Social Welfare Bill, 2000: Committee and Remaining Stages 28th March, 2000 SECTION 1. An Cathaoirleach: Amendments Nos. 1 and 4 are related and may be discussed together by agreement.   Mr. Costello: I move amendment No. 1: In page 5, between lines 13 and 14, to insert the following new subsection: "(3) The Minister shall as soon as may be after the passing of this Act prepare and lay before both Houses of the Oireachtas a report on the rationale for the different commencement dates of social welfare and tax aspects of the annual budget.". While acknowledging that the Minister has taken a positive step in terms of bringing forward the payment of increases in respect of many social welfare benefits to 1 May, in keeping with the spirit of my amendment, I must criticise him for not harmonising the timescale under which tax benefits come into operation and social welfare increases are paid. The increase in child benefit will not come into force until 1 September and the increase in carer's allowance will only come into play on 1 October.

In my opinion this is an opportune time to harmonise tax concessions and social welfare increases. The Minister stated in the Lower House that it would cost in the region of £20 million to make increases in social welfare benefits payable from 1 April. That is not a huge amount when one considers some of the expenditure the Government is making in other areas and it would have tremendous benefits in terms of creating an equitable and just society. A decade ago we could not have imagined the level of wealth which we have at our disposal. The challenge we now face is how to distribute it. What sort of society are we seeking to create? Are we going to treat those at the bottom of the scale as fairly as we treat those at the top? The Minister for Finance has been particularly generous to those who pay tax at the top end of the scale. The higher one's salary, the more one will benefit on 6 April from the tax concessions made in the Finance Act. I would like the Minister to have moved in the same direction and made all social welfare increases payable from 6 April. Many people - the unemployed, widows, old age pensioners, single parents and children - would have benefited if the payment date had been brought forward. Women form the largest category of social welfare recipients and they, as well as children, would benefit most from the change to which I refer. Members who serve on local authorities are aware that, in most cases, the rent charged to people who live in local authority houses increases on 1 January. Such an increase can be sizeable in terms of the demand placed on a low income family and it must be remembered that approximately 88% of local authority tenants are social welfare recipients. That demand operates from January but people must wait until 1 May for their social welfare increases. The gap between the two dates can cause considerable hardship. As well as looking at the tax and social welfare systems, the Minister should examine how and when local authorities decide to impose rent increases on tenants in local authority housing. While I welcome the progress the Minister has made to date, he was in a position to bring forward the payment date of social welfare increases to coincide with the introduction of tax changes. It was a missed opportunity. The Minister should have struck while the iron was hot, although perhaps he might still revise his decision.   Mrs. Ridge: My amendment is similar to Senator Costello's. I would never say he speaks on my behalf but he has echoed my sentiments in this regard. I listened to the Minister's explanation last week of the difficulties he would have paying social welfare increases at the same time as the tax changes. However, benefits for a fairly well off couple will come on stream in April while disabled people will have to wait a month for theirs. Perhaps the Minister could do something in that specific area. We tend to prattle on about equality, equal access, equal this and equal that but the Minister could accommodate equality in this area.   Ms Leonard: We should acknowledge that the Minister has brought forward the payment date over the past couple of years. When he came to office there was a huge variation in the payment dates but there has been a remarkable improvement. Last week he indicated that the date would be brought forward again next year. Senator Costello referred to increases in local authority rents. That is not in the remit of the Department of Social, Community and Family Affairs. It is a matter which councillors can raise with their local authorities. The councillors have certain powers over the executive of local authorities and the matter is more appropriate to those fora.   Minister for Social, Community and Family Affairs (Mr. D. Ahern): I thank the Senators for raising this issue. Over the years, particularly during hard economic times, Governments tended to postpone dates for the implementation of increases to make resources stretch as far as possible. Most of them were postponed as far as June. When I came to office the increases were being paid from the week beginning 9 June. It meant that in the budget year the increases were only being paid for 29 weeks. Since then, and taking account of the changes being made in this Bill, the number of weeks has been increased from 29 to 35. That is a dramatic change. The Minister for Finance and I have decided to bring forward the date for payment of increases next year to coincide with the tax year, that is, on 5 April. That is a commitment on our part. It is at a cost of £20 million. We decided to implement it over three years rather than one. Senators might ask why we do not go the whole way now. It would cost £40 million to bring it forward by two months. Even though more resources are available now, it is still a case of loaves and fishes, so to speak. One must balance everything. It was decided to bring payments forward by four weeks this year and to 5 April next year. When Deputy Quinn was Minister for Finance in the previous Government it was decided to bring forward the budget from the end of January to the first week in December. That exacerbated matters because while the budget was announced earlier, people were not getting their increases until much later. At the time very little provision was made to bring forward payments. We would all like to see them equalised and the Government has made a firm commitment to do this next year. It is unusual that commitments of this kind would be given in advance of a budget. With regard to Senator Costello's comments on the local authorities, I agree with the remarks made by Senator Leonard. I cannot be held responsible for what local authorities do with regard to rent increases. That is a matter for them, in conjunction with the Department of the Environment and Local Government. We could have brought forward child benefit payments, but it would have been at a huge cost. For example, to bring payments forward to April from September would cost £44 million in that year. I support the rationale of providing child benefit payments in September, which is to boost family incomes when children return to school. We are committed to bringing forward all other payments to 5 April in next year's budget.   