at risk of poverty. Children in such families are poorer than other children. This is not speculation; it is a fact. We have been told this repeatedly by the OECD, the CSO, the ESRI and several NGOs working directly with children.
When I spoke last December opposing the cuts in child benefit, I spoke at length about the cumulative impact of successive cuts in successive budgets on vulnerable families. I stressed that any hardship felt within a family is most acutely felt by children. The concerns I raised then were not new, they were the concerns that were repeatedly raised in the context of budgetary measures, not only domestically but also by international observers. The United Nations independent expert on the question of human rights and extreme poverty, Ms Magdalena Sepúlveda, visited Ireland in January 2011 and in the course of her statement said:
Children continue to be the group most at risk of poverty in Ireland, with families – in particular single parent families – struggling to ensure food, appropriate housing, heating and decent winter clothing. The substantial cuts in child payments in recent budgets are of particular concern as they can exacerbate the situation of children and lead to an increase in child poverty rates, which are already worryingly high. This would represent a major step backward for children's rights in Ireland.
I find it really difficult to reconcile these policy decisions. Why not remove section 4 and bring it back when we are ready to put in place the supports outlined by the Minister? We all want better outcomes for lone parents. Why such haste?
I thank the Minister for the detailed contribution on the Bill. There has been a significant increase in the demands on the social welfare system. People drawing social welfare do not have a choice because of the changes in the employment market. In 2010, €20.8 billion was paid out in social welfare when the yield from income tax was slightly over €11 billion. Last year, the yield from income tax was only €13.317 billion whereas the health budget was €13.4 billion and the social welfare budget was over €20 billion. The spending on these two Departments was over €33 billion, in contrast to the yield from income tax of less than 40% of that figure. The Government faces a major challenge to try to maintain services and benefits for those who need them. It must ensure the element of fraud is tackled.
People have come to my constituency office in recent weeks to ask questions about decreases in their social welfare payments. One person who came to me was getting €310 in social welfare payments between himself and his wife. His wife is now getting a weekly income of €110 for eight hours of work. As a result, his social welfare payment has been reduced by €140, rather than by €110. It does not make sense to me that there should be such a disincentive to going out to get work. We need to look at this issue.
I was contacted yesterday by someone who has an opportunity to get four months work. They are afraid that if they take the work they have been offered, they will lose many of the benefits they are currently getting. The person in question found it hard to get those benefits in the first instance and had to jump quite a number of obstacles to get them. They are afraid that if they take the four months work over the summer months, they will have to go through the same loops again to get the benefits back. We need to examine such issues.
Many people who want to work and know they can get work are afraid they will be penalised for making that effort. We need to change the system to facilitate them. I understand that the Minister or one of the officials in the Department suggested that people could use text messages as a means of informing the Department, for example, that they are working this week and do not intend to draw their benefits, but will do so next week. We need to develop such a system.
The issues I have mentioned should be examined in order to ensure that the many people who want to work can get back working. The system is not accommodating such people at the moment.
Ba mhaith liom comhghairdeas a ghabháil leis an Aire, an Teachta Burton, as ucht an obair atá á dhéanamh aici dúinn. I commend the Minister on her efforts to reduce and tackle social welfare fraud. I only have a few minutes. She is already considering giving additional powers to inspectors at airports and ports. That is also to be commended. I am aware of social welfare recipients who anxiously wait for the hour when they can collect their due entitlements. Long may that be considered. I understand that many other people can afford to wait for three or four weeks before collecting their payments. I am suspicious of those who can wait for a month before they receive their social welfare payments. We should examine their means of support. I was brought up in a one-parent family as the eldest of four children. The lone parent was my father who worked away from home six days a week. I was responsible for looking after my siblings every day except Sunday. I assure the House that there were no lone parents' payments, or any other parental payments, in those days. I am not saying that I would like a return to those days. I believe we have come a long way. I applaud the Minister again for her efforts in overcoming social welfare fraud.
I welcome the Minister of State. I commend the Minister, Deputy Burton, on her level of financial expertise, which has not been seen in the Department of Social Protection previously. She is combining the work she did as her party's very effective finance spokesman with her new area of responsibility. I will not intrude into the timeframe to which we wish to adhere.
We need to consider the integration of the tax and welfare systems, as proposed by Milton Friedman many years ago when he advocated a negative income tax. Too much means testing is taking place. We are producing the poverty traps about which several Senators have spoken. If we are going to be radical, as we should in a country that had to be bailed out by the IMF not that long ago, we should consider the integration of the tax and welfare systems. Where it has been proposed, it has typically been resisted by the bureaucracies on the tax and expenditure sides.
