SENATE SPEECHES
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Social Welfare Bill, 2000: Committee and Remaining Stages
28th March, 2000

SECTION 1.

An Cathaoirleach: Amendments Nos. 1 and 4 are related and may be discussed together by agreement.

 

Mr. Costello: I move amendment No. 1:

In page 5, between lines 13 and 14, to insert the following new subsection:

"(3) The Minister shall as soon as may be after the passing of this Act prepare and lay before both Houses of the Oireachtas a report on the rationale for the different commencement dates of social welfare and tax aspects of the annual budget.".

While acknowledging that the Minister has taken a positive step in terms of bringing forward the payment of increases in respect of many social welfare benefits to 1 May, in keeping with the spirit of my amendment, I must criticise him for not harmonising the timescale under which tax benefits come into operation and social welfare increases are paid. The increase in child benefit will not come into force until 1 September and the increase in carer's allowance will only come into play on 1 October.

In my opinion this is an opportune time to harmonise tax concessions and social welfare increases. The Minister stated in the Lower House that it would cost in the region of £20 million to make increases in social welfare benefits payable from 1 April. That is not a huge amount when one considers some of the expenditure the Government is making in other areas and it would have tremendous benefits in terms of creating an equitable and just society.

A decade ago we could not have imagined the level of wealth which we have at our disposal. The challenge we now face is how to distribute it. What sort of society are we seeking to create? Are we going to treat those at the bottom of the scale as fairly as we treat those at the top? The Minister for Finance has been particularly generous to those who pay tax at the top end of the scale. The higher one's salary, the more one will benefit on 6 April from the tax concessions made in the Finance Act. I would like the Minister to have moved in the same direction and made all social welfare increases payable from 6 April.

Many people - the unemployed, widows, old age pensioners, single parents and children - would have benefited if the payment date had been brought forward. Women form the largest category of social welfare recipients and they, as well as children, would benefit most from the change to which I refer.

Members who serve on local authorities are aware that, in most cases, the rent charged to people who live in local authority houses increases on 1 January. Such an increase can be sizeable in terms of the demand placed on a low income family and it must be remembered that approximately 88% of local authority tenants are social welfare recipients. That demand operates from January but people must wait until 1 May for their social welfare increases. The gap between the two dates can cause considerable hardship. As well as looking at the tax and social welfare systems, the Minister should examine how and when local authorities decide to impose rent increases on tenants in local authority housing.

While I welcome the progress the Minister has made to date, he was in a position to bring forward the payment date of social welfare increases to coincide with the introduction of tax changes. It was a missed opportunity. The Minister should have struck while the iron was hot, although perhaps he might still revise his decision.

 

Mrs. Ridge: My amendment is similar to Senator Costello's. I would never say he speaks on my behalf but he has echoed my sentiments in this regard. I listened to the Minister's explanation last week of the difficulties he would have paying social welfare increases at the same time as the tax changes. However, benefits for a fairly well off couple will come on stream in April while disabled people will have to wait a month for theirs. Perhaps the Minister could do something in that specific area. We tend to prattle on about equality, equal access, equal this and equal that but the Minister could accommodate equality in this area.

 

Ms Leonard: We should acknowledge that the Minister has brought forward the payment date over the past couple of years. When he came to office there was a huge variation in the payment dates but there has been a remarkable improvement. Last week he indicated that the date would be brought forward again next year.

Senator Costello referred to increases in local authority rents. That is not in the remit of the Department of Social, Community and Family Affairs. It is a matter which councillors can raise with their local authorities. The councillors have certain powers over the executive of local authorities and the matter is more appropriate to those fora.

 

Minister for Social, Community and Family Affairs (Mr. D. Ahern): I thank the Senators for raising this issue. Over the years, particularly during hard economic times, Governments tended to postpone dates for the implementation of increases to make resources stretch as far as possible. Most of them were postponed as far as June.

When I came to office the increases were being paid from the week beginning 9 June. It meant that in the budget year the increases were only being paid for 29 weeks. Since then, and taking account of the changes being made in this Bill, the number of weeks has been increased from 29 to 35. That is a dramatic change.

The Minister for Finance and I have decided to bring forward the date for payment of increases next year to coincide with the tax year, that is, on 5 April. That is a commitment on our part. It is at a cost of £20 million. We decided to implement it over three years rather than one. Senators might ask why we do not go the whole way now. It would cost £40 million to bring it forward by two months. Even though more resources are available now, it is still a case of loaves and fishes, so to speak. One must balance everything. It was decided to bring payments forward by four weeks this year and to 5 April next year.

When Deputy Quinn was Minister for Finance in the previous Government it was decided to bring forward the budget from the end of January to the first week in December. That exacerbated matters because while the budget was announced earlier, people were not getting their increases until much later. At the time very little provision was made to bring forward payments. We would all like to see them equalised and the Government has made a firm commitment to do this next year. It is unusual that commitments of this kind would be given in advance of a budget.

With regard to Senator Costello's comments on the local authorities, I agree with the remarks made by Senator Leonard. I cannot be held responsible for what local authorities do with regard to rent increases. That is a matter for them, in conjunction with the Department of the Environment and Local Government.

We could have brought forward child benefit payments, but it would have been at a huge cost. For example, to bring payments forward to April from September would cost £44 million in that year. I support the rationale of providing child benefit payments in September, which is to boost family incomes when children return to school. We are committed to bringing forward all other payments to 5 April in next year's budget.

 

Mr. Costello: I welcome the Minister's commitment that next year social welfare payments will be brought forward to 5 April. I presume this will cover the vast majority of payments, including unemployment benefit, unemployment assistance, widows' pensions and old age pensions.

 

Mr. D. Ahern: Everything.

 

Mr. Costello: Everything except child benefit. Is that correct?

 

Mr. D. Ahern: Correct.

 

Mr. Costello: Then 1 September is the wrong date on which to provide child benefit payments. All schools now provide for a mid-term break in February and to facilitate that they open at the end of August; in my time they opened in September. I do not think any schools start the school year as late as 1 September. Leaving that aside, there are strong grounds for bringing forward child benefit payments a month or two months earlier. What would be the cost of bringing payments forward to 5 April?

 

Mr. D. Ahern: It would be £44 million.

 

Mr. Costello: What would be the cost of bringing them forward a month? It would mean parents could prepare for the school year at the beginning of August, which would be beneficial. It would be even more beneficial if payments were brought forward to the beginning of the summer when parents could perhaps make some savings in the very expensive business of ensuring their children return to school with the necessary equipment, books and clothing. The back to school allowances are not adequate, given the expense of equipping children for school.

While I welcome the Minister's commitment to bring the vast majority of payments forward to 5 April, perhaps he would consider also bringing forward the increase in child benefit as many parents find themselves in the position of having to borrow from moneylenders - the subject of other discussions in this House - to meet their children's school needs.

 

Mr. D. Ahern: A sum of £8.8 million would be required to bring forward child benefit payments by one month and it would cost £44 million to bring it forward to 5 April. On the issue of assisting parents with the cost of children returning to school, I increased the back to school clothing and footwear allowance dramatically in the budget. Each of the rates will be increased by £20 from June this year - from £43 to £63 and from £58 to £78 - a much bigger increase than has ever been given. That is additional assistance for families with school-going children and it is being made at an earlier date at the request of parents.

The child benefit is a much broader issue. In the past social welfare payment increases were paid in September but have been progressively brought forward over a number of years. Given that students return to school in the last few days of August or the beginning of September it is logical that child benefit increases are paid at that time. It is an issue we can look at but I do not feel anything would be gained by paying it earlier. It evens out at the end of the day because the full increase is received throughout the year. It is the Government's intention in the next budget to bring forward all social welfare increases to coincide with the tax year.

Mr. Costello: The substantial increase in the back to school allowance is to be welcomed. The Minister will remember the delay which took place last year in processing back to school allowances. I wonder if that has been streamlined. Many children were back at school before parents received the allowances. Child benefit increases were not paid until the beginning of September and the back to school allowances were not paid until the middle of September. I continue to argue the case that 1 August would be the desirable time to pay the increase in child benefit and back to school allowances because school-related shopping takes place in August. If the cost of bringing forward child benefit payments was only £8.8 million, it would seem reasonable for the Minister to attempt to address that matter in the next budget. Will he give a commitment to give the issue serious consideration for the next budget?

 

Mr. D. Ahern: I said I will consider it but I am not convinced of the arguments about bringing it forward given that, while it is £8.8 million, it would in effect reduce the money I might be in a position to provide for the general increase people will get for the full 12 months. The effort should always be made to increase payments over a longer period. If I was bereft of the £8.8 million, it might mean a lower figure in the overall increase because of the money that might be allocated. There would not be a difference in that regard between any other Minister and myself.

 

Mr. Costello: That is the old argument.

 

Mr. D. Ahern: It is the argument. It is easy from the Opposition Benches. I could say everything from a political point of view and that nothing was done on this issue when the Senator's party were in Government. I have brought forward the general payments substantially. I am not convinced of the argument about bringing forward child benefit. I will obviously consider it in the run-up to the next budget but I would not like to do it if it would mean a lower increase in the new rate. The Senator made one other point -----

 

Mr. Costello: The back to school allowance.

