Speech on the Second Stage of the Social Welfare Bill 2016, by Minister Leo Varadkar

Social welfare bill 2016, Second stage speech, Dail Éireann, by the Minister for Social Protection, Leo Varadkar T. D.

8 November 2016

Check against delivery

I move that the Social Welfare Bill 2016 be read a second time.

The purpose of this Bill is to provide the legislative framework for the implementation of the measures announced in Budget 2017. It also contains a number of largely technical measures which aim to resolve minor deficiencies identified within the welfare code.

Overall, this Bill represents -

• a prudent approach, with modest increases across the board alongside more targeted measures
• an inclusive approach, which ensures that the recovery benefits everyone, with no one left behind
• a progressive approach to making work pay, through positive reforms to the social insurance system and access to benefits extended to the self-employed
• a targeted approach with measures to assist lone parents, farmers and school children

The Bill provides that the maximum rate of all weekly benefits will increase by €5 so that people of working age, as well as retired people aged 66 or older, will all see an improvement in their weekly income.

Increases for recipients aged 66 years and over will come into effect during the week ending 10th March 2017. This includes, for instance, all those who are in receipt of the State Pension Contributory and the State Pension Non-Contributory. Pensions next year will be €8 per week higher than in 2009 which means nearly all pensioners are back to where they were in terms of payments from my Department even if you factor in the reductions in the telephone allowance and fuel allowance. I intend to build on this in future budgets by continuing to increase the state pension at a rate greater than the rate of inflation

The increases for other recipients will come into effect during the week following the 10th March so that all of those people who rely on Social Welfare for their income will have the increased rate paid by St. Patrick’s Day. Approximately 840,000 working age people will gain from this increase. It covers people in receipt of over 30 different payments. These include:

• Invalidity Pension, Disability Allowance and Blind Pension
• Illness and Partial Capacity Benefit
• Occupational Injury Benefit
• Widow’s, Widowers and Surviving Civil Partner’s Pensions
• One-Parent Family Payment
• Back to Education Allowance
• Maternity, Paternity and Adoptive Benefit
• Farm Assist
• Carer’s Benefit & Allowance
• Pre-Retirement Allowance
• Supplementary Welfare Allowance
• Back to Work Enterprise Allowance
• Jobseeker’s Benefit, Allowance and Jobseeker’s Transition Payment; and
• Employment Support Payments such as CE, TÚS and Rural Social Scheme

It was very important to me and to all of my colleagues in Government that no one was left out as we sought to extend the benefits of the economic recovery to all sectors of society.

Recipients of working age payments – widows, carers, the sick or disabled – have seen no increase in their income since the cuts of 2010 and 2011. Even after the €5 increase they will still be €11.50 per week worse off than 2011 so I plan to continue to increase these rates above the rate of inflation in future budgets.

Overall almost one and a half million people will benefit from these increases and local communities and businesses will also benefit in turn from increased spending.

A social impact assessment, using the ESRI SWITCH model on a non-indexed basis, of the Social Welfare Budget package found that people who are in lower income quintile, the bottom 20% gain the most from Budget 2017 measures.

The ESRI recognises explicitly that this was as a result of the inclusion of the weekly rate increase for working age rates of payment.

Alongside the increases in weekly rates, this Bill also provides for very progressive changes affecting the self-employed - a sector which is critical to sustaining the Irish economy.

Sections 4 and 9 of the Bill establish the legislative basis for a new deal for up to 380,000 self-employed people who pay PRSI at the S class. The self-employed sector is hugely diverse – and includes people like farmers, professionals, taxi drivers, small business owners and tradesmen. Until now, the PRSI contributions they pay have enabled them to qualify for a State Pension (Contributory) on reaching pension age. This contributory pension is of course, in itself, a substantial benefit, but I have long been concerned that the social insurance system does not respond adequately to the risks which the self-employed face in the course of their working lives.

I am pleased therefore that Budget 2017 marks a major step in resolving this deficiency. Section 9 of the Bill provides that from March 2017, the self-employed will be entitled to access the optical, dental and hearing benefits currently available to employees under the Treatment Benefit scheme.

This Section of the Bill also provides that when the range of optical and dental treatments is expanded from October of next year, both employees and the self-employed will benefit equally.

