Before the debate was adjourned I referred to the lack of any fundamental thinking on reform of the social welfare system. The Minister said that the provisions in the Social Welfare Acts and this Bill have transformed the social welfare system as we know it. He invited the House to pass judgment on his performance not only in terms of this Bill but over the past three years. When Deputy De Rossa was appointed Minister for Social Welfare people had high expectations that he would transform the social welfare system, having regard to the party of which he is a member. However, this transformation has not taken place and, in line with the budgets introduced by the Government, the Bill proposes a serious of incremental changes which are designed to appease interest groups but which have no underlying coherent philosophy or direction. This policy has characterised the Government's approach to the economy and I am not surprised it has adopted the same policy in the administration of the social welfare system.
Having regard to our economic position and the anticipated demographic trends during the coming decade, fundamental questions arise about the social security system. We have enjoyed a period of rapid economic growth but ESRI studies suggest that long-term unemployment will continue to be a persistent social problem. This will lead to a continued high demand for unemployment payments, notwithstanding rapid economic growth. In this context, radical changes are required. Initiatives such as the family income supplement and the back to work allowance scheme have been introduced but much work still remains to be done. There is no evidence of any fundamental rethinking by the Minister in this area.
During the years leading up to 2031 there will be a continued increase in the number of people in receipt of old age pension. The lack of provision made by the Minister for the social insurance fund is disquieting in view of the increased liability on the State to pay old age pensions in the long-term. Entitlement to contributory pensions has been increased due to the extension of PRSI to self-employed persons. In a few decades there will be a universal entitlement to old age pension and the funding of this will put an enormous burden on the State.
Similar concerns have been expressed about certain pay arrangements for the public sector agreed by the Government and their implications for the public service pensions bill. However, the only ball on which the Government seems to have its eye is the general election. The Minister has displayed a lack of fundamental thinking on this serious question during his time in office.
Another issue of considerable importance in the evolution of the social security system is the integration of the tax and social welfare systems. Reports on this issue have been published and there has also been a great deal of discussion on it. Without making a commitment in regard to basic income, a guaranteed minimum income or negative income tax, there is a need to approximate the tax and social welfare systems as far as possible. One obvious step in this area which should have been taken during an election year is the harmonisation of the years of payment under the tax and social welfare systems. The Minister did not avail of the opportunity to do this in the Bill and I wonder if it will be done in the near future.
I am very disappointed that no consideration was given in the budget or the Bill to the alignment of basic social welfare payments with general tax allowances. If the public had been invited to submit their views on desirable proposals for the budget the Minister would have received many representations urging him to use the additional money available to increase basic tax allowances and to harmonise the tax and social welfare systems. The Government lost the opportunity to do this and the budgetary process represents more an Arab bazaar than coherent policy. The incremental improvements in tax benefits for various groups provided in the budget have no underlying direction or philosophy. This policy has been carried through into the Social Welfare Bill which provided the Government with a marvellous opportunity to ensure some alignment between basic social welfare payments and general tax allowances.
That, too, is a disappointment and a failure by this Minister who claims to have effected a complete transformation of the social security system. He has not made any fundamental change to the social welfare system.
Another issue which arises when one considers the integration of tax and social welfare is child benefit payments. Substantial improvements in these payments were made in recent years, but further increases would serve to emphasise the child centred nature of social welfare support. That is important because there is much discussion in the media about the desirability or otherwise of payments to particular categories of persons. We must make it clear that these moneys are being targeted at children.
If the tax and social welfare systems are to be integrated, the relationship between a possible tax allowance for children and child benefit must be examined. The Minister has avoided that issue. I realise there are political pitfalls involved and that it is not a good idea to be courageous in an election year or engage in fundamental thinking, but in introducing this measure the Minister advanced the bold claim that he has effected a transformation of the system in the past three years. He has not, and that guff must be got out of the way well in advance of the general election.
A further matter in relation to the social welfare system is whether taxpayers receive value for money. I am referring to the incidence and extent of fraud perpetrated on taxpayers by those who do not qualify under the legislation making claims. Whether the Minister likes it or not, there is enormous public concern about this issue. Deputies constantly receive representations about alleged abuse of the system. Abuse is inevitable in any system, and in his contribution the Minister of State referred to discussions he had with ISME on attempts to tackle problems relating to the black economy, but there is substantial public disquiet about the incidence of abuse. That public disquiet reflects not only on the social welfare system but on the entire political system. It is one of the factors that has contributed to the considerable loss of public confidence in the political system. To put it bluntly, people who work hard and keep the rules feel discriminated against. That is the general perception. I note from the Minister of State's contribution he does not have any specific legislative proposals to deal with this problem.
The issue of PRSI arises under this Bill because it provides the statutory foundation for the collection of social insurance contributions in any particular year. For many years, taxpayers did not really understand or accept the theoretical basis of PRSI as advanced by successive Ministers for Social Welfare. As far as they are concerned it is another form of taxation. Because of the Government's refusal to reduce the top rate of income tax, we now have a situation where more than half of certain taxpayers' income is taxed at an early stage. That has caused enormous disquiet over a number of years, yet the Minister has not seen fit to address it in the budget.
Given the continued Exchequer commitment to pensions, it will be necessary to ensure adequate and proper funds are collected through some form of social security tax in the future. The Minister has not brought forward any real proposals to effect fundamental reform in social security tax arrangements, despite the fact that commentators and commissions over many years have indicated that the current arrangements are unsatisfactory, operate as a disincentive to creating employment and bear hardest on the weaker and poorer sections of the community. There has been some tinkering around in particular budgets but no fundamental change. The suggestion of some sort of transformation in the social welfare system is entirely fallacious.
I would like to hear the Minister's view on the question of a movement towards individuated payments. I welcome the introduction by the Minister of certain changes in the dependency rules relating to adult dependants. A clear suggestion in that measure is that there will be a movement towards individuated payments over a period of time.
If one looks at the social welfare system historically, it is clear that it has operated to inhibit the greater participation of married women in the workforce. The rules in the current social welfare code relating to that area will have to be reviewed, and I am glad the Minister has taken a step in that direction. I agree this is an aspect of his brief where transformation will take a substantial period of time — it will not be done overnight.
There is an anomaly in the payments for multiple births. The Minister of State is aware that the parent of twins is discriminated against because the amount prescribed for multiple births is in excess of that prescribed for twins. The Minister for Social Welfare, when in Opposition, viewed this as a justifiable case for reform, but he has opted not to remove this anomaly from the social welfare system. I urge him, even at this late stage, to consider whether the special payment for multiple births should be extended to include twins so that this differentiation can be equalised. The current arrangements are discriminatory. For example, a person who gave birth to triplets last year received £184 in child benefit while a person who had twins received £58. Certain changes were introduced in the initial grant to alleviate the position of the parents of twins, but the financial differentiation seems remarkable and difficult to justify in principle.
I urge the Minister to re-examine that issue to see if this anomaly can be eliminated from the social welfare system. With the declining birth rate this could be done without any great loss to the Exchequer. In the context of a declining birth rate, the birth of twins to a couple is a far more fundamental development than it might have been ten or 20 years ago. The Minister should review these arrangements to ensure there is no inequality of treatment as between the parents of twins and the parents of triplets or greater numbers of children.