Social Welfare Bill 2005

Second Stage Dáil Éireann Speech by the Minister for Social Affairs Séamus Brennan, T.D. 13th December 2005

I move that the Social Welfare Bill 2005 be now read a second time.

I am very pleased to introduce this, the first of two Bills intended to implement the €1.12 billion social welfare package announced last week in Budget 2006. This substantial investment represents a €246 million, or almost 28%, increase on the 2005 package of €874 million. It brings the projected level of social welfare expenditure in 2006 to over €13.5 billion which is double what was spent in 2000. Behind the expenditure statistics are the men, women and children for whom the welfare benefits and supports can be a financial lifeline during vulnerable and difficult times.

In total, some 1.5 million people will benefit from the significant increases and improvements in the Budget that will protect and improve the living standards of social welfare recipients.

The Department of Social Affairs has a pivotal role to play in ensuring that the fruits of our economic growth benefit all, particularly those who are most vulnerable. I am happy to have secured a substantial increase in the Social Welfare budget this year which underlines this Government's commitment to those for whom the support of the State is vital. By any standard this is a ground breaking Budget.

The facts speak for themselves:

• €800 million on substantial increases in allowances, pensions and entitlements
• a further €300 million specifically for a range of social policy reform measures
• social welfare payments have been increased by almost 4 times the expected rate of inflation
• the lowest rates of social welfare have been increased by an unprecedented €17 a week, to a new level of €165.80, with proportionate increases in the Qualified Adult Allowance
• means tested old age pensions have been increased by €16 a week to €182 and contributory pensions by €14 to over €193 a week
• a wide ranging reform programme will boost the entitlements of older people, alleviate poverty, support activation and recognise carers
• fuel allowances are being increased by €5 a week as part of a major fuel poverty relief package costing over €42 million
• carers' allowances are being increased by over €26 a week so that the top rate of carer's allowance will now stand at €200 a week
• a range of measures costing €28m will promote activation by improving income disregards and tapered payments for people with disabilities
• maternity Benefit is being increased to 80% of reckonable weekly earnings and the duration of both Maternity and Adoptive Benefit is being extended by 4 weeks in 2006 and a further 4 weeks in 2007

Over the past year I have been laying out, with the support of the Government, a strong new social reform agenda and now major funding of more than €300 million is available to underpin and give tangible effect to these important, and necessary, reforms. The reforms, while protecting those who are disadvantaged amongst us, must also strive to get behind the welfare payments and tackle the social issues involved. It is a well established fact that the best route out of poverty is through employment. That is why, through these reforms, I want to create the changes and opportunities that will bring people from welfare dependency to financial independence by providing the stepping stones to a better standard of living and income.

Overall then, the Budget is a clear demonstration of this Government's commitment to vigorously addressing, in particular, the needs of older people, making further progress towards alleviating poverty, especially child poverty and pensioner poverty, the development of a range of supports and opportunities for lone parents and recognising and enhancing supports for carers. I will outline briefly the key benefits of Budget 2006 for each of these customer groups.

We have a booming economy and it is only right that the people who helped lay the foundations for our current prosperity should be able to enjoy the fruits of the tremendous strides which the country has made over the last decade or so. This Government has delivered record increases in pensions since taking office in 1997. In fact, pensions have increased by over 80% since then which is well ahead of the increase in the Consumer Price Index and gross earnings over the same period. In addition to the significant weekly increases, this Budget makes provision for a number of very important measures which are designed to target resources at particular groups of older people including:

• combining all non-contributory payments for people over 66 years of age, other than Carer's Allowance, into one standard enhanced non-contributory pension scheme with a greatly improved means test that will lift some 34,000 pensioners onto higher or full pensions
• increasing the amount of means disregarded from €7.60 to €20 per week for this standard pension
• providing a special earnings disregard of €100 per week
• increasing the additional allowance paid to those over 80 years of age by €3.60 to €10 per week, benefiting over 100,000 pensioners including some 33,000 receiving widow's and widower's pensions

As I have said a number of times, I am determined that everyone in this country should be entitled to a decent pension. Central to achieving this aspiration is widespread increases in occupational and private pensions coverage. I have received a very comprehensive report from the Pensions Board on the current situation and proposals for measures we might take in the future. This report is currently before the Cabinet for consideration and when this is completed it will be published. I want to see this report engender a national debate on the future of our pensions system when published.

On many occasions, I have identified child poverty as one of the key challenges of this Government, and of society in general. The long-term cost of poverty in childhood for individual children, their families and communities and, indeed, for society at large, demands that we address this issue as a priority.

In the context of Budget 2006, I have taken a number of measures, in addition to substantially increasing the lower income weekly rates by €17, to alleviate child poverty.