Section 4 of the Bill provides that the self-employed will be entitled to apply for Invalidity Pension with effect from December 2017. This will mean that where a self-employed person is no longer able to continue to work because of long-term ill-health, they will have access to the safety-net of State income support without a means test. It’s all part of the Government’s policy of making work pay and encouraging self-employment and entrepreneurship. I intend to continue to extend the benefits available to the self-employed through the social protection system and will be looking at further options in the coming year.

Budget 2017 included a package of measures supporting lone parents, encouraging them into the workplace and into education, and helping to reduce their childcare costs.

All lone parents on One-Parent Family Payment and Jobseeker’s Transition and Jobseekers Allowance will receive the €5 increase in the weekly rates of payment.

A new €500 annual Cost of Education Allowance will be made available to Back to Education Allowance participants with children from the next academic year in September. This will help parents, including lone parents, to return to education.

The income disregards for the One Parent Family Payment and Jobseeker’s Transition payment will rise by €20, from €90 to €110 per week, reversing in part previous reductions, to encourage one parent families to stay in, and return to work, and work more hours.

For those earning €110 per week or more, it will increase the combined social welfare and earnings income by up to €15 per week.

The Single Affordable Childcare Scheme being provided by the Government will also significantly reduce the cost of childcare for lone parents and is a step change in state support for childcare in Ireland. I have also provided increased funding for school breakfasts which will help lone parents and low income households more generally.

63% of One Parent Family payment recipients do not receive any income from paid work. The changes in Budget 2017 and this Bill will assist lone parents into education and to keep more of what they earn where they are back in employment. They will help them to escape the trap of long term welfare dependency.

As part of the Government’s commitment to rural Ireland, I plan to reverse completely cuts to Farm Assist, a programme which helps more than 8,000 farm families. At a time of falling farm incomes, it’s essential that we strengthen the safety net for farmers who are on the margins. And even for farmers who do not qualify for Farm Assist, they have the reassurance of a strong safety net should they need it.

Many farmers who benefit from Farm Assist live in remote parts of the country with very limited prospects of off farm income. So, in recognition of the crucial work undertaken in rural communities under the Rural Social Scheme, an additional 500 places will be made available next year.

Young jobseekers who are under the age of 26 generally receive age-related reduced rates of jobseeker’s payments of €100 or €144 per week. These will increase proportionally with the general rate increases.

However, the focus of Government is to help and encourage young jobseekers into employment and education. We do this by actively engaging with them and by helping them to get additional training and educational qualifications that will assist them to get a job.

I strongly believe that welfare should be a second chance, not a way of life.

So, from next September, when a young jobseeker participates in my Department’s Back to Education scheme, he or she will be entitled to receive the full maximum rate of jobseeker’s payment which will then be €193 per week, as opposed to the €160 which they are currently on. This 21% increase represents an extra €33 a week, and demonstrates the State’s support for young jobseekers who seek to enhance their skills. It is the biggest single increase in the Social Welfare package.

Of course more remains to be done and I am determined that we help more young people in the most effective way possible, by helping them into the workforce or education.

I will now give a brief outline of the various Sections of the Bill before us today.

Section 1 provides for the definition of certain common terms used in the Bill.

Section 2 provides for one of the technical amendments to the Social Welfare code which are being carried in this Bill. In this instance, the definition of a “qualified adult” in the Act is being amended so as to formally provide that a person in respect of whom an increase for a qualified adult is being paid is not disqualified from receipt of a half-rate Carer’s Allowance in his/her own right.

To be absolutely clear, the scheme has been operating since its inception in line with the policy intention that a person can qualify for a half-rate carer’s allowance in their own right when she or he is a qualified adult on another person’s claim. So no one has lost out in the interim and this amendment merely serves to tidy up the governing legislation in this area.

Sections 3 and 4 provide fortheaddition of Paternity Benefit and Invalidity Pension to the list of schemes for which Class S contributions (payable by self-employed people) are reckonable.

Paternity Benefit has been open to the self-employed since the scheme was introduced in September while Invalidity Pension will be open to the self-employed from December of next year.

