Opening Remarks by the Minister for Social Protection at the Pre Budget 2018 Forum, Dublin Castle

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Good morning everyone and welcome to this year’s Pre-Budget Forum.

I am very pleased to be hosting this event and I want to thank you all for attending today.

I know some of you already and I know your dedication to helping and representing some of the most vulnerable people in our society. Through your efforts, individuals, families and communities are better equipped to cope in what are often difficult circumstances. The work of the Department is also better informed by the contributions which you make and the insights that you provide on how our services actually impact people ‘on the ground’. In fact the impact of our services is enhanced by the efforts that you make to increase awareness of the services, to help people access the services, and to help us tailor the services more effectively to meet the needs of our people.

Given your vital role it is important that I hear your views directly on how we can improve our services and on the changes I should prioritise in the development of the budget for 2018. That is the purpose of our forum today and I look forward to sitting in on all of the workshops and in receiving the feedback from our moderator – Brigid McManus – later in the morning.

In listening to your contributions the question I will keep in mind is how can we build a Budget across all of government, but particularly in my Department, that will make sure that scarce resources are prioritised effectively?

Prioritised to deliver the best impact both in terms of directly reducing the risk of poverty, and to improving employment outcomes so that people who are currently dependent on welfare, but who have an ability to work, can become financially independent.

In doing this I will have regard to the full remit of the Department’s activity which, as you know, is very wide.

Each week, about 1.3 million people, - pensioners, people with disabilities, workers on maternity or sick leave, carers, and jobseekers receive a payment from my Department. In addition to this, over 626,000 families receive Child Benefit each month for over 1.2 million children.

These payments and services account for about 37% of gross current Government expenditure – in cash terms just under €20 billion. In fact total expenditure on welfare is greater than total receipts from income taxes.

There can be a misconception that most welfare payments go to people who are unemployed. This is not the case.

• the biggest single block of expenditure in 2017 is Pensions, which will amount to almost €7.3 billion, or 37% of overall expenditure
• expenditure on working age schemes comprises two programmes - Income Supports and Employment Supports - which combined account for about €4.7bn or 23% of total expenditure
• the next biggest expenditure sub-head is expenditure for Illness, Disability and Carers which will amount to over €3.8 billion or 19% of expenditure in 2017
• expenditure on children and families will account for nearly 13% of expenditure or €2.6 billion, of which €423 million will be spent on the Family Income Supplement paid to low income working families
• expenditure on Supplementary Payments like rent supplement, agencies like MABS and the CIB and Miscellaneous Services accounts for €863 million or 4% of expenditure

Although these figures are large and in many ways daunting it is important to remember that there are real people with real needs behind all of these numbers. – I am mindful that every euro spent goes to a person who needs support from their fellow citizens, in many cases to buy the necessities of basic existence.

I am also acutely conscious that the benefit of welfare expenditure travels way beyond the direct recipients. - Every euro spent inevitably works its way through the pockets of the people, as they buy their day-to-day necessities, to end up in the tills of local Irish businesses, helping to fuel our economy and sustain local communities.

Nevertheless the scale of the expenditure is such that even modest improvements in individual payment rates gives rise to very significant increases in total expenditure. This limits the scope available for the State to fund other priority programmes, including programmes of particular interest to many of you attending the forum here today – whether they be in housing, health, childcare, education or any other sector.

Fortunately, and helping to at least partially ease these pressures, Ireland has experienced a recovery in employment that has been much more rapid that even the most optimistic analysts projected.

There are more now more than 2 million people in employment with 65,100 net new jobs added in the past year alone. Unemployment now stands at just 6.3%; there are about 47,000 fewer people on the Live Register in June 2017 than the same time last year and almost 87,500 fewer people than this time two years ago.

The ongoing drop in the Live Register is freeing up the resources needed within my Department to cope with increasing numbers of peoples on pensions and in receipt of disability, carers, and Family Income Supplement payments.

However the scope for further increases in expenditure through increases in rates of payment is not as generous as some media reports might suggest. Some of the media commentary might lead people to believe that the State has found a fiscal space that enables us to splurge in an irresponsible manner reminiscent of the worst days of the ‘if I have it I’ll spend it’ form of Government of the early noughties. (And the ‘even if I don’t have it I’ll spend it anyway’ days of previous decades).

That is not the case.

Even with no rate increases expenditure on pensions alone will grow by about €200m in 2018, expenditure on disability and carers payment is likely to grow by roughly the same amount. So, you can see the challenge I face in securing any significant increases in payment rates given the other priorities such as housing, health and childcare that I have already mentioned.

That is not to say that nothing can, or will, be done, but it does mean that we have to prioritise and focus on those changes that will make a real difference to improving welfare and reducing poverty. And I want to hear your views on what those priorities should be.

We already laid the foundation for this process in Budget 2017 by making the first across the board range of rate increases for many years.

The Budget 2017 improvements cost €330m this year and included:

• the first general increase in all weekly rates of payment since 2009 at a cost of €285 million in 2017. Approximately 1.5 million people benefited from this increase which came into effect last March
• the extension of Invalidity Pension to the self-employed from December this year
• improvements to the range of benefits available under the Treatment Benefits scheme for all workers from October
• the inclusion of newly designated DEIS schools in the School Meals scheme and the phased extension of the scheme to breakfast clubs in non-DEIS schools from September 2017
• improvements in the Farm Assist and Rural Social Scheme and a range of other schemes

In addition, a Christmas Bonus of 85%, was paid to over 1.2 million long-term social welfare recipient at a cost of €220 million.

Significantly these increases have a carry-over effect of increasing payments to recipients by over €130m in 2018. So we are starting the Budget 2018 process with a number of increases in favour of welfare recipients already hard-coded into next year’s expenditure.

In addition although not part of Budget 2017 the Government agreed to an increase of 25% in the Back to School clothing and Footwear Allowance payable this year and also increased the rate of payment for children in direct provision centres.

I am also pleased to announce that from the 2017 Fuel Season there will, as many of you have requested, be an option for customers in receipt of the fuel allowance to receive their payment in two lump sums – one at the start of the fuel season in October and the second in January next. The current value of the lump sums will be €292.50 each, making up the current total annual value of €585.00.

This will enable people who wish to avail of the lump sum payments to buy fuel in bulk, potentially securing special offers or discounts on the purchase of the particular fuel that meets their specific needs.

For the first issue of the lump sum in October 2017 a cut-off date for applications of 15th September will be advertised. More details will be available in the coming weeks.

The 2017 improvements reflected much of the input to last year’s pre budget forum. They resulted in rates, which although not at preferred or historic levels, represent a reasonable baseline from which we can now move forward in a more targeted manner. Including the value of ancillary benefits such as the fuel allowance and household benefits package most of our payment rates are now at, or close to, the benchmark levels with average earnings proposed in policy reviews before the recession.

Increases due to demographic pressures in the number of people in receipt of pensions, disability and carer payments means that we must now make choices in how to target the limited fiscal space available for new initiatives across all Departments in Budget 2018.

This will mean that choices will have to be made as to best achieve our goals and we must accept that not everything cannot be done in one year.

I don’t have all of the answers. As a new Minister I don’t even have all of the questions. That is why today is a really important day for me - to hear directly from you as to what you think should be the main priorities for me in Budget talks.

I look forward to hearing your views and proposals.

My promise to you is that you will be heard and your proposals will be considered and that I will, mindful of other priorities across government, do the best I can to ensure that the changes we make reflect your inputs and concerns and deliver the best outcomes for all of our people.

ENDS