Seanad Éireann - Volume 183 - 21 March, 2006
Social Welfare Law Reform and Pensions Bill 2006: Second Stage.
Question proposed: “That the Bill be now read a Second Time.”
Mr. S. Brennan Mr. S. Brennan
Mr. S. Brennan: I am pleased to introduce this, the second of two Bills intended to implement the €1.12 billion social welfare package announced in budget 2006 by the Minister for Finance. This substantial investment represents a €246 million, or almost 28%, increase on the 2005 package of €874 million. It brings the projected level of social welfare expenditure in 2006 to over €13.5 billion, which is double what was spent in 2000.
Ireland is now making solid and steady progress in tackling the core issues that can blight people’s lives and, too often, leave them vulnerable and marginalised in society. Over €13 billion on welfare supports and entitlements is a huge investment of taxpayers’ money. It means investment in welfare now accounts for €1 in every €3 the State will spend this year. Spending on this scale will have a hugely positive impact on the day-to-day lives of hundreds of thousands of men, women and children who are largely dependent on the safety net that welfare payments provide.
As I have stated many times in this House, payments alone will not solve our social problems. That is why we must go behind the payments and tackle the causes that trigger the need for them. It is why the common theme running through the Bill is reform. The Bill represents another important milestone in a wide-ranging programme of reforms of social policy in this country. These reforms are about liberating, empowering, balancing rights and responsibilities, activation and encouragement and, above all, striving to ensure that the potential of no individual is overlooked and that nobody’s contribution is written off.
The reforms are to help many of the 80,000 lone parents, caring for 130,000 children, who want to escape from welfare traps and start out on the paths to training, education and work. They will help confront the unacceptable blemish of child poverty in the exceptionally wealthy Ireland of the 21st century. Child poverty is unacceptable and we must strive to banish it for good.
The Bill is about reforms that will help us meet the impending pensions challenge, which brings threats of pensioner poverty. They will lay the foundations that will allow all our citizens have a decent pension and dignity and security in their later years. It is about recognising the valued and valuable role of carers in society and rewarding their compassion, and often sacrifice, with adequate supports and entitlements.
The Bill gives legislative effect to a range of reforms, improvements, incentives and increases, and includes important measures to reinforce protection and extend investigative powers in the pensions area. The welfare and social policy provisions and reforms in the Bill include the introduction of a standard and enhanced non-contributory pension scheme that will lift some 34,000 pensioners onto higher or full pensions; increased supports and entitlements for lone parents, carers and widows; changes to scheme names as part of a modernisation programme so that they more accurately reflect modern society and the underlying purpose of the entitlements; increased emphasis on employment activation measures so as to ensure that every individual’s potential and contribution is recognised; and the establishment of the legal structure for the payment of the early child care supplement, which begins later this year, to some 260,000 families in respect of 350,000 children under the age of six.
On pensions, there are new measures to strengthen protection for members’ pension schemes as a way of further strengthening public confidence in the pensions industry. The measures include provision for the Pensions Board to impose a fine as an alternative to the prosecution of an offence; allowing the Pensions Ombudsman to bypass the internal dispute resolution procedures in cases where there is clearly nothing to be gained from this process; and powers to make regulations requiring a scheme actuary to have his or her work reviewed to ensure that it complies with the provisions of the Pensions Act.
The Department of Social and Family Affairs has a pivotal role to play in ensuring that the fruits of our economic growth benefit all, particularly those who are most in need of supports, encouragement and life-enhancing opportunities and solutions. Central to this is ensuring that all older people, and particularly those who are most vulnerable, have decent pensions and security in their later years. It is also important that those reaching pension age who wish to continue work should be encouraged to do so. While pensions to older people have increased by almost 100% in less than a decade, significantly ahead of increases in the consumer price index and gross earnings over the same period, further significant improvements are now being introduced.
The Bill makes provision for a number of important new measures which are designed to target resources — in addition to significant weekly increases announced in the 2006 budget — at particular groups of older people who are aged 66 or over. These measures include combining all non-contributory payments for people over 66 years of age, other than carer’s allowance, into one standard and enhanced non-contributory pension scheme with a greatly improved means test that will lift some 34,000 pensions onto higher or full pensions. The means disregard for this standard pension is being increased from €7.60 to €20 per week. In order to allow pensioners earn more income without having the value of their pension affected, a special earnings disregard of €100 per week will be introduced in this legislation. The weekly disregard of €20 ensures that a single person with no other means will be able to have up to €35,000 in capital and still qualify for a pension at the maximum rate. This rises to €70,000 in the case of a pensioner couple.
The Bill makes provision for the extension of the enhanced earnings arrangement in the new non-contributory state pension to particular persons aged under 66 years who are in receipt of widow’s or widower’s pension, deserted wife’s allowance, and prisoner’s wife’s allowance. This will introduce a special earnings disregard of €100 per week. It is estimated that this improvement will benefit over 3,000 recipients of these payments.
On many occasions I have identified child poverty as one of the key challenges of this Government, and of society in general. The long-term cost of poverty in childhood for individual children, their families and communities and for society at large demands that we address this issue. The investment of over €100 million in increases in child benefit will bring payment rates to €150 for the first two children and €185 for the third and each subsequent child. These increases will benefit over 540,000 families in respect of over 1 million children and fully honour the Government’s commitment on child benefit.
Child poverty is particularly relevant in the area of lone parents. That is why I am committed to significant reforms that deliver a better standard of living and fresh opportunities for lone parents and their children with policies that are directed at the breaking down of existing obstacles to employment, increasing access to career enhancing education and training opportunities through targeted supports and enlightened social policies. At present, income support is provided through the one-parent family payment to over 80,000 lone parents at an estimated cost this year of over €847 million. There has been no change to the income limits applying to the payment since it was introduced in 1997.
The Bill includes changes that will give lone parents an opportunity to continue to increase their earnings without raising fears about entitlement to the payment. A provision in the Bill substantially increases the upper income limit for the one-parent family payment from €293 to €375 per week. This should allow many lone parents to access employment. Lone parents working over 19 hours per week may also be eligible for the family income supplement. Senators will recall that the weekly income thresholds of that scheme were increased substantially from January this year.
As the House is aware, the senior officials group on social inclusion was mandated late in 2004 to examine obstacles to employment for lone parents and report back to the Cabinet committee on social inclusion with proposals. As part of this work, my Department established a working group that undertook to look closely at income supports and at how they can be adjusted to better address the social problems that can arise for those who receive these payments, including the cohabitation rule and the fact that the payment can act as a disincentive to the formation of partnerships.
Senators will be aware that I published the findings of both working groups yesterday in a Government discussion document, “Proposals for Supporting Lone Parents”. I have asked that over the coming weeks the proposals, several of them radical in nature, are extensively debated and that all views are listened to. I am confident the report can make a valuable input into the shaping of reform measures targeted at further modernising social policies in the area of lone parents and other families on low incomes.
The early child care supplement, announced in the budget 2006, and which will be payable to parents of children under six years of age, will contribute significantly to assisting in the raising of children. Some 260,000 families receiving child benefit will be paid the supplement in respect of approximately 350,000 children under the age of six. This is equal to about 50% of all families receiving child benefit and some 33% of all children for whom payment of child benefit is being made. The rate of payment is €1,000 per annum paid over four quarters, with three payments being made in 2006. In general, payments will issue early in the month following the end of each quarter. It is intended to issue the first payment in August 2006 for the quarter April to June, with further payments in October for the quarter July to September. Every effort will be made to make payments for the last quarter of 2006 — October to December — in December. It is expected that similar payment arrangements will apply in 2007.
Payments will issue for full quarters only, which means a full quarter payment will be made in respect of an eligible child born during a quarter or a child reaching six years of age during a quarter. The estimated expenditure on early child care supplement payments in 2006 is €265 million and the estimated full-year expenditure in 2007 is €357 million.
The scheme for child-minding relief was announced by the Minister for Finance in budget 2006 and the legislative approach is being underwritten as part of the Finance Bill. The scheme will exempt from taxation the child-minding income of an individual who, subject to certain conditions, minds up to three children in his or her home, subject to a maximum income from child-minding of €10,000 per annum. The Bill deals with the social insurance aspects of this measure. To ensure that all who participate in this scheme are afforded the opportunity to build up a social insurance record which can, in turn and in time, have important advantages for benefits such as pensions and maternity benefit, the Bill will require that an annual PRSI contribution of €253 is made in respect of this child-minding income. This is in keeping with the Government’s recognised policy of making every effort to encourage the extension of pension coverage, particularly to women, who have emerged as especially vulnerable because of their lack of adequate, or indeed any, pensions.
As I have stated many times in the House, recognition of and support for carers must be at the very core of a caring society. In recognition of the valued and valuable work of carers, the Bill makes provision for increasing the rate of the annual respite care grant by €200 to €1,200 from June. In 2005, more than 36,000 grants were awarded and it is expected that the number of beneficiaries in 2006 will further increase. The duration of the carer’s benefit scheme is being extended from 15 months to two years for each care recipient. In addition, regulations will provide for increasing the number of hours which a person can work and still receive a carer’s allowance, carer’s benefit or respite care grant from ten to 15 hours per week. The Bill also contains the necessary amendments to the Carer’s Leave Act 2001 to provide for the extension of the duration of carer’s leave from 15 months to two years.
Few will disagree when I say that Irish society is changing rapidly. At the same time, attitudes and expectations in regard to welfare schemes and entitlements are also changing. In order to keep pace with that change, and as part of a general welfare modernisation programme, the Bill makes provision for the titles of some schemes to be changed so that they more accurately reflect modern society. Examples include the old age contributory and non-contributory pensions, first introduced in 1908 by Lloyd George, the titles of which are to be changed to that of “State pension”.
The old age pension reflected a time in history when life expectancy was in the early 70s. Today, the vast majority of people reaching pension age at 66 do not consider themselves old and regard the term “old age” to be outdated and sometimes demeaning for people in their later years. I assure Senators there has been widespread consultation with the relevant organisations and representative bodies in advance of decisions being made to change titles. The scheme name changes provided for in the Bill are as follows: the old age contributory pension will become the State pension (contributory); the old age non-contributory pension will become the State pension (non-contributory); the retirement pension will become the State pension (transition); unemployment benefit will become jobseeker’s benefit; unemployment assistance will become jobseeker’s allowance; unemployability supplement will become incapacity benefit; disability benefit will become illness benefit; orphan’s contributory allowance will become guardian’s payment (contributory); and orphan’s non-contributory pension will become guardian’s payment (non-contributory).
If Ireland is to adequately address the major challenge of meeting the projected employment demands of a surging economy over the next decade and further into the future, a wide range of reforms and initiatives are required as part of an overall employment activation strategy. Ireland is now close to full employment and yet, at a time when the Central Statistics Office forecasts that this country will require up to 50,000 immigrant workers per year for the next decade in addition to home produced workers, simply to maintain our current levels of economic growth, Irish people remain on the live register, or elsewhere, who may not have had their talent and full employment potential properly assessed.
The Bill includes provision for the phasing out over the coming decade of the pre-retirement allowance, PRETA, scheme in view of the changed labour market conditions since the introduction of the scheme in 1990, a time of extremely high unemployment. It was introduced originally for long-term recipients of unemployment assistance who were aged 55 years and over and who had effectively retired from actively seeking employment. PRETA numbers have decreased from a high of almost 15,300 in 1994 to 11,000 at the end of 2005.
