Willie Penrose (Westmeath, Labour)
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Question 102: To ask the Minister for Social and Family Affairs if he has received a copy of the Combat Poverty Agency's recent report, Irish Social Expenditure in a Comparative International Context: Epilogue; if his attention has been drawn to the fact that despite strong economic growth, Ireland continues to be among the nations with the lowest social spending which contributes to high poverty rates; his views on whether it is possible to combine high economic growth with high social spending; and if he will make a statement on the matter. [17110/05]

Paul Gogarty (Dublin Mid West, Green Party)
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Question 124: To ask the Minister for Social and Family Affairs his views on the recent report (details supplied), Irish Social Expenditure in a Comparative International Context: Epilogue; and if he intends to implement any of its policy recommendations. [17135/05]

Séamus Brennan (Dublin South, Fianna Fail)
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I propose to take Questions Nos. 102 and 124 together.

The report to which the Deputy refers, "Irish Social Expenditure in a Comparative International Context: Epilogue", compares social expenditure in Ireland with that of other European and developed countries. While the level of expenditure on social protection in Ireland appears low by EU standards, the discrepancy can partly be explained by demographic differences and by the way the Irish social protection system has evolved and is currently constituted.

There are a number of specific factors which account for the relatively low level of social expenditure recorded for Ireland. Gross measures of expenditure can distort the real picture, as they do not take account of social charges or taxes which are levied on benefits in some countries nor do they include transfers made by means of tax concessions, as opposed to direct cash payments. In addition, social expenditure is usually given as a proportion of GDP which in the case of Ireland includes a high proportion of repatriated profits. A better measure of the actual income available is GNP which in Ireland is significantly lower than the figure for GDP, by up to 15%.

The level of expenditure is also significantly influenced by the age profile of the population. Currently Ireland, with one of the youngest populations in the EU, needs to spend less on pensions and health care and care of the elderly than most other member states. Ireland's elderly population, over age 65, is a third lower than the EU average, requiring much lower expenditure on pensions and health care, for example, Ireland's old age expenditure in 2001 amounted to only 28% of the average old age expenditure in the EU.

The extent to which the State directly provides supplementary pensions is also an important factor to consider. Social insurance was only extended to the full working population in recent decades, as a result of which a high proportion of current pensioners still only qualify for pensions under social assistance. Expenditure on private pension schemes provided by private insurance, including personal retirement savings accounts, is not included in the Irish social expenditure figure.

Ireland's current level of unemployment, at about 4.4%, is among the lowest in the EU, requiring less expenditure on unemployment related supports. This low level of unemployment is due in part to strong active labour market programmes, including education and training, to facilitate integration into the labour force of those formerly excluded.

Working to eradicate poverty requires action across a range of different policy areas. A central aim of this Government is to build an inclusive society. The principle strategy for achieving this is the national action plan against poverty and social exclusion. The plan incorporates the strategic approach to tackling poverty which was set out in the earlier national anti-poverty strategy and also reflects the social inclusion commitments agreed in Sustaining Progress.

The report in question makes recommendations on employment policy, lower income earners and the family income supplement, FIS, scheme. A number of policy instruments crossing a range of Departments are used as a way of preventing poverty amongst those in employment who are at risk of poverty. These include changes to the taxation system, the introduction of a national minimum hourly wage, provision of training and access to lifelong learning opportunities, assistance with job search and placement, the introduction of flexible working arrangements and increased access to affordable child care and changes to the social welfare system to support the transition to employment and improve the retention of non-cash benefits during that transition.

The FIS scheme preserves the incentive to remain in employment in circumstances where the employee might only be marginally better off than if he or she were claiming other social welfare payments. Budget 2005 increased the FIS earnings thresholds by €39 in respect of each family size. This increase was unprecedented since the introduction of the scheme in 1984. The specific recommendations relating to the tax system are the responsibility of my colleague, the Minister for Finance.

The report recommends increases in spending on social services and mechanisms for linking benefit incomes to earned incomes. Expenditure on social services involves a number of Departments. In my Department, between 2001 and 2005, spending on social welfare has increased from €7.8 billion to more than €12.2 billion. During the same period, the lowest social welfare rates have increased by 40% while the consumer price index has increased by just over 13%. As a result of budget 2005, welfare payments have increased by three times the expected rate of inflation. With economic growth, as measured by GNP, averaging 5.8% over the six years from 1998 to 2003 and the outturn for 2004 expected to be 5.3%, Ireland continues to successfully combine high economic growth with increased social spending.