SOCIAL WELFARE AND PENSIONS BILL 2013SECOND STAGE SPEECHDAIL ÉIREANNBY THEMINISTER FOR SOCIAL PROTECTIONJOAN BURTON T.D.24TH October 2013
Check against delivery
I move that the Social Welfare and Pensions Bill 2013 be read a second time.
Ireland is thankfully emerging from the catastrophic fiscal crisis that we inherited upon taking office in 2011. We are about to exit the bailout programme and stand on our own two feet again.
The Department of Social Protection is making a very significant contribution to that recovery. We have reformed the way the Department engages with jobseekers to help them back to work, and firmly maintained the welfare safety net for those most in need. All of this has been done while reducing overall welfare expenditure in order to assist with the necessary task of repairing the public finances.
Helping people back to work:
I’ve said many times before that the single most effective way of reducing welfare expenditure is getting people back to work. The proof of this is now being witnessed.
When negotiations on the Budget began, the Department was initially requested to make new expenditure reductions of €440 million. However, we were able to limit expenditure reductions to €226 million – as part of an overall €290 million adjustment – largely because of the performance of the Live Register.
At the height of the crisis, there was a very real risk that the Register would exceed 500,000. Instead, thanks to the recovery initiated by this Government, the Register is – thankfully - falling.
More than 20,000 people have left the Register over the past year. And given the trend in the figures over the last few months, I am fully confident that the Register at the end of October will fall below 400,000 for the first time since May 2009. This is still far too high, of course, but we are making progress, slowly but surely.
Every 10,000 we help off the Live Register saves around €95 million in yearly welfare expenditure. This is why, since coming to office, I have focused on transforming the Department from the passive benefits provider of old to an active, engaged and focused organisation that provides employment services for jobseekers and employers alike. It is why I have placed such emphasis on our Intreo “one-stop shop” offices, where jobseekers can get their income supports and employment supports in the same place for the first time.
I have secured additional capital funding next year which will allow us complete the full roll-out of Intreo to all of the Department’s offices nationwide.
The numbers in work increased by 33,800 in the last year, and the private sector is now creating 3,000 new jobs every month. And while not wishing to overstate it, as the recovery picks up some pace, there will be a steady flow of additional jobs created in our economy next year.
It is chiefly as a result of this progress that I have been able to lower the expenditure reductions required of my Department in 2014. I am keenly aware that reductions of €226 million will still impact on, and cause difficulties for, social welfare recipients.
However, the lower adjustment means I have protected the State Pension, Carer’s Allowance, Disability Allowance and all other core weekly payments upon which people depend. I have also protected crucial supplementary supports for pensioners, carers and people with disabilities, such as the Fuel Allowance, the Electricity/Gas Allowance, Free Travel, the Half-Rate Carer’s Allowance and the Respite Care Grant. Child Benefit has also been protected in this Budget, and will remain a vital universal support for all families and all children. And we are finding the room, despite the overall budgetary pressures, to invest further in crucial initiatives such as the roll-out of many more Breakfast Clubs, to ensure schoolchildren in disadvantaged areas get the right start in the mornings, and the right start in life.
This shows that we have protected the welfare safety net, despite inheriting a state of economic emergency that required urgent and drastic action to address.
Fixing the public finances:
The Department has maintained the safety net and reformed services for jobseekers while at the same time playing its full part in the deficit reduction programme necessary to exit the bailout. Overall welfare expenditure will fall below €20 billion in 2014 - despite demographic pressures in the shape of the increasing number of pensioners.
Despite those pressures, this Government has abided by its commitment to protect core weekly social welfare rates, including the State pension. For example, next year, my Department will provide €190 million extra in funding for State contributory pensioners and widow and widower contributory pensioners.
The fact that we are doing this in the context of a reduced overall spend demonstrates the degree to which the Department is prudently managing its budget – and protecting against poverty - in exceptionally difficult times.
And in a wider sense, as I have said many times, strong and responsive welfare provision for those who need it does more than just provide a safety net. Welfare is spent at local level, in shops and businesses in every community. It continues to represent a vital demand stabiliser, even as economic activity and employment grows.