The Bill proposes that no new person will join the scheme from a specified date and that, as a result, the scheme will be phased out without impacting on any of the existing recipients. This will mean that those currently on the live register aged 55 to 66 who might have transferred to PRETA will no longer be able to do so, which will lead in the short term to an increase of about 2,000 on the live register. However, this increase should in time be offset by the inclusion of the over 55s for intervention and support in the Government’s employment action plan. In addition, my Department and other agencies have developed a wide range of employment support payments, services and initiatives to assist jobseekers and others who may feel vulnerable to return to employment, education and training.
I will now outline the main provisions of the Bill. In the area of child income support, the Government’s policy is to concentrate resources on enhancing the child benefit scheme. Child benefit now accounts for 67% of child income support, while in 1994 it constituted less than 30%. There are sound reasons for this policy. Child benefit is both neutral vis-à-vis the employment status of the child’s parents and it does not contribute to poverty traps. As a near universal payment, child benefit is not taxable, is not assessed as means for other secondary benefits and is payable to the primary carer, usually the mother. When account is taken of these aspects of payment, child benefit is a most effective child income support mechanism.
Expenditure on this scheme in 2006 is expected to be over €2 billion. Section 3 provides for increases in the monthly rates of child benefit as announced in budget 2006. The lower rate of benefit, payable in respect of each of the first two children, is being increased by €8.40 per month from €141.60 to €150. The rate for the third and each subsequent child is being increased by €7.70 per month, bringing the rate from €177.30 to €185. These increases come into effect on 1 April.
As part of the wider objective to make the social welfare system more accessible and to further modernise the social welfare code, as well as to reflect a more contemporary outlook and changed societal expectations and to reflect the purpose of the payments to a greater extent, I am making provision at section 4 and Schedule 1 for changes to the titles of certain social welfare payments, as I have already outlined. In keeping with the Government’s policy of extending pensions coverage, particularly among women, who are less likely to have such cover, I am providing at sections 5 and 6 that where tax relief is claimed on income earned by the self-employed home childminder, it will be liable for a social insurance contribution of €253 per annum.
At present carer’s benefit is payable for a maximum period of 15 months. Section 7 provides for the extension of the payment period to two years, and provides that this improvement takes effect from budget day, 7 December last. This means that any carer who was in receipt of carer’s benefit on or after 7 December 2005 will be entitled to receive an additional 39 weeks of carer’s benefit. This will, of course, be subject to the carer continuing to fulfil the qualifying conditions. In order to minimise any disruption to carers affected by this measure, I am also making arrangements to commence the payment of the additional weeks as quickly as possible so that carers whose 65 weeks payment expires prior to the enactment of the Bill will not suffer an interruption in their payment.
Sections 9 and 13 provide for the calculation of a daily rate to facilitate the payment of what was known as old age contributory pension and retirement pension from the date the customer attains 66 or 65 years respectively. At present, these pensions are paid from the pension payday after the relevant age is reached. In addition, sections 11 and 12 provide for the automatic transfer from invalidity pension or retirement pension to old age contributory pension, now known as the State contributory pension, when the recipient reaches the age of 66. Section 15 provides for the phasing out of the pre-retirement allowance scheme, the reasons for which I outlined earlier.
The Bill, at section 16, provides the legislative basis for the establishment of the State pension non-contributory scheme from September 2006. Section 17 and Schedules 2 and 3 provide for a number of consequential amendments, which are required on foot of the establishment of this pension. As a consequence of the introduction of the State pension — non-contributory — for persons aged 66 years and over, blind pension, widow’s and widower’s non-contributory pension, and one-parent family payment will no longer be payable after age 66. Accordingly, sections 20 to 22, inclusive, provide for consequential amendments to these schemes. Similar provision is made in section 23 for the purposes of those who have continued entitlement to the deserted wife’s allowance and prisoner’s wife’s allowance schemes.
Section 24 and Schedule 4 contain the rules governing the means test, which will apply to the non-contributory State pension. In addition, certain amendments are required with regard to the provisions governing existing long-term payments. Section 25 and Schedule 5 provide for the collation of the rules governing the means test for those long-term schemes applicable to customers under pension age including those in receipt of blind, widow’s, widower’s and orphan’s non-contributory pensions, one-parent family payment and carer’s allowance. Schedule 5 also contains a provision to disregard €100 per week from earnings in respect of recipients of widow’s and widower’s non-contributory pensions and those in receipt of deserted wife’s and prisoner’s wife’s allowances who are aged under 66 years. Section 27 provides for an increase in the upper earnings threshold for one-parent family payment, from €293 to €375 per week.
The Bill, at sections 28 and 29 and Schedule 6, provides the legislative basis for the introduction of the early child care supplement which I have outlined. My Department will administer the scheme, which comes into operation on 1 April, on behalf of the Office of the Minister for Children.
Section 30 provides for an increase, from €1,000 to €1,200, in the amount of the annual respite care grant, which is paid to carers in June of each year. Section 31 provides for the disregard of the amount of any contributions to personal retirement savings accounts for the purposes of the income thresholds applicable to the family income supplement scheme. Section 32 provides that a person who qualifies for an Irish invalidity pension under EU regulations will not suffer a reduction of pension if he or she subsequently becomes entitled to a survivor’s pension or a retirement pension under the EU regulations from another EU member state.
Section 33 provides for amendments to the definitions contained in Schedule 3 to the Social Welfare Consolidation Act 2005, which contains the rules that are applied in assessing means for the purposes of certain social welfare payments. This section further provides for the exclusion of certain payments, such as the early child care supplement, the home care grant and home tuition scheme, from the means test.
Section 34 provides for the alignment of the treatment of benefit and privilege in respect of supplementary welfare allowance, where the person is living with parents, to that applying to other means-tested schemes from April 2006. Section 35 provides for the inclusion of the National Council of Special Education, the Teaching Council, the Private Security Authority and the Commission for Taxi Regulation in the list of specified bodies authorised by legislation to use the personal public service, PPS, number as a public service identifier.
As I have said on many occasions, there are no quick-fix solutions to the fact that, at present, almost half the country’s current workforce of 2 million do not have any personal pensions and are facing into a retirement in which their main source of income will be the State pension. As the House is aware, I recently launched the National Pensions Review, the comprehensive report produced by the Pensions Board to review the progress being made on our overall pensions strategy and targets. The report sets out our current position, the challenges we face, and a range of measures we can consider for the future. In summary, the main recommendations of the report include a State incentive for contributions to personal retirement savings accounts of a matching contribution, similar to the SSIA type arrangement; the call for tax relief at a higher rate for all personal pension contributions; and the proposal of an option to defer the State pension.
The measures announced by the Minister for Finance in the Finance Bill to incentivise the transfer of SSIA funds into pensions represent a substantial statement from the Government as to how seriously it is taking pensions and of its commitment to developing pension policy that will address crucial issues facing this country on pensions coverage and adequacy. The Government, by paying a bonus of €l for every €3 transferred directly into a pension account of SSIA holders who are taxed at 20% — and significantly in the case of those who are not in the tax net — up to a maximum of €2,500, is creating an ideal opportunity for thousands of people on middle and low incomes to improve their pensions position as it allows for a maximum once off contribution of up to €10,000. I urge people to avail of this opportunity as a way of investing in securing a decent income for their later years. While the Pensions Board is in favour of a continuation of the existing voluntary system for supplementary pensions, the report has also highlighted the need for further consideration of mandatory pension provision, State-sponsored annuities and the introduction of a pension protection fund.
Reforms are required if we are to reach our targets in relation to pensions coverage and the debate now centres on how we are to do this. I will be calling together all interested parties to a national forum to consider the central issues and to hear the views of all stakeholders on the way forward. Planning for the forum is at an early stage but I will be inviting public representatives, social partners, industry representatives and those representing the interests of pensioners. While the main purpose of the forum is to hear the views of stakeholders on the conclusions of the National Pensions Review, it is also my intention to invite speakers to outline major reforms proposed or undertaken in other countries. The forum is scheduled for 5 May next.
I will outline the main measures regarding pensions in the Bill. Section 39 introduces an alternative “pay-up and remedy or be fined” regime similar to that set out in the Company Law Enforcement Act. Under the new provision, the Pensions Board may notify a person in writing that it is alleged that an offence has been committed and that if, within 21 days of the notice, the person has remedied the offence to the satisfaction of the board and paid the appropriate fine, a prosecution will not be instituted. Section 39 also provides that certain documentary evidence submitted in a prosecution is admissible without the attendance of the Pensions Board officer at court. The board believes this is a more economic and efficient approach.
Section 40 provides that as Minister, I may, in consultation with the Minister for Finance, indemnify the members of the Pensions Board and the staff of the board against liability for damages or costs where they have discharged their functions in good faith. This is similar to legislation introduced in recent years establishing other boards.
Section 42 allows for regulations to be made requiring a scheme actuary’s work to be reviewed, to ensure that it complies with the provisions of the Pensions Act and any professional guidance issued by the Society of Actuaries in Ireland. I recently met with representatives of the society to discuss this issue. Given the important role played by actuaries in the management of defined benefit pension schemes, I have decided to introduce such a system of compulsory monitoring of actuaries for compliance with the Pensions Acts and Society of Actuaries’ professional guidance. It is envisaged that independent actuaries would carry out the monitoring. In addition, the Pensions Board will carry out random checks of pensions actuarial work. The matters to be prescribed in the regulations include the appointment of a reviewing actuary, the frequency of reviews and the timescale for reviews.
In his annual report, the Pensions Ombudsman highlighted areas of concern relating to the operation of the internal dispute resolution procedure. Section 43 addresses these concerns. It provides that the Pensions Ombudsman may now bypass the internal dispute resolution procedure and investigate complaints in cases where there is clearly nothing to be gained from the process. An example of this is where the complaint lies against the employer rather than the trustees of the scheme.
Section 44 and Schedule 8 also provide for a number of miscellaneous amendments to the Pensions Act which are technical in nature. The Bill provides for a small number of amendments to other Acts as follows: section 45 contains an amendment to the Combat Poverty Agency Act 1986 to provide for an extension from three years to five years to the term of office for new appointments to the board of that agency. This will ensure that the expertise developed by board members will be retained for a longer period, thereby ensuring they give a more valuable contribution to the agency.
Section 46 amends the Freedom of Information Act to exclude for the purposes of that Act a secrecy clause in the Pensions Act 1990 in relation to the functions of the Pensions Ombudsman and a similar clause in the Comhairle Act 2000 in relation to that agency’s function. Section 45 provides for the amendment of the Taxes Consolidation Act 1997 to exempt early child care supplement from being reckonable as income for income tax purposes.
Section 48 and Schedule 9 contain the necessary amendments to the Carer’s Leave Act 2001 to provide for the extension of the duration of carer’s leave from 15 months to two years. Under Standing Order 121, I ask the Cathaoirleach to direct the Clerk of the Seanad to make a formal correction to the Bill, replacing the word “Act” in line five of page 29 with the word “section”.
I thank the House for taking this Bill today. I am conscious that it is a considerable piece of legislation, which I have discussed in detail. It builds further on the development of social inclusion measures adopted by this Government over recent years. It safeguards the living standards of those who rely on social welfare income and other supports and prioritises the allocation of resources in favour of those most in need.
Resources will continue to be targeted on helping those most in need in order, not alone to raise their standard of living, but to ensure that everyone is a valued citizen who can make his or her own individual contribution to society, regardless of his or her particular circumstances.
