Seanad Éireann - Volume 100 - 24 March, 1983

Social Welfare Bill, 1983: Second Stage.

Question proposed: “That the Bill be now read a Second Time.”

Minister for Social Welfare (Mr. B. Desmond): The primary object of this Bill is to provide for the implementation of the proposals for increases in social welfare payments and other changes in social welfare schemes announced in the budget. It also contains a number of other provisions affecting the social welfare code. Provision is made across the board for increases of 10 per cent in short-term benefits and 12 per cent in long-term benefits. These increases will take effect from the end of June. There has been some criticism of the fact that the increases will not take place earlier. I would much prefer to be able to come to the House with a Bill providing for increases not alone from an earlier date but also much better increases. The Government, however, find themselves in a very difficult financial position. We have been going through a period of prolonged recession, minimal economic growth and increasing unemployment. This all adds up to financial problems of the most difficult kind. As Minister for Social Welfare I am particularly affected by this situation. More people are unemployed, resources are limited and the high inflation rates of recent years have added immeasurably to the problem of providing and maintaining adequate social welfare services.

Each week at present the Department of Social Welfare pay out benefits to about 635,000 people. When you add to these a further 530,000 spouses and dependent children the total number of those benefiting in one way or another from weekly social welfare payments reaches the huge total of some 1,165,000 people. This is the reality of the situation: this is the magnitude of the problem that [368] must be faced in finding the money to finance payments.

The single biggest element of social welfare expenditure is the mounting cost of unemployment. An indication of this is the fact that in 1980 when there were some 106,000 unemployed the cost of unemployment payments amounted to £107 million. In 1983 provision has been made for £473 million on unemployment payments for an estimated 203,000 unemployed. The cost of unemployment payments has reached such dimensions that it now amounts to a quarter of all expenditure on social welfare. Another way of looking at it is that these payments now represent more than half the amount to be borrowed to meet the estimated overall current budget deficit of £897 million.

I will now turn to the effect of the increases on individual payments. Section 2 of the Bill provides for the increases in social insurance payments and occupational injuries benefits. The personal rate of old age contributory pension for persons under 80 years of age is being increased by £4.85 to £45.10, while pensioners aged over 80 will receive an additional £5.15 per week. The amount payable in respect of an adult dependant under pensionable age is being increased to £28.80 and for an adult dependant over age 66 years to £33.65. Accordingly a married couple both over pensionable age will get £78.75 as compared with £70.30 at present and if the pensioner is over 80 the new rate will be £81.85 as against £73.10 at present.

In addition to the weekly payments all pensioners over the age of 66 years are entitled to free travel and they may also qualify, if living alone, for increased living alone allowances of £3 a week, free electricity, free telephone rental and free TV licences. These additional benefits enhance the overall value of their pensions.

The new personal rate of widow's contributory pension and deserted wife's benefit will be £40.60 for a person under pensionable age, an increase of £4.35. Higher increases are paid to such persons over age 66 years. The new rate of pension for a widow with three dependent [369] children will be £75.40, an increase of £8.10 a week.

An invalidity pensioner aged under 66 years will get an increase of £4.25, bringing the personal rate to £39.75, while a married couple with two children will get an additional £9.10, bringing their rate up to £84.80. The personal rate of disability and unemployment benefit is increased to £34.80 from £31.65 a week and a married couple will receive £57.35 as against £52.15 at present. Maternity allowance is also being increased to £34.80. Section 2 also provides for increases in occupational injuries benefit in line with the general increases in social insurance payments.

Increases in social assistance payments are provided for in section 3. The maximum personal rate of old age non-contributory pension is being raised by £4.15 to £38.60 for persons aged under 80 years. It will go up to £41.40 for persons aged 80 or over. The overall maximum payment for a pensioner under 80 with a dependent spouse under age 66 will go up from £51.75 to £58. The increase payable in respect of a prescribed relative giving full time care and attention to an incapacitated pensioner is raised to £21.60 a week.

The maximum weekly personal rate of widow's non-contributory pension is being increased from £33.80 to £37.85. A widow with two dependent children will receive an increase of £6.25 a week bringing her new rate to £58.55 per week. These increases will automatically apply to the social assistance allowances for deserted wives, unmarried mother and prisoners' wives.

The personal rates of unemployment assistance will go up to £28.90 for persons living in urban areas and to £28 for persons living elsewhere. There are also increases for dependants. The new rate for a married person with two dependent children will be £65.15 as compared with the present rate of £59.20.

The rates of unemployment assistance payable to smallholders in certain designated areas whose means are notionally assessed by reference to their rateable valuation are not being increased. This is because of the High Court judgment [370] which declared unconstitutional the rateable valuation system in which the means of smallholders were notionally assessed. Payments to small holders based on the notional system of assessment must therefore be maintained at their present levels. It is, however, open to any smallholder to have his means assessed on a factual basis if he considers it would be in his favour to do so.

The rates of supplementary welfare allowances are being increased in line with the rates of unemployment assistance payable to persons in rural areas. A recitation of the various increases and the new rates that will be payable for different benefits in differing circumstances may not make for very exciting listening. These provisions are, however, a central feature of the Bill and it is important to place on record what the Bill is providing in this respect.

The provisions in this Bill relating to short-time workers have been widely published and have given rise to much controversy. I am afraid there has also been a lot of confusion about the provisions. I would like therefore to take this opportunity to explain the facts.

First of all, there has been widespread misunderstanding as to who are affected. Short-time employment is clearly defined in section 5 of the Bill as employment in which, for the time being, a number of days is systematically worked which is less than the number of days which is normal in a working week in the employment concerned. The measures in the Bill do not apply to casual workers such as dockers, seasonal workers or part-time or temporary workers.

A critical examination was made of the benefit entitlements of short-time workers and the examination showed that they were very often better off working short-time than working a full normal week.

The most common arrangement for short-time working is where workers, normally engaged on a five-day week, work for three days and are laid off for two. In general these workers receive three-fifths of their basic pay and, after the statutory waiting period, three days flat-rate unemployment benefit and pay-related [371] benefit, representing half the appropriate weekly rate of these benefits. To illustrate the extent to which short-time workers are better off than when working full-time, I would cite the following examples. As a percentage of his normal take-home pay when working full-time, a worker on a three-day week with gross earnings of £100 a week would receive by way of pay and benefits amounts ranging from 104 per cent if he is single to 113 per cent if he is married with two children. The corresponding replacement ratio for a worker earning £145 a week ranges from 103 per cent to 114 per cent. In addition, many short-time workers also qualify for income tax refunds because of their entitlement and their reduced earnings.

The measures contained in section 5 to 7 are aimed at ensuring that short-time workers' pay and benefit will be somewhat less than their normal full-time take-home earnings. This I believe to be fair and reasonable. It is somewhat more than the limit of 85 per cent which applies in the case of those fully unemployed. The limitation is being achieved by restricting benefit payments to two days flat-rate, instead of three days as at present and also by abolishing pay-related benefit.

I should perhaps mention here an amendment that was made on Committee Stage to section 6 of the Bill in the Dáil. During the course of the debate a number of Deputies referred to the calculation of the flat-rate benefit payable to short-time workers. It was calculated on the basis of one-sixth of the weekly rate for each day on which benefit was paid. The point was made that short-time workers are effectively being restricted to a five-day week for benefit purposes and their daily rate of flat-rate benefit should accordingly be calculated on the basis of a fifth rather than a sixth of the weekly rate. The validity of this point was accepted and accordingly I introduced an amendment on Committee Stage to deal with it.

The overall levels of pay-related benefit available during sickness or full unemployment have been the subject of [372] such concern for some time. An examination of the position indicates that despite the existence of various limits, the level of benefits, particularly when account is taken of tax refunds, can be relatively high when compared with previous take-home pay. For example, a married man with three children whose gross earnings are £145 a week can now receive disability benefit and pay-related benefit amounting to 98 per cent of his normal take-home pay. This does not take account of any tax refund which may accrue.

Sections 8, 9 and 10 therefore provide for changes to remedy the position. The effects of these changes will mean that in the case I have mentioned of a married man with three children earning £145 when working will, when sick, qualify for disability benefit plus pay-related benefit amounting to 86 per cent of his net weekly earnings increasing to 88 per cent from June. The same man drawing unemployment benefit and pay-related benefit will continue to be limited to 85 per cent of his take-home pay.

As a result of the changes in the Bill the rates of pay-related benefit will be 25 per cent for 23½ weeks and 20 per cent for 39 weeks. The waiting period for pay-related benefit is being increased from two to three weeks while at the same time the earnings floor for calculating pay-related benefit is being raised from £32 to £36. Separately by means of regulations, the overall benefit ceiling for disability benefit purposes is being set at 80 per cent of reckonable weekly earnings instead of the present 100 per cent with effect from April. Regulations will also provide for an increase in the earnings ceiling for the purposes of calculating pay-related benefit from £9,500 to £11,000. This will also take effect from April and will mean increased levels of benefit for persons in that earnings bracket.

Section 11 provides for the withdrawal of maternity grant in respect of confinements on or after 4 April 1983. This grant of £8 is no longer of any real significance in the context of the maternity allowance scheme which was substantially improved two years ago for employed women on [373] maternity leave. The scheme for working women now provides average payments of about £900 for about 10,000 claimants while the remaining 10,000 women receive on average £500 under the general scheme. These schemes are of far greater importance to women than the once-off grant of £8 being discontinued.

Section 12 provides for the removal from entitlement to children's allowances of apprentices with effect from 1 July 1983. In the past, apprentices aged between 16 and 18 may have had little or no wages but they may now earn between £30 and £50 a week. At a time when financial resources are scarce, the continued payment of children's allowances to apprentices can, therefore, no longer be justified as a priority. Young unemployed workers between the ages of 16 and 18 lose their children's allowances.

I come now to measures which are included in the Bill but not within the scope of the budget. Section 147 of the Social Welfare (Consolidation) Act, 1981 provides land-owners in certain areas of the country with the option of having their means assessed for unemployment assistance purposes by reference to the rateable valuation of their land where the valuation does not exceed £20. Following the High Court judgment of 30 July 1982 that sections of the Valuation (Ireland) Act, 1852, were unconstitutional, the Attorney General advised that the continued use of the notional method of assessment of means is unlawful and that the Social Welfare Act should be amended as soon as possible. Provision is therefore made under section 13 for discontinuing the notional method of assessment of means on the basis of the rateable valuation of land. Some 14,000 smallholders who are at present notionally assessed will, under section 13, retain entitlement to unemployment assistance on the present basis of calculation until such time as their means can be assessed on a factual basis. The factual assessments will be carried out as quickly as it is possible to do so but the Bill provides that they must in any event be completed within three years.

Following the introduction of increased rates of PRSI contributions in [374] April 1982 representations were received about the impact of the increased contributions on workers who received retrospective lump sum pay awards which went back to the preceding contribution year. The then Taoiseach gave a commitment that refunds would be made as early as practicable where a rate is charged on back money at a level higher than that which applied when it was earned. Section 14, accordingly, provides a statutory basis for the determination of the rate of social insurance contributions payable in respect of lump-sum wage settlements paid in the 1982-83 contribution year but which related in whole or in part to the preceding contribution year.

Section 15 provides that the share of the cost of supplementary welfare allowance payable by local authorities in respect of 1981, 1982 and subsequent years and their liability for administration costs for 1982 and subsequent years may be limited by regulations made in consultation with the Minister for the Environment and with the consent of the Minister for Finance. Provision is also made for Exchequer subvention of administration costs where such costs are not fully defrayed by the local authorities.

Under existing legislation local authorities are obliged to meet a share of the expenditure on the supplementary welfare allowance scheme and the balance is met by the Exchequer. The local authorities recoup the health boards the full costs of administration as there is no provision for an Exchequer subvention. In recent years the payment of these sums has caused problems for local authorities as the annual rate of increase in supplementary welfare allowance expenditure has exceeded the rate of increase in their incomes prescribed by the Minister for the Environment. Local authorities were advised in April 1982 of limits in their liability in 1982 to contribute to the cost of supplementary welfare allowance, including certain amounts due in 1982 in respect of allowances paid in 1981. This provision enables the position to be regularised by regulation.

The scope of the occupational injuries benefit scheme is being extended under section 16 to trainees under schemes [375] approved of or provided by the Youth Employment Agency. This brings their insurance cover into line with trainees under AnCO schemes. These amendments follow on the advice of the Attorney General in connection with defects in the existing legislation for dealing with fraud in relation to social welfare. Under the provisions of sections 17 to 25, the Department's powers to prosecute for offences are being strengthened and clarified. These are necessary so that we can take effective measures to deal with abuse of the social welfare system.

The existing provisions are now being tightened up to ensure that any person acting on behalf of an employer who aids, abets, counsels or procures an employee to obtain benefit fraudulently is guilty of an offence and liable to a fine or imprisonment. This is being done under section 17 which refers to social insurance and sections 19 and 24 which relate to unemployment assistance and supplementary benefit (“Wet-time”) respectively. Previously no action could be taken against such persons because the existing provisions of the Social Welfare (Consolidation) Act 1981 refer only to the employer.

Under section 116 of the 1981 Act the time limits within which proceedings in relation to social insurance may be commenced are

(a) three months from the date on which it is certified in writing, sealed with the official seal of the Minister, that evidence to justify the institution of a prosecution comes into the possession or procurement of the Minister, or

(b) two years from the commission of the offence whichever period latest expires.

The period of three months specified in the certificate is being extended under section 18 to six months to allow sufficient time for the completion of inquiries and the processing of any appeals.

The provisions in section 18 refer only to social insurance. Sections 20, 21, 22, 23 and 25 bring the provisions for social assistance payments into line with those [376] in section 18 and also effect uniformity in all of these provisions.

The Bill has been criticised because it has been stated that the increase in benefits are inadequate. The overall cost of these increases in 1983 will, however, amount to almost £81 million. This figure cannot be taken in isolation because next year the cost will add up to £160 million and this is before any provision is made for further increases next year. Overall in 1983 we will spend £1,870 million on social welfare and finding the money for this is now an extremely serious problem. I referred in my opening remarks to the difficult economic situation in which we find ourselves. There are widespread demands for increased rates of benefit. Most people will favour this but it is extremely difficult to find anybody who will come up with practical proposals for levying the additional finances that are necessary.

Let us look at how the £1,870 million will be spent in 1983. Non-contributory social assistance services will cost £799 million; social insurance schemes will cost £976 million and, administration costs will amount to £75 million, making a total of £1,870 million.

All of the cost of the social assistance services is borne by the Exchequer. The cost of the social insurance services is paid for by the contributions of employers, employees and the Exchequer. The main fund covering the social insurance services is the Social Insurance Fund. In 1983 the income of that fund will be £1,019 million. Employers will contribute 52.7 per cent of this, employees will contribute 25.6 per cent and the Exchequer will contribute the balance of 21.7 per cent.

It is, perhaps worthwhile at this stage to say a few words about the PRSI contribution system. There has been a lot of confusion and misunderstanding about what it means and what it does. Originally social insurance contributions were essentially flat-rate. Everybody paid the same amount of contribution — the worker earning £20 a week paid exactly the same as the worker earning £100 a week. This was rightly regarded as regressive and unfair and penal in its [377] effect on lower paid workers. In 1979 the flat-rate system was replaced by a wholly pay-related system whereby every worker paid a contribution in proportion to his earnings up to the ceiling. Now the stage has been reached when some people maintain that because they pay pay-related contributions they are automatically entitled to pay-related benefits. This is not so. Pay-related contributions are simply a method of financing the entire system of social insurance benefits which covers flat-rate pensions for old age, survivors and invalidity and also the short-term flat-rate payments for sickness and unemployment. In addition, there are the pay-related supplements for the short-term benefits. Pay-related contributions help to pay for all of these but in order to qualify for any particular benefit a claimant must satisfy the conditions for receipt of that benefit. The social insurance system is a pay-as-you-go system whereby those who are fortunate enough to be at work pay contributions which help to fund benefits for those who may be sick, unemployed, retired or may have lost a husband.

I can understand the resistance that has developed to the payment of PRSI contributions, particularly since they have reached their present level. On reflection, however, I hope people will see the necessity for paying contributions and will realise that there is a real social equity about this. Those who have jobs are fortunate and any community with a social conscience can hardly complain about making a contribution towards the support of those who are sick, unemployed, old or widowed.

I appreciate the burdens that must be borne by all in times of recession and the existing financial stringency but it is only by sharing the burden all round that we can live up to the responsibilities of a civilised and caring society. This year when there has been so much talk about the burden of taxation, I think it is only fair to point out that there has, in fact, been no increase in the actual rates of PRSI contributions. The contribution rates will be exactly the same in the coming year as they have been in the present year though the ceiling on which the contribution [378] is levied is being increased from £9,500 to £13,000.

There is one final point I would like to make about the PRSI contribution. In this Bill we are dealing only with the social insurance contribution. Also collected side by side with the PRSI contribution is a 1 per cent youth employment levy, a 1 per cent health contribution and from April next the newly introduced 1 per cent income levy. These contributions have nothing to do with social welfare. They are not covered by this Bill and provision is made for them separately in other legislation.

It has often been the practice to compare our system of social security with that of Britain and Northern Ireland. There, I would point out, pay-related supplements with short-term benefits were abolished last year. We have no intention whatsoever of doing so in the Republic. Apart from this, and even allowing for different currency values, the level of our flat-rate disability and unemployment benefit is much higher than that of similar benefits in the United Kingdom.

This, then, is the setting in which I bring this Bill before the House. Everybody would like to see bigger and better benefits and so would I. However, in a situation of economic recession where there is an absolute need to utilise scarce resources in the most effective way possible I am satisfied that this Bill will provide the means of safeguarding our social welfare system and guaranteeing protection for those who are genuinely in need. I commend the Bill to the House.

