Wednesday, 25 November 2015
Social Welfare and Pensions Bill 2015: Second Stage
I am delighted to be back in the Seanad. Last month the Government announced a responsible, balanced and pro-employment budget. The social welfare package included in the budget was carefully designed to ensure a number of core groups would benefit. They include pensioners; families with children, including lone parents; carers, and people with disabilities. The budget was prepared in the context of the country moving in the right direction, with living standards gradually being raised in every home.
My Department has carried out a social impact assessment of the main tax and social welfare measures included in budget 2016. This assessment was based on the tax and welfare micro-simulation model, SWITCH, which had been developed by the ESRI. Social impact assessment is an evidence-based methodology which is used to estimate the likely effects of policies on household incomes, families, poverty and incentives to take up employment. The assessment found that average household incomes would increase by 1.6% or €14.30 per week as a result of budget 2016. Importantly, there are higher than average gains for the bottom two quintiles, the lowest income households in society, while the smallest gain is for those in the top quintile.The biggest beneficiaries are lone parents, dual and non-earning couples with children, with an average gain of 2%. Non-earning lone parents and single earning couples with children fare above average, gaining around 1.8%. I should emphasise that child benefit expenditure, although universal, favours lower income households. Budget 2016, therefore, will deliver considerably bigger gains for the poorest households.
I refer to the State pension and the Christmas bonus. Throughout the worst of the crisis, the Government protected the State pension. I am particularly pleased that the Bill provides for an increase of €3 a week for pensioners and carers aged 66 years and over. It is small, but it is important to indicate that circumstances are getting better. There is also an increase of €2 a week for adult dependants aged under 66 years and an increase of €2.70 for adult dependants aged 66 or over. This will benefit 583,000 pensioners and more than 93,000 qualified adults and is the first weekly rate increase for pensioners since 2009. That is important because they have been without an improvement in weekly income for quite a long time. There has been a significant welcome from pensioners for the fact that we are able to increase payment rates. This is all part of our approach of properly assisting the different groups in society, most particularly those who are less well off and vulnerable. Pensioners asked us to maintain the free travel scheme and we have done so. The budget added €3 million in additional funding to the scheme, making a total of €80 million in 2016. Pensioners value their free travel.
On Monday the Ministers for Social Protection and Public Expenditure and Reform signed the regulations for the payment of a 75% Christmas bonus which will benefit older people, carers, people with disabilities, long-term jobseekers and lone parents at a financially stressful time of the year. We hope the first payments will be made in the first week of December. This will mean a bonus payment of €141 for a single person on disability allowance, while a pensioner couple, both of whom are in receipt of the non-contributory State pension will receive a bonus payment of €328.50. Some 1.23 million people will receive the Christmas bonus in the first week of December and we make absolutely no apologies for paying it. Our focus is on ensuring we can improve circumstances for every person, not just a few. Importantly, the bonus is spent in the local economy in businesses and stores, providing a stimulus for communities across the country.
When the Government took office, there were grave fears that the numbers unemployed would exceed 500,000. The deficit in the Social Insurance Fund was heading towards €2 billion and unemployment would eventually peak at 15.1%. It is currently 8.9%. Therefore, we now have an unemployment rate under 9% for the first time since December 2008. Employment increased by 56,000 in the past 12 months, which means that more than 1,000 people are returning to work every week. There has been an increase of 59,400 in full-time employment in the past year, with a corresponding fall of 3,400 in part-time work. This means that more than 1,100 people are returning to full-time employment every week. It is welcome that people are securing full-time employment rather than being under-employed or in part-time work. This is making a significant difference not only to the people concerned but also to their families. There are still, however, too many people unemployed, but it is clear that unemployment is falling rapidly, thanks to the sustained focus of the Government on restoring the economy to growth and helping people back to work. The Government has ensured there has been a focus on a jobs-led recovery.
As a result of people returning to work in high volumes and more employers being able to reward employees with pay increases, the Social Insurance Fund has been transformed. The 2016 budget estimate provides for Social Insurance Fund income to increase to almost €8.9 billion in 2016, with expenditure estimated at €8.67 billion. This means that there will be a projected surplus of €216 million in the fund, the first such surplus since 2007. If we can continue to increase the surplus, those who have contributed to their pensions can be confident that they will receive their pensions and that we will be able to improve them as time passes. The certainty that pension levels will be maintained with the possibility of increases is significantly important, especially to older people.
The increase in the minimum wage to €9.15 an hour from next January is a hugely important measure for low paid workers. We made a pledge earlier this year that if we increased the minimum wage, we would address PRSI "step-effects" arising from such an increase and we are doing so in the Bill. The measures will reduce the weekly PRSI bill for more than 88,000 employees and ensure the benefit of a national minimum wage increase will be felt by all those in receipt of it. This is, of course, in addition to the gains from the USC changes announced on budget day. This is the second time the national minimum wage has been increased under the Government and while there is a still a distance to go, the increases have been welcomed.
The legislation provides for a €5 increase in the rate of child benefit, making it the second budget in a row in which child benefit has been increased. This will bring the monthly rate from €135 to €140 per child, with effect from 1 January 2016. Child benefit is a crucial support for families, in particular, low and middle income families, through difficult times. A total of 623,000 families and almost 1.2 million children will benefit from the increase.
The introduction of a paternity benefit scheme to take effect from next September was also announced in the budget. The family income supplement income threshold is also being increased by €5 a week for each of the first two children from next January. This will mean an additional €3 or €6 a week for in excess of 59,000 low income working families with a total of more than 131,000 children.
The Minister will shortly make regulations to provide for an increase in the earnings disregard for jobseeker's transition payment, from €60 to €90 per week. The improved disregard will apply to existing and new recipients from next January. All earnings above €90 will be assessed at a rate of 50% from January; they are currently assessed at a rate of 60%.
Funding for the school meals programme will increase by €3 million next year to €42 million. The programme currently benefits 217,000 children in more than 1,700 schools and other organisations. The allocation of an additional €3 million in 2016 will be used to provide breakfast for an additional 27,800 pupils or lunch or a light meal for almost 12,000 additional pupils.
