I move:
That a sum not exceeding £1,253,554,000 be granted to defray the charge which will come in course of payment during the year ending on the 31st day of December, 1984, for the salaries and expenses of the Office of the Minister for Social Welfare, for certain services administered by that Office, for payments to the Social Insurance Fund, and for sundry grants.
This is the figure which appears in the Estimates volume and which must be provided by the Exchequer. It includes provision for the increases which were announced last January in the budget. The estimate shows an increase of some £160 million over the outturn for 1983, and the bulk of the increase is made up of the carry-over effect this year of the 1983 budget increases, the extra cost of this year's budget increases and provision for a higher number of unemployed. The continuing high level of unemployment in particular requires a very substantial provision in the Estimate.
The Estimate of £1,253,554 million for this year is, as Deputies no doubt appreciate, a net figure only. It is the amount which must be provided by the Exchequer. To arrive at the total expenditure on social welfare services it is necessary to take into account also the full expenditure of the Social Insurance Fund, the Occupational Injuries Fund and the Wet-Time Fund, which are financed mainly by contributions from employers and employees. When account is taken of this additional expenditure overall spending on social welfare in 1984 is expected to amount to £2,156 million. Of this, spending on social insurance benefits amounting to £1,147 million is the largest element. Expenditure on social assistance will amount to £902 million, while occupational injuries and wet-time benefits will cost about £23 million. The cost of administering all these schemes will be £84 million or about 4 per cent of the total expenditure.
It is not so very long ago that the Department of Social Welfare were being criticised for the low level of their expenditure as a percentage of gross national product. Expenditure on social welfare has, however, been taking up an increasing share of GNP. Ten years ago about 10 per cent of GNP was devoted to social welfare. By 1981 it had risen to 11.6 per cent and this year it is expected to be about 14.8 million.
The wheel has, however, now come full circle on this issue and the impact of social welfare spending on the economy has been the subject of much critical comment, especially in recent time. Concern has been expressed that the percentage of GNP required to meet these payment will in future years continue to grow beyond a level which is supportable. I fully appreciate the concern expressed, but I am equally conscious of the realities underlying the situation. The Government are only too keenly aware of the problems posed for the country in the area of the public finances, and the containment of those finances to an acceptable level is a priority matter in the overall area of Government policy. There need be no fear, therefore, that the Government will indulge in such measures of expenditure as would add to the difficulties in this area.
I want to refer to the high dependency ratio of population. It is of the utmost importance that we do not lose sight of the need to protect the most vulnerable groups, and we must ensure that the resources to meet their essential needs are provided.
Because of the demographic structure of our population with its high dependency ratio of the very young and the old, by comparison with the active working population, it is inevitable that the cost of social protection will be a matter of concern in the years ahead. Proposals are put forward from time to time for radical changes in the structure of the system to enable it to meet more effectively the burdens with which it is faced. I have seen it suggested that we are approaching the stage where the distinction between social insurance and social assistance payments should be re-examined. It is important to remember, however, that even with the current high level of unemployment, slightly less than 30 per cent of the cost of social insurance benefits is met by direct Exchequer subvention. The remaining 70 per cent of the cost is met out of the pay-related contributions paid by employers and employees. These contributions form the basis of a specific right to benefit guaranteed by statute which is not subject to a means test. As a result contributors more easily recognise the end result of making contributions to maintain a certain level of benefit.
If the insurance concept were to be abandoned, the question of financing would become of vital importance. Given the financial constraints that exist at the present time and that are likely to exist into the foreseeable future, I cannot visualise a free-for-all system of payments where everyone received payment regardless of means. The cost would be enormous and could result in heavy increases in general taxation. I cannot see that approach commending itself to the many people at different levels of our society who maintain that even the existing burden of taxation is far too heavy.
The only alternative would be a wholly means tested system of payments. Neither do I believe this would find general acceptance. It would be very costly to administer, requiring many additional civil servants at a time when there seems to be a general consensus that the existing numbers in the public service are too high. I do not believe, either, that there is any substantial number of the population which would prefer a means-tested system to one which was available without a means test. If evidence of this is needed, we need look no further than the controversy which has arisen over the "farmers' dole"— I use that phrase — where the Department has been obliged to abolish the notional system, under which unemployment assistance was available to certain smallholders irrespective of means, and replace it by the standard means-tested system of unemployment assistance.
Now I want to refer to the national income-related pension scheme. I would, therefore, think hard and long before embarking on a fundamental re-appraisal of the system in that direction. Indeed, my strong inclination would be to go the other way. I have before the Government at the present time proposals for a national income related pension scheme. The funding of this scheme is based on the social insurance contribution principle and it will cover for the first time self-employed workers as well as employed workers. The self-employed at the present time rely on the social assistance schemes paid for out of general taxation. I think it is time they contributed to the solidarity of the social insurance system by making an appropriate level of contribution in return for which they will qualify for the various pensions of that system. I hope they will welcome the new plan as a forward looking provision for their social betterment, as well as being a significant addition to the general social fabric of the State.
The new rates of benefit and assistance payments and the changes that are being made in the social insurance and assistance schemes have already been dealt with in the House during the debates on the budget and more recently on the Social Welfare Bill. There are, however, some points which I would like to refer to again.