Each of our social welfare systems should reach the target group and that group only. The payment of universal child benefit to the wealthiest people in the country, who are well outside any target group, has to be put on the agenda. We should be cautious with the proposal to extend the medical card to the entire population. What is the point in giving medical cards to millionaires at a time when the country is broke and other priorities need to be addressed? Low administration costs are needed. That is another reason to consider the integration of the tax and welfare systems. We need measures that do not distort the choice between working and not working, or between phoning in sick and not doing do. Non-demeaning benefits are essential because we should be trying to help people rather than turn them away.
We have to question what we have done to make child care so expensive in a country that has an unemployment rate of 14.5%. Did we gold-plate the child care industry during the Celtic tiger era?
If there are women in the community who would like to mind other people's children in their homes and have the ability to do so, why does child care cost so much in Ireland? I agree with the many Senators who have spoken about child care as an obstacle.
We need a balance in job creation. We hear a great deal about new high-end jobs. That kind of job creation will not make any difference to the 14.5% of people who are unemployed. We have given grant aid to companies that have subsequently found it necessary to import workers from outside this jurisdiction. When the grant-awarding agencies speak about the creation of high-end jobs, I am reminded that the rate of unemployment among graduates is 5%. The rate in the community in general is 14.5%. Could we try to achieve a better balance between attracting jobs and looking after the interests of those who most badly need jobs?
The Minister spoke about defined benefit pension schemes. In the 1950s, it was estimated that people worked for 53 years and retired for 11 years. At a time when we are heading towards a participation rate of 70% in third level education, and given that approximately a third of those born this year are expected to reach their 100th birthday, more contributions into pension funds are required. I am in favour of later retirements as well. We have to look at the conduct of some of the defined benefit schemes. The McCarthy report on the privatisation of State companies found that those companies had net liabilities of €3.4 billion in 2009 and €4.2 billion in 2008. There have been far too many schemes of early retirement and added years, etc. Some of the trustees of pension funds have to be questioned. The previous Government had to take approximately a dozen of those pension schemes into public ownership because the trustees had been dispensing far too much largesse on early retirement schemes. The whole idea underpinning such schemes, which were fashionable not that long ago, seems bizarre at a time when people are living for longer. We have to prepare for that.
The Minister, Deputy Burton, has made a good start. I know she has annoyed some of my colleagues on the opposite side. As part of the package they seek, there has to be some onus on those who leave the family unit to make a contribution afterwards. The burden should not always fall on the taxpayer. Do we have the numbers in this regard? How good are we at securing attachments to the earnings of those - typically men - who depart the family home and renege on their responsibilities to their spouses and children? They have to be part of the solution as well.
Ní chuirfidh mé aon mhoill ar an díospóireacht seo. Ceapaim go bhfuil an reachtaíocht seo á bhrú tríd i bhfad ró-thapaidh. Níl ciall nó réasún leis an bealach ina bhfuil an sceideal le haghaidh an Bhille tábhachtach seo á eagrú. I note that the timing for the amendments to this Bill is absolutely ridiculous. It is a disgraceful way to put through an important piece of legislation that will have a massive impact on people across the country.
In her speech, the Minister, Deputy Burton, mentioned a couple of the Government's aims, one of which is "empowering and enabling people to participate in work". She also said we "have to ensure the neediest in society are protected". I find it astounding that the Government, Fine Gael and the Labour Party are targeting lone parents for such savage cuts. This is disgraceful and I call on all Members not to support those sections of the Bill.
Many in this Chamber are parents and I remind them that all parents are just "one step away from being a lone parent", something everyone should take into consideration. I did not come up with this phrase; it came from a lone parent in one of the organisations that lobbied against the changes proposed in the Bill. I have great respect for Senator Healy Eames, but I found her contribution quite patronising towards lone parents when she spoke about the dependency mentality and suggested that lone parents need mentoring. I know quite a lot of lone parents. They work very hard for themselves and their children. They are very industrious, clever and try their best to improve through education. They make their money stretch as far as possible and would be fantastic at running most businesses. They would probably do a great job as Ministers for Finance because they are so clever and frugal with the money they have. To say they are in need of mentoring is incredibly patronising.
