Dáil Éireann debate -
Tuesday, 7 Nov 1978

Vol. 309 No. 2

Social Welfare (Amendment) Bill, 1978: Second Stage.

Minister for Social Welfare (Mr. Haughey)

I move: "That the Bill be now read a Second Time."

The Bill will provide for the conversion of the existing flat-rate and pay-related social insurance contributions and flat-rate occupational injuries contributions into fully pay-related contributions. There will be separate Bills to deal with pay-related redundancy contributions and health contributions. When the new social insurance contribution system comes into operation in April 1979 all of these contributions in respect of employees will be collected together as a proportion of their pay.

Over the years there has been widespread criticism of the inequitable aspects of the flat-rate social insurance contribution system. The system of fully pay-related contributions is intended to redress this situation. It will benefit not only employee but also employer as well as improving the system of collecting contributions for my Department. I shall discuss the effects of the proposals later but first I should like to outline for Deputies the background to the Bill and the purpose of the changes envisaged.

Before doing so, however, I must mention that the present social insurance system is based on the Social Welfare Act, 1952, to which a considerable body of legislation has been added over the years making up the Social Welfare Acts, 1952 to 1978. Consolidation of this legislation is in hand but cannot be completed at this stage. The present Bill takes the form mainly of providing for amendments of these Acts. Because of this, it is somewhat technical and complex and details of the new scheme may not be readily apparent from its terms. The explanatory memorandum circulated with the Bill will, I trust, be of assistance to Deputies in this regard. I shall, of course, be happy to clarify any matters on which further explanation is required.

As Deputies will be aware, the present social insurance system has two funds, the social insurance fund, out of which all benefits other than those related to occupational injuries are paid, and the occupational injuries fund which I will deal with later. The social insurance fund is financed by way of flat-rate contributions, the 3 per cent pay-related contribution introduced in 1974, and an Exchequer subvention. This method is, in the overall, regressive in its impact on contributors. The flat-rate contribution, which accounts for about 70 per cent of the total financing of the social insurance fund, is clearly regressive and the effectiveness of the present pay-related contribution in achieving vertical redistribution is limited by the comparatively low earnings ceiling of £2,500 on which the contribution is levied. The maximum pay-related contribution payable annually in respect of any employee is £75, that is 3 per cent of £2,500, of which the employer would pay £50 and the employee £25. The regressive nature of the flat-rate contribution, in which no account is taken of the ability of the employee to pay, means that, in the case of the lower paid employees, this contribution can be a considerable burden.

Deputies will recall that in order to ease this burden on lower-paid workers, the flat-rate social insurance contribution payable for workers with earnings of less than £50 a week was reduced by £1 a week last January. This concession was increased from April last, so that at present the worker earning less than £50 a week has his contribution reduced by £1.16 a week and his employer's contribution is reduced by 34p a week. It was recognised when these provisions were made, however, that they were only a "stop-gap" measure pending the introduction of fully pay-related contributions. The new system will subsume these reductions and so consolidate the benefits given by them.

The ordinary weekly rate of flat-rate contribution payable by employees, including the redundancy and health contribution, is £3.42 for men and £3.35 for women, less in each case £1.16 for those earning less than £50 a week. Employees also pay a 1 per cent pay-related contribution on pay up to £2,500 a year. For workers earning £25 a week, therefore, insurance contributions represent about 10 per cent of their pay, for workers earning £50 a week, 7.8 per cent and for workers earning £100 a week, 3.9 per cent.

The flat-rate social insurance contribution is also a heavy burden on the employer in the case of labour-intensive industries. The weekly contribution payable by the employer, including that for redundancy and occupational injuries, is £5.26 for male employees and £5.21 for female employees plus 2 per cent of pay up to £2,500 a year. As was mentioned in the Government's Green Paper on Development for Full Employment, the introduction of the new pay-related contribution system will, by reducing wage costs in labour intensive industries, make a positive contribution to the achievement of the Government's employment objectives without involving additional public expenditure.

It can also be said of the flat-rate contribution system that it is a somewhat inflexible method of financing the services. The income from contributions varies only with increases or decreases in the level of employment and there is no buoyancy of income where levels of pay rise. Thus, increases of income needed to pay increased rates of benefit can only be assured by increasing the rates of contributions.

I will now outline the main features of the proposals in the Bill.

The new system will commence on 6 April next though certain provisions of the Bill, such as those requiring confirmation or variation of rates of contribution before commencement of the scheme, will take effect from other dates. It is intended that the new contribution will, like the present 3 per cent pay-related contribution which it will subsume, be collected for the vast majority of employees by the Revenue Commissioners through the PAYE system of income tax collection. It is necessary, therefore, to start the scheme at the beginning of the income tax year. Section 6 of the Bill will enable me as Minister for Social Welfare to assign all necessary functions relating to the collection and recovery of contributions to the Collector-General of Revenue.

I might explain for Deputies the reason for the various functions that I may under the Bill assign to the Collector-General. Though the present 3 per cent pay-related contribution provides a basis for the new fully pay-related contribution system, there is much more involved in the new system than a mere increase in the rate of that contribution. The new system will see the end of the stamped insurance card. This removes a basic source of information at present on individual insurance records. Though there are many problems and difficulties inherent in the stamped card system it can be said that it provides a fairly efficient system of recording weekly contributions on which the social insurance system is based. With the abolition of the card, the main source of information available to the Department for the purpose of maintaining insured persons' records will be the data which employers will be required to submit to the Revenue Commissioners. The collection of this data by the Revenue Commissioners and its availability to my Department will be vital for the efficient operation of the social insurance code. Without it, insured persons records would be deficient and this could lead to delays in payments and hardship to claimants.

The collection of the information needed for the determination of claims to benefit will be as important a task for the Revenue Commissioners under the new system as is the collection of contributions. For these reasons, the Collector-General must be equipped with all the necessary powers to enable him to pursue the collection of contributions and to secure the prompt return of information relating to contributions and the duration of insurable employment covered by them.

Employers will, under regulations, be required to keep records of their employees' earning and duration of employment and these records will be open to inspection. Also, information obtained by the Revenue Commissioners will be made available to my Department where required for the maintenance of insured persons' records, the determination of benefit claims and to assist in any action by officers of my Department to ensure that employers are fulfilling their contribution obligations.

Before moving on to discuss how contributions will be calculated I should perhaps refer to the position of those employees who do not come within the scope of the PAYE system, including employees of companies incorporated outside the State who are paid from outside the State. These employees, relatively few in number, will pay a pay-related contribution under special collection machinery which will be operated by the Department of Social Welfare. Such special arrangements already exist in relation to those employees for whom the existing 3 per cent pay-related contribution is due.

Under the new system, a contribution will be due on every payment of reckonable earnings made to an employee up to the limit of an annual ceiling. A definition of reckonable earnings will be contained in regulations. These will be the same earnings as are used for income tax purposes and on which the present 3 per cent pay-related contribution is collected, that is, gross earnings in cash less approved superannuation contributions.

A ceiling to the amount of reckonable earnings on which contributions are charged is a feature of the present 3 per cent pay-related scheme and it is being continued in the new system. Benefits payable are for the most part flat-rate and, in the circumstances, it would be unreasonable not to have a limit by way of a ceiling on earnings liable to contribution. Among countries which operate earnings-related schemes, including those where benefit is earnings-related, there is a widespread practice of having a ceiling which is related to average earnings and is set at a level which ensures that the bulk of the earnings of the vast majority of workers is within it. This practice was followed when our present pay-related scheme was introduced and workers and employers are now familiar with it.

The earnings ceiling of £5,000 specified in the Bill is intended, following the international practice which I have just mentioned, to cover the bulk of the earnings of the great majority of workers. It is, however, a provisional figure. The level of the ceiling was determined having regard to the latest information available, at the time the Bill was published, of the average earnings of workers in the transportable goods industries. Power is taken in the Bill to enable the ceiling to be confirmed or recalculated on the basis of whatever later information becomes available before the scheme commences.

The Bill also provides for variation of the ceiling from time to time as required and that, when a change is made, account would be taken of variations in the average earnings of workers in the transportable goods industries. For obvious administrative reasons the ceiling can only be changed with effect from the beginning of an income tax year and it would, of course, have to be determined in good time before that date to avoid inconvenience to employers who must operate the system.

Before moving to other aspects of the scheme, I should like to explain to Deputies how the ceiling will operate in the case of employees who work at the same time for two or more employers. For employees, the maximum liability for contributions will always be limited by the level of the current ceiling on earnings in a contribution year. No contribution will be payable by an employee on any part of his earnings which exceeds that ceiling, even if these earnings are aggregated from different employments. In the case of the employer who takes on a worker already engaged in other employment, however, it is not proposed that earnings from both employments should be aggregated so as to relieve the employer concerned of the social insurance contributions which he would pay if he were the only employer. Accordingly, I am proposing in the Bill that such an employer should pay the employer's element of the contribution on all earnings paid by him up to the ceiling. This proposal will ensure that it will be more advantageous, in respect of social insurance liability, for an employer to take on a person already in other employment rather than to engage someone on the live register.

There will be a standard rate of contribution in respect of employees who are eligible for all social insurance benefits. The effect of this will be to eliminate the present differential in the flat-rate contributions as between men and women and as between ordinary and agricultural employment. These differentials, which have not been increased for many years and have thus become relatively small by reference to the overall contribution rates, were introduced largely to take account of the lower earnings of the workers concerned. In the case of women, account was also taken of restrictions in benefit entitlements which have now been removed except in the case of certain married women whose benefits in respect of sickness or unemployment are restricted.

A fully pay-related contribution of its nature automatically embodies a differential between individuals or groups to the extent that their levels of pay differ. There is, therefore, no need for continuation of the existing differentials.

The standard rate of social insurance contribution specified in the Bill is 11.2 per cent, of which 7.8 per cent is payable by the employer and 3.4 per cent by the employee. The purpose of the Bill is, as I have indicated, to convert the present contributions to fully pay-related ones and the rates of social insurance contributions have been calculated by reference to the most recent income distribution data and the £5,000 ceiling to yield approximately the same income as would have been produced by flat-rate contributions and the 3 per cent pay-related contribution. At this stage the rates are provisional and they will, like the earnings ceiling to which I have already referred, be reviewed and either confirmed or varied by regulations before the scheme commences. This review of the rates will have regard to the most up to date information regarding income distribution and the income yields required for benefit purposes. The rates of 7.8 per cent and 3.4 per cent take account of the special increase of 31p in the flat-rate contribution which was introduced in 1975 to help to meet the cost of the high level of unemployment claims and has been continued on an annual basis since then. The need for further continuation of this increase will also be considered in the context of the review to which I have just referred.

The new pay-related system of contributions will apply to all persons insured under the Social Welfare Acts. Employees in the public sector and other employees who are insured for a limited number of benefits of the social insurance system pay special reduced flat-rate contributions but do not pay the present 3 per cent pay-related contribution. Their flat-rate contribution will now be converted to pay-related contributions at reduced rates appropriate to the cost of the limited benefits for which they are insured. The new rates in these cases will be provided by regulations under section 12 of the Social Welfare Act, 1952.

The present flat-rate contributions payable by voluntary contributors are similarly being converted into income-related contributions. These will be collected directly by my Department as a percentage of the reckonable income of the contributor up to the ceiling of £5,000. Reckonable income for this purpose is to be defined by regulations and will include earnings as a self-employed person. Rates for each of the three classes of voluntary contributor are specified in the Bill. These rates are made up of the elements of the standard rate for employees which are appropriate to the benefits covered by each category of voluntary contribution. As with the ceiling and the standard rate, the rates of voluntary contributions specified in the Bill—4.4 per cent, 2.7 per cent and 1.7 per cent—are provisional at this stage and they will be either confirmed or varied before the commencement of the scheme.

An outline of the situation in regard to tax relief on the new contributions would, I feel, be helpful as this is not a matter which needs to be provided for in this Bill though it is relevent to the rate of contribution. As Deputies may be aware, at present an employee can claim income tax relief in respect of the pensions element of his flat-rate social insurance contribution. As the contribution is flat-rate this is a fixed sum each year. Under a pay-related contribution system, the amount of this relief could change with every payment of earnings made to an employee. To avoid the difficulties that would arise in applying such a variable deduction, direct tax relief on the employee's social insurance contribution will be discontinued. In compensation for the extra income tax thus charged on the employee, the overall increase in the amount of tax collected has been taken into account in calculating the employee's contribution and the appropriate reduction made in the rate of contribution. If tax relief had not been taken into account in this way, the overall contribution would, like the existing pay-related contribution, be shared on a 2 to 1 basis between employer and employee with the employee's rate being 3.9 per cent instead of as it will be 3.4 per cent.

