Dáil Éireann debate -
Thursday, 17 Nov 1977

Vol. 301 No. 8

Social Welfare (Alteration of Rates of Contributions) Regulations, 1977: Motion.

Minister for Social Welfare (Mr. Haughey)

I move:

That the Social Welfare (Alteration of Rates of Contributions) Regulations, 1977, proposed to be made by the Minister for Social Welfare and laid in draft, sanctioned by the Minister for Finance, before Dáil Éirann on the 7th day of November 1977, under subsection (9) of section 6 of the Social Welfare Act, 1952, be approved.

The purpose of these regulations is to reduce by £1 a week the employee's element of the flat-rate social insurance contribution in the case of workers on weekly earnings under £50 as promised in the Government's election manifesto. The £1 reduction will benefit all insured employees apart from permanent and pensionable employees in the public sector who are insured for limited benefits, mainly widows' and orphans' pensions and deserted wife's benefit, all of whose social insurance contributions are less than £1.

The £50 limit will be applied to earnings chargeable to income tax on which the existing 3 per cent pay-related social insurance contribution is based, in other words, gross earnings less superannuation contributions.

The regulations provide that the £1 a week reduction will take effect from Monday, 2nd January, 1978, which is the beginning of the contribution year for men. It is proposed to provide a new series of social insurance stamps at the reduced rates for the various classes of contributors involved and to place these on sale alongside the present rates which will continue to be payable in respect of persons earning £50 a week or more.

An average of over 300,000 insured persons a week will benefit from the reduction which will be of particular value to young people commencing employment and to many women workers. The measure is expected to cost some £13 million in a full year.

The regulations which it is proposed to make under section 6 (9) of the Social Welfare Act, 1952, may not be made until a resolution approving them in draft form has been passed by each House of the Oireachtas.

I recommend the draft regulations for the approval of Dáil Éireann.

Mr. Boland

As the Minister says, this is the implementation of one of the offers made by his party during the general election campaign. However, I am disappointed that the Minister has not taken the opportunity, when amending the social welfare regulations, of abolishing social welfare contributions in respect of persons under 21 years of age. This would have the effect of providing an incentive to employers to engage young people and it would go a long way towards improving the unemployment situation. It might even have been considered that persons up to 25 years of age should have been excluded. Unfortunately, the question of tackling unemployment has not been given any consideration in these amendments of the regulations and the reduction by £1 per week in the social welfare contribution in respect of persons earning less than £50 per week will not make any contribution towards improving the employment situation.

We might note, too, that this reduction in the cost of the stamp will benefit the employee while there is no corresponding benefit to the employer. In other words, there is no incentive to employers to create further employment. From that point of view I am disappointed that the Minister seized the opportunity that was presented to him on certain occassions.

In addition, he might have used this opportunity of introducing a reduced social welfare contribution in respect of persons who are not working full time, five days a week. Anyone who works more than two days a week is obliged to pay the full social welfare contribution while his employer, too, is obliged to pay his full share. Obviously, it would be much more attractive to employers who might not have a full five-day week job to offer to have the social welfare contribution reduced. This would encourage such employers to take on workers for three or four days' or even for two days' work. A change in this area would be of much interest to employees also because for anyone working perhaps only two-and-a-half days per week the full social welfare contribution is a heavy burden in terms of gross pay. The application of some imagination in this regard could have led to the creation of additional employment.

It surprises me that the Minister is able to give a figure of more than 300,000 insured persons as benefiting by virtue of this scheme. I must admit that when I examined the order I had difficulty in trying to establish the number of people earning less than £50 per week. My understanding was that the pay-related benefits are always based on the previous year's wages or salaries, for the simple reason that at any given time during the financial year the Government are not aware of how many people are earning less than £50 per week in that year and that the only accurate statistical information is in relation to the previous financial year after the adjustments have been made by the Revenue Commissioners on the completion of returns. I would be inclined to question whether there are more than 300,000 people who are earning less than £50 per week.

The other aspect of the matter is that the £50 per week refers to gross earnings with the sole exclusion of superannuation contributions. The payment to local authority manual employees is usually taken as the yardstick for the general labourers rate. I understand that council workmen earn about £1,800 per year or between £42 and £43 per week in flat pay. From time to time many of these workers earn overtime pay or receive bonuses so that even in that category there will be many workmen employed by local authorities who will not benefit by virtue of this change in the regulations because their earnings would gross more than £50 per week. Consequently, again I question the Minister's figure of 300,000 persons.