 

Mr. D. Ahern: No. I cannot recall what it was but it might come to me in a minute. The overall budget for child benefit has increased this year by 25% - the biggest increase by far since its inception - from £106 million to approximately £575 million, a sizeable sum. This will be of benefit in the run-up to children returning to school.

 

Amendment put.

 

The Seanad divided: Tá, 10; Níl, 20.

 

Burke, Paddy.

Cosgrave, Liam T.

Costello, Joe.

Cregan, Denis (Dino).

Doyle, Joe.

Henry, Mary.

Manning, Maurice.

O'Toole, Joe.

Quinn, Feargal.

Ridge, Thérèse.

 

Níl

Callanan, Peter.

Cassidy, Donie.

Chambers, Frank.

Cregan, John.

Dardis, John.

Farrell, Willie.

Finneran, Michael.

Fitzgerald, Liam.

Gibbons, Jim.

Glynn, Camillus.

Haughey, Edward.

Keogh, Helen.

Kett, Tony.

Kiely, Daniel.

Leonard, Ann.

Lydon, Don.

Moylan, Pat.

O'Brien, Francis.

O'Donovan, Denis.

Ormonde, Ann.

 

Tellers: Tá, Senators Costello and Ridge; Níl, Senators Farrell and Keogh.

 

Amendment declared lost.

Mr. Costello: I move amendment No. 2:

In page 5, between lines 13 and 14, to insert the following new subsection:

"(3) The Minister shall not later than 6 months after the passing of this Act prepare and lay before both Houses of the Oireachtas a report on the measures required to close the differential between the rates of periodical benefits and rates of periodical social assistance paid to a beneficiary and the rates paid to a qualified adult.".

 

This amendment seeks to eliminate gaps in the payment of social welfare. It focuses on the difference between the main beneficiaries of social assistance and benefit and qualified adult dependants. There is a considerable surplus in the Exchequer and we must decide how to spend it to create the type of society we desire. Most qualified adult dependants are women. Women and children are, therefore, at a disadvantage because of the anomaly between what is received by the main beneficiary and the adult dependant.

The Minister for Finance wants to individualise the tax system. If the Minister wants to make taxpayers equal beneficiaries, surely the social welfare system should reflect that. There should be a move towards narrowing and eventually closing the gap between someone on unemployment assistance who receives £77.50 and a qualified adult dependant who receives £47, which is a 40% gap. CORI recommended that the ratio should be increased to 70%. It should be eliminated on a phased basis.

It is a tenuous argument that two people can live more cheaply than one person. If the same tax benefits are given to two people living together, why does the same not apply to social welfare benefits? It is not appropriate to give a smaller amount of social welfare to dependants, who are usually women. It is time we took a fresh look at our social welfare system and eliminated such sexism. We are in a position to do so now. Perhaps the Minister will outline what it would cost to increase the ratio to 70% and then to increase it by 10% over the next number of years.

Mrs. Ridge: I support the amendment.

 

Mr. D. Ahern: This issue has been around for some time. When I became Minister, the benchmark for qualified adults was 60%, as recommended by the Commission on Social Welfare. That was an undertaking in Partnership 2000 and we reached that over the past two years. A working group was then set up to look at married, cohabiting and one parent families and the connection between the tax and social welfare codes. It published a report in August. The issues relating to individualisation and the taxation system for which the Minister for Finance was wrongly criticised were examined in that report. A reading of the report shows that the working group could not agree on what should be done, although it made recommendations.

The working group looked at the qualified adult allowance and individualisation of the social welfare system. It suggested that the 60% level should be increased to 70%. The Government has accepted that and undertaken to move to the 70% level over a three year period, including this year. To start that process, we introduced in the budget increases in the qualified adult allowance of between 8% and 17%.

The working group looked at economies of scale in a family with a man and a woman. It is generally accepted that there are economies of scale due to the fact that people are living together. Qualified adult allowances will become less relevant in the medium to long term because the vast majority of people will be entitled to a payment in their own right.

We made a promise at the last election to help to provide pensions for women who took time off work to care for children or the elderly at home. I hope to progress that issue in the final two years of this Government so that women are given credit for taking time off work. While it is not an issue of individualisation, it is built into the issue of qualified adult allowance.

The Programme for Prosperity and Fairness also looked at the issue of individualisation. The social partners and the Government agreed to set up two groups under the programme to produce proposals to progress the implementation of administrative individualisation within the social welfare system. That is where payments can be split between husband and wife, although not necessarily in equal amounts.

The working group was also asked to produce proposals for the development of a fully inclusive social insurance model which would facilitate combining work and family responsibilities in the context of changing work and social patterns. Increasing payments to 70% of the personal rate in a full year would cost £38 million; it would cost £100 million to increase them to 80%, £144 million to increase them to 90% and £198 million to increase them to 100%. This is not an inconsiderable amount of money in the context of the overall social welfare package of about £400 million this year.

 

Mr. Costello: I thank the Minister for those figures. He indicated that he had agreed to bring the ratio up to 70% over a three year period. This is a fairly long period of time. Does he intend to revisit these figures over the duration of the national agreement, as I presume the three years is mentioned in that context? If the financial situation allows, does he intend to move towards the 80% ratio rather than stopping at 70%?

 

Mr. D. Ahern: We would all wish to go as high as possible and we will be considering this issue. The commitment is to do so over three years. Discussions on the partnership agreement and the agreement itself noted that the Government had committed itself to achieving this objective and there was no additional commitment in that respect, other than the issue of setting up the working group to progress administrative individualisation. Senators would wish us to move to a position where everyone would receive a payment in their own right. The issue of QAAs will diminish in the coming years because certain age groups are almost fully covered by the social insurance system.

 

Amendment, by leave, withdrawn.

Mr. Costello: I move amendment No. 3:

In page 5, between lines 13 and 14, to insert the following new subsection:

"(3) The Minister shall prepare and lay before both Houses of the Oireachtas a statement on the increase in the Consumer Price Index for the period of 1 January 2000 to 31 December 2000, within seven days of the publication of the relevant figures by the Central Statistics Office, and the statement shall compare the increase in the rates specified in Schedule A and Schedule B over the rates specified in the Social Welfare Act, 1999 in percentage terms with the increase in the Consumer Price Index for the said period.".

This amendment seeks to index social welfare payments to the consumer price index as the national agreement seeks to index salaries for those in employment. There is concern that inflation has begun to creep back into the economy. With the introduction of the euro and the linking of our open economy with the German economy, which has always been strong on anti-inflationary trends, it was thought that we would not see a recurrence of the situation which arose in the 1980s and early 1990s when inflation reached high levels. However, we have been surprised to find that Irish inflation is not on a par with that in Europe but seems to have a life of its own.

During debate on the Appropriation Act in this House last year, the Minister for Finance, Deputy McCreevy, said that the inflation rate for 1999 was 1.6%. However, by the end of January 2000 the figure had been adjusted to 4.4%. The OECD then came up with a figure of 4.6% and stated that the Irish rate was twice the European average and three times that in the UK. This is a serious concern and the budget has added to the problem as it seems to have skewed tax concessions disproportionately in favour of those who are already well off. These people are likely to purchase goods from sterling and dollar countries. The increase in the price of oil is also a serious consideration as it is priced in dollars.

There are serious inflationary considerations, yet there are no mechanisms to protect social welfare payments if the increase in inflation continues. The Minister for Finance indicated that he expects a further slight increase in inflation in the next month or two following which the rate will settle and decrease. However, he has been projecting such a stabilisation over the past six months when there was in unexpected increase.

The increase in the inflation rate is likely to continue. In such circumstances what protection will there be for social welfare payments? We are talking about an inflation rate of 4% to 5% and the average increases in social welfare payments will be 5% to 6%. This means that the increases could be wiped out during the year and, by the time they come into effect on 1 May, the monthly increase in the rate of inflation will be over 5%, as it probably is at present. This makes it more desirable to bring forward social welfare increases to as early a date as possible.

 

Mrs. Ridge: I support the amendment.

 

Mr. D. Ahern: Last year's social welfare payments were based on an average increase in the CPI of an estimated 2% over the year. The outturn for inflation last year was 1.6% which was lower than the increases. This time last year, I was criticised in the Dáil by Deputy De Rossa who claimed that the outturn for inflation for the year would be 6% to 7%. This was the indication at the start of the year because the CPI tends to be higher at that time because of the budget and so on. I said that the Deputy was wrong and that a number of economists were talking up inflation by saying that they expected it to be 6% for the year. The rate turned out to be 1.6% while the normally conservative Department of Finance predicted it would be 2%.

Deputy De Rossa suggested that the Government should make up any loss over the 2% increase. However, neither the Deputy nor the Department of Finance has called on me to reclaim for the State the difference between the 2% increase in payments and the 1.6% inflation rate. I would guard against any suggestiom that inflation will be in excess of the estimated figure and this year's figures are based on an expected increase of about 3% over the year.

It is acknowledged that there are a number of factors in the reckoning this year which were not included last year, particularly the Government decision, taken with the full knowledge of the implications it would have for the CPI, to increase cigarette prices in the budget. That caused a significant increase in the CPI in the first weeks of this year. That is why petrol and tobacco were not subject to increases in recent years - to hold down inflation. It was a strategic and innovative decision to use the money gained from the increase in tobacco prices for specialist research and facilities and cardiac equipment. That fund is dedicated to increasing the amount of money available for cardiac assistance for patients. We took the decision knowing that it would cause a slight increase in the CPI but that it would even out over the year.