However, the significant social issues we face can be eased, but not solved, by welfare and support payments alone. The House is aware of my views in this regard. The easy route is to salve our social conscience by signing the cheques and hoping the problems will go away. The honest route is to go behind the payments and confront the problem. It is vitally important that we do not view welfare as permanent. That is why a one-size-fits-all system will not provide the answers. Welfare support systems must be tailored to the specific needs of individuals, not the other way round, and should be seen as stepping stones to achieving a better quality of life. To achieve the changes in social policy that reflect the needs of the Ireland of the 21st century will call for courageous reforms. The window of opportunity is there and, through this Bill and further changes planned over the coming months and years, we are shaping the reforms that will introduce more enlightened and progressive social policies in a number of key areas. I apologise for the length of my address to the House, however, I wished to address all of the items in the Bill in detail. I thank Members for their patience, commend the Bill to the House and look forward to a constructive debate.
Ms Terry Ms Terry
Ms Terry: I welcome the Minister to the House. I appreciate the time he has taken to outline the contents of this lengthy and detailed Bill. It took him 30 minutes to do so and I appreciate that he has been on his feet for a long period. However, it was worthwhile hearing him outline the details of the Bill because it is very detailed and tackles many social problems. I agree with the Minister that it is not a matter of simply giving payments to individuals. While many people must receive financial support, we must change our society to enable and facilitate people to help themselves.
For too long, many people have been dependent on social welfare payments. We must break this cycle but to do so, people must be helped financially when they need financial support. We must find better ways of encouraging people back into the workplace because it is through work that the cycle of poverty is broken. For far too long, generations of children have never witnessed their parents going out to work. Thankfully, this state of affairs is changing but circumstances have not changed for some people.
We must retain our focus on and address the needs of elderly people, homeless people and those who, for whatever reason, cannot find work, in addition to children, lone parents and unemployed people. Unfortunately, inequality and social disadvantage still blight the lives of many people, despite the country’s economic growth. I accept that many households have benefited from our economic growth and that in many households, at least one adult goes out to work. However, work-poor households still comprise over 13% of the household population.
Work-rich households also experience new difficulties. These include quality of life and social well-being issues like family life, work, health, education, community life and housing. These new difficulties must be tackled and this Bill is one way of tackling many of them.
I welcome many of the social welfare and social policy provisions and reforms in this Bill, including the introduction of a standard and enhanced non-contributory pension scheme, which will bring more pensioners on to higher or full pensions. The introduction of a special earnings disregard of €100 per week, which will allow pensioners to work more without having the value of their pension affected, is very timely. As the Minister noted, people aged 65 or 66 no longer regard themselves as old. The general population is healthier and fitter than before and many people do not wish to retire at 65 or 66. This initiative is a welcome development for those people who wish to continue working.
People who wish to continue working past the age of 65 should be allowed to defer drawing down their pensions, which would provide them with an enhanced pension. I understand that this was one of the recommendations in the report by the Pensions Board. We must examine such a measure to facilitate people who wish to work past 65.
While I welcome some provisions in this Bill, I also have certain criticisms. I am disappointed that the Minister did not use this opportunity to address the financial dependency of women on men in respect of the State pension. The Minister could have introduced four measures, about which I have spoken previously. He could consider these measures between now and the next budget.
First, the qualified adult payment should be paid directly to all women. I am aware that the payment is available by choice but it should be made mandatory. We are talking about a certain category of women which will not exist in 20 or 30 years time. These women must be released from this dependency. Second, the qualified adult payment for all old age pensions should be increased to 100% of the non-contributory old age pension. Third, the 1994 homemaker disregard scheme should be changed to a homemaker’s credits scheme. Fourth, these credits should be made retrospective for all women who engaged in unpaid home care work from 1973 onwards.
I am attempting to address the plight of women who were forced to stay at home due to the marriage bar and take up caring duties and who are now facing into old age with little access to State pensions. I understand the Minister has spoken about this issue and that he spoke today about the low take-up of State pensions by women. However, this is a group of women who were forced to give up work and who need special treatment. As a result of the culture of the time, they generally stayed at home to rear their children and did a very fine job. Many of these women have returned to work but we must address the plight of those who did not do so.
Women aged 65 and over have a 41% risk of falling below the 60% poverty line in comparison to 36% of men. Giving women direct access to pensions would help to move women out of poverty and increase their economic independence. The Minister has missed an opportunity to deal with these issues. People who spend time caring for young children or a disabled or elderly relative do not earn pension credits because it is unpaid work. The homemaker scheme goes some way towards acknowledging care work and helping them qualify for an old age contributory pension. However, disregards give no value for short-term payments and slightly lower yearly average than if credits were awarded.
The increases extended to carers are welcome. However, just 24,000 out of 150,000 carers receive either carer’s benefit or carer’s allowance. The work carers do cannot be measured. We must abolish means testing for carers. The Minister said this would cost €140 million, but that is a small sum to address the problem. We must not take for granted the contribution made by carers. Work done by carers — women are predominantly the carers — has always been taken for granted. This results in lost earning opportunities and pension entitlements, making them, once again, financially dependent when they, in turn, reach retirement age.
The Minister must do more for carers and ensure that their work is recognised. Work done by carers brings considerable savings to the Exchequer. The 150,000 carers provide up to three million hours caring each week, resulting in savings to the Exchequer of approximately €2 billion each year. These figures were provided by the Carers Association in 2005.
I thank the Minister for ensuring that child minders looking after up to three children in their own homes, subject to a maximum income of €10,000, can make PRSI contributions of €250 per annum. This is worthwhile and it will ensure that another group of women will not fall into the poverty trap when they retire or need to claim other benefits such as maternity benefit or widow’s pension. The National Women’s Council of Ireland brought this matter to the attention of us all. We raised it with the Minister of State, Deputy Brian Lenihan, when he was in the House recently. This is a welcome initiative.
The increases in child benefit are welcome. These have improved greatly over the years, and rightly so. However, we must consider that, on average, it costs €213 a month to raise a child, which excludes child care. The early child care supplement of €1,000 works out at €19.20 a week. This is less than 10% of the average national child care cost per month. While it is an early child care supplement and while I acknowledge one must start somewhere and we did not expect that everything would be done in the first year, it does nothing to help women who have children over the age of six, women at work who still have child care costs, including after school costs and caring for children during holiday periods and when they are sick. As we cannot forget parents who have children in these age groups, much more needs to be done in the child care area. I recognise that the Minister indicated more will be done. It is necessary.
The measures in the Bill in regard to lone parents will help to address the social exclusion and poverty experienced by many people. At present, 80,000 lone parents receive income support through the one-parent family payment. The Bill includes changes that will allow lone parents an opportunity to earn up to €375 a week, and still receive a payment. This should remove the disincentive for many lone parents to access employment. In addition, lone parents working more than 19 hours per week may also be eligible for the family income supplement. I congratulate the Minister on the campaign to highlight the family income supplement, which I have seen on TV and read about it the newspapers. I acknowledge the Minister is making a great effort to bring it to the attention of many people because there was a very low take-up on the payment. I hope this will result in many more people applying for the payment.
I attended the launch yesterday of the discussion paper entitled Proposals for Supporting Lone Parents. I look forward to contributing in the future to a debate on the issue. There are many interesting proposals in the discussion paper which should address many of the problems facing lone parents and enable them to get back into the workplace. I thank many of the NGOs who do trojan work. These include organisations such as the Society of St. Vincent de Paul, the Combat Poverty Agency, the Carers Association and many others who go about their work quietly. They do wonderful work for many people who need their services.
While the pension provisions in the Bill are necessary, they will do nothing to instil confidence in people to join pension schemes. That problem will still exist. Unless legislation is introduced to provide protection for pension schemes, people will not join them. I have asked the Leader to organise a debate on the report recently published by the Pensions Board. While it is an enormous book, it includes very few recommendations that will adequately tackle the issue. We hear almost on a daily basis about companies changing the defined benefit schemes to defined contribution schemes. I congratulate the National Union of Journalists which managed to win its case last week and persuade employers not to change their pension schemes. I am pleased it had the power to do so. I hope other people will take note of this and ensure that their employers do not treat them in the shabby way many employers have treated their employees.
The Pensions Board is failing many people by not being tougher on employers and the pensions industry to ensure that people’s pensions will be secured. A protection scheme should be brought forward. The board has indicated this may be done. I hope it will happen. Providing the Pensions Board with €500,000 to run a campaign to encourage more people to join a pension scheme is a waste of money. It is not about joining pension schemes, it is about protecting people’s pensions. The measures in the Bill to deal with pensions do nothing for individuals. However, I do not oppose them because they are necessary minor adjustments to the Act.
Ms Cox Ms Cox
 Ms Cox: I welcome the Minister to the House. I am pleased to have an opportunity to speak on the Second Stage of the Social Welfare Law Reform and Pensions Bill 2006. It is a great privilege to be in a situation whereby the Minister has a budget of €1.12 billion to spend in the whole area of social welfare. This money will be used to look after people who need to be looked after because they cannot look after themselves or because they are entitled to be looked after given the contributions and efforts they have made over many years helping to build and sustain the Celtic tiger.
When we discussed the Social Welfare Bill after the budget, I said to the Minister that it is a great honour for him to be able to work in the Department of Social and Family Affairs and to put money into social welfare. The challenge for him, which he is properly facing up to fairly well, is not to sit back and say he has done all of this, there is not much more to do and that he does not need to change anything. As he recognised in his contribution and in the fine initiatives he has put in place, the responsibility on him is even greater in times of prosperity to ensure he gets the best value for money for the taxpayers. As the Minister has said in this House on many occasions and recently in the other House, €1 in every €3 spent is spent on social welfare. That is a significant responsibility and it is important to ensure the investment in our social welfare system benefits all the people and is fairly distributed.
I wish to focus on a number of key issues, including child benefit. Since becoming a Member of this House, each year I have been pleased with the considerable improvements to child benefit. Child benefit is the main payment making a difference to the lives of families. Whether a family is rich or poor, a lone parent family, a family with two, four, six or more children, that payment makes a huge difference each month. It is not taxed or means-tested but, most especially, it is directed in most cases at the mother. It is one of the principal pillars on which our social welfare system is built and of which we should be proud. We must continue to protect it and ensure it does the job it is supposed to do and that it is primarily used as a method to address child poverty and alleviate the cost of looking after children which, as we all know, becomes more expensive each day.
Each year a considerable amount of the Minister’s budget is spent on child benefit and it will continue to increase year on year. However, it is important we draw up the guidelines and parameters within which we will measure its success. While a certain amount will need to be paid, when we pass a certain point, the key challenge will be whether we are politically brave enough to ask if this additional money is addressing child poverty, which child benefit should address, and if it is time to ensure a redistribution so that everybody does not get exactly the same amount as we move forward.
I very much welcome the early child care supplement which will address some of the issues. We recognise that the years between birth and six years of age in a child’s life are some of the most expensive. That is being addressed with a targeted measure. I do not want anyone in receipt of child benefit being taxed or means-tested but if we continue to give the type of increases we have given to date, we must ensure there is a proper targeted mechanism.
It is important to reflect on the record to date. For a family of four to receive a payment of €670 each month is significant, makes a difference and is welcome. A family of six will receive a payment of €1,040 following the introduction of the increases on 1 April. I acknowledge the benefit it will bring and, in particular, the fact it is targeted at children, the family and, most of the time, at the mother or the principal carer of the family.
Before Christmas following the budget, I reflected on the early child care supplement. I said it was a remarkable and radical initiative which I very much welcome. It is smart, effective and will make a difference. It will make a significant difference for some though not all families. However, it is a recognition that looking after children is important, whether one gets somebody outside the home to do so or whether one stays at home to look after them. The supplement should be commended and welcomed. I, for one, am proud of it.