Neither is it clear who will decide from week to week whether a person is earning less than £50. A person operating on the PAYE system has his deductions amended by his employer as his earnings vary from week to week. I wonder if a situation could arise where, for instance, a person might be paid £49.99p for 51 weeks of the year and who would have his employer stamp the social welfare card at the reduced rate and then in the fifty-second week the employee might be paid a bonus or some money based on a productivity deal of the order of, maybe, £1,000 so that it would be only apparently in respect of that last week that the employee would be obliged to pay the higher rate. The Minister may say that after some time and when the income tax returns are made adjustments would be made for that sort of situation, but I cannot foresee how it will be possible, as the scheme operates from week to week, to determine who, in any given week, has a gross income of less than £50.

I am surprised, too, to note that the change in the regulations is being introduced as and from January. Up to now any such change was always introduced either in March or in the autumn of the year concerned. I wonder if the Minister is in a position to give an undertaking to the House that there will be no increase in Social Welfare contributions announced in the budget which also will be due in January, an increase that might have the effect of negating the reduction we are talking of here. The question we must ask is, how illusory is this scheme and how much more illusory will it be if there are upward changes in the January budget in respect of social welfare contributions? Is the Minister in a position to guarantee to the people who he alleges will benefit from this change that the benefit will continue to the same degree after the budget of 1978?

The other question that ought to be answered relates to the suggestion from the Minister that within a certain time a scheme will be introduced for the purpose of abolishing the social welfare stamps as we know them and, instead, of having the social welfare contributions paid through the income tax system. I wonder if the Minister is in a position to give an undertaking that when that scheme is introduced the benefit for the people earning less than £50 per week will continue to apply.

We heard yesterday that the Congress of Trade Unions have indicated that they are prepared to consider the idea of a new national wage agreement. This figure of £50 per week is very low in the context of present-day wages and I do not accept that there are 300,000 people earning less than this gross £50 per week in November, 1977. No matter how many there are they should be given today an undertaking that if their income is brought above £50 per week by virtue of a national wage agreement, or any freely negotiated wage increase in the event of there not being a wage agreement, they could continue to be eligible for the reduced rate of payment. Obviously any wage agreement will have the effect merely of keeping them in line with their fellow-workers. The intention of this is to benefit lower paid people who, even after the effect of a wage agreement, will still be in the lowest category and they ought to benefit from this reduced payment.

From that point of view I am a little disappointed that the areas I have outlined were not dealt with in the Minister's short statement. I am more than disappointed that the opportunity was not taken to use a little imagination in a real attempt to stimulate employment when the regulations were being amended, by the abolition of social welfare contributions for young people under a certain age in the twenties. That would have created real employment opportunities. In addition, the idea which I suggested to the House of introducing a reduced social welfare contribution in respect of both employer and employee for people who do not work a full 40-hour week again would have the effect of creating employment and giving a real stimulus to employers to take on extra people. In any discussion that comes before this House at present we should be most concerned about the creation of new jobs and the provision of employment for young people and first-time employees. No attempt has been made to improve the lot of those people and from that point of view the amendment to the regulations is disappointing.

Mr. B. Desmond

There is no doubt that the proposal contained in the Minister's resolution is a novel approach, but I have personal doubts and my party also have doubts about the extent to which the Fianna Fáil Party in devising this promise gave any great thought to the expenditure of money of this nature. There can have been only an estimate of the most vague kind, and I challenge the Minister to give a breakdown of the £13 million in a full year—presumably 1978. It would be illuminating to get that.

Mr. Haughey

I will give it to the Deputy now.

An Leas-Cheann Comhairle

The Minister will be replying.

Mr. B. Desmond

The Minister and I have always worked together. It would be interesting to get a breakdown of the 300,000 insured persons who allegedly will benefit from this reduction. The first point I make in relation to the £50 is that presumably it was discussed in the Fianna Fáil Party around the beginning of 1977, and then, it became obvious that in about April or May, the figure of £50 was arrived at and it has rested there since May-June, 1977. A look at the figures for earnings last December after the implementation of the 1976 interim national pay agreement, shows that the average earnings of an industrial worker in transportable goods industries—that is, over 111,000 workers —was £71.35 a week. We tend in Ireland to regard our pay levels as being pretty low. In fact they are not low. The average fireman in Dublin has a basic pay substantially in excess of that of the fireman in London. The fireman in London on his basic pay of about £47 per week would qualify for the Minister's scheme if that is merely his take-home pay.