Energy costs will also affect the CPI. Last year energy costs caused the CPI to rise by 1%. The Programme for Prosperity and Fairness is based on an estimated CPI increase of 2% to 2.5% over the two years and nine months of the programme.

Increases in social welfare have been ahead of the rate of inflation for each of the years I have been in office. Last year the CPI increased by 1.6% while social welfare increases were between 4% and 8.3%, a real increase of between 2.4% and 6.7%. This year the £7 increase for old age pensioners is a 7.9% to 8.9% increase, depending on the scheme. The general increase of £4 in social welfare payments is an increase of 5.2% to 5.6%. If the CPI increase is 3%, as is expected, there would be real increases of between 2.1% and 5.7% above the rate of inflation. We are looking at real increases in the qualified adult allowance of between 4.6% and 13.8%.

Irrespective of the increases, under the Programme for Prosperity and Fairness we are committed to a minimum rate for all social welfare old age pensioners of £100 per week by 2000 and to make substantial progress in increasing other social welfare payments to £100 per week. The social welfare recipient this year, even though there may a slight increase in the CPI, is well guarded and will still receive real increases above the rate of inflation. That will be borne out over the course of the year.

 

Mr. Costello: I understood that the projected rate of inflation for 1999 was 1.6%.

 

Mr. D. Ahern: No, the projected figure was 2%.

 

Mr. Costello: On the Appropriations Bill on 16 December, the Minister is on record as stating that the projected rate of inflation would be 1.6%. There may have been a different projection earlier in the year. I was under the impression, however, that when the figures were adjusted at the end of January it was discovered that the true rate of inflation was 3.9%. That figure was then readjusted and in January and February inflation was running at between 4% and 5%. The rate of inflation was low in the early part of 1999, contradicting what the Minister has said, that the rate of inflation is high at the start of the year and then decreases as the year goes on. In 1999 the rate of inflation was low in the first half of the year and rose dramatically in the second half of the year.

Out of the blue there has been substantial inflation in the economy. We should try to make good the difference and ensure that those in receipt of social welfare payments can keep pace with rising inflation. The system should be index linked to achieve that. Only time will tell if the Minister is right but there should be a mechanism in place to prevent detrimental effects on those in receipt of social welfare.

 

Mr. Connor: The Minister presents the Government's point of view about how social welfare payments have outstripped the rate of inflation. He makes comparisons against the basic necessities for those who are on social welfare. Many social welfare recipients live in rented accommodation, the price of which has increased far above anything included in the general rate of inflation. There have also been increases in transport costs. If one examines the price increases in a basket of typical goods and services for a person on social welfare, one will find that they are well up to the level of compensation the recipient gets from the increases in benefit or pension in the current year. It is unfair for the Minister to make comparisons which look good. We should make the comparison against the essentials for those who find themselves on low income, those who survive on social welfare benefits.

 

Mr. D. Ahern: The out-turn for the consumer price index for all items, as per their overall statistical release in February 2000, shows that in 1999 the percentage increase was 1.6%. The Minister for Finance was probably referring to that figure.

We make our calculations according to the rate of increase in the CPI from year to year. Every increase I have given has always been way ahead of the rate of inflation according to the CPI, the time honoured yardstick which is used. The fact that tobacco prices were increased will cause a distortionary effect in the CPI in the initial few months of the year but that will taper out. It will probably lead to an overall increase over the year but the rationale behind the price increase on tobacco was to put extra funds into preventing coronary disease and the effects of tobacco. Given that increases, particularly for old age pensioners, are 7.9%, as a minimum, and 8.9%, as a maximum, it is obvious that we will not reach that level in the CPI. It was fairly average over last year, although it was slightly higher in the last month than in previous months, which is relatively normal.

It is not an exact science and sometimes a Minister in my position would be somewhat worried that the forecast on which the figures are based might be wrong but, generally speaking, the Department of Finance has been fairly accurate in regard to the CPI. On Senator Connor's point, one can choose many things and say whether it is inflation but this is the time honoured yardstick and it is the only one on which we have to go at this point in time.

 

Mr. Connor: It suits.

 

Amendment put and declared lost.

 

Mrs. Ridge: I move amendment No. 4:

 

In page 5, between lines 13 and 14, to insert the following new subsection:

 

"(3) The Minister shall as soon as may be after the passing of this Act prepare and lay before both Houses of the Oireachtas a report on the rationale for the different commencement dates of social welfare and tax aspects of the annual budget and in particular the possibility of paying all social welfare increases from 6 April each year.".

 

Amendment put and declared lost.

 

Section 1 agreed to.

 

Sections 2 to 5, inclusive, agreed to.

SECTION 6

Mrs. Ridge: I move amendment No. 5:

In page 6, between lines 38 and 39, to insert the following subsection:

"(1) Not less than 3 months after the passing of this Act, the Minister shall prepare and lay before both Houses of the Oireachtas a report on the extent of child poverty in the country and on the feasibility, in the context of surplus funds in the Exchequer, of increasing child benefit to £25 per week for children under 5 years and by 25 per cent for children over 5 years.".

 

We tabled practically the same amendment last year. I remember the Minister's reasons for not acceding to the request to increase child benefit to £25 per week. He referred specifically to the discrepancy in regard to children over five years of age. I am sure the Minister will be pleased to know that we have tried to accommodate that by seeking a 25% increase for children over the age of five. I read the Official Report of the Dáil debates on the Bill and am in total agreement with the points raised. Recently we received the Combat Poverty Agency report and I am convinced that early intervention is the best form of assistance one can give to children who are at risk. I do not need to spell that out any further.

 

Mr. D. Ahern: The latest ESRI figures from the Living in Ireland survey show that the extent of consistent child poverty has fallen between 1994 and 1997 to 18% from 23% and to 15% from 17%, while the numbers living in households below the 50% relative income line fell from 29% in 1994 to 24% in 1997. My view generally is that the best way out of poverty - I believe every Member of the House will accept this - is to give people a job. In 1990 one million people were at work and in 2000 some 1.7 million are at work.

People would generally accept that inter-generational unemployment is decreasing. There was a time when people in my constituency from particular housing estates who put their address on an application form were refused a job. My experience in recent years is that these people are all getting jobs. It means the cycle of unemployment in their families is stopping. The best way out of poverty is a job.

I fully accept the issue of child poverty needs constant attention. That is one of the reasons my Department looked again at the type of targets we should meet in the recent national anti-poverty strategy. I specifically asked my Department to include in future references or targets what we should be doing to reduce child poverty. That issue was subsequently raised by the social partners and has been taken up in the new partnership agreement.

This amendment deals with payments between the ages of 0 to five and what one gives after the age of five for special increases. I have a basic view on this matter. Child benefit is the best way to address child poverty and to help families with children. It is a universal payment, irrespective of whether they are well off. Some people will say the well off should not get child benefit and there may cause for some discussion there in terms of the taxation of child benefit, which is not on the political agenda. As to whether the well off should not get child benefit and whether we should spend the resources better, that is a huge social and political issue which is not on our political agenda.

The amendment tries to target benefit at younger children. It has been suggested that between 0 and five years is the key time because when children go to school such matters are picked up. If a family has children aged two, three, four and five years and we give them these special under five payments, as each year passes another child will go over the threshold of £20 per week or whatever and that family will lose a dramatic amount of their weekly income over three years. One may say that is the way it should be but my children are aged nine and 11 years and the expense is no less now than when they were aged between 0 to five years. We would be open to much criticism from people who have children aged 12 or upwards and who would say children become more expensive as they get older, not less expensive. Just because children are over the age of five does not mean they no longer exist. Doing it this way means that one can only give a lesser payment per child because it is a scattergun approach. Of all the social welfare schemes, however, it is probably the best.

The issue of increasing child benefit will be kept on our agenda. In the Programme for Prosperity and Fairness, the Government has made a commitment that it will move towards a situation where the payment of child benefit will increase from £56 for the third and subsequent child to £100 over the period of the partnership. We will make substantial progress towards reaching that target. That means that dramatic increases in child benefit must be introduced in next year's budget and the following two budgets. For the reasons I stated, the way we are proceeding in this area is probably the best way.

There is a commitment in the partnership programme to bring forward a strategy on child care by the end of this year. That will address the issue of supply and demand in this area. By the end of my tenure of office, but more particularly by the end of the partnership agreement, I hope that child benefit will have increased fairly dramatically, that we will have made substantial progress towards increasing the current payment of £56 for the third and subsequent child to £100. That is a firm commitment in the partnership agreement.

 

Mrs. Ridge: I do not agree with what the Minister said about the costs incurred in respect of children who are over the age of five. My intention in tabling this amendment was that the parents of children would have access to a greater amount of child benefit when children require more care, particularly pre-school care. From the age of five children have access to a free school system and parents' outgoings are less than for children under that age.

 

Mr. Costello: I am glad the Minister acknowledged that child benefit is the best way to provide income to combat poverty and to distribute social benefit in this area. I agree with that. It was a major disappointment that there were no significant budgetary concessions in the area of child care. There was an expectation that tax concessions would be introduced in this area. A commitment was given in the 1997 Fianna Fáil manifesto that concessions would be introduced, but that did not come to pass.

