The job of the last Government was to fix the economy and avoid national bankruptcy. The economy is now recovering strongly but we also have a deeply fragmented society.
The new Government allows us to consider the kind of economy and society we want to build. We should strive for an enterprise economy built on sound public finances, which prospers from the goods and services we sell at home and trade abroad. One in which work – not speculation – pays, and which rewards innovation.
I believe in a welfare state that provides a safety net for those who need it, that gives everyone a fair go with opportunities to better their lives, but doesn’t trap people in a cycle of poverty and dependency. It’s a vision of a European social market economy, where a strong society feeds a strong economy in a virtuous cycle.
That’s why I am excited by the challenge of being Minister for Social Protection. This Department touches so many lives, and almost every home in Ireland: through pensions, child benefit, support for jobseekers, lone parents, carers, people with disabilities, low income working families, maternity benefits, sick pay, and many other areas.
Unemployment has fallen to 7.8%, with long-term unemployment below 5% for the first time since the financial crisis. We compare favourably with other European countries but are behind others like Germany.
A recovering economy creates more jobs for more people. However, some are still struggling to break into the workforce. There is evidence of rising levels of people unemployed for more than five years, who lost their jobs during the crisis and can’t get back to work.
We know the longer you spend on welfare, the less likely you will escape it. So it’s important that activation, employment and training schemes focus on those who need the most help including the long-term unemployed, lone parents and people with disabilities.
Ireland also has more than 300,000 self-employed people. They are crucial to the economy, and deserve a new deal from the State. The last Budget started the process, with the first steps towards tax equality. However, they don’t get the same benefits from PRSI as employees. In the next few months, I propose extending social insurance protections to provide a stronger safety net if they have to give up work due to invalidity, care for a relative, or their business fails.
We all pay into the Social Insurance fund through PRSI contributions. However, the benefits we receive in return were eroded during the recession. I want to turn the tide and move to a contributory European-style social insurance system, including: the introduction of paternity benefit from September, restoring some dental, optical and other health benefits – subject to agreement with professional bodies – and enhanced financial support for people who become unemployed after years of paying into the system.
A pension crisis is looming. Less than half of people pay into an occupational pension. A majority will rely solely on the State pension in retirement. The sooner you start saving or paying into a pension, the greater your pension when you retire.
Some countries automatically enrol workers into pensions, sometimes it’s compulsory, other times there is an opt-out. Attractive and tax efficient Personal Future Funds could encourage people to save for retirement, giving them ownership over their savings, such as: flexibility about when to retire, the possibility of taking a year out, or dipping into the fund for important events. This will be an enormous project. I am keen to take it on.
The value of weekly welfare payments rose rapidly during the Celtic Tiger years, but was cut during the recession. They haven’t increased in years. Social transfers are a highly effective tool in reducing inequality and poverty. The Government is committed to increasing many core weekly payments in line with – or ahead of – increases in the cost of living. We should legislate for that. Other payments like the Fuel Allowance and Back to School Allowance can target those most in need.
Reducing child poverty is a key objective. I will be working closely with the Minister for Children on a new Working Family Payment to both reduce child poverty and remove disincentives for parents to enter the workforce or work more hours.
I will spearhead improvements to Community Employment and Farm Assist, extend the small loans scheme, replace JobBridge, lead further crackdowns on fraud, increase rental supplement and transition away from it to a more effective system.
Benjamin Disraeli once claimed that ‘power has only one duty: to secure the social welfare of the people’. The last government secured the recovery. It’s up to this government to revive a spirit of hope, confidence, and optimism. Ensuring that all our people are protected and offered new opportunities is a good place to start.
This article was published in the Irish Independent on June 9th.