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Dáil Debates & Questions
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December 10 2009 Dáil Debates Parliamentary Questions
DÁIL DEBATES Minister for Social and Family Affairs (Deputy Mary Hanafin): This Bill will give legislative effect to the 2010 Budget Statement. As Minister for Social and Family Affairs, I am conscious of the needs of more than 400,000 people on the live register. I also fully understand that a wide range of other groups, such as people with disabilities, carers and pensioners, depend on the welfare budget for vital support. I assure the House that the Government, in the context of a tough budgetary environment, has done its utmost to protect the most vulnerable in society. While I appreciate that the cuts we make in the welfare area will not be easy for people, I genuinely believe that if the Government does not take steps now to reduce overall public expenditure and restore stability to the public finances, we risk making the economic situation far worse for everyone, including welfare recipients, in the long term. In 2010, €21.1 billion will be spent on social welfare. This is €676 million or 3.3% more than the expected final expenditure figure of €20.4 billion for 2009. The pre-budget outlook published by the Government last month estimated that if no changes were made to welfare payments in 2010, expenditure on welfare would be almost €22.3 billion next year. The Government is introducing cuts in welfare rates and schemes that will generate savings of €762 million in 2010 vis-a`-vis the pre-budget estimate. This will reduce overall public expenditure and improve the financial incentive for jobseekers to take up work or training. In doing so, we have avoided making any cuts in the State pension and fully protected more than 420,000 children in welfare dependent and low income families from cuts in child benefit. We have also ensured that cuts in weekly rates for those aged under 66 years are lower than the decreases in prices over the past year or thereabouts and the value of the euro for welfare recipients is better in real terms. Before I detail the areas where changes are being made, I will first outline the supports being maintained at their current levels to provide reassurance to people who were concerned supports may have been cut. As I indicated, pensions and other payments to people aged more than 66 years, including payments for pensioners’ dependent spouses who are aged under 66 years, are not being cut. This means more than 474,000 people aged over 66 years are being fully protected in the budget. Extra allowances which are paid to pensioners who live alone and those who are aged over 80 years will continue at their current rates. The household benefits package, which includes the free television licence, electricity-gas allowance and telephone allowance, is also being fully maintained, as are the fuel allowances and free travel scheme. The half rate carers allowance scheme will stay in place. The half rate illness benefit and jobseeker’s benefit payments for widows or lone parents will also remain. The additional payments for lone parents and people with a disability who participate on community employment schemes are also being retained. The domiciliary care allowance, paid to parents and guardians of severely disabled or ill children under 16 years of age is not being cut. The value of the respite care grant is being maintained at €1,700 per annum. Funding for the 107 family resource centres and grants for counselling and mediation programmes are also being maintained. I mention these benefits because people were concerned that these elements would be hit in the budget. I am pleased we were in a position to maintain them at current levels. The main areas where reductions are being made are as follows. Child benefit is being cut by €16 per child per month for all children and full compensation is being provided to families who are dependent on welfare payments or receiving the family income supplement. It is important that the most vulnerable families are being protected from the cut in child benefit. The weekly rates of payment to those aged under 66 years are being reduced by about 4.1% or an average of €8.30 per week. Reduced rates of payments will apply to new jobseeker’s allowance claimants aged 24 years and under who are not in training or education. Reduced rates will also apply to jobseekers of any age who unreasonably refuse offers of training or education. The treatment benefit scheme is also being limited in 2010 to free dental and optical examinations and the medical and surgical appliances scheme only. Additional fraud and control savings of €33.3 million to give total savings of €533 million are being targeted for 2010, through enhanced targeting of particular schemes and the introduction of new anti-fraud powers provided for in the Bill. In addition, savings of €20 million are expected to result from reductions in the maximum rent levels for new or renewed rent supplement tenancies, while savings of €2 million are being made through restructuring of the regional