As the Minister said, the years up to age five are significant. They are also significant in the sense that the State provides the smallest amount to parents in respect of child care to during those years. It does not provide a national system of support for the parents of children up to the age of five. It does not provide child care services, crèches or pre-school education. The primary school scheme provides for their education when children reach the age of four or five. While a good primary school system is in place, the State has not taken care of its responsibilities for children up to the age of four or five.

In the absence of targeted measures introduced by the Government to assist parents in caring for children, increasing child benefit would be a way to assist parents in this regard. This area needs to be addressed. I welcome the commitment to develop a strategy on child care in the Partnership for Prosperity and Fairness. We will have to consider introducing means testing, if we go down the road towards introducing significant increases. I would favour going down that road. We must address the infrastructure we are prepared to put in place to provide for the care and education of children prior to their attending primary school.

Coming from an area close to the Border, the Minister will appreciate that the first step taken by the then Minister for Education in Northern Ireland in the short-lived Executive was to provide a level of national pre-school education for children aged from three to four. That system is now in place in Northern Ireland. We have not provided any such system here. I am disappointed this section does not represent a significant move in the direction of improving the lot of children in terms of care and support.

Dr. Henry: I listened carefully to what the Minister said and I am sure his heart is in the right place in terms of what he wants to do for children, but it is most unfortunate that we seem to have lagged so far behind the rest of Europe in what we have done for pre-school children. We need to have a sense of urgency about addressing this matter. I accept a child strategy will be brought forward and that there is an interdepartmental examination of child care but, having children of his own, the Minister will appreciate that money is very important when children are small. Perhaps the needs of the parents of twins and triplets could also be taken into account as they incur a good deal of expense all at once.

The State's strategy in terms of its sense of responsibility for the early lives of children appears to be quite weak. The Minister probably saw the recent programme on Finnish nursery schools, which would make any mother with children attempting to work outside the home feel incredibly envious. Those strategies in Finland and similar strategies in France and other countries have been in place for decades. Despite cherishing the family in the Constitution, we seem to lag inordinately behind other countries in this area.

Whatever the Minister can secure in this area will be well worthwhile. I am sure he intends to progress this area as fast as possible. We know only too well from numerous sociological studies here and abroad how seriously childhood deprivation, especially in the early years, affects the later development of children in every way, not only educationally but mentally, psychologically and physically. Any money invested in the early lives of children is well worth spending. I am sure the Minister would have the support of every Member of the House in that regard.

 

Mr. D. Ahern: I am not the Minister with responsibility for child care. That area is the responsibility for the Minister for Justice, Equality and Law Reform.

 

Ms Ridge: All we want is money invested in child care.

 

Mr. D. Ahern: I am the Minister with responsibility for income support for children through the child benefit scheme. I smile when I hear people say no significant provision was made for children and child care generally in the budget, given that the budgetary provision for child benefit was £106 million, which represents a 25% increase on last year's allocation. That is a very significant increase. As I am of the view that child benefit should be provided for all children, the allocation of £106 million is spread more evenly throughout the system and the increases are probably not as high as people would wish.

Senator Costello said that nothing is being done in the area of child care, but that is not the case. Historically, a good deal of investment was made in the provision of child care, particularly in disadvantaged areas. I have responsibility for community development projects. The Deputy would be familiar with some of them around the country and probably in his constituency. Most of those premises have child care facilities, which were funded by my Department. The Department of Justice, Equality and Law Reform has also invested in this area over the years, although not as much as we would like.

An amount of £250 million will be invested in the supply side of child care over the term of the national plan. In this year's budget, the Minister for Finance, Deputy McCreevy, announced that £46 million would be invested in the supply side. From an objective point of view, there is no point in investing a major amount of money in the demand side unless the required number of places are available. The position is similar to the £3,000 housing grant. All that did was put money into the pockets of the builders. The price of houses increased by £3,000. It did not solve the problem it was designed to address. Supply must be created before the amount of money is increased in relation to demand and more money is put into families' pockets. This is what the Minister for Finance, Deputy McCreevy, and the Minister for Justice, Equality and Law Reform, Deputy O'Donoghue, are trying to achieve with the £46 million. An equal amount of money will be paid every year over the period of the national plan.

As I said in the other House, the Government will find it difficult to spent the full £46 million by the end of the year on increasing the supply. I have received £5 million for my area to provide out of school hours services under community development projects. I hope to have a scheme publicised and to have received applications for it by next month.

Senator Henry referred to Finland. We have considered the position there and everyone would wish to emulate it. However, it is unfair to criticise the situation in Ireland given that the country has been on its feet only for a few decades. In financial terms, the country has been on its feet only for a few years and in a position where it could be said that some money was available for this type of investment. Ireland is a developing country in this respect and the issue must be considered in strategic terms. There are as many opinions on this issue as there are Senators and Deputies in the Houses of the Oireachtas.

The new Programme for Prosperity and Fairness undertakes to come up with a strategy. I hope that by the end of the year there will be some indication in that regard. I also hope that the commitment in the programme to substantially increase child benefit will be part of the overall strategy.

 

Amendment put and declared lost.

 

Section 6 agreed to.

 

Sections 7 to 9, inclusive, agreed to.

 

NEW SECTION.

 

An Cathaoirleach: Amendments Nos. 6 and 7 are related and may be discussed together. Is that agreed? Agreed.

 

Mr. Connor: I move amendment No. 6:

In page 8, before Section 10, but in Part III, to insert the following new section:

"10.- The Minister shall consider the implications of-

(a) paying the respite care grant to all carers including those who are presently excluded by the means test,

(b) increasing the present weekly income disregard to £250 per week, and

(c) removing the disqualification whereby Carers in receipt of social welfare payments are effectively excluded from qualifying for a carer's allowance,

and shall report to Dáil Éireann thereon within 3 months of the passing of this Act.".

 

The amendment asks the Minister to consider the implications of paying the respite care grant to all carers, including the many carers who are currently excluded by the means test. It also asks the Minister to consider increasing the current weekly income disregard to £250 per week and removing the disqualification whereby a carer who is in receipt of a social welfare payment is effectively excluded from qualifying for a carer's allowance. Perhaps the Minister could deal with the issues raised in the amendment before I elaborate further.

Mr. D. Ahern: I was the first Minister to bring forward a £200 respite care grant. This was paid on 3 June 1999 to 12,000 carers at a cost of £2.4 million. This grant is paid to carers who are receiving the prescribed relative's allowance and the constant attendance allowance. It will also be paid to carers who are in receipt of the new carer's benefit which was introduced in the budget. From this year, the Department of Health and Children will pay respite care grants to all persons in receipt of a domiciliary care allowance who are not in receipt of a carer's allowance. This is another new change.

Based on the estimated 50,000 people who are caring for adults and children with disabilities, the cost of paying this respite grant to all carers would be in the region of £15 million a year. There is a need to consider that in the context of the budget. The figure of 50,000 is a rough estimate.

 

Mr. Connor: It could be 100,000, according to the Carers Association.

 

Mr. D. Ahern: It could be closer to 100,000.

 

Mr. Connor: Yes.

 

Mr. D. Ahern: The issue then is how to decide which carers would be entitled to the grant, based on the type of care required. One could ask how long is a piece of string, but ultimately one must target resources at those most in need. The more it is extended, the more difficult it becomes to manage in terms of whether the money is going to the right people.

At present, all those in receipt of a carer's allowance will receive the respite care grant. The sum was £200 last year but this will be increased this year by £100, bringing the total to £300. I hope that, over a number of years, the total will be gradually increased to make it a reasonable payment to those in receipt of carer's allowance.

In relation to the income disregard, I made changes in the 1999 budget whereby the first £150 of joint weekly income for married carers was not taken into account. In the case of single earners, the first £75 of weekly income was disregarded. If the disregard was increased to £125 for a single person and £250 for a couple, as suggested in the amendment, the estimated cost would be approximately £16.5 million.

Regarding the issue of removing the disqualification whereby carers in receipt of social welfare payments are effectively excluded from qualifying for the carer's allowance, a review of the carers allowance was published in 1998. It noted that the carer's allowance is an income support payment and not a payment for caring. The review suggested strongly that the practice of paying only one allowance should continue as it is a fundamental feature, with few exceptions, of all social welfare payments and is designed to ensure that limited resources are not used to make two income support payments to an individual. I will return to this matter if the Senator has a view on it.

There have been calls for the abolition of the means test; it has become a clarion cry. No payment under the social welfare code in the social assistance area, with the exception of child benefit, is not means tested. The rationale behind means testing in the social welfare area is to ensure that the available resources go to the people most in need. For example, if the Minister has a certain amount of money, it may be suggested that the means test should be abolished. However, if that happened, somebody who is very well off and caring for somebody in the home would be as entitled to a carer's allowance payment of approximately £88 as a person with a very low income. I do not agree with that. If there is a certain amount of money to give in this area, it should be targeted at those most in need.

I am not dismissing the difficulties people face, irrespective of their income. Each couple has particular difficulties in relation to caring for people in the home. However, ultimately, the State will never be able to repay a family for minding an incapacitated person in the home. The State is not in a position to do so, but it can give income support to low income families to help them meet some of their needs. This is the rationale behind it and it is generally accepted that the abolition of the means test is not feasible, irrespective of the political party in Government at this time. Abolishing the means test - based on a figure of 50,000 carers - would cost the Exchequer £150 million in a full year.