Mr. Haughey

That is if he went back to work.

Mr. B. Desmond

Yes, indeed. There is no fireman in Dublin who would come under the £50 limit. He would be at least £10 or £12 over that limit. Virtually no male adult industrial worker in manufacturing industry will benefit from the £1 per week.

Employers were complaining bitterly about the alleged penal imposition of social welfare contributions and the Fianna Fáil Party reacted and in the end said: "We will take £1 a week off the employee's element of the flat rate of social insurance contribution." I predict that I will put down a Dáil question about this at the end of 1978, and I have a feeling that the number and scope of workers coming under this, the cost of its administration and the total cost is going to be substantially less than what the Minister is suggesting, unless, of course, in the meantime there is a major change in the £50 earning limit. Therefore, I am making a point that there is hardly an employee who takes home less than £50 per week in gross pay. We are talking of £55 and £60 per week and there are deductions from that. The average bricklayer apprentice of 20 years of age would benefit but not anybody on the male side in many of the key sections of the economy such as the construction industry.

One group of workers who will certainly benefit from this measure are the adult female industrial workers. The best part of 40,000 women who are working in the manufacturing industry will benefit because last December their average earnings were only £36.29 per week. One has to add on to that the first phase of the 1977 national wage agreement, the 2½ per cent plus £1 a week, with a minimum increase of £2 and a maximum increase of £4.13p. Even if one adds all that on to the average earnings of many adult female industrial workers this will only bring their earnings up to £40 a week. Those people will benefit. I would like to get a breakdown of the 300,000 people who are expected to benefit from this.

I do not know if my remarks will have any influence on the national pay agreement. We are all thankful that the unions have decided to enter into negotiations on a national pay agreement. I am not so sure that this measure will have any influence on the negotiations. Measures of this nature are regarded as election promises and people say: "Thank you for your election promise. Now let us get down and talk about what the increase in wages will be for 1978." When the former Minister for Finance, Deputy Ryan, came into the House and asked for approval for tax concessions and increased social welfare benefits, very little cognisance was taken of this in the negotiations which followed on a national pay agreement. I would, if I had £13 million to spend on social welfare, feel there are better ways of handling an expenditure like this so that those in greatest need benefit.

There is a large number of lower paid workers, many of whom are exploited. There seems to be a popular myth that every worker in the country is in a trade union. We know that around 65 per cent are in organised trade unions but there are thousands of young workers earning far less than £50 a week. There are thousands of women in the personal service industries, in restaurants, hotels, the forecourts of garages, the hairdressing trade and many other places, who are not organised and are earning far less than £50 a week. I would hate to see any employer turning around and saying: "You are now getting £1 a week off your social welfare stamp and that is all you will get." Many of those employers never heard of a national pay agreement.

A man was offered a job recently on the basis that he would get £35 a week when the employer was getting £20 a week employment premium. The employee came to me and said that was all he was offered, that he was told to take it or leave it. The employer was getting the benefit of the £20 a week employment premium and he was simply going to pay out another £15 bringing that man's wages to £35 a week.

I hope this social welfare regulation is not exploited by people who will turn around and say, particularly to those who are not in trade union employment: "You are getting £1 a week reduction, that is your wage increase for 1977-78." I hope those employees will not be exploited in that manner. We will take note of this measure, see how it works and see to what extent it meshes in with the overall reform of the social welfare contribution system which the Minister has promised, the pay-related system. At the end of 12 months we will have further questions down when the scheme is in operation. It will be illuminating to see to what extent the promise contained in the manifesto had reality, to what extent it helped the lower paid in the community. I believe most of us, pending that 12 months trial, would be wise to stay in a state of some suspended approval of the measure.

Mr. Haughey

What sort of approval?

Mr. B. Desmond

Suspended. We will wait and see.

Mr. Moore

When Deputy Boland was speaking he chided the Government on carrying out their election promises. That may be a rare happening for other Governments but it is the policy of this Government to carry out each promise. The Minister is to be congratulated on another step towards bringing social justice into the wage structure. While some people may say that £1 off is not very much simple mathematics will show that it is £52 a year. As far as I know the insurance period is 48 weeks in the year so there is a gain there. Perhaps the Minister at some time in the future might try a sliding rate because the change will take place very rapidly in the wage structure.

