Speech
Minister Doherty Statement at the Pre Budget 2019 Forum
From Department of Social Protection
Published on
Last updated on
From Department of Social Protection
Published on
Last updated on
Opening Remarks by Minister for Employment Affairs and Social Protection, Regina Doherty, T.D, At the Pre Budget 2019 Forum, Dublin Castle
CHECK AGAINST DELIVERY
Friday 20th July 2018
Good morning everyone and welcome to this year’s Pre-Budget Forum.
I am very pleased to be here and thank you all for attending today.
The Pre-Budget Forum is an opportunity for all of us to share views on the future direction of the social protection system, particularly in the context of Budget 2019. The groups here today represent a wide cross-section of society, have a wide range of expertise, and have a crucial role to play in supporting people in need throughout the country.
I want to take this opportunity to thank each of you for the work that you and your organisations carry out, year in year out. Through your efforts, individuals, families, businesses and communities are better equipped to cope in what are often difficult circumstances.
The work of my Department is also better informed by the insights that you provide on how our schemes and services actually impact on people across the country. The effectiveness and reach of our services is boosted by the efforts that you make to increase awareness of my Department’s services, and by helping people to access those services.
Given your central role, I believe that it is important that I hear your views directly on how we can improve our services and on the changes I should prioritise in the development of the Budget for 2019. That is the purpose of this forum today and I look forward to sitting in on each of the workshops and hearing the feedback from our moderator – Sinead Ryan – later in the morning.
The general focus of the Government for the forthcoming Budget is on improving employment and living standards, public services and take-home pay, in a way that is affordable given current economic resources and that is also sustainable in the medium to long-term.
In terms of my Department, my question is how do we build a Budget package that delivers the best impact in terms of reducing the risk of poverty, particularly for children, while also improving employment outcomes so that people who are currently dependent on welfare, but who have an ability to work, can become financially independent?
As you are most likely aware, the Department’s activities impact on the lives of most people in the country. Each week, about 1.3 million people – pensioners, people with disabilities, workers on maternity or sick leave, carers, and jobseekers receive a payment from my Department.
In addition to this, over 628,000 families receive Child Benefit each month for over 1.2 million children.
These payments and services account for about 36% of gross current Government expenditure – in cash terms just over €20 billion.
There can sometimes be a mistaken belief that most welfare payments go to people who are unemployed. This is not the case.
The biggest single block of expenditure in 2018 is Pensions, which will amount to €7.6 billion, or 38% of overall expenditure; Expenditure on Working Age schemes comprises two programmes - Income Supports and Employment Supports - which combined account for almost €4.2 billion or 21% of total expenditure.
The next biggest element of expenditure is on Illness, Disability and Carers which will amount to over €4.2 billion - also 21% of expenditure in 2018.
Expenditure on Children and Families will account for 13% of expenditure or €2.6 billion, of which €431 million will be spent on the Working Family Payment paid to low income working families.
Expenditure on Supplementary Payments like rent supplement, agencies like MABS and the CIB and Miscellaneous Services accounts for €814 million or 4% of expenditure.
These payments work to alleviate poverty, reduce income inequality and contribute to the wider economy. Every euro spent by people in receipt of most social protection payments finds its way to shops and business, in turn helping to fuel our economy and sustain local communities.
In Budget 2018, I was pleased to be able to introduce a number of improvements for social welfare customers. The weekly rates of payment for all primary schemes increased, building on the 2017 rate increases. I announced a range of improvements targeted at supporting children and families, and additional supports for the most vulnerable. These improvements will cost over €340m this year. The measures included:
In addition, a Christmas Bonus of 85% was paid to over 1.2 million long-term social welfare recipients in December 2017 at a cost of €220 million.
Earlier this year, the Government announced a further additional fuel allowance payment in response to the severe weather caused by Storm Emma.
Significantly, measures introduced in Budget 2018 have a carry-over effect of increasing payments to recipients in 2019, at an additional cost of €110 million. In addition, earlier this year, the Government announced new measures to assist contributory pensioners affected by the changes to the rate bands made in 2012. Payments to these pensioners will be made next year.
So we are starting the Budget 2019 process with a number of increases already factored into next year’s expenditure.
Looking ahead at the Budget, the Summer Economic Statement sets out that there will be an additional €3.4 billion available for expenditure next year, but €2.6 billion of this is pre-committed – for capital expenditure as part of the National Development Plan, public sector pay restoration, carryover costs from Budget measures from previous years and costs arising from demographic pressures. This leaves €800 million available, for tax and spending measures.
The scale of my Department’s remit is such that even modest improvements in individual payment rates give rise to very significant increases in spending. For example, a €1 increase in the weekly rates of payment would have a full year cost of €70 million in 2019, and many of the pre-Budget submissions that I read are calling for increases of €5 or more per week.
Introducing such an increase in the weekly rates of payment would then limit the scope available for the State to fund other priority areas. This includes areas of interest to many of you attending the forum here today – such as housing, health, childcare, education or any other sector.
Employment continues to grow strongly with more than 2.2 million people now in employment and 62,100 new jobs added in the past year alone.
Unemployment now stands at just 5.1%. At the end of June, there were 40,600 fewer people on the Live Register than in June 2017. This is, of course, extremely positive news.
However, in previous years, the rapid recovery in employment and decline in unemployment helped – at least partially – to ease demographic spending pressures.
Given that the numbers on the Live Register have actually halved from July 2012, there will inevitably be a slowdown in the Live Register savings generated in the coming years.
Against this backdrop, even with no rate increases, expenditure on pensions alone will grow by about €200 million in 2018, and expenditure on disability and carers payments is likely to grow by €150 million.
The Programme for Government committed to above-inflation increases in pensions, protecting Free Travel for pensioners and people with disabilities, as well as rate increases for people with disabilities and for carers. These commitments have been delivered in the previous two Budgets.
While the 2018 changes did not go the full way to restoring all rates of payment to previous levels, they did reflect much of the input to last year’s pre budget forum and have resulted in, what I believe is, a fair baseline from which we can now move forward in a more targeted manner.
For Budget 2019, this means that we have to prioritise and focus on those changes that will make a real difference to improving welfare and reducing poverty. And I want to hear your views on what those priorities should be.
Even if we did nothing in this year’s Budget, demographic change means that expenditure on social protection next year will increase by hundreds of millions. This means that we must now make choices on how to target the limited space available for new initiatives across all Departments in Budget 2019.
Choices will have to be made as to best achieve our goals and we must accept that not everything that we consider should be done can be done in one year.
That is why today’s event is so useful. It allows me to hear directly from you as to what you think should be the main priorities for me in Budget talks.
I look forward to hearing your views and proposals.
My promise to you is that you will be heard and your proposals will be considered and that I will, mindful of other priorities across Government, do the best I can to ensure that the changes we make reflect your inputs and concerns and deliver the best outcomes for all of our people.
ENDS