Vol. 183 No. 7
I move:—
That it is expedient to authorise such payments out of moneys provided by the Oireachtas as are necessary to give effect to any Act of the present session to amend and extend the Social Welfare Acts, 1952 to 1958, and the Old Age Pensions Acts, 1908 to 1959.
Am I correct in believing that the Money Resolution in connection with this Bill is designed to provide for the Exchequer contribution which is to correspond with the contribution made by employers and employees? Further, am I correct in thinking that the transfer of persons now in receipt of non-contributory old age pensions to the category of those who hereafter will enjoy contributory old age pensions is calculated to save the Exchequer approximately £2½ million, thus leaving the net contribution from the Exchequer in respect of this service at about £300,000? These figures deserve attention. We ought, when considering the nature of the contribution hereafter to be paid by the employer and the employee which, between them, will amount to approximately £4 million per annum, to appreciate that what that will mean to a section of the existing old age pensioners is a supplement of 11/6 per week to the old age pension.
It is a bit more if the wife is a dependant.
As far as the old age pension aspect is concerned, at present he is entitled to 28/6 per week. When he becomes a contributory old age pensioner, as a result of the contribution by employers and employees of £4 million a year, he will get in respect of his old age pension a supplement of 11/6 per week. As the Minister says, there are other benefits in connection with widows and orphans and certain other services which are also referred to in the Bill.
Undoubtedly, the contributory old age pension principle has attracted much attention in the country. It is desirable that we should clearly know the exact nature of the proposed benefit. While I think it is the desire of Parties on all sides of this House to collaborate in the improvement of our social services, nothing is more important than that when we impose additional taxation we should try to get for that taxation the best possible value for the beneficiaries we have in mind. Four million pounds per annum is not a small sum. A sum of four million pounds per annum represents approximately two shillings on income tax—that is my recollection. That is a formidable tax burden to carry in this country and there is a great danger which has grown up in recent years of short-circuiting the Budget and we manage to impose very substantial taxation without any reference to the Budget at all, with the result that there is no annual accounting for the charge thereafter. But what we are in effect doing in this Bill is bringing in a Supplementary Estimate which is to involve the employee and the employer in the payment of £4,000,000 per annum more than they are paying at present.
I have studied the benefits set out in this Bill — 11/6d. on the old age pension for this very restricted number of pensioners and certain benefits under the Widows' Pensions Act and other allowances — and we are all in considerable difficulty here because the calculation of these benefits is an extremely abstruse, actuarial procedure which I certainly am not competent to investigate adequately, but, having been associated with a good deal of insurance legislation in this House in the past, both of commercial and social character, I know sufficient about it to realise that £4,000,000 per annum is a pretty formidable premium.
I often wonder if the whole of these premiums were offered to insurance companies, plus the charge that falls upon the Exchequer for the administration of these payments, would we get better value than we get at present? Frankly, I do not know but, mark you, whatever the source of Exchequer contributions is — and in one sense, you may say it is being provided by the old age pensioners themselves — the total annual payment hereafter for the total benefits for insured persons under this code will amount to about £6¾ million per annum.
I wonder what a premium of that character would purchase from commercial insurance? I wonder if the Minister has caused any inquiry to be made into that matter and if he has, I should be very glad to have the fruit of his inquiry but I should be especially grateful if he would tell us to-day whether he thinks that, having regard to the substantial additional taxation which we undertake — £4 million per annum—the benefits envisaged in this Bill will be commensurate with the burden that will fall upon the employee and the employer.
It is very important that that should be made clear because the reason for inviting a young man on the threshold of life entering employment at 18 or so, to undertake this very substantial annual burden to provide against contingencies which, to the young mind, are very hard to envisage and which he naturally wonders if they will ever come to pass, is something that you have a duty to make very clear and precise.
I do not know if the Money Resolution is the appropriate time to mention one detail of this matter. The stamp, that is the contribution made by the employee hereafter, is now assuming formidable proportions. Would it be possible in any way to provide where a young boy enters employment at, say 16, or whenever he first becomes liable to stamp his card, that instead of levying upon him from the first day of his employment the full subscription, it would be for the first five years, say, a graduated subscription working up, say, at 21, to the full stamp which he is required to pay under the section?
I think it would be a matter for a subsection of the Bill.
I do not know if there is an appropriate section on which it could be raised. However, I mention the point generally now and it can be raised again more specifically when an appropriate section of the Bill is being discussed.
Not for the first time I have some sympathy with the point of view which has been expressed by the Leader of the Opposition, although I think that he rather understated perhaps the position which will exist as between contributory old age pensioners, on the one hand, and the other categories of beneficiaries who will benefit pretty considerably under this Bill, on the other. It is not true to say that the Bill will benefit mainly the existing holders of non-contributory old age pensions who will receive contributory old age pensions under the Bill because the other extensions and the increases of benefits under other heads will be very considerable also.
