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Social Welfare Bill 2012: Second Stage (Continued)

Tuesday, 11 December 2012

Dáil Éireann Debate
Vol. 786 No. 1

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(Speaker Continuing)

[Deputy Joan Burton: Information on Joan Burton Zoom on Joan Burton]  In 2012 the deficit will be more than €13 billion, equivalent to more than 8% of GDP. With the single exception of Spain, which has a similar level of deficit but a lower stock of debt, no other EU state is adding to its debt more quickly than Ireland, despite the huge efforts that have been made so far. Discussions are continuing in relation to the promissory notes and other aspects of the banking debts imposed on the State by Fianna Fáil. I am confident that a positive outcome will be achieved that will contribute to achieving these aims and reducing the burden on the taxpayer.

This is the background against which the Government has had to frame the 2013 budget. It has been necessary both to increase tax and other revenues and to reduce expenditure. Spending on social protection accounts for nearly 37% of current Government spending and given the background I have outlined, it is simply not possible to exclude social protection schemes and services from consideration when it comes to cutting back on expenditure, nor is it possible to exclude PRSI from consideration when it comes to raising badly-needed revenue.

I fully realise that nobody in this House would want to cut social welfare and I certainly do not wish to cut child benefit, the respite care grant or the duration of jobseeker's benefit. We are all aware of people who are struggling to make ends meet, pay bills and put food on the table. The social protection system is an expression of solidarity with those who are less well off than ourselves. It supports social cohesion but it also sustains economic activity by maintaining incomes in times of recession. Securing the long-term viability of the social protection system is a vital goal that serves the interests of society as a whole, and not just those who directly benefit from social welfare payments.

I have long been of the view that the burden of resolving the financial crisis should not fall disproportionately on those who are dependent on social welfare for their income, whether they be pensioners, parents, children, the unemployed or people on a disability payment. People rely on social welfare as a safety net when they become parents, retire or become ill or injured. The unemployed rely on the social welfare system both as a safety net while they are unemployed and as a springboard to help them get back to work, education or training when they have been unlucky enough to lose their jobs. I also believe that social protection spending acts as a very important stimulus, as the money we pay out is recycled back into the economy. People spend their social welfare payments on themselves and their families. The money they spend supports shops and other businesses in their communities.

The comprehensive expenditure review, published last year for the period 2012 to 2014, provided for a reduction of a further €540 million in expenditure by the Department of Social Protection in 2013 as its contribution to the reduction in current expenditure of €1.7 billion envisaged at that time. However, the Government has decided that the adjustment to social welfare spending will be €150 million less than previously agreed. This means I am introducing savings measures of €390 million next year compared with the original figure of €540 million announced this time last year.

As I mentioned earlier, it is not possible to entirely avoid cuts in social protection this year. However, while social protection accounts for almost 37% of spending, it will account for less than a fifth of the total savings in current expenditure in 2013. This has allowed me again to preserve the core weekly payment rates while at the same time providing for the increasing numbers of pensioners, who represent a real demographic bonus to Ireland. We have more older people and they are living longer. That is something we as a society should celebrate, but it has a cost in terms of the social welfare budget. While I understand the disquiet felt by those affected by the measures in this Bill, it is also fair to point to the large numbers of social welfare recipients whose incomes are entirely unaffected by the budget because their payments have been preserved. For the second year in a row, there has been no across-the-board cut in weekly payments, which is a considerable achievement. This can be compared to the €16.30 per week cut which Fianna Fáil imposed on carers and people with a disability as well as jobseekers.

People can continue to rely on their basic weekly payment, which is essential in order that they can have a sense of security regarding their income. Pensioners and all those under the age of 66, such as people with disabilities and jobseekers, will have their weekly payments fully maintained. As a result, spending on social protection will again be more than €20 billion in 2013. Fianna Fáil's proposal for 2013 in its national programme for recovery was a spend of €18.5 billion - that is, additional cuts of a further €1.5 billion over what the Government has unfortunately had to face.

Deputy Bernard J. Durkan: Information on Bernard Durkan Zoom on Bernard Durkan Hear, hear.

Deputy Joan Burton: Information on Joan Burton Zoom on Joan Burton Members can understand the high priority the Government continues to give to the area of social protection for people relying on a social welfare income in these very difficult times.

The Government's determination to protect the most vulnerable welfare recipients by maintaining the level of core payment rates is strongly informed by the significant contribution of social transfers to poverty reduction in Ireland. As Members may be aware, official data show that in the last year for which figures are available, social transfers reduced income poverty by 60%, from 40% to 16%. If pensions are included, the impact on poverty reduction rises to 68%. As such, our welfare system plays a vital role in minimising poverty, and Ireland's performance on this score is the best in the European Union. This performance is rarely given adequate recognition in public debates about the impact of the economic crisis on the most vulnerable.

In that regard, I wish to acknowledge the support I received from the Opposition last week when I presented a request for a Supplementary Estimate to the Dáil. While we differ on many issues, it is clear that there is support on all sides of the House for the social solidarity that spending on social protection represents.

I am also pleased to have secured €30 million in new spending on employment programmes and child care places. This investment is consistent with the Government's priority of getting people back to work or getting them back to education or training in order that they will improve their chances of getting a job in the future. I hope that if this programme proves successful it will be seen as a small but progressive first step on the road to building a social protection system that will ultimately provide our citizens with better services.

Turning to the specific contents of the Bill, it provides for the following changes arising from budget 2013: changes in certain pay-related social insurance, PRSI, contributions; a reduction in the maximum duration of jobseeker's benefit; changes in the assessment of income from farming and fishing for means-tested social assistance payments; a reduction in the monthly rate of child benefit; a reduction in the respite care grant; abolition of the employer rebate in respect of statutory redundancy lump sum payments paid to employees; and facilitation of the recovery of a greater amount of overpayment through weekly deductions from social welfare payments. The Bill also provides for a number of miscellaneous amendments to the social welfare code, which arise mainly from a budget 2012 measure to provide for a new structure of reduced rates in the case of contributory pension schemes.

I propose to introduce major reforms to pensions policy next year, following publication of the OECD review of the pensions landscape in Ireland, which is due in April. As Members will be aware, I have previously signalled concerns about the current rules for the distribution of assets in the wind-up of defined benefit pension schemes that are underfunded.


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