 

Mr. Connor: The Minister has trotted out old arguments relating to the cost of carer's allowance without considering the money which would be saved in other areas if we put in place a more comprehensive home/care allowance system. Every welfare home and private nursing home that cares for elderly people is literally bulging at the seams.

Let us examine the case of an ordinary person who is being cared for in a welfare home which is funded by one of the eight health boards. The only contribution that person may make to their own care is through their non-contributory old age pension and the net cost to the State for their care will be approximately £400 to £500 per week.

The amendment requests that the work done by all those who provide care for elderly parents, relatives or neighbours be recognised. There are approximately 14,000 recognised carers in the country. However, the Minister has admitted that there are probably at least 50,000 carers while the Carers Association has informed us that there are at least 100,000 people who provide care in the home for people who need it.

The Minister indicated that it would cost £16.5 million if he was to increase the current weekly income disregard to £250 per week. One cannot ignore the fact that this is a large sum but we must consider the beneficial social impact which would result from its being spent in this area. If the disregard was increased to £250 per week, I believe the number entitled to the carer's allowance would rise to approximately 20,000. However, it would also mean that thousands of people who not have to be cared for in public institutions.

 

Mr. D. Ahern: I will outline the exact position with regard to the figure of £16.5 million when replying to the Senator.

 

Mr. Connor: We are dwelling on the cost involved in increasing the income disregard but we must also recognise that there are huge savings to be made. Such an increase would eliminate the need to provide thousands of beds for the elderly in welfare homes, particularly if these people do not require daily nursing or direct medical care. The best place to care for an elderly person who is, to one degree or another, incapacitated is in their home. The Minister indicated that increasing the income disregard would cost £16.5 million. Has his Department considered the savings on the other side, particularly in view of the huge costs incurred by the health boards?

The Minister indicated that a report has been carried out into removing the disqualification whereby carers in receipt of social welfare payments are effectively excluded from qualifying for the carer's allowance and he appears to be keeping an open mind on the subject. There is a need to give careful consideration to this matter because there are people who are in receipt of reduced rates of unemployment benefit or assistance because they probably have some form of income from part-time work or another source. However, some of these people also provide care for elderly parents or relatives and if they seek payment of a carer's allowance it is paid at an almost identical rate to the benefit they already receive. The individuals to whom I refer hardly benefit by being willing to provide care for elderly relatives or other elderly people. I see nothing wrong with paying these people a supplement on their social welfare income which, where relevant, would comprise a carer's allowance.

The amendment requests that the Minister should investigate this matter and report to the Dáil within three months of the Bill being enacted. In my opinion he should produce a comprehensive report because while the suggested changes may result in additional expenditure, there will also be huge savings. The report, if it is to be meaningful, should consider this matter in the context of the savings which may be made in addition to looking at the extra expenditure involved. That is the reason for the amendment.

There is no justice in the fact that only one-quarter of recognised carers qualify for the carer's allowance. There is a pressing need to increase the income disregard to allow at least a further 10,000 people to qualify. We should tackle this matter progressively so that, in less than five years, at least 50,000 carers will receive some recompense from the State for the highly essential work they do.

 

Dr. Henry: When the Minister for Finance, Deputy McCreevy, came before the House shortly after introducing the Finance Bill in the Dáil, I strongly supported the individualisation of taxation because, having been taxed for all my adult life on the basis of the earnings of another person, I realised that people can be placed in a very invidious position. It is for that reason I support the individualisation of the carer's allowance put forward in these amendments. It is not right that payment should be dependent on the earnings of another adult.

I stated that individualisation was correct in relation to taxation and I believe it is also correct to introduce individualisation in respect of these benefits. I also stated that it was right in terms of the universal payment of child benefit because one never knows how much money is being passed on to those who are doing the caring, be it for children or old people.

The officials in the Department of Finance who deal with taxation should be able to devise a scheme where funds could be recouped from the families of the rich if they were receiving an inordinate amount of money because some woman - it would definitely be a woman - whose husband earned a great deal of money, stayed at home to care for an elderly relative. Elderly people who are well off deserve as much care, comfort and attention from their families as those who are poor. I would like these people to be nurtured in the bosoms of their families for as long as possible.

The provision of resources is splendid because it is easier if one can hire a home help or afford to place one's relatives in a nursing home. However, old people like to remain at home for as long as possible and any support we can give them in that regard is also very important.

 

Mr. Costello: I agree with the comments made by Senators Connor and Henry. The carer's allowance was a good initiative when it was introduced but we have been slow to extend it and use it to the full.

If only one quarter of carers are covered by the terms of the carer's allowance - the Minister estimates the total number of carers at 50,000 while the carers' organisations believe it is higher - it is clear that we have concentrated too much on the criteria under which people are entitled to the allowance rather than expanding the allowance to as many people as possible.

I agree with Senator Connor. If one compares the amount of money the State pays for respite, residential and other forms of care through subsidies and so forth with the benefit of primary care being provided by a close relative, friend or spouse, there is no comparison in human terms and in terms of the best use of resources. The cost of residential care is exorbitant and the health boards are paying substantial sums to people who qualify for subsidies for such care. Can the Minister outline the amount the State is paying in lieu of paying a proper carer's allowance to a wider group of people who should qualify for it? We should be more flexible in this regard. If there is a carer, let us find a way of employing him or her in situ. It should be looked at in those terms rather than as an income support or in a context where the State must ensure no extra income or second social welfare payment is given to the carer.

I am not convinced that it should not be considered on the same basis as child benefit. The Minister pointed out that child benefit is not means tested. In this case we are also discussing the vulnerable, the incapacitated and the elderly. Indeed, we may be talking about emergency or critical situations. When the costs are added up in all situations, the Minister will discover there would be greater benefit from extending the carer's allowance across the board. He mentioned a sum of £150 million. We can discuss a gradual improvement in the position but can the Minister give us figures with regard to the gap that would have to be bridged if one were to deduct what is already contributed by the taxpayer through the Minister's Department and the Department of Health and Children to various residential homes in the State? We should examine the difference and carry out a cost benefit analysis. We could then see whether it is possible to move along the lines proposed by Senator Connor and me.

Ms Leonard: Senator Costello said there had been slow movement on this allowance since its introduction in the early 1990s. I agree there was slow progress on it until the current Minister came to office. However, there have been many improvements to the scheme since his appointment. Free travel was introduced for carers and this year sees the introduction of free telephone rental. Last year's budget relaxed the residency rule and carers for people between the ages of 16 and 65 years are now eligible to apply for the allowance. The carer's benefit was also increased this year. A number of changes have taken place quite rapidly in this allowance.

I said on Second Stage that I do not support the abolition of the means test. There would not be a level playing field if a family with an income of between £40,000 and £50,000 per year with only one individual at home were to receive the same amount of money as a family living on a low income. We should target the people who are most in need.

There has been reference to the disqualification of carers who are already in receipt of a social welfare payment. The carer's allowance is an income support for the carer. It is not a payment to the care recipient. In many cases care recipients are already in receipt of old age pension or other payments. The carer's allowance, however, is to support the carer's income.

I understand a review of the carer's allowance is taking place which will look at the care recipients and their needs. That is something we should take on board as this scheme is developed further. I agree with the comments of previous speakers about the increase in the number of elderly people who will require care and the cost of that. Reports indicate there will be a huge increase in the elderly population and that must be addressed in the long term in the context of the carer's allowance. We should look at the needs of the care recipient and put the money in that area rather than abolishing the means test. That would ensure the people we claim we are trying to help, that is, the people most in need, will benefit in the long run.

It is disingenuous not to acknowledge that there have been huge changes in the carer's allowance scheme in the last three years.

 

Mr. Glynn: It is important to point out that in many cases it is necessary for people to be put in residential care because of their needs. In most cases, although there are exceptions to every rule, it should be borne in mind that they are assessed and there are clear criteria in the assessment process. In order to meet the service needs of these people, it is necessary for them to be in institutional care. There are many reasons for this, not the least of which is that the appropriate rehabilitation processes will be undergone in residential care.

In many cases, people in need of care cannot be looked after in the home situation. It is incorrect, therefore, to make the blanket assertion that many people in residential care could be looked after in the home. There are many carers in this country. There is a long and time honoured tradition in this and other countries that people care for others simply because they care. That is most important.

I agree with Senator Leonard with regard to the alacrity with which the Minister has dealt with a serious situation pertaining to the concept of care and the recipients of care. He has done it effectively in a relatively short time. However, we must conserve our resources for those who need them and not spread them to all and sundry like snuff at a wake. We would like to see people cared for in the best possible situation but in many cases residential care is the most appropriate.

 

Mr. D. Ahern: I reject Senator Costello's assertion that things have moved slowly in this area. The carer's allowance was introduced as recently as 1990 by my predecessor, Deputy Woods. The estimated expenditure in that year was £100,000 and at the end of this year it will have increased to £78 million. I do not believe the funding allocated to any other social welfare scheme has increased as dramatically. When I took up office the expenditure on the allowance was £35 million and the numbers in receipt of it were 9,500. At the end of this year we estimate that number will have increased to between approximately 17,000 to 18,000.