support agencies that work with the family resource centres. I propose to outline the details of these measures, starting with the changes being made to child benefit. As Deputies will be aware, between 2000 and 2009 the monthly rates of payment for child benefit increased from just €53.96 for the first child and €71.11 for the third and subsequent children to €166 and €203, respectively. In the same period, overall expenditure on child benefit grew from €638 million to approximately €2,500 million each year. As a result, approximately 12% of gross social welfare spending in 2009 will be on child benefit. Currently more than 600,000 households receive child benefit in respect of 1.1 million children. A family with four children currently receives €738 per month, or €8,856 per year in child benefit, regardless of the parents’ earnings from employment. The Government is proud to have been able to deliver such significant increases in payments to families when the resources were available. However, in the current economic environment we simply cannot afford to keep spending at the same level as when our tax revenue was a good deal higher. In this context, we decided to reduce overall expenditure on child benefit. In considering the various options to make savings in this area we were conscious that the payment can be an important source of income for all families for various reasons. Some families rely on it to buy basics such as food and clothes. For many women, it makes it possible for them to work outside the home by helping with child care costs and even for women in high income families, it may be the only money paid directly to them. The Government decided, therefore, against withdrawing child benefit completely from any family. We also decided against taxing the payment. Apart from the significant administrative complexities that taxing child benefit would involve, that proposal also has the major drawback that it would lead to a cut of up to 20% of the child benefit payment for tax units on the standard tax rate, and up to 41% of the payment for tax units on the higher tax rate, which would reduce its value to €100 from €166. Given these elements, the 10% cut across the board is a fairer way to achieve the required savings, while protecting families who are dependent on welfare or in low income employment. To this end, the lower rate of child benefit, paid in respect of the first and second child, will be reduced by €16 to €150 per child per month. The higher rate of child benefit, which is paid in respect of subsequent children, will also be reduced by €16 to €187 per child per month. Families with children dependent on social welfare will be fully compensated for the reduction in child benefit by getting an extra €3.80 per child per week in the qualified child increase paid with their main welfare payment. Approximately 363,300 children are expected to benefit from this measure. Families which currently receive a half rate qualified child increase because they have other household income, and are not totally dependent on welfare, will receive an extra €1.90 per child per week in welfare payments. Approximately 128,600 children are expected to benefit from this measure. The family income supplement, FIS, income thresholds are also being increased by €6 per child per week to compensate low-income working families for the cuts in child benefit. This will translate into a weekly increase in FIS payments of €4 per child. Approximately 57,380 children are expected to benefit from this. I appreciate cuts in child benefit will be difficult for some families. However, it should be recognised that the payment will remain very generous compared with other countries and that the Government is also making a substantial contribution towards child care provision, including the introduction of a free preschool year from January 2010. The next area where cuts will be made is the weekly rates of payments to people aged under 66 years, which are being reduced by about 4.1% or an average of €8.30 per week. Proportionate decreases are also being made in payments for the qualified adult dependent spouse of the main welfare recipient. However, where a claimant is 66 years or more and has a qualified adult aged under 66 years, there will be no reduction in the rate of payment for the qualified adult. During the past 12 years, the Government has delivered unprecedented increases in welfare rates. The jobseeker’s allowance has increased by 129%, the disability allowance has increased by 129%, the carer’s allowance for those aged under 66 has increased by 147% and the one parent family payment has increased by 129%. During the same period the cost of living has increased by 40%. Even throughout the economic difficulties of the past two years, the Government has done its best to prioritise social welfare. The 2008 budget provided for increases of between 3% and 3.8% in the basic payment rates at a time when inflation for 2009 was expected to be 2.5%. In reality, prices have dropped considerably this year. By October 2009, prices, as measured by the consumer price index, had fallen by 6.5% and