Mr. Fallon: I would like, on this occasion, to welcome the Minister to the House. I regret that the news which he brings to us is not the very best of news. This is a Bill that has generated quite a degree of controversy. It has already been described by a former member of the Labour Party and a trade union member as savage and evil. Savage and evil are very harsh, tough and devastating words in any social welfare situation, or for any Bill for that matter. There is no doubt that the greater part of this Bill will cause real problems for the poor, the sick [379] and the unemployed. There is clear evidence that the Bill is in many ways, anti-child, anti-poor, anti-unemployed. It is hitting hardest at the weakest sections of our community. It is an attack on those least able to carry the burden of the present recession.

If we examine the Financial Statement of 9 February we will see the third objective as follows: to minimise the effects of the recession and of the necessary adjustment policies on the low paid and on those of low incomes generally. I would say it is a very honourable objective. The Labour Party manifesto declared that social progress must not stop in times of recession. The Labour-Fine Gael joint programme stated that benefits should be maintained in relation to inflation. I have to say quite clearly that we have had already a very real degree of reneging and breaking of a promise. I would have thought quite honestly that the Labour partners in the Government, in particular the Labour Party Ministers, would have learned from the grassroots of their party after the John Bruton budget which endeavoured to put 18 per cent VAT on clothing and footwear. I hoped that if they came back into Government they would be mindful of that event. I am sorry to say that does not seem to be the way and certainly this Bill does not clear the air for me. I will have to compare past Governments and past Social Welfare Bills.

On this side of the House, certainly, we have shown down the years a practical approach to the problems of social welfare. We can be and are proud of our record of social welfare. We allocated an increase of 25 per cent to social welfare beneficiaries in the last three years, even though we were again in a difficult period of economic stagnation. While we gave 25 per cent, this Government are prepared to give only 12 per cent for longterm beneficiaries and 10 per cent for short-term beneficiaries. With the increased cost of so many items, in particular since VAT was increased by 5 per cent, it is obvious that the purchasing power of the money which they will receive will be greatly reduced. The previous [380] Government were committed totally to the needy sections, notwithstanding the difficult economic circumstances that prevailed at the time.

At all times we gave the highest priority to maintaining and advancing the social provisions of the needy and the disadvantaged. Our priority must always be and should be to ensure a basic standard of living for those who must depend on social welfare benefits, both in terms of income and service. I would have expected that any self-respecting Government would grant increases in this area which were at least in line with inflation, but regrettably this has not been the case. Since 1977 this is the first time that we have had no real improvement for those dependent on social welfare.

One can go through the Bill and quickly enumerate some of the changes that are taking place. The pay-related benefit is reduced from 40 per cent to 25 per cent for almost the first six months, or 147 days. Then you have a sliding scale downwards to 20 per cent. The pay-related benefit waiting period is to be extended from 12 to 18 days, reducing the maximum duration of the new 25 per cent grade from 147 days to 141 days from April of this year. The pay-related benefit ceiling is also being raised from £9,500 to £11,000 and the maximum rate of benefit will be £46 a week. The overall benefit ceiling for disability purposes will be reduced from 100 per cent to 80 per cent of reckonable weekly earnings for all payments. We read that apprentices will be disqualified for children's allowances purposes from April 1983. The maternity grant of £8 to which the Minister referred will be abolished. The flat-rate unemployment benefit for all short-time workers will reduced from three days to two days. Smallholders, whose means are calculated notionally on the poor law valuation system, will not qualify for increased rates of employment assistance. We have the temporary 1 per cent levy on incomes, which levy will apply in the same way as the youth employment levy. The Minister also mentioned another levy and, while he says that they are not covered by this Bill, incomes are being eroded as a result of [381] these levies. They are levies on income, having nothing to do with profits or anything of that nature. You pay the money over and that is the end of it.

The proposal to extend the waiting period to 18 days is particularly hard on people who will be ill for a period from time to time of three to four weeks. This is quite common; it happens to all of us. They will have extreme difficulty in meeting their commitments. Public representatives — and many Senators — realise that people with SDA loans or loans from building societies, people who had been in good jobs and find themselves out of work, are now finding, for the first time, real problems in paying back their loans. When we introduce legislation we should at all times introduce it so that people can cope with these problems.

It was never part of our policy to reduce the payment of pay-related benefit by such amount as is at present before us. This Government will have to take full responsibility for those measures. It is clear that the Government have forgotten the concept of pay-related social insurance and that they are using it as another tax. Thousands who have marched in protest in the past will march in the future. They will see this as a substitute for further increases in PAYE. Those people have noticed what is happening. Many thousands of workers, like myself, thought that the whole purpose of PRSI was to allow people to insure themselves against illness, unemployment or old age. This concept is being lost and the mention of PRSI is now more hateful to workers than PAYE. They were willing to accept PRSI because they saw it being of benefit in the future, but they are no longer willing. I would have to question the morality and legality of the Bill in this regard.

I read this morning on a newspaper that workers in Waterford are now instructing their employers not to deduct PRSI and PAYE. That would mean a loss of £1 million per month. I believe that this practice will grow as the year goes on and it is perhaps understandable that workers around the country might adopt this policy. It is no harm to mention at this stage that certain Fine Gael members [382] of the Coalition have been indicating that there is in some way, merit in employers not paying over PRSI and PAYE. I have read that firms with as many as 3,000 employees in 1982 had withheld the benefits. If TDs say that there is merit in doing this, then who can blame the workers of Waterford, or any other part of Ireland, for telling their employers not to deduct their PRSI and their PAYE?

Many of us thought that this Bill would be about something different — about the spongers, about the misuse and abuse of tax. If that was the case, everybody would adopt a tough policy with these people. That, unfortunately, is not the case. Take the case of section 13 of the Bill, which is something of tremendous importance to many local and public representatives the decision that smallholders will be factually assessed. I can only anticipate what will happen in the light of my experience as a public representative in relation to reviews and appeals. It takes three or four months for an appeal of this kind to be processed. I cannot help feeling that social welfare generally is clearly one of the areas that could and did need a massive decentralisation effort, because more and more people, like inspectors and people doing the investigating, could be sited on a regional or on a county basis, which would have beneficial results for all concerned. We would be opposed to section 13 of the Bill. I hope that the small and uneconomic farmers are given the assistance they need.

The whole Bill has been described as emotional nonsense and the attack by Deputy Bell on it has been referred to as emotional nonsense. This is not fair. In the next few months, when workers find themselves with £13, £14 and £15 a week less in their wage packets, their unemployment assistance, or their social welfare benefits at a time of soaring prices, you will have real emotion. To suggest that it is emotional nonsense is not fair. When it hits home, there will be marches and protests about this matter. Many of my own friends in the Labour Party at grassroot level are in total despair over [383] this Bill. They see it as a contradiction of all the philosophies of the Labour Party.

This is a Bill that will positively injure the unemployed, the needy and the underprivileged. Other issues like sponging, misuses and abuses could well have been tackled. That would have been welcomed and we would have supported it. The Bill, as it stands, is one that we will oppose in many ways. We will be submitting suitable amendments for the next Stage of the Bill.

Mr. A. O'Brien: This is my first opportunity since the unanimous election of the Leas-Chathaoirleach to congratulate her and wish her well. Go mara tú i bhfad.

If we are to make a fair assessment of the proposals made by the Minister, we must keep before our minds some essential facts regarding the present financial and economic position. It is fair to say that there is general agreement on two important points, firstly, the urgent need to reduce overall Exchequer borrowing requirements and, secondly, that it is now absolutely necessary to reduce and control the current budget deficit.

If we start off on these two points there will be a greater appreciation of the difficulties confronting the Minister and the Government at the time of taking office. We have been living beyond our means for a number of years. We have continued to live as if the massive oil price rise of 1973 had not taken place. That massive increase of 1973 ended a period of stable self-sustaining growth. It became necessary to borrow if we wanted to maintain the standard of living that we had enjoyed in the immediate preceding years and that policy was embarked on. It was followed then by the shock of a second oil price rise of the 1979-80 period which aggravated the position. By the year 1982, we had reached the serious position of the Exchequer debt servicing absorbing the total revenue from income tax.

Concurrent with that alarming development, the effects of worldwide recession brought us further problems, as they did to many other nations. In 1980, the [384] expenditure on all unemployment benefit, including smallholders' unemployment assistance, amounted to £170 million. By 1982 it had increased to £381 million — an increase of over 65 per cent. This year the sum provided is £473 million — an increase on the 1980 figure of 178 per cent. Bearing in mind that our total income tax receipts go to service the debt, along with the figures that I have just quoted, we can see clearly the difficulties that confronted the Minister in his efforts to help effectively the social welfare sector.

The income tax burden on some sections of the community, notably the PAYE sector, is generally claimed — and indeed largely admitted to be — too great. Their dissatisfaction at the level of the contributions they must make has almost brought them to breaking point, due to their justified belief that others pay less — in some cases very much less — than their fair share. It is right to bear in mind that the Minister for Finance in his Budget Statement of 9 February draws attention to this problem, stating:

Successive Ministers for Finance in recent years have indicated their concern to establish a more equitable system of taxation. There has been a widespread recognition that the burden of taxation is unbalanced and is excessive in some areas.

We realise that it will take some time to get this system, which has been operating for years, changed into such a form that it will ensure greater equity for different sections of the community.

It is important to bear in mind the difficulties caused by these problems not being tackled effectively in time and by the fact that taxation in some areas has reached saturation point. The willingness of the people to meet this high taxation demand is eroded to a great degree by the belief that others are able to dodge or evade their responsibilities. The Minister has undertaken to have this problem examined. It is to be hoped that it will do two things, that it will substantially increase revenue to the Exchequer and that the dodgers will be caught up with. In itself that will remove a good deal of [385] the dissatisfaction prevailing amongst those who have to pay a high rate of tax and who have no opportunity of evading it because it is stopped at source.

I would agree further with the Minister's statement that it is widely understood that excessive borrowing has added to rather than reduced our problems. This means it could not be considered wise at this stage to engage in more borrowing in order to increase to any substantial degree social welfare benefits or payments. If we keep in mind that every 1 per cent increase in social welfare payments, excluding children's allowances, will cost as much as £14.5 million, we see clearly the constraints within which the Minister had to operate.

I might refer to another paragraph in the Minister's budget statement:

Eliminating the deficit means both extra taxation, on the one hand, and controlling State expenditure on the other...

Therefore we have a Minister whose options are very limited because of the accumulated effect of the world recession, a very slow, almost negligible economic growth and the cost of servicing debts incurred in the past. All these factors together impose severe constraints on the Minister. In fairness to the Minister and the Government all these facts should be borne in mind when we are examining the Bill before us today.

The Bill is clear evidence of the Government's intention to take all possible steps to ensure that the poorer sections of the community do not suffer. It has been drafted in difficult circumstances with no practical options. It is correct to say that the Minister and his Cabinet colleagues would have done more for the social welfare classes than has been done in this Bill but for the stifling constraints to which I have already referred. I believe the Minister is as concerned as anybody else in the House to do justice to the under-privileged sections of our community. But he had to make a judgement as to whether we should go deeper and deeper into debt, thereby jeopardising our financial independence and stifling [386] economic development by endeavouring, for a little longer, to maintain an artificial standard of living. The right decision was made when the Government decided to do the best possible for the less well-off sectors of our community in the prevailing constrained circumstances.

If one is to form a balanced judgment on the provisions of the Bill one must remember that a large number of people in the community hold GMS cards, fuel vouchers, that a large number enjoy free travel, free electricity, free telephone rental, free television licence and enjoy differential rents. We are all happy that it was found possible in the past to make these concessions to the less well-off. All Senators would hope that our economy improves to such a degree that in the not-too-distant future it will be possible to do even more to help those in need of help, to show a caring attitude for the aged, the infirm and the underprivileged in general. I believe the Minister does cherish this section of the community as much as any other.

It is a good thing that the Minister has decided to appoint a commission to examine the social service structure with a view to ensuring that the best possible value is obtained for money and with a view to eliminating abuse. It is widely recognised that if abuses could be eliminated the people who are entitled to assistance would be able to get more without any extra cost to the State. The system warrants a thorough probing examination. We all know that there are some people receiving, under the social services schemes, money to which they are not entitled and that others are getting more than their correct entitlement. From the point of view of administration, it is also true to say that delays in payment to legitimate recipients very often cause more dissatisfaction than does the amount paid. It is true to say also that there is a duplication of work between the different Departments and the health boards. A co-ordination of such work would eliminate such duplication. Every day there are pension officers carrying out checks on people which are either preceded by or followed by other checks on the part of officers of health boards. [387] That aspect is worthy of examination and will eliminate waste.

It has been the experience of history that in times of recession organisations become more efficient because of the need imposed on them to cut out waste and duplication. It is true also — but not everybody likes to say it — that medical certificates are obtained too easily, that there are “dossers” who regularly get medical certificates and draw money to which they are not entitled. I believe that abuse is on the increase rather than the decrease. Everybody here knows — whether we want to say it or not — of the “dossers” who turns up to the doctor declaring he has a pain in his back and is unable to work. It is maintained that there is no way of checking out the accuracy of his contention. He gets a certificate and does well for himself until the regulations demand that that certificate be renewed. These easily obtained certificates are a passport to easy money. Sick pay benefit has been shamefully abused in some cases. I know that in the relatively small work force employed by a small local authority like Cavan Urban District Council, in 1981, the abuse of this scheme cost the taxpayers and ratepayers of that urban area £10,000. They were people working three days, getting certs, going on sick leave, then queueing up on Saturday for double-time in order to go to town presentable on Sunday. It is time that a sincere and determined effort was made to eliminate abuses of that kind.

I would like to compliment the Minister on his decision to do what he can to ensure that it will not any longer be possible for people to have more take-home pay by working part-time than the man who is prepared to do a full week's work. It has gone beyond the time those abuses were eradicated. It is the subject of public criticism on a very wide scale. When the average taxpayer sees that people can play tricks like that on local government authorities and on Government Departments it reduces their faith in the efficiency of the people to whom they sub scribe rates and taxes. That is a step if [388] the right direction and it is to be welcomed.

With the growing unemployment problem — and I am not referring entirely to the shocking growth in unemployment that has taken place in this country and other countries recently because of the ravaging effects of the recession; I am thinking of the problem of unemployment that may continue for years to come because of the advances made in technology — there are people in the world today who give a lot of thought to this matter. They are convinced that full employment will hardly ever return again and that this will be due to sociological developments, the employment of robots and so on. These people advocate early retirement and a shorter working week. This problem poses greater difficulties for us than perhaps other countries because of our high percentage of young people. The problem of unemployment, irrespective of what Government are in power, is a serious one. Hopefully in the years immediately ahead it will not be nearly as serious as it is now. Hopefully, when the recession begins to ebb and our economy begins to thrive again thousands more will get back to work. But unemployment is a problem that will demand attention from people in power in times to come. My personal view is that rather than pay unemployment assistance to able-bodied people——

An Leas-Chathaoirleach: May I interrupt the Senator to allow the Minister to leave for a vote in the other House?

Mr. A. O'Brien: Yes, certainly.

An Leas-Chathaoirleach: If the Senator wishes to continue in the absence of the Minister he may do so.

Mr. A. O'Brien: I had almost finished. Contemplating the problem of unemployment and how to deal with it it is my view — and I want to make clear that I am not speaking from a party point of view on this, this is a personal belief — that consideration will have to be given to a certain amount of the money allocated for unemployment assistance being allocated to local authorities, perhaps even State bodies and other [389] agencies so that they could provide work. It is wrong to see vast amounts of work left undone — to take some obvious examples — in the line of improving roadways, road drainage, improving fields and effecting arterial drainage. There is an almost limitless amount of work to be done. Yet there is a huge work force there not employed on it while at the same time they are getting money for doing nothing.

The greatest possible assistance should be given to the aged, the infirm, invalids and people entitled to assistance. I believe also that able-bodied people would much prefer to work than get up morning after morning, week after week, with no hope whatever of being employed in any gainful occupation. This demoralisation, encouraged by that type of system, will have to be abolished completely. The money currently paid to able-bodied people, who are willing to work, who have the capacity for work must be channelled into some other development in a redeployment of the resources at our command. That would constitute a morale boost for the people concerned. It would add to the productivity of the country, its scenic attractions and, in the last analysis, will help in the achievement of greater productivity. In the last analysis a genuine way to a better standard of living for everybody is greater productivity in industry, on the land and so on.

Mr. Lynch: This is my first time to speak with you in that noble position, a Leas-Chathaoirligh. I should like to wish you many happy years there.

I listened with a certain amount of apprehension to the Minister's introductory remarks. It saddens me to have to agree in this House that the steps we took over the years to help to alleviate the problems existing in many areas of our social life have taken a retrograde step. The Minister said this Bill would safeguard the needy. It is my honest opinion that this Bill totally lacks social equity. Contrary to what the Minister has stated, the Bill will not provide the means of safeguarding our social welfare system, will not guarantee protection for those in [390] need. If other sections of our community have been living beyond their means certainly social welfare recipients have not been doing so. We, as public representatives, and more importantly, the Government, no matter to which party they belong or what amalgamation of parties they belong to, have a duty and responsibility to these people. This Government are not carrying out their duty or shouldering their responsibility towards these people.

I listened with enthusiasm to Senator A. O'Brien, my neighbour across the border in Cavan, when he cited instances of additives, given over the years. They are not luxuries but the extra little things that mean so much to our old age pensioners and sick people — the free electricity scheme, the free television licence, free travel, free telephone. It is a pity that Senator O'Brien did not go the whole hog and state that the instigators of all these perks were the Fianna Fáil Party, most of them instigated by our present Leader when he was Minister for Health. We have always had a humane approach to the social welfare code. This Bill is an inhumane and repressive one.