As is very clear from the figures I gave, the strong economic recovery we can see around us is, above all, jobs-led. That is crucial because secure and fairly paid work remains the best protection against poverty. The budget is, therefore, pro-work. Our aim is to move towards a full employment society, with work for everyone who needs and wants a job. In the budget increases of €2.50 a week were also announced in the top-up payments for jobseekers availing of the community employment scheme, the rural social scheme, Gateway, job initiatives and other such schemes. Earlier this year we introduced a new incentive called the back-to-work family dividend which helps jobseekers with families to return to work. This dividend provides an incentive of €1,550 per child in the first year of employment or self-employment and half that amount in the second year.There are currently over 9,500 families and 15,000 children benefitting from the dividend. This measure, when taken together with the employer incentives such as JobsPlus, will ensure that long-term jobseekers also benefit from the strong recovery in the labour market.
Apart from the rate increases I have already mentioned, the fuel allowance is being increased by €2.50 per week to €22.50 for the duration of the fuel season. This is another targeted measure and will benefit almost 381,000 households. The name of the respite care grant scheme is being changed to the carer's support grant. In light of the hugely important role carers play in our society, I am particularly pleased to announce that the rate of the grant is to be increased by €325 to €1,700 from 1 June 2016. It will be payable to around 86,000 carers next year. In another improvement, carer's allowance will now be paid for 12 weeks after the death of the person being cared for, instead of the current duration of six weeks. I thank the carers' organisations which made that proposal during the course of our pre-budget discussions.
I will now turn to the specific measures in the Bill. Section 1 provides for the Short Title, its construction and collective citation with the Social Welfare Acts and the Pensions Acts. Section 2 provides for the definition of certain common terms used in Part 2. Section 3 provides for an increase in the rate of State pension, contributory, and, in respect of persons who are 66 years or older, increases in the rates of the following schemes: widow's, widower's and surviving civil partner's contributory pension, death benefit and disablement pension. It also provides for increases in rates for qualified adults.
Section 4 and Schedule 1 provide for an increase in the personal and qualified adult rates of State pension, non-contributory. It also provides for an increase in the rate of carer's allowance for recipients who are 66 years or older. Section 5 and Schedule 2 provide for the renaming of the respite care grant to carer's support grant. Many have welcomed this because it recognises what that grant does. Section 6 provides for an increase of €325 to the carer's support grant, from €1,375 to €1,700. Section 7 provides for an increase in the monthly rate of child benefit, from €135 to €140. Section 8 provides for an increase of €5 per week in the family income supplement, FIS, earnings threshold for families with one child and €10 per week in the thresholds for families with two or more children. This measure comes into operation on 7 January 2016. Section 9 provides for the period in which carer's allowance is payable following the death of the person being cared for, to be extended to a period of 12 weeks. Section 10 provides for two changes in pay-related social insurance, PRSI. A new tapered PRSI credit is being introduced for employees insured at class A whose earnings are between €352.01 and €424 per week. The upper threshold at which the lower 7.8% class A rate of employer PRSI applies is being increased from €356 to €376 per week. These measures take effect from 1 January 2016.
As we are all aware, earlier this year we saw the historic result of the marriage equality referendum. The subsequent legislation, the Marriage Act 2015, was enacted on 29 October. Sections 11 to 18, inclusive, provide for amendments to the Social Welfare Consolidation Act 2005 in light of the enactment of that Act. Section 19 provides for the inclusion of registered nurses within the definition of medical assessor in the Social Welfare Consolidation Act. These nurses will be employees of the Department. Section 20 provides for the inclusion of credit unions providing personal micro credit loans among the specified bodies for the purposes of the household budgeting scheme. Sections 21 to 25, inclusive, provide for amendments of the Pensions Act 1990 to enable the Financial Services Ombudsman to carry out the role, duties and functions of the Pensions Ombudsman in light of the intended merging of those two offices.
The significant social welfare package in this year's budget consists of diverse and complementary elements. These include the Christmas bonus as well as improvements in a range of payments, benefitting in particular pensioners and retired people, people on disability allowance, carers, families with children and families at work, who have children and are on low incomes. These positive developments have been made possible by all the taxpayers, workers and employers in the country who pay PRSI.
The fact that so many more businesses and individual workers are getting back to work has been the catalyst that has enabled us to provide for the improvements and changes we have made in the budget and this Bill. We are always very conscious of our responsibility to ensure that every cent of employee and employer PRSI contributions is used effectively and efficiently. We are focused on making sure that all social protection monies go to those for whom they are intended, that they get the payments they are entitled to and that the special investigations unit, inspectors and departmental staff will do their best to ensure that nobody can defraud the social welfare system or take money that rightly should go to persons who require it most.
Over the recent very difficult and challenging years, our social welfare system has continued to play an essential role safeguarding the most vulnerable in our society. We protected that very strong system through the worst of times. We are now strengthening and improving it in these better times. The social protection measures contained in budget 2016 and in this Bill are built on the foundations of the recovery. These measures are targeted at securing improvements in living standards and creating greater opportunities for every person, every family and every community. I commend the Bill to the House.
One has to welcome in principle any increases in social welfare but they have to be put in context. We believe that the measures contained in this Bill fall far short of what is required to ensure that low income and vulnerable households are protected from poverty and social exclusion. The small-scale measures contained in the Bill are not sufficient to offset the regressive budgets introduced by this Fine Gael-Labour Government since it took office in 2011. The Government has been responsible for 40 deep and wide-ranging cuts, the effects of which will be felt by households throughout the country next year: cuts to the household benefits package and fuel allowance; abolition of the telephone allowance and the bereavement grant; reductions in jobseeker's benefit and child benefit, which is still not back to its original level; reductions in the back-to-school clothing and footwear allowance and punitive changes to the eligibility criteria for the one-parent family payment. These are the hallmarks of the two-tier recovery overseen by this Government. It has also failed to address the issue of rent supplement. The gap between market rents and rent supplement ceilings is widening at an alarming rate and the Government has completely ignored this.