Regarding unemployment, I mentioned earlier the fact that provision has been made in this Estimate for an increasing number of persons who are expected to be unemployed. The estimated cost of unemployment payments this year is £615 million, or about 28.5 per cent of the total estimated expenditure on social welfare services. Such a level of unemployment is a cause of deep concern, not only because of the severe strain it places on the Exchequer by reducing income and increasing expenditure but also because of the drastic impact such a situation has on the lives of so many of our people. The level of unemployment has been clearly identified as the most important issue facing the country at the present time and is one which will require sacrifices all round if adequate measures are to be devised to reduce it.
I have spoken with sympathy and understanding on many occasions of the plight of those people who are unfortunate enough to be unemployed and I have laid particular stress on my concern for the long-term unemployed. On this occasion last year, when speaking on the 1983 Estimate for my Department I promised to see what could be done to improve the lot of the long-term unemployed at that point in time. As a result, special recognition has been given to their plight. An additional increase of 5 per cent was introduced last October for those who were unemployed for 15 months or more. Furthermore, the increase being awarded to them from next July is 1 per cent higher than the level of increase that will apply to other social welfare recipients. I will continue to keep under review the situation of this group of people who now number about 75,000.
Regarding the enterprise allowance scheme, there has been a very encouraging response to this scheme which was introduced at the end of 1983 and is administered by the Department of Labour. This scheme provides financial support for unemployed persons who want to start up their own businesses. People accepted into the scheme can qualify for a weekly allowance for the first year to enable them to get their enterprise off the ground. In order to give further encouragement and support to the unemployed willing to start up in business, arrangements are now being made that the pay-related benefit they would have received if they had remained unemployed can be paid to them as a lump sum. This will be available to meet the capital expenses of opening a business. It is a truism that the only solution to unemployment is the creation of employment, and I believe that the undoubted attraction of this scheme for a significant number of the unemployed is an important step in that direction.
Regarding voluntary work for the unemployed, during 1983, a voluntary work scheme was introduced to encourage people receiving unemployment benefit or assistance to do voluntary work. Provided the unemployed person is still available to take up employment, and is actively looking for employment, he may do voluntary work without affecting his entitlement to unemployment benefit or assistance.
The scheme covers many forms of voluntary work, including helping the sick, elderly or handicapped, or helping community groups or residents' associations.
This type of voluntary work will benefit the unemployed people involved, by developing their skills or by providing them with work preparation. It will also, of course, be of great benefit to voluntary organisations and to the community. It is hoped that by the introduction of this scheme local voluntary and community groups will be encouraged to look for ways of getting unemployed people involved in voluntary work.
I now refer to unemployment benefit assistance for claimants on holidays.
Since the beginning of 1984, recipients of unemployment payments who so wish may take an annual holiday within the State. When they return, they will be allowed to "sign-on" retrospectively, and will then receive payment for the period of their holiday. Needless to remark, notification of intention to avail of this provision should be given in advance to the supervisor at the employment exchange, otherwise there would be considerable difficulty.
On the use of social welfare funds for job-creation projects, it is suggested from time to time that moneys spent on unemployment payments would be better used in creating jobs for the unemployed or in maintaining the jobs of those threatened with unemployment. However, there are some general points that should be taken into account by those who advocate State employment of people on some form of public "make-work" projects.
One common error often made in comparing the cost of State employment with the cost of unemployment payments is to ignore the cost of materials, capital goods, supervision, overheads, employers' PRSI contributions etc. Ignoring these items can have the effect of reducing the apparent cost of employment by nearly 40 per cent.
In cash terms, the cost to the Exchequer of State employment is at least twice as much as the cost of unemployment payments. For instance the net cost of creating a job in the public sector at a weekly gross wage of £100 for a single man with no dependants would be over £110 compared to the maximum unemployment assistance payment appropriate in his case from July next — long duration — of £32.80 weekly. At the other end of the scale, in the case of a married man with two children on unemployment benefit, the net cost of providing the same job would be £118 compared to the cost of his unemployment benefit and pay-related benefit payment of £62.
The foregoing examples are based on an average wage of £100 per week. The average weekly earnings — men and women — in transportable goods industries are estimated at £143 for 1983 and for males only at £165. In public works projects, the State is generally obliged to pay the "going rate" rather than a low wage and the trade union movement would obviously oppose any scheme that smacked of cheap labour. However, even if wages paid to an employee were as low as the welfare payments, in which case his take home pay would be less than his welfare payments after PRSI and perhaps PAYE the net cost to the Exchequer would in general be over 50 per cent for employment rather than for welfare payments.
I hope that in that regard the cost factor of some of the very simplistic assertions about taking people off the dole, off unemployment benefit and assistance, and putting them into public works employment, which comes from persons from whom one would expect a higher degree of awareness, will be brought home to them. I am sure when they realise the double cost of doing it, at least 50 and probably 75 per cent to 100 per cent extra in many instances, they will have second thoughts about the superficial merits advanced in favour of their case.
Another basic difficulty with this type of suggestion is the conflict with the statutory provisions governing social welfare funds. Under existing financial procedures, monies voted for a specific purpose cannot be diverted to other purposes, no matter how meritorious the intention may be. It is considered, therefore, that there are strong reasons for keeping the unemployment payment schemes separate from the area of job creation or job subsidy. These schemes have very specific functions, and it is not possible to reconcile these functions with the concept of paid employment without radically altering both the scope of the schemes and the fundamental principles on which they are based. That is not to say that in relation to the particular schemes that have been advanced, the enterprise allowance scheme and the many other schemes in existence, that we cannot dovetail these schemes into the structure of the unemployed.
