The Cedar Lounge Revolution

Meanwhile, back at the Seanad…Social Welfare Special! June 30, 2011

Last week the Seanad discussed the Social Welfare and Pensions Bill. Let us start with Senator John Kelly of our social democratic/democratic socialist party…

Senator John Kelly: I will focus on what has gone wrong and what changes need to be made. While I do not propose to reduce our generous social welfare rates, it is unfortunate that a series of other bonuses have been introduced for those in receipt of social welfare payments. Free travel and electricity, rent allowance, mortgage subsidies, medical cards and so forth make it difficult for recipients of social welfare to take up employment. They are one of the reasons for the large number of people who are in long-term unemployment. If new charges, for example, water rates or property taxes, are introduced, social welfare recipients should not be automatically exempted from paying them as to do so would make it even more difficult for people on social welfare to take up a job.
Everyone in receipt of social welfare costs the State €21,000 per annum. By giving employers €10,000 for taking one person off the dole queue, we would create 100,000 jobs in the retail and tourism sectors. It should be mandatory for anyone offered such a place to accept it. Those who refuse to participate should have their payment reduced by 5% per annum until such time as they find work. The creation of 100,000 jobs would save Ђ1.1 billion per annum.
Overpricing in the hotel sector, an issue I raised on the Order of Business last week, was referred to by two Senators this morning. I propose adopting the French model under which two star, three star, four star and five star hotels may only charge prices within a fixed price bracket. This would prevent hotels from charging ridiculous prices, such as the €499 per night charged by some establishments last weekend to coincide with a number of concerts in Dublin.
I also raised the issue of rates last week. I ask the Minister to outline the Government’s proposals in respect of the rates charged to small businesses. If a business goes under and only one person joins the dole queue, the cost to the taxpayer will be €21,000 per annum. This does not make sense of the company’s rates bill is €5,000 per annum. As I have noted previously, for every negative action there will be a reaction.
All of the issues I raise create costs for the Department of Social Protection. Only one small pot of money is available to this country. It is wrong to think of various Ministers having different budgets because we only have one budget. As such, we must formulate ways of ensuring we do not create costs for the taxpayer. Adopting my proposals would reduce the social welfare bill.

Now I know this will come as a shock to some of you, but on the odd occasion I’ve heard Labour Party members express unfraternal opinions about Sinn Féin. Very very unfraternal. And I’ve even – and I know this too will come as a shock to even more of you – heard LP members suggest that SF aren’t really left of centre.

So it’s remarkable to hear from Senator David Cullinane of Sinn Féin the following response that seems more than a little bit positioned in what I’d describe as traditional social democracy, or even – perish the thought – socialism. Or, if you prefer, stating the bleeding obvious.

Senator David Cullinane: The Government must avoid making the mistakes of the previous Government. One of its biggest mistakes was to believe that cuts provided the way out of recession, such as cutting people’s pay and welfare benefits. A previous speaker spoke about some of the secondary benefits people on social welfare receive. The reason they receive those benefits is because they need them. When the low income and middle income families see their wages cut, that has the opposite effect and we have seen that. We have had all these cuts over the last number of years, and we have seen a reduction in retail sales. The reason small businesses across the State are suffering is that footfall is down and people have less money to spend. They are fearful and are tightening up their spending. That is why I have called several times for a proper discussion on the future of the JLCs. It is very important to me because if we continue to cut the pay of low income families, which it seems the Minister is about to do, this means that the industries where those people work, such as the retail sector, hairdressing or whatever, will be punished again because people will have less money to spend in restaurants, grocery stores and so on. Every euro taken from the pocket of a low income family is taken from the tills of local retailers. That has happened over the last number of years and will happen again if this Government continues on its course.

So, let me see if I’ve got this right. It’s the Sinn Féin Senator who is defending people on social welfare, the Labour Party Senator who is seemingly arguing that various supports are little better than optional add-ons.

These things are clues.

As is the following. For the irrepressible Senator Kelly was opining on a different aspect of social welfare the next day:

Senator John Kelly:    I welcome the Minister for Social Protection, Deputy Joan Burton, to the House. It is great to see she is not afraid to address us and listen to our gripes. The Minister has the most important job of anyone in Cabinet in dealing with our social welfare crisis. She has the largest budget and, unfortunately, everything negative that happens in the economy lands on her lap. There is a case to be made for Ministers knocking heads together and realising that whatever is done wrong in one Department costs in another, and it always costs the Department of Social Protection. Many examples of this exist and I will give one. I have raised the issue of commercial rates with the Minister of State, Deputy Perry. They are crippling small businesses which might employ one or two people. They could be closed down because of an amount of €4,000 or €6,000 per year. However, it would cost the Minister for Social Protection €21,000 if one employee is made redundant and €42,000 if two employees lose their jobs. We must come together and formulate a policy whereby we seek common sense. As I stated to Deputy Perry, we are dealing with one pot of money. It does not matter what Department has €20 billion and what other Department has €5 billion; it is one pot of money. If we come together we will be able to work our way through it.