Senator Costello said there is little or no difference between the carer's allowance and unemployment payments. Following changes I have introduced, those in receipt of the carer's allowance are now in receipt of all the free schemes. In the social welfare code it is estimated that anybody in receipt of all the social welfare schemes gets entitlements to the value of £13 to £14 per week extra. In addition, somebody in receipt of carer's allowance will get a higher weekly payment than a person in receipt of an unemployment payment. Despite the fact that the money allocated to the carer's allowance has increased dramatically much more needs to be done. I am aware Senators and Deputies have received many representations on the issue. We cannot look at the carer's allowance in isolation; we must look at all the other aspects.

Senator Connor referred to the payments in respect of the various helps, including home helps, the health board subventions and the carer's allowance. I do not have the figures before me because the issue of caring for people is generally not in my area. However, I am concerned with income support for carers. The Department of Health and Children deals with other aspects.

I have looked at the short term over a number of budgets and have made changes from year to year, but we now need to look at the broader issue of an ever increasing aging population. I have provided the House with the figures on old age pensioners. At present there are 440,000 people aged over 65 years. In 50 years time - it is not too far away - this will have risen to one million and there will be far fewer people working to support the extra 600,000 people.

The pensions aspect has been looked after jointly by my Department and the Department for Finance with the reserve fund. Strategically, the State should look at what needs to be done for the care of the elderly in the medium to long term. In this regard I have had a number of meetings with my colleague, the Minister for Health and Children, Deputy Martin, to see if we can perhaps look at the amalgamation of all the assistance to carers.

We should not lose sight of the fact that in recent years dramatic financial intervention has been made to the care recipient, the person who has the disability or the infirm person. My Department set up a review to look at the carer's allowance, the issue for which I have responsibility, to see where we were going after ten years.

Some Senators referred to the issue of keeping people at home rather than in institutions. Every politician and Government would wish that families be given the opportunity to keep people at home as much as possible. Senator Glynn made a relevant point - one that has not been made - on needs assessment. What do people need? He rightly says that people in institutions are fully assessed.

The carer's allowance is paid on a doctor's certificate and the same amount of money is given to everybody, irrespective of whether one case is more difficult than the other. That is an inequity. The carer's allowance review looked at this and took a view on the question of whether people should be kept at home or in institutions. It suggests that community care can be as costly, if not more so, than institutional care where a proper and adequate range of community services are provided in the community. This is because the medical professionals involved mainly deal with people on a one to one basis. It is also the case that many people being cared for at home spend a certain time in hospitals. This is reflected in the allocation of £100,000 to the carer's allowance in 1990 compared with an estimated £78 million in 2000.

When he established this scheme I have no doubt the then Minister, Deputy Woods, made the case that it would reduce the amount of money needed by the Department of Health. However, there was no saving because an ever increasing amount of money is required anad it did not result in a reduction in health spending.

When I took up office it was clear that the scheme needed to be looked at again. All but one of the recommendations of the carer's allowance review, published in October 1998, have been implemented by me in the last two budgets, including the free schemes. This year I am introducing a carer's benefit, recommended in the review. It is a non-means tested payment, a PRSI based payment. We estimate it will go to another 6,600 carers and will increase the number of people in receipt of payment from the State.

Needs assessment is the only issue not fulfilled from the carer's allowance review. The review suggested that there should be a non-means tested continual care payment over and above the carer's allowance to be given to those people who are most in need, not only the carer but also the care recipient. However, it said it could only be introduced in the context of the implementation of a complete system of needs assessment. That would arise where a health board would look at each individual case and determine the needs of the carer and the care recipient. It does not only cover financial assistance but all the other assistances they need, whether it be changes to their house, the type of home help required, etc. That is a longer-term issue. The Minister of State at the Department of Health and Children, Deputy Moffatt, is chairing a committee established between his Department and my Department to advance the issue of needs assessment.

The only other main bone of contention in the carer's allowance is the issue of doing away with the means test completely. Given the fact that I have now implemented all but one of the recommendations of the carer's allowance review - I hope the outstanding recommendation is now in the process of being advanced - I will, in the year left to me in this ministry, look at the issue of increasing the disregard that is currently in place. This was not recommended in the review. I will look at the issue of an increase in the disregard in my consideration for the budget next year to ensure more people qualify for the carer's allowance. That, however, will not solve all the problems in this area. It is my intention to look at this issue on a medium to long-term basis.

Amendment, by leave, withdrawn.

SECTION 10.

Question proposed: "That section 10 stand part of the Bill."

 

Mr. Connor: My query relates to the new section 82G which deals with a concept introduced by section 10 of last year's Social Welfare Act to define who is a "relevant person" entitled to a carer's allowance. A new medical division, set up by the Department to deal with the matter, has been notoriously slow in reaching decisions. Many applications take months to be processed. I am innately suspicious of advice provided by the Department of Social, Community and Family Affairs because medical referees have a very poor reputation in determining what would be regarded as objective assessments of people eligible for disability benefit. Approximately 10,000 people in Ireland suffer from ME yet no medical adviser in the Department would recognise those people as ill or unable to work. Such people are entitled through contribution payments to disability or sickness benefit or, if non-contributory, disability allowance.

The degree of incapacity which an elderly person must suffer to be eligible for a carer's allowance seems to have changed. People are now subject to medical examination. Section 28 - which I may be unable to discuss as we have not reached it - lays down in greater detail what is meant by medical incapacity or physical incapacity to qualify for a carer's allowance. I suspect we are raising the crossbar to disqualify many of the people who formerly qualified for that allowance. In other words, people will have to be totally incapacitated before they become eligible for the allowance. Such things have not been defined in previous legislation. Perhaps it is not bad that we define them now. These matters are determined by medical advisers in the Department who have anything but a good reputation for arriving at objective decisions in regard to a person's illness or degree of incapacity. One only has to look at the number of decisions given by medical referees and overturned by the independent appeals officers. That problem has never been tackled by the Department. One glaring example is persons suffering from ME. The medical advisers in the Department have determined that no such illness as ME exists, although 10,000 people are recognised by the medical profession as suffering from it.

 

An Cathaoirleach: Senator Connor is broadening the debate.

Mr. Connor: I thank you for your indulgence, a Chathaoirligh. I am giving an example of the degree to which the medical advisers err on the side of saving money. I would like to hear the Minister's comments on that matter.

 

Mr. D. Ahern: There have been suggestions that my Department is dramatically cutting people off the carer's allowance.

 

Mr. Connor: It is true.

 

Mr. D. Ahern: The figures to date show that 14 claims were disallowed on the basis that they did not fulfil the full-time care and attention condition, six of which were reinstated following appeal. This clearly indicates that the level of carers having their allowance terminated with regard to the eligibility criterion is very small.

 

Mr. Connor: The six people reinstated must be living in my constituency.

 

Mr. D. Ahern: It is at variance with the suggestion trotted out publicly in the media in recent times that this practice is widespread. Very few people in my constituency have been struck off the carer's allowance because of the full-time care and attention requirement.

 

Mr. Connor: Do the figures apply to those currently applying? I understand the Minister's figures relate to those already in receipt of the allowance. I am talking about people who never get past the application stage because they are disqualified for health reasons.

 

Mr. D. Ahern: We discussed this issue with some of the organisations who raised this issue with our officials. We are not trying restrict eligibility, we are trying to make things more transparent so that if a dispute arises a person can be medically assessed and the matter can then go through the appeal process. The medical advisers in the Department are qualified medical practitioners who are updated on all issues in the medical field. While people might be dissatisfied with particular cases, in general the appeals system and medical assessment in the Department work well. It has stood the test of time.

 

Mr. Connor: I agree with what the Minister says as regards the appeals system but I do not agree with him about the medical assessments.

 

Mr. D. Ahern: I assure Senator Connor that there has been no change in the criteria for eligibility for this allowance or the way in which they are interpreted as a result of my being in office.

 

Question put and agreed to.

 

Sections 11 and 12 agreed to.

 

size="2" face="Arial, Helvetica">Amendment No. 7 not moved.

 

NEW SECTION.

Mr. Connor: I move amendment No. 8:

8. In page 13, before Section 13, but in Part IV, to insert the following new section:

"(13) The Minister shall, having regard to the financial difficulties encountered by widows and widowers, prepare a report and lay same before Dáil Éireann on the feasibility of extending to all widows and widowers

(a) the Free Travel Pass,

(b) the Free Electricity Allowance, and

(c) the Free Telephone Rental Allowance,

which report should also review the possibility of a special increase payment to widows and widowers who have no source of income other than Social Welfare.".

This is a simple amendment which relates to benefits accruing to widows in receipt of widow's contributory or non-contributory pension. The amendment asks that the Minister look at the feasibility of extending to all widows and widowers the free travel pass, the free electricity allowance and the free telephone rental allowance and consider a special increase for widows and widowers who have no source of income other than social welfare. A number of reports have shown that poverty is very pervasive among widows and widowers. For example, a person in her fifties who has been widowed for five or six years and is in receipt only of a non-contributory pension lives below the poverty line. She is not entitled to a living alone allowance or a free telephone rental allowance, nor is she entitled to a free travel pass or a free electricity allowance - both of which are age related.

Extending those allowances to widows and widowers would be a generous gesture which would not cost a lot of money. This amendment only asks the Minister to consider the feasibility of extending these allowances and to report to the Dáil. I hope we can obtain the views of the Minister and those of his Department in that regard and the cost entailed before publication of the 2001 Social Welfare Bill.