Our prime obligation is to care for the older and weaker sections of the community, the sick, the infirm, the handicapped and the aged. Having said that, we must also give due care and consideration to our work force and the employers who maintain that work force. This Bill is unbalanced. There is a defeatist attitude prevalent throughout the Bill. There are cutbacks here, there and everywhere. There are delays of payments here, there and everywhere. I warn this Government and House that in the months ahead there will be hardship here, there and everywhere and that there will be a reaction to that hardship, as has already been stated by Senator Fallon. There is no evidence of a commitment by the Government in this Bill to raise the living standards of social welfare recipients. In fact, the raising of those standards initiated by Fianna Fáil and continued by our party in successive budgets has now been reversed. There is only a 12 per cent increase for long-term and a 10 per cent for short-term beneficiaries. [391] Coupled with the increases in VAT that will bring them into a nil or minus situation. Indeed with rising inflation it is my opinion that it will certainly be a nil situation. It must be remembered also that these increases will not be granted until early July. I wonder could this constitute the first step in abandoning our responsibilities to the weaker sections of our community. Neither is there any increase provided in children's allowances. The delay in the payment of the increases until July is indicative of a move in this direction. It would be a sad day for democracy were we to abandon our obligations to the weaker sections of our community.

I spoke on a motion here recently regarding employers' duty to the State of sending in their returns on time to the Revenue Commissioners. I spoke in favour of that motion. I said it was most desirable and necessary, because there are obligations to the State and Exchequer requirements that must be met. I mentioned then a few problems of the ordinary business people who are spread right across the board in our society. This Bill has serious repercussions for these people. I will mention once again the family grocer, the family draper, the family publican, which is my particular trade, and the motor trader. The motor traders were on the march yesterday. They were quite entitled to march. Indeed they were quite entitled to march when we were in Government. The problems facing the family businessman today — who has to pay more than his fair share of taxes, PRSI and PAYE contributions — are enormous.

The small family grocer was the backbone of this country. His only knowledge of book-keeping was entering into his books some time during the week the goods a neighbour got “on tick” and for which he hoped some day he would be paid. This type of business person had to realise that he had to compete with the multinationals who are importing over 90 per cent of what they sell. These goods could have been produced at home, could have been bought at home. It might be no harm if this House were to call on the [392] people to support our products, to “buy Irish” and ask retailers to sell Irish. Then we could be in a position of having a Social Welfare Bill with which everybody could be in agreement. If we supported our produce our financial problems would be eliminated in a very short time. But the grocer, the publican and the small businessman improved their premises. What has happened with regard to repayments to banks of enormous rates of interest of over 20 per cent? Those businessmen still have to meet their commitments with regard to VAT, income tax, PAYE, PRSI, rates, water rent, youth employment levies, ESB charges, insurance, heating, cleaning and so on. Yet year after year successive Governments and Ministers for Finance have imposed especially on publicans this extra obligation to collect money for the State. It is no longer fair. I would say that the shortfall in revenue from spirits for 1983 will be colossal. Speaking as one in the trade, what has happened, especially since January last, is that the commercial traveller, especially in the northern part of the Twenty-six Counties, has almost disappeared. In his place we have the professional smuggler who is offering the publican goods at 50 per cent cheaper than the commercial traveller could offer. I would be the last to condone smuggling but—

An Leas-Chathaoirleach: The Senator might relate his remarks more closely to the Bill.

Mr. Lynch: I am making the point that, with the shortfall, most of these people's incomes have dropped by almost £1,000 per week. Therefore it follows that the shortfall for the Minister for Finance, or for the Revenue Commissioners, in the coming year will be colossal. We will be faced with more bills, more cuts. I wonder what will be the reaction of our colleagues in the Labour Party to that, the people who preached before the last election that they would seek equity, demand it and would deliver, who walked through the lobby this week to vote for a Bill that was against all of their principles, if they have any left.

[393] As a member of a local authority, I should like to bring section 15 to the Minister's attention. Section 15, page 7, provides:

(1) Section 218 of the Principal Act is hereby amended—

(a) by the substitution of the following subsection for subsection (8):

“(8) The Minister shall, out of moneys provided by the Oireachtas, make grants to health boards to defray so much of their expenditure on supplementary welfare allowance and costs of administration of that allowance as is not met by income under this section.”,


(b) by the insertion of the following subsection after subsection (8):

“(9) Notwithstanding any other provision of this section—

(a) the total amount to be paid under subsection (1) by all local authorities referred to in that subsection in respect of each of the years ending on 31st December, 1981, and on 31st December, 1982, and in respect of each year after the year ending on 31st December, 1982, shall be such amount as may be prescribed for each such year by the Minister, after consultation with the Minister for the Environment and with the consent of the Minister for Finance, and the proportion of those amounts payable by every such local authority in respect of each such year shall be that which the total expenditure on home assistance by that local authority in the year ending 31st December, 1975, bears to the total expenditure by all local authorities referred to in subsection (1) on home assistance in that year;

(b) the amount payable under subsection (3) by a local authority referred to in that subsection in respect of the year ending on 31st December, 1982, and in respect of [394] each year after the year ending on 31st December, 1982, shall not exceed such amount as may be prescribed for that year by the Minister, after consultation with the Minister for the Environment and with the consent of the Minister for Finance.”

Most Members of this House are also members of local authorities. As a member of a local authority and as a member of a health board I would like to bring to the notice of this House and the Minister that there is an ongoing problem with local authorities and health boards with regard to payments of these contributions. The financial position of county councils at the moment is not good: in fact it is very poor and the signs are not great.

I would ask the Minister to look into this problem and try to take it out of the councils' lap. Finance should be forthcoming from the Exchequer because we, as local authorities, are not able to meet our commitments. As Senator O'Brien said, our roads are in a poor state, and yet we have to give supplementary grant assistance to health boards — huge amounts of money that could be spent on local improvements. The responsibility is, morally, with the Minister and I would ask especially that the Minister would look into that role.

Coming from a Minister who has preached over the years his aims and goals and objectives for the poor and weaker sections of this community, to me this Bill is not alone totally inadequate but it is a complete reversal of the Minister's publicised views. In my opinion it is a fraud. The Minister, in my opinion, to put it mildly, has fraudulently stated over the years that he and his party would look after the weaker sectors. Now they have failed miserably. I hope that this House will reject this Bill.

Mr. O'Mahony: I will deal with three matters briefly because the Minster is anxious to get this Bill through quickly. I want to deal first with the attitude of the Fianna Fáil Party to the Bill, and in particular to Labour's involvement. Second, [395] I want to talk briefly about the economic context in which the Bill has been introduced. Third, I want to refer to the failure of successive Governments to date to confront the scandal of inequality and inequity which persists in our society.

So far as the attitude of the Fianna Fáil Party to the Bill is concerned I think it is nothing short of hypocritical and opportunist. The reality is that three or four short months ago, that party, which now dare to ascribe wrong motives to the Labour Party, proposed, stood over and fought an election on a set of policies which were more draconian than the admittedly very difficult and tough measures in this Bill. The great tragedy about Irish politics now is that words no longer seem to have any meaning: people can say one thing today and when it suits them, for opportunistic reasons, they can say exactly the opposite the following day, even though the circumstances remain the same. I will refer, for the record, to The Way Forward published by the Fianna Fáil Party in Government. It is the document on which they fought the last election. I will put on the record a number of sections from it. On page 20 it states:

The measures initiated in the July 1982 non-pay expenditure cuts and in the 1983 Estimates will be continued to bring about a cumulative reduction of up to 5% in the volume of non-pay expenditure by 1986 as compared with 1982.

On the same page, in paragraph 15, it states:

Total transfer expenditure can grow by an annual average of only 8% in nominal terms over the period to 1986. The protection of the living standards of old age pensioners and other such recipients of long-term social welfare benefits may well require restrictions on increases in other transfer expenditure.

In other words, they acknowledged quite clearly in paragraph 15 that it was their intention — they fought the election on this basis — to provide increases in [396] short-term welfare payments below inflation. More specifically, in paragraph 18, page 21, they list a series of proposals in relation to social welfare. The changes proposed are as follows:

to remove the present disincentive to work, flat-rate unemployment benefit for short-time workers will be limited to ensure that it will be related to a five day working week and pay-related benefit for those workers will be withheld;

for disability benefit purposes, the overall benefit ceiling will be reduced from 100% to 80% of reckonable weekly earnings;

Pay related benefit for those entitled will be reduced from the current level of 40% to 30% for the first six months and to 20% for the remaining nine months;

the Government will rectify the anomaly whereby employees by a combination of tax refunds and social welfare benefits can receive more than when they are wholetime at work.

I quote these references from The Way Forward to point again to the sheer opportunism and hypocrisy of the Fianna Fáil Party in adopting the line which they have adopted to this Bill.

I want to refer also in this context to the ploy in which they are engaged to attempt to split the Labour Party on the issue. It is an obvious ploy. It is one that they used before in the 1940s and at that time they succeeded in splitting our party, for different reasons, and the same ploy was involved. The reality of our position is quite simple. Collectively we took a decision to go into Coalition in Limerick. We are there. We do not like having to enact this Bill, but we took that decision democratically and we must carry the responsibility which that involves. I will come back to that matter towards the end of my speech, but I want to assure the Fianna Fáil Party that we know their record. We know the kind of society they created during the long successive periods they were in office. We are not going to be taken in by this simplistic [397] ploy to split a party with the record we have on areas to do with social welfare and in relation to the poor and their needs.

It does not come well from that party in Opposition to adopt the attitude they have adopted. It is simplistic and it is the kind of attitude which is turning off more and more people from politics, because above all else what people want now from their politicians is some attempt to establish what is the right thing to do and then to stick to it, and not to shift and change on the basis of whether one is simply in Government or in Opposition.

I would also point out to Members of the Opposition party that not only were measures proposed by them in The Way Forward more disadvantageous to welfare recipients than those proposed by the Government at this stage, but they also failed to provide £31 million in their Estimates at the end of last year and that would have worsened the situation even beyond the position it is in now. Again, we are talking about the simple reality of an Opposition party contradicting themselves for opportunistic reasons, and really at the end of the day having no credibility whatsoever on this matter.

Second, I would like to refer briefly to the economic context in which the Bill is introduced. The Minister indicated earlier that spending on unemployment payments has risen from £107 million in 1980 to £473 million in 1983. That is a very rapid increase in unemployment benefit expenditure and of course it reflects the reality that unemployment is rocketing to an unacceptably high level. The truth of the matter is that given the present structure of our economy and the present demographic patterns in society and the low level of people in the economy actually engaged in productive investment, unless we deal effectively and quickly with the problem of unemployment the social welfare system itself simply will not be able to cope.

That is the real problem facing the Government now. We have got to come to grips with this problem of unemployment, not just for reasons that people are entitled to work and that they create the wealth through working, but because, on [398] a pragmatic basis in a sense, the welfare system will not be able to cope with any further significant increases in unemployment at a time when those in work are already complaining bitterly, and rightly so in some cases, about the burden of taxation which they bear.

The real problem for the Government in the years ahead will not be simply to keep welfare payments in line with inflation, in itself. The real problem will be to come to grips with this unemployment crisis which we have. In coming to grips with that problem, admittedly in the context of a world economic environment which is adverse, the Labour Party will play their full share. Our concepts and ideas in relation to this will become clearer as the year goes on.

It is also true in relation to the economic context in which this Bill is introduced that the Opposition party brought this country to its knees financially, deliberately, cold-bloodedly, calculatedly. They spent for purposes of achieving power, or holding power, with no economic or social objective in mind, consistently throughout the period since 1977. The end result of that economic madness, or political opportunism if you like, is that we now face the kind of economic financial crisis we face and we now find that the party which brought this country virtually to the edge of bankruptcy can complain about, admittedly, very difficult welfare decisions taken in this Bill.

The third matter to which I would like to refer briefly is one which all Labour Party speakers must always refer to. That is the problem of equity, or the lack of it, in our society. All of us understand that sacrifices have got to be made to put the economy right. The problem has always been, and is again this year, that the greatest burden of sacrifices is imposed on those who can least bear them. Throughout the history of this State, the two major parties consistently have used rhetoric to deal with the idea of justice and equality and eliminating poverty and so on. Never have they seriously confronted the issue, because to confront that issue means confronting many of the people from whom they draw their support. [399] That is at the end of the day what makes the Labour Party different — that in the end we put the interests of the poor and the least well-off first.

As far as the Labour Party are concerned, we accept our responsibilities. We will support this Bill because circumstances require that we do, but our task now in the remainder of this year will be to pursue the implementation of equity in society. I do not accept that because we are in a recession or because the economic circumstances we find ourselves faced with are difficult, it precludes the ongoing search for an implementation of greater equality.

Labour's task now will be to see to it that the movement towards taxation equity, for example, which is missing from or is not there in sufficient quantity in the present Finance Bill, will be put right in the 1984 budget. That is our principal task, and I am pleased to say that the Tánaiste yesterday appointed a committee of our party to review taxation policy generally and to come through with proposals for Government in the context of the 1984 budget. He has charged me with the task of being chairman of that committee, and I want to assure my colleagues in the Labour Party, and I am sure the Fine Gael people will accept this as being reasonable too, that we will come through with taxation proposals, and that is the time when Labour's presence in this Government will be felt in the best way possible.

Professor Hillery: I acknowledge the financial constraints, outlined in the Minister's opening address, in which he has had to introduce this Bill, which in turn have affected the levels of benefits contained in it. The reality, however, is that social welfare recipients are concerned with the here and now, and this is the first year since 1977 in which there will be no real improvements for those relying on social welfare. As a group, people in receipt of social welfare benefits represent the weaker section of the community.

I want to refer to a few specific provisions in the Bill. We are all aware that the [400] country is facing financial difficulties, but this does not excuse, for example, the three months freeze on payments to old age pensioners, to the disabled, to the unemployed and the other affected categories. The net effect of this freeze is that for the year from 1 April 1983, long-term recipients will receive only a 9 per cent increase rather than 12 per cent and short-term recipients will receive only a 7½ per cent increase rather than 10 per cent. In other words, they will receive the full rate for a nine month period only in that period of 12 months and at rates which are seriously below the anticipated rise in the cost of living. This freeze, of course, will save the Government £39.3 million, but consider the cost in human terms for the people affected by this cutback. Surely this is an inadequate response from the Government to the weaker sections of the community.

On the question of the pay-related benefit waiting period, this is to be extended from 12 to 18 days, reducing the maximum duration of the new, and substantially reduced rate of 25 per cent from 147 days to 141 days. This is a particularly harsh measure, especially for those who fall ill, say for a three or four week period. Again, with the range of outgoings and the high cost of living these reduced benefits will compound the difficulties and the worry facing these people, especially in the case of married people with children. In regard to children's allowances, of course, there are no increases at all.

The PRSI limit is being raised from £9,500 to £13,000 from April. This increase by £3,500, on which PRSI must be paid, affects both employers and employees. For firms in a precarious financial position — and I know as a matter of certainty there are several around at present — the increased PRSI could prove to be the additional cost that will push these firms to the wall. The inevitable consequence is more job losses with, of course, further increases on the enormous figure already being paid in unemployment payments.

My final point relates to smallholders. I recognise that for legal reasons smallholders whose means have been calculated [401] notionally on the PLV system will not qualify for increased rates of unemployment assistance. They will have, however, the right to factual means assessment. Many small farmers could just not provide for and rear their families without State supplements to their incomes. They live and work on uneconomic holdings. We are all aware of these small farmers in these circumstances, particularly in the west, including my native west Clare.

I am totally opposed to the abuse of the system, but the notional method of assessment should be retained or, if that does not prove legally possible, I would urge the Minister to look at some other method with the overriding objective of ensuring that the small farmers can survive.

Mr. Ferris: We would be sharing the concern of most people, particularly on this side of the House, about fundamental changes that are taking place as a result of the enacting of this Bill, changes that have caused many of us, particularly in the Labour Party, many a heartache and many a long night of deliberation at all levels of meetings, at branch level, constituency, trade union level and at our county level, in parliamentary party meetings, in discussions with the Minister and our other Cabinet colleagues.

I want to assure the House that, of all the pieces of legislation that have come before the Oireachtas, this piece of legislation has created for us many problems because of the fundamental changes that it initiates in the social welfare code. This is because it affects people whom we have represented in Opposition and in Government, in a minority role as part of Government. We have always taken it upon ourselves to ensure that the underprivileged, the old, the weak, the sick and those out of work were protected against the ravages of inflation and the rising cost of living.

That has not altered. What has altered dramatically in this country in the past ten years particularly, is the situation that the Government who have been in power for most of that time have allowed our finances to get into. Those of us who [402] represent this very weak section of the community, a section who have very little voice to speak for them with the exception of the trade union movement and the Labour Party, appreciate that they have to bear the brunt of the bleak winds that blow in economic situations. That is something which we must all feel guilty about. We must all feel that we have played a part in this whole process of continuing to borrow at the expense of productivity, and now it is the weaker sections of the community who are asked to take up the task.

We talked yesterday about how we would like to see equity in the system of taxation. I warned that, if there was not equity soon, those of us who are confined within the structures of the taxation system, the PAYE and PRSI sectors, are now reaching the end of their tether, that they feel they are the only people genuinely subscribing to the coffers of Government, from which we had hoped the less well-off would be protected and looked after.

It is in that financial climate, a climate in which Estimates of the previous Government had been published and, as Senator O'Mahony pointed out in his contribution, had been included in the previous Government's plan to tackle this problem of the anomalies in their Social Welfare Bill, even more stringently in some sections of it than what the present Minister and Government are trying to do, that the Social Welfare Bill, 1983, was introduced. Many of us in politics have accepted that there were anomalies, particularly in the short working week payments, throughout the social welfare system, plus the pay-related, plus the income tax rebate, plus the lesser rent paid for local authority housing as well as all the advantages of having income from the social welfare system applied to a three-day working week. The system threw up anomalies and it was recognised by the trade union movement that it was beginning to create problems in trying to get people back to a full working week or to get industry to try to negotiate itself out of a shorter working week into a longer one. Unfortunately, in the process, [403] the Bill, as published, created many problems for us.