As I have said, the rates of contribution are designed to replace the income which would have been raised by the existing contribution system, had this continued. In the calculation of the rates, it was accepted that the cost of the concession afforded in the employee's rate to compensate for the loss of the income tax relief will be met by an increase in the Exchequer subvention to the social insurance fund.

Flat-rate contributions of 19p and 16p are at present payable for male and female employees respectively in respect of occupational injuries insurance. These will also be converted under section 16 of the Bill to a pay-related contribution at the standard rate of 0.45 per cent of an employee's reckonable earnings up to the ceiling of £5,000 to which I have referred earlier. As in the case of the new social insurance contribution, the existing difference in contribution for men and women will, therefore, cease to apply. This contribution is payable only by the employer and is paid into a separate occupational injuries fund. In recent years expenditure on benefits, which is growing each year, and on the administration of the occupational injuries insurance scheme has exceeded income from contributions and the rate of 0.45 per cent is intended to ensure that the fund remains solvent. So far as the occupational injuries insurance scheme is concerned, therefore, the proposals are more than a straightforward conversion of the flat-rate contribution since they are designed also to rectify the deficit situation. The rate of 0.45 per cent will also be subject to confirmation or variation in the light of any new information on income distribution and benefit changes before April next.

Deputies will note that the rates I have quoted include decimal fractions and the calculation of contributions by employers who do not have computerised payroll systems could pose difficulties. To facilitate such employers with their calculations, tables of contributions or ready reckoners will be provided.

The change-over from a weekly stamped card system to one under which contributions are payable only on payment of earnings necessitates some additional legislative changes, the most important of which relates to the contribution conditions for benefit under the social insurance system. These conditions require a specified number of contributions to have been paid. At present, a contribution is payable for a person in respect of every contribution week in which he is insurably employed. The number of contributions paid or, if you wish, stamps on his record, thus represents the number of contribution weeks during which he was insurably employed.

Under the new pay-related system, contributions will be payable only when payments of reckonable earnings up to the ceiling are made. When the ceiling is reached no further contributions will be due in that contribution year. Also, in the case of a person who is fully employed throughout the year and is paid monthly, for instance, only 12 contributions at most would be due in the year but these contributions would represent 52 weeks of insurable employment. Thus, the number of contributions will not necessarily be the same as the number of weeks of insurable employment in respect of which they are paid. It is consequently necessary in the various contribution conditions to substitute for the number of contributions paid, the number of weeks of insurable employment for which contributions have been paid or would have been paid but for the operation of the ceiling. This is provided for in section 13 of the Bill.

The new pay-related contribution system in terms of legislative provisions and administrative arrangements represents a major departure from the existing system. To ensure continuity between the two, section 20 of the Bill enables transitional arrangements to be made by regulations. This provision will be availed of to ensure that the change-over is effected without any disruption in benefit entitlements. It will, for example, be necessary to provide for special contribution and benefit year arrangements for disability benefit and unemployment benefit purposes to cover the period up to the year 1981 when the preceding income tax year will for the first time be the governing contribution year for benefit purposes for both men and women.

These then are the main provisions being made in the Bill. Before finishing I should like to talk about some effects which these proposals will have.

To take first a specific case, female domestics in private employment are insured for all benefits of the social insurance system but are excluded from the pay-related benefit scheme because it was not possible to arrange for the collection of the 3 per cent pay-related contribution for them. Because of a more comprehensive system of collection now possible, they will be included in the new pay-related contribution system and will then be covered for pay-related benefit for the first time. The standard rate of contribution will apply to them.

For employees generally the new contribution system will eliminate the regressive aspects of the present flat-rate contribution system which bears heavily on the lower paid worker and will relate the level of contribution to ability to pay. It will also remove an anomalous situation arising in relation to the present £1.16 reduction in the contribution of employees earning less than £50 a week. A man earning say, £49.50 a week, is at present liable for a total social insurance contribution of £2.11 leaving his pay £47.39 net of that deduction. If his pay were increased to £50, his contribution would go up to £3.27, leaving him £46.73 after deduction, which is 66 pence less than he had before his pay was increased. The new system, by scaling up the contribution directly and proportionately as pay increases, will prevent this happening.

Employees on the higher pay levels will pay more under the new contribution system than by way of their present flat-rate and 1 per cent pay-related contribution. However, the new pay-related contribution will not be charged on earnings in excess of the ceiling and they will gain in another way. I propose by regulation to raise the ceiling applying to the pay-related benefit scheme from the commencement of the new contribution system from the present level of £2,500 to whatever ceiling is finally determined for contribution purposes and to maintain parity in future. Higher paid workers would benefit from this proposal which will give them higher overall payments of benefits when they are sick or unemployed.

With the ceiling and rates proposed, employees earning less than about £80 per week will pay less by way of social insurance contributions under the new system than under the flat-rate system. This will mean that, of the employees who will be paying contributions at the standard rate, about 500,000 will pay less by way of contribution under the new scheme while about 200,000 will pay more. For employers, the new system will provide a simpler way of collecting the various "social" contributions payable and will relieve them of the work connected with the handling and safe custody of insurance cards and stamps. The existence, since 1974, of a dual system of collection of insurance contributions, with flat-rate contributions being collected largely by means of the sale of insurance stamps at post offices and pay-related contributions being collected in conjunction with the PAYE income tax system, has added to the expenses of employers as well as imposing an undue administrative burden on the insurance funds. The new system will thus eliminate duplication of work and reduce costs. It will also remove the complication and responsibility for employers of ensuring that the appropriate reduced rate of stamp is used only for those earning less than £50 a week.

In respect of an employee earning less than about £73 per week the employer's social insurance and occupational injuries insurance contribution will be reduced. How individual employers will be affected will depend on the numbers of employees they have whose earnings are above and below that figure.

For my Department, the new system will, in addition to the reduction in administrative costs to which I have referred, eliminate certain problems and difficulties associated with the existing card-stamping system, including the question of security and fraud arising from the theft, counterfeiting or re-use of stamps. It will also facilitate computerised methods being employed in the processing of information, leading to a more efficient records system.

I should refer at this point to the effect which abolishing the present scheme will have for postmasters who are paid on the basis of the work which they do. About 60 per cent of income from flat-rate contributions is collected by way of insurance stamps sold at all post offices. Payment to postmasters at sub-post offices for this work now amounts to about £1.2 million a year and this is met from the insurance funds. The proportion of any individual postmaster's income deriving from work connected with the sale of insurance stamps depends on the extent of such sales. This work will of course cease and its cessation would affect the remuneration of postmasters at sub-post offices. The Irish Postmasters' Union has raised this matter with the Department of Posts and Telegraphs and I understand that discussions are at present proceeding at the postmasters' concilliation council which is the agreed body for dealing with the remuneration of postmasters.

The Green Paper "Development for Full Employment" points out that the need for a tighter system of control of expenditure implies that social welfare schemes are designed in the most effective way to cover the contingencies for which they are primarily intended. In this regard, as stated in the paper, a review of the existing provisions relating to exclusion from social insurance of subsidiary employment and employments of inconsiderable extent is being undertaken. This issue is of particular relevance in the context of the new pay-related system. The inclusion within the scope of the insurance system of employments of a minor nature on which the employees are not mainly dependent for their livelihood could result in a situation in which employees could work minimal hours and pay minimal contributions which would entitle them to flat-rate benefits on a par with full-time workers. The review will be completed and any necessary amendments to the existing regulations made before the new contribution scheme commences.

The outline which I have given of the proposed new system has of necessity been rather general. This is because many of the detailed arrangements of the scheme will be made by regulations. The working out of the finer points of a scheme such as this involves consultation between my Department, the Office of the Revenue Commissioners and other Departments concerned. Intensive examination of possible procedures and the requirements of my Department in operating the social insurance code is necessary to ensure that there will be no major teething troubles after 6 April next. The consultations have been in progress for some months now and whilst some work still remains to be done, the arrangements will be finalised in good time to enable the preparatory work of instructing employers in the working of the new contributions to be completed and the scheme successfully implemented from 6 April next.

The provisions contained in this Bill represent a major development in the modernisation and improvement of our welfare system and it is with great pleasure that I recommend the Bill to Dail Eireann for its early and favourable consideration.

Mr. Boland

The minimum cost of lunch in Leinster House today is £2.50. The maximum rate payable by this State to a contributory old age pensioner is £2.29 per day. Therefore, when the Minister commends this Bill and asks for a favourable response from the House he is asking us, apparently, to continue to endorse a situation where the maximum amount which this State and this House pay to an old age pensioner is less than the cost of one meal in the restaurant of this House of Parliament. Of course, if the pensioner is over 80 years of age he gets an extra 14p a day, giving him a grand total of £2.43. If he is unfortunate enought to be a non-contributory old age pensioner with no means whatsoever he will get the maximum return of the non-contributory old age pension; that will mean he will get £1.94 per day, or if he is over 80 he will get an extra 15p to give him a grand total of £2.09p, to provide for all his bodily needs. All of those rates per day are far less than the cost of one meal in this House or indeed in virtually any restaurant in this country.

The Bill is designed to make it administratively more easy to produce more revenue from the social insurance contributors in a faster method in return for what are virtually unchanged benefits. With the exception of making the category known as "female domestics" eligible for pay-related benefit, in return of course for pay-related contributions, there is no attempt whatsoever in this Bill to improve the lot of social welfare recipients of any sort. Indeed, in many ways the relative position of groups of people appears to have worsened. However, we can have a look at that as we go through the Bill.

We heard at the weekend the suggestion of the Minister for Economic Planning and Development that the middle-income group, having benefited from the abolition of domestic house rates and of motor car taxation, ought now be asked to pay more for the privilege of having returned his party to power. This Bill is part of that philosophy. As the Minister has explained, not perhaps as starkly as I might say it, the middle-income earner is the man who is hit here. Most people examine legislation, rules and government increasingly today on how it affects their pockets. This Bill is designed to hit the pocket of the middle-income earner, of the very man who, as the Minister for Economic Planning and Development said, had benefited by some of the electoral promises of his Government and who is going to be asked to pay more in social insurance and pay-related contributions than he pays at present. I do not see contained in this Bill any reciprocation in additional payments of benefits which he or his dependants might be entitled to. Surely if you want to adopt the very worth-while principle of making social insurance contributions pay-related you should also adopt the worth-while and extremely laudable aim of making social insurance benefits pay-related. There has been no attempt to make any additional benefits pay-related with the exception of benefits for female domestics.

Mr. Haughey

The ceiling is pay-related.

Mr. Boland

The ceiling has been increased in return for increased contributions. I do not object to that at all as it is the main principle of any insurance scheme. The essence of any insurance scheme is that the benefit is in proportion to the amount paid. Not many people would be prepared to pay more for an insurance policy without getting increased benefits, but that is what the social insurance contributor is being asked to do. There is no attempt to make old age pensions, widows' pensions, deserted wives' allowances, death grants and so on pay-related.

The Minister asks us to welcome the concept of pay-related contributions. I welcome them and any extension of insurance in exchange for benefits. If insurance contributions are to be pay-related then benefits should also be pay-related. The Bill is a success only in so far as it makes contributions pay-related. I am afraid that the middle-income group, the soft touches who were attacked again recently by the Minister for Economic Planning and Development, are becoming the favourite target of the Government. They are the easiest group for the Government to turn to to help finance changes in the administrative structure. This group is least organised and least likely to strike back. The most important effect of this Bill will be to make the middle-income earner pay more for benefits to which he is presently entitled.

The Bill presented the Minister with an ideal opportunity to reform the social insurance code, which we have all spoken about from time to time. The Minister has agreed that there are inequities in that code. He has expressed his desire to eliminate the inequities but has failed to do so. He introduces what he describes as a major Bill to change the Social Welfare Acts but makes no effort to look at the areas of inequity. The only way in which he has attempted to deal with discrimination is to say that the contributions made by females will be at the same percentage rate of income as the rates paid by males. He has not made an attempt to eliminate areas of discrimination such as the shorter periods of payment of benefit and the amount of benefit paid to women who are insured under the scheme and who become eligible for benefit.