I now come to the educational courses for the unemployed. The question of unemployment payments to unemployed people who wish to take up adult and continuing education courses, is another area which is the subject of much discussion. The purpose of the Unemployment Assistance and Unemployment Benefit Schemes is to provide income maintenance for persons who are involuntarily unemployed. It is a fundamental requirement, laid down in statute, that all claimants must be available for work. There is no specific provision in the Social Welfare Acts which debars unemployed people from participating in educational courses, but any claimant who fails, by virtue of his participating in an educational course, to satisfy the availability condition would be liable to have his or her claim disallowed.
Whether a person is available for employment is a question of fact to be determined in the particular circumstances of each case. In general, any educational course being pursued by an unemployed person which involves a high degree of commitment by him is likely to render him ineligible for unemployment benefit or unemployment assistance. For instance, students attending college full-time by day would not in the normal way be eligible for unemployment assistance and unemployment benefit. Such students might argue that they would discontinue their studies if they obtain or are offered employment, but the general view would be that the commitment they have shown by applying for a place in college, the payment of fees etc. would indicate that they are not genuinely on the labour market.
It is accepted that in times of high unemployment there should be every possible encouragement to unemployed people to use their time constructively. However the provision of such encouragement does not fit easily with the unemployment payment schemes, which must contain a significant element of control.
The best way to encourage unemployed people to take up activities of this kind may be to remove them from the live register and make payments to them under independent arrangements. Unemployed people who participate in training courses approved by agencies such as AnCO, for example, are treated in this way. Similarly the Government encourages unemployed people to start their own businesses through the enterprise allowance scheme. In all these cases, it is found that the best approach is for entitlement to unemployment payments to cease in favour of payments from the particular scheme in question.
The whole structure and concept of employment in industry in the private and in the public sector has changed dramatically in the past ten years. Those of us in our late 40s or 50s tend not to appreciate the extent to which modern industrial technology has passed us by. We think in the concept of the 1950s and 1960s. It may be — and here I may sound somewhat heretical — that the very success of technology and western industrial society has created the situation regarding unemployment. Unemployment is virtually a product of success. Within the public sector there has been the development of massive computerisation. In the private sector one could go through factories without meeting many workers and in some public sector areas there are very few people employed. The success of technology and modern administrative methods have created massive unemployment. It is my view that even if we had growth rates of from 3 to 6 per cent per annum in the economy it is quite unlikely that the impact on unemployment would be substantial.
My general point is that what is at issue is a totally new concept and understanding of the meaning of unemployment and work. We may reach a stage, particularly in the advanced western countries, where the idea of a person going through an educational course and then getting a nine to five job will be changed totally. We need new concepts with regard to education, work and income distribution. I believe that what is at issue on the social policy side is how we distribute on an income maintenance basis the resources arising from new technologies, automation and computerisation. Above all, how can we ensure that people have a meaning to their lives when in future they may never work in a factory because of automation. Even now there are few jobs in factories in the conventional sense that we knew when we grew up in the 1950s, 1960s and 1970s. Politicians in particular have not addressed themselves to the situation. Politicians who make the point that, if the unemployment figure is brought down to 150,000 or 180,000 or if it does not exceed 250,000, we can regard that as a bench-mark of economic progress and success are deluding themselves about the true impact of that kind of data.
I hope that within the body politic there will be objective discussion as to what constitutes employment, education and income. We have not thought about those matters in much depth. To that extent we are all conservatives and perhaps we should try to break out of that mould. It is in that context that I wish to deal with unemployment assistance for smallholders because it is in this area that that dilemna is posed in its most acute form, namely trying to relate unemployment assistance and income maintenance to agricultural production which is what the scheme for smallholders is supposed to be about.
I think it appropriate to refer to the widespread publicity in recent times given to the question of unemployment assistance for smallholders and it is perhaps as well to outline briefly the history of this issue. Until 1965 smallholders qualified for unemployment assistance under the general means-tested principles set out in the legislation for that scheme. From that year, however, a special scheme was introduced for smallholders in specified areas. Under the scheme the smallholder was deemed to have a notional yearly income based on the PLV of his holding. He then qualified for unemployment assistance having regard to the notional income irrespective of his real income. This scheme with variations one way or another remained in existence until 1982.
A High Court action had been brought by a number of individual farmers contesting the constitutionality of certain sections of the Valuation Acts. In a judgment given on 30 July 1982 the High Court declared that the use of the poor law valuation system for assessing income from land was no longer lawful. Arising from this judgement my Department received legal advice that the continued use of the notional method of assessment of income for unemployment assistance purposes based on PLV was equally no longer lawful and should be discontinued. My Department were obliged to take action in the matter and the notional method of means assessment was abolished in the Social Welfare Act, 1983. Approximately 12,500 smallholders were involved and while no new cases were taken on, existing recipients retained their entitlements until their means could be factually assessed. The process of assessment commenced in May 1983 and to date approximately 8,500 cases have been re-assessed, leaving 4,000 outstanding. The process of re-assessment is, therefore, well on the way to completion.
During the debate on the Social Welfare Bill there was considerable comment on and criticism of the question of applying factual means tests to smallholders. The position now is that under the law uniform provisions relating to means testing are laid down and apply equally to all whether they be from a rural or urban environment. There is no question of discriminating against smallholders or anybody else. The scheme of unemployment assistance is a part of the social welfare code and I hope all will agree that there is nothing wrong in applying equal standards all round.