The Minister has tabled an amendment in relation to the three-day working week and I wish to thank the Minister, and the Irish Congress of Trade Unions for their representations — many of us made representations through our political groupings along these lines. That obvious anomaly in the Bill has been removed through which a man was paid for three working days, and got two-fifths of a week's social welfare added to it because that was the number of days that he was out of work. Otherwise, the other 180,000 people unemployed would have a complaint to make that they were not being treated fairly. People who were working a full five-day week could legitimately claim that they could sign for the sixth day for social welfare because that was the norm we were using. We have now removed that anomaly by substituting two-fifths for three-fifths.

I am extremely worried about the fact that in the two days which are allowed to remain as social welfare it is written into this Bill that pay-related would not apply to the two days. I am concerned about that because the people themselves contribute pay-related in the knowledge that it would benefit them in the event of unemployment. If we are not prepared to pay pay-related for those two days perhaps we should look at whether persons on a three-day week should not contribute the full PRSI rate for the three days they are at work on the basis that they will not benefit from the balance of that week. If that is the principle that we accept then the income and related social insurance which would be paid should have a ceiling put on it. It would be fair to accept that, even if you apply the ceiling and accept the principle of the payment of PRSI for the two days and still apply the ceiling, there would be many complaints about payment into a fund and then not benefitting from it. I am not sure whether it is physically possible to do that within the present structure of the Bill, but the vast majority of the unemployed have already accepted it. They had to accept a ceiling on their total [404] income, that is, a ceiling of 80 per cent. This Bill accepts a ceiling of 90 per cent, which is a definite advantage. It is right that there should be a definite advantage because at least they work three days in the week and should get some additional compensation for that effort.

In spite of the anomaly the social welfare code has thrown up which has given them more for a shorter week, we know they would prefer to be allowed to remain on a full working week if possible. I know people in my area who drive long distances to work from Tipperary to Limerick which is the best part of 30 miles. They have been doing that for some time. Some of them are now subjected to a short-term working week and it is debatable whether it would pay them to be on a full week's unemployment rather than to be on a short working week and not get the full pay-related benefit.

I hope there is not a disincentive unknown to those of us who are trying to do away with anomalies. I hope there is not a disincentive in this Bill for people working at least some part of the week. I should like to feel that, if these anomalies come up in the operation of the Bill, the Minister and the Government will keep an open mind as to how they should be tackled in future legislation to ensure that there is not an incentive for people to work a short week. It is not of their choice. Some of them are faced with working a five-day fortnight as opposed to a three-day week. I should like the Minister to confirm whether a five-day fortnight in which they work four days one week and one day the next week is a disincentive. Employers shuffle this around to suit themselves and their own schedules, knowing the State picks up the tab.

From looking at the Estimates published by the previous Government I know no provision was made for the additional number of unemployed people who it was obvious would come on the register in 1983. The additional allocation of some £30 million in the Social Welfare Bill will take up the slack. We have a responsibility for people who will lose their jobs this year. The economic [405] situation has overtaken some firms and people will lose their jobs. Their employment will disappear and we cannot just apologise to them and say: “We did know and we did not make provision.”

It is our duty as the Government to ensure that we do know and that we sound a warning and that we have the political courage to include a provision in the Bill to ensure that when these unfortunates are out of work there will be sufficient money there to pay them. They have contributed to this fund. The employers have contributed a major part to the fund and the Government have contributed to it also. When we add the three components together we have a fund that should cushion people in a most traumatic period of their lives. There is no doubt that because they contributed to the fund they should be cushioned in the first year or year and a half, which was the principle behind PRSI at the beginning. We moved away from flat rate contributions to an insurance stamp and we moved towards the pay-related contribution so that the benefit would be related in some way to their most recent pay.

The assessment of means for smallholders has been the subject of a controversy particularly in the west of Ireland where it is known that many people cannot survive without social welfare of some description. People in socialist groups debate whether the social welfare section is the correct section to look after people like that. Social welfare is based on a person's ability either to earn or not to earn, or on a person's ability to go to work or not to go to work because of illness. Whether we should sustain people in smallholdings through the social welfare code is something I should like to hear debated at length at another time. The family income supplement has been announced as part of this Bill but has not become law. It is a fundamental part of the whole social welfare code that there should be income supplements of some description. They have been promised by this Government and are likely to be introduced towards the end of the year, in October or some such date.

[406] People such as smallholders will suffer as a result of the introduction of this legislation. When it filters its way through we will find out how these people will suffer. People will have less money one week than they had the week before. We have to look at the anomalies and remove them. We cannot ignore the fact that people may face hardship. The Minister should not be unmindful of the fact that we have a supplementary welfare allowance system on which we may have to make demands if genuine hardship cases are brought to our attention. If voluntary societies dealing with questions of hardship are made aware of problems our minds should be open and our hearts should be big enough to say: “These were problems we did not envisage in the Bill. Now that they have arisen we will deal with them”. I look with some confidence to the introduction of a family income supplement before the end of the year so that we can get down seriously to helping people who are unable to assist themselves.

I should like to commend the Minister on his effort to have the whole area of social welfare examined by an independent commission which he has agreed to set up. This is a welcome move in the whole area of social welfare which has been subjected to abuses and malpractices by some recipients and employers. The Department of Social Welfare have a responsibility to ensure that moneys paid by workers into insurance funds are available to provide the services and the supplements to which they are entitled. Having a ceiling would make all the other matters fall into place and the principle of the payment of pay-related to somebody who had contributed would still be enshrined in the social welfare code.

The Minister has shown a lot of courage in presenting to the Houses of the Oireachtas, to the media and to the public at large a very difficult Bill in difficult economic times, with tremendous pressure from his own parliamentary colleagues. There have been over-reactions to some parts of the Bill. People will benefit. Provision is made for increased benefits in June. We would like to see them paid in April but there was no financial [407] provision for that. The widening of the tax net cannot take place immediately. You cannot broaden the whole tax code overnight. This Government are in power for such a short length of time that it would take a miracle to effect a change in the whole area of taxation.

As my colleague Senator O'Mahony said, our party are committed formally to the setting up of a special committee to deal with the whole area of equity in taxation. We will ensure that the base for the receipt of income for Government purposes will be so broad that it will be obvious to everybody, to those on PAYE in particular, that we are committed to tax equity. In this commitment to tax equity the coffers of the Government will be replenished so that we can make a serious effort on behalf of our people. Some people are on a very low level of social welfare, a level that is unacceptable to me and to many of my colleagues. Unless we have a commitment to increasing the amount of revenue available to us, nothing can be done for these people.

We cannot use confetti or paper money, or try to convince these people with pious platitudes that we are doing something for them. We have to be seen to be able to deliver. We can no longer borrow abroad to do that. We should be able to generate wealth from within this country. It is there if there is a commitment from all sections of society to generate it.

I appeal to all sections, the Opposition, those of us in Government, the farming organisations and their leaders, the trade union movement and all other sectors with a responsibility in the area of leadership to bring this country out of the morass it got itself into and try to broaden the whole spectrum. We must do something for people who are ill, or old, or incapacitated or mentally or physically handicapped. These are the people to whom we must have a commitment. We must not say to them: “I am sorry. There was no provision in the previous Estimates so we cannot give you what we would like to give you”. They can believe us only if we say: “In the future there must be a commitment to you, and the [408] only way to do that is to try to ensure that the necessary finances are provided by all sections of the community”.

I commend the Minister on his efforts to bring some equity into this situation. I commend him also on the courage he has shown in a very difficult time. I am sure the other Social Welfare Bill was very much worse than this Bill even though some of us are unhappy about some of its sections. We understand his dilemma but we accept his commitment to set up a commission to look into the social welfare code. In the future this Government will have a commitment to people who are weak and have very little political muscle.

Mr. B. Ryan: Yesterday I threatened to talk for two hours. I will not, as much to my own relief as anybody else's. I do not particularly intend to get involved in a long spiel of rhetoric about what is wrong with the Bill. It has been said over and over again. I want to pin down in fairly rational terms the objectionable philosophy which underlines the justification for many of the measures in this Bill given in the budget speech by the Minister for Finance. We have to start with some reflection on the whole idea of the State's intervention in supplementing incomes and in supplementing the living standards of those who cannot work, those for whom we cannot provide work, or those who are too old or too enfeebled. There is much more to it than just helping people to live decent lives.

Welfare and all our welfare systems are a very important part of holding our society together. This is not accidental. It is not by some strange chance that the western European social democracies which have well developed and very detailed social welfare systems have lower crime rates, have better levels of public health, have higher levels of participation in the political process, than the United States with their almost defunct welfare system. There is a direct and clear link between a comprehensive welfare system and people's sense of cohesiveness of their society and people's sense of their participation in society.

At that very level of self-interest of [409] those of us who have got something out of society, the welfare system should always be treated with great care. Otherwise we are threatening one of the things which holds our society firmly together, which keeps everybody in touch with society. We could end up with levels of participation in the political process in this country of the 30 and 40 per cent which are typical in the United States, with consequent alienation, high crime rate, and so on, which they have to deal with. We want to go very slowly in any area of cutting back on welfare.

In that context and to move on to a more specific issue, the issue of what is or is not an incentive to an individual, implicit in much that has been said about this Bill is the assumption that, if you underpay somebody in welfare less than what they are getting at work, automatically that will encourage them to work. In other words, they can get more by working harder or doing more.

The extraordinary thing is that we do precisely the opposite when we offer incentives to people in industry. If that particular theory were to be applied, we would tax industry harder on the grounds that they would then work harder, produce more, generate more wealth, and therefore make more money. It would appear what is an incentive when you are on one side of the fence is a disincentive when you are on the other side of the fence. We give handouts all over the place to industry. Most of them I would not disagree with.

What I find objectionable is the suggestion that what is a handout on one side becomes an incentive to investment or to productivity or to development or to something, on the other side. Either through direct State assistance or through reductions in taxation levels, we are giving money to people in return for something they do. It is unjust and unfair and reflects a very inadequate social philosophy to distinguish between groups and say what we are giving one group is a handout and what we are giving the other group is an incentive.

There has been a good deal of self-righteous talk about the fact that the modifications, amendments and changes [410] proposed in this Bill will still give people on pay-related benefit 80 per cent, 85 per cent, or 90 per cent of their take-home pay, depending on how you do your sums and whom you are talking about. The extraordinary thing is that when almost everybody in the public service, all of us politicians, and many other people at least on the political side, get sick, we do not get 80 per cent, 85 per cent or 90 per cent of our take-home pay. We get 100 per cent. I can imagine how many of those outside the public service, industrial organisations, employer's organisations and chambers of commerce who have preached most loudly about the disincentive effect of excessively high levels of welfare, would react if their little perk which guarantees them six months' full salary if they get sick, were to be reduced to 80 per cent or 85 per cent of their full salary because it was implied that was a disincentive to those fine people to work. How is it that it is always the people on £100 or £120 per week who are supposed to be subject to these temptations, and those of us on £10,000, £15,000 or £20,000 a year in the public service, who are entitled to full salary for six months when we are sick, are not subject to those temptations? I do not really think it has to do with disincentives. It has to do with the climate of opinion which can justify certain cutbacks.

If the issue were really just a question of anomalies, why not link all these benefits to people's salaries, and say: “Right, you cannot have more than 100 per cent of your take-home pay if you are on disability benefit”. If people like myself who are employed in the public service are entitled to that, I do not see why anybody else outside the public service should be entitled to any less. Are they a different kind of specimen? Do we take it that those who depend on supplementary or disability benefit through the social welfare system are some sort of inferior kind of species of a lower moral character who cannot be trusted to operate the system, but those of us of a higher moral character who have 100 per cent of our salaries when we are sick can be trusted?

We are playing games. What we are [411] actually doing is saving money at the expense of people who in many cases have relatively small salaries. If the issue is a question of anomalies, we should not say 100 per cent. That is, after all, what the rest of us get.

From what I have read in the Official Reports and what I have heard today, the one detailed study on one major area of pay-related benefit that has been done, does not seem to be particularly well known, that is, Paper No. 108 from the Economic and Social Research Institute by an author named Hughes. The maximum estimated level of abuse for disability benefit was 9 per cent. I do not know how you can get a system in which you can get below those sort of levels of abuse without starting to penalise people who are genuinely in need. That was in a position where 21 per cent of claimants were double-checked. In other words, they were certified by their own medical practitioners and then were subjected to an examination by a medical referee. I emphasise the word “subjected”. The evidence from this survey is that mose people on disability benefit cut down on food, clothing, cigarettes, children's toys, and so on. In 1978 less than 12 per cent of total potential working days were lost due to disability benefit. More days were lost in that year due to unemployment than to disability benefit.

Contrary to popular opinion our absenteeism rate is not particularly high. It is higher than it is in England. It is comparable with many other countries. I would refer those people in public life who think otherwise to a very interesting address given by a senior executive of the Pfizer Chemical Corporation which was reported in detail in The Cork Examiner. The Dublin newspapers did not see much point in recording it in detail. He went through all the accusations thrown at the Irish work force about absenteeism, about unit productivity, about unit wage costs, and about industrial relations. In each case, he pointed out that in that major international chemical corporation the Irish work force were close to the top in all areas, except absenteeism where [412] they were well below the worst, and comparable with the best.

One thing about our social welfare — and it is the disability area that is usually lectured about as being a disincentive — the evidence just is not there. Before this scheme of pay-related disability benefit was introduced, many people continued to work while they were sick. This is a thought which seemed to escape many employer groups when they pointed to the increase in claims after pay-related benefit was introduced. What else did they expect? The interesting thing is that, notwithstanding the propaganda to the contrary, the numbers of people claiming disability benefit, in spite of the alleged increased disincentive to work because of the rates of payment, have actually been dropping. In 1978, 341,000 people claimed disability benefit. In 1981, that figure had dropped to 289,000. In terms of what has been said about disincentives to work, and in terms of what is being said about the anomalies in the pay-related area, the evidence really is not altogether that clear cut.

The number of people making claims which were later found to be unjustified was 9.1 per cent, before the pay-related disability benefit scheme came in, in other words, when people who were on a flat rate, which nobody I believe would think was excessive. It rose from 9.1 per cent before pay-related to 9.15 per cent after pay-related. There is no evidence to suggest that the pay-related system was in any way being abused on any wide scale, or that there was any direct relationship between the levels of pay-related benefit and any sort of abuse. Before the scheme came in, many studies had shown that families got into debt, lived in increasing squalor and suffered from malnutrition. That is mentioned in a letter to The Irish Times by the author of the ESRI Report. The number of prosecutions for abuses in that area were minimal as well.

If we are talking about disincentives to work in the way people have been talking about them here, at least we could address ourselves to the facts and the evidence. What we are saying is that we are having to tax more and more people on relatively-speaking lower and lower [413] incomes because of the state of the public finances. Therefore, some people at the bottom of the earned income bracket are now beginning to be taxed at such level that they are actually getting close to welfare rates. The extraordinary logic is then introduced which suggests that the problem is not with an excessively high level of taxation on low incomes, but with an excessively high level of benefits for those on welfare. The remedy is a change in the taxation system rather than a further penalisation of people on social benefits. That is an area we could go on about all day.

I do not see why the figure has to be 85 per cent, 90 per cent or 95 per cent, when the rest of us here, many of us in the public service, deem ourselves to be entitled to 100 per cent. I wonder what would happen if the Minister were to suggest to the public service unions that, in future, because it was a disincentive to work, he was going to reduce their sickness benefit to 90 per cent? It is perhaps that people who are unemployed and sick, and so on, are not as well organised as people in the public service unions.

The Minister proposes to increase the waiting time for disability benefit. I should like to know what he proposes the families of people in that category should do in this extra waiting period. Let me quote from NESC Report No. 62 on page 60:

The administration of income maintenance payments must be capable of providing an accessible and efficient service to those dependent on such payments. Even short delays in the receipt of entitlements can cause considerable distress.

That is just one of the self-evident things which needs, unfortunately, to be repeated again and again. I want to talk later on about the scheme that the State has which is supposed to cover people who are victims of bureaucratic bungling and delays in their welfare benefits.

Before I would go on to that, there is a little thing mentioned here which does not seem to have received much notice, that is, the reference to the abolition of children's allowances for apprentices. I have a strong suspicion that we will still [414] be giving children's allowances extended through third level education, the child allowance which is there in the taxation system and which will still be available to the children of the upper 10 per cent income bracket who go to third level education. That will be retained, but children's allowances for children who are apprentices are being abolished. The Minister asserted that one of the reasons for this was that apprentices now earn between £30 and £50 per week. This country is singularly lacking in evidence about low income groups.

How does he know that all apprentices are in that area? What is he going to call an apprentice? Is it just a person registered with AnCO? What is the situation about people in the catering industry who are in training schemes, people in the hairdressing and beauty areas who are in some sort of training schemes, or those who are working in restaurants, garages and so on? It is not at all as simple as the Minister would suggest. They are not all earning between £30 and £50 a week. There is no evidence there to back up his assertion but I would be interested to hear if he has any evidence.

I was going to propose an amendment but there may be some difficulties about that and I will raise the matter here. It is a fact that people are refused unemployment assistance because they cannot give evidence of an address. I hope the Minister will not stand up and tell me that he is advised that it is not a fact because I can tell him from regular experience that it is a fact. People who do not have a permanant address will be refused unemployment assistance and supplementary welfare. I have met people walking around the streets of Cork with their hands in their pockets having been refused either supplementary welfare or unemployment assistance because they had no address. They have asked me if I would say that they were staying in the Simon Community and I have said “Of course I will” and I have done it.