The investing over €100 million in increases in Child Benefit will lift payment rates to €150 for the first two children and €185 for the third and each subsequent child. These increases will benefit over 540,000 families in respect of over 1 million children and fully honouring the Government's commitment on Child Benefit.

When taken together with the Government's Childcare package where all families with children under 6 years will benefit from the new childcare payment, this brings the total annual cash support for children to at least €2,800 per annum;

When it comes to practical, targeted and concentrated measures to tackle poverty then the Family Income Supplement (FIS) has an increasingly important role to play. That is why I have made major changes to the support scheme, making it particularly beneficial to larger families, and increased funding by a further €25 million. As Deputies will be aware, FIS is paid to parents in low income employment with the objective of directing more resources to larger families. Under the changes that are now being introduced, FIS payments will make further significant contributions to incomes in thousands of low income homes. As a result of the improvements it is estimated that over 5,000 additional families will become eligible for the payment next year.

From FIS alone, depending on the size of the family, weekly increases will range from over €11 to €169 a week. For example, a family with 4 children could see its weekly FIS payment rise by up to €64.80 a week while the increase for a family of 6 children could rise by nearly €117 a week. FIS can contribute significantly to boosting child support incomes.

For example:

• a family with earnings from employment of €20,000 and with two children under 6 years, would qualify for €3,900 in FIS annually
• when you add to that to the €2000 in childcare payment and €3,600 in Child Benefit then that family has an annual tax free child welfare income support of €9,500 a year
• for a family on the same income of €20,000 but with four children, two of them aged under 6 years, the annual FIS support amounts to €7,644, giving the family a total child support package of €17,684 a year. At €30,000 income from employment, the same family would still qualify for total child support income of €11, 694 annually

For thousands of families on low incomes, another important support is the Back to School Clothing and Footwear Payment. This payment is being substantially increased by €40 per child and entitlement to it is being further extended.

I am making a further €2 million available to the school meals programme which makes a valuable contribution to the quality of life and the educational opportunities of children in low income families. Over €10 million is now earmarked for the various school meals initiatives next year.

I am increasing the Fuel Allowance by €5, bringing it to €14 per week, payable with effect from January 2006. I am also availing of the opportunity to remove the current anomaly whereby residents in some local authority flat complexes with communal heating systems were ineligible for the fuel allowance. Such residents will now be able to qualify for the allowance if they meet the other conditions of the scheme. In all, over €125m will be spent on fuel allowances next year benefiting nearly 275,000 households.

Most Deputies will be aware that the National Economic and Social Council (NESC) has being analysing the issues and developing proposals in relation to child income support and in particular, the possibility of merging FIS and Child Dependent Allowance into a second tier child income support, which would avoid the disincentives inherent in Child Dependant Allowance. My priorities for 2006 will include how best we can pursue the proposals arising from the NESC report.

Central to alleviating child poverty is improvements in incomes and supports for Lone Parents. As research released yesterday by the Central Statistics Office clearly demonstrates, among those found to be most at risk of poverty were those living in lone parent households.

My Department provides income support to about 80,000 lone parents through the One-Parent Family Payment at a total cost this year of over €760 million. Since I became Minister, I have repeatedly stressed the importance of reforms in this area and of the need to deliver a better standard of living for lone parents and their children with policies that are directed at the breaking down of existing obstacles to employment, increasing access to career enhancing education and training opportunities, and the transforming of lives through targeted supports and enlightened social policies.

As many in this House may know, there has been no change to the income limits applying to the One-Parent Family payment since the scheme was introduced in 1997. I want to give lone parents an opportunity to continue to increase their earnings without raising their fears about losing their entitlement to the payment.

In recognition of this I am pleased, therefore, to increase the upper income limit for the One-Parent Family Payment from €293 to €375 per week. This substantial increase will encourage employment. Lone parents working over 19 hours per week can also claim the Family Income Supplement.

In addition, I am providing additional funding in the Budget to the Family Support Agency and Money Advice and Budgeting Service (MABS) so that they can further develop the services they provide to vulnerable families.

The additional funding of €3 million to the Family Support Agency will enable the establishment of 12 new Family Resource Centres around the country and increase the level of grant assistance that the Agency provides to marriage and family counselling agencies, amongst other initiatives.

The additional funding of €1.5m that I am providing for MABS includes provision for the further development of the service as well as specific funding for the establishment of a national Helpline.

As Deputies will know, I have initiated a major review of the One-Parent Family Payment in order to assess how best we can support lone parents in their efforts to improve their own lives and those of their children. That review is now being finalised and I will be bringing it to Government in January next with a view to publication and wide consultation.