Means tests are carried out by social welfare officers who undergo a comprehensive training programme and to guide them they have detailed instructions which are applied uniformly. Furthermore they are working under the control of district supervisors who have many years of experience in this aspect of their work. The purpose of the exercise is to determine the facts, and the officers of my Department have no vested interest in denying to any person his statutory rights. I would like here to pay particular tribute to the staff involved in the means testing exercise a number of whom have been the subject of much unfounded allegation and unfair and unwarranted criticism, some of which has, unfortunately come from this side of the House. Indeed, as an indication of my concern in this matter, I met representatives of the Civil Service Executive Union and assured them that I deplored the unfounded criticisms to which staff had been unfairly subjected. I have personally looked into this matter in considerable detail and I am fully satisfied that the officers involved were carrying out their job impartially under very difficult circumstances.
I am sure that Deputy O'Hanlon agrees that there is always the mythical case of the Fianna Fáil smallholder who is allegedly being hounded by a social welfare officer who supports a different party and the same applies to the mythical Fine Gael or Labour smallholder who is allegedly being hounded by the social welfare officer with Fianna Fáil leanings. It is remarkable that social welfare officers have a enormous political profile in the eyes of so many people and it is a unique aspect of public service employment. However, during my time in office I have never received concrete information relating to a case which would warrant even sending for a review of the file in question. I urge politicians to refrain from stirring up trouble in this regard. I am quite satisfied that social welfare officers apply the system as objectively and fairly as possible throughout the country, bearing in mind that, very often, they get very little assistance in regard to basic information.
It would, I think, be appropriate to take this opportunity of explaining to the House in some detail the methods used to assess the means of smallholders. Under the law what must be assessed is the yearly value of the advantage a smallholder derives from his holding. The basis of the calculation of farm income is normally the net income over the 12 month period prior to the investigation of means. Under arrangements which I made some while back the claimant is notified in advance that the social welfare officer will call and in the advance notification details are given of the items of income and expenditure which are taken into account in the assessment as well as the documentation which the social welfare officer will require. During the course of the interview details are ascertained of gross income from farming activities such as the sale of stock, crops or other produce, sale of milk to creamery and so on. It there were exceptional circumstances associated with the particular year in question, allowance would be made for this. Account is also taken of additional income, for example, from letting of land, hiring out of machinery or from headage payments.
When the gross income has been ascertained, it is then reduced by the amount of the costs actually and necessarily incurred in connection with the working of the farm. These would include items such as rent, rates and annuities, the cost of seeds, fertilisers and feeding stuffs, renewal of tools and farm machinery, repairs to farm buildings, fences and the like, veterinary expenses, the cost of electricity, petrol and diesel and so on. In relation to farm machinery, hire purchase and other instalments are allowed or a reasonable annual allowance is made for depreciation. An additional and significant cost item for many farmers in recent years is interest paid on moneys borrowed and here again such interest is allowed where it arises out of borrowings in connection with the working of the farm and where it is paid. Necessary labour costs, excluding that of husband and wife, are also allowed as a deduction in calculating net income. When all the information available has been taken into account the assessment is made on the basis of the details supplied by the farmer himself.
I would like to stress, however, that while the investigation of means is carried out by the social welfare officer the final decision as to the level of means to be assessed and the consequent entitlement to unemployment assistance is, in the first instance, under the legislation a matter for a deciding officer. Any person who is dissatisfied with the decision of the deciding officer can appeal against the decision and have his case referred to an appeals officer for determination.
It is hard to conceive any other expenses which can be allowed unless we reach the absurd stage where contributions to the local GAA club will be included in farm assessment or that we allow a holiday in Lourdes. We have allowed every possible expense and we could reach a farcical stage where people would demand allowances for the car to bring them to Mass on Sundays because they live in a rural area.
It is to everybody's advantage that farmers should have all their facts available at the initial investigation by the social welfare officer because reinvestigations arising from appeals in individual cases create problems not only for the person concerned but also for the Department of Social Welfare. Social welfare officers are obliged to take account of all items of income and expenses in making their reports but obviously they must depend largely on the information given to them in the course of the interview. Where the full details are available at the initial stage in relation to both sides of the equation the assessment poses no problem.
I am emphasising in particular the question of the method of assessing means because I regard it as crucial in this whole debate. I am not suggesting that the assessment of means is a simple straightforward book-keeping exercise because very often the information required may not be readily available to the applicant. What I am saying, however, is that there is a well-tried system in operation whereby a fair and reasonable assessment can be made. Since I took office as Minister for Social Welfare I have had the method of assessing farm means subjected to detailed analysis and I am satisfied that all possible measures are taken to ensure that the assessment in individual cases is a fair one.
I have considered the views which have been put to me by various farming representatives and I am satisfied that what farmers want is a fair and reasonable method of assessing means. They are not seeking the payment of unemployment assistance to any person who does not satisfy the statutory conditions. They accept that the abolition of the notional system will result in some farmers having their assistance payments reduced or withdrawn completely. On the other hand they realise that many smallholders will receive increased payments as a result of the assessments and, as I have already said, will qualify for increases in rates of payment in the same way as all other unemployment assistance applicants.