Mr. Costello: I welcome the Minister's commitment that next year social welfare payments will be brought forward to 5 April. I presume this will cover the vast majority of payments, including unemployment benefit, unemployment assistance, widows' pensions and old age pensions.   Mr. D. Ahern: Everything.   Mr. Costello: Everything except child benefit. Is that correct?   Mr. D. Ahern: Correct.   Mr. Costello: Then 1 September is the wrong date on which to provide child benefit payments. All schools now provide for a mid-term break in February and to facilitate that they open at the end of August; in my time they opened in September. I do not think any schools start the school year as late as 1 September. Leaving that aside, there are strong grounds for bringing forward child benefit payments a month or two months earlier. What would be the cost of bringing payments forward to 5 April?   Mr. D. Ahern: It would be £44 million.   Mr. Costello: What would be the cost of bringing them forward a month? It would mean parents could prepare for the school year at the beginning of August, which would be beneficial. It would be even more beneficial if payments were brought forward to the beginning of the summer when parents could perhaps make some savings in the very expensive business of ensuring their children return to school with the necessary equipment, books and clothing. The back to school allowances are not adequate, given the expense of equipping children for school. While I welcome the Minister's commitment to bring the vast majority of payments forward to 5 April, perhaps he would consider also bringing forward the increase in child benefit as many parents find themselves in the position of having to borrow from moneylenders - the subject of other discussions in this House - to meet their children's school needs.   Mr. D. Ahern: A sum of £8.8 million would be required to bring forward child benefit payments by one month and it would cost £44 million to bring it forward to 5 April. On the issue of assisting parents with the cost of children returning to school, I increased the back to school clothing and footwear allowance dramatically in the budget. Each of the rates will be increased by £20 from June this year - from £43 to £63 and from £58 to £78 - a much bigger increase than has ever been given. That is additional assistance for families with school-going children and it is being made at an earlier date at the request of parents. The child benefit is a much broader issue. In the past social welfare payment increases were paid in September but have been progressively brought forward over a number of years. Given that students return to school in the last few days of August or the beginning of September it is logical that child benefit increases are paid at that time. It is an issue we can look at but I do not feel anything would be gained by paying it earlier. It evens out at the end of the day because the full increase is received throughout the year. It is the Government's intention in the next budget to bring forward all social welfare increases to coincide with the tax year.

Mr. Costello: The substantial increase in the back to school allowance is to be welcomed. The Minister will remember the delay which took place last year in processing back to school allowances. I wonder if that has been streamlined. Many children were back at school before parents received the allowances. Child benefit increases were not paid until the beginning of September and the back to school allowances were not paid until the middle of September. I continue to argue the case that 1 August would be the desirable time to pay the increase in child benefit and back to school allowances because school-related shopping takes place in August. If the cost of bringing forward child benefit payments was only £8.8 million, it would seem reasonable for the Minister to attempt to address that matter in the next budget. Will he give a commitment to give the issue serious consideration for the next budget?   Mr. D. Ahern: I said I will consider it but I am not convinced of the arguments about bringing it forward given that, while it is £8.8 million, it would in effect reduce the money I might be in a position to provide for the general increase people will get for the full 12 months. The effort should always be made to increase payments over a longer period. If I was bereft of the £8.8 million, it might mean a lower figure in the overall increase because of the money that might be allocated. There would not be a difference in that regard between any other Minister and myself.   Mr. Costello: That is the old argument.   Mr. D. Ahern: It is the argument. It is easy from the Opposition Benches. I could say everything from a political point of view and that nothing was done on this issue when the Senator's party were in Government. I have brought forward the general payments substantially. I am not convinced of the argument about bringing forward child benefit. I will obviously consider it in the run-up to the next budget but I would not like to do it if it would mean a lower increase in the new rate. The Senator made one other point -----   Mr. Costello: The back to school allowance.   Mr. D. Ahern: No. I cannot recall what it was but it might come to me in a minute. The overall budget for child benefit has increased this year by 25% - the biggest increase by far since its inception - from £106 million to approximately £575 million, a sizeable sum. This will be of benefit in the run-up to children returning to school.   Amendment put.   The Seanad divided: Tá, 10; Níl, 20.   Tá Burke, Paddy. Cosgrave, Liam T. Costello, Joe. Cregan, Denis (Dino). Doyle, Joe. Henry, Mary. Manning, Maurice. O'Toole, Joe. Quinn, Feargal. Ridge, Thérèse.   Níl Callanan, Peter. Cassidy, Donie. Chambers, Frank. Cregan, John. Dardis, John. Farrell, Willie. Finneran, Michael. Fitzgerald, Liam. Gibbons, Jim. Glynn, Camillus. Haughey, Edward. Keogh, Helen. Kett, Tony. Kiely, Daniel. Leonard, Ann. Lydon, Don. Moylan, Pat. O'Brien, Francis. O'Donovan, Denis. Ormonde, Ann.   Tellers: Tá, Senators Costello and Ridge; Níl, Senators Farrell and Keogh.   Amendment declared lost.