While I know the Minister is not one to rest on his laurels, there is a need for flexibility to be able to spend time at home looking after one’s children and to stay at home if a child is sick. If, God forbid, a child is out sick for two or three weeks and one must take time off, parental leave provides that flexibility but not everybody can afford to take such leave. A priority for next year, in the partnership talks, in next year’s budget and so on should be the issue of paid parental leave on a phased basis. We started with maternity leave, paying maternity benefit on a phased basis. Maternity leave has now been extended and I commend the Government on that initiative. If we do not move towards paid parental leave, we are wasting our time and are merely pretending parental leave is of benefit to people. It is only of benefit to a group of people who earn a certain amount of money. It is not a universal benefit and a true child-focused, family-oriented measure. It is a great measure, particularly since it has been extended to eight years, and it is an important one in the lives of families.
As I have said before, our children are our future. They will look after us when we are old and grey, they will continue to look after this country and provide for all of us as we move towards old age and they will pay the taxes to sustain the country. We must invest in them and in the family so that children growing up do not become involved in anti-social behaviour and do not wander the streets with nobody to look after them. We must ensure there is a proper family structure of which we can be proud. We must prioritise the necessary measures in terms of what we need to do next in the areas of child benefit, child poverty, the family and child care costs.
We must make a clear decision on parental leave, which I suggest should be tied into social partnership. Following the partnership talks and in next year’s budget, we should introduce paid parental leave for perhaps eight weeks next year for either parent. We could then increase it from eight weeks to 16 weeks, to 24 weeks and so on. If we do not make a commitment given the current position of the economy, paid parental leave will never be introduced and it would be a terrible shame to leave children and families that type of legacy.
In regard to childminding relief, I very much congratulate the Minister on the way he dealt with the social welfare issue and on the way in which people taking up this relief can pay social welfare contributions and build up stamps towards whatever benefits they wish to avail of in the future. It is smart and unique and is something of which we should be particularly proud. We spoke about childminding relief on many occasions in this House and suggested it to the Minister, the Minister for Finance and the Minister of State with responsibility for children. I was delighted to see it implemented and tied to the social welfare contribution. This radical and important relief gives a sense of equality and value to people looking after up to three children in their own homes and who can earn an income of up to €10,000 per annum.
It is all about joined-up Government. We cannot have child minding relief and child benefit if we lack other elements that allow flexibility in the workplace such as parental leave and support for organisations and companies that allow for shared working hours, mother hours and term-time hours.
The extension of carer’s leave from 15 months to two years is important. Someone came to me after the budget who was approaching the end of the 15 months and that person was delighted because it made a huge difference. The carer’s leave and carer’s benefit model is highly effective. Parental leave and benefit for the period of leave is the most logical next step.
Sometimes we ask if the €11 billion in social welfare makes a real difference to people’s lives. The respite grant makes a huge difference and the significant increase and universal availability for anyone looking after a child with a disability or an older relative are particularly welcome. They have made a major difference to the lives of these people who are providing such an important and valuable service.
We have spoken before about the effectiveness of the Department and its officials in communicating with people. We must recognise the changing society in Ireland and the many different nationalities working here. All information on benefits, particularly child benefits and the family income supplement, should be available to those who do not have English as a first language. Many workers in lower paid jobs whose first language is not English are entitled to support from the State. It is important, therefore, that they are made aware of the benefits and payments they can get under different schemes.
We appear to have stopped talking about rent allowance but spending it in the present way is a complete waste of money that is making private landlords richer every day. That money should be dedicated to the purchase of houses administered by the local authorities to build up our housing stock. We would also no longer need to rely on local authorities building 100 units each year. The rent allowance being paid every month should be used by a treasury management organisation to buy assets in order that we no longer make private landlords any richer.
I appeal to the Minister to examine the situation for those in receipt of the widow’s or widower’s pension who cannot claim carer’s benefit. It is scandalous. If I look after someone and my husband is working, I have an income disregard for his salary. If I am a widow or widower I can only get one pension from the State. That is not fair and must be changed.
I commend the Bill to the House.
Mr. Quinn Mr. Quinn
Mr. Quinn: I welcome the Minister to the House. We look forward to hearing his views each time he attends.
Each year when this Bill comes before the House, I look at it slightly differently from others. I am influenced this year by a conversation I had in January with the Secretary of State for Labour in the United States, a bright young Asian woman, the first Asian woman to sit at the Cabinet table in the White House. She talked about her objective and that of the Cabinet being the creation of the environment where the private sector can create jobs. That is what we would expect to hear from a Republican Government.
She then criticised other countries that allowed their costs to get so high that jobs became unsustainable, losing business to other countries. France was one of the countries that cropped up in the conversation. It did a wonderful thing for its citizens some years ago by introducing a 35 hour working week, with the objective of solving the unemployment problem because more people would be at work even though they were only working 35 hours. The result was the opposite because costs have gone up to the extent that it is no longer attractive for foreign direct investment. The French Government, in the last week, tried to address youth unemployment but because costs are so high, the effort to change the situation will not survive because of the outrage against it. The intention is good but it will be difficult to solve.
Where am I going with this? Listening to the calls for paid parental leave, I am concerned that if we do not watch carefully the costs we lay on industries that will create jobs in the years ahead, we will lose business to our competitors because we will be less attractive to foreign direct investment.
In recent years, younger people have forgotten what the situation was like 20 years ago. When my daughter left university in 1986, 37 from a class of 38 emigrated. If we are not careful we may find ourselves in the opposite position, we may be too complacent. I am looking at this Bill to see if there is a danger of that happening and I want to focus my contributions on just two aspects of this complex and welcome Bill, which I support — the child care allowance and the general question of pension provision.
I applaud the decision which makes the child care allowance available to the parents of all children, regardless of whether they are receiving child care outside the home. That is the right decision and was by no means obvious. These days we pay so much attention to getting more women into the workforce that we do not hesitate to discriminate in our tax regime against those women who choose instead to look after their own children at home rather than go out and work.
This is an issue that brings us right up against the question of whether we are running an economy or a society. If one views this question in purely economic terms, one will consider as an unalloyed good the fact that as many women as possible form part of the workforce. If, on the other hand, one views it from the point of view of society as a whole, one must then balance the desirability of women working, on the one hand, with the desirability of women staying at home to look after their young children, on the other. The forces of economics pull us in one direction while the forces of society pull us in the other.
This decision should be made at the level of individual families and the Government should be as even-handed as possible in the matter. There is no doubt that many families do not have a choice in this matter because simple economics force women to work, even though they would much prefer to look after their children at home. These economics are not totally outside our competence in that they are at least partially due to the manner in which we have allowed the price of housing to spiral out of control.
Notwithstanding this, the Government should not make matters any worse by tipping the balance against women who choose to be homemakers rather than employees. This is the reason that despite sympathising with those who found themselves caught up in the opposite trap, I consider the decision to introduce tax individualisation to be fundamentally wrong. At least this time around, the Government has not compounded its mistake and all families with young children will receive the new child care allowance, and that is a correct decision.
As to the question of the extent to which the new payment will defuse the child care problem we have ignored for so many years, only time will tell. At least, however, it is a step in the right direction and I applaud the Minister both for taking it and the manner in which it was taken. Senators Cox and Terry alluded to future citizens. When asked recently whether she worked, my daughter, who looks after four children at home, nearly went wild and argued that it was wrong to say the work she does is not real work. We all make the mistake of failing to distinguish between the work of rearing our future citizens, upon whom we will rely to create wealth when we need pensions in the years ahead, and those in formal employment.
Rather than focusing on the pension provisions provided for in the Bill, welcome and important as they are, I will address a broader issue. A few months ago, the Minister had the courage to fly a kite when he suggested that the time may have come to consider making it compulsory for everyone at work to provide for his or her pension, only to find that it was promptly shot down. While I can understand the reason for this, I was sorry it occurred. My objective today is to determine whether we can patch up the Minister’s kite and somehow get it to fly again.
Few people want to make voluntary provision for their pension. When one is young and at the beginning of one’s career, one fools oneself into believing one will always be young and healthy. Looking ahead to what will be one’s financial position nearly half a century hence requires more foresight than most young people aged in their 20s possess. After all, as someone pointed out to me recently, many people expect to win the lottery at least once in 50 years. Perhaps this is one of the reasons we do not start to make provision for our pensions at the start of our working lives.
Most people only start to consider providing for a pension, if at all, when they get married, by which time they are older and providing for a pension is more expensive. Moreover, this is a period in their lives when they must cope with many additional calls on their income. The result is that a shockingly small percentage of our population approach pensionable age with a proper provision for their declining years. This Bill shows that relative to other countries, Ireland provides comparatively generous State pensions. However, despite the generosity of our welfare system, the fact remains that it is difficult to live comfortably on what the State can provide. The real point is that if this is true today, it will be even more true in the future. The current system is possible only because we have a sufficient number of people at work to support the number of people drawing pensions. If this balance shifts, as it certainly will, the continuation of current benefit levels will quickly become unsustainable.
Given that, as individuals, we are reluctant to face up to the consequences of this challenge, we have, as a society, no option but to take collective action. All Governments have a responsibility not only to serve the voters of today but also to protect the interests of the next generation and the generation beyond that. If this necessitates making unpopular but correct decisions, so be it. No one ever said that government was about making only the easy decisions.
The only way out of the pension problem we face is to make it compulsory for everyone at work to contribute to their own pension. While one could argue that we do this already through the PRSI mechanism — providing for pensions was the original purpose of the scheme — we must face up to the fact that the sums simply do not add up in that regard. If people are to have decent pensions to provide for them in retirement, they must pay out more than they currently do. If they expect a future Government to play fairy godmother to them on this question, they are only fooling themselves.
By now we have had more than enough experience of the voluntary approach to know that it simply does not work to the extent required. Only a tiny minority of the population has proper pension provision and I forecast that the position will not change for as long as we continue to consider pension provision to be a voluntary matter. I accept this is a tricky subject and I do not propose to demand that the Minister address it given that he has already flown a kite which was shot down. Nevertheless, there is nothing outlandish in the idea that pension provision should be compulsory. Yesterday, I examined the approach taken by several countries which operate schemes of this kind, all of them with conspicuous success. Finland, Germany, Singapore and Switzerland operate compulsory pension schemes and Australia is, I understand, phasing in a new scheme. The Minister will know more about them than I do.
One of the great benefits of the compulsory approach is that people start providing for their pension from their first day at work. In other words, they start paying in to their pension at precisely the best time for them to do so. By putting aside money for their pension throughout their working career, individuals make it possible to get a decent pension at a reasonable cost, which is not the case if they leave the matter until they are in their 30s or 40s.
If, as an employer, I suggested to an employee aged between 19 and 25 years that he or she should set aside money for his or her pension, I would soon find that pensions are far from a major concern. Young people setting up home and having children are tempted to further put off making provision for retirement because they face many additional costs.
The Minister flew his kite and the vested interests promptly shot it down but that should not be the end of the matter. We simply cannot afford to let the matter rest. Instead, we must bring this horse back to the water again and again in the hope that one day it will see sense and begin to drink. It is a challenge which we cannot put on the long finger for too long. Someone must face up to it and I wonder whether this Minister will have an opportunity to do so.