I look forward to this measure which will bring great benefit to many of the lower paid workers earning £50 a week. It is quite true, as Deputy Desmond said, that some people are not even getting the benefit of national pay agreements. I feel that it is a fault in our educational system that parents are inclined to focus their children's attention on taking up white-collar jobs. Some of those white-collar employers are notorious for paying bad wages. An industrial worker will almost certainly be in a trade union, of which we have 93. There are many unorganised workers so the State must step in with a measure like this to give them a better income.

Deputy Boland said that this did not bring any solace to an employer. It brings solace to an employee and also in an indirect way to the employer. Any satisfied worker is an asset to any employer. £1 a week, especially with the inflation rate falling, will be much more valuable than it was two years ago. We will have more satisfied people working. In the case of workers who are denied the benefits of national pay agreements by unscrupulous employers we find the State stepping in with a subvention to the lower paid workers.

Deputy Boland and Deputy Desmond mentioned that there are not many workers earning less than £50 a week. I believe there are thousands of agricultural workers who do not earn £50 a week. I do not know what their rate is but I am quite sure it is not over £50 a week. The people we want to help, the agricultural workers, will benefit from this and therefore, it is a worthwhile motion. I take it the Opposition will not oppose it.

We would all like to see a much bigger sum being given. Since the Minister took office a few months ago as Minister for Health and Social Welfare, he has adopted a humane approach and, apart from its humanity, there is a very constructive approach to each measure bringing benefit to those most in need of it. Very few people need to benefit as badly as the workers benefiting under this motion, all 300,000 of them.

Deputies may argue that is not a realistic total but, taking into account the agricultural workers and the lower paid commercial workers, it is easy to reach that total. This extra money will bring a measure of happiness and wellbeing to families. In a family the benefit may not be confined to just one worker. Most workers in rural factories will benefit and a household with a father and two or three daughters working will gain substantially from this motion.

The motion shows the Minister's dedication to making our social welfare code better. We realise there is a lot more to be done, and we also realise our limitations. We must keep on bringing in motions like this to ensure that we have the best possible society at the earliest possible time, always appreciating just how far we can go. This motion and other measures introduced by the Government since the election are a credit to the Government. We are carrying out our election promises. The rates have gone. The car tax has gone. Now £1 is going off the social welfare insurance stamp.

Mr. Boland

Ground rents?

Mr. Haughey

Next month.

Mr. Boland

Abolished?

Mr. Haughey

Before Christmas.

Mr. Boland

Will they be abolished?

An Leas-Cheann Comhairle

Ground rents cannot be discussed on this motion. Deputy Moore on the social welfare motion.

Mr. Moore

We should educate Deputy Boland on some of these points in our policy.

An Leas-Cheann Comhairle

I would prefer if the Deputy did not.

Mr. Boland

So would I.

Mr. Moore

Then I will not. I could tick off a longer list, and I am sure it will bring joy to Deputy Boland's heart when he sees this progressive Government introducing these measures. He may sigh for lost opportunities. Deputy Desmond said there was talk about this motion about a year ago. I remember hearing it mentioned about two years ago. We sighted for the opportunity to change the Government's thinking then, but we could not. Now that we have been back in office for four or five months, the Minister is doing it and we are keeping up the pressure on the inequalities and the injustices in our social services.

Mr. Boland

Two years ago, £50 a week was worth a lot more than it is now. Therefore it should be much more than £50 now.

An Leas-Cheann Comhairle

Deputy Boland has already spoken. Deputy Moore should pay no attention to him.

Mr. Moore

I like to hear that Deputy Boland is interested in these things. Week after week he will see more measures like this being introduced.

Mr. B. Desmond

In the past two years, weekly earnings have gone up by 36 per cent.

Mr. Moore

So did inflation. The previous Government eroded the people's earnings. We are taking the very opposite action. Not only are we improving the social welfare system, but we are reducing inflation at the same time, so that £1 will really be £1.

Mr. B. Desmond

Real earnings have gone up this year by 4 per cent.

Mr. Boland

On that basis the figure should be £68 a week.

An Leas-Cheann Comhairle

Deputy Boland and Deputy Desmond should not help Deputy Moore to make his speech. He is well able to make his own speech.

Mr. Boland

That is debatable.

Mr. B. Desmond

Dublin Deputies are a very gregarious crowd.

An Leas-Cheann Comhairle

Deputy Moore on the motion.