Mr. Costello: I move amendment No. 2: In page 5, between lines 13 and 14, to insert the following new subsection: "(3) The Minister shall not later than 6 months after the passing of this Act prepare and lay before both Houses of the Oireachtas a report on the measures required to close the differential between the rates of periodical benefits and rates of periodical social assistance paid to a beneficiary and the rates paid to a qualified adult.".   This amendment seeks to eliminate gaps in the payment of social welfare. It focuses on the difference between the main beneficiaries of social assistance and benefit and qualified adult dependants. There is a considerable surplus in the Exchequer and we must decide how to spend it to create the type of society we desire. Most qualified adult dependants are women. Women and children are, therefore, at a disadvantage because of the anomaly between what is received by the main beneficiary and the adult dependant. The Minister for Finance wants to individualise the tax system. If the Minister wants to make taxpayers equal beneficiaries, surely the social welfare system should reflect that. There should be a move towards narrowing and eventually closing the gap between someone on unemployment assistance who receives £77.50 and a qualified adult dependant who receives £47, which is a 40% gap. CORI recommended that the ratio should be increased to 70%. It should be eliminated on a phased basis. It is a tenuous argument that two people can live more cheaply than one person. If the same tax benefits are given to two people living together, why does the same not apply to social welfare benefits? It is not appropriate to give a smaller amount of social welfare to dependants, who are usually women. It is time we took a fresh look at our social welfare system and eliminated such sexism. We are in a position to do so now. Perhaps the Minister will outline what it would cost to increase the ratio to 70% and then to increase it by 10% over the next number of years. Mrs. Ridge: I support the amendment.   Mr. D. Ahern: This issue has been around for some time. When I became Minister, the benchmark for qualified adults was 60%, as recommended by the Commission on Social Welfare. That was an undertaking in Partnership 2000 and we reached that over the past two years. A working group was then set up to look at married, cohabiting and one parent families and the connection between the tax and social welfare codes. It published a report in August. The issues relating to individualisation and the taxation system for which the Minister for Finance was wrongly criticised were examined in that report. A reading of the report shows that the working group could not agree on what should be done, although it made recommendations. The working group looked at the qualified adult allowance and individualisation of the social welfare system. It suggested that the 60% level should be increased to 70%. The Government has accepted that and undertaken to move to the 70% level over a three year period, including this year. To start that process, we introduced in the budget increases in the qualified adult allowance of between 8% and 17%. The working group looked at economies of scale in a family with a man and a woman. It is generally accepted that there are economies of scale due to the fact that people are living together. Qualified adult allowances will become less relevant in the medium to long term because the vast majority of people will be entitled to a payment in their own right. We made a promise at the last election to help to provide pensions for women who took time off work to care for children or the elderly at home. I hope to progress that issue in the final two years of this Government so that women are given credit for taking time off work. While it is not an issue of individualisation, it is built into the issue of qualified adult allowance. The Programme for Prosperity and Fairness also looked at the issue of individualisation. The social partners and the Government agreed to set up two groups under the programme to produce proposals to progress the implementation of administrative individualisation within the social welfare system. That is where payments can be split between husband and wife, although not necessarily in equal amounts. The working group was also asked to produce proposals for the development of a fully inclusive social insurance model which would facilitate combining work and family responsibilities in the context of changing work and social patterns. Increasing payments to 70% of the personal rate in a full year would cost £38 million; it would cost £100 million to increase them to 80%, £144 million to increase them to 90% and £198 million to increase them to 100%. This is not an inconsiderable amount of money in the context of the overall social welfare package of about £400 million this year.   Mr. Costello: I thank the Minister for those figures. He indicated that he had agreed to bring the ratio up to 70% over a three year period. This is a fairly long period of time. Does he intend to revisit these figures over the duration of the national agreement, as I presume the three years is mentioned in that context? If the financial situation allows, does he intend to move towards the 80% ratio rather than stopping at 70%?   Mr. D. Ahern: We would all wish to go as high as possible and we will be considering this issue. The commitment is to do so over three years. Discussions on the partnership agreement and the agreement itself noted that the Government had committed itself to achieving this objective and there was no additional commitment in that respect, other than the issue of setting up the working group to progress administrative individualisation. Senators would wish us to move to a position where everyone would receive a payment in their own right. The issue of QAAs will diminish in the coming years because certain age groups are almost fully covered by the social insurance system.   Amendment, by leave, withdrawn. Mr. Costello: I move amendment No. 3: In page 5, between lines 13 and 14, to insert the following new subsection: "(3) The Minister shall prepare and lay before both Houses of the Oireachtas a statement on the increase in the Consumer Price Index for the period of 1 January 2000 to 31 December 2000, within seven days of the publication of the relevant figures by the Central Statistics Office, and the statement shall compare the increase in the rates specified in Schedule A and Schedule B over the rates specified in the Social Welfare Act, 1999 in percentage terms with the increase in the Consumer Price Index for the said period.". This amendment seeks to index social welfare payments to the consumer price index as the national agreement seeks to index salaries for those in employment. There is concern that inflation has begun to creep back into the economy. With the introduction of the euro and the linking of our open economy with the German economy, which has always been strong on anti-inflationary trends, it was thought that we would not see a