No doubt the Minister will try to gainsay what I have said by suggesting that extending these allowances will cost prohibitive sums of money, but I do not believe that is the case. Ordinary fair play demands such allowances be applied to this category of social welfare recipient. Widows are often lonely people on a low income and so many find themselves in a situation where, because the husband was the sole bread winner, they are at a stage in life where they are unable to find a job. Often a widow's only income is a non-contributory widow's pension or, if she is fortunate enough, a contributory widow's pension based on her husband's contributions. Of course, this situation exists for many men also. At a minimum, these small concessions could be extended to this category of social welfare recipients.

 

Mr. L. Fitzgerald: Before I refer to an area directly related to the amendment, I welcome the Minister. This is my first opportunity to address him in this House. I regret missing the Second Stage debate and look forward to contributing and highlighting some of the major achievements and laudable initiatives taken by him since becoming Minister for Social Welfare. I commend him on his many fine achievements on which he can proudly look back in the two and a half year term of office.

I refer specifically to what is regarded by a category of civil and public servants as discrimination against them under social welfare legislation. Under the present legislation, practically all categories of residents in the State, with one major exception, will, on reaching the age of 66, have an underlying entitlement to secondary benefits including free electricity and the others mentioned, by virtue of being awarded an old age pension, whether contributory or non-contributory. The major exception comprises solely civil and public servants recruited prior to 6 April 1995 as established officers. A further exception is the lower paid civil and public servants who may qualify on a means test basis.

The introduction of PRSI for self-employed persons in 1988 means that even the richest in the State, the millionaires, may now qualify for an underlying entitlement or a secondary benefit known as the free electricity scheme and the others to which I have referred by virtue of having qualified for the old age contributory pension based on as little as five years' PRSI contributions paid in a lifetime, yet the majority of civil and public servants have paid 45 plus years PRSI at a compulsory modified rate and are denied those benefits.

Over the past few years, the contribution to qualify for the old age contributory pension has been diluted considerably for both the self-employed person and the private sector employee, yet the civil and public servants, the majority of whom pay PRSI for 45 plus years, have been completely forgotten about as far as the improved benefits for PRSI employees are concerned. Unfortunately, it requires the death of a spouse for the civil and public service pensioner to qualify for the underlying entitlement and other secondary benefits at any age from 66 onwards. When one looks at this discrimination in the context of the Equal Status Bill, 1999, the current budget proposes that all residents in the State will qualify for an underlying entitlement to free electricity, etc. on reaching 75 years of age which I laud and strongly welcome. Nevertheless, the Equal Status Bill provides, inter alia, for the promotion of equality and prohibits discrimination on specific grounds, yet it appears that discrimination is inherent in this provision.I stand to be corrected if the Minister feels otherwise, .

The point was made earlier that where there are not unlimited resources, we must discriminate in favour of those in greatest need. While accepting that principle, if there is a glaring anomaly as appears to be the case here, it should be considered again and I appeal to the Minister to do so. There is an underlying entitlement to free electricity or a secondary benefit under the PRSI scheme which is usually available to the self-employed and the private sector employees at the age of 66. It is available, exceptionally, at a lower age in long-term sickness cases. Surely it is discriminatory that this underlying entitlement or secondary benefit is available to civil and public servants only when they reach the age of 75. The Minister should seriously consider and address this issue as an anomaly contrary to and in conflict with the principle and the sections of the Equal Status Bill.

 

Mr. D. Ahern: I will address the last point first. I made changes in this budget which mean that for the first time anyone over the age of 75, irrespective of income and household make up, will be entitled as a right to all the free schemes. This was done as a nod in the direction of elderly people. The point raised by Senator Fitzgerald has been an issue for many years and relates to the fact that public servants have not paid a full stamp historically and, therefore, have not been entitled to the secondary benefits. There is a review of the free schemes and the issue to which Senator Fitzgerald referred is being examined as part of the review process. I cannot be sure of the outcome of the review but I understand why it is a bone of contention, given the fact that in recent years in particular - and there have been examples in my area - the issue of PRSI contributions and the qualifying criteria have been changed somewhat or relaxed. Once the goal posts in social welfare are moved, one is under pressure to move them continuously as it creates a situation where somebody will be disadvantaged on one side or the other.

The free schemes issue was considered in the mid-nineties and it was amended to allow low income pensioners who were not in receipt of social welfare type pensions and who qualified on the basis of a means test to qualify for these free schemes. The weekly income limit fixed for this purpose is the maximum personal rate of old age pension plus £30 and any increases for qualified adults, dependant children, those living alone, as appropriate. The make up of this income limit means it increases automatically each year on foot of the budget increases in pension rates. The pension has increased more dramatically in recent years and has caused the limit to increase fairly dramatically.

This issue is being considered in the review. The Government will have to consider the recommendations of the review in the context of future budgets. It is hoped that review will be published soon but I cannot remember when.

Regarding the point raised by Senator Connor in his amendment, the issue of widows has been on my agenda. He asked me to examine this in the context of next year's budget. I have done so in the context of this year's budget as a result of representations from all sides of the House and especially from my parliamentary party where we recently had a number of discussions on this issue of looking after widows. The difficulty is that, whatever is done for widows would also in equity have to be done for one parent families and the long-term unemployed. It cannot be seen in isolation because widows are part of the one parent family issue. If we did it for them, we could then be accused of discrimination and we know what happened recently regarding the equal treatment issue.

To extend the free schemes, as suggested in the amendment, to 37,000 widows and widowers under 66 would cost £25 million. As I said, if it were to be extended to widows, it would have to be done for deserted wives, lone parents and long-term unemployed single people, so in effect it would be adding another £40 million, which amounts to a total of £65 million. I examined the issue of free schemes for widows, but for the reasons I have outlined and a number of others, I could not do it this year.

I examined an alternative, which was the introduction of a special £1,000 grant for widows with children, and that is now in place as a result of the legislation. It is an area on which I will keep a close eye because it is something about which I receive many representations.

 

Amendment put and declared lost.

 

Sections 13 to 15, inclusive, agreed to.

SECTION 16.

Question proposed: "That section 16 stand part of the Bill."

Mr. Glynn: I welcome the Bill. I raise the issue of those who left the workforce due to the marriage bar, something which has been raised a number of times recently. People had to leave employment, professional employment in many cases, because of the marriage bar. Perhaps the Minister could examine this situation and give us his views on it. They were unfairly treated and it is a long-running sore for many women who are primarily the sufferers.

 

Mr. Connor: I welcome the fact that an anomaly which people felt was very unjust has been recognised and that the Bill now allows for account to be taken of at least some of the contributions made by workers before 1953. Another issue is the improvements made by the Minister and his predecessor whereby people in insurable employment who do not have ten years' contributions are entitled to a pro rata pension where they have a minimum of five years' contributions.

There is an anomaly whereby some self-employed people who could have paid contributions were not required to do so because of their level of income. One does not pay pension contributions if one's income in a year is below a certain level. Many of these people, although they could have paid contributions, found they were not required to do so under their tax assessments. Although they believe they should be legally entitled to a pension, they now find that those years where the taxation and social welfare systems found they did not have to pay contributions are held against them. The Minister should examine the situation where a person fully complied and paid whatever taxes were due but did not make a contribution because of their low income. Those years where contributions were not made because of the level of income should be reckonable for pension purposes. That is all I ask of the Minister.

I met a person last year who was eligible to make contributions for five years, which would have given him a pro rata pension, but because he did not make a contribution in one year because his income level did not justify it, he was disqualified for a pro rata old age pension. That is unfair and the Minister should examine it.

 

Mr. D. Ahern: I understand that anyone self-employed after 1988 has to make some contribution. People such as the Senator refers to would have made some contribution irrespective of their income level. They would have had to make a minimum contribution.

 

Mr. Connor:Yes, but my understanding is that, because of their income level, it did not go towards their pension.

 

Mr. D. Ahern: My understanding is that, irrespective of their income, they had to make a minimum payment to PRSI which would have qualified them. If the Senator knows of a specific case, we can check it if he brings it to my attention.

Regarding the other issue raised by Senator Glynn, we have made political commitments to do something to assist people who took time out to mind people in the home, and that would also encompass married women, such as my deceased mother, who had to give up their jobs once they married. That is the type of injustice we should move towards rectifying so that people in those circumstances would at least be given the opportunity to have a pension in their own right. It is on my agenda. A scheme called the homemaker's scheme exists which deals with cases as far back as 1994 but it does not cater for the people to whom Senator Glynn referred. I thank him and Senator Connor for their comments about the pre-1953 changes.

 

Question put and agreed to.

 

Section 17 agreed to.

 

SECTION 18.

Question proposed: "That section 18 stand part of the Bill."

 

Mr. Connor: This refers to improvements in the farm assist scheme. While I welcome them, there are many more improvements the Minister could make. Many farmers have found they were better off under the old assessment of means scheme.

I wish to raise a bone of contention which I have raised with almost every Minister for Social, Community and Family Affairs on Social Welfare Bills in both this House and the other House. It relates to the level of notionality, so to speak, which still exists in the regulations governing the assessment of farm income for schemes such as farm assist. The Minister's Department does not allow certain items to be taken into account, such as depreciating assets on the farm. If a small farmer applies for farm assist, he lists all his expenses and gross income from sale of produce and subsidies. However, he is not allowed to include the depreciation of fixed assets, such as farm out-offices, machinery, fences, farm roads, etc., although he is allowed to do so under the tax code. I cannot understand why we allow that injustice to continue. We allow it for a system which collects tax but we do not allow it for social welfare recipients who are less vocal and powerful.