Mr. Moore

I do not know whether Deputy Desmond can trace any affinity between the three of us, other than the fact that we are members of the House. It stops there.

Mr. B. Desmond

Let us hope so.

Mr. Moore

We would not exchange places with the Opposition.

Mr. Boland

It will happen.

Mr. Moore

A sum of £1 in £50 would be an increase of 2 per cent for the recipient, and so on through the scale. This is based on gross earnings, less superannuation contribution. In his wisdom the Minister has decided on this basic figure as the qualifying figure. I can find no fault in this small scheme, as it is. It is the precursor of greater things to come.

The Opposition would be very foolish to oppose this motion. The policy of this party has always been to achieve a system of social justice. Nobody suffers more than the lower-paid worker from the injustices in the present system. Every effort made to improve the system will benefit the worker and benefit the whole community including the employer. Apart from the fact that we should try to ensure that every person is satisfied, if they are satisfied that is for the common good.

I would ask the Minister to have a look at widows' contributions. I am not clear what they pay now. It was changed some time ago.

Mr. B. Desmond

They are exempt.

Mr. Moore

They are exempt at the moment, but could we give them something extra? Perhaps we could work something extra into this motion for widows and women workers in general.

I have great pleasure in welcoming the motion. I congratulate the Minister on what he has done in this small simple measure. Above all, it shows his intent to perfect our social welfare code so that it will be the best one we can possibly have. I look forward to early in the new year when new measures will be introduced to benefit people still further. I look forward to the Minister continuing his pursuit of social justice through legislation in this House.

Dr. O'Hanlon

I will be brief. I want to compliment the Minister on introducing this motion and implementing another item in the Fianna Fáil Party manifesto. Indeed, it is a tribute to the sincerity of the Minister and the Government that they are slowly and surely getting through the items offered to the electorate which the electorate so resoundingly accepted in June.

I accept the Minister's figure of 300,000 persons who will benefit. That is a large percentage of our working force to benefit. If we are to look at the amount that people earning less than £50 a week would have to spend on luxuries after meeting commitments, such as house purchase, rent, food, and so on, £1 represents a fair proportion of what they have left to spend. If they have £5 less to spend it represents 20 per cent and £10 less represents 10 per cent so that for these people on less than £2,500 a year it is something worth while in the pay packet at the end of the week. I congratulate the Minister on introducing this measure at this time. There could have been a temptation to wait until the budget and for a further six months after that.

Mr. McCreevy

First of all, I should like to congratulate the Minister on his appointment since this is the first time I have spoken on a motion introduced by him. He states that 300,000 insured persons will benefit per week. I would like him to reassure people who are a little doubtful as to when the proposed new scheme will come into operation—that is, the scheme designed to replace the social welfare stamp eventually. It will probably be the same as the pay-related contribution scheme at the moment with a certain percentage taken per week from the wage packet. That would be a very positive step. I am in business myself and, as an accountant, I have found that employers experience great difficulty in operating the present system of stamping cards, deducting PAYE, pay-related benefit and so on. The new scheme will be a step in the right direction. Some workers are perturbed in case this £1 reduction will be lost when the new scheme of percentage reductions comes in. I should like to hear the Minister's views on that.

I have received representations from the sub-postmasters union regarding their plight. I am informed there are about 2,000 postmasters in the Twenty-six Counties and 1,000 earn less than £30 gross per week and 25 per cent earn less than £25 per week. As they are paid on the basis of units, or something like that, the social welfare stamp represents a considerable number of units and as a result of a survey made by the union it has been found there would be a loss of 26 per cent——

An Leas-Cheann Comhairle

I am sorry, Deputy, we are only dealing today with one specific item.

Mr. Boland

It is a very important point.

An Leas-Cheann Comhairle

I know it is, but we are not dealing today with the complete abolition of the social welfare stamp.

Mr. McCreevy

I bow to your ruling, but I would like the Minister to allay these fears because a number of sub-post offices may possibly close down if the social welfare stamp ceases to exist. Reducing the employee's contribution by £1 a week is a very worth-while reduction. The Minister should look at the whole question of the social welfare stamp because it is becoming a disincentive to employing more people. The stamp is a little over £7 and the employer has to pay in the ratio of about 2:1. If we are to get more people back to work—that is the aim of this Government—the Minister should try to reduce still further the cost of the stamp to the employer.

Mr. Boland

Hear, hear.