recurrence of the situation which arose in the 1980s and early 1990s when inflation reached high levels. However, we have been surprised to find that Irish inflation is not on a par with that in Europe but seems to have a life of its own. During debate on the Appropriation Act in this House last year, the Minister for Finance, Deputy McCreevy, said that the inflation rate for 1999 was 1.6%. However, by the end of January 2000 the figure had been adjusted to 4.4%. The OECD then came up with a figure of 4.6% and stated that the Irish rate was twice the European average and three times that in the UK. This is a serious concern and the budget has added to the problem as it seems to have skewed tax concessions disproportionately in favour of those who are already well off. These people are likely to purchase goods from sterling and dollar countries. The increase in the price of oil is also a serious consideration as it is priced in dollars. There are serious inflationary considerations, yet there are no mechanisms to protect social welfare payments if the increase in inflation continues. The Minister for Finance indicated that he expects a further slight increase in inflation in the next month or two following which the rate will settle and decrease. However, he has been projecting such a stabilisation over the past six months when there was in unexpected increase. The increase in the inflation rate is likely to continue. In such circumstances what protection will there be for social welfare payments? We are talking about an inflation rate of 4% to 5% and the average increases in social welfare payments will be 5% to 6%. This means that the increases could be wiped out during the year and, by the time they come into effect on 1 May, the monthly increase in the rate of inflation will be over 5%, as it probably is at present. This makes it more desirable to bring forward social welfare increases to as early a date as possible.   Mrs. Ridge: I support the amendment.   Mr. D. Ahern: Last year's social welfare payments were based on an average increase in the CPI of an estimated 2% over the year. The outturn for inflation last year was 1.6% which was lower than the increases. This time last year, I was criticised in the Dáil by Deputy De Rossa who claimed that the outturn for inflation for the year would be 6% to 7%. This was the indication at the start of the year because the CPI tends to be higher at that time because of the budget and so on. I said that the Deputy was wrong and that a number of economists were talking up inflation by saying that they expected it to be 6% for the year. The rate turned out to be 1.6% while the normally conservative Department of Finance predicted it would be 2%. Deputy De Rossa suggested that the Government should make up any loss over the 2% increase. However, neither the Deputy nor the Department of Finance has called on me to reclaim for the State the difference between the 2% increase in payments and the 1.6% inflation rate. I would guard against any suggestiom that inflation will be in excess of the estimated figure and this year's figures are based on an expected increase of about 3% over the year. It is acknowledged that there are a number of factors in the reckoning this year which were not included last year, particularly the Government decision, taken with the full knowledge of the implications it would have for the CPI, to increase cigarette prices in the budget. That caused a significant increase in the CPI in the first weeks of this year. That is why petrol and tobacco were not subject to increases in recent years - to hold down inflation. It was a strategic and innovative decision to use the money gained from the increase in tobacco prices for specialist research and facilities and cardiac equipment. That fund is dedicated to increasing the amount of money available for cardiac assistance for patients. We took the decision knowing that it would cause a slight increase in the CPI but that it would even out over the year. Energy costs will also affect the CPI. Last year energy costs caused the CPI to rise by 1%. The Programme for Prosperity and Fairness is based on an estimated CPI increase of 2% to 2.5% over the two years and nine months of the programme. Increases in social welfare have been ahead of the rate of inflation for each of the years I have been in office. Last year the CPI increased by 1.6% while social welfare increases were between 4% and 8.3%, a real increase of between 2.4% and 6.7%. This year the £7 increase for old age pensioners is a 7.9% to 8.9% increase, depending on the scheme. The general increase of £4 in social welfare payments is an increase of 5.2% to 5.6%. If the CPI increase is 3%, as is expected, there would be real increases of between 2.1% and 5.7% above the rate of inflation. We are looking at real increases in the qualified adult allowance of between 4.6% and 13.8%. Irrespective of the increases, under the Programme for Prosperity and Fairness we are committed to a minimum rate for all social welfare old age pensioners of £100 per week by 2000 and to make substantial progress in increasing other social welfare payments to £100 per week. The social welfare recipient this year, even though there may a slight increase in the CPI, is well guarded and will still receive real increases above the rate of inflation. That will be borne out over the course of the year.   Mr. Costello: I understood that the projected rate of inflation for 1999 was 1.6%.   Mr. D. Ahern: No, the projected figure was 2%.   Mr. Costello: On the Appropriations Bill on 16 December, the Minister is on record as stating that the projected rate of inflation would be 1.6%. There may have been a different projection earlier in the year. I was under the impression, however, that when the figures were adjusted at the end of January it was discovered that the true rate of inflation was 3.9%. That figure was then readjusted and in January and February inflation was running at between 4% and 5%. The rate of inflation was low in the early part of 1999, contradicting what the Minister has said, that the rate of inflation is high at the start of the year and then decreases as the year goes on. In 1999 the rate of inflation was low in the first half of the year and rose dramatically in the second half of the year. Out of the blue there has been substantial inflation in the economy. We should try to make good the difference and ensure that those in receipt of social welfare payments can keep pace with rising inflation. The system should be index linked to achieve that. Only time will tell if the Minister is right but there should be a mechanism in place to prevent detrimental effects on those in receipt of social welfare.   