I agree that men and women should pay the same rate of contribution but I would have thought that women were entitled to the same benefit. The only element of largesse in the Minister's speech is that he may dole out some sort of ready reckoner to employers in order to help them cope with the complicated new system.

Let us consider the rates. The maximum rate for a contributory old age pensioner under 80 is £16.5 or £2.29 per day. The maximum rate for a non-contributory old age pensioner with an income of less than £6 per week is £13.60, or £1.94 per day. The maximum rate for a widow's contributory pension, under 80, is £14.60 or £2.8 per day; for those over 80, the rate is £15.75 or £2.75 per day. Are we satisfied that we are introducing a major change in the social welfare code when we are prepared to continue that level of benefit without making it relate to the income of recipients and to the pay-related contribution?

There should have been an expression of intent to relate benefits to contributions. People who could reasonably be described as having similar outgoings are all paid at varying and inexplicably different rates under the social welfare code. The maximum rate for a widow's contributory pension is £14.60 and there is a payment of £4.90 per week in respect of each child. If a widow dies, an orphan's allowance of £10.60 will be paid in respect of each child, yet if that widow, or an equivalent widow, in receipt of an occupational injuries widow's pension were to die her orphan child would have an orphan's pension of £11.30 per week. The maximum contributory pension is £14.60 per week, yet for some inexplicable reason the widow in receipt of occupational injuries benefit receives £18.85 per week.

These differences in the code do not seem to have any degree of equity. Are they not the sort of things that could have been examined and revised by this House in what was apparently to be a major review of the social welfare code? A married man with two children who is receiving unemployment assistance as opposed to benefit receives £27.60 as a maximum amount per week. That means he receives less than £4 per day for each day of the week out of which he is expected to feed and clothe his wife and two children, to house them and to look after them generally. In any kind of review of the social welfare code is that not the sort of thing we should be examining?

On all sides of the House we have spoken often about the fact that there still remains within the social welfare code clear-cut areas of discrimination against women in employment or seeking employment, against women who had been in insurable employment and who seek benefit in return for their insurance contributions. We have been told by all sides of the House that this is unfair and that at the first available opportunity those areas of inequity would be eliminated, and when we asked the Minister from time to time why he had not done anything about it, he has explained in his persuasive and seductive way, to use his own expression in relation to another measure before the House, that these things must be handled in an orderly manner and dealt with as opportunities arise. I would never presume that my manner might be persuasive or seductive, but I suggest this is an ideal opportunity in legislation designed to amend the social welfare code to eliminate these obvious areas of discrimination.

For instance, a woman who has been in insurable employment and who has paid her insurance contributions and who becomes unemployed is only eligible for 156 days unemployment benefit as opposed to a man who is paid for 390 days. In other words, a married woman receives payment for marginally less than half the length of time during which her male counterpart receives payment. Up to today the only justification that could be given for such discrimination was that there were marginally different rates of social welfare contributions in respect of a man and a woman. That rate of contribution is being eliminated and they will both pay 4.4 per cent of their incomes and the employer will pay 8.25 per cent. If the same percentage of their incomes is to be paid into the social welfare fund, should they not both be entitled to the same period of benefit? Is that not an anomaly that should have been eliminated from the code?

If a married woman who is supported by her husband, whether she is living with or apart from him, has in her own right been in insurable employment and has paid the same percentage contributions of her income as any other male or female contributor of the fund why should she not receive the same benefit? Should she not be equally entitled to the same benefits for the same period of time as any other contributor? Should she not get the same level of benefit when she is unemployed? At the moment the maximum unemployment benefit in respect of a man is £14.35 per week whereas a woman receives £12.50, which is the rate that applies to a person under the age of 18 years. That is in relation to a woman who is dependent on her husband. If a married woman in employment who is contributing to the fund becomes unemployed she will not be paid benefit in respect of her husband if he is out of employment, yet when a married man is unemployed, if he is insured he can claim in respect of himself and an additional allowance in respect of his wife. If a married woman becomes unemployed having been in insurable employment she can only claim in respect of herself, and if she endeavours to claim in respect of her husband, although he is unemployed, she will be refused payment of additional benefit in respect of the husband who is dependent on her unless he happens to be an invalid, and because of some strange quirk of the rules she must prove that her dependent husband is an invalid. In respect of occupational injuries benefit, the maximum a female is entitled to is £15.70 per week as opposed to the male entitlement to £20.10 and the same conditions apply in respect of the woman whose husband is invalided.

These are a few of the discriminatory areas which still exist in the code. In fairness to him, the Minister has accepted in the House more than once that these are areas which need the attention of the House at the earliest possible date. We are now being given an opportunity to ask women to pay at the same percentage rate out of their incomes as men and surely such an opportunity should be availed of to provide that the same period of benefit, the same level of benefit and the same general conditions should apply to female single or married contributors and to male contributors. In that area nothing has been done except in relation to the female domestic employee who is now being included in the pay-related scheme for unemployment and disability benefit. I welcome that, but it is small and the only area where there has been any attempt to improve the condition of women in insurable employment.

Should we not have had a look at the situation in respect of the rates paid by way of child allowances to contributory widows, non-contributory widows, occupational injuries, contributory widows and people in receipt of unemployment or disability benefits, old age or retirement benefits? In respect of these there are different levels of payments in respect of child allowances. I have suggested there should be pay-related benefits for pay-related contributions. On several occasions the Minister has agreed that the invidious means test about which we have complained so much about is in need of revision——

An Leas-Cheann Comhairle

This Bill deals only with the social insurance code, not with the social assistance code. There is plenty of scope in that. It is not in order to deal with assistance schemes on this Bill.

Mr. Boland

I accept the ruling of the Chair. The point has been made that the inequities in the code generally include social assistance as well as——

An Leas-Cheann Comhairle

The Deputy will get an opportunity to deal with the social assistance code later.

Mr. Boland

I accept the ruling of the Chair, but I should like to point out that the title of the Bill states that it is a Bill to amend the Social Welfare Acts, 1952 to 1978, and included in those Acts is the legislative authority for the operation of the social assistance code as well as the social insurance code. From that point of view I should have thought I was entitled to look at the operation of social assistance as well as social insurance.

An Leas-Cheann Comhairle

The Bill deals completely with the social insurance fund and the social insurance scheme.

Mr. Boland

At the moment a very harsh provision operates in the social insurance code whereby benefits such as occupational injuries benefit and disability benefit are not taxable, but when the recipient of such benefit comes to retirement age he finds that, while he can switch from benefit to pension with little change in the amount paid by the State, his pension is taxable while the benefit is not taxable. A person who may be in receipt of a small amount of money, usually from his employer, will discover that, while he was not taxed when in receipt of disability or occupational injuries benefit, when he switches to an old age pension he is then brought into the tax net and his real income falls. There should have been an attempt in this legislation to ensure that this does not happen but no such attempt was made.

The suggestion I am making is not revolutionary. When a deserted wife reaches the qualifying age for an old age pension she may opt to continue to receive the deserted wife's benefit if it appears that she will be better off materially to receive that benefit rather than the old age pension. Of course, a woman who has an income other than the deserted wife's benefit will discover that she should continue to receive that benefit rather than risk having the old age pension taxed. I am suggesting that that kind of provision should have been built into the code generally. The opportunity should have been taken in this measure to introduce a similar provision in relation to all beneficiaries who come to pension age and who have been in receipt of benefits.

I do not know how the following suggestion will be received by the Minister, but in a major review of the social welfare code the question of providing benefit to an insured male whose wife has deserted him and who has a family should have been considered. We all understand and appreciate the very real difficulties, financial and social, experienced by a deserted wife, but often society is not as conscious of the difficulties experienced by a widower or by a deserted husband. He finds himself obliged to continue in employment to provide financial security for his family, especially if they are young, and he also discovers that he must employ somebody—often a number of persons—to look after his children. We should have considered the possibility of providing a realistic allowance to which insured people could contribute in order to help a husband who becomes a widower or whose wife deserts him and who must employ a housekeeper.

I discovered that there is a provision of this kind in one set of circumstances, namely, where a retirement pensioner is a married female. If she can prove the ridiculous requirement to which I referred earlier, namely, that her husband not only is dependent on her, but is also an invalid, she gets an allowance in respect of her husband and if she dies her surviving invalided spouse is entitled to benefit at the same rate as the maximum contributory widow's pension. In this one aspect there is provision whereby the surviving spouse of a pensioner is entitled to benefit but, of course, he must be invalided. That kind of concept should be extended to a husband who is dependent on his spouse and I am disappointed that consideration has not been given to it.

Although I can understand the complexities of the matter, I am disappointed that there has been no attempt to include the self-employed. So far as social insurance by the State is concerned, the self-employed are left in a limbo. I appreciate that there are difficulties and that the levels of contribution without the employer element might involve rather daunting claims on the incomes of the self-employed if they were brought into the social insurance code. I appreciate also that a discussion paper was issued on this matter some time ago but a comprehensive social welfare code will not be comprehensive until we have tackled this admittedly difficult, thorny but nonetheless important question of compulsory insuring the self-employed. I am thinking of this not only to make sure that they are entitled to benefit in the event of illness or unemployment but also that their dependants are covered in a State scheme. It is apparent to all that very often people do not go to the trouble of covering themselves by way of a voluntary or private scheme in the event of illness or disability. Consequently, real hardship can devolve on their families and dependants in the event of their death or their becoming incapacitated. The State must grasp the neetle and introduce an equitable system of compulsory insurance for the self-employed. The Minister should give full consideration to the self-employed. I am sure that the introduction of any such measure would have the widespread approval of all sides of the House.

While the Minister is considering the position of the self-employed who are not eligible to contribute to the State compulsory insurance fund, he might exercise his mind regarding the anomalous position in which full-time Members of the Oireachtas find themselves in relation to payments to this State insurance fund.

There is a range of other areas which is not included in the Bill but which is deserving of some comment from the Minister. Concern has been expressed in the House on a number of occasions regarding the dependants of people who are insured socially in so far as these dependants are not covered for dental, optical and certain aural benefits. There is developing now a rather grey area as to whether these people will be included in the extension of the health insurance scheme or whether they will remain without cover as a result of the provisions of this Bill not being extended to include them. I trust the Minister will clarify the position in this regard.

The Minister might like also to avail of this opportunity to explain to the House the reason for the delays being experienced by people who are insured currently in respect of dental, optical and aural benefits. Sometimes the delays are considerable and in some cases there is failure in regard to having the benefits provided. I refer in particular to the withdrawal recently of a number of professional people from these services in parts of the west. If the Minister is introducing what he described as a more comprehensive method of pay-related contributions, he should at least ensure that the existing benefits for which people are insured under the flat-rate contribution system are made available to people who qualify for them. It appears as if the existing level of services is not being maintained.

I am rather confused regarding the position of voluntary contributors. I appreciate that some people in this category may not be in employment now or may have become self-employed but that because of their previous entitlement they continue to be voluntary contributors. However, in respect of other voluntary contributors I would have thought that the administrative changes introduced in this Bill would have meant that those contributors would be paying in some other way. Perhaps the Minister would enlighten us as to how the voluntary contributory categories fit in in terms of the new scheme.

There is a category of persons in receipt of certain benefits through the Department of Social Welfare or in receipt of widows' pensions that are derived by reason of their spouses having been insured by way of social legislation in other EEC countries, Such recipients are not liable for deductions from their earnings in respect of flat-rate contributions. The present position is that their employers pay the flat-rate contribution and also a 2 per cent pay-related contribution. I should like to hear how that category will be dealt with in terms of the changes envisaged in the service. The Minister will appreciate that there is confusion also in respect of the limited eligibility category as to the distinction between the various elements of this category.

Mr. Haughey

That question does not arise on this Bill: it relates to the Health Contributions Bill.

An Leas-Cheann Comhairle

We are dealing with the social welfare code.

Mr. Boland

I was referring to the limited cover category rather than to the question of eligibility.

Mr. Haughey

The term "eligibility" misled me.

Mr. Boland

I appreciate that limited eligibility refers usually to the health schemes but there is a category of persons, including public servants, outworkers, weavers and fishermen in respect of whom there are a number of fine distinctions which help to create that maze which is the social insurance code and which all of us in public life must endeavour to find our way through, appearing only very rarely to come through successfully.