The Senator drew a comparison between the situation of lone parents and her own. She said that at times her husband appears like a lone parent at home. However, there is a substantial difference. He may be at home carrying out the parenting responsibilities, which is laudable, but there are two incomes going into that family, with a fairly handsome income coming from her job in the Seanad. The major difference between her situation and that of lone parents is that lone parents have only one income and are very much dependent on the payments they get. It is appalling that the Government would choose to target them in this Bill and I call on all Members not to support section 4. We must take the elephant in the room - unemployment - into consideration. We hear about how much is being spent by the Department of Social Protection. I agree there is a huge amount being spent, but the main reason for that is we are spending so much on people who are unemployed. This is because the Government has not made a major impact on unemployment.
I would like to note the changed tune of the Labour Party. Less than two years ago, the Fianna Fáíl Government dropped the cut-off age for lone parent payments to 14 years and along with Sinn Féin, the Labour Party objected to this move on the grounds that the necessary supports and services were not in place. That has not changed. I also note that at its recent conference, the Labour Party was called on to refrain from imposing any further cuts on benefits for lone parent families that would create further barriers to accessing work and education opportunities. Therefore, I cannot understand how Labour Party Members can come into the Chamber and support section 4 of this Bill. They must oppose it. I am not trying to play party politics on this; I am quite serious. It is essential we rethink this.
As Senator Power mentioned, there was very little consultation with the lone parent advocacy groups . Frances Byrne, director of OPEN said:
There is a huge fear among lone parents that the changes being proposed to stop the One Parent Family Payment when children reach the age of seven will make it increasingly difficult for parents to meet the costs of raising a family alone. The majority of lone parents are already in work or want to work but the ongoing lack of supports such as reliable and affordable childcare and afterschool care present impossible challenges, as the government cannot address this by 2015. Removing the One Parent Family Payment and moving parents to Job Seekers Allowance without addressing the absence of appropriate supports will inevitably push more families into poverty and welfare dependency.
Not only is this unfair to those lone parents, but it will also force many of them already working, paying taxes and contributing to the Government's coffers back onto social welfare payments full time. It makes no sense.
We also have to put this into context with the other budgetary cuts that affect lone parents. There has been a reduction in the income disregard, a reduction in the entitlement age, CE schemes are effectively closed to lone parents, university contributions were increased and grants were cut, back to school clothing and footwear allowance have been reduced by €50, school transport contributions have increased, the household charge applies to lone parents who own homes, the fuel allowance has been reduced by six weeks, child care subvention rates to community crèches have been cut by 5%, the JobsBridge programme is not open to lone parents, and single parents must now pay €25 a week towards child care when participating in FÁS and similar courses, etc. These all impact on lone parents and we cannot look at this move in isolation. The Minister spoke about pathways to employment, but section 4 is a pathway to unemployment.
Sinn Féin intends to raise other measures in the Bill on Committee Stage. The change with regard to calculating jobseeker's payments by moving from a six to a five-day week does not make sense and the examples given so far in this debate show that. We should move to a situation where the number of hours per week somebody works should be taken into consideration. We will also have some points to make with regard to the pensions scenario.
I call on all Senators not to vote in favour of section 4 of this Bill. It is unfair, inequitable and wrong. It is not fair that the Government and the parties involved are focusing on lone parents with this punitive treatment.
I am glad to have the opportunity to speak on this social welfare legislation. Such legislation appears annually and we sometimes have two social welfare Bills per annum and they give rise to interesting debates. However, we debate social welfare and proposed changes in the aftermath of a budget or of the publication of a Bill and at that stage it is probably too late for any significant changes. I hope the Minister will take on board the suggestion that each year, well in advance of the budget - perhaps in September or October - we should organise debates on social welfare where the anomalies can be addressed and where various interest groups can have their concerns dealt with here in the House rather than at various committee meetings. A Department responsible for the spending of almost €21 billion must engage as fully as possible not just with the stakeholders, but with the broader public on how that money can be best spent. The social welfare budget is approximately 40% of the entire government budget. The major part of that spend is necessary, but we must consider how it can be better spent, how the schemes can be amended and what changes can be introduced. That debate must be ongoing rather than taking place only once or twice per annum when we have these kinds of set piece occasions when the decisions are already made. I hope the Minister will try to encourage greater and deeper debate on social welfare policy and spending throughout the year so that in advance of the budget the various political parties and lobby groups can get their proposals on the table.