Mr. Connor: The Minister presents the Government's point of view about how social welfare payments have outstripped the rate of inflation. He makes comparisons against the basic necessities for those who are on social welfare. Many social welfare recipients live in rented accommodation, the price of which has increased far above anything included in the general rate of inflation. There have also been increases in transport costs. If one examines the price increases in a basket of typical goods and services for a person on social welfare, one will find that they are well up to the level of compensation the recipient gets from the increases in benefit or pension in the current year. It is unfair for the Minister to make comparisons which look good. We should make the comparison against the essentials for those who find themselves on low income, those who survive on social welfare benefits.   Mr. D. Ahern: The out-turn for the consumer price index for all items, as per their overall statistical release in February 2000, shows that in 1999 the percentage increase was 1.6%. The Minister for Finance was probably referring to that figure. We make our calculations according to the rate of increase in the CPI from year to year. Every increase I have given has always been way ahead of the rate of inflation according to the CPI, the time honoured yardstick which is used. The fact that tobacco prices were increased will cause a distortionary effect in the CPI in the initial few months of the year but that will taper out. It will probably lead to an overall increase over the year but the rationale behind the price increase on tobacco was to put extra funds into preventing coronary disease and the effects of tobacco. Given that increases, particularly for old age pensioners, are 7.9%, as a minimum, and 8.9%, as a maximum, it is obvious that we will not reach that level in the CPI. It was fairly average over last year, although it was slightly higher in the last month than in previous months, which is relatively normal. It is not an exact science and sometimes a Minister in my position would be somewhat worried that the forecast on which the figures are based might be wrong but, generally speaking, the Department of Finance has been fairly accurate in regard to the CPI. On Senator Connor's point, one can choose many things and say whether it is inflation but this is the time honoured yardstick and it is the only one on which we have to go at this point in time.   Mr. Connor: It suits.   Amendment put and declared lost.   Mrs. Ridge: I move amendment No. 4:   In page 5, between lines 13 and 14, to insert the following new subsection:   "(3) The Minister shall as soon as may be after the passing of this Act prepare and lay before both Houses of the Oireachtas a report on the rationale for the different commencement dates of social welfare and tax aspects of the annual budget and in particular the possibility of paying all social welfare increases from 6 April each year.".   Amendment put and declared lost.   Section 1 agreed to.   Sections 2 to 5, inclusive, agreed to.

SECTION 6 Mrs. Ridge: I move amendment No. 5: In page 6, between lines 38 and 39, to insert the following subsection: "(1) Not less than 3 months after the passing of this Act, the Minister shall prepare and lay before both Houses of the Oireachtas a report on the extent of child poverty in the country and on the feasibility, in the context of surplus funds in the Exchequer, of increasing child benefit to £25 per week for children under 5 years and by 25 per cent for children over 5 years.".   We tabled practically the same amendment last year. I remember the Minister's reasons for not acceding to the request to increase child benefit to £25 per week. He referred specifically to the discrepancy in regard to children over five years of age. I am sure the Minister will be pleased to know that we have tried to accommodate that by seeking a 25% increase for children over the age of five. I read the Official Report of the Dáil debates on the Bill and am in total agreement with the points raised. Recently we received the Combat Poverty Agency report and I am convinced that early intervention is the best form of assistance one can give to children who are at risk. I do not need to spell that out any further.   Mr. D. Ahern: The latest ESRI figures from the Living in Ireland survey show that the extent of consistent child poverty has fallen between 1994 and 1997 to 18% from 23% and to 15% from 17%, while the numbers living in households below the 50% relative income line fell from 29% in 1994 to 24% in 1997. My view generally is that the best way out of poverty - I believe every Member of the House will accept this - is to give people a job. In 1990 one million people were at work and in 2000 some 1.7 million are at work. People would generally accept that inter-generational unemployment is decreasing. There was a time when people in my constituency from particular housing estates who put their address on an application form were refused a job. My experience in recent years is that these people are all getting jobs. It means the cycle of unemployment in their families is stopping. The best way out of poverty is a job. I fully accept the issue of child poverty needs constant attention. That is one of the reasons my Department looked again at the type of targets we should meet in the recent national anti-poverty strategy. I specifically asked my Department to include in future references or targets what we should be doing to reduce child poverty. That issue was subsequently raised by the social partners and has been taken up in the new partnership agreement. This amendment deals with payments between the ages of 0 to five and what one gives after the age of five for special increases. I have a basic view on this matter. Child benefit is the best way to address child poverty and to help families with children. It is a universal payment, irrespective of whether they are well off. Some people will say the well off should not get child benefit and there may cause for some discussion there in terms of the taxation of child benefit, which is not on the political agenda. As to whether the well off should not get child benefit and whether we should spend the resources better, that is a huge social and political issue which is not on our political agenda. The amendment tries to target benefit at younger children. It has been suggested that between 0 and five years is the key time because when children go to school such matters are picked up. If a family has children aged two, three, four and five years and we give them these special under five payments, as each year passes another child will go over the threshold of £20 per week or whatever and that family will lose a dramatic amount of their weekly income over three years. One may say that is the way it should be but my children are aged nine and 11 years and the expense is no less now than when they were aged between 0 to five years. We would be open to much criticism from people who have children aged 12 or upwards and who would say children become more expensive as they get older, not less expensive. Just because children are over the age of five does not mean they no longer exist. Doing it this way means that one can only give a lesser payment per child because it is a scattergun approach. Of all the social welfare schemes, however, it is probably the best. The issue of increasing child