The Social Welfare Bill 2015 only underscores a lack of commitment to the less well off in society in the Government's pursuit of an agenda that punishes the vulnerable and rewards the better off. The at-risk of poverty rate has risen from 14.4% in 2008 to 15.2% in 2013, the last year for which figures are available. The consistent poverty rate has risen from 4.2% to 8.2% in that five year period and the deprivation rate has risen from 13.7% to 30.5% in 2013. Any small gains in the budget must be considered in the context of previous budgets. To provide the context in which these increases are being legislated, data from the Central Statistics Office reveal that between September of last year and September of this year, prices rose for the following essential goods: overall education costs by 5%; bus fares by 2.7%; travelling by train by 4.6%; house insurance by 6.5%; car insurance by 26.7% and communications, postal and telephone costs by 2.4%.It is interesting to look at the response of various organisations and associations involved with the more vulnerable in our society. The commentary on the measures announced in the Bill has been mixed. Some stakeholders have welcomed improvements in the rates. Others noted the Bill has not yet restored the reductions to which I referred and seen in recent years and that the improvements provided for are too limited. In this context, the Society of St. Vincent de Paul welcomed the thrust of the budget but noted that it was only giving back a small element of the losses people endured in recent years and could have been better targeted.
Social Justice Ireland stated, "Budget 2016 failed to deliver an increase in the minimum social welfare payment - which remains at €188 per week". As detailed by it in its pre-budget document, Budget Choices 2016, this payment has remained at this level since January 2011. Since then inflation has eroded its value, as I pointed out in the earlier statistics.
Age Action, in its reaction to the budget measures, some of which are in the Bill, welcomed the first increase in the State pension in seven years, although anecdotal evidence suggests the general reaction to an increase of a modest €3 has been that it has not gone down well universally. Before the Minister of State in his reply reminds me that Fianna Fáil proposed a €5 increase in its budget submission, I suggest that a €5 increase would not have gone down all that well either. A spokesman for Age Action stated that since 2009, an older pensioner on the State pension has seen his or her weekly income cut by more than €13 a week.He noted that all of that cannot be fixed at once. However, he said that what we have seen would indicate that much more should be done in this regard.
In response to the proposed increase in the income thresholds for receipt of the family income supplement, Stuart Duffin of One Family said:
Government has not listened to the calls of many organisations in the voluntary sector to target resources at the poorest children in Ireland rather than giving a pre-election €5 to everyone on Child Benefit. What low-income working families need is the Family Income Supplement adjusted so that it makes work pay by reducing the qualifying hours to 15 hours per week and tapering the payment; as well as recognising the value and costs of shared parenting by providing the Single Person Child Carer Tax Credit to each parent.
This is a laudable aspiration.
Children and families have not been protected in the Bill. Despite the budget increase of €5, which is welcome, child benefit is still €10 lower than what it was in 2010 when Fianna Fáil was in government. The budget increased the thresholds for the family income supplement by €5 for the first child and €10 for each subsequent child to apparently offset the increase in the national minimum wage, but the increase in thresholds is not enough, given that a 50 cent increase in the national minimum wage means a €20 increase in gross income based on a 40 hour week.
Lone parents, for example, have not been referred to. The change to the eligibility criteria to qualify for the one-parent family payment was a particularly callous move which was opposed by us. There is little in the budget from which lone parents can take comfort. We proposed to increase the maximum child age of the one-parent family payment scheme from its current threshold of seven years to 14 years. I know the argument put forward by the Minister at the time was that we were trying to come into line with European best practice, but we are our own country with our own individual problems that need to be addressed.
I welcome the Government's initiative in respect of the increase in the carer's grant, which has been renamed the respite grant. This has proven to be a popular move and one that is wholeheartedly welcomed. However, it was only because of the continuous and persistent criticism on the original decision to reduce it by Fianna Fáil in both Houses, allied with all of the various organisations across the country, that this was taken on board by the Government.
The budget has failed to restore the housing adaptation grant for people with a disability, which we called for in our pre-budget submission. The budget has also offered no alternative to the mobility allowance and motorised transport scheme, which was closed in 2013. People with disabilities will not see their living standards improve next year. Much of the infrastructure required for people with disabilities to lead full and independent lives has been dismantled by this Government. The budget was a missed opportunity and failed to enhance the lives of people with a disability.
Overall, any increase for those who are most vulnerable in our society is to be welcomed. However, in the context of the expanding economy, this Government has not gone far enough in this regard, in particular in the areas I have outlined.
An issue was mentioned to me yesterday. It is not within the scope of this Bill but I remember a couple of years ago changes were made to the qualifying stamp contributions for those on contributory State pensions. This affects, in particular, women who would have left the workforce in their 20s to stay at home and rear their families. These women, 20 years later, now want to return to the workforce. They are being penalised in the context of the amount of time they have to get a sufficient number of stamps to meet the full qualifying criteria for old age pensions. It is not contained in this Bill, but I remember at the time there was much discussion about the issue and how it was affecting, in particular, females who wished to return to the workforce. The Minister of State might make some comment on it.
I am pleased to have the opportunity. I welcome the Minister of State, Deputy Humphreys, to the Chamber. The Bill will give effect to a number of social protection measures announced in the recent budget which relate to statutory schemes. I am aware they can only be implemented by way of primary legislation. I do not intend to elaborate on them all but the main measures of the Bill include an increase in the monthly child benefit rate to €140 from January next. An increase of €3 in the weekly payment to pensioners and carers aged 66 years and older is small but will be welcomed. Any increase for the less well off, as my colleague stated, must be welcomed.
There is an increase of €2 for adult dependants aged under 66 years and an increase of €2.70 for adult dependants aged 66 years or older. The name of the respite care grant is to be changed to carer's support grant and its rate will be increased by €325 to €1,700 from 1 June next. Following the death of the person being cared for, carer's allowance will be paid for 12 weeks from January next instead of the current six weeks. There is an increase of €5 per week in the family income supplement income threshold for families with one child and an increase of €10 per week in the threshold for families of two or more children.
There is a new tapered PRSI credit for insured class A employees whose earnings are between €352 and €424 a week. The lower 8.5% class A employer PRSI rate will apply to weekly earnings up to €376, which is up from €356, with effect from 1 January next. Regulations were signed this week to provide for the 75% restoration of the Christmas bonus which will be paid during the first week of next month. The Government will also make regulations to provide for an increase in the earnings disregard for the jobseeker's transitional payment from €60 per week to €90 per week, as mentioned by the Minister for State.