Ms Ormonde Ms Ormonde
Ms Ormonde: I welcome the Minister to the House. This is the first time I have spoken on this subject in which I have never taken a major interest. I have, however, taken an interest in this Bill because more than €13 billion of taxpayers’ money is being invested in social welfare reform and pensions. It is necessary, therefore, to think clearly about how this money is being spent. I congratulate the Minister on changing the Title of the Bill to make it more interesting. This change alone enticed me to start thinking about the issues because previously I regarded social welfare, at least in some areas, as being about handouts.
The Minister outlined reforms to the social welfare code and pension schemes. The Bill will modernise welfare and pension provisions for vulnerable and needy people, improve the lot of lone parents and provide for child care and benefits. It introduces measures which will improve the quality of life for people who want an opportunity to make a contribution. From my experience of education, I have learned that many young people would have great potential if they could access training and education but are caught in a poverty trap. The Bill represents a golden opportunity to target these groups and remove them from that trap. I complement the Minister on the thought he has given to the matter, which I will not discuss in great detail because it is quite difficult to grasp.
I am not one for reading from notes because I do not get my message across when I do so, therefore, I will not read a speech but will discuss the problem areas I encountered when I did my homework. The Minister and I have discussed the reorganisation of pension rights on many occasions, particularly with regard to those aged 66 and above. He often noted that the people who are not on pension schemes also have to be looked after and I welcome the measures he has proposed in this area.
In light of the fact that we should be giving the fruits of the Celtic tiger economy to the most vulnerable in our society, I have taken a special interest in lone parents, who can now earn as much as €185 per week of which they can retain up to €146 if they work or access education or training. However, I find that a clumsy provision. The Minister is bringing forward proposals on lone parents and cohabitation in the context of accessing training and education. Perhaps we should not have brought this aspect of the Bill forward, given that we may introduce changes at a later stage. Will it be possible to introduce such changes without disturbing the provisions under discussion today? I am confused about this and wonder how the proposals brought by the Minister will impact on this aspect of the legislation.
Many bright 16 to 18 year olds become caught in the trap of being a lone parent, although they do not do badly because they earn the qualified lone parent allowance in addition to child benefits, which have been increased to €150 for the first two children and €185 for third and subsequent children. They also have access to employment and training or education. The provision becomes unstuck in this area but there is a significant potential for FÁS, which I condemn for not taking the opportunity to become more involved. Some of the courses it provides are no longer relevant to the Celtic tiger era and should be geared towards helping young people to access training and education. That represents a golden opportunity for them to retain their allowances, up to a certain level, while accessing the training and education needed to escape the traps that hold them.
The early child care supplement, a payment of €1,000 per annum for all children under six years of age, will make a difference to young people who find themselves in vulnerable situations. In addition, a child minding relief provides for tax free earnings of up €10,000. I congratulate the Minister on introducing a measure to require that people make PRSI contributions, which is important because it helps them to provide for their security.
With regard to pensions, it seems that anybody over the age of 66 can earn up to €100 while also retaining their non-contributory State pensions. That is to be welcomed because many people above the age of 66 do not consider themselves old. In this day and age, one should not consider the use of terms like “old age”. I have talked to people in that category and found them pleased with the provision.
This is a worthwhile and modernising Bill which makes me feel part of the system for the first time. Previously, I did not understand these allowances and schemes. While I welcome the reform of State pensions, I would like to see an emphasis placed on access to training and education by lone parents. We have the opportunity to lure them into the fine courses provided by FÁS and the education system. If we provide properly for those aged 16 and above, we will have done a great day’s work in helping them enter employment.
Ms O’Meara Ms O’Meara
Ms O’Meara: I welcome the Minister to the House. This debate, which I have followed on the monitor in my office, is a useful one and concerns important legislation. I acknowledge the work done by the Minister since his appointment to his portfolio and I would be party political and petty if I did not acknowledge that reform has been on his agenda and that he seems committed to bringing change.
I look forward to a thorough examination of the proposals published yesterday with regard to supporting lone parents. The Minister has signalled that we need to investigate the manner in which payments are made to lone parents and that it is time to modernise our approach to the issue.
In the past, the lone parent allowance, and before that the single parent allowance, came into operation and was to be welcomed. There were many cases of women on their own, trying to support themselves and their children in a state of poverty. The lone parent allowance, as it has developed over the years, has allowed many women, in particular, to support their children in an independent fashion. There have been complications, however, which the Minister pointed out in yesterday’s document. These include the issue of cohabitation, but other issues are also evident. I look forward to examining the relevant proposals in detail, as it may not be appropriate to comment on them now.
Other Members have referred to a number of issues that are relevant to lone parents, and I wish to deal with these also. Senator Ormonde finished on the matter of lone parents in the workforce. Many lone parents work, and we should not have the old-fashioned notion that they are all scrounging on the State, as this is no longer so. Public representatives sitting in clinics around constituencies meet lone parents who have many problems. I would always ask what are invariably young women whether they are on a training course, and if not, why not, and when they could begin one. I would also ask what job they could get on finishing such a course.
There is a core group of such people who may not even be thinking this way. I would say to such people that they are young, perhaps in their early 20s, with a child of three or four years of age. In 15 years these children will be ready to leave home, and the lone parents will only be in their 40s. Will these people look at a life without work, complete with boredom and dependency on the State? We must consider this question, as the Minister appears to be doing judging from reports in today’s newspapers. That is to be welcomed. We must examine this area as a generation of children is being raised in an environment where the family has no history of employment, or there is no experience of someone in the household being in employment. This cannot be considered a positive experience. We should consider how to support an entire family.
This leads to the issue of child care. The child care supplement is very welcome, although it amounts to under €20 per week. We should not be churlish and be too critical of it, but it will not be enough for many people given the high cost of child care. We should consider a series of measures that fully support those parents who wish to place their children in child care, and actively encourage those who may be considering the idea, or who may not have thought of it. This issue may be dealt with by the Minister with regard to some policy change in the future. Part of the problem is that the child care area is too segmented.
The support for community child care facilities, particularly those in receipt of capital funding under the EOCP, needs to be improved with regard to the staffing grant. In particular, we need more targeted investment and incentives in those child care facilities where lone parents are present, especially those being educated or trained. The direction and thrust of the policies, right across Departments, must be to encourage, support and enable parents, particularly low-paid or social welfare dependent parents who are in education or training. The supplement on its own will not be enough to do this, and other levels of support are required. Delivering these through community child care facilities would be useful.
Along with a number of my colleagues, I visited a project in Tallaght a number of months ago. The project was in a community with a high level of disadvantage. Like many other similar projects it depends on community employment schemes to staff the facility. It tried to run parenting programmes, for example, along with pre-schools in an attempt to get mothers to bring children in, even those mothers who were not working or in training. This is aimed at giving children the best possible start in life. We must consider targeting investment at this area. While welcome, the supplement is not high enough. It should be accompanied by other targeted investments to support the cohort of lone parents. The Minister knows of the type of people to whom I am referring.
I have noticed that a number of young women are now taking up child care as a career option. This is welcome as there is some flexibility with courses being far more widely available than they were, such as those being run through VECs and FÁS. Child care is developing as a career option because the industry is growing, and this makes the option attractive. This should be welcomed, as young women are being well trained, and their own children and the children they work with in their communities are going to be well supported by this type of education and training. It will stand to these people and their communities at every level. This is occurring for a variety of reasons, and I wish to acknowledge it.
The Minister mentioned combating pension poverty, and poverty among those dependent on the State pension. I welcome this also approach, but a number of actions should be taken on this front. While the value of the pension continues to rise, which is welcome, there is another side to the equation where pensioners, like others, are being badly hit by increases in bin charges and other services.
Free schemes make a difference, but there may be imaginative ways of extending such schemes, such as a free bin service. I have no idea what the cost of such a scheme would be or how it could be managed with private companies running the waste collection service. One of the major issues I hear of from pensioners is that a pension increase is often apparently followed by a bin charge increase. In many cases, the pension increase is effectively wiped out, and this bothers people. A few counties operate waiver schemes, but the free schemes make a difference to pensioners. Could we consider this in the context of pensioner poverty? It is simply a suggestion, and I have no idea how much it would cost.
Senator Terry raised the matter of older women’s pensions and I agree with her comments. That area is in dire need of consideration, and I ask the Minister to take on board what Senator Terry has said. I support her fully and look forward to the Minister’s response. The main points have been covered by other speakers, so rather than repeating what they have said, I welcome the legislation and the Minister’s reforming approach on this issue.
I would not like to discommode anybody by finishing early so I will discuss the issue of carers. Much has been done for carers in the past number of years. Whichever Government was responsible it should be acknowledged that we have finally given recognition to carers by the extension of carer’s leave. We must monitor the situation closely because the majority of carers are women, who can become lost because the work is home-bound and isolating. It is usually a full-time occupation and many also care for their own family. The only chance they get to state their needs is when a representative such as myself turns up on their doorstep. They have insufficient time to communicate to people the nature of their role.
I also welcome the Minister’s stated intention to change the names of some schemes. The simpler we can make their names the better because doing so makes them more accessible. Am I required to finish now?
An Cathaoirleach An Cathaoirleach
An Cathaoirleach: The Senator has a couple of minutes left.
Ms O’Meara Ms O’Meara
Ms O’Meara: I often ask people if they know about family income supplement and constantly promote it. Why is the take-up at such a low level? I would like to know because it is a very accessible scheme and is widely advertised.
I thank the Minister for his address and look forward to further debate on this important legislation.
Mr. Kitt Mr. Kitt
Mr. Kitt: I welcome the Minister to the House and thank him for his fine speech. I also thank Senator O’Meara for speaking at such length. I welcome this Bill, running through which the common theme is reform. Since taking office, the Minister has signalled a number of new areas in which he is interested, one of which is pensions, to which I will return later. In the last budget, the Minister for Finance, Deputy Cowen, discussed extending the SSIA scheme to promote pensions for people on low income, which I welcome.
The Minister referred to poverty traps and the need to meet targets that have existed since the Government came to power. He has targeted a pension of €200 since he took office. I welcome the provisions on income disregards, which will be appreciated by many people, particularly carers. The disregard has risen from €270 to €290 for a single person and from €540 to €580 for a married couple. Increasing numbers of people now qualify for that allowance. As with family income supplement, to which Senator O’Meara referred, people often feel they are not entitled to it. Upon making an application they are pleasantly surprised and find the income disregard a great help.
The increase in the respite care grant of €200, bringing it to €1,200 for each recipient, is also welcome. There seem to be major differences in subventions for elderly people in nursing homes throughout the country. The health boards used to review the situation and I now hope the Health Service Executive does so, because €1,200 is not as useful for respite in a nursing home in some parts of the country as in others. As the Minister will be aware, Galway does not have the same building costs as parts of the midlands or even rural parts of Dublin.
Carer’s benefit also needs to be promoted. The Minister stated in his speech on the budget, as did the Minister for Finance, that the benefit will, from May 2006, be payable for up to two years, an increase of nine months. The scheme has helped many people who have given up work to provide care. It is a simple scheme in comparison to other schemes involving benefits and needs to be promoted, though many are now aware of it.
The increase in fuel allowance of €5 per week to €14 is very welcome. The weather has been very cold in the past few weeks. Indeed, it was reported to be the coldest St. Patrick’s Day for 100 years.
An Cathaoirleach An Cathaoirleach
An Cathaoirleach: But not that cold for Galway.
Mr. S. Brennan Mr. S. Brennan
Mr. S. Brennan: Thank you, a Chathaoirligh.
Mr. Kitt Mr. Kitt
Mr. Kitt: It was cold for the people who travelled from Galway to Croke Park. The increase is very welcome and I compliment the Minister.