are now forecast to drop by an average of 4.4% during 2009. I appreciate it is important to consider not simply the overall change in the consumer price index but also the impact that this may have on different groups. A technical analysis carried out by the Department of Finance suggests that between October 2008 and October 2009 the consumer price index fell by approximately 3.25% for retired households, 5.75% for unemployed households and 7.5% for working households. Prices are falling by approximately 7.5% for the highest income groups and approximately 4% for the lowest. Therefore, while decreases in the cost of items such as mortgages and cars would naturally have had a greater impact on higher income families, the overall cost of living has also dropped for low income households in general. Significantly lower prices exist and the result is there is an opportunity to maintain people’s spending power despite the reduction in welfare payments. Consumer prices are back to February 2007 levels. However, after the 2010 budget the lowest weekly rate of payment for those aged between 25 and 66 years will be €10 higher than in 2007. Therefore, even after the budget changes we will achieve the commitment in the national action plan against poverty to maintain the real value of the lowest social welfare rate in 2007 terms. The consumer price index is expected to fall by another 0.8% in 2010. The Government appreciates that reductions in rates will be difficult for people but we also know that if action is not taken now we put social welfare payments at greater risk in future. We have also been conscious of the need to avoid disincentives for people to move from welfare to work. At present, when basic welfare rates and secondary benefits such as the rent and mortgage interest supplements are taken into account, some families are financially better off on welfare than in low income employment. Long-term dependency on welfare is not good for these parents or for their children. The changes in welfare rates being made today will address some of these disincentives. There will also be a reduction to €150 per week in the rate of jobseeker’s allowance and supplementary welfare allowance payable to people who have unreasonably refused offers of training or education. I wish to highlight how the family income supplement, FIS, can help low-income working families with children. It is a weekly tax-free payment available to married or unmarried employees with children, who work for 19 or more hours per week or 38 or more hours per fortnight. It is designed to give extra financial support to people in employment on low pay. To qualify for the payment, the net average weekly family income must be below a certain amount for a given family size. In 2010 the FIS income thresholds will be as follows: €506 per week net for a family with one child; €602 for a family with two children, equating to €31,304 net; €703 or €36,500 per annum for a family with three children; and €824 or €42,848 per annum for a family with four children. Higher thresholds apply for families with five children or more. I emphasise these are net income figures, calculated after taxation. The level of FIS payment a family receives is equal to 60% of the difference between their net family income and the FIS income threshold which applies to their family. Given the level of the income thresholds, FIS can be of benefit to families whose income from employment is relatively good. However, it is of greatest benefit to those whose earnings are low. For example, if a family has one parent working full time and the other works for 19 hours a week, both on the minimum wage, their net income from employment would be approximately €500 per week. If they have four children, the improvements we have made to FIS will have the result that from January they would now be entitled to a top-up payment of €194 per week in addition to their wages, giving a combined net income from employment and the family income supplement of €694. Such people would also be entitled to child benefit of €155.53 per week. I refer to the new arrangements being put in place for new jobseeker’s allowance claimants aged 18 to 24 years. To incentivise young jobseekers to avail of education and training opportunities and to try to prevent them from becoming welfare dependent from a young age, changes are being made to the jobseeker’s allowance. I emphasise that for new entrants, the rate of jobseeker’s allowance will be reduced to €100 per week for 20 and 21 year olds and €150 per week for those aged between 22 and 24 years who are not in training or education. The basic rates of supplementary welfare allowance payable to new claimants aged 24 years and under is also being reduced to ensure jobseeker’s allowance claimants affected by the above measure do not have recourse to a basic supplementary welfare allowance top-up, the net effect of which would be to negate the measure. The qualified adult rate for a spouse payable where the main claimant is aged 20 to 21 is also being reduced to €100 per week. The full adult rate of jobseeker’s allowance will be paid to those