Section 5 provides for a technical amendment to the legislation governing entitlement to Illness Benefit which secures the existing practice and policy intention whereby the rate of payment to a claimant is held constant for a period of 312 benefit days or one year. In practical terms, this ensures that a claimant is not negatively affected where their claim for Illness Benefit straddles two years and the governing contribution year changes as a result.

This Section also confirms the existing practice whereby a claimant on a reduced rate Illness Benefit payment can gain as a result of a change in the governing contribution year, then my Department will ensure that the higher rate is paid.

Sections 6, 7 and 8 of the Bill provide for the increase of €5 in the weekly rates of Maternity Benefit, Adoptive Benefit and Paternity Benefit, which will come into effect in March 2017. The main changes in the rates are dealt with in Sections 18 and 22 which I will come to shortly.

Section 9 (a) is similar to Sections 3 and 4 and provides for the extension of Treatment Benefit to the self-employed. This Section of the Bill will come into effect in March of 2017. The purpose of Section 9 (b) is to widen the application of the Treatment Benefit scheme beyond what is currently provided for, which is limited to dental and optical examinations only.

Once the necessary discussions with the bodies representing dentists and opticians are finalised, I will introduce regulations to make an expanded Treatment Benefit scheme available to both the employed and self-employed with effect from October of 2017.

I am a strong supporter of the contributory principle, the idea that people who pay into the system should benefit from it. We should not divide society in to one group that pays for everything but gets little in return and another group that contributes very little but believes itself to be entitled to everything for free. Social Insurance is the contributory principle at it’s best and I envisage more benefits being linked to it in future.

Section 10 of the Bill is another provision which brings policy and practice into line with the legislation. Put simply, it allows lone parents who are in receipt of both the One-Parent Family Payment (OFP) and Blind Pension to retain their OFP payment until their youngest child turns 16. This has been done on an administrative basis to date pending the tidying-up of this aspect of the social welfare legislation.

Section 11 provides for an amendment to the definition of “qualified child” for the purposes of the Supplementary Welfare Allowance scheme to provide that the qualified child must be ordinarily resident in the State. This will formally bring the definition of a qualified child for the purposes of this Scheme into line with that used in the wide range of other schemes operated by the Department.

Section 12 is an amendment to require employers, where they are requested to do so, to provide information to the Department in relation to Child Benefit claims.

This mirrors the requirements which already exist in relation to a number of other schemes operated by the Department, such as Family Income Supplement and the Back to Work Family Dividend. These powers are particularly relevant in relation to Child Benefit payments made on the basis of employment in the State under EU Regulations.

In order to determine entitlement at the initial claim stage and to ensure that the right to ongoing entitlement can be validated, the Department must be able to secure confirmation of details from employers.

Section 13 deals with situations where a person has an entitlement to Maternity, Paternity, Health and Safety or Adoptive Benefit as well as the Back to Work Family Dividend.

Since January of 2015, the Back to Work Family Dividend offers financial support to families moving from social welfare into employment where the claimant, having taken up employment or self-employment, stops claiming a jobseeker's payment or a one-parent family payment.

It has been brought to light that, under the legislation, someone in receipt of the Family Dividend cannot concurrently receive payment for Maternity, Paternity, Health and Safety or Adoptive Benefit. Where that happens, payment of the Family Dividend is suspended until entitlement to, for example, Maternity Benefit is exhausted at which point payment of the Family Dividend is resumed. This practice is disruptive as well as being very cumbersome from an administrative perspective. Section 13 provides that Maternity, Paternity, Health and Safety or Adoptive Benefit may be paid concurrently with the Back to Work Family Dividend.

Section 14 provides powers to allow Regulations to be introduced to prescribe a specified time for making a Paternity Benefit claim. Again, this measure is a standard provision which applies to the full range of welfare schemes.

The purpose of Section 15 is to ensure that there are adequate legislative powers to enable the Minister for Social Protection to set out in Regulations the conditions which apply where a person nominates another person to act as their “temporary” agent to receive or collect a social welfare payment on their behalf.

Section 16 is another technical amendment. It simply provides that the current references in the Social Welfare Consolidation Act to members of the Garda Síochána being seconded to the Department “by the Minister” to exercise the powers and duties of a social welfare inspector will now, more accurately, provide that the Gardaí in question are seconded “to the Minister”.