benefit will be kept on our agenda. In the Programme for Prosperity and Fairness, the Government has made a commitment that it will move towards a situation where the payment of child benefit will increase from £56 for the third and subsequent child to £100 over the period of the partnership. We will make substantial progress towards reaching that target. That means that dramatic increases in child benefit must be introduced in next year's budget and the following two budgets. For the reasons I stated, the way we are proceeding in this area is probably the best way. There is a commitment in the partnership programme to bring forward a strategy on child care by the end of this year. That will address the issue of supply and demand in this area. By the end of my tenure of office, but more particularly by the end of the partnership agreement, I hope that child benefit will have increased fairly dramatically, that we will have made substantial progress towards increasing the current payment of £56 for the third and subsequent child to £100. That is a firm commitment in the partnership agreement.   Mrs. Ridge: I do not agree with what the Minister said about the costs incurred in respect of children who are over the age of five. My intention in tabling this amendment was that the parents of children would have access to a greater amount of child benefit when children require more care, particularly pre-school care. From the age of five children have access to a free school system and parents' outgoings are less than for children under that age.   Mr. Costello: I am glad the Minister acknowledged that child benefit is the best way to provide income to combat poverty and to distribute social benefit in this area. I agree with that. It was a major disappointment that there were no significant budgetary concessions in the area of child care. There was an expectation that tax concessions would be introduced in this area. A commitment was given in the 1997 Fianna Fáil manifesto that concessions would be introduced, but that did not come to pass. As the Minister said, the years up to age five are significant. They are also significant in the sense that the State provides the smallest amount to parents in respect of child care to during those years. It does not provide a national system of support for the parents of children up to the age of five. It does not provide child care services, crèches or pre-school education. The primary school scheme provides for their education when children reach the age of four or five. While a good primary school system is in place, the State has not taken care of its responsibilities for children up to the age of four or five. In the absence of targeted measures introduced by the Government to assist parents in caring for children, increasing child benefit would be a way to assist parents in this regard. This area needs to be addressed. I welcome the commitment to develop a strategy on child care in the Partnership for Prosperity and Fairness. We will have to consider introducing means testing, if we go down the road towards introducing significant increases. I would favour going down that road. We must address the infrastructure we are prepared to put in place to provide for the care and education of children prior to their attending primary school. Coming from an area close to the Border, the Minister will appreciate that the first step taken by the then Minister for Education in Northern Ireland in the short-lived Executive was to provide a level of national pre-school education for children aged from three to four. That system is now in place in Northern Ireland. We have not provided any such system here. I am disappointed this section does not represent a significant move in the direction of improving the lot of children in terms of care and support. Dr. Henry: I listened carefully to what the Minister said and I am sure his heart is in the right place in terms of what he wants to do for children, but it is most unfortunate that we seem to have lagged so far behind the rest of Europe in what we have done for pre-school children. We need to have a sense of urgency about addressing this matter. I accept a child strategy will be brought forward and that there is an interdepartmental examination of child care but, having children of his own, the Minister will appreciate that money is very important when children are small. Perhaps the needs of the parents of twins and triplets could also be taken into account as they incur a good deal of expense all at once. The State's strategy in terms of its sense of responsibility for the early lives of children appears to be quite weak. The Minister probably saw the recent programme on Finnish nursery schools, which would make any mother with children attempting to work outside the home feel incredibly envious. Those strategies in Finland and similar strategies in France and other countries have been in place for decades. Despite cherishing the family in the Constitution, we seem to lag inordinately behind other countries in this area. Whatever the Minister can secure in this area will be well worthwhile. I am sure he intends to progress this area as fast as possible. We know only too well from numerous sociological studies here and abroad how seriously childhood deprivation, especially in the early years, affects the later development of children in every way, not only educationally but mentally, psychologically and physically. Any money invested in the early lives of children is well worth spending. I am sure the Minister would have the support of every Member of the House in that regard.   Mr. D. Ahern: I am not the Minister with responsibility for child care. That area is the responsibility for the Minister for Justice, Equality and Law Reform.   Ms Ridge: All we want is money invested in child care.   Mr. D. Ahern: I am the Minister with responsibility for income support for children through the child benefit scheme. I smile when I hear people say no significant provision was made for children and child care generally in the budget, given that the budgetary provision for child benefit was £106 million, which represents a 25% increase on last year's allocation. That is a very significant increase. As I am of the view that child benefit should be provided for all children, the allocation of £106 million is spread more evenly throughout the system and the increases are probably not as high as people would wish. Senator Costello said that nothing is being done in the area of child care, but that is not the case. Historically, a good deal of investment was made in the provision of child care, particularly in disadvantaged areas. I have responsibility for community development projects. The Deputy would be familiar with some of them around the country and probably in his constituency. Most of those premises have child care facilities, which were funded by my Department. The Department of Justice, Equality and Law Reform has also invested in this area over the years, although not as much as we would like. An amount of £250 million will be invested in