who participate in a full-time Youthreach course for young early school leavers or a full-time course in a senior traveller training centre, qualify for the back to education allowance for pursuing a fulltime second level course or post- leaving certificate-VTOS course, or participate in a full-time FÁS training course. A person in that category will be selected for the employment action plan after 53 days on the live register, and directed to FÁS for appropriate training, education and jobseeking interventions. It is important to note that the following people will not be affected by the measure: existing claimants, young people with dependent children, those who have paid sufficient PRSI contributions to qualify for jobseeker’s benefit, and people transferring to jobseeker’s allowance immediately after exhausting their entitlement to jobseeker’s benefit or those transferring from the disability allowance directly to jobseeker’s allowance. Where an existing jobseeker’s allowance claimant aged 24 or under, being paid the full adult rate, gets a job and leaves the allowance but loses the job and ends up back on jobseeker’s allowance within 12 months, he or she will be entitled to the full rate of up to €196 again, rather than €100 or €150 a week. If that was not done, there would be little incentive for those currently on jobseeker’s allowance to take up offers of work. The rationale for the change is straightforward. Receiving the full adult rate of jobseeker’s payment at a young age without a strong financial incentive to engage in education or training can lead to welfare dependency. It is considered particularly necessary to provide 20 to 21 year old jobseekers with a strong financial incentive to engage in education or training. It could be also argued that people aged 24 or under without child dependants do not need an income of €196 per week and that the current income differential between young jobseekers and third level students is not justifiable. The argument has been also made that people who have worked all their lives and who receive €196 per week should get more or that someone who has never worked should not get the same amount. The new reduced jobseeker’s allowance rate for 20 to 21 year olds amounts to €5,200 per annum and the reduced rate for 22 to 24 year olds amounts to €7,800 per annum. That is more than is payable to such young people if they attend college away from home. It is worth noting that the United Kingdom pays a reduced rate of just £50.95 per week to jobseekers aged 24 and under. Similar provisions relating to 18 and 19 year olds, introduced earlier this year, have been effective. The aim of the measure is to ensure that the short-term unemployed and the young unemployed do not become the long-term unemployed and the old unemployed. The Government has also decided to limit the treatment benefit scheme, from next January, to the medical appliances scheme and the free examination elements of dental and optical benefits. The position will be reviewed annually after that. As Deputies are aware, treatment benefits are paid to insured persons from the social insurance fund, SIF. Although the SIF has operated a surplus since 1996, that position began to change last year when expenditure had to be partially funded from the accumulated surplus. Expenditure continued to exceed PRSI and investment income to the fund this year and it is expected that the accumulated surplus will be completely exhausted in the first half of 2010. It is estimated that the Exchequer will be required to subvent the fund by approximately €1.2 billion next year. The changes to the treatment benefit scheme will save €54 million next year. The effect of the limitation of the scheme provided for in the Bill is that the treatments previously available under the scheme will be limited to dental and optical examinations. The hearing aid scheme will be retained as is. However, approximately 2 million insured persons will continue to be covered for the annual free examination and hearing aids and more than 400,000 people are likely to claim a dental examination and 200,000 an optical examination in 2010. Turning to the rent supplement scheme, the Government is determined to ensure that reductions in rent levels generally in the year to date result in savings for the taxpayer. The maximum level of rent supplement payable by the State will be reviewed early in 2010 on the basis of the latest data available on general trends in rental prices. The maximum rent limits payable will be then adjusted and new limits will apply in respect of all new tenancies or renewals of tenancy from April 2010. Based on current information available about decreases in rent levels since April, the Department expects the rent review to lead to savings of €20 million in 2010. With rent prices falling in general, it is vital that taxpayers money is not used to pay inflated prices to landlords. The budget also provides for an increase in the target for control and fraud savings next year to €533 million across all of the Department’s 50 schemes. That is €33.3 million more than the level of control savings planned