The €20 billion plus being spent is necessary, but we must focus on how we can spend as much of that money as possible in supporting work and encouraging people to get back to work. I and many colleagues have often made the point that all Departments, no matter which, must try to ensure their budget moneys are used to create employment. Much of the money in the Department of Social Protection can be used to trigger, support and create employment. Schemes such as back to education schemes and the family income supplement play a role in both the education and job creation areas and we should focus on those.
I was not here for most of the debate this morning as I had other meetings, but I heard and watched some of the debate on the monitor. Much of the discussions has focused on section 4 and the proposals relating to lone parents. I look forward to the Minister's response on that. I am sure, having watched some of the Dáil debate, the Minister will remind us of what applies in other jurisdictions. We do not stand alone isolated from the world.
We must look at best practice and see how other countries are using similar schemes to support people from an income perspective. Even more importantly, we must examine how they support people to ensure that their future is not just one of social welfare and social income but hopefully entails their return to the jobs market and to a more independent type of living. My understanding is that most of our near neighbours have measures in place in respect of lone parent payments that are much closer to what the Minister is proposing to do than what we currently have in place. Her proposed changes would put us in the norm from a European perspective. I concede, of course, that child care provision is much greater in most other countries, and we must move in that direction.
The Minister must get credit for her willingness to reflect on the Bill at the time of its publication and for then seeing that further amendment was required. She has said that she will demand of the Government that additional supports be put in place for child care in the next budget. I look forward to the progress on that. When it is made, the changes the Minister hopes to introduce will be reasonable. We must try to live in the land of fiscal and political reality. I would wish dearly that the available funding was higher but the money is not there. We have yet to design a money-growing tree and I do not think it will happen this year. We have to make the most of what we have and use it as best we can. Unemployment support and pension support is very necessary but if the focus of this debate is to be on the lone parent sections - it is a topic worthy of debate - we have to try to see beyond what we have been doing over the past 20 or 30 years.
From a minimal financial perspective, we have been genuinely supportive of lone parents. However, if our only aspiration for lone parents is to provide them with a sufficient living income and hope that they will remain politically silent, that is not good enough. We have to aim higher, and part of that is to ensure that the majority of lone parents are given an opportunity by way of child care and alternative schemes to get back to work and to see a future beyond welfare in the workplace. That debate is only beginning and it must be substantial. We will come back to this on Committee Stage. I look forward to what my colleagues have to say. It is interesting and that is why I would like to have this debate in October or November in advance of the crisis, rather than as part of post-crisis talks.
I support this Bill. I support what the Minister is doing. She is a thinking Minister who is willing to be flexible and who is trying to spend our limited resources in a constructive and proactive fashion.
-----and to the way programme for Government commitments on guillotines are being completely ignored. This Government is surpassing the previous Government for using the guillotine. It is time its Members stood up to Ministers and told them to abolish guillotine, since that is what they promised.
Why is the Seanad always able to sit on a Friday when we are shafting people and when we are trying to attack the most vulnerable people in society? Why can we not sit 24 hours a day, seven days a week to pass debt relief legislation for vulnerable people? We cannot do so as the proposed legislation keeps getting postponed, yet the door is always open if we are to make cuts, no matter what government is in power. The doors will be open seven days a week if we are going to hurt people but if we make any improvements to people's lives, the Civil Service, the troika and the advisers on €150,000 per year all tell us it cannot be done. It can always be done on a Friday if it affects the poor and the vulnerable and the people who are least able to represent themselves in society.
We have been told time after time that we are getting Scandinavian child care. Perhaps that is where the Minister is this morning. Is she in------
Where is this in the troika agreement? It is nowhere to be seen. This is a deliberate policy choice of the Labour Party and the Fine Gael Party and it is coming into effect next Thursday. Somebody who becomes a single parent after next Thursday is subject to the provisions of this Bill and will have not Scandinavian child care available. Let us stop talking about Scandinavian child care and the undertakings that the Minister has given because they do not apply to anybody who becomes a single parent from next week. The Minister is talking about a crisis next December. There will be a crisis next week for many people in vulnerable positions.
The change for people on mortgage interest supplement would have some merit if we were forcing the banks to do some of the heavy lifting but we are not forcing the banks to act. We are sending vulnerable people to negotiate with them and then go back to a social welfare office to see if they have done enough to quality for mortgage interest supplement. Again we are targeting the most vulnerable-----
The point is that they are forced to negotiate with the banks by themselves with no strong arm, no help and no legislation backing them up, with bank managers asking why they have Sky Sports instead of Sky Movies and why they are getting Kellog's corn flakes instead of Aldi corn flakes. These are the questions being asked in banks.