the supply side of child care over the term of the national plan. In this year's budget, the Minister for Finance, Deputy McCreevy, announced that £46 million would be invested in the supply side. From an objective point of view, there is no point in investing a major amount of money in the demand side unless the required number of places are available. The position is similar to the £3,000 housing grant. All that did was put money into the pockets of the builders. The price of houses increased by £3,000. It did not solve the problem it was designed to address. Supply must be created before the amount of money is increased in relation to demand and more money is put into families' pockets. This is what the Minister for Finance, Deputy McCreevy, and the Minister for Justice, Equality and Law Reform, Deputy O'Donoghue, are trying to achieve with the £46 million. An equal amount of money will be paid every year over the period of the national plan. As I said in the other House, the Government will find it difficult to spent the full £46 million by the end of the year on increasing the supply. I have received £5 million for my area to provide out of school hours services under community development projects. I hope to have a scheme publicised and to have received applications for it by next month. Senator Henry referred to Finland. We have considered the position there and everyone would wish to emulate it. However, it is unfair to criticise the situation in Ireland given that the country has been on its feet only for a few decades. In financial terms, the country has been on its feet only for a few years and in a position where it could be said that some money was available for this type of investment. Ireland is a developing country in this respect and the issue must be considered in strategic terms. There are as many opinions on this issue as there are Senators and Deputies in the Houses of the Oireachtas. The new Programme for Prosperity and Fairness undertakes to come up with a strategy. I hope that by the end of the year there will be some indication in that regard. I also hope that the commitment in the programme to substantially increase child benefit will be part of the overall strategy.   Amendment put and declared lost.   Section 6 agreed to.   Sections 7 to 9, inclusive, agreed to.   NEW SECTION.   An Cathaoirleach: Amendments Nos. 6 and 7 are related and may be discussed together. Is that agreed? Agreed.   Mr. Connor: I move amendment No. 6: In page 8, before Section 10, but in Part III, to insert the following new section: "10.- The Minister shall consider the implications of- (a) paying the respite care grant to all carers including those who are presently excluded by the means test, (b) increasing the present weekly income disregard to £250 per week, and (c) removing the disqualification whereby Carers in receipt of social welfare payments are effectively excluded from qualifying for a carer's allowance, and shall report to Dáil Éireann thereon within 3 months of the passing of this Act.".   The amendment asks the Minister to consider the implications of paying the respite care grant to all carers, including the many carers who are currently excluded by the means test. It also asks the Minister to consider increasing the current weekly income disregard to £250 per week and removing the disqualification whereby a carer who is in receipt of a social welfare payment is effectively excluded from qualifying for a carer's allowance. Perhaps the Minister could deal with the issues raised in the amendment before I elaborate further. Mr. D. Ahern: I was the first Minister to bring forward a £200 respite care grant. This was paid on 3 June 1999 to 12,000 carers at a cost of £2.4 million. This grant is paid to carers who are receiving the prescribed relative's allowance and the constant attendance allowance. It will also be paid to carers who are in receipt of the new carer's benefit which was introduced in the budget. From this year, the Department of Health and Children will pay respite care grants to all persons in receipt of a domiciliary care allowance who are not in receipt of a carer's allowance. This is another new change. Based on the estimated 50,000 people who are caring for adults and children with disabilities, the cost of paying this respite grant to all carers would be in the region of £15 million a year. There is a need to consider that in the context of the budget. The figure of 50,000 is a rough estimate.   Mr. Connor: It could be 100,000, according to the Carers Association.   Mr. D. Ahern: It could be closer to 100,000.   Mr. Connor: Yes.   Mr. D. Ahern: The issue then is how to decide which carers would be entitled to the grant, based on the type of care required. One could ask how long is a piece of string, but ultimately one must target resources at those most in need. The more it is extended, the more difficult it becomes to manage in terms of whether the money is going to the right people. At present, all those in receipt of a carer's allowance will receive the respite care grant. The sum was £200 last year but this will be increased this year by £100, bringing the total to £300. I hope that, over a number of years, the total will be gradually increased to make it a reasonable payment to those in receipt of carer's allowance. In relation to the income disregard, I made changes in the 1999 budget whereby the first £150 of joint weekly income for married carers was not taken into account. In the case of single earners, the first £75 of weekly income was disregarded. If the disregard was increased to £125 for a single person and £250 for a couple, as suggested in the amendment, the estimated cost would be approximately £16.5 million. Regarding the issue of removing the disqualification whereby carers in receipt of social welfare payments are effectively excluded from qualifying for the carer's allowance, a review of the carers allowance was published in 1998. It noted that the carer's allowance is an income support payment and not a payment for caring. The review suggested strongly that the practice of paying only one allowance should continue as it is a fundamental feature, with few exceptions, of all social welfare payments and is designed to ensure that limited resources are not used to make two income support payments to an individual. I will return to this matter if the Senator has a view on it. There have been calls for the abolition of the means test; it has become a clarion cry. No payment under the social welfare code in the social assistance area, with the exception of child benefit, is not means tested. The rationale behind means testing in the social welfare area is to ensure that the available resources go to the people most in need. For example, if the Minister has a certain amount of money, it may be suggested that the means test should be abolished. However, if that happened, somebody who is very well off and caring for somebody in the home would be as entitled to a carer's allowance payment of approximately £88 as a person with a very low income. I do not agree with that. If there is a certain amount of money to give in this area, it should be targeted at those most in need. I am not dismissing the difficulties people face, irrespective of their income. Each couple has particular difficulties in relation to caring for people in the home. However, ultimately, the State will never be able to repay a family for minding an incapacitated person in the home. The State is not in a position to do so, but it can give income support to low income families to help them meet some of their needs. This is the rationale behind it and it is generally accepted that the abolition of the means test is not feasible, irrespective of the political party in Government at this time. Abolishing the means test - based on a figure of 50,000 carers - would cost the Exchequer £150 million in a full year.   