I have said before in this House that I have frequently deceived the social welfare system by stating that people had addresses in the Simon Community who never spent a night there, because the [415] alternative was for them to be classified as having no fixed abode and, therefore, qualifying for nothing. Let nobody deny it — it does happen. I had intended to put down an amendment to that effect. I would be grateful if the Minister would ensure that the absence of a permanent address, in other words, the categorisation as “no fixed abode” would not be used to disqualify people from unemployment assistance in the future.

I want to talk now about a scheme which more and more will come to be necessary for the future, that is the supplementary welfare scheme. I read and re-read the sections of the Bill to do with supplementary welfare. I would like the Minister to assure me that there is not contained in those clauses somewhere an attempt to restrict the scale of payments for supplementary welfare, that there is not an attempt to tell each area health board and local authority that there is a maximum sum of money they are allowed to spend on supplementary welfare, or are we actually trying to reduce the level of expenditure on supplementary welfare?

In the context of supplementary welfare generally, I would like to refer to a report called “No Homes to Go To” a report on the clients of an “Open Door” centre, which is a centre for people with problems of homelessness and others, operating from the Pro-Cathedral in Dublin. Since many Members in this House are going to be assuring us in great detail within the next month or two about their allegiance to a particular Church, about their acceptance of that Church's teaching, about their concern for that Church and to be seen to be members of that Church, may I draw to the attention of Members of this House that the “Open Door” is actually sponsored by the Archdiocese of Dublin, by the Roman Catholic Church. It contains a report — not the first one — on the supplementary welfare system and it describes in detail the experiences of people who have to claim supplementary welfare. On page 3, section (1) it states:

The concept of entitlement is played down completely in the administration [416] of the scheme. As a result, many claimants feel that they are getting a handout at the discretion of a particular community welfare officer. This is reinforced by the wide variation in the interpretation of regulations by different community welfare officers. Furthermore, some officers do not even tell claimants about extra items for which they are entitled to claim.

This is a long report and I am not going to trouble either this House or the Minister with a repetitious and a monotonous reading of large extracts from it. I want to draw the Minister's attention to the fact that this report exists and that it is not written by any sort of militant political figure like me. It is written by an agency of the Holy Roman Catholic and Apostolic Church to which the vast majority of Members of this House make great obeisance, particularly when there is political gain to be made out of it.

I would like to refer to one further criticism of the supplementary welfare system. The conditions under which claimants have to pursue their claims are very unsatisfactory. Claimants spend a long time queuing to see a community welfare officer and they are generally seen within the hearing of other claimants. The onus of proving entitlement is left totally to the client. Frequently he is sent from place to place to obtain documents before the community welfare officer will look at his case though in some instances a simple phone call by the officer would solve the problem. This document is a catalogue of degradation and humiliation of those who are at the bottom of the pile in our society, the people who receive supplementary welfare.

I have drawn the attention of successive Ministers to the maladministration, to the inhuman administration, to the uneven administration, and to the humiliating administration of the supplementary welfare scheme. I appeal to the Minister, who I know to be concerned about these issues, to do something about them. If the financial situation here is such that we have to survive the present levels of payment, then that does not justify the sort of degradation that recipients of benefits, particularly supplementary [417] welfare, have to put up with. It can be reformed at relatively little cost and it will be necessary. Do not forget that whenever anybody is a victim of a delay in receipt of social welfare benefits he is always told he can claim supplementary welfare. Apart from the fact that it is substantially lower, it is also a humiliation of great magnitude to the recipients and to the claimants.

Finally, may I refer again to this appalling distinction between long-term and short-term benefits and to the fact that short-term benefits have increased disproportionately in recent times? The Minister for Finance here yesterday tried to explain the difference to me but, I have said before, sometimes I am very dim and I can never understand these distinctions. What I do know is that unemployment assistance, which is what we give to people when they are unemployed for a long time, is actually categorised in terms of the level of increase as a short-term benefit. The reason we are told short-term benefits must be kept in control is because they are creeping dangerously close to the actual rates of payment for work.

Do not let anybody tell me that £29.60 for a single person on unemployment assistance is a disincentive to work. If there is a reason for increasing unemployment assistance at a lower rate than increasing other benefits then let us have it. If the reason is because we cannot afford it, well I do not accept that, but at least let us have it. Let us not start playing up the fact that there are certain anomalies in certain areas of short-term benefit to justify ungenerous increases to large numbers of unemployed and in particular to our large number of unemployed young people who must by and large only be claiming unemployment assistance, since our school leavers in particular will have no other entitlements. It is just not good enough.

I repeat what I said yesterday, I will not accept that £29.60 is a disincentive to work for a young person, bearing in mind, incidentally, that 25 per cent of our unemployed young people under 25 do not get any State assistance. As I said yesterday, £29.60 or £30 would be quite [418] easily dismissed in the columns of The Irish Times in their column “Table for Two” as being a reasonable price for a meal for two people and that is what we offer our unemployed young people. To give them that we attach strings of all sorts, means tests, all sorts of humiliations and all sorts of categorisations of not being available for work, which means that if you do anything you are not available for work and if you do not do anything you are accused of being a “dosser”. We play games with our young people and when people in the position of senior Government Minister give credence to this nonsense about disincentive to work, then they are actually giving credence to the prejudice which humiliates our young people in particular. They know there is no work available: the problem is not that they are not available for work, but that work is not available for them. That is the problem we should be addressing instead of pretending that our young people would fiddle vast sums from the State if we actually let them loose without all these restrictions, controls and humiliations.

The Bill is fundamentally wrong. It reflects the philosophy of welfare which I could not accept. I do not accept that the cutbacks are being made for the reasons outlined. The fundamental reason is that the money is scarce. I do not believe that the anomalies are as serious as is suggested. Neither do I believe that the anomalies have the effect that is suggested. If there are minor anomalies, then I would suggest the obvious thing is to make sure that people's levels of benefit never exceed 100 per cent of their previous take-home pay, which is what the rest of us are entitled to when we are sick.

Mr. Cregan: I welcome the Minister to the House. I congratulate him and hope he will be there for a long time. The pressure he has been under over the past few weeks must have been enormous and I can appreciate his concern. I am aware that he pointed out the difficulties with regard to this Bill and his priorities. The impression was given throughout the House that no help was given to anybody [419] but that is most unfair. In this time of recession I should imagine that the Government will give the highest priority to putting our finances in order so that we can have a better society generally.

I readily admit that the working person is paying too much tax but we must remember that in 1980 when we had 106,000 people unemployed we were spending £107 million on unemployment benefits while in 1983 we will spend £473 million. Where are our priorities? The Minister has explained that he has had to look for money to give people a reasonable living standard. I admit that some people have a lower standard of living than I would wish but it is unfair to suggest or imply that nothing is being done for them. Governments in the last ten years have been aware of the plight of the less well-off and substantial amounts have been given to them.

Senator Ryan must readily admit that there are sections in our society who got massive increases over the years. It has been said that a person in the public sector who was out of work for six months would get very annoyed if he did not get his full wages. I am more than annoyed about the present situation but people in the public sector have muscle that those whom Senator Ryan says he represents have not got. They get only £26 per week and £29 per week. I would also question Senator Ryan on his priorities. He said that the person in the public sector should not get less than 100 per cent if he is out of work but I am satisfied from the statement of the Minister and also from the investigation going on into the welfare system and into the public sector in general that that will be seriously questioned.

I am speaking on behalf of workers. Many of them question why they will have less take-home pay than the unemployed. This is because of their increased PRSI contributions. A person earning £9,500 is not entitled to free medical benefits and has to provide cover for himself. I understand that from next June the limit will be £11,000. A person earning £210 weekly gross with four or five children will not be entitled to any benefit. He will be obliged to provide the necessary cover for himself in a voluntary organisation. [420] However, his neighbour with four or five children on £190 a week will have the benefit of free services. That is wrong and it does not give an incentive to a person to work.

Are we creating a situation where the person on £210 a week is tempted to stay out of work? I know people who are earning well over £11,000: they are not white collar workers, they are lorry drivers, meat workers. It is not a great amount of money today, not with current price increases. Let us take the case of three workers, one in a local authority job as a general operator, another in a milk factory and another in a meat factory. The three people are general operators but with different rates of pay, the lowest being in the local authority, and they are not treated on the same basis. People on lower incomes find that it is more beneficial for them to become unemployed because in that event they are eligible for benefits they would not get otherwise. This is very important in the case of a family who require medical services. There is no incentive for a person to remain at work.

My first priority is to make sure that everybody is working. I want to make sure that all moneys will be spent in such a way that we will have productive employment for everybody in the country. That might be an illusion, but I would hope that I will go some way towards achieving that. However, we are doing the opposite. We are creating a situation where we are telling one person with five children on £80 a week that he is entitled to certain benefits but for a person on £100 a week, which is £20 more, he will have no benefits or a medical card. In my view nobody should have a medical card. We should not always be putting the emphasis on a person with five children having as his priority health problems. Society generally and the medical profession in particular are responsible for putting all this emphasis on health matters. The general tendancy now is to go to the doctor for the slightest ailment and in such circumstances a medical card is a very valuable benefit. What is society coming to? Services should be available but not free services.

[421] I know of very big employers who benefited from having a three-day week and whose workers have received more money than if they were on full-time working. I know the situation because I have been changing the cheques in my own public house. Our first priority must be to make sure there are incentives for people to work but I am not saying they should work for £80 or £100 per week with prices as they are today. Some months ago there was a proposal that every old age pensioner should have a medical card. Are we saying that a retired bank manager on £200 per week should start looking for free services? I have no objection to giving benefit to people who have worked all their lives but we must also have regard to the cost.

I will give another example of an ex-local authority worker aged 74 years and his wife aged 78 years. He has a little pension from Cork Corporation of something in the region of £84 per month and he also has his old age pension. He has no medical card because he is something like £4 over the limit. This man has approximately £72 per week and I calculate £50 would cover his living expenses, including rent. He spends approximately £20 per week on a few drinks but out of that amount £12 comes back to the State by way of revenue. I make the point that if he saved that £20 the State would not get any revenue from him. I agree that there are certain people who must be cared for and who must receive benefits. It is my belief that the possibility of the withdrawal of free medical services is the main reason people opt for unemployment. I heard one person say he could not take his child to hospital because he was not eligible for free hospital services. That man was earning £190 per week gross. Where were his priorities? In Cork city some years ago we built a massive hospital with all the necessary services, yet the man who has paid his contribution every week is not entitled to these services. On the other hand, a man earning £180 per week, perhaps with fewer children, can avail of the services.

That is not a fair system. Should we not be saying that any person, irrespective [422] of who he is, is entitled to this service? No-one can tell me that anybody on £20,000 a year will be continually running to the regional hospital with a sick child; he will not, let us be realistic about it. However, when there is a health problem, there is no reason why that man should not get the service.

Unfortunately, we are giving the impression that there are very many people on £20,000 a year or more. There are very few indeed with that kind of money here. Any person earning over £11,000 annually must make more money to amass more profits for VHI, which is not right. This person is going to say “I am not going to go to work for the last three months of the year, because if I do I will exceed the £11,000 ceiling”. From June 1983, above £11,000 he will get no services, but he pays PRSI up to £13,500. That is not a fair system, so people will say “I am better off staying out of work”. No one should be put in that position. We want more people at work and we need to create incentives. I am not saying I have the perfect answer to unemployment, I have not.

I understand that there are part-time workers, such as dockers, who are entitled to benefits whereas others are not. How have we reached a situation where the person on unemployment benefit of £26.50 a week — which according to Senator Brendan Ryan is going up to £29.00 — should be entitled to earn something extra and still get his unemployment benefit? I seriously question this and would ask the Minister to review it. There are many areas where people are engaged in part-time employment. A great deal of money is being spent — I know of it, personally — on part-time workers. Unfortunately, a situation is brought about where a person who is not working cannot be employed part-time, even for 3 or 4 hours a week. He is not eligible for employment because he does not pay PRSI and PAYE. The people who employ these part-timers cannot employ anybody who is unemployed. This is because the law says that the person who is drawing unemployment money — which is only £26.00 — is not entitled to [423] do any work while he is on the unemployment register. This must be questioned. You can only employ a person who is already in employment with somebody else. In other words, if you want to employ a part-time worker for three hours on a Friday or Saturday night, you cannot employ anyone who is not working and that is not fair. If you take on a part-time worker, you pay PAYE. Why does that situation not apply to everybody including dockers? A vast amount of money, particularly in Dublin and Cork, is made on part-time work, yet the only people who get that work are those who are already working. That money could be given to people who have not got it, but they are not entitled to it. There is no reason why a person who is not working should not be allowed to do up to 16 hours a week part-time work, and still be entitled to some benefit from the local exchange. Why not? It is work and at least it would give him some kind of standing in society. The State does not allow this and the people must be able to go on a Tuesday or Thursday to sign on, otherwise they get no unemployment benefit. Some people can get away with it and that is not fair.

I am always conscious of the fact that the PAYE sector are constantly hammered; I will not deny that. These people are becoming annoyed about it and with justification. I ask the Minister to look seriously at whether we are bringing about a situation in which the person who is prepared to put on overalls is suffering the worst. That would be a very serious situation. Indeed, there are areas where one is better off not going to work. I would also question the correctness of our priorities with regard to creating employment. There are areas where people who do not have to work are working. We should give incentives to these people to stay at home.

I again congratulate the Minister. He has had a hard time over the last few weeks but he has done quite well.

Mr. Fitzsimons: On this first occasion on which I have the honour of addressing the House I want, like all the other Senators, [424] to congratulate the Cathaoirleach and the Leas-Chathaoirleach on their appointments. I want to thank the Clerk of the Seanad and the Clerk Assistant for the help they have given me and also my colleagues and the Senators on the other side of the House for their consideration. I hope I am in order in mentioning especially Senator John Robb. I canvassed for Senator Robb almost 60 miles below Belfast. On the journey down I had two young men with me and we discussed many topics and agreed on very few, but on the return journey one thing we were unanimous about was our admiration for the judgment of the then Taoiseach Deputy Haughey, in nominating a man of the calibre of Senator Robb. I must congratulate the Taoiseach on endorsing this judgment by renominating Senator Robb. I also want to congratulate the Minister.

The Minister states that the single largest element of social welfare expenditure is the mounting cost of unemployment. In 1980 when there were some 106,000 unemployed the cost of unemployment payments amounted to £107 million. In the present year, provision has been made for £473 million on unemployment payments to an estimated 203,000 unemployed. The cost of unemployment payments has reached such dimensions that it now amounts to a quarter of all the expenditure on social welfare.

I, like all the other Members, am very concerned about this major problem of unemployment, but it can be solved. I was interested that the previous speaker, Senator Cregan, referred to productive employment for everybody as the target. I think it is a realisable target, but not on the sturctures that we have now. Is it not possible for the Government to step in and provide employment for all of the unemployed? As an example, for a particular country £50 million, say, is paid in unemployment benefit. Is it not possible for the Government to put £25 million more with that £50 million for the provision of schemes resulting in productive employment, so that, at the end of the day, we would have realisable assets of £75 million plus? That is possible, but not with the existing structure. I look with [425] some hope to the Government planners and wonder if they will be radical enough in their approach to this problem.

Like everybody else here, I believe that everyone is entitled to an income consistent with the minimum acceptable standards of comfort — nobody would disagree with that. However, charity is out of date in this day and age. To provide employment with the spade, shovel or plough would be no problem, but we must make the best use of up-to-date science and technology. With our educational system, we have not been trained——

An Leas-Chathaoirleach: I do not like to interrupt the Senator in his maiden speech, and I congratulate him on his contribution, but he will have to get back to the Social Welfare Bill.

Mr. Fitzsimons: I thought, since employment is mentioned specifically in the Minister's speech — and it is so important — that the Chair would allow me some latitude——

An Leas-Chathaoirleach: I am now interrupting the Senator, having allowed him to continue to this point. Would he please get back to the Bill?

Mr. Fitzsimons: The elements in the Bill which concern me most are worth listing. Pay-related benefit is reduced from 40 per cent to 25 per cent for the first six months and 20 per cent for the remaining nine months for all claimants, from the beginning of April 1983. The pay-related benefit waiting period is to be extended from 12 to 18 days, reducing the maximum duration of the new 25 per cent rate from 147 days — that is 24½ weeks — to 141 days — which is 23½ weeks — from April of this year.

The pay-related benefit income floor above which benefit is calculated is being raised from £32 to £36 a week from April of this year. The PRSI ceiling is being raised from £9,500 to £13,000 from 6 April of this year. The pay-related benefit ceiling is also being raised from £9,500 to £11,000 and the maximum rate of pay-related benefit will be £46 a week. [426] The overall benefit ceiling for disability benefit purposes will be reduced from 100 per cent to 80 per cent of reckonable weekly earnings for all claimants from April of this year. Apprentices will be disqualified for children's allowance purposes again from April of this year. The maternity grant of £8 will be abolished also from April. The flat-rate unemployment benefit for all short-time workers will be limited to two days instead of the previous three, and pay-related benefits will be withheld from April of this year.

£1.8 million is being provided to establish an anti-poverty agency and to fund the work of suitable voluntary bodies in the social services area, preferably for once-off projects. £5 million is being allocated in 1983 towards the introduction of a family income supplement for low income families in the active labour force and it is envisaged that about 20,000 families could benefit from this scheme.

For legal reasons, smallholders whose means have been calculated notionally on the poor law valuation system will not qualify for increased rates of unemployment assistance. Such smallholders have the right to factual means assessment and if their means permit they will benefit from the budget increases.

Finally, there will be a temporary 1 per cent levy on income. The levy will apply to the same income categories and will be collected in the same manner as the youth employment levy.