for 2010 in the pre-budget outlook. The additional savings are being targeted on the non-contributory State pension, illness benefit and one-parent family payments. The increased target also takes account of new anti-fraud powers included in the Bill which I will detail later. Welfare fraud is theft. It is a serious crime and the Department of Social and Family Affairs is doing everything possible to crack down on people who abuse the system. There are more than 600 staff working in areas related to control of fraud and abuse of the welfare system. Between January and the end of October this year, more than 600,000 individual claims were reviewed. The level of fraud on most schemes is very low. As reported by the Comptroller and Auditor General, the percentage of expenditure resulting from fraud identified in the Department’s fraud and error surveys was 0% for pensioners, 0.1% for illness benefit, 0.8% for family income supplement, 1.8% for child benefit and 2.3% for disability allowance. Nonetheless, the Department is conscious that in a small number of schemes, some groups of claimants present a higher risk than others and we have made changes to address that. For example, a number of individual surveys have highlighted a high level of risk that non-Irish nationals could claim welfare payments to which they are no longer entitled after they have left the State. Having identified that risk, the Department has sought to minimise it by removing the option to receive payments by electronic fund transfer, EFT, for new claimants of jobseeker payments. Claimants must attend in person at the post office each week thus confirming their continued residency in the country. Their claim is automatically suspended where two consecutive payments are not collected. Targeted control measures have been also put in place for child benefit claims from non-Irish nationals and for other customer segments in schemes where any form of high risk has been identified. Since the Department started the cross-Border operations, the percentage year-on-year increase in people signing on for jobseeker’s payments in virtually all of the Border offices has substantially reduced. Fraud detection systems have been also improved through data matches with organisations such as the Revenue Commissioners on commencement of employment data, the General Register Office on marriage and death information, and many other organisations including the Departments of Justice, Equality and Law Reform, the Environment, Heritage and Local Government, Education and Science and other State bodies. In addition, a data matching programme is now in place to ensure that relevant information available in one area of the Department of Social and Family Affairs is applied to all schemes. I assure the House that the Department continues to prioritise using every available means to crack down on welfare fraud. It is correct, especially in the context of having to make cuts in social welfare, that we should accelerate our efforts in this area. The budget includes funding of €7 million to allow the roll-out of the new public service card to commence. The card will contain a photograph and signature and will help to combat fraud. I wish to mention one other initiative focused on getting people back into work, namely, the employer jobs, PRSI, incentive scheme. Our main priority is to stabilise the finances to ensure we can protect existing jobs and get people off the live register and back into employment. In addition to the wide range of employment support initiatives already in place, a new jobs stimulus measure is being introduced in 2010. Under the employer jobs, PRSI, incentive scheme, where an employer creates a new job and takes on a person who has been unemployed for six months or more the employer will be fully exempted from the liability to pay PRSI for the first year of that employment. That will give employers an 8% to 10% saving on employment costs for each new job created. Full details of the initiative will be announced early in 2010 and will be included in the next social welfare Bill. I will move on now to the main provisions of the Bill. Sections 3 and 4 and Schedules 1 and 2 provide for reductions ranging from €7.50 to €8.50 in the weekly personal rates of payments, excluding payments to recipients age 66 or over and recipients of invalidity pension age 65. Those sections also provide for reductions of between €5.50 and €5.90 in the weekly rate for qualified adults under age 66 and for an increase of €3.80 per week in the rate payable in respect of a qualified child, bringing the rate to €29.80 per week. Those changes take effect on different dates for different payments in the period 30 December 2009 to 8 January 2010. Section 5 provides for an increase of €6 per week in all family income supplement, FIS, weekly earnings thresholds, effective from 1 January 2010. Section 6 provides for a reduced personal rate of jobseeker’s allowance of €100 per week for persons aged 20 and 21 years and €150 per week for persons aged 22 to 24, inclusive. It also provides for a reduced rate of €100 in respect of the qualified adult of a