Mr. McCreevy

I look forward to further improvements in social welfare legislation by the Minister.

Minister for Social Welfare (Mr. Haughey)

I must confess it is a bit puzzling to find the Opposition and particularly the Labour Party representive here refusing to afford an enthusiastic and wholehearted welcome to this measure. This measure will ensure that from 2nd January next 300,000 of our lower paid workers will receive an extra £1 per week into their pockets. It is as simple as that. There is no gloss on it.

Mr. B. Desmond

Any breakdown?

Mr. Haughey

I will come to the breakdown in a moment. It is simply a matter that, in pursuance of the Fianna Fáil election undertaking, we are giving effect now to this proposal. A very substantial number of our work force and almost the entire section of lower paid members of that work force will get a positive benefit of £1 per week as and from 2nd January next. Deputy Desmond found it in his heart today to afford only suspended approval to the measure. I would like it to be clearly understood by the lower paid workers that, so far as Deputy Desmond is concerned, he is not prepared to urge me to go ahead with this measure.

Mr. B. Desmond

Since when is £50 the dividing line?

Mr. Boland

Since two years ago, according to Deputy Moore.

An Leas-Cheann Comhairle

The Minister, without interruption, please.

Mr. Haughey

The dividing line was the clear demarcation laid out in the Fianna Fáil election promise to the lower paid workers. So long as we understand that Deputy Desmond, representing the official Labour Party here, can say that he only gives suspended approval to this measure——

Mr. B. Desmond

Precisely.

Mr. Haughey

In other words, he would be just as happy if I did not bring in this measure. As long as we understand that——

Mr. B. Desmond

For example?

An Leas-Cheann Comhairle

The Minister is in possession. There should be no interruptions. He did not interrupt Deputy Desmond. I will not allow Deputies to go on interrupting.

Mr. Haughey

Whatever about Deputy Desmond, there is a very clear implication in what Deputy Boland says: he would prefer this £1 to be taken off the employer's contribution.

Mr. Boland

The Minister is being deliberately obtuse.

Mr. Haughey

There was quite a definite hint in what Deputy Boland said to that effect. We are quite determined in the Fianna Fáil Party, no matter what the opposition is from Fine Gael, strident vocal opposition, and muted opposition from the Labour Party, to go ahead and bring in this measure and reduce the employee's contribution to the social welfare stamp by £1 per week from 2nd January next.

Mr. Boland

We are not opposing it. We think it is too small.

Mr. Haughey

We are giving this positive benefit of £1 per week to 300,000 lower paid workers.

Mr. T. J. Fitzpatrick

(Cavan-Monaghan): Is that an accurate figure? Is the Minister satisfied there are 300,000?

Mr. Haughey

Not alone am I satisfied but I will go a little further. The 300,000 is a round figure. There will actually be 303,800 persons who will benefit. I will give the House the calculation in my own good time.

Mention has been made of the national pay agreement and I think it is the unanimous wish of both sides that a national pay agreement satisfactory to both sides will be forthcoming. Deputies must admit that this proposal of mine represents a positive and significant contribution to a favourable atmosphere in which such a pay agreement can emerge. It is certainly helping to set a favourable scene in which these discussions can take place. I shall put it no further than that at the moment. The participants in the discussions can be certain, particularly on the trade union side, that this positive advantage will accrue to lower paid workers on 2nd January whether or which.

Having said that, I should like just to deal with the question of the 300,000. This is a firm calculation worked out by the statisticians, analysts and economists in the public service available to the Government in the public service by the best, sophisticated methods available. I shall give the House the benefit of their calculations. In the income tax year 1977-78 there will be approximately 700,000 persons paying pay-related social insurance contributions. The distribution of that number can be calculated reasonably accurately as 43.4 per cent of those who have earnings under £2,500 a year, £50 a week. That gives me a figure of 303,800. The average contribution by those persons contributing to the social insurance fund who pay at least one contribution a year is £42.

Mr. B. Desmond

There are 970,000 insured persons.

Mr. Haughey

So we take 303,800 persons, multiply it by 42 and we get £12.8 million.

Mr. B. Desmond

Is that the basis of the calculation?

An Leas-Cheann Comhairle

Deputy Desmond should not interrupt.

Mr. Haughey

It is a perfectly sound and valid calculation.

Mr. B. Desmond

It is not.

Mr. Haughey

What is wrong with it?