I have great respect for Senator Mooney and he asked where it will all end with regard to the social welfare budget. Only the Lord himself knows that but I know when it started, which was many general elections ago when a previous Taoiseach bought elections by promising to increase social welfare in all its guises—–
Senator Darragh O’Brien:    The Opposition stated it was not enough.
Senator John Kelly:    Promises were made to increase unemployment assistance to more than €200 per week, to increase the pension to €300 per week and to give medical cards to millionaires aged over 70. Unfortunately this must now be addressed.
Many things were done wrong in the past. People on social welfare benefit from free schemes attached to social welfare and do not have to make certain payments. We may have another impending crisis with regard to water rates and a property tax. An argument might be made that people on social welfare should not have to pay these. This will make it twice as difficult for a person on social welfare to be motivated to go to work. The same person on social welfare is probably better off than somebody on the minimum wage.
Fraud in social welfare is rife. Senator Moloney mentioned photo ID, which is a great idea but I do not know why we do not consider fingerprinting all of the citizens of the country. Any law-abiding citizen would be quite willing to be fingerprinted with regard to claiming social welfare. If a person is law-abiding there will be no issue with this. We should consider it.

Let me observe, and speaking only for myself, in my opinion he’s wrong on that score. Completely and utterly wrong. But then what of this:

Senator Moloney referred to the transfer of community welfare officers. The system is in crisis because the Department has asked community welfare officers, the most loyal and hardworking employees in the public service, to transfer to a Department about which they know very little. Moreover, they do not know what is in store for them in future. The Minister should meet a delegation of community welfare officers to discuss their future because they are not being kept informed by the Department.

And what, pray tell, was Senator Kelly’s career prior to joining the Second Chamber?

Ah. And what of that other issue of the Bill they’re discussing? Take it away again Senator Kelly…

I cannot understand the reason some people are making an issue of the decision to increase the age of retirement to 66, 67 and, ultimately, 68 years. My father and mother who are 82 and 83 years old, respectively, run a petrol station. They are well able to do so and do not want to be unemployed or redundant. Most people aged 66, 67 or 68 years want to continue working. When one is 20 years old one believes a 50 year old is elderly and when one is 66 years old one believes people in their 90s are old. Let us take a common sense approach to this issue. If someone is in poor health at the age of 65 or 66 years, he or she should be entitled to a pension.

But you think he’s alone in this new model Labour Party? You think wrong…what of Senator Hayden, also of the LP?

Cutting the 8.5% rate of employer’s PRSI is an exceptionally important measure as part of the jobs initiative. I am only too well aware of what happened in this country in the 1980s. At the time, I worked in Darndale, Killinarden and Ballymun and I saw those communities sink into the despair of unemployment, recession and the issues which came with that. We only have to look at our nearest neighbour, in communities such as south Wales, where a whole category of people are referred to as “NEETs”, which means “Not in employment, education or training”. There are three generations of families in this region who have never known a family member in employment. These are important measures that will prevent Ireland going back to where we were in the 1980s, or having the experiences of some of those communities.
In respect of the increase in the pension age, we need to ensure that there is no discrimination against older people in the workforce. I have spoken to the Minister on another occasion about this and I know she is committed to it. It is also very important that older people are not discriminated against when it comes to educational and training opportunities, and are given access to good quality employment. We need to work hard to ensure that happens.
I have had the pleasures of teaching and tutoring in UCD over the last few years, and I have met a significant number of young people going through that university. I am aware of the difference something like the internship programme can make to young people coming through the educational system today. There was a whole generation of young people in the 1980s who never got access to proper, decent job opportunities during that recession. The Minister has shown her commitment to the internship programme. When the last Government stepped down, there was not one single internship place in this country, and I know this Minister is committed to providing 10,000 internship places. If she has anything to do with it, that 10,000 will be 20,000. I commend the Bill to the House.

And Senator Moloney?

Senator Marie Moloney:  All Members are aware of the country’s financial state and how much we are tied up with the EU-IMF deal. Job creation and getting people back to work is paramount for the Government. Our esteemed colleagues on the Opposition benches agree with this and will support many of the initiatives that we will introduce which will bring about job creation.
Social welfare deals mainly with the unemployed, people with illnesses and disabilities and State pensions. While a large percentage of its budget goes on providing for these areas, part of it goes towards creating employment, getting people back into the working environment and towards the retention of existing jobs. I welcome the lower 8.5% rate of employer PRSI contribution being halved to 4.25% from 2 July 2011 which will continue to apply until the end of 2013. Many employers are struggling to keep afloat at this time and every business has been affected one way or the other by the recession, except maybe undertakers. I hope that by the end of 2013 the Minister will be in a position to revisit this with a view to extending the reduction for a further period, provided as Senator Healy Eames said earlier, that the benefits of the reduction are monitored.
We must make being in employment incentive-driven rather than having a situation where people are happy to remain unemployed. It should never be the case that people can be better off being unemployed. Unfortunately, this appears to be the mindset adopted by some individuals at present. Many state that they are better off on social welfare because they can avail of secondary benefits such as medical cards, rent or mortgage supplement, reduced local authority rent and the back to school allowance. A distinction must be made between people who genuinely cannot work and those who quite simply do not want to work.
It would be desirable if measures were introduced whereby those in receipt of long-term unemployment could perhaps give something back to the community. Many of those who are unemployed have various levels of skills and they would be more than willing to put those skills to good use. They could, for example, work in their local communities for one day per week or per fortnight. What a difference this would make for local communities, Tidy Towns associations and elderly people who might have some odd jobs which need to be done in their homes but who are not physically capable of doing them. Some people detest being regarded as a statistic on the live register. They would feel a sense of purpose and would, for as long as they are unemployed, have a reason to get up each morning if they were given the opportunity to put their skills to use in the way I have outlined. Many of those who are unemployed take pride in their communities and would have no difficulty “mucking in”.