It is quite true that the contributory old age pensions will perhaps account for two-thirds of the total cost of the Bill and, as the Leader of the Opposition has pointed out, they will pay— perhaps "pay" is not the right word —there will be savings in respect of the non-contributory pensions which they now enjoy which will enable us to defray the cost of contributory old age pensions to these pensioners to the extent — and I am doing a sum in mental arithmetic to which I hope the Deputy will not hold me too strictly —of about two-thirds again of the content of the new contributory pensions.
The other benefits which arise under this Bill, apart altogether from contributory pensions, are very substantial and those who will be called upon to pay increased contributions will be paying them in order to enjoy increased benefits in respect of periods during which they may be ill or unemployed and also very considerably and very substantially increased benefits for their widows and for their own children. Therefore, I think it is not true to say that this Bill will merely provide benefits for persons who are now 70 years old or over or who will in the near future attain the age of 70 years.
As the Deputy knows, this Bill covers the whole range of social maintenance services, in so far as these include pensions for old people, allowances for those who are unemployed, pensions for widows and pensions for orphans.
A great deal more is being given under this Bill than just merely increasing the amount paid to holders of non-contributory old age pensions. The Deputy in his speech suggested that really the only benefit to be conferred under this Bill would be an increase in the rate of pension enjoyed by the holder of a non-contributory pension who had been in insurable employment during his lifetime. Of course, that is not so because, first of all, there is no means test and also the dependant of an existing old age pensioner who has been in insurable employment and who has fulfilled the conditions for securing a pension will immediately be given an allowance under this Bill, an allowance which she will not lose during the remainder of her life unless she happens to remarry or breaks one of the other conditions attaching to that dependant's allowance. Once the dependant's allowance is given to the spouse of a person who has become entitled under the Bill to a contributory old age pension, that allowance will continue and exist during her lifetime and it will be paid irrespective of means. There is no means test in relation to this Bill. I think we could regard that as a great social advance. Of course, the Bill is based on the insurance principle.
Is there no means test in respect of a non-contributory old age pension?
That comes under another Bill which I hope to bring before the House tomorrow but this Bill is based entirely on the insurance principle and relates only to those persons who have been in insurable employment during their lifetime. Therefore, so far as the dependants of these persons who become entitled to contributory old age pensions are concerned, there is no means test. I think that represents very much more than the Leader of the Opposition adverted to when he was speaking to me because this concerns not merely a man, but a spouse; not merely a woman, but her spouse and it means that there will be some provision made for them during their lifetime.
No short-circuiting of the Budget is taking place under this Bill, as the Leader of the Opposition alleged. The provisions of the Bill were envisaged in the Budget speech and it was quite clearly indicated there what the additional net contribution from the Exchequer would be. There was also a very clear indication that these proposals were based, as I have said, on the principle of insurance and, of course, that principle involves the payment of premiums at whatever rate may be regarded as equitable.
The Deputy put a question as to whether the whole scheme had been offered to an insurance company and asked would we get better value from an insurance company. First of all, in our circumstances, I do not think any of our insurance companies would be prepared to take the risk. The fact of the matter, quite frankly, is that the Exchequer is taking what might be described as an open risk in regard to this matter because we have not been able, despite everything we have done, to get very close estimates as to what this will cost the Exchequer.
I am coming to the House on the basis of what I think is a comprehensive estimate. I do not want to state what the cost will be to the Exchequer. I am saying that this is what we expect it will be but there are so many imponderables, such lack of any data on which we could base an actuarial calculation, that I think we can say we are coming here with an open risk, the extent of which we do not know, but we are assuming for the purposes of the Budget in this year that it will amount to about £334,000 or something like that. It may be a great deal more; it may be a little less; but it certainly will not be very much less than £334,000.
So far as the scheme is concerned, this represents what can be done immediately for all those persons who come within its ambit, the old as well as the young, and it is true that, perhaps, we are weighing the balance a little bit in favour of the elders. I do not think that we have any great need on either side of the House— because this is not the Bill of the Government; this will be the Bill of the Dáil — to be very apologetic for anything we may do now for that age group who, say, are over 65 or 70 years of age, because do not let us forget that that was the generation which bore the brunt of the last phase of our struggle for independence and, if we are able to do this for them now, we are only giving them a little bit, a very small proportion, of the fruits which younger generations will, I hope, live to enjoy.
So far as the future is concerned, I think, the position will be that, without increasing the rates of contribution, we ought to be able, within a very few years, substantially to increase the benefits and in that way the people who are now entering into insurance at a comparatively early age will obtain the due measure of what they might be properly entitled to under any contractual engagement which they might enter into with an insurance company.
I do not know that there is any other aspect of this matter which the Leader of the Opposition raised which calls for any comment at this stage.