Deputies may be interested in having the results of an analysis which was made of 6,241 cases which were actually decided up to March last. Entitlement was revoked in 1,905 cases, (30.5 per cent); rate of assistance was reduced in 2,617 cases, (41.9 per cent); rate of assistance was increased in 1,719 cases, (27.6 per cent).
These figures do not take account of cases appealed, but data in this form is not available in those cases. The only information available relating to appeals is that up to the end of January 1984 of 896 appealed, 367 were successful and 529 were unsuccessful. "Successful" in this context means that the means assessed by the appeals officer were lower than the level assessed by the deciding officer but not necessarily that unemployment assistance was restored at its original level. In many cases there would be a marginal difference only in the amount of means assessed.
I fully accept the need to ensure that applicants for unemployment assistance are aware of the level of means which have been assessed in their case. In future therefore I am arranging that smallholders whose means are assessed on a factual basis will be informed as to the net income assessed and of the gross income and gross expenditure figures from which the net income is derived. Because, however, the system is not a bookkeeping one it is not possible to give a more detailed breakdown of individual items making up the assessment.
I would expect that the arrangements for advance notification of the visit of the social welfare officer will overcome many of the difficulties which have been experienced and will enable the farmer to sort out any difficulties in discussion with the social welfare officer. Where, however, he is not satisfied with the subsequent decision and appeals against it he will be given a further opportunity of elaborating on his case. At that stage, where there is an oral hearing, it will be possible for the appeals officer, who will have all the papers available to him, to discuss individual items of income or expenditure included in the assessment where these are a matter of dispute.
Where advance notification is given of the intention to visit a smallholding, and particularly where a date is given, the odd case has been known to officers where cattle or sheep might be moved to another farm. Then the social welfare officer is assured that the smallholder in question is in the dregs of poverty. That is why a visit by a social welfare officer to a smallholding without notice has a degree of merit in terms of assessment of income. I have indicated that I am prepared to give advance notification. That is being done and will be done, and it will probably help to speed up matters. Lest howls of execration descend upon my head for making that point, let me say that the vast majority of smallholders act in an entirely honest manner. In all walks of life there is always a percentage who will try to pull a fast one when being assessed for income tax or any other kind of assessment. For every arrangement one makes, one has to accept there are those who will take advantage of it.
I realise that a large number of smallholders who have already had their means reassessed on a factual basis have not had the advantage of the arrangements which are now being introduced in relation to current and future cases. However, when all smallholders have had their entitlements reassessed the arrangements for the provision of as much detailed information as possible in individual cases will be applied when reviewing entitlements in future.
In all of this I would like to stress that what I and my Department are trying to do is to provide a scheme that is fair and moreover seen to be fair. I hope the system which I have outlined to the House will be accepted as such. I hope some of the political capital which is being made out of the difficulties facing my Department will subside to some extent.
A new scheme of family income supplement will be introduced from the beginning of November next and will cost about £2.2 million in the current year. The necessary provision is made in Subhead N of the estimate. The estimated cost in a full year is £13 million. The purpose of this scheme is to provide cash support for employees whose earnings are low and who have a family to support. Workers in this category receive little or no benefit from income tax allowances as they are below or just above the tax threshold, and because they are working, they do not qualify for social welfare payments. While the new scheme may not fully satisfy everyone, I feel sure that it will be welcomed by the low income employees it is designed to help.
There are some aspects of this scheme which have been raised and which I want to clarify. I would like to make it quite clear that the scheme will apply to single-parent families. Where a single parent such as a widow, deserted wife or unmarried mother is in full-time employment and the family income, including social welfare payments other than children's allowances, is within the limits of the scheme, that family will qualify for a family income supplement. Also, persons receiving the supplement will not be liable for income tax or PRSI contributions in respect of it. An important point is that the scheme covers only persons in full-time employment and does not apply to the self-employed. The method of paying the supplement will be by means of books of orders encashable weekly at post offices.
Finally, the supplement will not be paid exclusively to either spouse as such. It is intended as a supplement to earnings and will be payable to whichever member of the family is employed or the principal wage-earner when the claim is made. I hope these points will help to clear up any doubts or misunderstandings which may have arisen regarding this scheme. The regulations governing the implementation of the scheme are at present being drafted and full details will be publicised in due course. The income limits which will govern eligibility for the supplement have already been published in the Social Welfare Bill which was passed by the House at the end of March.
During 1983, regulations were made extending the occupational injuries benefit scheme to cover some additional occupational diseases. The principal new diseases covered are hearing impairment caused by occupational noise and bronchial asthma arising from certain recognised agents or irritants.
In the 1984 budget provision was made to allow unrestricted free travel to recipients of invalidity pension-benefit and to blind persons who are attending full-time long-term rehabilitation courses. New arrangements have also been made recently for holders of free travel passes who travel on the Derry-Dublin express bus service. Up to now, travellers had to write to the Department of Social Welfare in Dublin to get a special travel warrant for the Northern Ireland portion of the journey. It is now possible for travellers to get these warrants on the day of their journey by calling to the Ulsterbus depot in Derry or the CIE depots in Monaghan or Dublin. This allows much-greater flexibility for the travellers concerned.
It was also found possible in this year's budget to remove a restriction in the free telephone rental scheme. People who satisfy the other conditions of the scheme may now qualify for this allowance where they have children under the age of 15 years living with them.
