Paudge Connolly (Cavan-Monaghan, Independent)
Link to this: Individually | In context

Question 421: To ask the Minister for Social and Family Affairs his views on recent Central Statistic Office figures which found that in 2004, 21% of Irish people were at risk of poverty, one of the highest EU rates, after pensions and social welfare payments were factored in, that women are at higher risk and are more likely than men to live in consistent poverty and that almost 20% of Irish children live in income poverty for over five years; his views on the fact that Ireland's expenditure on social protection at 15% of GDP is one of the lowest in the EU; and if he will make a statement on the matter. [32027/06]

Séamus Brennan (Dublin South, Fianna Fail)
Link to this: Individually | In context

The figures that the Deputy refers to are derived from the recent Central Statistics Office publication 'Measuring Ireland's Progress', which provides an analysis of the economic, social and environmental situation in Ireland. The source for the statistics on poverty used in this report is the EU Survey on Income and Living Conditions (EU-SILC), which was launched last December.

It should be noted that, for the 'Measuring Ireland's Progress' report, the CSO used a different methodology for calculating the 'at risk of poverty' rate than is normally used for national consideration of poverty figures. This national methodology, also using the EU-SILC results, found that the 'at risk of poverty' rate was 19.4 per cent in 2004. This was a slight decrease in the percentage of persons 'at risk of poverty' from 19.7 per cent in 2003. These figures represent a halting of the upward trend of previous years in the numbers in the broad category of 'at risk of poverty' and reflect the impact of improvements in employment and social provision over the past number of years.

EU statistics also show the level of poverty intensity i.e. the extent to which levels of income are below the "at risk of poverty" threshold. The level of poverty intensity in Ireland is shallow, with the proportion of those with incomes close to the threshold being higher than the EU average, especially in the case of older people.

Levels of relative income poverty are affected by increases in incomes generally. During periods of high economic growth increases in household income can outstrip even substantial increases in the incomes of households with relatively low earnings or on social welfare. This is precisely what happened in Ireland in recent years. There were particular circumstances in the period from the mid-1990s when a combination of increased female participation in the workforce, reduced unemployment generally, tax reform and, crucially, high earnings growth caused very large increases in household income. These increases in household incomes were substantially higher than increases both in individual earnings and social welfare incomes over this period, despite virtually unprecedented improvements in employment and social provision across the board in this period.

A recent article in the prominent journal "Development and Transition", published by the UN Development Programme and the London School of Economics and Political Science, insisted that relative poverty indicators can not be used for international comparisons unless countries are similar in their level of economic development. Overall, it concluded that reliance on the "risk of poverty" indicator causes a number of problems.

I am strongly of the view that a more appropriate indicator is the "consistent poverty" measure. This tells us that 6.8% of our population continues to experience poverty, hardship or deprivation in some form in their lives. This survey also tells us that women are at greater risk of poverty than men, which reflects the findings of other surveys, with 7.4 per cent of females being in consistent poverty in 2004 compared to 6.2 per cent of males. Furthermore, the surveys and indicators show that the families with children most at risk of poverty are large families and those headed by lone parents. Many of these families have not been able to avail of the greatly increased employment opportunities and the related higher incomes that accrue from employment. A range of reforms and increased welfare supports, child-centred services and child care are addressing these problems. These include: proposed reforms of the schemes for lone parents and the qualified adults of social welfare beneficiaries; payment of the new €1,000 a year early childcare supplement for all children under 6 years; increases in welfare supports and entitlements in real terms; and the creation of additional childcare places.

It is estimated that some 65,000 children remain in consistent poverty, and moving these children out of poverty remains a priority. I intend in this regard to build on the good progress we have made so far. Some 100,000 children have been lifted out of deprivation inside the last decade as a result of targeted measures and supports.

The most significant measure my own Department has taken in recent years to support families with children has been the very substantial real increases in child benefit rates. Between 1997 and 2006, the rate of child benefit rose from €38.09 per month for the first two children and €49.52 for each child thereafter to €150.00 per month for each of the first two children and to €185.00 per month for the third and each subsequent child. Child benefit is paid to over half a million families in respect of approximately 1.1 million children at a cost in 2006 of more than €2 billion.

These increases reflect the fact that under this Government there has been a sustained and substantial increase in social protection expenditure. When examining comparative social protection data it is important to remember that gross expenditure measures do not take account of social charges or taxes which may be levied on benefits after they are paid, nor do they include transfers made by means of tax concessions, as opposed to direct cash payments. For example, tax relief on contributions towards occupational and private pensions, which are an important feature of Ireland's pension system, is not counted as expenditure. The level of expenditure is also significantly influenced by the age profile of the population. Ireland, currently with one of the youngest populations in the EU, needs to spend less on pensions and healthcare/care of the elderly than most other member states.

In addition, social protection expenditure as a percentage of GDP is crucially dependent on the pace of economic growth and the level of unemployment. The statistics show that at EU level, between 1993 and 1996, social protection expenditure relative to GDP stabilised at a level below the peak of 28.8 per cent in 1993. This was due to renewed GDP growth and slower growth in social protection expenditure, particularly related to unemployment benefits. Over the period from 1996 the EU average dropped from 28.4 per cent to the level of 27.7 per cent in 2002. Ireland's position mirrored that of the EU as a whole, except that the level of economic growth and the decline in unemployment were much greater in Ireland than in most other EU countries and consequently the drop in the percentage of GDP accounted for by social protection expenditure was greater.

Moreover, it should be noted that social welfare expenditure will have increased substantially during the 4 year period 2002 to 2006. The overall spending on social welfare in 2006 increased to over €13.6 billion, an increase of over €1.4 billion from the 2005 figure, representing the highest ever spend on social welfare.

Indeed, between 1997 and 2006 the basic rate of social welfare payment has increased by 99.7 per cent, well ahead of the 34.2 per cent increase in consumer prices and the 67.7 per cent increase in gross average industrial earnings. This represents an increase in real terms of 48.8 per cent, in comparison to a real increase in industrial earnings of 25.0 per cent.

This Government will continue to address the scope for further improvements in Ireland's social protection infrastructure, guided by the National Action Plan against Poverty and Social Exclusion, while at the same time continuing to take the measures necessary to maintain economic growth and competitiveness and thereby generate the resources for further social investment. Indicators show us what groups in society are most at risk of poverty and deprivation and the intensity of that poverty, and these clearly indicate where our priorities lie in combating poverty and social exclusion.