I remind my colleagues that the Christmas bonus, which was abolished in 2009, will benefit many people, including older people, carers, people with disabilities, long-term job seekers and lone parents, at a financially stressful time of the year.That will benefit older people, carers, people with disabilities, long-term jobseekers and lone parents at a financially stressful time of the year. Some 1.25 million people will receive the Christmas bonus this year at a cost of €197 million. It is important to stress that the Christmas bonus is spent within the local economy and will give a significant boost to local businesses and communities.
The Department of Social Protection is now actively involved in helping jobseekers to find employment as well as working closely with employers in every region of the country to help them to find recruits for their businesses. The new tapered PRSI credit for class A contributions for employees earning between €352 and €424 per week will reduce the weekly PRSI bill for over 88,000 people as the Minister of State pointed out earlier. In addition, the lower 8.5% class A rate of employer PRSI will be extended to over 26,000 employers, with the employer threshold being increased. I welcome the increase in the top-up payments for jobseekers availing of community employment, the rural social scheme, the jobs initiative and other such schemes.
Child benefit is due to be increased next January and 632,000 families will enjoy an increase of €5 per child per month, at a cost of €72 million next year. Pensioners and carers will also receive increased payments, with 583,000 recipients to benefit at a cost of €93 million next year. A carer's support grant, previously known as a respite care grant, valued at €1,700 will be paid to 86,000 carers throughout the country at a cost of €30 million. The increase in family income supplement threshold means that over 59,000 families will benefit.
The Minister of State spoke about the improvements in our economy and referenced, in particular, the drop in unemployment from 15.2% to 8.9%, which is a significant achievement. I would prefer to say that almost 45% of those who were unemployed five years ago are now working.
The Tús scheme benefits communities throughout the country. However, given the increase in employment opportunities, the numbers available for participation in Tús schemes has reduced significantly. I am aware of two men who have performed extremely well in my community on the Cooley peninsula who performed well on Tús schemes. They are most anxious to continue working after the 52 weeks allowed under the scheme. Furthermore, the community wants them to continue working and recognises the contribution they have made. Those men, unfortunately, will have to go back on social welfare at the scheme's end which they do not want to do; they want to work. Given that the number of people available to embark on Tús schemes is reducing, the Government should consider extending the schemes from 52 weeks to two years. Common sense should prevail in this regard. The managers in charge of the various Tús schemes should be given the opportunity to acknowledge and recognise the work done by scheme participants. I am sure there are many Tús schemes throughout the country experiencing the same difficulty. The Minister of State would not believe the extent to which the men in question implored me to help them. They want to continue working, to get up in the morning and contribute to their community. They do not want to go back to claiming social welfare. We must look at this issue carefully. Allowing participants to continue on these schemes for longer would further reduce the unemployment figures. It might be possible to stipulate that if there are new applicants for the schemes, those who have been participating for longer than a year must come off them to give others a chance. The schemes could be reviewed two months before their end date to determine whether there are people waiting to replace those already on the schemes. If there are no new applicants, then those participating should be given the option of extending their contract for a further year.
I welcome the Minister of State. I am sure he is delighted to be here as the bearer of good news. We do not get good news very often but there is a quite a lot of good news in this year's Social Welfare and Pensions Bill. In the lead up to the general election the Government is prioritising legislation which will increase pay rates for civil servants, social welfare recipients and those on the minimum wage. The first weekly rate increase for pensioners since 2009 is long overdue, as is the extra support for carers. I am glad to see that the Christmas bonus is will be reintroduced and I hope this money will serve as an economic stimulus and go straight back into local towns and cities across the country. It is likely that this money will be spent and not saved. However, as I have stated on many occasions, I am very wary of such broad increases. For example, the rise in the minimum wage has not been properly thought out. The minimum wage should have been linked to some basic economic factors, such as inflation or deflation, instead of being increased by a seemingly arbitrary figure. Similarly, we should be looking at incorporating economic analysis rather than simply implementing rises of a nice, round figure. I would be interested to hear the reasoning behind the €5 per week increase in family income supplement and child benefit payments and the €3 per week increase in the pension. I would like to know how the Department came up with these figures. Is a formula used or did the Department simply opt for round numbers? How much of a part did economic factors play in deciding those numbers?
In a more general sense, I ask the Minister to make more progress in terms of changing the overall ethos of our social welfare system. We can utilise some of the best practice employed by our European neighbours in this regard. I would be interested to hear from the Minister about where we stand in terms of the European model whereby if someone refuses an appropriate job as proposed by a State body, then his or her welfare payments will be cut. Also, in some EU countries, following receipt of social welfare payments for 12 months, a person is required by the Government to take up a job, say, painting a local school or cleaning the floors of a local hospital, in exchange for social welfare payments. The point is that if people do not take a job that is reasonable vis-à-vistheir qualifications and experience, then they lose their benefits. Indeed, many people here would prefer this to staying at home doing nothing. The Government has said that it will follow the model of not paying benefits if a person refuses a job or training, as happens in countries like the Netherlands or Germany but will that ever happen? I ask the Minister of State to give an update on any progress that has been made in this area.
Figures were provided a few years ago which showed that a massive one in seven people on the dole have never worked a day in their lives. Does the Minister of State have any update on those figures and can he indicate there has been any improvement in this regard? In the UK, the Government has been trying to tackle this problem by obliging people who are out of work for a long period to work for six months before they can go back to receiving payments. The idea is to get people back into a working mentality and to allow them to give something back to society. Has the Minister looked at this area and would the Government consider a similar scheme here? Long-term unemployment is a big problem and such a concept may form part of the solution. I would be interested to hear the Minister of State's views on this idea.
I ask the Minister of State to give some indication of what the Government is doing in the area of child care.It is obvious the cost of child care is a massive barrier to people getting back into the workforce and, thus, reducing their reliance on social welfare payments. Many European countries have recognised this. Interestingly in Denmark, families pay up to 25% of the cost of day care, with those on low incomes or single parents paying between nothing and 25% of the cost and with discounts for brothers and sisters. The Danish Government makes up the difference. Would our Government be better off putting money into subsidising child care rather than into other forms of social welfare payments? At the very least, we should be considering a tax credit for child care which would encourage people back to work, especially women. It may even get highly experienced older women back into work as child minders and have the effect of reducing the number of people on social welfare payments.