I would now like to turn to some particular aspects of the estimates themselves. Subheads A to D deal with the cost of administering the Department. The administration of my Department requires considerable resources to service the constantly increasing number of new claims especially from the unemployed. Each week, the Department are responsible for payments to some 1.2 million claimants and their dependants and some 25,000 new claims are received. As I said earlier, the total administration costs, including the costs incurred by outside agencies such as An Post, The revenue Commissioners, Office of Public Works, and so on, account for only 4 per cent of the Department's total expenditure.
There have been major increases in the numbers of payments made over the last few years. On the unemployment side alone the increase has been over 100 per cent since 1980. While all possible steps have been taken to cope with the increasing workload within the existing staffing restrictions, it is now becoming increasingly difficult to maintain the efficient delivery of social welfare services.
I am deeply appreciative of the dedication shown by all the staff of my Department who have had to work under considerable pressure to cope with an ever-increasing workload. I am satisfied that as far as my Department is concerned the stage has been reached where a more flexible approach to the provision of additional staff is necessary to meet essential requirements.
As part of the constant efforts to improve the administration of the Department the use of computers plays an increasingly important part. Since 1973 computerisation has been extended to pay-related benefit, disability, maternity, occupational injuries and treatment benefits, and, most importantly, to the contribution records of insured persons under the PRSI system. Last year saw the development of a computer facility to issue payments under the rent allowance scheme. During the current year a start was made on a computerised system of paying certain unemployed persons by cheque. It is intended to extend this system gradually in order to relieve pressure on accommodation and staff in employment exchanges and to improve the administration of the service to the unemployed.
The new system which is at present operating in two Dublin employment exchanges is progressing satisfactorily and has been well received by the unemployed persons who have been transferred to that method of payment. Another development in the current year is the commencement of the application of computers to the children's allowance and pensions area. This is a project that has been scheduled for some time but had to be deferred because of lack of resources. The first phase of the project is already in operation in the children's allowance branch. A system for the pensions area will be introduced later this year.
There are now over 300 computer terminals installed in headquarters buildings in Dublin and in a number of public offices and information centres both in Dublin and throughout the country. Since the beginning of 1983 visual display terminals connected to the Department's computers have been installed in the local offices of the Department in Limerick, Waterford, Tralee, Dundalk, Drogheda, Dún Laoghaire, Bray, Wexford making in all 11 offices with this facility. Terminals will shortly be installed in the Galway, Longford, Athlone, Mullingar, Sligo, and Letterkenny offices. These facilities provide instant access for enquiry purposes to information on disability, maternity and occupational injuries benefit claims. A telecommunications network is being planned to link the Department's offices with the objective of providing a more effective and efficient day-to-day administration, including better retrieval and communication of information for dealing with individual cases. This development will facilitate the eventual introduction of a degree of local administration of the disability benefit scheme. Office automation facilites such as electronic mail and filing have been introduced on a pilot basis and the Department expects to make more use of such facilities over the coming years according as the technology develops and improves.
To date computerisation has resulted in significant efficiencies and economies even against the background of an expanding workload. The further developments envisaged will continue that process and will help to improve the overall administration of my Department. I look forward to the continued co-operation of staff at all levels in the implementation and expansion of computerisation within the Department.
Subheads E and F of the Estimate deal with the social insurance services. Subhead E represents the Exchequer contribution to the social insurance fund in 1984. It is a residual figure representing the difference between the expenditure of the fund and the income received into the fund mainly through PRSI contributions from employers and employees. Full details of the expenditure and income of the fund are set out in the Appendix at page 194 of the published Estimate.
The standard rate of PRSI contributions is now 20.6 per cent of which the employer pays 12.1 per cent and the employee 8.5 per cent but it does not all go to the Social Insurance Fund. The fund's share is 16.8 per cent the remaining elements being 1 per cent for the health contribution, 1 per cent youth employment levy, 1 per cent income levy, 0.4 per cent occupational injuries and 0.4 per cent redundancy. There has been no increase in the social insurance element of the contribution since 1982 and this year, for the first time, there has been no increase in the ceiling up to which contributions are levied. The estimated income of the fund from contributions by employers and employees in 1984 is £853 million.
The overall income of the fund in 1984 is estimated to be £1,197,284,000 made up as follows:
£ |
% |
|
Employers |
574,000,000 |
48.0 |
Employees |
279,000,000 |
23.3 |
Exchequer |
342,817,000 |
28.6 |
Investments etc. |
1,467,000 |
0.1 |
It has been necessary to increase the occupational injuries element of the contribution from 0.3 per cent to 0.4 per cent. The Occupational Injuries Fund into which these contributions from employers only are paid is statutorily required to meet its expenditure. There is no provision for a State contribution and accordingly where its outgoings are expected to increase to an extent that cannot be met by the existing level of income from contributions and invested funds it is necessary to increase the rate of contribution. This is what was done on this occassion.
I regret the extent to which I have to deal with the Estimate but some of the issues that have arisen lately take some time to get through.
I have seen recently some newspaper headlines where the Federated Union of Employers among others criticised what they describe as the "spiralling cost of social welfare" and suggested the curtailment, reduction or elimination of some benefits. This typical comment totally ignores the quite major measures that have been introduced in the social insurance area in recent years with a view to achieving a more realistic relationship between a person's normal take-home pay and the level of short-term benefits. These measures since early 1983 included for example reduction in the level of pay-related benefit, an increase in the PRB waiting period, an increase in the PRB floor, withdrawal of PRB from short-time workers and reduction of DB "wage stop" to 75 per cent of reckonable earnings. In addition, control measures to combat unwarranted recourse to the social welfare system have been completely reviewed and strengthened. I am now satisfied that there is no justification for the introduction of any further major measures.