The package for care of older persons amounting to €150 million is also very welcome. Home help should be promoted, as should the nursing home subvention which I mentioned, improvements to palliative care and sheltered housing. Housing aid for the elderly, administered by the HSE, is an excellent scheme and requires greater funding.
The Minister has referred to pensions on many occasions. I tried to convey the importance of pensions to members of the farming community but it was very difficult to convince them to make a contribution to a social welfare fund for that purpose. A good scheme was devised in 1987 or 1988 whereby ten years of continuous contributions entitled one to a State pension. I applaud the Minister for changing the name of the old age pension to “State pension”, and that the phrase “old age” will no longer be used. People without ten years’ contributions will receive a pension pro rata, which is also welcome.
County councillors have also inquired as to whether they might make contributions to a scheme to qualify them for a State pension, but I will not go any further into the issue as it is very complicated. The farming community and self-employed welcome these provisions and there is now a good basis to review other areas.
I have raised the subject of missionaries with the Minister on many occasions. The habitual residence requirement has prevented many of them from returning to claim certain social welfare benefits. People think this is solely about pensions but it concerns more than pensions. It concerns a missionary who might wish to return to look after an elderly person and claim the carer’s allowance, which is disallowed at present because of the habitual residence requirement. It also concerns any medical treatment they might require, and disability or sickness benefit, now illness benefit. They are told that the habitual residence laws mean they do not qualify for social welfare benefits. The Joint Committee on Foreign Affairs, of which I am a member, has set up a sub-committee to try to make progress on this and I believe we will do so. I am determined that we will solve this problem. The sub-committee will be in constant touch with officials at the Department of Social and Family Affairs about the matter. I hope the Minister will be able to make proposals to deal with this issue, as it is an important matter for a small and declining number of people in the missions. Some want to stay out there while more want to return home. Whatever scheme the Minister comes up with should be supported.
I will address the issue of people with pensions outside the country. I welcome that the Minister has allowed people who work in the United States or European countries, for example, to add their contributions there to those made here. However, people who have worked in Great Britain, particularly England, now live in Ireland and are in receipt of a disability or incapacity benefit must sometimes go to the United Kingdom for medical examinations. This should not be the case. I can give the Minister examples and have previously written to him about people who lost their disability benefits and appealed here but needed to undergo their medicals in Newcastle-upon-Tyne. I am told that it is difficult to get there despite modern methods of transport. If these medicals cannot be arranged in the Republic, people should be allowed to arrange their medicals in Belfast and have them on this island rather than needing to travel to Newcastle-upon-Tyne. In fact, people have told me they would not mind if they could travel to London, Luton or somewhere with an airport but it would be better to have the medicals in Ireland and as close to home as possible.
I hope the Minister will examine this issue which affects a number of people with illness and incapacity benefits. To ask a person who is unwell to travel to Britain to undergo a medical is wrong and unfair. I hope a change can be made. I thank the Minister for introducing the Bill, to which he has given a strong theme of reform. I hope that he will be successful in making changes in the other issues with which he is dealing, particularly in respect of lone parents.
Mr. J. Phelan Mr. J. Phelan
Mr. J. Phelan: I welcome the Minister and largely welcome the Bill. To take up Senator Kitt’s last point, I also welcome the Minister’s launch yesterday of a discussion document regarding proposals for supporting lone parents. Going by the reports I read in today’s newspapers and heard in yesterday’s media, I will fully support the Minister in his endeavours to introduce reform in this sector. On the whole, it is fair to say that he is one of the more successful members of the Government. Despite being a somewhat reluctant occupant of his current position, he has managed to introduce a number of reforms in the social welfare area.
The Bill is a positive step and many positive proposals are contained therein although I have some bugbears concerning a number of areas. In my time in politics, one group with which I have had a lot of contact — as have all politicians — is carers. I regret that the Government has not done enough for people who provide the vital service of caring for family members in their homes rather than putting them in institutions and have saved the country vast amounts of money. I urge the Minister to examine a way of tackling this issue. Whatever about abolishing the means test, the thresholds should be drastically extended. Regarding the costs of lifting the thresholds vis-à-vis the benefits of looking after family members in their homes for as long as possible, it is clear that carers have not been adequately catered for. It is a sector that the State should support more than it has heretofore.
Spouses of self-employed persons are referred to in the Bill. Coming from a rural area, this brings to mind farmers’ wives, to whom Senator Kitt referred. Due to their husbands’ work, they have serious difficulties with regard to pension provisions. This issue, which not only includes farmers or people working in agriculture but everybody involved in self-employment of one shape or another, affects a whole group of people who do not have adequate pension provision and will be in an invidious position in their elder years unless the matter is addressed. I also agree with Senator Kitt’s comment on pension provisions for councillors. It is not an issue I will discuss today but the Senator spoke about how public representatives in local authorities throughout the country indicated their desire to be able to pay into a fund that would provide pensions for their retirement. The Government could usefully examine this matter.
Senator Quinn spoke about making it compulsory for people to pay into pension funds, which is a matter the Minister raised previously. Everybody already pays into a pension fund in the shape of the PRSI system. A case may be made for increasing PRSI contributions and ensuring that the increases go directly to the provision of increased pensions in the future. The problem with many of the new pension schemes being put in place is that the fat cats are getting their hands on people’s money and, when people investigate, they discover that their pension entitlements are considerably different from what they were led to believe would be the case.
I do not favour Government backing for every type of scheme but, when it comes to pension provisions, I would be more satisfied if I knew that the type of reform envisaged and any possible compulsory element would be done under the auspices of the Government, perhaps through the PRSI system or a new system rather than hiving off the matter to the private sector. There are many difficulties in that issue in respect of future pension provisions.
Following Senator Quinn’s remarks, another issue brought to my attention is that in the 1950s, 1960s and 1970s, a number of people were compelled to participate in pension schemes in the companies in which they then worked. I am not generally in favour of compelling people to pay into pension schemes as it should remain a fundamentally voluntary process, but if the Minister is looking to make provision for the future, he should examine a serious reform of the current PRSI system and use it as a mechanism to bring about such an event.
I will refer to the early child care supplement provision of €1,000 announced in this year’s budget. As Fine Gael’s finance spokesperson, I welcomed it on the day as it was and is a positive step. However, it is only a step. A payment of some €1,000 is a drop in the ocean compared with the costs of child care. If we are to provide child care support to families this figure must be increased.
I have received many representations from those with children older than five years. Such children do not qualify for the early child care supplement yet the parents have child care needs. They may finish work at 5 p.m. or 6 p.m. but their children finish school at 3 p.m. The task of minding these children entails a few hours per day and while those involved in full-time, permanent child care can make a living from their work it is difficult to find someone to undertake such work in a part-time capacity. If the Minister seeks to extend the early child care supplement or introduce new initiatives he should consider children in school who need child care between the time the child finishes school for the day and the time parents finish work.
Although it is very seldom that I praise members of the Cabinet, I welcome the Bill and the Minister’s initiatives, which take steps in the right direction.
Dr. Mansergh Dr. Mansergh
Dr. Mansergh: I welcome the Minister and the Bill. I commend the Minister on his efforts to reform the system. When the next history of the Department of Social and Family Affairs is written he will have many honourable mentions.
Social welfare has received substantial resources in recent years and payments now keep up with average real income growth, not just compensating for inflation. If one does not wish the poverty gap to increase, it is necessary to take this step. I welcome the new names the Minister has applied to various schemes. In the constituency in which I reside the point has been made that the terms “jobseeker’s benefit” and “jobseeker’s allowance” are, in some cases, aspirational. However, I do not make a serious objection to that.
Although it has not reached legislative form, I approve of the Minister's wish to make progress on the issue of lone parents. The scheme was introduced when people were balancing strong social disapproval with a duty to do something for lone parents. The climate has changed completely and the idea of social welfare espionage is inappropriate to the society in which we live today. I encourage him to bring such ideas to fruition.
As the Minister has been around for some time I had to smile at his statement that “child benefit is a most effective child income support mechanism”. He will remember, as I do, that 25 years ago the idea of providing money for child benefit was regarded as a waste of money. A former leader of our party once stated that if he had money to spare for social welfare, the last place he would put it was child benefit.
Mr. J. Phelan Mr. J. Phelan
Mr. J. Phelan: Which one was it?
Dr. Mansergh Dr. Mansergh
Dr. Mansergh: It is interesting how thinking has changed on this. We were not correct then but we have the correct attitude now. At that time it was easy to make that conclusion because payments were so small that even if one increased them they would not make a considerable difference.
The early child care supplement is welcome and it is a matter that wracked many Civil Service, advisory and ministerial brains in the late 1990s. While no one believes this is the complete solution, it is accepted as a foundation to be built upon when we have resources. The child care supplement has an immediate effect on child poverty and makes a major improvement to families with small children. Realism has finally kicked in regarding home child minding. The principle is that everybody must pay tax, irrespective of how they earn income, but pragmatism suggests we should encourage home child minding unless it is undertaken on an industrial scale, in which case moneys accruing from it must be brought within the tax system. Applying minimal PRSI payments to this work should also be welcomed.
Much discussion has taken place on pensions. Governments since 1997 deserve credit for considering the matter of pensions before it became a major crisis. We have examined the situation in continental Europe, where pensions have acquired a vice-like grip on large, continental economies. The Government has taken preventive action such as the National Pension Reserve Fund and the Minister’s encouragement of private pensions. This is not entirely unproblematic as people have mixed experiences of private pension funds and there have been many cases, across various places of employment, of shortfalls in contributions where set benefits should be provided. If Aer Lingus is privatised a certain amount of scrambling may take place to make up the gap between contributions and benefits.
I am not in favour of compulsion as that would effectively raise the tax or PRSI rate. That would send out all sorts of signals and we would have mixed benefits. I would be willing to support anything short of that.
It has always been frustrating that after budget announcements, particularly pension increases, the local authority raises rents. Given that there is little co-ordination on that, people do not get all the net benefit they may feel they should. I echo the point by another speaker on the value of housing aid for the elderly. It would make a significant difference to quality of life.
One must query the compulsory retirement of gardaí at the age of 55. Although this is not directly the Minister’s responsibility it was raised on the Order of Business here. One could quickly increase Garda numbers by making that retirement age voluntary. I echo what has been said about missionaries. I have received a representation that the system has been tightened against them. They were formerly able to claim a social welfare pension for the duration of visits home. They are like public servants or diplomats who go abroad and work for the State as they work on behalf of orders based in Ireland. The phrase “domicile” has gone out of fashion but used to be an important part of the tax benefits system and the Minister might examine this issue. Many councillors do a full-time job and should be entitled to at least a modest pension like anybody else. I commend the Minister on his work and on this Bill in particular.
Mr. U. Burke Mr. U. Burke
Mr. U. Burke: I welcome Deputy Brennan to the House and I welcome many of the provisions of the Bill before us. It is a substantial piece of legislation and great change will follow from its implementation. Has the Minister any indication of the costs of changing the names of the allowances? New application forms and supporting documentation will have to be changed as a result of this proposal. Does the Minister intend that the name changes will entail the inclusion of other situations not now covered? Disability benefit is to become an illness benefit. As public representatives we are all aware that social welfare officers and medical referees who examine people for disability would have immediately refused an applicant on the basis that he or she had an illness rather than a disability arising from an illness. A grey area will establish itself in people’s minds when new applications for this newly titled allowance are made.
