No value for money in our Welfare Nation

Willie O’Dea has again called for a €5 hike to the pension. A new report says such a move would have little impact for the better, writes Political Editor Daniel McConnell.

No value for money                    in our Welfare Nation

Willie O’Dea has again called for a €5 hike to the pension. A new report says such a move would have little impact for the better, writes Political Editor Daniel McConnell.

A Welfare Nation. That is what we are. No doubt about it.

Last week, we had Fianna Fail’s Willie O’Dea calling for a hike of €5 in the pension in October’s budget.

With dissent growing within Fianna Fáil, the Irish Independent told us, O’Dea decided to ignore the instructions of his party leader Micheál Martin and demand a “fiver for all”.

He publicly called for every welfare payment, apart from the Jobseeker’s Allowance, to be increased next year.

This has become familiar territory in recent years.

O’Dea went on a solo run in 2016 and caused chaos by seeking a similar hike, much to the anger of Martin, who had no choice but to back the veteran Limerick politician.

The most recent call could be put down to the traditional silly season summer kite-flying, but a new report, produced by the Department of Employment and Social Protection and published by the Department of Finance, has concluded there is little or no merit in such a proposal.

The impact of following such a path will only have a “small” impact on the country’s population who are at risk of poverty.

Interestingly, this report, released by the Department of Finance’s tax strategy group, states the country is “overly dependent” on social welfare payments compared to other countries.

It says that so generous is our system of welfare benefits that welfare payments from the public purse “impact either directly or indirectly on the lives of nearly everybody in the State”.

The report states that “the impact of social transfers in reducing poverty is one of the highest in the EU” — in other words our welfare system is one of the most generous and elaborate in Europe.

At the end of May 2018, there were 1.3m people in receipt of a weekly social welfare payment in respect of 2m beneficiaries. A further 625,300 families received a monthly child benefit payment in respect of 1.2m children.

Of the weekly welfare recipients, 616,200 were in receipt of a pensions payment and 205,560 were in receipt of jobseeker payments.

Some 194,010 received a disability allowance or an invalidity pension and 79,910 were in receipt of carer’s allowance or benefit.

While it says such benefits, which cost €20bn a year, made a huge impact in protecting people against the worst elements of the recession, in a recovery such generous payouts need to be examined.

“Ireland may, compared to other states, be overly dependent on monetary social transfers and that there may be issues to be addressed with regard to the level and distribution of market incomes and the availability of non-monetary social services,” says the report.

It also states that those at risk of poverty has reduced significantly since the crash.

“In 2016, social transfers (excluding pensions) reduced the at-risk-of-poverty rate from 33.6% to 16.5%, or 17.1 percentage points in absolute terms. This represents a poverty reduction effect of 51%,” states the report.

Given the pattern in recent years of rolling out increases to pensioners, the damning conclusions of the report expose the blatant hypocrisy of both Fine Gael and Fianna Fáil in recent years.

“The groups with the highest rates of consistent poverty were individuals who were unemployed, lone parent families, families with children on low incomes, or those living in social housing.”

“Those in employment, older people, and people living in owner-occupier housing were least affected by consistent poverty.”

In black and white, our department of welfare officials has made it clear that it does not believe handing money to pensioners is the best way to solve Ireland’s poverty crisis.

What is even worse is the reality that despite the evidence to the contrary, our politicians have insisted upon following strategies that have clearly been taken for political electoral reasons than from a good policy perspective.

Worse still is that, despite significant increases in the overall welfare budget of €20bn, we have made little or no progress in tackling the numbers in consistent poverty.

The government, in 2012, agreed a revised and enhanced national social target for poverty reduction to “reduce consistent poverty (overlap of at-risk-of-poverty and basic deprivation) to 4% by 2016 (interim target) and to 2% or less by 2020”. However, the report states that consistent poverty was effectively unchanged at 8.3%, leaving a gap of over four percentage points to meet the interim poverty target of 4% by 2016.

The Irish contribution to meeting the Europe 2020 poverty target is to reduce, by a minimum of 200,000, the population in combined poverty — ie, those in consistent poverty or at risk of poverty or experiencing basic deprivation.

“Over 178,000 people will have to be lifted out of combined poverty by 2020 in order to meet the Irish contribution to the Europe 2020 poverty target. This target suggests that those cohorts currently at greatest risk of poverty, ie, people who are unemployed (both single people and people with dependent children), lone parent families, and families with children on low incomes, should continue to be a focus of any changes to welfare rates,” states the report.

But at the same time, the report offers up six potential budget options for October’s budget. They are:

  • €5 weekly rate increase for pensioners with a proportionate increase for qualified adults at a cost of €160.6m;
  • €5 increase in the Living Alone Allowance, from €9 to €14 per week, at a cost of €55m;
  • €5 weekly rate increase for all working-age welfare recipients with a proportionate increase for qualified adults at a cost of €189.3m;
  • €5 weekly rate increase in the personal rate of payments for people with disabilities and carers at a cost of €79.3m;
  • €3.20 rise in the Increase for a Qualified Child, from €31.80 to €35 per week, at a cost of €56.3m;
  • Extend the fuel allowance season by one week, from 27 to 28 weeks, at a cost of €8.6m.
  • It is very interesting to read the fine print of the document which pours cold water on each of the above options as to their ability to address the country’s population at risk of poverty.

    The assessments say the impacts of the above listed options would be “small”, “not significant”, “negligible”, or have “no impact” at all.

    Reading between the lines, officials have offered up options they know their political masters will want but they know will not do anything meaningful to address poverty rates.

    From a taxpayer’s point of view, it is clear we are not getting good value for money for what we are spending on welfare payments.

    But amid such calls for more money for pensioners, who least need it, will anything change for the better come October? I would not hold my breath.

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