It is clear from the extensive range of statutory and administrative changes in social insurance provision both in 1983 and this year that this Department have made a responsible and effective response to potential misuse of the social welfare code. While the Department will continue to review the levels and effect of social insurance payments and will make whatever adjustments appear necessary to maintain target replacement ratios and so on any further significant erosion of benefit levels would adversely affect the living standards of those who, through no fault of their own, may be sick or unemployed. A measure of the social conscience of the Government is the way in which it protects the interests of the weakest and most vulnerable groups in our society at all times but it is especially so during periods of recession. I have no apology to make to anybody for the manner in which this Government have fulfilled their duty in that respect.
On the other hand I saw in a document prepared for the Conference of the Association of Scientific, Technical and Managerial Staffs a statement that the State contribution to the Social Insurance Fund had been falling in recent years. This is simply not true. The increasing level of unemployment has placed a severe strain on the fund. As I said earlier there has been no increase in the rate of social insurance contribution in the past two years. These factors have combined to bring about a considerable increase in the level of the Exchequer subvention to the fund in the period since 1979. For the information of anyone who may doubt this fact I will give the percentage of the total expenditure of the Social Insurance Fund which has had to be met by the Exchequer in the past years — 1979, 20.1 per cent; 1980, 25.6 per cent; 1981, 29.6 per cent; 1982, 27.8 per cent; 1983, 27.9 per cent; 1984 (estimated), 28.6 per cent. These figures clearly show the constant high level of the Exchequer contribution rising from 20.1 per cent in 1979 to 28.6 per cent this year.
But the level of the Exchequer contribution to the Social Insurance Fund cannot be taken in isolation. A huge proportion of social welfare spending goes on social assistance schemes the cost of which is borne fully by the Exchequer. The State contribution to the total cost of social welfare covering both social insurance and social assistance since 1979 has been — 1979, 54.5 per cent; 1980, 54.8 per cent; 1981, 57.7 per cent; 1982, 57.7 per cent; 1983, 57.9 per cent; 1984 (estimated), 58.5 per cent. That represents a constant general increase since 1979.
In Subhead O of the Estimate provision is made for £1 million for the establishment of an anti-poverty programme. The removal of poverty from our society is the ultimate aim of all social welfare programmes. With the approval of the Government I established earlier this year an interim board of the Combat Poverty Organisation. I have asked the board to report to me by the end of June with recommendations on the structure of a permanent Combat Poverty Organisation and the detailed terms of reference. The board are also considering the Irish input to the forthcoming EEC poverty programme and will provide advice in that area also. I look forward to receiving their advice and recommendations and will act on them as quickly as possible.
It is now almost ten months since I established the Commission on Social Welfare to review the social welfare system to ensure that it meets its objectives effectively. Under its terms of reference it is due to report in the autumn of 1985. A sum of £100,000 is provided in Subhead Q of the Estimate to enable the commission to carry out this important task. I consider that the work of the commission is of crucial importance to the long-term development of the social welfare system.
An item for which no provision has yet been made in the Estimate but which will arise later this year is the introduction of measures necessary to ensure equality of treatment between men and women in the social welfare code. In accordance with an EEC directive of December 1978 all discrimination as between men and women in the social security field must be removed by the end of 1984. Much progress has been made in recent years but there are still areas of the social welfare code where women are less favourably treated than men — notably in the area of unemployment schemes.
The most difficult area in relation to equality of treatment, however, is that of increases of social welfare payments for dependants. The social welfare schemes were framed on the basis that the husband was the head of the household and the person to whom increases in respect of adult and child dependants should be payable. While this approach was the norm when the schemes were introduced, the social position of married women has — not before its time — changed considerably. Therefore, women must accorded the same rights as men under the social welfare system. I am at present considering proposals aimed at bringing about that situation. When final decisions have been taken by the Government I will be bringing legislation before the House with a view to having the necessary provisions implemented before the end of the year.
I think it appropriate before concluding to refer to the recent report of the National Planning Board which received widespread publicity in the media. This is a comprehensive document which deals not only with the broad economic issues of the public finances, monetary policy, the balance of payments and employment creation but also with the protection of the less well-off and the disadvantaged. One of the board's recommendations is that public expenditure should be brought more closely into line with the revenue that can be raised at broadly acceptable tax rates. In this context the report states that the gap between expenditure and income in the public finances should be narrowed by reducing current expenditure rather than by increasing the burden. As spending on social welfare is now running at 26 per cent of the total Government current expenditure the board naturally considered what changes might be made to reduce spending in this area. The board's general conclusion, which I welcome very much, was, and I quote:
Unlike other elements of current expenditure, the scope for curbing the growth or reducing the level of social welfare transfers is extremely limited.
The board go on to say that it is essential that the effectiveness of existing spending on social welfare be assessed and that the allocation of existing resources within social welfare be improved. This has been my approach consistently as Minister for Social Welfare. We as a community now make a massive financial commitment to providing support for those who are unable to meet their own needs. All of that money, namely £6 million each day of the year, comes from employers, employees, general taxation and Exchequer borrowings. I fully agree with the board about the importance of ensuring that these scarce resources are directed as effectively as possible to people whose need is greatest.