jobseeker’s allowance recipient aged 20 and 21 where the couple do not have dependent children. These changes will apply to new claims for jobseeker’s allowance made on or after 1 January 2010. Section 7 provides for a reduction of €16 per month in the lower and higher rates of child benefit from 1 January 2010 bringing the rates to €150 and €187, respectively, per month. PARLIAMENTARY QUESTIONS Deputy David Stanton (FG): asked the Minister for Justice, Equality and Law Reform if the review of his Department’s sectoral plan has been completed; if the National Disability Authority will submit a report to his Department as the co-ordinating Government Department of the National Disability Strategy, with details of the six Departmental reviews of the sect oral plans; Minister of State at the Department of Justice, Equality and Law Reform (Deputy John Moloney): My Department is not among the Departments under the Disability Act 2005 thatwere required to provide for the preparation of sectoral plans as defined in the Act. However,the position in relation to the reporting of progress made in the implementation of the sect oralplans under the Act of 2005 by the six Departments who are involved is that the reports are inthe process of being finalised. My Department is arranging for a measure of co-ordination inthe promulgation of the reports. Copies of the reports will in due course be laid before bothHouses of the Oireachtas in accordance with the Act of 2005. Deputy Emmet Stagg (L): asked the Minister for Arts, Sport and Tourism his views on the success of the sports inclusion disability officer programme in increasing the participation of persons with disabilities in sports and physical activity; and if that funding will remain in place for the continuation and expansion of the programme. Minister for Arts, Sport and Tourism (Deputy Martin Cullen): Special funding of €2.5 million was allocated from the dormant accounts fund for the appointment of 20 Sports Inclusion Development Officers (SIDOs) in Local Sports Partnerships (LSPs) in 2008. The SIDOs were appointed on two-year contracts to provide opportunities for persons with a disability to participate in sport and physical activity. A network of 33 LSPs have been set up throughout the country by the Irish Sports Council (ISC) to coordinate and promote sport at local level especially amongst specific target groups such as older people, girls and women, people with disabilities, unemployed people, and those who live in identified disadvantaged communities. The special dormant accounts funding was in addition to the annual funding provided to the LSPs by the ISC for programmes and initiatives aimed at increasing participation in recreational sport. The ISC has allocated €6 million to the LSPs in 2009. The continued funding of the SIDO scheme is a matter for the ISC in the context of the distribution of its budget for 2010, supplemented by a provision of €395,000 in the Vote of the Department, and the Council’s priorities within its ongoing funding of the LSP network. The priority is to build on the significant progress by the Council in achieving its statutory objectives of increasing participation in recreational sport and improving high performance levels. Deputy Emmet Stagg (L): asked the Minister for Social and Family Affairs her views on granting free travel to children under 16 years of age when a carer’s allowance is being paid in respect of the child in view of the fact that the carer requires free travel. Minister for Social and Family Affairs (Deputy Mary Hanafin): Carer’s allowance is a social assistance payment which provides income support to people who are providing certain older people or people with a disability with full time care and attention and whose incomes fall below a certain limit. Persons who are in receipt of carer’s allowance also receive the annual respite care grant, the household benefits package and the free travel pass. In the majority of cases, persons who are being cared for will be in receipt of a payment in their own right (for example a state pension or disability allowance) and will be entitled to have a free travel pass. This includes anyone aged over 16 who qualifies for disability allowance. For a child requiring full-time care who is under age 16, a domiciliary care allowance may be paid to the parent or guardian. This payment is not means tested and is to provide for the additional costs involved in providing care and supervision that is substantially more than that normally needed by a child of the same age. This may include additional travel costs. A child who is attending school may be eligible for assistance under the Department of Education and Science’s school transport scheme. I have no plans at present to review the qualifying criteria for the free travel scheme or to provide free travel passes for children other than those who are in receipt of a qualifying payment from the Department. |
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Inclusion
Ireland, Unit C2, The Steelworks, Foley Street, Dublin 1, Ireland.
Tel: 01 8559891 Fax: 01 8559904 Email: info@inclusionireland.ie |