In relation to the revision of the social welfare code might there not have been some attempt made to make more simple the code in relation to these various categories? In this Bill which of its nature is complicated technically I cannot find any indication of an effort to standardise the situation in respect of some of these categories. As an example of what I have in mind, one is expected to understand for instance, that outworkers with the exception of male weavers, are part-time share fishermen under the contract of service. So far as I understand the Bill those same people not under contract of service will continue not to be eligible so far as pay-related benefit or occupational injury benefits are concerned whereas it appears that out-worker male weavers not under contract of service or soldiers who are no longer in service will be entitled to pay-related benefit but will not be entitled to occupational injuries benefit. I trust I am correct in my reading of the Bill in that regard. All of the categories I have mentioned fall, with others, into this limited cover category but it appears as if they are to continue to be insured and covered for different levels of benefit. This situation makes matters extremely difficult not only for the unfortunate person who is insured but for his employer and, no doubt, for the Department and for anybody else who happens to be involved in the morass of rules and legislation in terms of sorting out the position. I am suggesting that every effort should be made to simplify the code for that category of limited cover and to make as uniform as possible the amount of cover and benefit to which the people concerned are entitled. This would make for the efficient operation of the scheme.

Regarding efficient operation, I regret to have to advert again to the method of payment of the various benefits. There is a great unevenness in the payment of unemployment, disability and occupational injuries benefits and so on. Those of us in public life much more so than the man in the street, can appreciate the difficulties involved and the enormous bureaucratic machine that must be kept oiled and in operation fully in order to process, decide on and have entitlements paid to recipients. However, very often the claimant gets the picture of his being confronted by an enormous, mindless and uncaring bureaucracy. I would not agree with that impression because there are a great number of people in the Department who make every effort to be as helpful as possible and to ensure that claimants receive all benefits to which they are entitled. Having said that, there is an increasing obligation on whoever happens to be the Minister of the day to improve on the method of the processing of claims and the payment of benefit. In that regard I was interested to hear the Minister refer to the computerisation programme which was introduced in the Department some years ago.

I am not making my next remark in a political way, but I am afraid we will have to accept that our postal service is becoming less efficient. The old idea that a letter posted in Dublin today will be delivered in Dublin tomorrow is a thing of the past. The old theory that a letter posted in Dublin today will be delivered in two days time in any part of the country has gone with the flood, or at least in the last 12 months. The Department of Social Welfare are still sending cheques to eligible people through the post and this is putting an additional strain on the postal system.

Very often an inquiring claimant will be told by the Department that they issued a cheque last Friday. On Monday afternoon the claimant still has not received it. While this may be an annoyance to those administering the scheme, we should look at it from the point of view of the claimant. He is out of work and does not have any other income. He sends in a certificate on Monday or Tuesday confidently expecting to be paid on Friday. The cheque issues on Friday and he gets it the following Monday. He uses that money, assuming he will receive the benefit in respect of the following week the following Monday. Again the Department issue the cheque on Friday but it does not arrive on Monday. The claimant inquires from the Department and is told that the cheque has been issued. It may turn up a few days later or the Department may have to issue a replacement cheque, but they will expect him to wait a few days to see if the cheque arrives. In the meantime that unfortunate man could be destitute.

I suggest that the concept of relying on the postal service for the issuing of cheques will have to cease because, I regret to say, the postal service cannot be relied upon. As I said, I am not, making a political point; I am stating the facts of life.

I referred to the computerisation programme in the Department. I believe the Minister will have to examine the possibility of having computer terminals in employment exchanges throughout the country. The information as to whether a person is entitled to benefit and the amount of benefit to which he is entitled should be fed into the computer links and the money should be issued by the exchange. Another possibility that will have to be examined is the use of telex to provide information to local offices which can pay benefits locally rather than having the money issuing from Dublin by way of the inefficient and unsatisfactory postal system.

I appreciate that those changes will not bring about any improvement in rural areas because every village and townland does not have an employment exchange. I want the Minister and the Department to realise that people are experiencing a great deal of difficulty getting their regular weekly payments and very often the fault seems to be in the uneven and patchy operation of the postal service. That unsatisfactory service is not to the credit of the Department of Social Welfare who are blamed by the claimants if cheques do not appear in time.

The Minister referred to the fact that during the general election his party promised to reduce by £1 a week the social insurance contribution payable by all those earning less than £50 a week. To my surprise he seemed to be taking peculiar pleasure out of the suggestion that that degree of discrimination in favour of the lower paid worker was still going to apply. I do not accept that. He also suggested that for some months there has been a difference of £1.16 in favour of the people earning less than £50 a week. Under the terms of this Bill, will it not be the case that the man earning £40 a week and at present paying £2.66 will pay £1.76, whereas the man earning £50 a week will pay £2.20? In each case the redundancy contribution is excluded because we do not know what it is. The fact that this information has not been supplied is not very helpful for this discussion. In other words, the difference between the person earning £40 a week and the person earning £50 a week will now be only 50p a week, instead of over £1. That is clearly an indication that there is not a clear differential of £1 a week as promised in the manifesto. The Minister will probably say that if one goes high enough one will eventually come to a point where 4.4 per cent of a man's income is £1 more than 4.4 per cent of £40 per week. The fact is that there is no longer a clear-cut reduction of £1 per week in respect of those earning less than £50 a week.

The Government kept their election promise for a year but through the changes in this system there is no longer a sharp discrimination in favour of people earning under £50 a week as opposed to those earning over £50 a week. That difference does not become very sharp until one reaches the £70 or £80 a week category. I am sure the Minister will be anxious to explain that point in his reply.

The Minister said that this Bill represents a modernisation and improvement of our welfare system and that it was with great pleasure that he recommended it to the House for early and favourable consideration. What exactly is this modernisation and improvement of the welfare system mentioned in the Bill? It is certainly a modernisation and improvement of the system of collecting money. It will allow the Government in certain cases to collect money in a period shorter than 12 months in respect of a person working for 12 months. It will allow the Government to collect more money from certain female contributors than is collected at present. In return and for the first time, it makes the female domestic category eligible for pay-related benefit. It makes all contributions pay-related and it makes male and female percentage of income contributions the same as at present. What else does it do in return for those few improvements?

Although it is not made clear in the Bill because it is to be by way of regulation, so far as I can see, this Bill could be described as a rip-off of the female public servant. She is in the limited cover category and appears to be covered at present for a small range of benefits. In respect of those benefits, she does not make any contribution directly. The State makes the contribution on her behalf. If she is covered for health benefit the only contribution she may make is 50p a week. After the passing of this Bill, the female public servant—as best as can be established, because the Bill does not make it clear, and the Department did not take the trouble to issue any clarification—will have to pay a contribution. If not, a discrimination will remain in the code between the percentage contributions from male public servants and female public servants. That appears to be contradictory to all the Minister's other intentions in the Bill. We can only assume that everybody in the limited eligibility category will be asked to pay the same percentage contribution from their income.

If that is the case, the female public servant will now be paying some percentage of her income, presumably in respect of the benefits for which male public servants are covered, widows' pension, deserted wives' benefit and in some cases death grants. The male public servant is covered for those benefits which he will not enjoy, but which must give him some security of mind in the knowledge that his family are covered for contributory widows' and orphans' pension. In some cases at least, it must give security of mind to the family of a male public servant who may be contemplating deserting his family because the family are covered for deserted wives' benefit.

Since the change in legislation which allows married women to continue in the public service, presumably the female public servant is insured for the same benefits. At present the State pays the contribution, and she is not asked to pay anything. The Minister said he intends to standardise the rate of percentage contribution between male and female. It is very important that the Minister should clarify the regulations to be made under section 12 for the limited cover category which includes public servants. Does he intend to take from the female public servant a percentage of her income, and, if so, in return for what benefits? The only benefits she will be covered for, it would appear, are widows' and orphans' pensions and deserted wives' benefit.

While it has increased somewhat, the percentage of married women in the public service is still very small. Therefore, it would appear that the female civil servant, the female local authority employee, in general single women, will be asked to pay a percentage of their income in return for being covered for widows' and orphans' pensions, which she could only enjoy if after marrying she continued in employment and continued her contribution— otherwise her contribution would not be sufficient to enable her to benefit— or deserted wives' benefit. The same proviso will apply there. If that is the case, it appears quite likely that a large number of women in the public service will be asked to pay a percentage of their salary in return for benefits which they are unlikely to enjoy. This is most important and needs urgent clarification because it has been exercising the minds of many people in this category, and it has not received any clarification from the Minister or his Department. That category of person may be asked to pay more.

This Bill removes the element of tax relief on insurance contributions for pensions. At present, the pension element of a person's social insurance contribution is claimable against income tax. That tax relief will now be no longer available. Therefore, would it not appear fair that the pension at the other end ought not to be taxable? There is no suggestion whatsoever that the pension received on foot of paying into the pensions fund for a lifetime will not be taxable. An insured person will be asked to pay for the rest of his working life into a pension fund and, he will not be entitled to tax relief on those payments into the pension fund and when he gets his pension, he will discover that it is taxable as well. That person could well describe this change in the legislation as being a rip-off.

I say this sincerely. I do not think it was a good idea to remove the tax relief on the pension contribution unless tax was removed from the pension payable on foot of those contributions. That was not done. Now both contribution and pension will be taxable.

Mr. Haughey

There is compensation for it in the rate.

Mr. Boland

It has been stated that there is compensation for it in the rate. I presume the Minister will accept that the percentage rates and the figures are so complex, and the information available to the public so sparse, that it is impossible to compute whether or not there is compensation. I understand the suggestion in the Minister's speech is that the rate is .5 per cent lower than it otherwise would be, because the contribution element is not taxed. I have to accept that, because I cannot assess whether that is so.

Mr. Haughey

It is a calculation we are all given as exact.

Mr. Boland

I have to accept that in good faith.

Mr. Haughey

I have to accept it too.

Mr. Boland

I will not go into the question of the acceptance of advice from experts. The Minister dealt with that with another Member of the House recently and neither was satisfied as a result of that exchange. We will leave it at that. I do not think the principle of eliminating from tax relief the contribution or the pension is a good one and it should be looked at again. In that area everybody contributing can feel he is suffering if he is not getting tax relief. The female public servant can feel she is suffering in that area because she will be asked to pay a contribution for benefits she is most unlikely to avail of, unless she marries and continues in employment for a considerable period.

No effort has been made in the Bill to have any relationship between the level of pensions paid and the level of contributions to be made for pay-related benefit for the remainder of a man's working life. The middle income category will be asked to pay more as a percentage of their income than they are paying at present. I accept that the standardisation of the male and female contribution and benefit year is good and will help to sort out some of the difficulties in understanding the code. I object strongly to the fact that no effort has been made to remove or improve the anomalies or inequities which exist in the code. In the code there is a suggestion that the upper limit for pay-related benefit is to be £5,000 a year. The Minister told us that next April he may up that ceiling. If he does, the middle income category will be made to pay even more. Surely at this stage the Minister should be able to tell the House whether the upper ceiling will be £5,000 or, as originally suggested when the Bill was first mooted, £8,000.

Under this Bill any person earning more than £5,000 a year—not an extraordinary amount of money at present—who is paid by the month will have his 4.4 per cent and his employer's 8.2 per cent deducted in instalments. If a person is earning £10,000 a year in equal monthly instalments, his 12 months contributions up to the ceiling of £5,000 will be deducted over a six months period presumably. The Minister should appreciate that the individual earning over £5,000 a year will have his entire 12 months contributions stopped out of the first £5,000 of his income. Consequently the State will receive that individual's 12 months contributions in less than 12 months, in some cases in four months, five months or six months.

This is a hardship to some small degree on that relatively higher income earner, but it is a considerable hardship on the cash flow of a number of firms who have a high number of highly paid executives in their employment. They will have to pay 8.25 per cent of their employees' income which should be spread over a 12 months period in respect of whatever period it takes those employees to earn £5,000 or whatever the upper income ceiling is. This would have an effect on the cash flow of the relatively small number of employers of high income earners. I do not accept the reply which the Minister is already formulating in his mind to give on Second Stage that from the eve of administration this is the only way in which the scheme could be operated because I am sure that he knows, as the rest of us know, that in Britain provision was made for the employer's contribution in respect of the highly paid earner to be paid over 12 months in 12 monthly instalments. I see no reason why the same provision could not be made here.