The board acknowledge that the Commission on Social Welfare are currently undertaking a fundamental review of the income maintenance system and pending the outcome of this review the board at this stage do not make substantive recommendations for the development of social welfare programmes during the next four years. There are, however, a number of recommendations put forward for consideration and without prejudice to the outcome of the commissions review I would like to make a few brief comments on some of the points raised by the board.
The board take the view that the incentive to work has been weakened on the one hand by high rates of income-related taxation with which they include PRSI and on the other hand by relatively high untaxed sickness and unemployment benefit. With a view to reducing the overall rate of PRSI contribution the board recommend that the earnings ceiling, currently £13,000, should be removed and that the full employee's contribution should be payable by all categories of workers including public servants. On the question of the ceiling, there are, I believe, a number of considerations to be; borne in mind. The contribution system, could be regarded as regressive because for workers whose earnings exceed the ceiling their PRSI contribution as a percentage of their total earnings is less than in the case of lower paid employees. There is, however, the counter-argument that PRSI cannot be taken in isolation and that where the totality of PAYE and PRSI is taken into account the abolition of the ceiling would have a very significant effect on the net pay of the higher paid.
With regard to the extension of full PRSI coverage to certain public servants, their present cover is confined mainly to widows' and orphans' pensions and, accordingly, they pay PRSI contributions at a reduced rate. Permanenet and pensionable public servants were never insured for unemployment benefit purposes and they were also excluded from sickness and old age pension cover on the basis that their social security needs were adequately provided through their occupational arrangements. An important consideration, therefore, is that their limited social insurance cover is also related to the cost which would arise for the Exchequer by way of employer's social insurance contributions. The question would have to be considered whether full occupational benefits would be paid in addition to full social security benefits or whether arrangements would be made to reduce occupational pensions and sick pay entitlements. All of these matters could give rise in one way or another to significant additional administration costs.
To deal with the second point in the report, the proposal to tax short-term benefits would affect those payments which are at present broadly designed to represent a certain proportion of normal take-home pay. The board take the view that if as a result of including social welfare benefit, a person's income is such as to make him or her liable to income tax, then that person is merely being treated equally with a person who obtains a similar income from non-social welfare sources. I would be concerned, however, that the after-tax value of the benefits concerned would continue to represent an adequate proportion of the person's normal take-home pay. I am satisfied that changes made in the social welfare code in recent years in relation both to levels of benefits compared with take-home pay and in relation to control measures to combat unwarranted recourse to the social welfare system have been a reasonable and effective response to any potential misuse of the system.
Thirdly, the board are of the view that the present disability benefit scheme should be revised so that benefit would become payable from the 15th day of illness rather than from the third as at present. Employers would assume full responsibility for income maintenance during the first two weeks of illness and be compensated by a reduction in the general rate of PRSI.
This whole question is already under intensive examination in my Department. Transferring responsibility for sickness payments to employers raises the question of the purpose of the disability benefit scheme and the broader question of the role of the State and the private sector in the provision of income maintenance payments. Broadly speaking, the aim of the social security system is to provide replacement income for persons who are unable to obtain an income due to sickness, unemployment, old age, widowhood and so on. Social insurance came into being so that the protection against the various contingencies which the individual or family were not able to cope with alone could be provided on a collective basis with employers, workers and the State sharing the costs. Over the years the social insurance system including the disability benefit scheme has been progressively developed in terms of coverage, range, control and level of payments and unity of administration.
Side by side with the development of social insurance, however, there has been a significant change in employers' attitudes towards the provision of non-pay benefits for their employees. Occupational sick pay schemes now cover a large proportion of the employee workforce. Accordingly, I accept that the current role and general administration of the disability benefit scheme may need to be reviewed for these reasons. I am examining the scheme at present. In 1984 the overall scheme will cost about £190 million. In the event of any Government decision I would have to bring legislation before the House.
I would remind the House of the importance, in present economic circumstances, of the Estimate we are considering. Total expenditure on social welfare services this year will be about £2,156 million. This expenditure is a measure of the commitment, not only of the Government but of the Irish people as a whole, to providing for the essential needs of the less well off. It is a measure also of the massive financial commitment involved for the entire community in providing these services.
It is essential that we in the Houses of the Oireachtas maintain the scheme in a society where every pressure group are preoccupied exclusively and at times despairingly with their own interests, that we represent the national interest and that we maintain a system of social insurance for those who live in poverty, who are deprived or who become ill. It is essential that we resist pressure from pressure groups to modify the scheme in their direction.
I thank the House for the patience with which it has listened to me during this lengthy contribution and I look forward, in the 15 minutes that will be available to me later, to replying to the points that may be made.
I take this opportunity of thanking the Secretary of my Department, Mr. Jim Downey, who has had the most difficult Department of all perhaps to administer in the year 1983-84. No other Department has been under greater pressure. The Department have been up front in dealing with the question of income maintenance for more than 200,000 people who are out of work and for another 850 people who every week depend on the Department for their incomes. I express my gratitude also to the assistant secretaries, and to the principal officers in the Department as well as to the managers of employment exchanges throughout the country and the many staff whom I have not been able to meet because of the onerous task involved for me in heading the Department of Social Welfare. This requires an enormous amount of routine administration. I regret that I have not been able to visit the various employment exchanges but I intend doing so in the near future so that I might at least convey personally the thanks of these Houses to the staff who have managed to deliver what is an extremely good system, a system of social welfare that has been developed down through the years.