In 2014, only one family handed back their social welfare payment, saving the State €1,560. Does the Minister of State, Deputy Kevin Humphreys, have the figures to hand for this year so far? This is occurring in spite of the fact Ireland has eight billionaires and approximately 20,000 millionaires. According to a report in the Sunday Independent, "If a parent does not wish to claim their child benefit payment, they can notify the Department of Social Protection in writing to that effect and their claim will be stopped in accordance with their wishes.” This seems to be old-fashioned and the system is obviously not working. Will the Department set up a website where people can give back their child benefit payments more easily? That would be quite feasible in this era of computerisation and personal public service numbers. A system like this could save the State money if the Government is not willing to means-test the payment. Will the Minister of State comment on this idea? It would be a sensible move, making giving back the money easier. We are talking about electronic payments. Surely, this is an area in which the Internet could be used to good effect. It would not be a controversial development but merely a nudge towards working in that direction.
It has been a tough few years and it is welcome that a number of people will get back the benefits they lost over these past few years. I welcome anything we can do to encourage people back to work rather than just automatically making it easy for them to avoid work.
I welcome the Minister of State to the House. Obviously, as Senator Quinn said, we have had tough times. It was not easy over those years to stand up in this Chamber to defend cuts to the social welfare budget. I welcome the €3 per week increase for old age pensioners. Senator Mooney is right that it is not much but it is a start and a move in the right direction. It will take a long time to restore it as his Government cut benefits by €18 a week.
However, cutting benefits by €18 a week is pretty hard to take.
Does the Minister of State believe invalidity pensions should be included in section 3? It is payable over the age of 66 if the recipient does not have a full old age pension. Perhaps this could be brought forward on Committee Stage.
I welcome the restoration of 75% of the Christmas bonus. However, I am concerned that not everybody on jobseeker’s allowance will get it. Some recipients have spent 312 days on jobseeker’s benefit and have moved on to jobseeker’s allowance but will not get the Christmas bonus because they are not considered long-term unemployed. Everyone on jobseeker’s allowance should get the Christmas bonus as they would have been in receipt of a payment for a year. Will this be examined? I am delighted we have been able to reverse the cuts we made to child benefit and we are back where we started. Hopefully, whoever will be in government next year will be in a position to continue that trend.
The issue of carers has always been a hobby horse of mine. The Minister of State knows that I have fought long and hard for carers. Despite Senator Mooney’s claim that it was due to Fianna Fáil that this cut was reversed, I can assure him that I have spent the past several years fighting against this cut. I have worked with the Carers Association and have done my best to get the respite care grant restored. I am glad to say my work has come to fruition. I am delighted the respite care grant has been renamed the carer’s support grant. I have listened to people ask why the State should pay for somebody to go on holidays. Why should the State not pay carers to go on holidays? They blooming well deserve it and work hard.
We spoke this morning about hold-ups in accident and emergency departments. If we did not have carers, the accident and emergency departments would be worse. Many more people would be in need of beds in hospitals and long-term facilities. Carers are invaluable. I have always said, and will say it until I leave this House, that carers are one of this country’s most important assets. I welcome the fact the carer’s allowance will now be paid for 12 weeks after the death of the person being cared for. This gives carers time to come to terms with the loss of their loved ones and to reassess what they will do with themselves. There are 187,000 carers but only 80,000 get the respite care grant. That means many carers go unrecognised. Hopefully, we will be in a position to recognise them. The means-testing for carers should be totally abolished because they are saving the State a fortune. What is €204 a week to maintain a person in their home? I had hoped the telephone allowance would have been restored to carers because it would be invaluable to them to maintain contact with the person they are caring for if they do not live in their home.
I commend the Minister of State for taking steps to ensure the increase in the minimum wage makes an impact on employees, particularly for families. Up to now, when a person reached €352 a week, he or she would then enter the PRSI bracket and pay 4% on all his or her income. This would have resulted in a payment of €14.08. However, with the introduction of the €12 credit, it means they will only pay €2.08. This is a good saving for people on low incomes. I am glad the Minister of State took time to listen to one parent families and increased the disregard for parents on jobseeker’s transition payment from €60 a week to €90 a week, along with the reduction of the assessment of the balance from 60% to 50%.
Take the example of someone doing 18 hours’ work a week. I use this example because a person working 19 hours can avail of the family income supplement, which is probably more beneficial to him or her. For somebody working 18 hours, instead of being assessed at €62.82 per week from the minimum wage income, he or she will now be assessed at €37.35, giving him or her an extra payment on the transition payment of €25.47 a week. Someone working two days, who was being assessed at €51.84 from his or her income of the minimum wage, will now be assessed at €28.20, giving him or her an extra payment on the transition payment of €23.64 extra a week. That is a good help to parents. I am sure if their income were being cut by that amount, we would hear all about it. I am delighted this measure will help them in some way.
I welcome the increase in the family income supplement. Families benefited most from this budget with increases in child benefit, family income supplement, changes to jobseeker’s transition, the Christmas bonus for in receipt of the domiciliary care allowance and the increase in the respite care grant and the fuel allowance.
I would like to have seen payments to the under 25s fully restored, however.After all, a 25 year old could be married and have children. They are only being paid €140 by the State. Hopefully, we will be able to deal with that.
Senator Mooney mentioned the women going back to work. I agree with him; this is something I have fought for over many years. It is not a problem for the women who want to go back to work now. They will be fine because on 6 April 1994, a home-maker's credit was introduced. They will be able to add that credit to whatever contributions they have paid. It is the women who were affected by the marriage bar and those who had to give up work before 1994 who are affected. They are coming up to pension age now and are not going back into the working environment. They are the women I have fought long and hard for both in committees and here. I would have liked to see the home-maker's credit extended to those women, although it has not been so far.