Where is the Keane report? We had a report in October 2010 and the Keane report last year. We were assured all this was happening but it is now being ignored and are sending these people back to the banks following which they then have to satisfy a social welfare inspector that they negotiated some deal with the banks.
These two provisions deserve a much more serious debate than that allowed in the Dáil and the Seanad. There is so much more to the Bill. Private pensions are being dealt with but there is no time to talk about that issue. It is a time-bomb for the future and it should be the subject of separate legislation.
I look forward to the return of the Minister and to a good debate on Committee Stage but if the Government parties were in opposition they would be utterly opposed to this. They must be opposed to it in their heart of hearts. Nobody is forcing them to be in favour of it. The Minister and her Cabinet colleagues are forcing their hand but it is about time they stood up and asked why we are so quick to hurt the poor and the most vulnerable in society. Why do not we not open the doors on a Sunday night to pass legislation on mortgage relief for people in debt? I would be here for that but apparently it cannot be done.
I would like to reiterate all that has been said on section 4, especially the comments made by Senator van Turnhout, particularly given her own professional background. We should withdrawn section 4 until such time as the Minister's commitments come into force. Otherwise, this is going to affect lone parents from next week. That is putting it at its most simple. When the next monitoring report of the troika comes out in a few months all of the indicators and commentary will be about the low-hanging fruit - that awful term - in terms of the taxes and reductions that the Government has imposed in order to bridge the deficit. We are now entering into a much more serious period. Therefore, it seems that the much vaunted commitment of the Minister to introduce adequate child care provisions in advance is not going to happen because the Government will be faced with a much more difficult situation after July than it has faced up to now. Why then is the Minister of State pulling the wool over people's eyes by suggesting that these measures can be alleviated by bringing in proper child care? I do not believe that is going to happen.
Margaret Dromey, the CEO of Treoir, the national federation of services for unmarried parents and their children, has stated:
In the absence of vital support services such as child care, training, flexible working hours being in place, this legislation will have a disastrous effect on many one parent families. It just won't work. The supports must be in place before the age limit is reduced to 7.
They are saying it, not us. If the people at the coalface are saying it they should be listened to, even if the Minister does not want to listen to the political opposition.
I also want to mention the proposals in section 7 with regard to cuts and disqualifications from payments under the community employment scheme. Following a furore in the early part of this year about reductions and restrictions on CE services, the Minister promised that she would institute a review, which was to be finished by the end of March. It is now nearly May and we still have not seen the review. Could the Minister of State tell us when the review will be done? In the meantime, will he ensure the uncertainty with regard to CE schemes across the country, but particularly in rural Ireland, is removed? Even within the context of the massive reduction in the CE budget, could he at least provide some certainty? That budget has been reduced from €360 million to €315 million this year. In order to keep the schemes going as they are currently structured, money will have to be found elsewhere in the Department's budget. This is a serious question about CE schemes that the Minister must answer. This affects every Member of the House on all sides, from the Minister of State downwards. The Minister of State will know that in rural Ireland, including in his own constituency - mine is Sligo-North Leitrim - the CE schemes are a vital component of the social fabric. I have no doubt the Minister of State will be working hard to ensure the CE schemes are maintained in their present infrastructure.
First, there is a series of misnomers. We talk about social welfare, but I do not see much welfare around this country. Welfare means well-being, but there is a dearth of a sense of well-being among people. The Minister for Social Protection has not protected people. She has fought a battle - I give her that - and she gave an undertaking, but the undertaking has been overtaken by the passage of this Bill. It makes nonsense of it, and that is the reason I will be voting against section 4. I do not care if the vote takes place on Sunday night; I will come back from Laois, where I am talking about the closing of a hospital, specifically to vote on this Bill, as I came back from Tibet in order to vote in the abortion referendum.
While I am at it, I must say it is a disgrace that there was no Order of Business today. We should always have an Order of Business. I wanted the opportunity to put on record the fact that it is outrageous that the Vatican attempted to silence Fr. Brian D'Arcy. It was also outrageous to silence Fr. Seán Fagan. That is another misnomer - Christianity. Where is that gone? He is a man who held out his hand to unfortunate women who had abortions and felt they were going to hell. I want to take this opportunity, illegal though it may be, to utterly condemn that.
Senator Mooney has stolen my thunder, because I was going to read out exactly the same paragraph.
No, the important thing is that it is put on the record. It does not matter who says it. The jobseeker's allowance disregard is based on days worked and not worked, which is wrong, as there is a critical shortage of job opportunities.