Mr. Howlin: I must confess immediately that I intend to break what appears to be a rule of the House, in that I intend to be brief in my address. I would much prefer that my first occasion of addressing this House would be on a Bill which more clearly manifested Labour Party policy. However, as well as everybody else who would comment on this Bill, I am bound to do so in the general context of the situation in which we and this nation find ourselves. That context is one in which we are standing on the edge of the abyss. The finances of our country have been brought to such a situation by opportunist politicians that we have not the resources to meet the demands that we should have as a socially conscious nation. The situation [427] is clear that the social welfare benefits to be paid out by the State this year will amount to £1,870 million. Of that sum, almost £500 million will be paid in benefits to the unemployed — a situation which seems to be spiralling out of control because the previous Government's estimate for unemployment this year was 177,000. The current estimate is in excess of 200,000.

There seems no way in which this spiral can be curtailed or stopped in the short term. It is incumbent on us, as legislators, to provide for those who find themsleves out of work, without an income. We must ensure that by next December the people who go to our social welfare offices will be paid, that there will be money there to provide for them and their families. This is a situation which any Government and any Minister must regard as a primary responsibility.

I congratulate the Minister for providing an increase in social welfare payments of the order of 12 per cent and 10 per cent this year. Coupled with last year's increase, this will greatly overcome the rate of inflation, the prospect of which many workers will not enjoy this year.

I look to the areas of criticism of this Bill. It has been a traumatic period for Labour Party Members of this House and of Dáil Éireann who have found themselves in a quandary as to how they should justify support for this Bill with the perceived stance, philosophy and policy of the party of which they are members. However, many of us looking at it in the national context have found it possible to support the Bill. It certainly does not do all that we would like. I am sure the Minister would have much preferred to bring a different Bill before this House.

We would have liked payments to be made from April but, as the Minister has pointed out, that would necessitate an extra £39 million, which would be taken out of taxpayers' pockets — taxpayers who are currently groaning under the pressures of taxation which are acknowledged by everybody to be far too high. We would like to make a substantial improvement in unemployment assistance [428] in particular because the people on unemployment assistance are the recipients of the most meagre of social welfare payments. It is disconcerting that the area most criticised in this Bill, outside this House at least, was the replacement income ratio for short-time workers which the Bill proposes to alter. The designers of the original Bill in the previous Coalition, in 1973-77, envisaged a replacement income of the order of 85 to 90 per cent being available to those who were forced on short-term working? In many instances, the replacement income has been up to 120 per cent, greatly exceeding the incomes of their colleagues in full five-day week employment. It was the intention of the farmers of the original Bill that the replacement income would be of the order of 90 per cent. This Bill simply wants to put that into effect.

My colleague, Senator O'Mahony, earlier in this debate referred to equity. The concept of equity is a basic objective tenet of our party. It grieves us all to see Members on the other side of the House decrying our party because they feel that we are the social conscience of the nation. The Labour Party currently receives 10 per cent of the vote and until such time as that situation is rectified I am afraid we will not have the sort of business put before the House with which we would be totally happy.

This Bill is the best that can be given at this stage to protect the weakest, the most vulnerable and, at the same time, not put an increasingly intolerable burden on those currently suffering under the taxation system. It is my contention that at the end of the term of the present Government the two factors on which Labour Party participation will be judged will be their advances on unemployment and on taxation. As Senator O'Mahony outlined earlier, we will see dramatic movements in this area. We will see, before the end of a four-year Government, a far more equitable taxation system than currently prevails in this State. However, it cannot be done in three months. The situation is so desperate that the Exchequer needs revenue now. The only way in which revenue can be obtained in the short term is by increasing [429] the burden on those currently over-burdened. The Minister is in an impossible position. He cannot burden further those who are paying to the State. Rates of PRSI have not been increased this year and it is not proposed in this Bill to increase them but, at the same time, there is constant clamour for real, measurable improvements in benefit payments to the least well-off in our society.

I listened with certain disregard to members of the Fianna Fáil Party who campaigned in an election last November to do more or less the same as the Coalition now propose, except more savagely. I listened with great interest to what Senator Brendan Ryan had to say. The outline of the social services articulated by him before this House would be shared by all the Labour Senators at least in the House. Until such time as the State finances are brought into good order, until such time as the taxation system is levied throughout the population on a basis of equality, then the objective as outlined by Senator Ryan will not be achievable.

I hope this Bill will represent the first move and that before the end of this Government's term in office we will see a significant and quantifiable improvement in the benefits available to the weakest in our society. We must look at unemloyment and ways of creating employment, particularly for our young people. They must be given an opportunity and hope. They must see that we are in a tunnel but that there is light at the end of it.

I commend the Minister for doing a marvellous job with the limited resources available to him. I appeal for the support of all Members of the House for the objectives of an equitable system of social welfare payments in the short-term with the long-term objective of putting the nation's finances into such order that the resources of the State not now available from all those currently not contributing on an equitable basis be made available henceforth and brought to bear in solving the problem of unemployment ensuring a comfortable existence for everybody in the State. Everybody should be assured of enough food on their tables and of [430] access to educational advancement. On that basis the Labour Party's involvement will not be judged on a three-month participation but on a four-year participation in Government.

Mr. Harte: I am going to commit a mortal sin and be brief. I should like first of all to welcome the Minister of State to the House for the first time. We all recognise him as a person who is always on top of his brief. I trust that he will remain so between now and 1987 and that we shall have regular visits from him.

I was very pleased to find Senator Howlin being so alert in regard to the figures he was able to produce and the way he endeavoured to put the whole question of the social security situation into some sort of perspective. Figures are always revealing. For example, those in relation to the unemployment services alone show for this year they will be increased by £142 million. I agree with the difficulties confronting people on short time. As a former trade union official — and here I include the Minister present and other members of the Government — we always believed it was bad psychology to take away something people already had in their possession. There might have been some other way of dealing with that problem. Having said that, I must draw the attention of the people in the Opposition benches and of the public in general to the fact that in our programme for entry into Government we made reference to whether or not we would deal with this matter. What we said was that measures may be necessary to prevent the misuse of the system arising from situations where the after-tax income of a person not at work is higher than his after-tax income from employment. That is a reference from the Labour Party Special Delegate Conference in Limerick in 1982.

One of the difficulties about dealing with social welfare benefits in toto is that there are about 198,000 people in manufacturing industry. Against that there are approximately 1,100,000 people drawing on the Social Welfare Fund. As Senator Howlin said, last year's budget catered for approximately 177,000. We [431] are now talking about 203,000 on the live register. I will deal later with the fact that the 203,000 should not be there. One of the good things about the Labour Party being in Government is this: if Fianna Fáil had taken office they would have budgeted for £150 million less — in other words, they were going to take another £150 million out of the economy. Will anybody in this House tell me that either Fianna Fáil or Fine Gael would have taken that from anybody other than the working classes either by a direct cutback or in local government services? It is my guess that had Fianna Fáil adhered to their agreed budget deficit target — the £750 million local government services would have been totally cut back — and the effect would have been much more than it is now on the 14,000 people on short-time working.

Here we are measuring the 14,000 against a total of over one million people dependent on social security. Had the Labour Party not been in Government the likelihood is that £3 million per week would have been taken out of the economy. And, make no mistake about it, it would not have been taken from the richer classes; it would have been taken from the working classes. If for no other reason that is a very good one for the Labour Party to be in Government, making their influence felt. And I am not always an advocate of Coalition. I have not got it as a fixed principle. I deal with it on the basis of the situation obtaining, the circumstances in which we find ourselves at any given time.

There is a lot of emotion about the PRSI figures. One of the attitudes prevalent when I was a trade union official was that one took the gains and fought the losses. Therefore it is bad psychologically to take money from people. I thought there might have been some sort of buffer in that respect and that it could have been phased downwards. However. when one examines the sources of income of the Social Insurance Fund one finds the position is that employers are paying 52.7 per cent, employees 25.6 per cent. the Exchequer 21.5 per cent and from investments and so on .02 per cent. [432] This constitutes something serious for workers, who are not the biggest sufferers, but it hits their pockets and therefore is much more emotive. Employers are being squeezed in the sense of having to pay a much more substantial proportion than that of the people affected by the cutbacks.

I hate to reiterate this, but it must be said that we live in a selfish system created over the years since the State was founded. It is there and everybody has been on the make. Years ago every time people like myself stood up, when we were pulled away from evictions and so on by the police, when we were advocating a socialist society, we were branded by the Church and others. But a lot of the things we said then have come to pass. All we were arguing for at that time was a simple system of State co-operation with everybody. We never got it; nobody listened to us. It should never surprise people who do not vote for us that we have not got the things we should have.

If people do not vote for those who present policies that can prevent such things happening then it is predictable that they will happen. But of course they do not vote and that is it. It has always been our wish that people would have incomes when they hit hard times that would relate as closely as possible to their living costs. But we are unable to do so in present circumstances. One of the reasons we have not been able to do so is that over the years we have not tackled the canons of taxation. There is the question of evasion, avoidance, of limited liability people cheating the Exchequer and the community.

There is also the question of people who should be paying tax but who do not. Successive Governments not facing up to the problem of taxation means that there is insufficient money to re-distribute wealth in the way it should be. We hear people talk about equality. What do they mean? Do they mean equality in the sense that everybody would be equal before the law or have equal opportunity, or what do they mean? Are they talking about equality of sacrifice, which is another equality we do not have and which leaves us in a situation where an [433] awful lot of the wealth of this nation lies in the hands of very few. Always this works to the detriment of the majority. There has not been the political will to tackle things in a fundamental way, affecting real changes in society that had been advocated by the Labour Party over the years.

Let us be clear about it. We are partners in Government with Fine Gael. They know exactly where we stand. I am going to vote for this Bill, not because I believe it to be the greatest Bill that ever came before the House but because in the circumstances to which I have referred we have been unable to implement the major part of our policies. But as long as we can get some of them implemented, as long as we can keep fighting, we will be in there fighting. Socialists do not believe, and never have believed, that because something is not 100 per cent correct it is 100 per cent wrong; that is part of our thinking. That is why we shall always be in there fighting for the people we represent.

Can somebody show me any evidence, over the history of the State, of any consuming desire on the part of any of the political parties to create full employment? It is my guess that on analysis one will find what they were talking about was not full employment but an acceptable level of unemployment because they did not believe in the commitment to full employment. Consequently it never became a reality. Let us be clear about it, the will was not there. As long as people want to sponsor the private entreprise system, with its inherent problems and difficulties and are afraid of change, are not prepared to face up to the basics necessary to bring about more equity in society, then it must be realised that we are only shedding crocodile tears, supposed to be concerned about the people at the lower end of the scale.

I have been approximately 37 years arguing for people at the lower end of the scale and I hope to die arguing that way. I do not expect to see all the things I want implemented in my lifetime. But I expect that in the lifetime of this Government, and I hope it will last for four years, we will be afforded an [434] opportunity within Government to keep hammering home, no matter how distasteful it might be to our partners, that we represent a certain type of person in this country and that we will not let up on any of the things on which we sought agreement until they become a reality. That is our purpose and aim. We did not go into Government for three months. We entered Government on the basis of a programme that would hopefully carry us through a four-year period, when we hope to effect some of our policies and not merely sit in the Opposition benches where we could be used as cannon-fodder by a lot of people.

You know, funny things happen in Irish society when there are problems about social welfare, lack of equality, or such like. Funny things happen to the Labour Party that do not happen to any other party. For example, recently in Athlone the whole bridge was blocked with people screaming for the Labour Party to do something about the PRSI question. They did not scream for Fine Gael or the Fianna Fáil Party but for the Labour Party. How many votes do we get around Athlone during general election? One hundred and thirty. The only conclusion I can come to is that the reason that bridge was blocked was because it was a handy bridge to block and that it was easier to say the Labour Party than the Fianna Fáil or the Fine Gael Parties. One would think the Labour Party had been doing nothing since they were founded in 1912. One would think everybody listened to them, or that we were in Government and were bringing about this situation in society.

There remains an awful lot to be done to bring about equality, not just equality when things are good or when we are in a buoyant situation. When we are in difficult times an equality of sacrifice is necessary. Unfortunately the question of sacrifice in the case of short-time working social welfare recipients has had to hit workers.

Let us be quite blunt about it — and this would probably go some way towards satisfying workers — I want to see a situation, and the provisions exist in the Finance Bill to do so, in which when [435] people who avoid tax on a very large scale, or indulge in evasion, can be brought before the courts and be sentenced to prison, as an example to the workers on whose backs they have been living over the years.

For approximately 20 years PAYE workers have been taking the brunt of everything. There must be some evidence that the tax system is being tackled in a way that will afford an opportunity for a fairer distribution of incomes. While in present circumstances we should not wait for it, existing resources must be redistributed. We cannot afford a time lag. There are very many of our people on the poverty line. People do not want to face up to it. If one lived in one area where there was a lot of poverty, got a good job and moved out of that area, raising one's family somewhere else, one lost touch with the reality but it happens to exist. This is one of the desires of the Labour Party, the elimination of poverty. This is one of the matters included in our anti-poverty campaign — a drive towards ensuring that people are not left almost at the point of malnutrition, and there is a substantial number of them, something we should not forget. The poor should not be made to wait any longer. It is about time we faced up to this issue and talked about equality of sacrifice in the sense that there would be a redistribution of present resources. Human sacrifice in terms of money deducted from incomes is not always the best way of going about matters. This question has to be tackled. If it is put to people in a way that they can see it happening then we shall be able to overcome many of our difficulties.

Taxation does not constitute an answer to all our problems, only some of them. Fundamental changes in society are needed. When it is suggested to people who criticise what is not available that a transformation of society might make that difference, they do not want to know because they want to preserve a certain type of society and as long as that is done we shall have those difficulties. Any of them who feel they represent workers' interests or are serious about it — and I think a lot of them are — should pay [436] more attention to what the Labour Party are saying, what they have been saying over the years, and not treat them as people with a “Disney” concept of life. We have not a “Disney” concept of life — far from it. We do not encourage the extreme Left wing who might want to seize one's property overnight. That is not socialism. It is about time a lot of people in this House tried to understand what socialism is not rather than what they think it is. It is not the seizure of people's property, to hand it over to somebody on the social welfare code. It is a question of seeking equitable distribution, more control over goods and services and so on. These are things for which we have been arguing for years. People in this House can shout about taxation and so on. For example, one cannot argue for a system of taxation that would check the growth of wealth. That is the system prevailing: that cannot be argued against. Therefore one must argue that the system should be assisted for growth in wealth. In the course of the arguments advanced here today that is what has been happening.

You have been arguing against your own system because it is that system that advocates that type of development. In the long run incomes and expenditure ultimately are concerned with the common welfare. While I await my system becoming a reality I would settle for incomes and so on being equitably distributed for the common good. We know this does not happen. Yet we piously stand up regularly and say so. Generally people do not want to know if it entails some fundamental change. The common good is not embodied in extreme poverty alongside wealth. If one does not want that then one must think seriously about this question of equality of sacrifice, of the State making people work with greater co-operative activity than obtains at present. As long as one does not want that, one cannot be too harsh on people who try to rectify situations created by that very system, people who are doing their utmost within Government to ascertain whether they can redress that balance in some way.

The Social Welfare Bill is not all that [437] the Labour Party would want but we fought hard for some of its provisions. It is something in respect of which we took a democratic decision and on which we agreed to go into government. We did not say our programme would be implemented in three months. It is something we believe can become a reality in the lifetime of this Government. Not alone that, but our programme is the basis for future developments in the area of concern expressed regularly by the Labour Party. If anybody should think we have not expressed concern or have not pushed our policies, that is mainly because we have not had the money when other parties were receiving large sums of money. But we did present our policies which basically have not changed since the foundation of the party in 1912.

What may have happened to us as a society — and I have to admit this — is that there are socialists among us whose arteries may have hardened because of the nature of that society. That is probably a fact of life. The uphill battle they have been fighting has made it difficult for them, but I am glad to say that there are a lot of us around. My arteries may have hardened somewhat but I do not think I am any less a socialist than I was many years ago. I try to work as a socialist, I try to understand other people, their point of view and the system they want to fight. But I will never hesitate to bring home to them that it is their system that brought us into our present predicament. I am not here laying the blame particularly on Fianna Fáil; Fine Gael Governments have been there as well.

An Cathaoirleach: I think the Senator is deviating now from the contents of the Bill.

Mr. Harte: I am sorry about that. The general tone here is that we are talking about taxation in the sense of an equitable distribution of incomes. As long as we look at it in a fairly abstract way, saying we will plod along, we will not have plans, we will not tackle the problems as they arise, we will just drift on, we will make promises we cannot fulfil, [438] we are going to get into more and more difficulties.

In the case of the Social Welfare Bill, in all of the circumstances prevailing I do not see how anything else could have been done. I regret it happened in the way it did, as I said earlier. I am here to support the Bill. I will be arguing with Labour Ministers and other people about other aspects of Labour Party programmes which in effect bring us back to this whole question of how people should be treated in society.

Mr. M. O'Toole: May I congratulate you, a Chathaoirligh, on your elevation to your present position and on your many years of service and dedication to this House? Indeed it was an honour for the Fine Gael Party to have selected you and also the Leas-Chathaoirleach, Senator Honan, who proved her ability as Cathaoirleach during the previous Seanad. I am sure you will make a very good political matrimonial pair to represent us in any field. I want also to congratulate Mr. McMahon on his appointment as Clerk-Assistant and wish him many happy years here with us. I should also pay tribute to Mr. Geoghegan, his predecessor, for the very helpful way he looked after us all here on many occasions when we went to him for advice of whatever nature.