Opportunities for Young People:
But there is a difference between falling back on welfare when it’s needed and becoming dependent on it in the long term or across generations. Long-term welfare dependency is something we must prevent as the recovery picks up pace and more opportunities become available. In particular, signing on for Jobseeker’s Allowance on a person’s 18th birthday is not the start to adult life that any parent would want for their child. We have to be more ambitious for our young people.
I’m making the changes relating to Jobseeker’s Allowance for young people to place a greater emphasis on work, training and education supports rather than income supports. This will ensure that young people are always better off in education, employment or training than claiming.
To facilitate this, the Department will enhance the range of opportunities currently on offer in the form of internships, participation on employment schemes, subsidised private-sector recruitment, and supports for self-employment.
The full range of youth employment initiatives will be set out in our plan for the implementation of the EU Youth Guarantee, which will be finalised and submitted to the EU by the end of the year. As part of that, we will be looking to maximise the share of EU funding allocated to Ireland.
Even before any EU funding is agreed, the Department is already committed to spending €1.08 billion next year on work, training and education places and related supports for jobseekers generally – an increase of almost €85 million on the projected spend this year.
Change in activation arrangements for older jobseekers
As well as the need to ensure more opportunities for our young people, I am very conscious of the need to protect and support those who have worked and paid taxes over a long period. Many workers continue to face compulsory retirement in their early 60s, while other workers of the same age have lost their jobs in recent years – well before they reach State pension age and can claim their State pension. We have to strike a balance between the pressures of demographic change and the needs of those who have made a substantial contribution to our society over the years.
In recent Social Welfare Acts, I introduced provisions compelling unemployed people to engage with activation processes. I believe this is only right and proper – that in return for the Department doing its best for jobseekers in terms of assistance and support, jobseekers must do their best to engage with the Department.
However, in recognition of the difficult position facing some older workers – as well as their longstanding contribution to the State - I have instructed Departmental staff that, from January 2014, such compulsory conditions will no longer be applied to older people who seek the support of the jobseeker schemes in advance of pension age. In addition, arrangements will be made so that these older people will only have to register with their local office once a year and will have their jobseeker payments paid directly into their bank accounts.
This instruction means that persons on the jobseeker schemes aged 62 or over will not be subjected to the activation-related sanctions which are provided for in legislation, such as payment rate reductions and temporary withdrawal of benefit. However, where a person over 62 wants support to reskill or re-train, they may voluntarily seek to avail of an array of such supports. In this way, we will continue to support longer working while acknowledging the contribution of those moving towards retirement.
I would like to point out that this initiative should be viewed in tandem
with other arrangements already in place for jobseekers aged between 65 and 66. These arrangements provide that Jobseeker’s Benefit requalification provisions do not apply in the case of a person aged between 65 and 66 years – meaning that if a person qualifies for benefit at age 65, or their benefit is due to expire at age 65, benefit will be paid to 66. Furthermore, in the case of a Jobseeker’s Benefit recipient under 65 whose claim spans from one benefit year into another, a new Relevant Tax Year requirement is not applied in the case of entitlement relating to the second benefit year.
Separately to the above, I am coming to the end of my deliberations on the current issues on defined benefit pensions and I expect to have provisions shortly in the House on these matters.
Main provisions of the Bill:
I will now outline the main provisions of the Bill.
Section 1 provides for the short title, construction, collective citations and for the commencement of sections by way of commencement order.
Section 2 provides for the definition of certain common terms used throughout the Bill.
Section 3 provides for the second element of the Budget 2013 decision to broaden the base on which PRSI contributions are charged so as to provide that the exemption from PRSI that applies to employed contributors and occupational pensioners under 66 whose only additional income is unearned income will be abolished with effect from 1 January 2014.
The additional unearned income will now become liable to PRSI at 4% provided the person is a chargeable person for Revenue purposes. Essentially, a chargeable person means those with unearned income in excess of €3,174.
This will not apply to PAYE taxpayers with no other income, or additional income less than €3,174. In addition, people who have reached State pension age of 66 are not liable to pay PRSI, and therefore will not be affected.
Sections 4 and 7 increase the number of waiting days for entitlement to Illness Benefit and Injury Benefit respectively from 3 days to 6 days.
This change takes effect from 6 January 2014.
Section 5 provides for the alignment of the minimum and maximum rates of Maternity Benefit to a standard rate of €230 per week.
The change only applies to new claimants and comes into effect from 6 January 2014.