Mr. B. Desmond

In the first instance, the Minister is aware that there are 971,000 insured persons——

An Leas-Cheann Comhairle

The Minister is in possession and should be allowed to continue without interruption. The Deputy will have some other opportunity to deal with the figures if he wishes to do so.

Mr. Haughey

The only thing the Deputy is trying to do is to inflate the cost by telling me that there will be people benefiting——

Mr. B. Desmond

I am not.

Mr. Haughey

The actual number of pay-related social insurance contributors is 700,000; 43.4 per cent of those earn less than £50 per week. The average contributions paid by those persons is £42 and so, at £1 per week reduction the annual cost is £12.8 million. I have rounded that up to £13 million.

Mr. Boland

Can the Minister say how he arrives at the 43.4 per cent figure?

Mr. Haughey

That is a calculation made from the records available to the Department of Finance and the Revenue Commissioners.

Mr. Boland

Last year.

Mr. Haughey

No, 1977-78.

Mr. Boland

How can you have a record of the current year? It has not expired.

An Leas-Cheann Comhairle

Deputy Boland should not interrupt.

Mr. Haughey

It is known that the figure is 43.4 per cent in the current, 1977-78, tax year. These are known; they are on the computer. The Deputy must not worry about it. What are Deputies worrying about?

Mr. B. Desmond

We are simply saying that your 300,000 figure is wrong.

An Leas-Cheann Comhairle

Would Deputy Desmond and Deputy Boland please listen to the Minister? I did not allow anybody to interrupt them when they were speaking and I shall not at any time allow any Deputy speaking in the House to be interrupted.

Mr. B. Desmond

I sympathise.

Mr. Haughey

Deputy Desmond is greviously disappointed that I have very firm calculations prepared by the public service to justify the figure of 300,000 that I have given. I am prepared to stand over it. Certainly, the economists, statisticians and analysts in the Government service are prepared to stand over that figure and I am prepared to accept their word and their calculations rather than Deputy Desmond's.

Mr. B. Desmond

The calculation does not include the last phase of the national pay agreement.

Mr. Haughey

The Deputy may try to confuse the issue——

Mr. B. Desmond

I am not.

An Leas-Cheann Comhairle

Will Deputy Desmond please cease interrupting?

Mr. Haughey

The arguments are silly in any event.

Mr. B. Desmond

They are not.

Mr. Haughey

A very large number of lower paid workers will benefit from this reduction. That is what is annoying Deputy Desmond. That is what he is upset about. He is trying to say that there might be only 290,000. In fact, in so far as he advanced any argument it would be that the figure is more than I am suggesting. This is a clear calculation made by the best methods available to me, to the Government, the Department of Finance, the Revenue Commissioners and the Department of Social Welfare. All those official bodies are satisfied that this is a reasonably correct calculation and I am accepting their word and I am not prepared to think that Deputy Desmond knows more than the whole lot of them put together. That is the end of the argument.

Mr. B. Desmond

In my opinion, you are about 100,000 wrong.

An Leas-Cheann Comhairle

Deputy Desmond is entitled to his opinion but he is not entitled to express it while the Minister is speaking. The Minister without interruption, please.

Mr. P. Lalor

Deputy Desmond was very understanding when he was over here.

Mr. Haughey

Reference has been made, naturally, during the discussion to the longer term and to what is proposed in regard to the social insurance fund. I have already announced that we intend to change over as soon as possible to a pay-related system which will also involve the abolition of the cards and the stamps. It was the Government's wish to introduce that system as early as possible and my colleague, the Minister for Industry, Commerce and Energy in particular, was pressing very hard that the changeover be made as early as possible, because it is a sensible reform both on economic grounds and from the point of view of doing justice to the lower paid workers. It means the less you earn the less you pay by way of insurance contribution; it would be pay-related. Unfortunately, the experts in the public service from the different Departments concerned who were examining this matter reluctantly, in spite of very considerable pressure from me, have had to tell me that the earliest date on which this can be introduced is 1st April, 1979. It must come in at the beginning of an income tax year for a number of complicated technical reasons and the preparations and necessary changes cannot be made by 1st April, 1978. Accordingly, we are faced with the unavoidable delay of waiting until 1st April, 1979 to introduce the new system. I know there will be a widespread welcome in the trade union movement for it and also in industry because——

Mr. Boland

And from the sub-postmasters.

Mr. Haughey

——it will be a fairer system in that it will be pay-related. The insured person will pay a contribution directly related to his earnings.