I welcome the Minister to the House and congratulate him on his appointment as Minister for Health and Minister for Social Welfare. I would not congratulate him in the same vein as did my able friend, Senator Harte. I would be more afraid of the Minister than he because I know well his ability and dedicated service in Dáil Éireann. He knows where he is going with his eyes open. That is why I would be very much afraid of his decisions. He knows well what he is doing from his long experience in the Dáil and indeed in the field of social welfare with which we are dealing this evening.

For that reason if I have to criticise the Minister in the course of my remarks I shall feel that what he has done he did with his eyes open. There are aspects of this Bill with which I could not agree and indeed do not agree.

This Bill is coming into effect after a [439] budget that did nothing to curb unemployment. It has no development programme built into it whatsoever. It is just a mere academic exercise in mathematics to bring two financial figures closer without any sensitivity whatsoever or practicability on the ground. Because of this I fear that the poor will become poorer and the rich, while they may not get richer, will at least have stability of income.

Unemployment will continue to rise. The finances or capital that the Minister thinks he will receive as a result of the measures in this Bill will not have any effect at all. Not alone that, but because of the accelerating unemployment rate the mathematical figures will not be brought together. The higher output of finances to deal with this problem of unemployment will do nothing to narrow the gap that it was intended to narrow. I am not going into very aspect of it. I appreciate very well the laborious task the Minister had over many weeks in the preparation of this Bill and in putting it through the Dáil. I know that if I started talking about the various measures I would only parrot what was said in the other House or what might be said here.

I intend dealing with an area that requires some amount of thought. I will come first to the abolition of the maternity grant. It may not mean a lot to speak about an £8 maternity cash grant but while £8 is not a lot to have it is a lot to want. When the Minister talks of the £900 and £500 respectively he is talking of working wives but what he is actually doing with the £8 is taking it away from the wife who cannot be at work but who has to be in her own small farm home or indeed in her own cottage in some builtup area. That is what the abolition of the maternity grant means. The amount of revenue that will accrue as a result of the abolition of that £8 will not in any way bridge any gap financially. The Minister should have another look at this change because the people who will be affected by it are the unemployed and the people who are not in a position to receive anything by way of the change.

[440] I regret very much the interference with the children's allowance. I know we have an explosion of population and I would not like any measure that would curb the right of our people, in any way, to have large families and especially in my own west of Ireland where we have very large families. That was a tradition in that area and indeed in the country generally.

Mr. Smith: A prolific strain.

Mr. M. O'Toole: It is something we cherish. As the Minister knows well, there are three types of unemployment assistance. I am not talking about benefit. Unemployment benefit is something one receives as a result of having contributed to the insurance system. There is the assistance that one can get by reason of the notional system. This applies in the disadvantaged areas which include Counties Cavan, Clare, Cork, Donegal, Galway, Kerry, Leitrim, Limerick, Longford, Mayo, Monaghan, Roscommon and Sligo. I only refer to a portion of west Cork and portions of some of the counties.

There was special supplementary assistance granted in 1966 in that particular area but that is not the farmers' dole and neither is it unemployment assistance. I am talking about a supplementary assistance that was granted in 1966 and is now to be done away with by the abolition of the notional system. We used a notional system and a factual system in assessing that type of allowance. In Mayo there are 2,725 applicants on the notional system but this Bill is eliminating 2,725 applicants. The Minister is shaking his head as if to say I am not right but I have given him an accurate figure. There are 1,110 on the factual system. I am quoting from the Minister's figures as given in reply to Question No. 692 in the Dáil on Tuesday, 2 March 1983.

The abolition of the notional system will mean that an investigation officer, who is a pension officer, will come out and investigate in my county alone 2,725 people. The officials and the Minister know that an investigation of that magnitude will take up to three years to complete. [441] It will not be done on an electoral area system and neither will it be done on an alphabetical system.

Mr. B. Desmond: The Senator is right. It will be done on a valuation system, the top valuations.

Mr. M. O'Toole: It will operate up to only £20 valuation. There will be no valuations after the notional system is done away with. A person will be assessed on the basis of his means. Is that not correct?

An Cathaoirleach: The Senator should not invite the Minister to reply to each point as it is raised.

Mr. M. O'Toole: The Minister can reply at the end. The pension officer will investigate one of the 2,700 in my country but because of the extent of that investigation he may not arrive at the neighbour 100 yards down the road for two and a half years to three years. During this period, as a result of the investigation, my allowance is reduced, while my neighbour continues for at least three years to enjoy the supplementary allowance introduced in disadvantaged areas.

I appeal to the Minister to have another look at this because it will affect people who have no other income. When this system was introduced in 1966 it was for the sole purpose of increasing production in small holdings in the west and other disadvantaged areas. If one had an extra few eggs, an extra bonham, or an extra calf to sell, the pension officer would reduce the unemployment assistance, as it was known then. It was for that reason that the notional system was brought into being. It meant that small farmers were not penalised for increasing productivity. Not alone was he producing for his household but his products were sold to shops and so on. If the Minister looked at this again he would understand what I am saying. There will be an imbalance with regard to new investigations. People will be denied a year or maybe two to three years benefit. The investigation is not necessary in the disadvantaged areas.

I should like to ask the Minister what [442] farm expenses and incomes will be allowed in the calculation under the new assessment system. As the Minister is aware, we are entitled under EEC regulations to cattle headage and sheep subsidies. In my area they have never been regarded as income for means qualification for unemployment assistance. When this notional system is abolished is it the intention of the Minister to calculate the subsidies people in disadvantaged areas receive as income? Those schemes were designed specially to increase the number of stock on the hills of Mayo, Galway or disadvantaged areas from Donegal to Cork and for increasing the number of livestock and livestock units. I can assure the Minister that if we go back to a system of assessing such subsidies as income the first one to be damaged will be the disease eradication scheme because farmers will not present their stock as they were not doing prior to this notional system being introduced. The same may apply with regard to the sheep subsidy, although that is a different matter because it relates to sheep scab. There will not be the same implication as for the livestock units. I appeal to the Minister to have another look at this because it will affect farmers in the west and those in disadvantaged areas. The White Paper stated that the notional system is unconstitutional but I should like to ask the Minister who he prosecutes. Does the Minister prosecute himself? Is that the position? If it is unconstitutional to keep the notional system in operation, what is the position? Who prosecutes the Department of Social Welfare for implementing it? The Minister will have to accept full responsibility for the Bill and what will accrue in the way of hardship to the various sections of the community when it is in operation.

I do not accept, as suggested, that there is a 10 per cent increase in social welfare. There is nobody to assess the real features of a Social Welfare Bill except those in receipt of benefits. At the end of the day they will be able to tell the Minister as a result of the devaluation of the pound and the recent harsh budget the real figure they will get as a result of the Bill. Percentages are grand, but if you give a [443] 10 per cent increase to a man getting £100 as against 10 per cent increase to a man getting £1,000, there is a big margin of variation. Percentages do not mean anything. We should consider the hardships these people will have to endure as a result of the implementation of these measures.

Mr. Kirwan: I welcome the Minister to the House, not only as Minister but as an old colleague. Both he and I had the distinction of refusing promotion on the same night. I am not so sure whether he has gone a little further than I, but I have an idea that my promotion will be a little more permanent.

Like Senator Howlin I had come to the conclusion — he almost exploded that conclusion — that the concept of brevity had not penetrated the walls of this Chamber to any appreciable degree. For that reason I am not going to deal with the Bill section by section or in a haphazard manner. I am not going to comment in any shape or form on the statement made by the Minister. That has been done by at least seven or eight speakers who preceded me. I am a disciple of those who recognise the dangers of over-kill but I took particular note of a few comments made from time to time. There was an awareness on my part of the difficulties of my party and the Minister in respect of the Bill, the concern and problem it created for those in the trade union element of the Labour Party and those of us operating within the broad socialist front. I am conscious of those difficulties. Nevertheless, some things which were said call for comment from me. There was reference made to the capacity of certain individuals to react and the implication was that they reacted badly or certainly not in any logical way. There was also comment made on the leadership qualities that needed to be displayed in this difficult economic and social period.

I will deal with over-reaction shortly. In respect of the concept of leadership there are still a few people alive in the green, turgid jungles of South America who believe that Hitler stood as the [444] exemplar of leadership. Of course, there are many abroad who take the view that Pope John XXIII was the classic example of pacifist leadership. I have come to the second conclusion that leadership depends mainly upon the perspective from which you view it. In so far as I am concerned — I have some little experience of leadership albeit in another field — I will display the qualities which I think are consistent with the circumstances when that opportunity presents itself in the normal, traditional and time-honoured democratic way.

On the question of over-reaction, I have admitted that there are certain difficulties in respect of this Bill and these difficulties confront me as a direct representative of the trade union movement. But in recognising these difficulties I was a little alarmed to hear Senator Cregan wax eloquent about the vast numbers of people who draw more by way of social welfare than they would earn by manual labour. I am willing to inundate anybody in this Chamber, anybody within the structure, with tens of thousands of written affidavits from people who do not want to work a three-day week but who want to enjoy the full dignity of labour, and who want to preserve the independence of at least giving something tangible in return for what they need to live. There are tens of thousands of people who do not want to be caught within the ramifications of the social welfare mechanisms of this State. I ask Senator Cregan to take note of the fact that one swallow does not make a summer.

He also referred to the question of dockers. I was happy to note that the Minister in his statement dealt explicitly with this problem. He made it quite clear, I presume after exhaustive and detailed examination of the problem, that within the parameters of the Bill it was quite proper not to regard dockers as short-term workers in the generic sense. There were good reasons why this was done. Dockers work from Monday to Sunday as the exigencies of the service demand. Each day of the week is a working day to a docker. It was on this basis that the argument was developed and the premise was put forward on their behalf.

[445] I take the point made by Senator Harte that nobody can achieve perfection in one's lifetime. If we all could clearly see what we could achieve in our lifetime the capacity to dream would desert us and the capacity to create a vision would no longer be there. In the last analysis — I have said this before in this Chamber — there is a commitment on the part of whoever governs this State to abandon the Victorian work ethic that only when you are strong can you live according to the basic accepted criteria of a normal comfortable life and that the State still has a responsibility to provide for those people who cannot be provided for within the private enterprise context.

Mr. Smith: I want to begin a brief contribution by supporting the comment made by Senator Martin O'Toole in connection with how the Department of Social Welfare propose to deal with the question of payment of income supplements to farmers in disadvantaged areas. I want to put it to the Minister, who may not be familiar with many of the difficulties that face the areas that Senator O'Toole referred to, that they have benefited from certain EEC schemes under the disadvantaged areas system because of the very acute problems that are experienced in these areas. Perhaps many people in Dublin do not appreciate that the average number of animals in these herds is 14, that these areas have suffered mass emigration and migration over a very long period, that in these areas we do not have sanitary facilities in the houses, that we do not have running water supply and that thousands of young people leave that area every year. For the remaining families who stay on in the West of Ireland, in the 12 counties that have been referred to, the kind of income they have from the total herd that I have already described, is such — it is accepted not only here but right across the European scene — that in order for them to remain on in these areas certain income supplements will have to be continued by succeeding Governments.

While I have no great disagreement with the Government in whatever changes that may be made I would like to emphasise [446] that whatever changes are made I would like to see them related to additional production in these areas. Decisions have already been taken in the Department of Agriculture which further threaten farm incomes in these areas. Therefore, to add to that pending changes in the Social Welfare Bill which will make it increasingly more difficult for people to remain in these areas is generally unacceptable. Whatever the financial circumstances in the country — they are not good — I do not think we should look to disadvantaged areas, which have enjoyed EEC recognition, who have been put through the most painful screening to determine their eligibility for participation in these schemes, as areas to lose certain income supplements. In fact, perhaps a sad commentary on the Labour Party in particular, is that in all the statements that were made in the general election, and having seen the Book of Estimates at that time, which was unique in the sense that it was presented in a general election by the previous Fianna Fáil Government, and having seen and known the depth of our economic problems, the Labour Party said they would reject any of these cutbacks and then went on to produce a budget which enshrined in it many changes which obviously affect the living standards of the poor, the old and the deprived.

In that budget we have what the Minister tells us will be an increase in inflation of the order of 3½ per cent. We can take it that that is an additional thing and we do not know if it will prove right. It may well indeed add more in the light of the events of the last few days. The fact that old age pensions will not be increased until midway through this year and that fuel, coal and heating of all kinds have been massively increased means that many old people, particularly old people living on their own, will have to go on for the next few months without any increase in their pensions. I feel that as a pattern in Social Welfare Bills we should try, as far as possible, to grant those increases very quickly after the announcement of the budget. As far as Fianna Fáil are concerned, we have always tried to [447] ensure that these sectors, particularly the old, widows and others, gained the benefit of budgetary changes very quickly to offset whatever increases were introduced at that time.

Like other speakers I had intended to go into some detail on the particular changes that were made and to list and discuss these items, but I understand that practically all of them have been discussed this afternoon and I do not wish to delay the House.

I would like to mention that on top of these cutbacks we also have experienced changes in the health services. In my own constituency medical cards are being withdrawn at a phenomenal rate and people just on the threshold of qualification for medical cards see their contributions for drugs increased. All these measures are adding to the burden on the weakest section of the community. I was glad to hear Senator Kirwan refer to the fact — and I share his view — that the vast bulk of people want to have work and we want to provide the kind of environment which would make that possible. I share his view that abuses in the welfare code, which do exist, should be followed up as part of an overall programme of tackling abuses, whether they are in the social welfare code or in the taxation code.

I regret that this Bill makes no provision for an increase in children's allowances. In recent times allowances for children in the taxation code have gradually been reduced. The fact that we are making no increase in children's allowances is to be regretted.

I would urge the Minister to do all he can to ensure in future that payments, particularly for old-age pensioners and for the deprived sections in our community, are not delayed to the mid-part of the year but are made as soon as is technically possible after each budget.

Minister for Social Welfare (Mr. B. Desmond): I congratualte the Leas-Chathaoirleach on her appointment and I also congratulate our colleague, Martin McMahon, on his appointment as Clerk Assistant. I look forward to working [448] during the next few years with both you and our new Cathaoirleach, as well as the Clerk and Clerk Assistant of the Seanad. I wish to thank the Senators for their contributions and for their good wishes to me in this portfolio.

I do not wish to delay the House unduly but I feel I should reply at some length to the points raised by Senators. I am not at all satisfied, any more than any Member of this House, at the general rates of social welfare which over the years successive Governments — both Fianna Fáil and Coalition — have been paying to social welfare recipients. It is necessary at the outset of any reply to refer to just one particular figure. I do not know how many Senators would like to be unemployed. At the moment there are about 17,000 persons with families on long-term unemployment assistance, that is persons who have been unemployed for more than 15 months, who are living on the very basic rates of unemployment assistance. Even after June, after the increase, the rate for a husband and wife with two children will be £65.25 per week. That in stark terms is about £9.32 per day for four people. How many here would like to live on it? In terms of per person, to put it in a more realistic perspective, it is about £2.33 per human being. That is what we pay. If the lowest basic level of unemployment assistance does not stir the conscience of our community, then it is difficult to know what would stir us. That is the perspective I want to put before the Senators and I did likewise to my fellow Deputies in Dáil Éireann.

There is a basic question of the cash commitment that we have towards social welfare. We have two very serious problems. The first one is the very low level of payment in some areas, such as unemployment assistance. Then we have the problem that we spend about £1,000 million a year anyway, including what we spend on unemployment assistance. A good deal of that money is misdirected and does not result in really alleviating poverty. It does not result in an equity within transfer payments. Children's allowances across the board area classic example of the maldistribution of social [449] welfare payments, since they are paid irrespective of income. That is just one classic example, running into many millions of pounds per annum.

There have been many suggestions and usually we come up with the most facile suggestions. We do not usually indulge in any in-depth examination of the £1,000 million we spend on social welfare. We just want to do more of the same thing and we want to do it all now. For example, we ask why social welfare payments this year cannot be paid from 1 April. There is only one slight problem. It would cost about £40 million, or £39.3 million to be exact. Most politicians and Governments are reluctant to specify the means by which the money is to be found. Instead of paying 10 per cent and 12 per cent from last week of June — most of the payments will be for 27 weeks this year — why not pay 12 per cent all round from 5 April? There is only one problem. It would cost £171 million in a full year and another £6 million for health allowances, £177 million in all, or £133 million in nine months. This year we are spending £80.6 million on social welfare increases, so the other £50 million or £60 million has to be found if we do that.

Some people have said that it should not be 12 per cent from 5 April; it should be 15 per cent. Again there is the problem that the reality of the cost of 15 per cent is about £221 million in a full year or £166 million in nine months. This year we are spending £80.6 million, so it would cost another £80 million or £90 million. I am all in favour of it but I am not so sure that the electorate are in favour of bearing the burden of the cost. As Minister for Social Welfare I fight at Government level to have expenditure made available to me, but the Government have to make a choice.

What could they do? They could increase pay-related social insurance by about 2.6 per cent or increase the employers' rate from 11½ per cent or thereabouts and that would bring in about £80 million. Increasing the workers' contribution of 5½ per cent by another 3 per cent would bring in about £90 million. There would be no difficulty except for the howls of execration which would visit [450] the head of anybody who dared increase social insurance pay-related contributions. Some people say: “Why not abolish the £13,000 limit and let pay-related social insurance be paid right up to the top?

This year we are imposing a 65 per cent tax rate on incomes, which is a change which will bring in extra money. It is important to bear in mind that even if one imposes very high levels of taxation on incomes at the top rate, for example, increasing the rate from 60 per cent to 65 per cent, in terms of tax yields it is only worth about an extra £8 million or £9 million. What do we do? If we increase the PRSI rate, not up to £13,000 but right up to the top, that brings in only an extra £10 million. One cannot get much income from such measures so one is back to the old reliables.