The retirement pension is to become a State pension (transition). We can all envisage ourselves, currently or in the near future, in that area of transition. Maybe it is appropriate that we have it there to recognise the fact that some people will be allowed some element of earnings and work after the age of 65 or 66 years and still benefit from the allowance so that they can be eased out of the workforce. Is there a significance behind the name change? Will there be an improvement on the, in some cases, harsh, black and white decisions by medical referees and employment officers in the past? It is frightening to find out that, as the Minister stated in his address, half of the 2 million workers in the country face their retirement without any provision other than the State pension. Having given a lifetime of work it is disappointing that they cannot be recognised.
I will refer to an anomaly in the social welfare system that I have mentioned to the Minister and raised on numerous occasions here and in the other House when I was a Deputy. Many farmers, as self-employed people, having made pension contributions within the strict conditions of the scheme, found out at the end of the qualifying period that they benefited very little, if at all. Some people, because they had made contributions, for example, for five out of the ten years required for recognition of that scheme received half payment. Others fell short by a matter of a short period, for example weeks, in their contributions and have been excluded from the scheme. I have suggested before, and do so again, that many people and groups can purchase back contributions by paying a lump sum to the Department of Social and Family Affairs, or any other Department with which they were involved in this scheme. These self-employed people were not allowed to buy time and accreditation for the scheme. I ask the Minister to investigate; when he does so he will see that only a small number of people are in this situation and that it will take few resources to recognise them. As these people are often single, aging and living alone in a rural environment, the benefit that would accrue to them from the application of this would be immense.
I ask the Minister to examine this aspect of the pensions issue. This group feels aggrieved. It does not have much lobbying power and its members feel isolated and disappointed because, while the Department may have refunded their contributions, they have not had the same opportunity as many other groups in the workforce which can buy contributions by way of a lump sum, as is the case with early retirement schemes for teachers, gardaí and others in the PAYE system. It is a pity this group is omitted from such schemes. I ask the Minister to review this issue at the earliest opportunity, given that many have been penalised in the past.
The proposed changes to the means test are welcome. For those who have saved some of their earnings during extended working careers, the changes will allow for a certain amount of capital to be held by the applicant and-or the spouse of the applicant. At the least, they will have recognition and will benefit from a full rather than a reduced pension. It has often happened that pensioners would spent most of their retirement on a reduced pension due to having a small amount of savings whereas in many instances the families would earlier have gone without work income to more fully protect themselves by saving for a rainy day.
What is the position with regard to the early child payment? Media reports suggest it will be paid as soon as possible after the first quarter, which is April to August. There is no certainty in the process. The measure was announced in the budget in December but in all probability payment will be made 12 months after the original decision, which is a disappointment to many who embraced the idea following the announcement.
Having recognised the importance of carers, the Minister should clearly indicate that it is not intended to continue to means test carers. I do not know if anybody fully understands or recognises the contribution that carers make and the savings to the State that accrue from their work. Carers provide a wonderful service to people in need, whether family, friends or neighbours. I hope the means test will be eased out of existence and that certain allowances will be provided on a graduated scale.
Mr. Brady Mr. Brady
Mr. Brady: I welcome the Minister to the House and the opportunity to speak on this particularly innovative Bill. We have heard the Minister outline the statistics on spending and the doubling of the social welfare budget in the past six years to €13.5 billion in 2006. However, the Minister recognised that the issue is not just about payments or money. To deal with this sensitive and complex area and tackle the causes of unemployment and social disadvantage will take close study. The reform of any social policy must be tackled in a sensitive way and the Minister is succeeding in this respect. In recent years a number of changes have been made to the welfare system which have improved matters on the ground for people in their everyday lives.
In this debate and in previous speeches the Minister pointed out that every individual has potential, regardless of their circumstances, living conditions or educational background. The Bill recognises this point and changes the system that has been in place for a long time to benefit those who have been falling through the cracks. Every day of the week, people young and old, who have not kept up with the changes and opportunities which have arisen in recent years due to our increased prosperity and income, are falling through the cracks.
Of 80,000 lone parents who care for 130,000 children, few of whom I have experience did not want to get back to work or go on to further education. Some of the schemes introduced, such as the community employment scheme, which fulfilled a need at the time of its introduction, have outlived their usefulness. This is an area we must examine. The community employment schemes encouraged young people, in particular young parents and more particularly lone parents, to enter a cycle whereby they would join a scheme for a year, obtain an extension for a second year and then obtain a further extension for a third year. At the end of that time, they would have no qualifications.
While the scheme fulfilled a need when there was an employment shortage, those on the schemes ended up with nothing. Unfortunately, such people re-enter the welfare system and do not have an opportunity to move on. The Bill recognises that situations arise, particularly for lone parents, where support of the unemployed is required to ensure that no matter what the circumstances, they are encouraged to take advantage of the opportunities which arise.
It has been noted in numerous debates that training and education are the keys to employment. The more we can encourage and enable people to become involved in further training and education, the better. The Bill deals with this matter in great detail and takes it as a potential area for improvement, which must be welcomed.
The Bill also tackles pensioner poverty. For years, pensioners have complained that when they reached retirement age, they found it tough to cope with their basic needs, whether on a State contributory or non-contributory pension. Moreover, if such people had a small pension or top-up income as well as the State pension, it disallowed them from many other payments. The changes to the means disregards will provide an opportunity for many in this grey area. Such people must be catered for, which is the aim of the Bill.
People are entitled to a decent pension and a certain element of dignity. The quality of life of pensioners, particularly those who have served this country, needs to be seriously considered and investment made to improve it. Such consideration of pensions has been evident in recent years. If people wish to continue working after reaching retirement age, they should be encouraged to do so. The provision of a special earnings disregard of up to €100 per week for people who want to work after reaching retirement age gives people an incentive to do so. The matter of gardaí having to retire from the force at the age of 55 or 57 was raised earlier. However, I know of a number of gardaí who have gone on to work many years after reaching retirement age. In many cases gardaí do not have to continue to work for economic reasons, but in some cases where they have children at college they need to do so. If a person joins the force at the age of 18 or 20 and must retire from it at the age of 50, it is likely that the person will have responsibilities as regards children. A similar position applies to widows and widowers. Having regard to demographics, the reality is that unfortunately there are quite a number of relatively young widows and widowers who have young children. The will now have the opportunity of having the dignity to be able to get a job and support themselves and their family, and that is to be commended. That need is recognised in the Bill.
The child care supplement combined with the child benefit increases will directly benefit more than 260,000 families and will provide opportunities not only for lone parents but families where both parents are working. This measure is innovative and is one that has been discussed for many years. Provision is made in respect of child minding income whereby if a family member is available to mind one’s child, one may take advantage of that opportunity and formalise the arrangement by paying a small stamp which will qualify that person for other benefits further down the road. We have spoken about this matter for many years and it is welcome that this measure is now being introduced.
Lone parents face obstacles in gaining access to education and employment. The Bill will allow them to earn more and to take advantage of opportunities without jeopardising their entitlement to the benefits they already receive. The sensitive and complex issue of cohabiting has been tackled and resources used to monitor this area in the past can now be invested in other areas. That move is welcome.
Some 1 million of our people do not have pension provision and that needs to be seriously considered. Many other European Union countries such as Germany and France have major issues regarding pensions. Usually, when those countries sneeze we get pneumonia and end up in a position ten times worse. The national pensions review by the Pensions Board made three main recommendations including incentives similar to the SSIAs which are up and running, higher tax reliefs and options to defer the State pension. It is estimated that by 2050 there will be 1.5 persons of working age for every pensioner, the current position is that there are 4.5 persons of working age for every pensioner. We must plan for pension provision in the future. This Bill together with other enacted legislation lays the groundwork for a matter we must take extremely seriously; I realise the Minister is doing that.
Dr. Henry Dr. Henry
Dr. Henry: I welcome the Minister to the House and I also welcome his contribution. I congratulate him on the energy and imagination he put into his job. The Department of Social and Family Affairs is one of the most agreeable with which to deal. I warmly welcome the changes the Minister is proposing in this legislation.
The issue of lone parents in poverty is a difficult one. I am president of One Family and was also president of its predecessor, Cherish, for more than a decade. I realise, therefore, the difficulty in tackling the issue of lifting lone parents out of poverty. I, like the Minister, look forward to debating the proposals for supporting lone parents in the near future. It is essential that we try to tackle this issue, which is not only an Irish problem but an international one. It takes much more than one generation to lift a family up several rungs of the ladder.
I understand the reason the Minister seeks to address the issue by trying to get people back into education and back to work. That is something to which One Family has been committed for many years, albeit with moderate success. However, we still face problems such as child care. It is hard to encourage people to return to education or enter the workforce when only a modest supply of child care is available at a reasonable price. There are many issues we will have to move forward and I look forward to that debate.
People frequently comment on the amount of money given in child benefit, income support, medical cards and so on yet they see no improvement in the position. It takes quite a while to bring about an improvement in a situation and is usually inter-generational. The best thing we can do is to support those parents who desperately need support in order that their children will be able to fulfil their potential. What the Minister is trying to do in this legislation aims to achieve this and I congratulate him on that.
I am pleased the Minister has tried to recognise the plight — which is the only way I can put it — of carers. Frequently, women in their 30s or 40s, in particular, have to give up their jobs to look after elderly parents. If one is looking after children at least they get older and most of them are able to do more for themselves, but if one is looking after elderly parents, in general one’s workload increases. Sometimes when carers attended some of the committees, of which I have been a member, I often wondered who was more in need of help — the carer or the person for whom the carer was caring and frequently it was the carer. I am glad they have been given more money but they need much more help in different areas, such as job security when they feel they can get back into the workforce and in dealing with problems related to private pension schemes.
I am delighted that the respite care grant has been increased. I hope that all of us who are in a position to do anything about ensuring respite care is supplied in various institutions will do our utmost to encourage that. If the respite care is not available, it is impossible for these carers to get any time off from caring. I am sure the Minister and members of his staff have listened to people on radio programmes say what one weekend a month off would mean to them. That seems so little and it is extremely difficult for them. I am glad the Minister has increased the grant.
I am pleased about everything the Minister has done for older people in view of the fact that I am getting older myself, like everybody else, and we all must think about the future. I am glad to note the provisions in this area.
I want to raise a topic which has only become apposite since many more Irish married women entered the workforce. It is the issue of the plight of the working widows of Ireland whose husbands had paid for widows’ pensions for, say, 40 years in their PRSI contributions. Women who have been working outside the home have been paying PRSI and now find that when they finish working they will not get, as some of them expected, the widow’s pension from their husbands’ payments and their own entitlement to an old age contributory pension. This is causing great annoyance among this group. They did not exist on a large scale until recently. There are now women whose husbands paid for widows’ pensions for four decades and then died shortly before reaching retirement age. These women feel they should be entitled to the widow’s pension but, because they are working, not only do they not receive the widow’s pension but they must continue paying PRSI towards their own pension.
The Department has been in correspondence with me and the women in question and has explained the matter quite carefully. It informed us that the social welfare system is based on income replacement, with entitlement related to defined contingencies like sickness, unemployment, old age and widowhood. Under social welfare legislation, only one social welfare payment is payable at any one time, with few exceptions. This approach is common in most social security systems around the world and is intended to ensure that resources are applied to the best advantage in meeting the income needs of people who experience the contingencies covered.
The Department then explained that three main principles underline the operation of the PRSI system. The first principle is that only one income support payment may be paid at any one time. The second principle is the contributory principle whereby those qualifying for benefits must demonstrate an ongoing and genuine attachment to the social insurance system. The woman in question has paid PRSI contributions for decades. The final principle is that of solidarity. Under this principle, contributions paid by insured persons are not actuarially linked to benefits at the individual level but can be redistributed to support other contributors.