Section 17 of the Bill deals with the position of Romanian and Bulgarian nationals and their families who were working in Ireland during the transitional period, from 2007 to 2011.

This Section provides that contracts of service in the State in which they engaged during that transitional period fall within the categories of employment where a person is regarded as an “employed contributor.” As a result, any PRSI contributions paid by Romanian or Bulgarian “employed contributors” during the transitional period will be recognised as valid.

Section 18 along with Schedule 1 provide for new rates for social insurance benefits. The increase of €5 in the maximum weekly rate of the State Pension Contributory will be paid from the 10th March next year as will the increase in the Widow’s, Widower’s and Surviving Civil Partner’s Contributory Pension where the claimant is aged over 66. The increases in all the other insurance-based payments will come into effect in the week ending 17th March in line with the payments calendar.

Proportionate increases for those in receipt of reduced rate payments and for qualified adult dependants are also provided for.

Section 19 provides for the inclusion of a reference to the Green, Low-Carbon Agri-Environment (GLAS) scheme operated by the Department of Agriculture, Food and the Marine in the relevant Schedule to the Act in order to formally provide that income from this scheme should be partially disregarded in assessing means for social assistance payments.

Section 20 provides for the reintroduction of the income disregards and tapering arrangements which applied to the Farm Assist scheme before Budget 2012.

Section 21 provides for an increase in the earnings disregard for One-parent Family Payment from €90 to €110 per week, reversing previous reductions, and offering a greater encouragement to one parent families to stay in work or return to work.

Taken together with the increase in the weekly rate of One-Parent Family Payment, those earning €110 per week or more will see an increase in their income of up to €15 per week. This measure comes into effect from 5 January 2017.

Section 22 along with Schedule 2 provide for new rates of social assistance payments. All maximum weekly allowances are being increased by €5, with proportionate increases for those in receipt of reduced rate payments. Proportionate increases for qualified adult dependants are also provided for.

As with the insurance-based schemes covered by Section 18, the increases for those aged 66 and over will be paid in the week ending 10th March 2017 with all other increases coming into effect over the course of the following week.

Finally, Section 23 sets out the standard provisions in relation to the short title, construction and commencement of the Bill, once enacted.

The measures contained in this Bill will be supplemented by other Budget measures which do not require amendments to the primary legislation. The payment of the Christmas Bonus early next month, which will benefit more than 1.2 million people at a cost of some €221 million, is just one such.

This Bill reflects the prudent approach of the Government to ensuring that the economic recovery which is underway, and which is reflected in increasing numbers of people securing employment, is not put at risk.

There are meaningful if modest increases in social welfare payments which will benefit individuals, families and their communities. There are also specific targeted measures which will provide additional supports to vulnerable sectors of our society – including one-parent families and low-income farm families.

The Bill is also reforming in recognising the unique contribution which the self-employed make to our economy and our society.

It strengthens the connection between PRSI contributions and benefits. For example through the enhanced treatment benefits in respect of dental, optical and hearing care for the employed and self-employed and access to invalidity pension for the self-employed. I should mention at this point that I intend to bring forward a Committee Stage amendment which will change the social insurance status of city and county councillors as public office holders so that, in general, their income as councillors will in future be liable for class S (self-employed) PRSI. In return for their PRSI contribution they will be able to access benefits.

It will end the injustice of councillors paying PRSI but receiving nothing in return for these contributions unlike the employed and self-employed.

I also wish to advise the House that I will be bringing forward another amendment at Committee Stage which will update the provisions in the Social Welfare Consolidation Act which relate to habitual residence. My colleague, the Tánaiste and Minister for Justice and Equality, expects to be in a position to formally commence certain provisions of the International Protection Act 2015 before the end of this year.

The Act deals with the entry into and presence in the State of people in need of international protection. As a consequence, the relevant sections of the Social Welfare Acts will need to be updated.

This is the first Social Welfare Bill to be introduced under this Government. I hope it will be one of many that will improve living standards, assist people to move from welfare into work, support self-employment and self-reliance and develop a strong Social Insurance system based on the contributory principle.

I commend this Bill to the House.

ENDS