I am dealing with somebody who has just come back from America, where he was living as an illegal alien. He has three children of his own with his partner, and has adopted his partner's child from a previous relationship. The grilling he has been put through by social welfare officials is unbelievable. They want proof that he was an illegal immigrant, and they want him to go to the American Embassy to obtain this. The American Embassy will not do this. He has given them his birth certificate, his airline receipts, his marriage certificate - the whole works. He has given them every detail but there is an obstruction. I hope and believe that all Members from every party, including both groups of Independents, are on the Department's tail, because deliberate obstruction of the payment of social welfare benefits is rampant throughout the country. People are being held in queues and are not receiving the benefits they have applied for. This man in particular is living on the charity of his brother, which is outrageous.
I do not want to criticise people directly, but there was a man on the radio this morning who has eight children and wants a bigger house because he wants more children. I do not agree with the idea that having children is some kind of human right. When I did my leaving certificate there were 3 billion people on the planet; now there are 7 billion, and there will be 9 billion before I am in my box. It is a sensitive issue. There was a tragic case in which a young boy was seriously injured in an accident when his mother was driving the car. She did not have insurance or a driving licence, and she caused the accident, but the boy was awarded €11.5 million. That is paid by the taxpayer. The child must be looked after properly, and the hospitals must be paid, but I wonder. Maybe this money is absolutely necessary to keep this child in a proper condition.
A number of people have mentioned lone parents. This category has certainly been targeted in the budget. Let us consider some of the changes that have affected those in receipt of one-parent family payment: a reduction in the income disregard from €146.50 to €130, a reduction in the cut-off age of the youngest child to seven years, and the stopping of CE scheme payments. They are also affected by changes such as the new household charge. Lone parents need that money so they can look after their children. It is disingenuous for the Minister to say she will examine the area of child care and at the same time provide in this Bill for a reduction in the age limit for one-parent family payment to seven. If the Minister was so minded, she could have removed that provision. Let us remember that the Labour Party opposed the move by Fianna Fáil to reduce the eligibility limit from age 18 to age 14.
The Labour Party opposed that at the time but now it is to reduce the age limit to seven years. It is wrong.
I refer the House to a number of submissions made by the Irish National Organisation of the Unemployed. It is particularly concerned about a proposed new section of the Bill, section 8(12), which deals with mortgage interest supplement, and is seeking for this amendment to be removed. It is also concerned about the section that deals with entitlements for social welfare recipients with regard to jobseeker's benefit. It has a concern about the effect of cuts in entitlements on people's ability to return to work.
There is some mention of pensions in the Bill. One of the things the Government should consider is what happened at Waterford Crystal, where hundreds of workers were left without any pension entitlements whatsoever because this and previous Governments failed to implement an EU directive that forces pension companies to take out a bond to protect workers so that if their pension schemes go belly-up, which many have done, or if a company closes and therefore does not have new workers paying into the scheme, workers are not left high and dry without any pension. The aim of the directive was to ensure pension companies would take out insurance so that workers were guaranteed at least 60% of their pensions. Why is the Government not implementing that directive? Why do the former workers of Waterford Crystal need to take the Government to the Commercial Court to force it to do the right thing? Something like this may happen again. When it happened in Waterford Crystal, many workers were left high and dry. It is high time the Government implemented the directive to safeguard the pension entitlements of working people so that what happened to the Waterford Crystal workers, which was disgraceful, does not happen to others. The implementation of the directive is in the Government's hands.
I thank all Senators who have contributed to this debate, especially those Senators who have given their support to many of the measures contained in it. I have listened carefully since I came here two hours ago. We are dealing with a huge budget of €20 billion, but in challenging times it is hard to accommodate all needs. I have listened carefully to what was said by those who spoke on the provisions contained in the Bill and other social protection issues. I appreciate the depth of feeling and sincerity of those who have criticised the measures being proposed. However, these measures are driven by budget 2012 and the need to reduce overall social welfare expenditure. They are also driven by the need to make the social welfare system better by encouraging people to move closer to the world of work and away from long-term social welfare dependency.
I will now respond to some of the points raised in the debate. It is acknowledged that lone parents and their children experience higher rates of consistent poverty than the general population. The rates of consistent poverty experienced by lone parents have remained at high levels, despite more than €1 billion being spent annually on the one-parent family payment and other supports. This also indicates that the long-term income support provided by the one-parent family payment without any requirement for the lone parent to engage in employment, education or training was not effective in addressing the poverty and social exclusion experienced by some of these families.