Mr. Connor: The Minister has trotted out old arguments relating to the cost of carer's allowance without considering the money which would be saved in other areas if we put in place a more comprehensive home/care allowance system. Every welfare home and private nursing home that cares for elderly people is literally bulging at the seams. Let us examine the case of an ordinary person who is being cared for in a welfare home which is funded by one of the eight health boards. The only contribution that person may make to their own care is through their non-contributory old age pension and the net cost to the State for their care will be approximately £400 to £500 per week. The amendment requests that the work done by all those who provide care for elderly parents, relatives or neighbours be recognised. There are approximately 14,000 recognised carers in the country. However, the Minister has admitted that there are probably at least 50,000 carers while the Carers Association has informed us that there are at least 100,000 people who provide care in the home for people who need it. The Minister indicated that it would cost £16.5 million if he was to increase the current weekly income disregard to £250 per week. One cannot ignore the fact that this is a large sum but we must consider the beneficial social impact which would result from its being spent in this area. If the disregard was increased to £250 per week, I believe the number entitled to the carer's allowance would rise to approximately 20,000. However, it would also mean that thousands of people who not have to be cared for in public institutions.   Mr. D. Ahern: I will outline the exact position with regard to the figure of £16.5 million when replying to the Senator.   Mr. Connor: We are dwelling on the cost involved in increasing the income disregard but we must also recognise that there are huge savings to be made. Such an increase would eliminate the need to provide thousands of beds for the elderly in welfare homes, particularly if these people do not require daily nursing or direct medical care. The best place to care for an elderly person who is, to one degree or another, incapacitated is in their home. The Minister indicated that increasing the income disregard would cost £16.5 million. Has his Department considered the savings on the other side, particularly in view of the huge costs incurred by the health boards? The Minister indicated that a report has been carried out into removing the disqualification whereby carers in receipt of social welfare payments are effectively excluded from qualifying for the carer's allowance and he appears to be keeping an open mind on the subject. There is a need to give careful consideration to this matter because there are people who are in receipt of reduced rates of unemployment benefit or assistance because they probably have some form of income from part-time work or another source. However, some of these people also provide care for elderly parents or relatives and if they seek payment of a carer's allowance it is paid at an almost identical rate to the benefit they already receive. The individuals to whom I refer hardly benefit by being willing to provide care for elderly relatives or other elderly people. I see nothing wrong with paying these people a supplement on their social welfare income which, where relevant, would comprise a carer's allowance. The amendment requests that the Minister should investigate this matter and report to the Dáil within three months of the Bill being enacted. In my opinion he should produce a comprehensive report because while the suggested changes may result in additional expenditure, there will also be huge savings. The report, if it is to be meaningful, should consider this matter in the context of the savings which may be made in addition to looking at the extra expenditure involved. That is the reason for the amendment. There is no justice in the fact that only one-quarter of recognised carers qualify for the carer's allowance. There is a pressing need to increase the income disregard to allow at least a further 10,000 people to qualify. We should tackle this matter progressively so that, in less than five years, at least 50,000 carers will receive some recompense from the State for the highly essential work they do.   Dr. Henry: When the Minister for Finance, Deputy McCreevy, came before the House shortly after introducing the Finance Bill in the Dáil, I strongly supported the individualisation of taxation because, having been taxed for all my adult life on the basis of the earnings of another person, I realised that people can be placed in a very invidious position. It is for that reason I support the individualisation of the carer's allowance put forward in these amendments. It is not right that payment should be dependent on the earnings of another adult. I stated that individualisation was correct in relation to taxation and I believe it is also correct to introduce individualisation in respect of these benefits. I also stated that it was right in terms of the universal payment of child benefit because one never knows how much money is being passed on to those who are doing the caring, be it for children or old people. The officials in the Department of Finance who deal with taxation should be able to devise a scheme where funds could be recouped from the families of the rich if they were receiving an inordinate amount of money because some woman - it would definitely be a woman - whose husband earned a great deal of money, stayed at home to care for an elderly relative. Elderly people who are well off deserve as much care, comfort and attention from their families as those who are poor. I would like these people to be nurtured in the bosoms of their families for as long as possible. The provision of resources is splendid because it is easier if one can hire a home help or afford to place one's relatives in a nursing home. However, old people like to remain at home for as long as possible and any support we can give them in that regard is also very important.   Mr. Costello: I agree with the comments made by Senators Connor and Henry. The carer's allowance was a good initiative when it was introduced but we have been slow to extend it and use it to the full.