As Deputies will be aware, the provision of recognition and supports to carers is one of my principal priorities and I am pleased to announce that this Budget provides for a range of measures which will benefit carers including:

• increasing the rate of Carer's Benefit by €17.00 to €180.70 per week, the rate of Carer's Allowance will increase by €26.40 to €180 per week for a carer under age 66, and the rate for carers over age 66 will increase by €30.20 to €200 per week, making it the single largest welfare entitlement apart from over 80's pensioners

These represent increases of over 17% for recipients of Carer's Allowance and will serve to acknowledge and support the invaluable work of our family carers.

• increasing the rate of the Respite Care Grant to €1,200 from June next year
• increasing the number of hours which a person can work and still receive a Carer's Allowance, Carer's Benefit or Respite Care Grant from 10 to 15 hours per week
• increasing the income disregards for the means test for Carer's Allowance to €290 for a single person and €580 for a couple and fulfils the commitment in the Programme for Government to enable all those earning up to average industrial earnings to qualify for Carer's Allowance
• extending the duration of the Carer's Benefit scheme to 2 years per care recipient from May 2006

This is a most significant Budget for carers, not only in terms of expenditure on income supports from my own Department but also in the realisation of this Government's commitment to the proper recognition of carers and the delivering of the necessary structures and supports for carers and the people for whom they care.

Resources in this Budget will be targeted on helping those most in need in order, not alone to raise their level of income and standard of living, but to ensure that everyone is a valued citizen who can make their own individual contribution to society regardless of their particular circumstances.

I will now outline the main provisions of the Bill.

Sections 2 and 3 of the Bill reaffirm the Government's commitment to supporting pensioners, and together with the Schedules to the Bill provide for increases in the rates of social welfare payments, including an increase of €14 per week for persons in receipt of Old Age (Contributory) Pension and for recipients of Widow's or Widower's (Contributory) Pension and Deserted Wife's Benefit who are over age 66, and for recipients of Retirement or Invalidity Pension aged 65 and over, bringing the weekly payment to €193.30.

Provision is also made for an increase of €16 in the weekly personal rate of Old Age (Non-Contributory) Pension, and this increase also applies to Blind Pension, Widow's and Widower's (Non-Contributory) Pension and One-Parent Family Payment where the recipient is aged over 66 years.

In line with my particular focus on supporting carers, I have made provision for a special increase of €30.20 per week for persons in receipt of Carer's Allowance who are over age 66. A special increase of €26.40 is provided for recipients of Carer's Allowance who are under age 66. An increase of €17.00 per week is provided for in all other social insurance and social assistance payments where the recipient is under age 66 and for recipients of Invalidity Pension under age 65.

Section 2 of the Bill provides for increases in the social insurance-based payments and for increases in respect of qualified adults of recipients of those payments. An increase of €10.80 per week is being provided in respect of qualified adults of recipients of Invalidity Pension, where the qualified adult is aged 66 years or over. An increase of €10.80 per week is also being provided for qualified adults aged 66 years and over where their spouse or partner is receiving an Old Age (Contributory) Pension or is receiving a Retirement Pension (with pro-rata increases for those on certain reduced rates). In addition to providing for the increases in social assistance payments, Section 3 of the Bill provides for increases in respect of the qualified adults of those payments.

For example, the weekly over 66 qualified adult allowance rate is increased by €10.60 in the case of Old Age (Non-Contributory) pensioners and by €11.30 for the qualified adults aged under 66 of Blind pensioners. Proportionate increases will be applied where persons are in receipt of reduced rate qualified adult allowance payments.

As I have stated, I am also conscious of the needs of other vulnerable groups in our society

Accordingly, by providing for a weekly increase of €17 in the personal rates of a range of payments, those in receipt of Unemployment Benefit, Unemployment Assistance, One-Parent Family Payment, Supplementary Welfare Allowance and Farm Assist will receive a maximum personal weekly rate of €165.80.

The social welfare Budget increases included in this Bill will become payable from the first payday in January 2006.

Increases for recipients of the short-term payments such as Unemployment Benefit/Assistance, Disability/Maternity Benefit, Family Income Supplement, Farm Assist and Supplementary Welfare Allowance will be paid from the first payday in January 2006.

Recipients (both long and short-term) who are paid by means of Electronic Funds Transfer (EFT) will receive their increases from the first payday in January 2006. Due to the lead-in times involved in the production of Personal Payable Orders for certain long-term payments such as pensions, it will not be possible for Budgetary increases to be paid immediately, in such cases, from January next. Some 211,000 recipients (of, for example, Widow(er)s, One-Parent Family and Invalidity Payments) will receive their new order books in mid–February 2006. This group will receive 6 weeks' arrears of their Budget increase which will be included in the first order of the new book and the weekly increase will be incorporated in their normal weekly payment thereafter.