If we want to raise £80 million extra for social welfare we can do so by, for example, putting an extra 20p on petrol. Just imagine the number that would then march to Dáil Éireann. If we put an extra 10p on a pint of Guinness and beer it would bring in about £80 million. One could put, for example, 10 per cent VAT on clothes which would be worth about £80 million for social welfare. We could decide to abolish food subsidies and this would be worth £70 million. We could tax relief on life assurance, on house mortgages, and on VHI, which would bring in about £80 million. We could bring back the wealth tax, only this time to the power of four. The wealth tax in 1976 was worth about £8 million. To bring in £80 million we would now have to bring in a wealth tax to a factor of about four.

People demand health and social welfare services. We have action committees all over the place but there is not an action committee in the world prepared to state where the money is to come from. With profound respect to my parliamentary colleagues on the right, the only action committee we had — it was from 1976 onwards — was one to borrow money. This year alone as a continuation of that trend we are borrowing £897 million. As an indication of the cost of unemployment alone, leaving aside pensioners, [451] widows and disabled persons, this year half of that £897 million — £475 million to be exact — is unemployment related expenditure. These are the stark realities.

The question of notional assessment has been raised here. I must confess a slight wry reaction in some respects because were it not for the adamant action of certain farmers, not, I stress, in the west although there was a feeling about it there as well, we would not be landed in a position today when the Attorney General has made it perfectly clear that the notional assessment system must cease. I must ensure that social welfare legislation is constitutional. It is arguable that it should cease at a quicker rate than three years. The present arrangement for notional assessment must be ended on foot of a High Court judgment.

In recent years the policy in dealing with smallholders on notional assessment has been to eliminate this method and substitute factual assessment. In 1976 no budget increase was given to smallholders with a rateable valuation over £15. In 1977 the notional system was withdrawn from smallholders over £20 rateable valuation. Those with over £10 valuation got no budget increase in 1977. As a result of these measures some 1,000 smallholders lost entitlement and about 8,000 received no increase in the rates of unemployment assistance. In 1979 — there were different Governments involved — the multipliers used to calculate means were increased. In 1980 budget increases were not given to notionally assessed smallholders. They were given the option at that time of factual assessment which was an interesting budgetary decision. About 4,700 people availed of the option of factual assessment. Two-thirds actually benefited at the time from factual assessment. Those who did not benefit reverted to the notional position. But now, all farmers in accordance with the budget and with the Attorney General's virtual direction on the matter, must be assessed for social welfare purposes on a factual bases.

The assessment will be carried out by [452] social welfare officers of the Department who will visit farms on what is essentially an income-expenditure basis. The income is assessed by reference to income derived from sale of stock, crops and other farm produce including milk. Farm produce consumed by the family is also taken into account. All expenditure necessarily incurred in earning the income is also taken into account such as the cost of feeding stuffs, fertilisers, veterinary expenses, hired machinery and any interest paid in respect of loans obtained in connection with the operation of the farm enterprise. The difference between the income and expenditure is taken as the annual means of the applicant for unemployment assistance purposes.

Any person who is dissatisfied with the decision of a deciding officer as to his means may, of course, appeal and have his case determined by an appeals officer. As in the case of any other applicant for unemployment assistance, the forms are available at local level. The factual method of assessment for smallholders is exactly the same system which applies to all other unemployment assistance applicants, including, I stress, farmers who live outside the specified areas. It should be mentioned that the entitlements of factually assessed smallholders will be determined by reference to the higher standard rates of unemployment assistance which apply to the general body of unemployment assistance recipients.

I have been described — I know it is a convention that one should not refer to the other House or to colleagues in the other House — as the “new Cromwell of the west of Ireland”. I have had a few names attached to me in recent months, but that is a new one. There is nothing particularly Cromwellian about it. In fact, if one examines the situation it is entirely equitable. There are tens of thousands of unemployed workers in urban settings who are subject to the ordinary assessment of means and there is nothing unfair in the general elimination of the notional system. Whether it is fair or equitable, we are obliged, by virtue [453] of the High Court judgment and the Attorney General's advice, to change the position.

Senator Ferris suggested that instead of withdrawing pay-related benefit from short-time workers a ceiling of overall pay, flat rate and PRB might be introduced. This approach was considered by the inter-departmental committee who examined this matter but was found to be impracticable for two reasons. First, the pay might vary from week to week for each worker and, secondly, two independent sources of income are involved, namely, the employer and the employment exchange. For those reasons the proposal was not advanced any further.

Senator Lynch spoke of the problems faced by local authorities in meeting their obligations in financing supplementary welfare allowances. It is precisely in recognition of these difficulties that the provision made in section 15 of the Bill is included. Section 15 provides that the amounts payable by local authorities towards the cost of supplementary welfare allowances should be limited by regulation, made by the Minister for Social Welfare in consultation with the Minister for the Environment and with the consent of the Minister for Finance. I assure Senators that there is nothing of a draconian nature in that; by and large it means an additional Exchequer subvention.

Senator Brendan Ryan questioned the situation of persons applying for unemployment assistance being obliged to prove a fixed abode. Social welfare is loaded with all sorts of mythology. To listen to some people you would think that everybody in the country was, every Monday morning, taking a deliberate decision to apply for disability benefit. There is a tremendous anti-welfare ethic because those who have never been on social welfare believe that those who are get away with murder. These great myths deserve to be exploded now and again, but the harder one works at it the more entrenched many people become in their opinions. Likewise, there is a popular view that, because a person has no address or no fixed abode, there is a social welfare officer hanging around the corner, or lurking in the employment [454] exchange, ready to declare him to be of no fixed abode and immediately to disenfranchise him from his basic entitlements. That is not so. I would say to Senator Brendan Ryan that if he has a name and address, even a Simon Community address, I will check very carefully with any employment exchange regarding the entitlements of such persons. A person is not denied unemployment assistance because of inability to furnish an address. It is important that we have some address, even a temporary address, because otherwise the general normal administration of the system would not be possible such as, for example, any kind of routine administrative check which would have to be made from time to time.

Senator Brendan Ryan has a convoluted sense of ideological equity in some respects. He is a very fascinating contributor on many occasions. But, his suggestion that a person on disability or unemployment benefit should get 100 per cent replacement of earnings because he is under the illusion that some private investors in manufacturing industry get 100 per cent grant and that there is an automatic correlation in terms of social policy is disingenuous, to say the least. If one wants to be ideological, it is entirely irrelevant. In relation to pay-related benefit. Deputy Frank Cluskey, Deputy Brendan Corish, the Department of Social Welfare and the then Taoiseach, Deputy Liam Cosgrave, in 1973 and 1974 decided to bring in pay-related benefit. The Department of Finance were not entirely happy about it, but they are never very happy about anything so we went ahead and brought in pay-related benefit as a supplement for unemployment benefit in order that workers would have replacement of their earnings while out of work of about 85 per cent. Deputy Frank Cluskey was very proud of this. He received tremendous commendations from the Irish Congress of Trade Unions and from many prominent trade unions at the time.

The basic floors within the system have not been changed since 1974. This has resulted in a situation where some workers on short-time working — about 8,000 or 10,000 — because of the technical [455] calculations in the system get two or three days' earnings, which of course are subject to tax. Because one is on a three-day week one pays less tax and less PRSI and gets, in addition, three-sixths or half a week of social welfare benefits which are tax free, plus three-sixths or half a week of pay-related benefit, which is also tax free. It means that a worker earning £150 a week — say, a married man with two children — on short time, has a take-home pay, and it shows the severity of income tax and PRSI, on a full-time basis, of £117.10. On a three-day week he would get £80.04 net earnings, plus £34.03 unemployment benefit, plus £19 pay-related benefit which would give him £133 — in other words, 114 per cent of the £150.

In that situation, as a member of the Labour Party and a socialist — people use the term rather glibly but the fundamental aspect of socialism is fundamental equity within incomes — one cannot stand over a situation where a worker on a full-time five-day week out of £150 would get £117 and a worker on three days would get £133. We are saying now, very simply, that from April when a worker on £150 will get £115 a week there will be a drop because of income tax and the 1 per cent levy. Instead of getting £117.10 the worker on £150 will get £115.43. That is a drop of about £1.50 because of the 1 per cent levy. Such a worker on a three-day week will get a replacement of £106 which is 92 per cent. That is more than fair, more than reasonable. I have been a member of the Council of Europe's committee on health and social questions from 1973 to 1981. On that committee I have visited most countries in western Europe and I know of no other country that provides that kind of replacement rate.

Likewise in terms of unemployment benefit there is a provision now for around 85 per cent replacement between the flat rate and pay-related benefit. Admittedly, on disability benefit the payment is 80 per cent but it was 100 per cent. If I have to choose in terms of providing basic income support [456] maintenance under social welfare, my first priority is, without question, the family on long-term unemployment assistance with the bare minimum rate rather than, for example, somebody getting 100 per cent on disability benefit, because most disability benefit claims are for four or five weeks. A person is out sick but such a person, although out sick and nobody wishes him to have illness visited on him, has a job to go back to. He resumes full-time employment. In equity with only a very limited amount of money around this year the first thing I had to do on becoming Minister for Social Welfare was to go straight to the Cabinet and say “The outgoing administration made provision in good faith for 177,000 persons to be out of work. It now appears that we will have a monthly average of 193,000, plus possibly another 12,000 or 13,000 on short-time working, and on the basis of no change in the budget, absolutely no change in the rates, I need an extra £31 million”. I got the money. That is why we have a difficult and harsh budget.

Perhaps Senator Brendan Ryan, while admittedly he has pointed out that public service workers have certain basic benefits in relation to sick pay, implied that it is not all that rosy or so very lenient and not as loose and open to abuse as is implied in some respects.

Mr. B. Ryan: I never implied it. I said the opposite in fact.

Mr. B. Desmond: We can deal with it on Committee Stage. There are about 300,000 people in the public sector and the most any civil servant or public servant can take in at any one time without medical certification is two days' sick leave. I was secretary of the ICTU Public Service Committee for five or six years and I recall that the maximum is about seven uncertified days in a year and any sick leave taken over that seven days becomes a matter of discipline. As an employer of a large staff, 3,500 people in the Department of Social Welfare, I can assure the House that our personnel division implement the civil service regulations. It is true that if a worker in the public sector is out ill there is a period [457] of six months on full pay, six months on half pay and then one reverts to the pension rights. It is also true that one can receive disability benefit under social insurance at a rate of up to 80 per cent with pay-related added for a period of 15 months. For illness of long duration one has a continuing basic entitlement. Therefore, it is not all black and white. We need to be very careful in terms of our situation. Any public servant who in any way malingers under sickness certification to my knowledge is very carefully noted and very quickly dealt with within the public sector.

Perhaps I have dealt excessively with some of the points raised, but I will conclude with two or three brief points. There has been criticism that we have not provided any increase in children's allowances. Under my colleague, Deputy Eileen Desmond, in 1982 very major and substantial increases were provided, and we all forget about them. As a nation when we have it we forget about it and if anybody dares to take away a shilling all hell breaks loose.

Mr. B. Ryan: Quite rightly.

Mr. B. Desmond: I did not appreciate it until I had a look at the figures. How many of us accept that in 1982 increases ranged from 88 per cent in the rate for the first child to 94 per cent for the sixth and subsequent children while each of the second, third, fourth and fifth children received in the 1982 budget 25 per cent increases? These provisions were made in the Coalition's budget of 27 January 1982 and, of course, they were implemented by the Fianna Fáil Government on assuming office on 9 March of that year. There was only one difficulty. The increases were provided for but the money was not provided. By the middle of 1982 all hell broke loose when the current budget deficit was then in the region of £750 million. As a result, panic measures——

Mr. B. Ryan: Is the Minister suggesting that the children's allowances were the cause of the Government's budget deficit?

[458] Mr. B. Desmond: I am finishing, and we can deal with the matters on Committee Stage. The criticism we faced in relation to children's allowances in that regard is not justified. For example, if one wants to say what parties did, that is irrelevant but in 1971 there was no increase in children's allowances, in 1972 there was no increase in that allowance, in 1976 there was no increase, in 1978 there was no increase and in 1983, after a very major increase in 1982, there was a decision not to give an increase.

One reason which influenced me in that regard was that children's allowances are paid across the board irrespective of income. I made the point in the other House the other night that I received children's allowances for a six year old child and 12 year old child and I earn around £30,000 a year. When I was earning £13,000 as a Dáil Deputy I received children's allowances. When I was getting £8 a week as a transport union official with Senator Kirwan in 1957 I was not married so I would not have been receiving children's allowances, but in 1961 after being married I received children's allowances. It was across the board, irrespective of income and we spend a great deal of money on children's allowances. We must find some rational way of dealing with this question and I have no doubt that it can be done.

Finally, I assure Senators here that I intend to go ahead and appoint as a matter of urgency a commission on social welfare. It is a matter of profound regret that there has been no commission on social welfare since 1949. There has been no really comprehensive, in-depth examination of this major aspect of social policy since the introduction of social insurance in 1952-53. I intend to ask the commission to make major recommendations to the Government on the effectiveness of our present system, and in particular on eradicating poverty which is one of the fundamental objectives of the system. I have no doubt they will also examine the system of financing social welfare schemes because there is a widespread public misunderstanding about the whole purpose of pay-related social [459] insurance and taxation for social policy. The Government are determined that those who form the commission will be persons of outstanding expertise in the social policy area and will make a decisive contribution.

The self-employed get a lot of stick. Everybody assumes a self-employed person earns £25,000 a year, which is part of our mythology. If a person is hard up he has a go at the self-employed; if he is worse off he has a go at the large farmers, and the worst off in our society scream about capital taxation. It is about time we developed a more sophisticated appreciation of our taxation structures, [460] of our system of financing £1,000 million for social welfare and £980 million for health expenditure. It is time we sat down to examine the situation. Unfortunately, we have been so busy as party politicians making sure our parties are in power that the real needs of the electorate tended to be overlooked.

I hope next year's Social Welfare Bill will be more forward looking and that I will feel more confident coming to the House with it. I also hope it will help to eradicate poverty. If it achieves that much over a period of two or three years, it will have achieved a good deal.

Question put.

The Seanad divided: Tá, 29; Níl, 15.

Belton, Luke.

Browne, John.

Bulbulia, Katharine.

Burke, Ulick.

Connor, John.

Conway, Timmy.

Cregan, Denis (Dino).

Daly, Jack.

Deenihan, Jimmy.

Dooge, James C.I.

Durcan, Patrick.

Ferris, Michael.

FitzGerald, Alexis J.G.

Fleming, Brian.

Harte, John.

Higgins, Jim.

Hourigan, Richard V.

Howard, Michael.

Howlin, Brendan.

Kelleher, Peter.

Loughrey, Joachim.

McAuliffe-Ennis, Helena.

McDonald, Charlie.

Magner, Pat.

O'Brien, Andy.

O'Leary, Seán

O'Mahony, Flor.

Quealy, Michael A.

Robinson, Mary T.W.


Cassidy, Donie.

de Brún, Séamus.

Fallon, Seán.

Fitzsimons, Jack.

Hillery, Brian.

Honan, Tras.

Kiely, Rory.

Kirwan, Chris.

Lynch, Michael.

Mullooly, Brian.

O'Toole, Martin J.

Ryan, Brendan.

Ryan, Eoin.

Ryan, William.

Smith, Michael.

Tellers: Tá: Senators Belton and Harte; Níl: Senator W. Ryan and de Brún.

[461] Question declared carried.

An Cathaoirleach: Next Stage?

Professor Dooge: Earlier today, the House was of a mind that we should meet next Tuesday to take the Committee Stage of the Bill. At that time we did not know that neither the Minister nor the Minister of State would be available on Tuesday or Wednesday. This leaves us faced with a choice between continuing with the Bill tonight or meeting tomorrow morning. The Minister is willing to carry on this evening or to return tomorrow, whichever the House would wish.

Mr. W. Ryan: Rather than sit tomorrow I think we should continue tonight. I say that under the strongest possible protest. It is most unfair to this House that a Bill like this should be thrown at us a few days before it becomes law. When we decided earlier today that we would take the Committee Stage on Tuesday, no matter what other engagements the Minister or the Minister of State might have they should have cancelled them and agreed to come here on Tuesday so that we could have a full discussion on the Committee Stage of the Social Welfare Bill. I have discussed this with the Leader of the House and the Minister, and there does not appear to be any way out of it other than to sit tomorrow or to continue tonight. This side of the House would prefer if it was finished now.

Mr. B. Desmond: I am anxious to have the Bill through as a matter of urgency. I have to make detailed administrative arrangements on a number of matters. That is one of the reasons for urgency. I have a number of long-standing engagements on the basis that the Dáil would be in recess. Arrangements have been made on behalf of the Minister of State and me for major meetings on Tuesday. I say this with regret. I am most anxious that the Bill should be completed either tonight or tomorrow — I could be here all day tomorrow.

[462] Mr. B. Ryan: The last time somebody said something like this in one of the Houses of the Oireachtas people thought it was very funny: I resent very deeply the fact that I cannot tell my wife and family whether I will be here for one day, two days, three days, all day or all night. This House makes a presumption about women and families and the children of politicians who are totally subservient to the needs of this House and the other House. It is offensive to women, to family and offensive to everything. I find it appalling that I could not tell my wife two days ago what I would be doing in Dublin, when I would be in Dublin and when I would be going home again. Considering the sanctimonious talk about the sanctity of the Irish family, I am sick and tired of hearing from politicians that I cannot tell my family when I will be in Dublin and when I will not be and what this House will do. I find it offensive to myself and to my family, and I am sick and tired of having to sit here waiting until we agree on what we will do. I do not care particularly whether it is the Social Welfare Bill or a Bill to amend the Constitution, I find it offensive that we cannot order our business in a way that will be predictable. This House seems to believe that it can run itself independent of the rest of our lives, of our families and everything else. If nobody else finds it offensive, that is all right, but I do. I deeply resent the way we run our business.

Agreed to take remaining Stages today.