Section 6 provides for the alignment of the minimum and maximum rates of Adoptive Benefit to a standard rate of €230 per week.
The change only applies to new claimants and comes into effect from 6 January 2014.
Section 8 provides for the discontinuation of the payment of a Bereavement Grant in the case of deaths occurring on or after 1 January 2014.
Section 9 provides for the amendment of the rates of Jobseeker’s Allowance payable to certain claimants aged under 26 years.
A reduced weekly rate of €100 rate currently applies to 18 to 21-year-olds and a reduced rate of €144 applies to 22 to 24-year-olds, in both cases where the claimant does not have children.
This section provides that the reduced weekly rate of €100 will continue to apply to existing claimants aged between 18 and 21 years until they reach 25 years, and will also apply to new claimants aged between 22 and 24 years.
Section 9 also provides that the reduced weekly rate of €144 will continue to apply to existing claimants aged between 22 and 24 years when they reach 25 years and will apply to new claimants who are aged 25 years.
In addition, these lower rates of Jobseeker’s Allowance will apply to claimants aged 25 and under who have exhausted their entitlement to Jobseeker’s Benefit.
Claimants who have children will be unaffected by these measures.
These changes will apply from 15th January 2014.
Section 10 provides for amendment of the rates of Supplementary Welfare Allowance payable to persons under 26 years.
The reduced weekly rate of €100 rate (currently applicable to 18 to 21-year-olds) will apply to persons without children who reach the age of 22 from 9 January 2014 and to new claimants aged 23 and 24, also from 9 January 2014.
The reduced weekly rate of €144 (currently applicable to 22 to 24-year-olds) will apply to persons without children who reach the age of 25 from 9 January 2014.
Section 11 provides for the discontinuation of the Mortgage Interest Supplement scheme for new applicants with effect from 1 January 2014 and allows for a winding-down of the scheme for existing claimants over a four-year period, i.e. by 1 January 2018.
Section 12 provides for the discontinuation of:
(a) the higher personal weekly rate of Invalidity Pension (€230.30) payable where the pensioner attains 65 years of age on or after 2 January 2014, and
(b) the higher weekly rate of increase of increase for a qualified adult (€206.30) payable where the qualified adult attains 66 years of age on or after 2 January 2014.
Section 13 provides that where a specified illness or disability payment is paid by the Department of Social Protection to a person who is unable to work as a result of an accident, injury or disease, and that social welfare recipient has been compensated for that accident, injury or disease (whether by way of court settlement or otherwise), the amount of such illness-related social welfare payments that have also been paid as a consequence of that personal injury is to be repaid to the Minister by the person liable to pay compensation (in most cases insurance companies).
Depending on the circumstances, this amount can be partially or fully offset by the compensator against any compensation for loss of earnings or profits.
Part 3 and section 14 provide for amendment to section 38 of the Personal Injuries Assessment Board Act 2003 consequential to section 13.
Section 15 provides for the definition of the “Principal Act” to mean the “Pensions Act 1990”.
Section 16 provides for the inclusion of a reference to the Surviving Civil Partner (Contributory) Pension in section 59B of the Pensions Act.
Section 17 provides for the inclusion of a reference to the Surviving Civil Partner (Contributory) Pension in section 59C of the Pensions Act.
Section 18 inserts a new section 59H into the Pensions Act and provides the trustees of a pension scheme with the power to amend the scheme rules to ensure that the correct occupational pension is paid at age 65.
This amendment arises from the change in the qualifying age for State Pension from 65 to 66 from January 2014.
It provides for the cessation of a bridging pension which may be payable in the period before the State Pension becomes payable and for determining the correct rate of occupational pension payable in the case of an integrated pension.
That completes the main provisions of the bill.
Balancing the needs of those dependent on social welfare against the money available is extremely difficult, but I assure the House that the Government has done and is doing its utmost to protect the most vulnerable people in society.
I welcome the fact that the level of the adjustment to the social welfare budget is less than that originally requested, and that we have protected core weekly rates and the crucial secondary schemes and supports mentioned earlier.
In 2014, my Department will continue to help more people back to work, reduce the overall welfare spend as part of the sustained effort to repair the public finances, and ensure the safety net remains firmly in place for those who need it most.
I commend this Bill to the House.