I do not accept either the Minister's passing reference to the Social Welfare (Consolidation) Bill of 1966 in which he says that the consolidation of this legislation is at hand but cannot be completed at this stage. Why can it not be completed? I suggest that one of the reasons why it cannot be completed is that since this Dáil first met, since the general election of 1977, the committee which was dealing with the Social Welfare (Consolidation) Bill has never been reestablished and has never again met. The committee which was set up in 1976 to bring about a single piece of workable, understandable social welfare legislation has never been reconvened and I have never got an opportunity until now to point this out because when I endeavoured to inquire by way of parliamentary question from the Minister why he had done nothing to bring about this updating of the legislation I was told that I could not ask the Minister that because it was up to the House to decide. But we all know very well that no attempt whatsoever was made to advance the stage to which that Special Committee dealing with the consolidation of social welfare legislation had got since July 1977. I do not see why the Minister says it cannot be completed. It certainly is in a less advanced stage of completion now than it would have been if the committee had been sitting for the last 15 months.

I accept the idea of pay-related contributions. It would be less than fair of me if I did not make that clear to the House. Indeed, the entire concept of pay-related contributions was introduced by the last Government in 1974 because it was quite clear that the flat-rate contribution applying from the lowest to the highest paid was quite unfair. It is obviously unfair to ask the man earning £40 per week to pay exactly the same sum out of this income as the man earning £100 a week. But I feel that the introduction of this change once again hits at the soft element in society, the middle income earner, the fellow the Minister for Economic Planning and Development wants to get at, the fellow the Minister for Social Welfare wants to get at, the fellow the Minister for Health wants to get at, the man who cannot readily strike back. He is the middle income earner and he is the man who is being hit by the progressive taxation proposals and changes such as this being introduced by the Government. I accept that as the Minister says the pay-related benefit will now extend on income between £40 and £100 a week instead of between £40 and £50 a week. I believe that that is a good thing. But would the Minister clarify if it is his intention to raise the £5,000 ceiling to which he has referred and which he says he may raise before next April? If it is his intention to raise that ceiling would it also mean then that the £100 ceiling for the pay-related benefit would also be raised in line with the raising of the £5,000 ceiling in relation to contributions? That is not clear.

Mr. Haughey

Yes. The Deputy is ignoring the fact that 500,000 lower paid workers are paying less under this scheme. That is the important thing.

Mr. Boland

I am conscious of the fact that 200,000 middle income earners, on the Minister's own figures, are going to pay more. I believe that figure is much higher than 200,000 but on the Minister's own admission he is going to ask 200,000 people to pay more than they are paying at present. They are the middle income earners and they are the people I am talking about.

Mr. Haughey

That is the whole principle of pay-related benefit. 500,000 people, twice the number, will pay less. We must be concerned with the lower paid worker.

Mr. Boland

The whole principle of pay-related benefit is also that the benefit one gets is commensurate with the amount one pays. There has been no attempt made whatsoever to change the level of pensions. There has been no attempt made in any one way to make pay-related or income-related the pensions and the entitlements under the code. There has merely been an attempt to take more money from people in the middle income category in order to lessen the Exchequer's share of the social insurance fund without any attempt being made to improve the benefits to be derived from the fund. That is what I am objecting to.

An Leas-Cheann Comhairle

Minister and Deputy, this Bill really deals with pay-related contributions and nothing else but the Chair has allowed the Deputy, and rightly so, to deal with how the income from such would be spent.

Mr. Boland

There is also a point of a technical nature that I wish to draw to the attention of the Minister and his advisers. That is in relation to the week for insurance purposes being made the same as the PAYE week. Apprehension has been expressed by a number of large employers who have a complex amount of deductions to make in respect of their employees that the PAYE week may start on whatever day of the week an employee comes into employment whereas the ordinary wages week is from the point of view of a number of large employers a much easier deduction week for them to operate rather than to operate in line with the PAYE week. I am not fully satisfied as to the degree of difficulty that would be involved in that case but I would like the Minister to explore that degree of difficulty and explain to the House whether he feels that is an area that might get some attention.

One of the great difficulties in trying to assess exactly how much any insured person or, indeed, any employer of an insured person is going to pay is that at present an element of the weekly payments of employees is their payment into the redundancy fund and it is now proposed, in line with changing the social insurance fund to pay-related contributions, to change the redundancy contributions to a pay-related element. It is impossible to assess the weekly outgoings of either employer or employee into the fund until one knows at what level or percentage the redundancy contribution is going to be. I appreciate that a different Minister would be responsible for the legislation involved but I would have thought it would have been helpful if the Minister had been able to say what percentage will now be payable in respect of the redundancy contribution so that an overall picture of the contribution from the employee could have been given.

An Leas-Cheann Comhairle

This will come in another Bill, I am sure.

Mr. Boland

I accept that.

Mr. Haughey

It does not go into this fund either. I thought the Deputy was talking about the total inflow into the fund.

Mr. Boland

Perhaps I should rephrase what I said. The Minister appreciates that the point I am making is that it is impossible to know exactly what an employer or employee will be paying in respect of any person insured in the insurance fund at the moment because in respect of that person there is also a redundancy payment to be made into the redundancy fund.

Mr. Haughey

That will be announced very soon now. It will all be available well before April.

Mr. Boland

There is a difficulty here in that one comes in to speak about legislation and is asked to agree, apparently without comment, to a scheme to change the social insurance stamp into a pay-related contribution, but one does not know, because regulations are to be made, whether male or female limited cover public servants are to be made to pay the same percentage.

An Leas-Cheann Comhairle

The Deputy is entitled to make a point about the redundancy fund but it is the responsibility of another Minister.

Mr. Boland

I accept that. We do not know what those people will have to pay. We do not know what people insured in the social insurance fund will have stopped from their salaries because of other deductions which may be made. We do not know how much an employer will have to pay because the employer will have to pay an element of other deductions to a fund operated by another Minister. We cannot compare the weekly amount stopped through the stamp system and through the system operating in the redundancy fund and the proposed new system until the Department of Labour announce what they will take, until the Minister introduces regulations under section 12 saying what he will take from people with limited eligibility cover and until the Minister makes up his mind as to whether £5,000 is to be the ceiling for pay-related contributions or whether that will be increased between now and April next. We have to put together with this the passage of the Bill dealing with the extension of the health insurance scheme which has not yet been published. It is extremely difficult to assess the amount of the stoppages to be made from April next on foot of these various changes.

Mr. Haughey

The Bill is quite specific.

Mr. Boland

It gives the Minister power to make regulations.

Mr. Haughey

It is all laid out in black and white.

Mr. Boland

I wish the Minister would not delay me. I have been interrupted during the past ten minutes.

Mr. Haughey

I am trying to be helpful.

Mr. Boland

I refer to regulations to be made under the amended section 12 of the 1952 Act. I referred to section 12 of this Act. Unfortunately there is a lot of confusion because the sections of this Bill are amending different sections of the 1952 Act. It is stated that regulations are to be made under section 12 of the 1952 Social Welfare Act which will provide for appropriate reduced rates for those who are covered for a limited range of benefits only. Those regulations have not been made. That is the complaint I am making. Until they are made, no one can know, unless the Minister tells us in advance, what percentage he envisages including in the regulations to be made under section 12 in respect of the limited cover category.

Mr. Haughey

They are in the speech.

Mr. Boland

Would the Minister like to draw the attention of the House as to exactly where they are?

Mr. Haughey

The rate of contribution specified in the Bill is 4.4 per cent, made up of 2.7 per cent and 1.7 per cent from the employer and the employee.

An Leas-Cheann Comhairle

Deputy Boland to continue his speech, please.

Mr. Boland

I do not want this to become argumentative. I understand the rate of 4.4 per cent applies to all full contributors and the 2.7 per cent and 1.7 per cent apply to voluntary contributors.

An Leas-Cheann Comhairle

The Chair suggests that we tease out these points on Committee Stage. It would be much easier because it is very difficult at this stage to deal with these practical points.

Mr. Boland

I wish to reiterate that the Minister may not have grasped completely what I have been saying. I understand that the rate for full contributors has been set by the Minister at 4.4 per cent, including the health contribution. I understand that the rates for voluntary contributors has been suggested by the Minister, although it states in the explanatory memorandum that those rates could be varied between now and next April. I have not yet heard the rate which the Minister proposes to have deducted from those limited cover categories.

Mr. Haughey

The Deputy means the public servants.

Mr. Boland

Outworkers, weavers, fishermen, public servants, soldiers, gardaí, Army officers—that category of persons.

Mr. Haughey

It will be exactly the same, translated into a percentage.

Mr. Boland

It is the translation of the Minister's intention and the size of that intention that have been delaying the House.

An Leas-Cheann Comhairle

The Chair is not in a position to let the Minister translate anything. Deputy Boland must come to his own conclusions and the Minister will reply later on. These points would be much easier to deal with on Committee Stage.

Mr. Boland

I am coming to the conclusion that the percentage the Minister has in mind is so unpalatable that he does not want to give it to the House at present. That is why I have been making the point that there is a percentage to be taken from the limited cover people, including all public servants, which I believe will be unpalatable to them when it is announced. If the Minister is to continue his principle of making the percentage from male and female equivalent in the limited cover category as he has been endeavouring to make in the ordinary and voluntary contributor category, then the female public servant will, for the first time, be made to pay in respect of benefits from which she is most unlikely to benefit. I am suggesting that is why the translation of the Minister's intention into a specific percentage has not been given.

Mr. Haughey

I will deal fully with that in my reply.

Mr. Boland

Good. The nearest I can come to ascertaining what that percentage might be is the information that in relation to certain voluntary contributors there is proposed a rate of 1.7 per cent which would cover such contributors in respect of widows and orphans and deserted wife's benefit. I presume the voluntary contributor pays the entire contribution himself because the employer does not pay a contribution in respect of him. If 1.7 per cent of the voluntary contributor's income is to cover him for those benefits, then presumably the Minister, in enlightening the House, will be able to tell us in his reply that the amount to be deducted from the limited cover category will be less than 1.7 per cent in order to allow for the State's share as well as the employee's share. If the figure is anywhere near 1.7 per cent, then it would appear that the public servant category, especially the female public servant category, is to be introduced into this scheme in large measure to finance outgoings from the scheme. That is why I said some time ago—the Minister appeared to be aggrieved to hear it—that in many ways the implementation of this Bill could be described as a "rip-off" of female public servants. For the first time they will have money stopped from their income in respect of cover to which they are already entitled but of which they are unlikely to avail and which at present is fully paid for by the State.

There are a number of small points with which the Minister might deal in his reply. Presumably the elimination of the social insurance stamp will mean that a number of employees in the Department and in the employment exchanges and regional offices throughout the country will now be released for other duties and perhaps the Minister will explain to the House the duties which he intends for such employees. It appears as if under the new scheme contributions might still be deducted in a case where an employee is sick but is being paid his wages or salary by his employer, who is possibly more enlightened than some employers. It would appear that it could be argued by the Department under this scheme that the employer must still pay the full pay-related contribution into the fund because of the fact that he is paying his employee the full equivalent of his wage or salary during the period of his illness. Obviously it would be very harsh on an employer if he were to pay full wages or salary and still be expected to pay the full percentage contribution into the social insurance fund. That same point would equally apply where a person would be on disability benefit and the employer would be expected to pay into the fund for some time.

I am also somewhat surprised to see continued a provision of the Social Welfare (Amendment) Act, 1975, which asked people stamping cards to pay 10p per week more in respect of the exceptional unemployment which then obtained. It now appears the Minister intends to continue this provision. I would like him to explain why he intends to do that. The levy was 10p per week. Under this Bill it will be changed to .2 per cent of 1 per cent of income. Those earning more than £2,600 a year will pay more than they are paying at present to meet exceptional circumstances. On the basis of .2 per cent of income they will pay more than 10p per week or £5.20 per year.

The Minister referred to the position of the bun mhaistin poist, to the position in which he will find himself as a result of the elimination of social welfare stamps from his turnover. Whilst we appreciate this is not a matter specifically for the Minister for Social Welfare the fact is the Minister found it worth his while to refer to it. These stamps form a varying proportion of the turnover of BMPs especially in towns in which there is a large volume of industrial employment. The turnover can be as high as 40 per cent. I understand the average is around 25 or 26 per cent.

The Minister might find in a small sub-post office near him an insignificant sale of social welfare stamps whilst his colleague, the Minister of State at the Department of the Public Service, who is sitting beside him, might discover that a very high proportion of the turnover in sub-post offices in his constituency would be devoted to the sale of social welfare stamps because of a large volume of industrial employment. This removal will affect some offices more than others, and here I want to sound a note of warning. The BMPs are seriously aggrieved, and with justification, at their treatment and, if the issue is not resolved to their satisfaction, yet another industrial dispute will be on our hands before this calendar year is out. The BMPs must be compensated for the removal of the sale of these stamps from their income.