There will have to be a cut-off point, an upper limit beyond which the contribution will not continue to increase. The percentage rate of the pay-related contribution and the cut-off point have still to be settled: and until we get the full report from the interdepartmental working group studying the matter at present decisions on these points will not be taken. So, any percentages which may be referred to can be totally disregarded at this stage. Those are not fixed and will not be settled until the full report of the working group is made available to the Government and until all the implications are clearly understood. The one thing that is fixed and definite is that the new system will be pay-related. This will be to the benefit of the lower paid workers.

Deputy McCreevy asked me how this related to the new changeover. In so far as it is a positive move towards the reduction in the contribution of the lower paid worker it can be seen as a forerunner of the changeover. It will eventually be subsumed into the new system but for the moment it represents a positive contribution to the lower paid worker on the industrial front. Another advantage which we hope to secure from the changeover is that there will be only one deduction. The new system will be administered by the Revenue Commissioners by means of their computers and only one deduction we hope will be made which will cover all the different social welfare contributions. The aim is to try to ensure that the whole system will be simplified.

Deputies will readily realise the economies that that will give rise to in the administration of not just the social welfare side but throughout the whole wage paying system in the private sector. Sub-postmasters and sub-postmistresses, I understand, are naturally apprehensive about a loss of earnings which this changeover will entail for them, and they hope to submit a case to the Government about this matter. It will be at least 12 months before any positive action can be taken, so the sub-postmistresses and sub-postmasters will have plenty of time to submit their case and to have it considered by the Government. The Minister for Posts and Telegraphs will be primarily concerned and it is to him that the submissions should be made. I am sure nobody would expect us to continue an old fashioned inefficient system which has many disadvantages if we can go over to much more modern efficient and much fairer system along the lines envisaged.

Mr. Boland

Can the Minister say that the sub-postmasters will not suffer any loss of earnings?

Mr. Haughey

I can only say at this stage that any submissions they make will be favourably and sympathetically considered. As an important and valued section of the community who have given dedicated service down through the years, they are entitled to have their submissions sympathetically and favourably considered by the Government. There will not be anything precipitate in this area. If our target of 1st April, 1978, had been adhered to there would have been a lot more pressure on them. They know that the changeover cannot take place before the 1st April, 1979, and there is plenty of time for them to make their submissions.

From the point of view of the sub-postmasters and sub-postmistresses there is one advantage in the changeover. The insurance stamps have constituted a danger to a number of offices. They were a constant worry as they represented a fairly valuable removable commodity, and indeed there was a fair amount of robbery and pilfering of these stamps. I know that many sub-postmasters and sub-postmistresses were apprehensive about their personal safety and the safety of their offices. With the changeover that burden will be removed. I readily recognise that this is not necessarily the most important aspect of the matter from their point of view. However, I am recommending this proposal to the House. I am surprised that any hint of reluctance to accept it should have been expressed from the Opposition benches because this is simply a straightforward measure giving positive real benefit to 300,000 of the lower paid workers in the community. It will become operative on the 2nd January and I hope that workers and their trade union representatives will recognise it as a positive gesture, a contribution from the Government towards creating a climate in which the very crucial and important pay negotiations can take place.

Mr. Boland

In order to help the Minister in his struggle with the clock, could I remind the Minister that I asked five questions to which he has not replied at all.

An Leas-Cheann Comhairle

The Minister cannot reply to them now because the time is practically up.

Mr. Boland

A question was asked about abolishing social welfare contributions for young people and about introducing a reduced rate stamp for people who do not work 40 hours a week.

Mr. Haughey

The first question is not relevant to this at all. That is a matter that the Deputy can take up in some other context. This is a positive contribution to a certain section of the working population. That is as far as it goes and no further. It just reduces the stamp for 300,000 lower paid workers.

Mr. Boland

The answer to the second question, that there should be a reduced rate of contribution in respect of part-time workers, will be the same?

Mr. Haughey

The Deputy does not fully understand that. The Deputy spoke about people who work two or three days a week. For purposes of this concession their earnings will be regarded as actual earnings. In other words, the two or three days a week will not be grossed up to a notional weekly wage.

An Leas-Cheann Comhairle

Is the motion agreed?

Mr. Boland

Yes, in its limited form it is agreed to.

Question put and agreed to.

The Dáil adjourned at 5 p.m. until 2.30 p.m. on Tuesday, 22nd November, 1977.