There are a couple of issues I would like to raise with the Minister of State, although they are probably not related to this Bill. We always avail of the opportunity to do so when we have a Minister in here, particularly from the Department of Social Protection. A kind of anomaly exists for people who do internships. I dealt with a man who was long-term unemployed, who did a couple of years on a community employment scheme and then went on an internship. All was going well, there was a promise of a job at the end of it and he was absolutely delighted but then he had a massive heart attack. He had to go on illness benefit because he had contributions from his community employment scheme. First he lost his free fuel allowance, then the special top-up rate of the SUSI grant and finally the Christmas bonus. I got him the disability allowance, with a fight, to make sure he did not lose those payments. It should not happen to anyone who has been unemployed for five or six years. If the Minister of State is going to tell me that working on a community employment scheme is considered work, then people on those schemes should be entitled to draw the family income supplement, FIS. We cannot have it both ways. It has to be one or the other.
While I welcome the top-up on the community employment schemes, the strict rules governing time allowances for social employment schemes, with three or six years as a maximum, cause difficulty for older workers. I would ask that they be retained up to pension age. There are people over 60 years of age with little or no prospect of obtaining commercial employment for whom training would serve no benefit and yet who have craft or lifetime skills that would be of benefit to society. The restrictive times should be removed for those people. It would not involve great cost - €20 a week - to the State. These people want to stay working. Senator Brennan mentioned the issue as well. They do not want stay at home and draw social welfare. They could be four or five years on social welfare before reaching the pension age. They have a lot to offer. I ask that we look at those rules.
I welcome the Minister of State to the House. Obviously, we are in a better position with this social welfare Bill than we were with the first three from this Government. Having said that, we have to look at what has happened in the round, consider the Government's five budgets and look at this budget in its own right. We must consider the analysis of those organisations which are tasked with examining income inequality, the effects of the budget, who the real winners and losers are and so on. We have had five reports from the ESRI on the Government's five budgets, as the Minister of State knows. If he was honest, they do not paint a pretty picture at all in terms of the big winners. According to the ESRI, the top 14% of income earners were the biggest winners in budget 2016. I will read out one quote from Cormac Staunton from TASC:
In our analysis of last year's 'triple effect' of changes to tax bands, tax rates and USC rates we found that Budget 2015 gave the biggest cash return - in absolute and relative terms - to those earning €70,000: which we dubbed the Budget 'Sweet Spot'.
Those with the biggest incomes in the State got, in percentage and monetary terms, the biggest amount of cash. A single person on a middle income of €500 a week gained by €277, which is about one third of his or her take-home pay. A person on €700 a week gained €377, which is 1.3%. A person on €75,000 per year, or over €1,500 a week, gets €902, three times what somebody on €500 a week gets and 2% of their net pay. That includes me, the Minister of State and the very civil servants who craft the budgets. Maybe it is not a surprise but it is deeply unfair and it is the reality of what the Government has done.
It is against this backdrop that we look at what the Government has given back to the rest of society. If those on €500 a week, who are lucky to have a job, were not the big winners from the budget and if the bottom 60% gained less than the top 40%, then what about those on welfare? It is the same old story of scraps from the table which has been the hallmark of the Government for five years.
We have a Government that gave €181 million in a tax giveaway to the top 14% and yet did not do more for those on welfare, carers, people with disabilities and so on. Older people had their telephone allowance cut and many of the cuts that could have been restored were not. We have a health crisis, a housing crisis and a crisis in public services generally but none of that was dealt with in any comprehensive way. It is mainly a Fine Gael budget if we are to be honest. The big winners were the top 14%.
With budget 2016, the Government has made it clear that it is seriously out of step with the suffering of the ordinary people. Christmas comes but once a year but the other 51 weeks have not been made any easier by the small change promised by the €3 to €6 increase in the family income supplement, the €3 increase in pensions, the €2 here and €2.70 there for qualified dependents or the restoration of the €5 that was pillaged from children in previous cuts to child benefit.
The restoration of the respite care grant is to be welcomed. I severely criticised the cut at the time, so if there is a restoration it must be welcomed. I also welcome the increase in the period for which carer's allowance is payable after the death of the person being cared for from six to 12 weeks. I commend Senator Moloney for her work on this. I am a huge admirer of carers and the work they do. The Senator is absolutely right that without carers, we would have an awful lot more stress in our hospitals, which are already at pressure point in many cases with the accident and emergency departments and the lack of step-down beds and so on. Any supports that can be given to carers are to be welcomed. The reality is that this cut should never have happened in the first place. There are many cuts about which we can ask why on earth they were made. Choices were open to Governments throughout those years and yet these are the type of people who were penalised.
I also welcome the new tapered PRSI credit and the increase in the upper weekly earnings threshold to which the lower class A rate of employer PRSI applies. This is another measure which Sinn Féin has advocated and which we costed in our alternative budget. Sinn Féin would have introduced a new rate of 15.75% employer PRSI and a portion of salary paid in excess of €100,000 per annum to address the shortfall in the social insurance fund.
This is really where we come to the crux in terms of the type of society and economy we want. Obviously, we want to be competitive and to make sure that taxes on employers or businesses are not too high. In reality, we have one of the lowest employer PRSI takes in the entire European Union at a time of cuts in social welfare, the trolley crisis and the housing and homelessness crises. Either we are going to pay for these things and ask those who can afford it to pay a bit more, or we are not. Senator Quinn spoke about millionaires and I am delighted that he raised the issue. We have 14,000 millionaires in the State but what about the billionaires as well? When we ask those people to make a greater contribution - nothing too radical - it is dismissed as fairy-tale economics and we are told it cannot be done. We are told not to ask those at the top to make a greater contribution and yet we can bring all these cuts in for people on welfare and that is okay.
I appreciate that. I welcome the positive elements of the legislation. We supported the Bill in the Dáil and we will support it here. If something is being given back to people, it has to be supported but a great deal more could be done. If we had a more progressive Government that did not include either Fianna Fáil or Fine Gael, I am sure we would be looking at a different budget. Perhaps this State will reach that point at some stage. The Bill is a step in the right direction but a great deal of work needs to be done to support those how need greater assistance.