There is one matter to which I have referred on every occasion on which we have had social welfare legislation before us. There is an obvious method available to the Government of encouraging the employment of young people. I refer to the removal of those under 21 years of age from liability for contribution to social insurance. This would encourage young people to find employment and it would also encourage employers to provide employment. These young people would have the advantage of being trained and, having been trained, the likelihood is employers would keep them on in employment and pay social insurance contributions. On the last occasion I made this suggestion the Minister said it was essentially a matter for Finance and economic Ministers and it would be no concern of his to implement such a proposal. I find it hard to accept the Minister is so far removed from his finance and economic colleagues in the Cabinet that he could not discuss with them the possibility of providing relief from social welfare contribution in the case of young people under 21 years of age. I invite him once again to comment on this suggestion in his reply.

This Bill should have been a major review of the social welfare code. Instead of that it is confined to making it administratively easier for the Government to collect contributions. In the case of limited eligibility contributions will be collected in less than 12 months. Those on limited eligibility and female public servants will be brought in and the contribution requirement will be radically altered without any increase in benefits. This is regressive legislation. Pensions will no longer be eligible for tax relief. I am disappointed that a very real opportunity for correcting glaring discrimination against women in the social welfare code has not been taken by the Minister, the Minister who professed his anxiety earlier here on the need to do this in an orderly fashion when the opportunity arose. The opportunity has arisen and the Minister has failed to grasp it. The reduction of £1 per week in contributions in the case of those earning less than £50 a week has been eroded and it is not until one is closer to £70 a week or £80 a week that the person earning £40 a week will be any better off to the extent of the £1 or £1.16 that the Minister mentioned earlier. I accept this legislation will make the collection of funds easier. There will be no additional benefits and from that point of view the Bill displays a continuing cynicism on the part of the Government towards social welfare recipients. It was my fond belief that the Minister earnestly wanted to amend the whole social welfare code.

Dr. O'Connell

The exchange between Deputy Boland and the Minister as to whether it should be 3.4 or 3.5 in regard to the employee's contribution reminded me of a statement attributed to Sir George Godber, erstwhile Secretary of the Department of Health and Social Security in Britain. He said a Minister's sole function was to present the Department's view to the Cabinet, to the Parliament and to the country at large. The Minister's acceptance of his figure without seeking an absolute breakdown to find out for himself if the Department's figures were accurate confirms my view that Ministers are there solely for the purpose of presenting the Department's view to the Cabinet, to the Parliament and to the country at large.

I was interested in Deputy Boland's suggestion about removing young people under 21 years of age from the necessity of paying social welfare contributions. I presented this to the former administration with all the enthusiasm I could muster and it was rejected at a time when I thought we might make a gallant effort to get young people back to work. That was in 1974 and it was rejected by the former Taoiseach. I mention that in passing—I wonder who runs Departments. I accept that this Bill, in making arrangements for pay-related contributions, is good. From the employee's point of view it will bear less heavily on the lower paid and from the employer's point of view it will benefit labour intensive industries, as far as I can ascertain. But the major point of the Bill is to alter the method of financing social insurance benefits.

If we are to confront and solve the anomaly of the flat rate contribution, we should also confront the other anomalies in the system. The Minister had a unique opportunity to bring in the necessary reforms of social welfare legislation which are long overdue. It is accepted, I think, that the question of pay related contributions has been in the Department for a few years. To my knowledge it emanated from the officials in the Department of Social Welfare and the Minister was presented with this and came here with this Bill.

The only thing wrong with it is that it is progressively diminishing the State's contribution to the social welfare fund. The Exchequer contribution has been dropping annually and declining dramatically in the last few years. In 1973-74 it was 30 per cent of the total fund. In 1977 it dropped to 19 per cent. Meanwhile the cost of the stamp has been escalating. It has jumped by almost 150 per cent in the past four years. So, I see this contribution as a social insurance tax, a hidden form of taxation, again on the PAYE worker. This is the greatest discrimination against that class of worker. The PAYE workers pay 87 per cent of the total income tax and now we are burdening them further by asking them to pay more in social insurance contributions.

According to NESC Report No. 7 on "Integrated Approaches to Personal Income Taxes and Transfers", social insurance taxes represent one-third of total personal income taxes. This Bill helps to some extent by spreading that burden on a more equitable basis, but the social insurance tax is likely to continue to grow, as I see it. The move has been more away from the State and to the employer and employee and so I cannot accept it as other than a social insurance tax, a tax on wages.

The State are now going to further reduce their contribution under the new scheme. I do not accept for a moment the statement in the explanatory memorandum that the income from this scheme will be approximately the same as that resulting from the flat rate contribution. I believe we will have extra revenue from it and I do not think that should be used to curtail the Exchequer contribution or to funnel off funds to cover, say, budgetary increases in social welfare benefits necessary to meet inflation. I have every reason to believe that the revenue from the pay related contributions will be considerably in excess of the £250 million collected last year. We should ensure that the extra revenue arising from this scheme would go directly into more benefits; otherwise it will be a sort of budgetary legerdemain whereby a substantial amount of the benefit will be used to reduce the State contribution and to throw a greater burden on the employer and employee.

Pay-related contributions will rise automatically with wages since they are based on percentages but the benefits are not tied in this way: the benefits must be increased at budget time or not at all. I think the discrepancy is glaring and should not be used opportunistically by any Minister or Government to reduce its obligations to the insured population and cover expenditure in other ways. We should keep a very close eye on the State contribution of 20 per cent to the insurance fund to see if it drops as it is likely to do, because I remember a Minister saying in this House that it was intended to reduce the State contribution to the social insurance fund. This would be a regressive move indeed.

The explanatory memorandum says that the Bill is designed to yield "broadly the same income as flat rate contributions" but the Minister must be aware that Exchequer Estimates are notorious for massive shortfalls and massive windfalls, particularly in the tax area. It is crucial that there should be full accounting of this system to see what surplus is coming in. To take just pay-related benefits, last year the contributions exceeded expenditure by £9 million. We do not know what happened that sum, which should have gone for the benefit of those who are paying the contributions. We should bear this in mind. I can see the windfalls creamed off to cover expenditure in other areas. The pay-related benefit scheme is the only pay-related scheme at present operating and an increase of £9 million over what was paid out gives, I think, a good indication of what will happen under the universal pay-related contribution scheme.

It would be very dangerous if the Department were to use this measure as a screen to cover it in reducing its commitment to the social insurance fund. Something very strong must be said about the whole social insurance fund. We must dispel the myth in the public mind that the State is playing an important role in paying social welfare benefit, disability benefit and so on. Last year, of £250 million paid into the social insurance fund, £200 million was contributed by employers and employees and the State paid only £50 million. But the State acts as if it is giving a handout to the people. It has perpetuated this myth in its harassment of beneficiaries, those seeking benefits. It has employed Gestapo-like tactics and techniques in interrogating people who seek benefits.

I had occasion to advise a person a few weeks ago to appeal against a refusal to grant her unemployment benefit. She said that when she went before the appeals officer they had employed Gestapo methods against her, asked her why she had consulted me, if I had advised her. They wanted to know why she came to me when she was not in my constituency, what kind of advice I gave her. They asked why she did not go to her own Deputy. An appeals officer in the Department of Social Welfare wanted to know all this. When the identity of that person is made known to the Department, can I have an assurance from the Minister that no measures will be taken against that person for disclosing that information?

Mr. Haughey

Of course.

Dr. O'Connell

I would like the Minister to investigate this because I find that there is increasing evidence of harassment of those people who have paid into this social welfare fund. Those people and the employers are the major contributors to this fund. The State is merely acting as an administrator of the fund. The State's contribution is only the very paltry contribution of £50 million out of a total contribution of £250 million. The State's role is a minor one in this social insurance fund. The ideal thing would be to have a council, composed of employers and employees, to administer this scheme. This would ensure that the scheme is used to the best advantage of the people concerned. The public are not aware that the State plays a minor role in the financing of this scheme.

During the budget debate I asked the Minister for Social Welfare to explain the discrepancy between a statement made by him and one made by the Minister for Finance. He told me that the difference was the amount of the social insurance fund financed by the employer and the employee. It seemed to me then that the Government were trying to take credit for this contribution in their announcement of the social welfare increases last April. This kind of public relations con job has to stop. The Government are only acting as a clearing house and are returning the peoples contributions in the form of benefits. People should realise that when the unemployed receive benefit they are receiving money which they have paid into the fund. It is no more a State hand-out than private insurance is a handout.

The Exchequer contribution should at least be maintained if not increased if this Bill is to have any genuine redistributive effect. As far as I can see the Exchequer contribution will be reduced. A great proportion of personal income lies outside the domain of the social insurance contribution. If the State does not make an attempt to take something out of this income in the form of tax and spread it through the social insurance system the base will be too narrow and there will be no redistribution of the fund. The whole concept of social insurance is to insure individuals against risk by spreading the burden across the population at large. It cannot, like any insurance scheme, work well if the base of coverage is stunted.

In this country approximately one-third of personal income is outside the social insurance contribution net. This means that one-third of personal income is free of social insurance taxes. According to the 1977 estimates published in the NESC Report No. 37 farming income totalled £740 million and other self-employed incomes totalled £850 million. This means that £1.6 billion of personal income in the country pays no social insurance taxes. That is a very large sum of money. If those people paid social welfare contributions there would be a greater input into the social welfare fund, greater opportunity to extend the benefits, less social welfare contributions from all concerned and greater benefits in the individual areas, which is not happening at present. Unless we spread that net the insurance principle cannot be expected to work effectively and at less cost to the individual contributors than at present.

Everybody knows that if more people are covered there will be more income for the fund, reduced rates for the contributors and increased benefits. We are not attempting to come to grips with social insurance contributions in that regard. It is confined to a narrow few, the same people paying the PAYE contributions, who are over-burdened contributing £87 million in income tax. Those people are also expected to pay the social welfare contributions and there is no way of spreading that net.

A social welfare contributor who has paid his contributions all his life gets £1 more in a contributory old age pension than a non-contributory old age pensioner does. He has paid for 80 per cent of the money he receives. The contributory old age pensioner is discriminated against. The farm labourer is actually subsidising his boss. He pays social welfare contributions but his boss does not. When it comes to retirement age the farmer gets a non-contributory old age pension and the labourer gets a contributory one. He is in fact paying his boss's pension. He is also paying the tax by PAYE for his boss's pension, which is not provided either by tax or social welfare contributions. It is an appalling thing that that should be allowed to happen. The NESC Report No. 38 states:

Contributors to social insurance and PAYE taxpayers are by and large the same people. Those who benefit from social assistance tend to be drawn from the farming population who, being self-employed, have no social insurance cover.

Later on in the report they state:

The financing of social insurance cannot be divorced from the position of social assistance which is wholly financed by the State.

The last point they make is:

In many cases the recepient of a contributory benefit could equally qualify on means grounds for the corresponding non-contributory benefit. This is demonstrated by the high number of wives of contributory old age pensioners who qualify for non-contributory pensions in their own right, yet the insurance benefit for which a person may have contributed over a long number of years may only be fractionally larger than the corresponding non-contributory benefit, for example, for widows.

In October 1977 the widow's contributory pension was £13.25 and the widow's non-contributory pension was £12.35, a difference of less than £1. This is gross discrimination against the people who pay social welfare contributions.

We had an opportunity in the House for the Minister to bring in a pay-related pension scheme, a system of pay-related contributions that would result in pay-related pensions for everybody at the end of their lives. I believe there is a Green Paper on this in the Department of Social Welfare. This would have been a major reform by the Department of Social Welfare and the Minister, who is so anxious to make an impact in this particular field. It is unfortunate that the Minister did not grasp the nettle in this particular area.

Various other aspects of the Bill are more appropriate to Committee Stage, but there are points which must be borne in mind. I would like some clarification on a number of points raised by the Minister. I am opposed to so many aspects of the Bill being covered by regulations which need not be discussed in the House. The Minister said that the £5,000 limit is provisional and that the limit can be decided by regulation before the operation of this Act. This is bypassing the Dáil and we do not get a chance to discuss it on its merits. The Minister also said that he will decide the upper limit by regulation.