Social welfare is a hand up, not a hand-out. A key objective of the Government is the activation of people of working age in receipt of income support, including lone parents. This is reflected in the development of the national employment and entitlement service with a move from passive income support to active engagement with social welfare customers of working age. This involves the identification of customer needs and the provision of co-ordinated support to support them into education, training and employment.
Reform of the one-parent family payment and the activation policy in relation to lone parents of working age pose challenges. These challenges will require a whole of government response with regard to the provision of appropriate education, training and employment supports, as well as the provision of child care supports that all job-seeking parents will require, especially after-school care.
When the youngest child of a lone parent reaches the age of seven years, if the parent is still in need of income support, he or she can apply for jobseeker's allowance which is paid at the same basic rate as the one-parent family payment and receive the activation support attached to that payment. Lone parents will then be profiled and have their individual needs assessed. This will facilitate the agreement of a progression plan with these customers, the development of their case management to assist them either to improve on existing skills or learn new ones and their gradual move towards entry into the labour force. Before leaving the one-parent family payment a lone parent may also apply for the back to education allowance, back to work experience allowance or, if they are in employment for more than 19 hours a week, family income supplement.
Ireland's policy on lone parents is not out of step with the welfare approach of other countries. The changes to the one-parent family payment bring Ireland's support for lone parents more into line with international provisions, where there is a general movement away from long-term and passive income support. In the United Kingdom lone parents are obliged to seek work when their youngest child reaches the age of seven years. This applies in Northern Ireland where it is supported by Sinn Féin members of the Executive, although Sinn Féin Members of the Oireachtas lecture us on the matter. In the United Kingdom there is a work obligation where the youngest child reaches the age of seven years and lone parents whose youngest child is aged 12 years or under have the right to restrict the hours they are available to work when claiming jobseeker's allowance. They are not expected to work outside the child's normal school hours. If they are in employment, lone parents must be working 16 hours or more a week in order to claim a child care tax credit. The maximum help available varies. It is, for example, £140 a week for one child in registered child care. That is the situation in Northern Ireland which Sinn Féin supports and where it is part of the Executive. It has one policy here and another in Northern Ireland.
It is a fact that in Northern Ireland Sinn Féin supports this measure in the Executive. In the Netherlands, Australia and New Zealand there is a work obligation when the youngest child reaches the age of five years. In Finland there is a work obligation when the youngest child reaches the age of four years. In Germany, Italy, Sweden and Norway there is a work obligation when the youngest child reaches the age of three years. It is recognised that different levels of non-income support, for example, child care, are available in these countries, but it is important to highlight this information and I am glad Senator David Cullinane is present to hear it.
This is straight talking.
I would like to clarify some elements of the voluntary contribution provisions. The total number of participants is 3,000, while the number of new applicants during 2011 was 1,720. Some 62% of voluntary contributors are male, while 38% are female. The voluntary contribution schemes applies both to former self-employed and former employed persons - 25% are former employed contributors, while 75% are former self-employed contributors. It is estimated that 100 cases annually will be affected by the change to be introduced in 2013, with a further 100 cases affected annually from 2014 onwards. The changes in the requirements to become a voluntary contributor do not affect existing voluntary contributors who are availing of the scheme. The people who avail of this option to become voluntary contributors include retired employees not in receipt of social welfare credits, persons working abroad no longer subject to Irish social insurance and self-employed contributors who have ceased self-employment or do not have a PRSI liability because they fail to meet the income threshold of €5,000 to pay class S PRSI contributions. There is a flat rate contribution for such voluntary contributors of €253 per annum. The principal purpose of the change to the scheme is to align with the change in the contributory State pension scheme which, from April, requires a minimum of 520 paid PRSI contributions for qualification purposes. These changes will not affect those currently in receipt of contributory State pension.
Senators referred to the need to control social welfare fraud which undermines public confidence in the entire system, as well as being unfair to other recipients of social welfare payments, businesses run on a legitimate basis and taxpayers. The Government is very conscious of the need to protect public money and determined to ensure abuse of the system is prevented and dealt with effectively when detected. A number of important fraud control measures are being provided for in the Bill. While social welfare inspectors have a range of existing powers of inquiry, it does not include a specific power of inquiry at ports and airports. New measures will allow them to make inquiries at ports and airports where they believe or are aware an offence has been or is being committed by individuals, that is, where they have a reasonable suspicion or evidence that an individual is entering the jurisdiction solely for the purpose of continuing to claim social welfare payments to which he or she is not entitled.