I welcome the Minister of State. We will have more time for debate on Committee Stage. My party spokesperson, Senator Mooney, outlined our main issues with the legislation and the aspects that we welcome such as the restoration of the respite care grant. I acknowledge that this cut was difficult for Government colleagues, particularly Senator Moloney, who fought hard for the restoration of the grant. I commend her on that. It is only right and proper that we say so when we agree with aspects of Government policy and legislation and I have done this during consecutive budget debates. I will recognise good measures but I will also, in my role as Opposition leader, highlight areas where something could be done differently.
I would like to focus on pensions, which comprise a small element of the Bill. I will table amendments in this regard. One issue relates to section 23 and this might have been lost within the Bill. The section amends section 128 of the principal Act. It looks to me that the Government proposes to merge the Financial Services Ombudsman with the Pensions Ombudsman. That is a retrograde step. Pensions are a massive issue. The State's pension liability is multiples of the banking liability but successive Governments have kicked this problem down the road and I do not just lay the blame at the door of the Government. That is a dangerous step forward because there needs to be a better and clearer focus on pensions into the future. If I am correct, section 23 proposes subsuming the Pensions Ombudsman into the Financial Services Ombudsman but the officials can tell the Minister of State before he replies. We will not agree to that and I have tabled amendments to delete the section.
In the 2013 Act, the Minister provided for single insolvencies of pension schemes, which allowed solvent profitable employers to run down their pension schemes and walk away, particularly from defined benefit schemes in which they had amassed huge liabilities. We had proposed that a solvent firm should not be allowed to close a defined pension benefit scheme except where the scheme had reached a minimum 90% funding standard. That is what happens in the UK and many other European countries. The Government relaxed those rules and, lo and behold, the airport pension scheme, the Irish airlines superannuation scheme, IASS, came tumbling down and retired members lost six weeks of their pension and long-serving deferred members lost up to 60% of their entitlements. That was facilitated by the Government's Social Welfare and Pensions Act 2013. I flagged it at the time. That is a major problem not just for the worker within the IASS and I will table amendments to deal with these issues on Committee Stage and to reverse some of the decisions made by Government under the State Airports (Shannon Group) Act 2014. I will table an amendment to reverse the unilateral removal of those members from the scheme and the unilateral reduction in their scheme benefits. That was allowed to facilitate the sale of Aer Lingus for a paltry €343 million. All these pensioners have been left swinging in the wind. No one agrees with what happened to them. My principal concern is that unless this is amended, this will happen to multiple other pension schemes, both semi-State and private. This is happening because the Government has given a road map to employers on how to run down a defined benefit scheme. People are promised a benefit on retirement based on the contributions they made but employers can extricate themselves from this commitment to their employees and set up a new scheme while writing off the deficit, thereby making the company more profitable and saleable if it is commercial semi-State company or allowing a private company to walk away from its pension responsibilities. That is a serious issue and it is for reasons such as this that the two ombudsmen should not be merged but, more importantly, I am concerned that thousands of other workers will be affected in addition to the 5,000 retired and deferred pensioners in the IASS. They were the first and there will be more unless this is changed.
The pensions industry in Ireland is small and all the pension experts and the various companies affected know this option is available. The Government provided for this under legislation the Minister of State brought through the House. We have an opportunity in the final few months of this Government to reverse that bad decision and to make sure this does not happen to any other people who are entitled to their pensions. It can be easy for us as public representatives and for departmental officials who contribute to pensions for which there is no funding as they are paid out of current revenue. I am talking about people who are members of pension schemes, which are being ripped up and torn asunder because of legislation introduced by the Government. I will table four amendments to undo the bad work that has been done on pensions.
If I am correct about section 23 and the merger of the two ombudsmen, I ask the Minister of State to revert to the Minister and ask for the Government to reconsider that decision. In 15 or 20 years, whether we are here or not, the State will be dealing with a much greater pension liability, which we all keep kicking down the road because it will materialise between 2030 and 2035. We are responsible for forward planning as well. I thank the Minister of State for his attention and I look forward to his response.
I thank the Senators for their contributions. I have listened carefully and I will endeavour to touch on everything they raised.
Senator Darragh O'Brien indicated he would table specific amendments relating to pensions and, therefore, I will deal with them on Committee Stage because it will probably take time to tease them out.
I accept that successive Governments have kicked the issue of pensions down the road but this Government has begun to tackle it. We had a major problem of unemployment to deal with and, hopefully, in our next term we will deal with the pensions crisis. I look forward, if I get the opportunity to serve in the Department, to deal with that crisis that successive Governments have left behind.
Specific questions were asked about statistics. I will have those checked and my officials will send them to Senator Quinn, in particular, if we have them, in a timely manner. Last year, we introduced a neutral budget and gave a little back contrary to what many economists said. Five years ago, on all the programmes I saw or heard, every professional who had an economics qualification was telling us we would need another bailout, unemployment would continue to shoot up and we would not see employment figures like we are seeing now.They were not talking about an unemployment rate of 15% - 15.1% was the rate it topped out at - but of a rate of 20%.
I always enjoy Senator Mooney's contributions. They can be a mixture of constructive criticism and downright criticism. The Senator should read what is contained in his party's pre-budget submission on many of the areas to which he referred, especially pensions. I would have liked for us to have been able to give pensioners more than a €5 increase but the Government's package of measures far exceeds a €5 increase. The only submission that was made in regard to pensioners was about the €5 increase. No submission was made with regard to the fuel allowance. One of the red herrings some of the Senator's party colleagues raised was that the free travel benefit would be abolished. That is a timely claim that the Senator's party has raised during the past five years. In contrast we put an additional €3 million into the free travel scheme to ensure such provision is secure into the future. I know the Senator would gladly acknowledge that we did that in spite of his party's policies. When Deputy O'Dea made a similar speech to the Senator's in the Dáil, I went through the measures item by item but I would not put the Senator through that. He remarked that everything cannot be fixed at once and I accept that. It has taken five years to fix the economy following the economic crash.
We made a start last year by putting money into the economy and that was very important. An unemployment rate of 8.9% must be welcomed. The creation of 130,000 jobs since February 2012 must also be welcomed. If we continue on that road, we will certainly be able to put many more fixes into the economy now that we are picking ourselves up from the economic crash and putting the pieces back into place. The Government has done exceptionally well but the electorate will make that decision early next year in the spring. We have not reached our destination yet but we are certainly on the road to it and that has been acknowledged. Much of what Senator Mooney said was by way of commentary but I would urge him to read the Fianna Fáil budget submission and he will note that the Government has done much more than his party has proposed.