Which is interesting… but consider the following from the same speaker;

I have no interest in engaging in the blame game. I refer to the tendency to blame the previous Government for everything that has happened. Everyone in the country knows what happened and the requisite punishment has been dished out. It is time to move on. However, there is one dastardly act for which I cannot forgive the previous Administration, namely, the reduction in the minimum wage. I accept that those involved will argue that this reduction was introduced to benefit employers and to assist job creation. However, did these individuals not stop to consider the effect what they were doing would have on the lives of people who are trying to survive on the minimum wage? I ask those opposite whose party was previously in power whether they could survive on €306 per week. Could they feed, clothe and educate their children, run a car and heat their homes on that amount? I would find it extremely difficult to do so. I commend the Minister on giving this matter priority and on restoring the minimum wage to its previous level. I thank Senator Mooney for agreeing that the previous Government made a mistake in respect of this matter. It is very honourable of him to admit that.
During the general election campaign I met large numbers of unemployed people, many of whom are graduates. These individuals often indicated that they would be willing to work for nothing. I refer to young solicitors who are willing to do anything, even work free of charge, in order to gain access to an internship.

And so the deserving and undeserving welfare recipients return to the discourse. Albeit in not quite such explicit terms.

Finally, what of this from the Minister herself?

People spoke about incentives to work. I do not think it is a secret that this is something that is lacking in the current social welfare system. The example was given earlier by Senator Healy Eames of a young man with a family who was reluctant to accept a job with a salary of €40,000. Let me try to do the maths. For an unemployed couple with three children, one benefit is the entitlement to a medical card if one or more of the children have an ongoing medical condition. If one is in low-paid employment and does not have a medical card or even a GP card, we all know how expensive it can be. For example, for a child who has a couple of bouts of asthma over one winter, the cost of visiting a GP can be €50 to €60, certainly on the northside of Dublin, and then there is the cost of prescriptions and inhalers. This problem is easily addressed by allowing people to retain their medical cards if they move into work, as in the back-to-work schemes that Senator Moloney spoke about. I was involved in setting these up many years ago when unemployment was high. We had an 18% rate of unemployment at the end of the 1980s and the beginning of the 1990s.
The other big differential between those who are working and those on social welfare is, of course, rent supplement. Let us be honest about this. For a family of five renting a three-bedroom house, particularly in Dublin, this can be worth as much as €1,000 per month, without any taxation considerations. A person who is the breadwinner for a family of five and earning €40,000 per year must pay PRSI, the universal social charge and a small amount of income tax, whereas a family on rent supplement could be receiving a housing benefit of €1,000 per month – which would not be untypical for such a family in the Dublin region – or, for a family outside Dublin, a couple of hundred euro less. We are talking about a differential of €10,000 to €12,000 per year, and that is what constitutes the difference to which people have referred in their examples.
Shortly after taking office, I asked my Department to carry out research on this, because employers do say they offered a job to somebody at €35,000 or €38,000 and he or she was not interested. I do not think those examples are in any way mythical, but they do relate to people with a number of children who are entitled to a medical card. The medical card issue is addressable by instituting a transition period, but the rent supplement issue can only be addressed by a concerted effort by the Departments of the Environment, Community and Local Government and Social Protection, working together to make arrangements such as the rental accommodation scheme, or the RAS, as people call it in Dublin. We must remember that in a family receiving rent supplement, only the person who receives the rent supplement is assessed for the contribution, whereas most differential rent schemes assess the social welfare income of all adults in the house.

Now maybe it’s me, but if I were standing in the Second Chamber discussing such matters I think I’d have chapter and verse on just why those examples stand up and more importantly again how many people do they impact upon.

It might also be useful in such a debate to have the figures for the levels both numerically and in percentage terms of welfare fraud. But here’s an helpful pointer from a year or two back. Why yes, the Oireachtas Joint Committee on Social and Family Affairs [who by contrast with our much vaunted second chamber were able to discuss the matter in much less… heated… terms]. Now that took me all of 30 seconds to find and I don’t have all the wealth of resources that members of the Oireachtas can bring to bear on such matters.

Most pertinently, though, consider the first sentence in the first paragraph quoted above. ‘Incentives to work’. It surely isn’t the social welfare system, or recipients, that have seen the unemployment numbers rise and in the face of the worst recession in a generation it’s hard to understand why Labour Party Senators or Ministers would be articulating this line about ‘disincentives’ to work.