A point I would dwell on is that the increased rates of 7.8 per cent and 3.4 per cent take into account the special increase of 31p in the flat rate contribution which was introduced in 1975. In 1975 the economic climate was very difficult and dangerous and, although the public may not be aware of it, a special levy was imposed on them to finance social welfare benefits. This levy, 31p in the flat rate contribution, was imposed as a temporary measure to help cope with the cost of increasing unemployment. There are claims that the numbers out of work now have been drastically reduced and there are boasts that we are on the road to economic recovery. If that is so the levy should be withdrawn, and the Minister should give us some indication to that effect.

At the beginning of my contribution I wondered if the Minister was fully satisfied with the figures given to him by the Department about employee contributions, taking into account tax relief in relation to pension contributions. The Minister should give us a greater assurance that that he has been informed of the fact and has accepted the figures on their face value.

Mr. Haughey

I did not say that.

Dr. O'Connell

I have not quoted the Minister. The Minister gave that impression.

Mr. Haughey

I said I have to accept.

Dr. O'Connell

The Minister does not have to accept. He should have asked.

Mr. Haughey

I went into the calculations, but I have to accept the figures.

Dr. O'Connell

Every worker must get proof. The workers must be assured that we are not depriving them of a tax benefit.

Mr. Haughey

That is what we must and will do. We will give the workers the figures and show them the calculations.

Dr. O'Connell

That is important, otherwise it would seem that the Department were trying to deprive the worker of a tax concession.

I accept that the stamping of cards must end. This system caused enormous problems for both employers and employees, because the system is too haphazard and gave rise to abuse. Many employers took contributions from their employees without stamping their cards. There was laxity on the part of the Department in relation to strict surveillance of the stamping of cards by the employers. The slipshod method of returning cards to the Department, plus the possibility of cards being lost in the post all added to the confusion. I know of a case where a card was returned but was lost in the Department for nearly eight months. The possibility of losing a card in the post also created a tremendous risk for both the employer and the employee because when a card was lost there was no evidence that a card had ever been stamped. An employer and an employee could be above board, but if the card was lost there was no other proof within the Department.

Another abuse was that cards were stolen and resold for criminal purposes. I am glad to see the end of that system. As we know, many thousands of people suffered due to the inadequacies, before any effective legislation was brought in to remedy the situation. Even at present, while there is a guarantee to the employee that if his card is not stamped he will receive benefit, the delay while the Department are investigating the case can be interminable. It is all right to say "Don't worry" to a person who is seeking unemployment or disability benefit, but the hardship can be great while they are waiting for the Department to complete their investigations. It is a relief that we have at last come to grisps with the problem and that the Government will introduce a more streamlined efficient system. The new system will reduce the burden on the Department so they should in future be more efficient.

The person seeking social welfare benefit is a person in need, and the majority of these people do not possess a private phone but must use the public phones. I am sure the Minister knows what a frustrating experience it can be trying to get on to a section in the Department of Social Welfare. One can be hanging on for as long as half an hour for a reply. By the time a person using a public phone gets a reply and waits to be put through to the appropriate section his time is up, he is cut off and he must start again. It is frustrating and agonising for the public using public phones trying to get information from the Department of Social Welfare about their entitlements.

This new scheme has streamlined the whole system within the Department, taking from the Minister the enormous burden of processing the issuing of stamps and so on, and I should like to know if he would make sure that the information section of his Department is brought up to date so that information can be given readily to people. Some months ago, acting on a suggestion from an official of the Department, I contacted that section for information. I was informed that they would have to contact the section concerned in Phibsboro. I would have thought that an information section would have replies to queries at their fingertips. I have found that section sadly lacking.

An Ceann Comhairle

That hardly comes under the Bill.

Dr. O'Connell

It does. I do not take issue with the Chair on many things but I will on this occasion. We are talking about benefits, entitlements and contributions by social welfare contributors. The Bill seeks to streamline the system and take away from the Department of Social Welfare the onus of collecting contributions. It is my contention that the massive labour force that will be available in the Department following the introduction of this Bill and the streamlining of the system should be deployed to provide proper information to social welfare recipients as to their entitlements. That is not an unreasonable request and it is one that is relevant to the Bill.

An Ceann Comhairle

I do not think so.

Dr. O'Connell

I should like to know why the Minister, in eliminating the differentials in respect of women in particular, did not seek to rid the system of this terrible discrimination against certain beneficiaries of social welfare. He should reconsider this matter. The Minister stated:

...except in the case of certain married women whose benefits in respect of sickness or unemployment are restricted.

I accept that the Minister wants to rid the social welfare system of discrimination in various areas, and this is a glaring area where he could take the initiative. I admire him for what he did in the case of unemployment assistance for females and this is another opportunity for him to rid the system of the discrimination against females. The Minister should avail of this opportunity to bring in amending legislation. He will then be in a position to say that he had done his best to eliminate discrimination against women in the social welfare code.

It is my hope that in the operation of the scheme people will not experience unnecessary form-filling, something which can be very frustrating for those who do not have any great knowledge of the dreadful bureaucracy that is within the Department of Social Welfare. I would like an assurance from the Minister that the form-filling required for benefits is simplified, particularly in view of the fact that the Department are able to streamline everything else. It should be possible to do this. Many people are deterred from seeking social welfare benefit because of the complicated process of form-filling involved. Other people, by virtue of their illiteracy, do not seek benefit either. I suggest that the Minister follow the example of the Department of Agriculture, who carry out a good promotional campaign on television about the rights of farmers to grants, subsidies and so on. The same enthusiasm and aggression should be adopted by the Department of Social Welfare to make rights and entitlements known to social welfare contributors. That campaign should be carried out on television. It would help to dispel the myth that entitlements are charitable handouts. I know the Minister would not wish to deprive people of their rights. I am not in favour of the books issued because they are complicated and difficult to understand, but the Minister should make more leaflets available and, for the illiterate, carry out an information campaign on television and radio. It can be very difficult to obtain entitlements from the Department. A Dutch citizen who is married to an Irishman sought entitlement to dental benefit under EEC regulations recently. She had contributed for seven years in Holland and one year in Ireland but when she went to the Department seeking benefit she was informed that it would take up to 12 months to process the application. She was told that it would involve complicated checks. That lady was told by an official at the Dutch Embassy that the Department should be able to get her her entitlement within one week. An official at the Embassy suggested that the Department telex the Dutch Department of Social Welfare. Our Department must be able to act with speed to give people their entitlements. If people contribute a lot of money to this new scheme—in my view the revenue will be far in excess of the Minister's estimate—there should be the minimum of delay in processing applications.

I should now like to deal with the question of retired social welfare contributors. This is a serious problem. Such contributors are being informed that they must make health contributions. This information is being conveyed to them by the Revenue Commissioners. When a public representative argues this matter with the Revenue Commissioners the matter is closed, but only temporarily. A short time later it is re-opened. It is a form of harassment. They are being harassed into paying health contributions. The Minister should make this position clear so as to put an end to a lot of needless worry by these people.

Mr. Haughey

It is not the fact that they are retired. What is their status now?

Dr. O'Connell

They are just old age pensioners but they are getting demands at regular intervals for health contributions. When I wrote I was told they had to pay. I wrote back and explained that, as recipients of contributory old age pensions, they should not have to pay. It was then agreed by the Department that they should not. It happens at regular intervals. I can understand isolated incidents; they can occur in the best organised Department. But this is happening to people regularly and I think a statement from the Minister might clarify the position.

Mr. Haughey

At present my Department would be collecting from voluntary contributors only.

Dr. O'Connell

I will give the Minister the information. I have known this happen on a few occasions when people felt they were being harassed. I must stress that it is happening at regular intervals.

Mr. Haughey

The Deputy had better come and spend a half day down there with me.

Dr. O'Connell

The resolution of the problems of social welfare would entail more than half a day. I shall not go into the finer points of the Bill. The Minister has presented the House with this simplified method of collecting social welfare contributions. The Bill does not give any promise of increased social welfare benefits in line with contributions. Certainly it is of great benefit to the lower income bracket. But the £5,000 ceiling at present is a relative figure. The way we are going I can see that this is a movable figure that will be adjusted in line with industrial earnings. It may constitute a great source of revenue for the Department of Social Welfare. It aims at being self-financing—that the State's contribution will become zero in the foreseeable future. If and when that happens we shall have reached a very regressive stage in our social services. The State has purported to be the guardian of the under-privileged, the people who rely on social welfare benefits. If what I predict happens the State will no longer be fulfilling that role. That is a serious matter—a drop from 30 per cent to 20 per cent within a few years represents a very serious decline in State contributions to the social insurance fund. It will constitute a regressive step and one which will not promote our good name. Certainly we are very much out of line with the rest of Europe in the matter of social welfare benefits. Indeed in the EEC league we are the lowest in terms of the social welfare benefits we make available to our people. Our social welfare recipients are the worst off in Europe in relation to the cost of living, industrial earnings, to our people's contributions to the scheme and in relation also to child welfare benefits. In relation to the benefits they receive they are the section of the community most discriminated against.

The Bill does not aim at introducing in this House enlightened social welfare legislation; in that respect it has failed with ignominy. Other than lowering the contribution for the lower income group—which is a relative factor having regard to the present rate of inflation—I cannot see in it any great reform for the future. I accept that it is very good at present. Administratively it is a very enlightened Bill and it will eliminate abuses of the scheme, but it does not aim at introducing enlightened legislation in the field of social welfare. In that respect I cannot in conscience accept it with any degree of enthusiasm.

Dr. Browne

Deputy O'Connell concluded on what is the most important principle of this Bill, that is, the changing attitude of the State to its responsibilities. The present Minister is a very lucky man in so far as he happens to be Minister in two extremely important Departments from the point of view of showing concern or a humanitarian attitude in relation to his responsibilities. As everybody has made clear essentially this Bill is not one of a humanitarian politician; rather it is one of a competent chartered accountant. As the Minister said, it will make things easy for the calculators, the administrators, and will tidy up a number of anomalies, but they are superficial. The basic tidying up is not superficial, it is a very fundamental one in an administrative sense. But the points claimed for the Bill changing from flat-rate to pay-related social welfare are justified because an injustice did exist there in so far as the higher income contributor obviously did better than the flat-rate lower income contributor. That is an anomaly but I am afraid it is a relatively minor one in the overall pattern of who pays what in our society.

The abolition of insurance cards has many of the advantages other speakers mentioned—the broad failure to stamp cards, loss of cards, certain administrative difficulties. The use of the PAYE system for collection will be of benefit from the point of view again of the actuary, of the accountant. Clearly that will be an improvement. There is a defect in the provision of the limit of £5,000 on the pay-related side. The question about who is paying and that it raises no more money than would have been raised by the present combined system of the insurance stamp plus the 3 per cent redundancy fund—3 per cent from the wages and 2 per cent from the employer, plus 1 per cent from the employee—is not as simple as it appears. There are certain cosmetic improvements and some relatively important administrative ones, improvements from the point of view of collecting the money and, in that way, easing things for the Minister's Department. But surely the Minister's primary responsibility is to the community. It is in his attitude to his job in relation to the community that he has failed in a particularly disappointing way because most of us had been given to understand that the Minister had radical attitudes and intended to endeavour to effect those while in office. Clearly that is not so.

The Minister is carrying on—he is not initiating anything—a trend which, since 1973, has become more noticeable since the term of office of the Coalition Government when, with Deputy Cluskey in control, there was registered a new approach to the whole idea of the re-distributive function of fiscal policy in society. Certainly that was in line with the traditional Cumann na nGaedheal, Fine Gael policies over the years, very conservative ones. The Minister carrying on these policies is quite clearly moving away from the radicalism of the early Fianna Fáil Governments in their social attitudes, their feeling that it was important that the wealthy be made responsible for helping to care for the under priviledged in society. The Minister has totally deserted that position, or is in the process of doing so. In his social attitudes he is now becoming quite indistinguishable from his opponents on the other side of the House. There is now no real difference between the two major parties and, indeed, and I regret to say it about the Labour Party, the three major parties in the House.

This Bill is all part of the continuing war of attrition between the employer and employee in society, in western capitalism, an attempt to deal with the fact that the old laissez faire idea of everybody looking after himself is no longer acceptable and has not been probably since the beginning of the century. Contributions were considered to be inevitable from the Central Fund, from taxation and from the Exchequer. The idea that there should be effectively a redistribution of wealth from the wealthier minority sections down the line to the less wealthy and poorer sections of society permeated most of the social welfare and health code, education, housing, indeed the whole of this aspect of life. That trend was slowly reversed down the years through the introduction of the insurance principle rather than “the free of direct charge at point of use” principle.

