The previous speaker, Deputy Mitchell, had discussed the whole scheme extensively and I would like to cover much the same ground. I would immediately like to repeat the points I made last week on an earlier Stage and that is to say exactly what the benefits of the extension of the PRSI to the self-employed and farmers will be. There are a number of positive aspects. First, it will give pensions and benefits to the people involved, as is their right, just like the rest of the workforce.
Social Welfare Bill, 1988: Report Stage (Resumed) and Fifth Stage.
Debate resumed on amendment No. 5:
In page 7, to delete line 52 and in page 8 to delete lines 1 to 14 and substitute the following:
"(i) with effect from 6th April, 1988, to be of an amount equal to 6.6 per cent of the reckonable income or the amount of £208, whichever is the greater.".
—(Deputy De Rossa.)
On a point of order, I reported progress on Report Stage. It is not yet 3.45 p.m. and I assumed that I would be resuming at that time.
The Deputy will be afforded an opportunity of speaking again. He need not feel disadvantaged.
I am not totally au fait with timing but having been called, I would appreciate being allowed to continue. I would not disagree with Deputy Mitchell speaking again later.
The second benefit is that the extension will provide pensions for widows and orphans, as a right, and will therefore remove the worry that was hanging over these people previously, a worry which was expressed to many of us as public representatives. It will remove the ludicrous situation I have referred to previously and which was discussed here this morning but which a number of speakers, including Deputy Mitchell and Deputy Wyse, seem to have ignored, that is the present payment of over £250 million from non-contributory benefits to the self-employed and farmers. The scheme will also broaden the contribution base to the whole social insurance scheme generally and will provide a greater degree of equity. The bottom line on those points is that a radical move in the long wished for and widely recommended national pensions scheme is being made. It is the first positive move in that direction since 1978. The Minister has to be lauded for his proposals. When all the conflicting views and points made here today are out of the way it will become more obvious that the Minister has taken the correct course. He has taken the middle ground, as it were, he has been fair in regard to implementing the charges and he has still allowed for a review in three years time should that be necessary.
I would not blame the public for being confused when looking at a report of today's discussion when, for instance, Deputy Enright and Deputy Mitchell from the same party were in total conflict. One of them claimed that there would be a total backlash from the hard pressed farmers and the other claimed that we were not charging half enough and that we were to spell out the reasons. Deputy Enright said it was obvious that there would be a total backlash and that we are dealing with a very dangerous situation. Again, this is in conflict with what Deputy Harney said yesterday. She told us that because the Government are in a giveaway situation the complaints from outside have died down and that everybody has accepted the scheme. Either Deputy Enright or Deputy Harney is wrong.
Deputy Mitchell agreed with some points but he ignored what was convenient to him. He analysed in detail the cost of the scheme and again that was in total conflict with what Deputy Enright, his party colleague, said. He ignored the £250 million being paid out at present, the broadening of the contribution base and the raising of the ceiling for contributions which will be done shortly. These factors have to be taken into consideration.
An important aspect, and he flitted across it, was the new collection system. He more or less sneered at the idea of even mentioning a new collection system. In the budget debate here previously I said that I thought it was ludicrous that the State has a different system of collection for health levies and youth employment levies from the system for collecting tax. If the State took a case against a person for non-payment of one levy it would have to repeat the same process in the case of another. The Southern Health Board have experienced great costs in sending out hundreds of solicitors' letters in trying to collect health levy charges. It was a crazy situation and in many cases the cost was greater than the income.
It is very important to recognise that to improve collection generally the Revenue Commissioners have introduced an integrated collection system which combines tax, health contributions, social insurance and employment and training levies. It has been the case with regard to some of the smaller levies that it has been very costly to try to collect them through the courts. The whole process is now being simplified. The person paying will get a more accurate assessment and will know exactly what he owes. This is a very important aspect of the new scheme. Experience with the levies has been used to demonstrate that we will not have a 90 per cent or more collection rate. The radically changed system which is now being introduced will eliminate such difficulties.
Deputy Mitchell referred to unearned income. We are all aware that there were easy ways of legally dodging payments. These loopholes must be plugged. The Minister will now take unearned income into consideration and charge on it. This will certainly make a difference.
Deputy Mitchell has not examined the question of broadening the bases. Everybody seems to ignore the fact that £250 million of taxpayers' money is being spent each year due to the absence of the kind of scheme now being introduced. This factor must be taken into consideration. I should like to be positive rather than negative. Deputy Wyse and I represent the same constituency which has a mixed urban and rural population. We have very few stud farms in Cork South Central. Every week people come to us who have not taken out cover and who are fighting for the minimum rate to be made available to them. I have dealt previously with the humiliation of people who have given 40 or 45 years of service to the State and who have to appear before local politicians or dignitaries to have a means test carried out in respect of a pension. They should have it as a right. I would emphasise the benefits in this scheme for widows and orphans.
The Minister has adopted a fair line by phasing in this scheme over three years. Everybody realises that we must take account of ability to pay. There are differing opinions in the House. Deputy De Rossa says the figure is too low, while Deputy Enright says it is far too high. The Minister has taken the correct option in going for the middle course. I have looked at the various recommendations made since 1978, although I have not had the privilege of seeing Mr. Massey's television show. I accept the Minister's figures as correct. There is to be a review after three years and if any problems have developed they can be dealt with.
My colleague, Deputy Wallace, also represents an urban/rural constituency. Deputy Enright was worried about the tension which exists between rural and urban communities because of the different levels of payment. Perhaps things will be more relaxed when people realise they are getting their benefits as a right. Certainly there was tension in relation to the collection of charges such as the youth employment levy and such issues were deliberately used to divide the community. We are proposing to get away from all that. The method of collection is very important and our country is too small for these tensions.
