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Financial Resolution No. 2: General (Resumed) (Continued)

Thursday, 13 October 2016

Dáil Éireann Debate
Vol. 924 No. 3

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  1 o’clock

(Speaker Continuing)

[Deputy John McGuinness: Information on John McGuinness Zoom on John McGuinness] Until such time as we instruct the Central Bank, the bank we own, to perform that very task and deal with debt, our economic difficulties will continue. The same applies in the case of mortgage holders and we must also face up to that issue. Little or nothing has been done for families who are in debt and cannot bring it under control. They are being threatened with homelessness because local authorities cannot respond to the issue. Nothing in the budget suggests we have heard their story and responded to it. That is where the budget fell down. It maintained the status quo and did not address individuals and business owners who need help to get on with their lives. This is a shame because it demonstrates that there is no new politics and there has not been a response to the citizens of the State.

Minister for Social Protection (Deputy Leo Varadkar): Information on Leo Varadkar Zoom on Leo Varadkar Budget 2017 aims to make sure everyone - the employed and self-employed; retired people and people with disabilities; carers and those who cannot work; people living in urban and rural areas; and the young and old - benefits from the recovery. It is a prudent budget in which there are no giveaways and the changes are modest. Nonetheless, more than 840,000 people will benefit from the first increase in weekly social welfare payments since 2009 and 650,000 people will benefit from the €5 increase in the State pension.

The social protection package ensures the recovery will benefit everyone, with no one left behind. It sets out to make work pay through reforms to the PRSI system, including a new deal for the self-employed, and introduces a number of targeted measures to assist lone parents, farmers and school children. From March onwards, there will be a €5 increase in the headline weekly rate of the State pension, with proportionate increases for those on reduced rates and qualified adults. The programme for Government commitment is that pensions will increase above the rate of inflation and this measure delivers on this commitment. The Fine Gael manifesto commitment was to introduce a €25 increase in the pension over five years and we are well on track to deliver on this commitment. Pensioners will also benefit from the reductions in prescription charges being introduced by my colleague, the Minister for Health, Deputy Simon Harris. In the area of taxation, pensioners with savings will benefit from reductions in DIRT. In addition, the Christmas bonus will also be payable to pensioners in December of this year at an increased rate of 85%.

The headline rate of weekly benefits for adults aged under 66 years will also increase by €5 a week. This is the first increase since 2009. Approximately 840,000 working age people will gain from this increase. "Working age" is a technical term and most people do not know what it means so allow me spell it out. It covers people in receipt of more than 30 different payments, including invalidity pension, disability allowance and blind pension; illness and partial capacity benefit; occupational injury benefit; widow’s, widower's and surviving civil partner’s pensions; one-parent family payment; back to education allowance; maternity, paternity and adoptive benefit; farm assist; carer's benefit and carer's allowance; pre-retirement allowance; supplementary welfare allowance; back to work enterprise allowance; jobseeker’s benefit, jobseeker's allowance and jobseeker’s transition payment; and employment support payments such as community employment, Tús and the rural social scheme.

I note that under many of the proposals made by the Opposition parties, many of these groups would not have received anything and others would have received an increased payment of less than €1 per week. I was strongly of the view that everyone should receive the same increase in the same month. The €5 increase in weekly benefits is permanent and will apply from March. While it would have been preferable to apply it from the start of the year, to afford to do so would have required excluding certain groups, which I could not countenance, or the introduction of an increase of less than €5, which I did not want to do. If we are to recover fully and build a more prosperous country, it must be on the basis of social cohesion and a united society, not one in which groups are divided against each other, young or old, sick or healthy, workers or unemployed, disabled or able-bodied people.

I have been encouraged by the understanding reaction of people to the delay in the implementation of the increase in payments to ensure their neighbours, other family members, friends and colleagues could benefit to the same extent. In total, almost 1.5 million people will benefit from the modest increases in the weekly rates of payment. The precise date in March will be announced on the publication of the social welfare Bill in two weeks.

A social impact assessment of the social welfare budget package, which uses the ESRI SWITCH model on a non-indexed basis, was published today. It finds that people in the lower income quintile gain most from the budget 2017 measures in percentage terms. The ESRI recognises explicitly that this was as a result of the inclusion of the weekly rate increase for working age rates of payment. The budget is, therefore, a progressive one that provides modest gains for all. The ESRI analysis includes the tax package and it finds that while everyone experiences modest gains from the budget, as a result of the social welfare package and the inclusion of non-pensioners and pensioners, those on the lowest incomes gain the most in percentage terms. This is true for deciles and quintiles.

The self-employed is a diverse group which makes a big contribution to society and the economy. Budget 2017 expands the new deal for up to 380,000 self-employed people who pay PRSI at the S class. This group includes farmers, professionals, taxi drivers and tradesmen who will have new benefits extended to them from next year. They will also benefit from an increase in the earned income tax credit and the extension of entrepreneurship supports.

From March onwards, class S contributors will be able to avail of treatment benefit for the first time, which includes free eye and dental exams, and contributions towards the cost of hearings aids and contact lenses required for medical reasons. In addition, and more significantly, self-employed contributors will be eligible for the invalidity pension. For the first time, this will give the self-employed access to the safety net of State income supports if they have a serious illness or injury that prevents them from working without having to go through a means test. As a result, self-employed people who become ill or are injured and cannot work will no longer be told there is nothing for them because they have savings, assets or partners with a job. They will be able to avail of the same non-means tested payment as employees. This will be available by the end of 2017, most likely in December.

There will be no PRSI rate increase in 2017. Some people called for self-employed persons to have the option of paying a higher rate of PRSI to receive more benefits. On this occasion, I have decided to extend benefits without asking the self-employed to pay an additional contribution. These measures are all part of the Government’s policy of making work pay and encouraging self-employment and entrepreneurship.

A range of dental and optical benefits will also be restored. These will benefit all PRSI paying employees and the self-employed, benefiting approximately 2.5 million people. Subject to successful negotiations with dentists and opticians, which I hope will be easier than the negotiations with general practitioners, the free scale and polish of teeth and free glasses from opticians will be restored by the end of next year.

The budget also includes a package of measures supporting lone parents to encourage them into the workplace and education and help to reduce their child care costs. All lone parents on the one-parent family payment, the jobseeker’s transition payment and jobseeker's allowance will benefit from the €5 increase in the weekly rates of payment. A new €500 annual cost of education allowance will be made available to back to education allowance recipients with children from the next academic year in September. This will help all parents, not only lone parents, to return to education.

The income disregards for the one-parent family payment and jobseeker’s transition payment will increase by €20 from 1 January 2017, subject to the passage of the social welfare Bill. This will partially reverse previous reductions and encourage single parents to remain in or return to work. The increase will benefit lone parents earning more than €90 per week. For those earning €110 per week or more, it will increase the combined social welfare and earnings income by up to €15 per week. The single affordable child care scheme being provided by the Government will also significantly reduce the cost of child care for lone parents and is a step change in State support for child care.

The focus on children in the budget is on the provision of services, rather than income supports. Ireland already has the third highest child benefit payment in the western world. Where we fall down is on the cost of education and child care and access to services such as health and speech and language therapy. For this reason, resources will be focused on these areas in future. The budget includes the child care package I outlined, the extension of medical cards to all recipients of domiciliary care allowance and measures in education, for example, an increase in the number of teachers and special needs assistants and better and new school buildings.

For my Department, the main budget provision for children is increased funding for school breakfasts.

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