My correspondent, who is a very well-informed woman, correctly pointed out that Ministers are in a position to draw two pensions. It is possible for former Ministers to draw pensions while they are still Members of the Dáil or Seanad. She believes that she and other working widows are being treated in a very shabby fashion. I will not discuss the examples she has given me relating to other people who are receiving payments but who are perhaps less entitled to them than working widows, who have made considerable contributions to the social insurance system both directly and through their deceased spouses.
I accept the points made by the Department in its letter; however, it is rather hard that an individual like this woman must continue to pay PRSI for a payment she will never receive. She will never receive the old age contributory pension because she receives a widow’s pension. On the other hand, an individual like her might not receive the widow’s pension because she is receiving the old age contributory pension. A few women who have contacted me about this issue feel that one or other spouse has been treated rather shabbily.
I am aware that the situation is new and difficult and will cost a considerable amount of money to rectify. However, we are taking money from people to go towards pensions to which they might never be entitled. Perhaps the Minister could ask one of his officials to examine the matter when he comes into the House at the next budget because I am sure that I will hear from women in this predicament in the future.
Mr. Daly Mr. Daly
Mr. Daly: I will not unduly delay the Bill. I compliment the Minister on a very innovative and forward-looking piece of legislation. The Department of Social and Family Affairs has been one of the most innovative Departments during my years in the House. Its work is reflected in the way in which it has approached the changes in society over the last number of years and the very positive approach towards the provision of services to people in different localities. I compliment staff in regional offices on the advice and guidance they provide to people in respect of their pension entitlements and the very co-operative and positive way in which they deal with public representatives. Major changes have taken place within the Department with regard to the provision of services and informing the public about these services during the years in which I dealt with it. Many areas still need improvement in this regard. Many people have failed to claim entitlements because they were unaware of them. I understand the Minister noted a few days ago that a considerable number of people are losing money because they are unaware of the family income supplement, which would be a fairly substantial income supplement.
I will draw the Minister’s attention to a few issues in respect of this Bill. Farm assist is a supplementary payment for farmers who are earning very small incomes, possibly from dairy farming, in areas like the western seaboard. Many farmers in this group have been squeezed very tightly in the last few years, particularly as a result of the rising cost of fuel, and do not get the return from farming they once received. The farm assist scheme provides them with a supplementary payment. We must not lose sight of the fact that there are people in small farming areas whose resources are very limited and who depend on payments like farm assist or the supplementary welfare allowance. When he is streamlining legislation, the Minister should ensure that the position of farmers who receive payments under schemes like farm assist does not worsen as a result of legislative changes. I want to ensure that smaller farmers who currently receive farm assist do not lose out as a result of the changes set out in this Bill. I am sure that they will not lose out but it is important for us to draw attention to the possibility of such a scenario to ensure it does not happen.
I have met with a number of elderly people who are concerned about refuse collection. A considerable amount of refuse collection was previously undertaken by local authorities, most of whom had refuse waiver schemes for elderly people, pensioners and people with disabilities who were living alone. When refuse collection was privatised, as has happened on a wide scale in my constituency, many people were forced to pay refuse charges. Could the Minister examine whether it is possible to devise a scheme akin to the household benefits package scheme which would give elderly people, particularly those living alone, an entitlement to free refuse collection? There is evidence of an increase in the illegal disposal of refuse, which may lead to the burning of refuse and resulting environmental problems.
For a considerable number of years, different Departments, chiefly the Department of Agriculture and Food, have encouraged farmers, particularly those in isolated areas, to give more land over to forestry. Generous schemes were introduced to encourage farmers to plant substantial areas of land, which was frequently of poor quality but which would be very productive from the perspective of forestry development. This is not a debate on forestry but many farmers now receive an income from the returns from forestry. In many cases, this income is putting elderly people out of the range of pensions. As other speakers have noted, elderly people expect to receive pensions and it is very difficult to convince them that their income from forestry puts them over the income limit for a pension. Could some relief be given in respect of income accruing from forestry development, particularly on the western seaboard?
I received a telephone call last night from a woman who suggested that the Minister might examine the possibility of introducing a waiver for her motor tax as she is over 67 years of age and believes it would be very encouraging if she was enabled to continue driving.
Mr. S. Brennan Mr. S. Brennan
Mr. S. Brennan: I thank Members for a useful and constructive debate. We will be able to go into matters in more detail on Committee and Report Stages.
Senator Terry raised the issue of deferring the State pension and having an enhanced one later. This is part of the pensions review proposal, which is a good idea. I must consider how it will work and how much one will pay actuarially. I will need to do this in the proper context. Work is being done in this regard to see how we can deal with the matter as quickly as possible.
She also raised the issue of the qualified adult allowance, which used to be called the adult dependant allowance, being paid directly to qualified adults, who are usually women. I said previously that I favour this proposal. There is always a risk of it being misinterpreted. “Individualisation” is a phrase about which one must be careful in the welfare system because it can be misinterpreted. Having said that, it makes a lot of sense. The National Women’s Council is interested in it and we are doing work in that area. The Senator asked about increasing the allowance up to 100%, which would be more difficult because of the financial cost involved. While I do not envisage this happening, we are trying to reach some targets.
On making home-makers’ credits retrospective, I promised that I would examine this issue. On the abolition of the carer’s means test, I discussed the issue recently with my colleagues in the Dáil. While I have an open mind on the matter, and I have a budget of €140 million, I am not sure if it is the right way to spend the money. In general, means tests are a good idea because they focus and target the welfare money which is available. However, as means tests are sometimes not worth a candle, it may be better to adopt a universal policy. While I am not sure if we have reached that point, that kind of money would increase significantly the carer’s allowance and the thresholds for people. I will keep an open mind on the matter and return to the subject.
The Senator asked me to continue the FIS advertising campaign and so on. I hope to get statistics in the next few days on the effect of the campaign. I agree that the staff in the Department and the professional advisers did a good job in this regard and I hope the message hit home. If there is evidence that the campaign worked, we will run a similar campaign on a range of other benefits.
The Senator spoke to me on many occasions about the protection scheme for pension funds. There is one in the UK. I do not want to misrepresent them, but the message I am getting is that they would not set up such a scheme again. Rather than making pension funds more responsible, it appears it contributed to making them less responsible. Once a major safety net was being managed by the State, they very often gave up too easily and handed over the problem to the protection fund. This has resulted in the protection fund coming under serious pressure in the UK. I promise to keep an eye on what is happening. The scheme is in operation in another jurisdiction and I will wait to see if it works. The early indications are that it is not working in the way it was intended. Therefore, we must consider if there is a better way to protect pension funds and, more important, to protect the cash flow and income flow of recipients of pension funds.
Senator Cox referred to paid parental leave, which remains on the Government’s agenda. There have been expansions to unpaid parental leave. Different benefits have increased dramatically in this area in recent times. The number of weeks for parental leave has increased. I will continue to monitor this aspect to see what is possible.
The Senator also referred to the widow’s pension. I examined whether a widow who is a carer should receive a carer’s allowance as well as the widow’s pension. The problem is ring-fencing the payment. While it may be a mantra, it has to do with not paying two allowances to someone. I examined the issue in the budget but I had to back off for a number of reasons, including the cost element. Even by paying a half rate, if one included other groups, the cost would amount to approximately €23 million. If one paid the full rate, the cost would amount to approximately €50 million. The carer’s allowance for people over the age of 66 was increased to almost €200, which makes it the largest single allowance in the State. I thought that by making the carer’s allowance the highest allowance available, it would attract people onto that allowance and off the widow’s allowance. It may be better to continue to make the carer’s allowance attractive because, while it may not be possible to pay two allowances, people will opt for the higher allowance. This was the thinking behind making the allowance the highest in the system.
I believe in keeping all the systems under constant review to see what is possible. The all-party Oireachtas committee recommended movement in this area. One cannot confine the allowance to widows. Many other groups in society in receipt of other social welfare payments could make exactly the same claim. In fact, everyone on social welfare could say they want a second allowance to do caring if they are available to do so. The proposal is not as simple as it appears. I am disposed to the concept but it may be better to give carers solid income support. When they get onto that allowance, it would be the most attractive one.
Ms Cox Ms Cox
Ms Cox: It would be good if we could have a more detailed debate on the issue in the Seanad. We might invite the Minister to come back to the House to debate the issue.
Mr. S. Brennan Mr. S. Brennan
 Mr. S. Brennan: The Senator might table a motion on the matter.
Ms Cox Ms Cox
Ms Cox: We will do that.
Mr. S. Brennan Mr. S. Brennan
Mr. S. Brennan: I would be happy to address the House on the matter. At that stage, I would hope to be in a position to give Senators all the details.
I agree with the point made by Senator Henry that child care is crucial to lone-parent reform, which is at the heart of yesterday’s document. I hope the Seanad will find time to debate that report. I have asked the Chief Whip if we can have a debate in the Dáil on the report. It would be useful to listen to the debate to see what progress can be made.
Senators Henry and Cox raised the issue of widows who cannot benefit from their husbands’ PRSI contributions because they are not entitled to a second payment. I will consider this issue, which comes back to the principle of one payment. I listened to what was said today and I will consider the matter.
Senator Kitt raised the issue of aligning respite costs per county. As I am aware of the differences in the county system, which goes back a long way, I will monitor it closely. We have already discussed pensions for missionaries, which I am examining. Missionaries who return to Ireland and remain here permanently will qualify for pensions. If they come back permanently, the HRC is not an issue for them. The issue is whether one can pay a pension if they return for a couple of months and go away again, and what will be the implications for people who come back but who are not missionaries. We are all supportive of missionaries but once we sort that problem, would we then have to deal with all the NGOs which go abroad to work such as Trócaire, Gorta and so on? We would then have to go beyond them to other groups which go abroad for short periods — even business types. I am conscious of the issue and would like to sort it out. We have, however, made some solid progress on it and I look forward to hearing what the committee has to say.
The Senator also raised the possibility of people doing medicals in Ireland. I am not too familiar with that issue. It sounds unhelpful that someone must travel to the centre of the UK and I will see what the issues are in that regard. If they can be resolved, we will do so.
I have responded to Senators who are in the House but I have the responses to other Senators which I would be happy to give them. Most of them raised sensible issues about pensions and lone parents. I was particularly pleased with the fairly positive response to yesterday’s document on lone parents. We should not underestimate the size of that reform. It is sensitive and substantial and I look forward to discussing it with Senators as we go forward. I thank Senators for considering this comprehensive legislation which will help many people in their daily lives.
Under Standing Order 121, I ask the Leas-Chathaoirleach to direct the Clerk of the Seanad to make a formal correction to the Bill replacing the word “Act” in line 5 of page 29 with the word “section”.
An Leas-Chathaoirleach An Leas-Chathaoirleach
An Leas-Chathaoirleach: I will arrange with the Clerk of the Seanad to have that correction made.
Question put and agreed to.
An Leas-Chathaoirleach An Leas-Chathaoirleach
An Leas-Chathaoirleach: When is it proposed to take Committee Stage?
Ms Cox Ms Cox
Ms Cox: On Thursday afternoon.
Committee Stage ordered for Thursday, 23 March 2006.
An Leas-Chathaoirleach An Leas-Chathaoirleach
An Leas-Chathaoirleach: When is it proposed to sit again?
Ms Cox Ms Cox
Ms Cox: At 10.30 a.m. tomorrow.
Seanad Éireann 183 Social Welfare Law Reform and Pensions Bill 2006: Second Stage.