It was unjust that all assessments up to 1984 or 1985 were notional. Gemma Hussey was responsible for changing it from a notional system to a factual one. A farmer was not told that because he had ten livestock units of a certain age his income was a certain amount based on a notional assessment. He was told he must prepare a proper balance sheet which included his expenses and his gross income and that one would be subtracted from the other to assess a factual income. If 12 animals are sold in a year, the social welfare officer, acting on instructions from the Department, will say the average annual sale is above that figure, not below it.

An IN93 form is used by the Department. Where there is an assessment against a person who has a farm, regardless of whether it is small or large or they are looking for the farm assist payment, an old age pension or a disability allowance, the element of notionality, so to speak, will be introduced. That is unjust and it should not be there. The Department tried to claw back some of the advantage it felt farmers had under the old notional system. It reintroduced it into the actual system which has been on the Statute Book for 15 or 16 years.

I ask the Minister to take those points on board. I asked him to do so last year and I made the same request to Deputy De Rossa the year before. I am like St. John who cried in the wilderness but I do not know if my diet will be locusts and honey.

 

Mr. D. Ahern: This issue keeps coming up and it seems to cause difficulty. Sometimes people misunderstand the assessment carried out by the Department of Social, Community and Family Affairs and the Department of Finance. They are not and will not be the same.

Mr. Connor: They determine income.

 

Mr. D. Ahern: No. That is accepted by all the farming organisations. The social welfare system is not to improve farmers' assets but to assist people who are at the bottom of the net.

 

Mr. Connor: It is based on their income.

Mr. D. Ahern: I made it clear to the farming organisations that the ballpark figure is a maximum of £100. Many of the people the farming organisations pleaded for did not fall under that £100 limit. It is only now in the partnership agreement that we hope to make substantial progress towards a basic income of £100. Nobody should think that farm assist will cure all ills.

It was also made clear to the farming organisations, which accepted it, that in setting up a new scheme we were obliged under the various rules to ask questions about current income. Many farmers on smallholders' dole would not have been assessed for a number of years and their income would have increased from the last time they were assessed. If they applied for farm assist, they would have to be assessed again and the problem arises that something new in their system was not taken into account.

The system of assessment is designed to reflect the actual net income of the smallholder from working his farm. In computing income, account is taken of the value of the sales of milk, livestock, crops and subsidy payments, such as headage payments. All expenses, actually and necessarily incurred, are deducted from this. These include the cost of fertilisers, repair to farm buildings and fences, the cost of replacing farm machinery, use of hired labour other than family members, the cost of electricity and transport used for farming purposes, veterinary expenses, the purchase of fodder and animal feed, rent of land, crop sprays, etc. The farmer is given a copy of the report by the investigating officer on the sources of the income and expenses and details of how the deciding officer has calculated the means and how this determines the rate of farm assist payable.

In so far as any tax returns which are available show the factual position, as required under social welfare legislation, they will be used by the social welfare inspector in preparing his report. However, the assessments are essentially different with different rationales. In assessing income for tax purposes, for example, depreciation of buildings is taken into account in an effort to encourage investment by the farmer. However, it is not taken into account in social welfare.

No farmer has lost payment as a result of the introduction of farm assist. The number of smallholders was declining on an annual basis from just over 10,000 in 1995 to 6,500 in 1999. This was because of the increase in incomes, particularly off-farm income. That trend has now been reversed as a result of the introduction of farm assist. At March 2000, 7,551 farm assist claims are in payment because farm assist is a more generous income support.

Section 18 provides for a technical change to the means test to allow greater flexibility in assessing the value of gross income from farming for the purpose of the scheme. The method of farm assessment is the same for all our schemes and is represented in practice by the yearly profits, that is, the expected gross yearly income from the farm less all the expenses actually and necessarily incurred in earning that income. In practice, the assessment is made up of the expected annual income and is based on normal output and costs appropriate to normal stock levels, capacity and market trends.

Normally, details of farming transactions in the year preceding the investigation are obtained. However, the assessment should be a fair and reasonable representation of the net income which the holding will provide annually, that is, the average annual income over the next number of years. The current legislation as drafted for farm assist states that the means of a farmer is "gross income received less any expenses necessarily incurred at section 191(m)". The effect of this section means that in assessing income from farming for farm assist purposes it is not possible to base the assessment on normal output and costs. It must be based on actual income and expenditure for a given 12 month period.

 

Mr. Connor: I will lose the argument yet again, but I am not convinced by the Minister's argument. He states that under the taxation code depreciation is allowed for on-farm buildings, fences, roads, etc. to encourage a farmer to invest. That is not the case. It is allowed because it is a depreciation of a farmer's income. The out-office does not depreciate over a year.

 

Mr. D. Ahern: Depreciation of his assets.

 

Mr. Connor: The assets must be replaced to maintain an income. I am a farmer so I know what I am talking about. I must deal with my tax man. I know the Revenue Commissioners are generous, although few people say good things about them. The Department of Social, Community and Family Affairs cannot bring itself to believe that should be included in the assessment of a farmer's income. The Minister's definition suggests that a farmer is too poor to own out-offices or to have a farm road or farm fencing on his farm worth anything. These assets depreciate on an annual basis. The evil day comes after four or five years when the road or the out-office has to be rebuilt because, like ourselves, they deteriorate with age. The Minister's argument that the tax authorities allow this to encourage people to reinvest is specious. It is done because it is recognised as a depreciating part of their long-term income. This is why, over a period of years, people are allowed to depreciate assets as they will be worthless in five, ten, 15 or 20 years. It is as simple as that.

 

Mr. D. Ahern: I do not agree with the Senator. The encouragement and benefit regarding the depreciation of buildings is part of the tax code. We have to deal with actual income and any expenses incurred in enhancing or replacing buildings is allowed. I listed the items allowable as expenditure and that has been the case for many years. One cannot compare the two systems.

 

Mr. Connor: I lost my case but I did not lose the argument.

 

Question put and agreed to.

 

Sections 19 and 20 agreed to.

 

SECTION 21.

 

Question proposed: "That section 21 stand part of the Bill."

 

Dr. Henry: I welcome section 21 because anything which encourages people with a disability to become more self-reliant is good. I realise that the Minister does not have responsibility for the disabled person's car scheme but, as he is a member of the Cabinet, I would ask him to support any proposal to extend the definition of disability in terms of the provision of mobility allowances. Anything which encourages people to become more self-sufficient is worthwhile but the current definition of disability is very narrow in terms of the car allowance. The definition is based on the medical condition and not on the immobility of the person. The Minister supports this concept because of changes in the allowance included in this Bill and I would ask him to support any extension to the definition of disability.

 

Mr. Connor: I tried to make a case earlier concerning the recognition of certain illnesses under the social welfare code. I am particularly referring to ME, sometimes called "the yuppie 'flu". The Department refuses to recognise ME as an illness. About 10,000 people have been medically determined as suffering from this disease, yet very few of them are in receipt of a disability benefit or allowance. The Department's medical adviser claims that no such illness exists yet ME's clinical characteristics are well known to the medical profession.

 

Mr. D. Ahern: I am aware of the matter raised by Senator Henry as a number of my constituents are experiencing difficulties in this regard. I will keep a close eye on this issue. A review is taking place in the Department of Finance. I am not involved in that review but a group is examining possible changes. A number of years ago the position was changed for the better, we would have thought, but, unfortunately, it does not seem to have worked out that way.

 

Question put and agreed to.

 

Sections 22 to 36, inclusive, agreed to.

 

Schedules A to E, inclusive, agreed to.

 

Title agreed to.

 

Bill reported without amendment and received for final consideration.

 

Question proposed: "That the Bill do now pass."

 

Minister for Social, Community and Family Affairs (Mr. D. Ahern): I thank Senators for their co-operation and constructive comments on the Bill.

 

Ms Leonard: I thank the Minister for the courtesy he has shown to Senators and wish him well for the next two years.

 

Mr. Connor: I thank the Minister for the courteous and comprehensive way in which he replied to our questions and dealt with our amendments. Unfortunately, he did not accept any of our amendments. We lost our case but we did not lose any of the arguments.

 

Dr. Henry: I congratulate the Minister on increasing resources for the less well off. However, I chair the friends committee of the Rotunda hospital and we still require a Samaritans guild for very poor people. When we are told on a daily basis that there are such great riches in the country it is amazing that clothes for newly born poor children have to be provided by a ladies guild. I thought those days would be long gone but if it were not for these women who buy clothes, small children would still be in want in this city. Improvements have been made but we still have quite a long way to go.

Question put and agreed to.

 

Social Welfare Bill, 2000: Motion for Earlier Signature.

 

Ms Leonard: I move:

 

That pursuant to subsection 2° of section 2 of Article 25 of the Constitution, Seanad Éireann concurs with the Government in a request to the President to sign the Social Welfare Bill, 2000, on a date which is earlier than the fifth day after the date on which the Bill shall have been presented to her.

 

Question put and agreed to.

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