Senator Terry Brennan raised the issue of Tús workers. A number of measures were introduced in response to addressing the level of unemployment including the Tús initiative and the expansion of community employment schemes. A positive aspect of it is that people are finding it difficult to get workers with respect to the Tús initiative because people are returning to employment, which is a positive sign. While this is not directly related to this Bill we have started a policy of reviewing all our schemes to ensure they operate to best effect for our society and economy. Tús has played an important role in keeping people in contact with the workforce. People were encouraged to prepare an updated CV and when a job placement arose they were in a position to take up that opportunity. I will endeavour to make sure that the Tús scheme will be reviewed and I listened carefully and have taken on board what the Senator said.
The JobBridge scheme will be reviewed. The tender documents for that review have been issued and we should get those documents back early next year. When I became Minister of State I introduced a reform under the Tús scheme with a move from the random selection process in place to allowing some 20% self-referral, which has worked extremely well. I thank the Senator for his comments about the other areas. As I said, Tús was designed to help people keep in touch with the workforce.
I would strongly disagree with Senator Quinn's view on the minimum wage. I believe what we have done has been very positive in restoring the rate by giving people back €1 and also in regard to the Low Pay Commission's recommendation. The Minister of State set up that commission which will review the minimum wage. There are representatives from the employers' bodies in that respect. There is an independent and evidence-based resource in place with respect to the minimum wage and that is a positive development.
The Senator made a number of remarks about people who do not want to return to work. Social welfare is a social contract and there are two sides to the contract, one side is the State, in terms of taxpayers, which supplies support to a person who has become unemployed. The other side of the contract is that the person would be actively seeking work. A number of amendments and changes have been made in that regard in terms of sanctions. I can forward the Senator the detail of that rather than going through it.
A number of amendments and changes have been made since April 2011 to ensure that people live up to their side of the social contract. People are paying taxes to ensure there is a level of decency below which the unemployed should not fall and that there would be an opportunity for them to get back into the workforce, and those people's side of the contract is that they would be actively seeking work. In my experience the vast majority of people want to work. They want not only the dignity of work but the social interaction and social networking that work provides, which is very important to the individual and to his or her family.
From my experience as Minister of State at the Department of Social Protection with a key role in labour activation, the vast majority of people who are unemployed want to get back into work. However, that presents specific challenges. We have statistics on intergenerational unemployment. When we moved out of earlier recessions, a payment in terms of unemployment benefit was made to people, in many ways, to set them aside and keep them quiet. There was not an active involvement and engagement process to assist them back into work. As we come out of this recession we must make sure that everybody has an equal opportunity to get back into work. It is important we should have a role model in every family, where a member of every family is working and in that way people will aspire to work and improve their circumstances.
In my role in labour activation I am very concerned about intergenerational unemployment. That must be tackled this time. Proposals to tackle it cannot be a shelf in the way that was done in the 80s, 90s and noughties. We must make sure that people have an opportunity to get back into work, whether it be through education or further training. We are doing much of that work now through the new Intreo offices where case officers give individuals a workplan and work with them to assist them to get back to work. I very much take on board what the Senator said in that regard but there are sanctions in place and they are implemented. In addition, JobPath is being rolled out throughout the country.
I am disappointed that Senator Cullinane is not present but I thank him for his good wishes and for recognising the improvements in the budget. He used figures similar to those cited by Fianna Fáil Deputies with regard to the number of millionaires. I am not a great reader of the "Sindo" if that is from where the statistics came. I like to have a quite pleasant Sunday so I am inclined to skip over that particular newspaper. I wonder if the Senator was referring to people's assets in his determining people to be millionaires. Are the millionaires to whom he referred, for example, the farmer whose farm is worth a €1 million, or a small businessman the valuation of whose business runs into millions of euro? As far as I can recall, Sinn Féin's policy is not to take account of the assets of farmers but I know it is a populist party.When one asks Sinn Féin to specify which individuals earning over €100,000 it would tax, one finds that it would exclude so many people that no revenue would be raised. I am inclined to agree with a remark made by Senator Darragh O'Brien during Senator Cullinane's contribution but I will not go there.
In response to Senator Moloney, I attended those parliamentary party meetings where she raised the issue of the carer's allowance and I recognise her work. In respect of those aged 25 with a family, there is no reduction in rates for jobseekers aged under 25 who have a qualified child dependant. I will be happy to look at the specific item she raised and refer it to the policy section of the Department to see whether there is a need to change that.
There have been many increases and I do not intend to go through them again. I appreciate the contributions from Senators. I believe we are on a better path. For the first time, there is hope at the end of that tunnel. The light is shining and it is not a train coming to knock us over and back. It has been a long and difficult road for our citizens. There have been terrible cuts and people have seen a reduction in expenditure. The people who have been worst affected during the recession are those who lost their jobs, those who did not have an opportunity to go into work after coming out of college and those who were forced to emigrate because there was no work. All Members of this House must acknowledge that there has been a change in respect of opportunities to go back into employment. I hope that when members of our diaspora come back to Ireland over the Christmas period, they will see what opportunities are out there because there are shortages in certain skillsets. Members of the diaspora could use coming back to Ireland as an opportunity to sound out the market. We cannot take the foot off the accelerator in respect of getting people back to work. Our ambition and the ambition of the next Government must be full employment. It must be to make sure that everybody has an opportunity to go back into work. I thank the Senators for their contributions and commend the Bill to the House.
- Ivana Bacik
- Terry Brennan
- Colm Burke
- Máiría Cahill
- Paul Coghlan
- Michael Comiskey
- Martin Conway
- Gerard Craughwell
- David Cullinane
- Maurice Cummins
- Jim D'Arcy
- Michael D'Arcy
- John Gilroy
- Aideen Hayden
- Fidelma Healy Eames
- Caít Keane
- John Kelly
- Marie Moloney
- Tony Mulcahy
- Rónán Mullen
- Michael Mullins
- Catherine Noone
- Trevor Ó Clochartaigh
- Pat O'Neill
- Feargal Quinn
- Tom Shehan