Hanafin rules out paying Christmas welfare bonus

MINISTER FOR Social and Family Affairs Mary Hanafin has ruled out paying the social welfare annual Christmas bonus payment because the State did not have the €233 million it would cost.

But the Opposition warned that the failure to pay the bonus would push people into the arms of loan sharks. Ms Hanafin’s remarks echoed comments made earlier in the Dáil by Taoiseach Brian Cowen, who said the Government “would not be in a position to make that supplementary payment this year”, and it was a “very difficult decision”.

Labour social and family affairs spokeswoman Róisín Shortall described the decision as “entirely heartless”, while her party leader, Eamon Gilmore, said it was “mean and shameful”.

Denis Naughten (FG, Roscommon South-Leitrim) warned that it was a particularly vulnerable time for people and “moneylenders will have a field day coming up to Christmas”.

The Minister said: “I hope people will not turn to moneylenders. People who are in dire circumstances can contact their local community welfare officers”, but “tough decisions unfortunately have to be made”.

Ms Hanafin said the decision was “one of the most difficult the Government had to make in the earlier part of this year” and it was announced in April so that people would have nine months’ notice.

The bonus, a double payment of weekly social welfare provision, amounted to a 2 per cent cut in the annual social welfare basic payments, but basic welfare payments “were increased last January and . . . by September 2009, the consumer price index (CPI) had fallen by 6.5 per cent”. “Tax revenue has deteriorated even further since April” and “I regret that it will definitely not be possible to pay a Christmas bonus this year”.

She added: “I know that any welfare cuts are hard for people to cope with, but if the Government does not take steps now to reduce overall public expenditure and restore stability to the public finances, we risk making the economic position far worse for everyone, including welfare recipients, in the long term.”

Ms Shortall said the Minister should “stop using the 6.5 per cent drop in the CPI as a figure in any way relevant” because “those dependent on social welfare rarely have mortgages or significant foreign travel, and those two elements account for approximately half of the reduction in the CPI”.

She said the decision would greatly exacerbate the hardship faced by people on social welfare. “It is an entirely heartless decision, especially where you had obvious choices and you could have increased taxes.”

Ms Hanafin accepted that “not everybody on social welfare has a mortgage or engages in foreign travel. It is also fair to say that in more recent months other elements of the CPI, including the price of food and clothing, have dropped significantly as well.”

She said “there is a gap of €22 billion between what is coming in and going out. Whether it is a household or individual budget or the State budget, the message is the same – you can’t spend what you don’t have.”

Mr Gilmore had first raised the issue and pointed out it would be the first time in almost 30 years “pensioners and others would not receive the relatively small payments which helps them to buy gifts for their grandchildren”.

Mr Cowen said the Government had to look at areas “we would not normally look at”. Exchequer revenue this year so far “is €26 billion and the total social welfare bill is more than €21 billion.” It was “clear that the availability of another €223 million is not possible in present circumstances”.