For instance, in the 1947 Health Act the then Fianna Fáil Minister for Health had the principle that there would not be any contribution at all. This was the famous one that ran into trouble later on in my own period of office. There was a basic philosophy of concern for the priviledged members of society, and this is the complete obverse, the other side of the coin, in so far as the Minister is now moving away completely from the idea that the wealthy have the responsibility to concern themselves with the less wealthy and the poor, who must now pay everything themselves. It is a development of benevolent capitalism of the good employers such as Guinness who looked after their employees' insurance, health, old age, disability and so on, but in fact the employee paid most of the contribution and really the employer paid very little.

It was a clever device. Now it is being used by Governments, and this Government in particular are following the lead given to them by the Coalition Government and we now have, as Deputy O'Connell said, a frightening and worrying change. In 1971 the percentage contributed from the State was 34.4 and in 1978 it is 20 per cent; that is a 14 per cent drop in seven years. Quite clearly the State is attempting to opt out of its responsibility in so far as Exchequer payments should be used to fund social welfare benefits of one kind or another. The other self-funding schemes like the redundancy payments and the Minister's proposed 1 per cent health insurance scheme are variants of this attitude where the people in control are rounding on the various components of society and saying "As far as we are concerned we are keeping what we have and if any services are coming to you in the communal sense you will fund them yourselves". Indeed, the Minister pointed that out in his statement. The total funds of the health scheme would be in the region of £22 million and the scheme he is bringing in costs about £7 million to £10 million and he has the rest for funding various health schemes. This is the new principle which is a departure from the old idea of the strong helping the weak.

Mr. Haughey

That is the principle of pay-related.

Dr. Browne

Yes, but it is a far cry from the principle of children's allowances where there is no contribution and no insurance scheme. This was one of the fundamental issues in conflict in the 1951 Health Bill. I did not want the insurance principle at all; I wanted the redistributive effect of fiscal policy to be effective. Instead of that the insurance principle was insisted upon later by subsequent Ministers and has now taken the dominant position. This is the important, reactionary, extremely conservative development to which the Minister is a party. He has not initiated this; it was initiated by Deputy Cluskey in collaboration with Deputy R. Ryan. We have no undertaking from the Minister about the policy decision laid down by Deputy Ryan, then Minister for Finance, when, speaking in the 1975 budget debate, he said, that not alone did the Government intend reducing the State's contribution to the social insurance fund but it intended over the next five years to eliminate the State's contribution altogether. The worker and employer would then pay for all the benefits.

Mr. Haughey

He is gone.

Dr. Browne

I would like an assurance from the Minister that at least he will stand on the position of the 20 per cent. Of course he cannot give an assurance for his successors. When the Minister for Economic Planning and Development starts to look for money quite obviously these are remarkably valuable sources of revenue.

Mr. Haughey

I do not want to interrupt the Deputy's argument, but in this legislation put forward by me now we are retaining the 20 per cent.

Dr. Browne

I can see that. It would be very unwise politically for the Minister to make any serious reduction. Obviously he is setting up the position whereby a progression can take place. Since 1971 it has taken place, from 34 per cent right down to 20 per cent. That is a speedy reduction in the State's contribution, especially as in this question of fiscal policy the wealthy minority have been so carefully protected in other ways. By the modification of capital gains tax, the abolition of wealth tax and various other methods their already wealthy position is certainly stabilised and under no serious threat.

What is happening now is a consequence of the old and unending conflict of capitalistic society; of profits and dividends gone astray to the employer; to the employee, of wages and salaries gone astray. There is an eternal conflict there which is insoluble and this continual battle is going on between the employer and employee, between trade unions and employers. What is happening now is that the insistence on keeping the mass of the people at a low subsistence level or slightly above it has become more sophisticated as it has to be because one has a very powerful trade union movement now which one did not have in 1913 and because there is a higher level of political literacy among workers. Therefore, all this kind of thing has to be carefully dressed up. It cannot be done as it was in the days of Mr. Blythe when he cut the old age pensions and so on. If one goes about it carefully, an effective reduction in living standards can be achieved by changing the components of the tax structure and the contributions of the State and the individuals to all the different health and social welfare services.

One of the odd things about it—and Deputy O'Connell touched on it—is the discriminatory nature of this kind of legislation. A relatively small percentage of people are workers. It is the workers who are going to fund this scheme with the employers. I can never accept that the employer really pays his contribution because all he does, if he is producing Guinness, is add an eighth of a farthing to the pint and that pays his contribution without much trouble. He is at a loss but he still makes the profits he always made and the workers pays.

Mr. Haughey

The employer's contribution is just another form of wages.

Dr. Browne

Give it to the worker but do not pretend it is an employer's contribution. It is hypocrisy to create the impression that the employer is paying something which he is not paying. He is getting it from the worker in a different way, then standing before the world and saying: "I am a generous employer."

Mr. Haughey

In other words, if he had not the worker he would not be paying it.

Dr. Browne

If he had not the profits that he makes out of the worker he would not be paying it.

Mr. Haughey

The employer only pays it because he has a worker on his payroll. Therefore, it is part of what is due to the worker.

Dr. Browne

My main interest is the discriminatory nature of this new development in our taxation system. In the old days if one got the advantage from any scheme one could say that the money was contributed by the whole community according to their means. That seemed to be a fair basic principle. We have moved away from that principle. What surprises me about the Minister is that he is a party to this development. As a man who has said that he would like to make radical stands on different issues, it surprises me that he is taking this position and is not making a serious effort to see that the contributions are not restricted to a minority in our society. In the old days everybody was vulnerable. Everybody paid either in direct taxes or in indirect taxes. This new system is reduced to two people, the employer and the employee, and the diminishing contribution from the State. Is that not discriminatory? The farmers, 22 per cent of the population, pay £1.6 million out of a taxation budget of £360 million. In deference to Deputy Blaney, I am talking about the wealthy farmers. I know quite well that anybody who reads the figures of the profits made by Munster and Leinster farmers will see that they are different from the Ulster and the Connacht farmers. That seems to be discriminatory in the most obvious sense. There are other points that I mentioned about the easing of the burden on the extremely wealthy.

Leaving that aside, there are people on various forms of social benefit, the unemployed in particular. These people are to be looked after; the fund is to be fed by contributions from the unfortunate employees and indirectly from the employers. That is difficult position to sustain on any point of equity. All through the years gone by the general trend was the idea of cherishing equally all the children of the nation. In this development we are quite obviously discriminating against the various children of the nation. We are imposing great hardships on some and making life easy for others.

In these proposals the Minister is introducing various superficial differences and administrative improvements. At the same time he seems to be more concerned with the mechanical side of the social welfare problems in his Department than he is with the result that will follow from the ordinary consumer of the social welfare benefits. I am also astonished at the insufferable complacency of the Government, and of the Minister on behalf of the Government, on the position of our society in relation to social welfare. Of the nine EEC countries, Holland is at the top of the table in comparable terms and Ireland is at the bottom in the percentage of GNP spent on social security, health and other things such as pensions for disabled persons, family allowances and sickness benefits as a percentage of earnings. We are at the bottom of the table in all these important categories. The Minister showed an extraordinary sense of indifference to these realities. He brings this Bill in here and tries to put it forward as if it were going to be of some benefit to the consumer. What he is doing is pushing away the burden from the people who are able to carry it and asking the ordinary worker to pay for it.

I do not know why the Minister does not see fit to attempt to defend or even to explain the rationale behind this approach. Surely there must be a level beyond which we would not go, being the meanest when paying the lowest and continuing our indifference to the conditions in which the majority in our society live. It is interesting to recall the propaganda at the time we were attempting to get into the EEC, the spiritual renewal, when quite obviously we were the meanest and the most pauperised of all the nine countries.

On the question of the upper limit of £5,000 a year, there is an enormous anomally. Is it not a fact that the person who has an income of up to £5,000 will pay the same tax for the same benefits as somebody who has an income of £8,000, £9,000 or £10,000, and is this not another element of discrimination in favour of a person with a higher income? As one goes up the scale the tax benefits, the mortgages, become more discriminatory against the lower taxpayer. I would therefore be in favour of abolishing the upper limit of £5,000 and making taxes more punitive on people who have the highest disposable income levels, the people with £6,000 or £8,000 or more per year.

The Minister claims to be radical and progressive in outlook. I do not see any signs of it in this legislation. How can he justify this continuing discrimination in favour of the wealthy sector of our society? What will happen in relation to the public service employees? How will they come out under this scheme?

Mr. Haughey

It will be the same except that it will be translated into percentages.

Mr. Boland

What about the female public servants?

Mr. Haughey

The same.

Dr. Browne

The Bill is restricted to 36 per cent of the population who will be responsible by their contributions for looking after the disabled social welfare sector. It is a basic departure from earlier social welfare policy which recognised that, properly used, the social welfare code could win some kind of significant redistribution of wealth in the total society. To sum up, the Bill makes it easier for the State's contribution to be eliminated, and I think that is its main aim. It has a few components which will promote a reduction of Exchequer expenditure on social welfare and make the workers pay, a burden which will fall on a minority. Therefore I must conclude that the Bill is far removed from any serious enlightened effort on the part of the Minister. It is retrograde. It takes over the policies of the Minister's predecessors in office, and it is therefore a depressing commentary on the state of the society in which we live.

An Leas-Cheann Comhairle

The Minister to conclude the debate.

The Minister for Social Welfare rose.

Deputy Blaney rose.

An Leas-Cheann Comhairle

The Minister has been called. No other Deputy offered.

Mr. Blaney

I did but you did not see me.

An Leas-Cheann Comhairle

The Deputy did not offer.

Mr. Blaney

I did offer.

An Leas-Cheann Comhairle

Not until the Minister had begun. The Chair had already called the Minister.

Mr. Blaney

The Chair may have called the Minister but this is a very retrograde attitude on the part of the Chair.

An Leas-Cheann Comhairle

The Chair waited a full minute for some other Deputy to offer and no other Deputy offered.

Mr. Blaney

There was no such thing as a minute's delay from when Deputy Browne sat down and I got up. I presumed one of the Deputies on the Opposition benches over there would be called——

An Leas-Cheann Comhairle

The Chair looked at all benches. I thought Deputy Corish might offer. I have called on the Minister to conclude.

Mr. Blaney

You may have called him but that is not irreversible.

Mr. Haughey

I had begun. I had said: "An Leas-Cheann Comhairle".

An Leas-Cheann Comhairle

The Minister is now in possession. If the Minister wishes to withdraw he can do so, but there is nothing else the Chair can do.

Mr. Blaney

The Minister may have been called——

An Leas-Cheann Comhairle

No other Deputy had offered.

Mr. Blaney

I had offered.

An Leas-Cheann Comhairle

Deputy Blaney did not offer.

Mr. Blaney

I did offer.

An Leas-Cheann Comhairle

You did when the Minister was already on his feet.

Mr. Blaney

If the Minister is fast asleep that is not my fault.

An Leas-Cheann Comhairle

Will the Minister move to adjourn the debate?

Mr. Haughey

I so move.

An Leas-Cheann Comhairle

I am now calling the Private Members' Motion in the names of Deputies O'Donnell and O'Toole.

Mr. Blaney

I want clarification from the Chair whether it is to be a practice that will never be departed from by this Member now sitting in the Chair that if in future the Chair has called a Deputy and another Deputy offers subsequent to the Deputy already on his feet that there will be no going back——

An Leas-Cheann Comhairle

The Chair calls speakers as they offer. No other Deputy had offered and therefore the Chair called on the Minister. There is absolutely nothing the Chair can do. We are now in Private Members' time.

Mr. Blaney

You are into a lot of trouble for the future if that is your ruling. I can assure you of that. I do not represent here any large body of opinion but I can make my opinions very clear——

An Leas-Cheann Comhairle

The Deputy should not blackguard the Chair on a matter like this. The Deputy did not offer.

Mr. Blaney

Your ruling is scandalous and I am amazed and surprised at it. I have seen a place being held for people outside the door and the Chair knows that.

Mr. Boland

The point Deputy Blaney has made is a fair one. The Minister merely rose but the Deputy had no opportunity of speaking.

An Leas-Cheann Comhairle

The Minister was in possession. If the Minister wishes to withdraw at this stage——

Mr. Blaney

The Chair should not put the onus on the Minister.

Mr. Haughey

I suggest we leave the argument over until the debate is resumed.

Debate adjourned.