With regard to the rent supplement scheme, there will be new measures to strengthen the powers of social welfare inspectors to make inquiries of landlords for rent supplement purposes. While there are existing powers that allow for the general investigation of rent supplement claimants, they do not include a specific power of inquiry of a landlord of a premises where a rent supplement is being paid to ensure the supplement is being correctly paid. This provision introduces new powers for social welfare inspectors and community welfare officers to make inquiries of landlords where a rent supplement is being paid. There are almost 95,000 rent supplement recipients, with a provisional expenditure outturn of €503 million in 2011. The estimate for 2012 is €437 million. In the case of new claims for social welfare payments, the existing legislation is being amended to make it a condition that a claimant's identity be appropriately authenticated. This provision allows for a photograph and electronic signature to taken, retained and reproduced. In the case of an application for and the allocation of a personal public service number and public services card, provision is being made to ensure a person's identity will be appropriately authenticated. This provision also allows for a photograph and electronic signature to be taken, retained and reproduced. As well as combating identity fraud, the public services card will, in time, replace the cards currently in use such as the social services card and the free travel card with a highly secure card.
As regards jobseeker's benefit, the proposed measure will not impact on a person whose sole income comes from social welfare; the headline rate of €188 a week for a single person is unaffected if the person does not have additional income from employment for days worked. It will only apply to those who have earned additional income from working some days during the week. The effect of the measure will be to reduce the contribution from jobseeker's benefit in the weekly amount of total income, welfare and wages combined, and work towards a reduction in reliance on the welfare system among those who avail of the mix of welfare and earned income. It is proposed to base jobseeker's benefit on a five-day as opposed to a six-day week, as is currently the case. This effectively means that all casual and part-time workers will have the same method of calculation of the payment as currently applies to short-time workers. If the employer of a person who has normally worked full-time reduces the number of days worked on a permanent basis, the person concerned may receive jobseeker's benefit for the days he or she does not work. For each day a person is unemployed, one sixth of the normal rate of jobseeker's benefit is currently payable. For example, if a person works part time for two days, he or she can claim four sixths of the normal jobseeker's benefit payment. As a result of the change provided for in the Bill, from July, for each day a person is unemployed, one fifth of the normal rate of jobseeker's benefit will be payable. For example, where a person works part time for two days, he or she will be able to claim three fifths of the normal jobseeker's benefit payment. An estimated 18,000 in receipt of jobseeker's benefit will be affected in a full year. It is important to note that recipients of the benefit may opt for jobseeker's allowance which is subject to a means test.
The purpose of mortgage interest supplement is to provide short-term income support for eligible persons who are unable to meet their mortgage interest repayments on a house which is their sole place of residence. The supplement assists with the interest portion of the mortgage repayment only; the capital element of the repayment is not taken into account in calculating the amount of supplement payable. Approximately 18,200 are in receipt of mortgage interest supplement, an increase of 360% since 2007. Expenditure of €50.8 million has been provided for in the year ending 31 December 2012. Budget 2012 provides for the curtailment of access to mortgage interest supplement for the first 12 months where a person is involved in the mortgage arrears resolution process, as set out in the code of conduct in dealing with mortgage arrears applied to mortgage lenders.
The Seanad Divided:
For the motion: 25 (Ivana Bacik, Sean Barrett, Paul Bradford, Terry Brennan, Colm Burke, Paul Coghlan, Michael Comiskey, Martin Conway, Maurice Cummins, Jim D'Arcy, John Gilroy, Jimmy Harte, Fidelma Healy Eames, Imelda Henry, Lorraine Higgins, Caít Keane, Denis Landy, Marie Maloney, Mary Moran, Michael Mullins, Catherine Noone, Susan O'Keeffe, Feargal Quinn, Tom Shehan, John Whelan)
Against the motion: 14 (Thomas Byrne, David Cullinane, Paschal Mooney, David Norris, Trevor Ó Clochartaigh, Darragh O'Brien, Mary Ann O'Brien, Marie Louise O'Donnell, Denis O'Donovan, Ned O'Sullivan, Averil Power, Kathryn Reilly, Jillian van Turnhout, Katherine Zappone)
Tellers: Tá, Senators Paul Coghlan and Susan O'Keeffe; Níl, Senators Paschal Mooney and Ned O'Sullivan.
Question declared carried.