Certain other long-term recipients (such as Old Age Pensioners and Disability Allowance recipients – some 256,000) will receive new pension order books at the beginning of April 2006. This group will receive a special once-off payment in mid-February representing 12 weeks of their Budgetary increase. This will cover retrospection of the increase to January plus an advance payment of the increase to the end of March 2006. From the book renewal date at end of March, the increase will be incorporated in the normal weekly payment.

Section 4 provides for increases in the weekly income thresholds applied in determining entitlement to Family Income Supplement (FIS) with effect from 5 January 2006. The new thresholds will range from €465 to €905 with the weekly FIS payments increasing by varying amounts from €11.40 in the case of a family with 1 child to €169.20 for families with 8 or more children. For example, the FIS payment to a family with 4 children will increase by €64.80 per week.

Sections 5 and 6 of the Bill provide for changes in PRSI. The earnings ceiling for employees' social insurance contributions is being increased, at Section 5, by €2,420 from €44,180 to €46,600 per annum with effect from 1 January 2006. In addition, this Section provides for an increase in the limit of weekly earnings, below which PRSI is not payable, from €287 to €300. Section 6 provides for an increase in the income ceiling, from €44,180 to €46,600 for optional social insurance contributions. This Section also comes into operation on 1 January 2006.

Section 7 of the Bill provides for an increase in the percentage of reckonable weekly earnings referred to in calculating the rate of payment under the Maternity Benefit scheme. This provision increases the rate from 75% to 80% and fulfils the commitment under Sustaining Progress to raise this limit to 80% of average weekly earnings over the life of that Agreement. The measure will benefit the majority of recipients of these schemes and will take effect from January 2006. In addition, this Section provides for the necessary amendments to extend the duration of Maternity Benefit, from 18 to 22 weeks, consequential on the extension of paid and unpaid maternity leave as announced in the Budget last week. This measure takes effect from next March.

With regard to the increases to the duration of the maternity and adoptive leave periods, my colleague the Minister for Justice, Equality and Law Reform has transmitted the heads of draft Orders implementing the increases to the Attorney General for formal early drafting.

This Section also allows for the extension of the period after birth, by 2 weeks to 24 weeks, within which a father can claim Maternity Benefit following the death of the mother, provided that he satisfies the contribution conditions of the scheme.

Section 8 provides for improvements in the Adoptive Benefit scheme by providing that, subject to certain conditions which will be prescribed in regulations, in the event of the hospitalisation of a child in respect of whom Adoptive Benefit is payable, the continuous payment of benefit may be postponed. This mirrors the current provisions of the Maternity Benefit scheme.

The Section also provides for the necessary amendments to Adoptive Benefit consequential on the extension of paid Adoptive Leave by 4 weeks, due to take effect from March 2006.

The Section further provides for an increase from 75% to 80% in the percentage of reckonable weekly earnings referred to in calculating the rate of Adoptive Benefit. This measure will come into effect from 1 January 2006. I intend to introduce a technical amendment to the section at committee stage to add clarity to the commencement order provision.

Section 9 of the Bill provides for the making of regulations to determine the manner in which the gross weekly earnings are calculated for the purposes of the One-Parent Family Payment scheme.

The introduction of One-Parent Family Payment in 1997 provided for payments to be made to parents rearing children alone, and subsumed the various schemes which had until then provided for families in those circumstances.

Special provision was made for recipients of Deserted Wife's Benefit, to ensure that they continued to receive payment for the duration of their continuous entitlement to the scheme, provided that the person's income was below a specified limit. Section 10 of this Bill contains a technical amendment to the scheme to provide for making regulations previously associated with the scheme.

Section 11 provides for the payment of the over age 80 allowance to recipients of Carer's Allowance from January 2006.

At present, for the purposes of the Rent or Mortgage Interest Supplement payable in accordance with the Supplementary Welfare Allowance scheme, an amount of up to €60 of gross income from earnings from employment may be disregarded. Section 12 contains an improvement to the scheme by providing for the disregard of up to €60, together with half the gross weekly earnings between €60 and €90.

Section 13 provides for an increase in the Health Levy exemption thresholds from €400 per week to €440 per week and from €20,800 per annum to €22,880 per annum. This measure will take effect from 1 January 2006. I intend to introduce at committee stage an amendment to this section to correct an error in the annual threshold in the Bill as initiated.

This Social Welfare Bill, the first of two instalments, builds further on the progression of social inclusion measures adopted by this Government over recent years. It safeguards the living standards of those who rely on social welfare income and other supports and prioritises the allocation of resources in favour of those most in need.

I commend the Bill to the House and look forward to a constructive debate.