It is being said in regard to television licences that so many are not paying that the cost is raised for those who do. This new scheme of social insurance could lower the cost for everybody. The £250 million which goes to the self-employed and farmers who have not contributed must come from the taxpayer.
The Minister could have taken the easy option of doing nothing. Instead he has brought about this debate and we are learning as we go. Side issues are now being brought into the discussion. The self-employed and farmers are looking at the situation of Civil Service employees. It must be remembered, however, that they have a totally different rate of benefit and that their pensions are covered under a separate payment. We are heading towards equality, with everybody paying the same and getting the same benefit.
The Minister was accused yesterday by Deputy Harney of giving away taxpayers' money. She was worried about stud farm owners and the like but I am more worried about the people I represent in my area. Some of the early misconceptions about this scheme have been cleared up and people have become better informed about it. They should know what is available and they will be thankful in the future.
I mentioned previously that the people further along the line are the ones who will thank, and remember the Minister for extending this scheme. I have had figures thrown at me about what will happen in 40 years time. Perhaps what happened in the past is that people got so bogged down in looking at what was going to happen in 40 years time that they forgot about what would happen in the next few years. I believe we have to act now and act positively. We have to make sure that the days of touching the forelock and of people going along in a very humble fashion saying, "please, may I have something even though I may not be entitled to it" are got rid of. I want people to have benefits as a right. They should have to pay for the services and they should get them. As I mentioned in relation to children's allowances, I am not worried about emotive arguments or the extreme cases that are trotted out here. I do not believe that is good practice, whether it happens on television or in this House. I represent the average person and I believe he recognises that this is a good scheme.
The arguments in relation to incomes and how much should be paid have, to some extent, been dealt with. Deputy Mitchell muddied the waters a little this morning when he referred to the 100 per cent collection rate. All of these factors have been taken into consideration. Leeway is provided in the Bill through the extra ½ per cent, the increase in the ceiling and the extension of the base. Nobody's figures can be so accurate that they can say the scheme will break even but there is room for movement if there are any problems.
I want to refer again to what I believe is the bottom line in this Bill. For ideological and other reasons we will have different views on the rates that should be charged. Some people will base the rates on purely economic factors and try to protect one particular group so that they will not be expected to pay anything. That is to be expected but I ask them to support the concept of fair play for all. People should pay what they can afford to contribute and they should get benefit in kind.
We have been accused of a number of things but in fairness I believe that Deputy De Rossa agrees with the principle of the Bill even though he disagrees with the figure proposed. I hope that having listened to the Minister he will accept that all aspects have been covered and that he will withdraw his amendment. The attitude of people who have said, "No we do not want this because the people we represent can look after themselves" those who have been damning in their criticism causes me some worry. I am worried about the people who say "Our people are all very rich, they can provide for themselves and put money in the bank. We are not too worried about the badly off people but look at all the money you are going to give to some millionaire." These are the kind of emotive arguments we can do without. We should have a positive discussion on this matter.
I have no hesitation in recommending the Bill in total. I think Deputy Mitchell said we could use this opportunity to look at the scheme. I would disagree totally with that because it is a reasonable scheme. Reference was made to gross income and the Minister pointed out that reasonable allowance would have to be made for expenses. This, again, is also a reasonable approach. People will pay on their income, as assessed for income tax purposes and there will be a single rate so people will know what they have to pay. I do not see any strong arguments against the proposal. It is a very positive move.
I mentioned earlier — and this might seem like strong language — that I thought it was an indictment of past Governments and Ministers that there had been no proposal since 1978 to bring in a national pensions scheme. I am sure the people who sat in the House during that time must have had feelings on it but nothing was done. I believe a balance has been found. That is not saying the rate is too high or too low. The bottom line of this Bill is that there will be equity for everyone, people will get their entitlements as a right, the contribution base will be broadened, as recommended in all reports, there will be a fair return on what is contributed and the £250 million which is at present being given away — and I say this in particular to Deputy Wyse and Deputy Mitchell — will cease. For all those reasons I strongly recommend the scheme and I ask Deputy De Rossa to accept the figures as put up by the Minister.
I want to deal with a number of points. While listening to the debate, which has been very constructive, I cast my mind back to hundreds of similar discussions in relation to the setting up of pension schemes. It is amazing that many of the points and arguments made during this debate occurred over and over again in the debates on the setting up of pension schemes for workers in the industrial and commercial sectors. The same factors are always involved — the trade union push to get the pension scheme on behalf of their members and the employer normally resists it. When agreement is finally reached one sector pushes very hard for it, normally the older sector, the middleaged people are divided on it and the younger element, who have the longest to go in the scheme, are opposed to it because it is so far away they do not think about it. Consideration has also to be given to the level of pension and what contribution the employer or employee should make and there is always conflict on these matters.
Therefore, I am satisfied with the explanation that was given by the Minister but I want to emphasise that there are so many imponderables. So many things can change — the number of people who enter the scheme, their income, the returns they make, the number of people who try to fiddle the system and the people who emigrate — that it would be virtually impossible for anybody to forecast accurately what the situation will be in 20 years time. That is the way it has been in every pension scheme I have been involved in and there is no difference in relation to this one. If there is a shortfall in the fund the actuary will say that the position is that we have less income or more income than we anticipated and we can give less or more benefits, as the case may be or, alternatively, we have to recommend that the contribution from the employer or employee should be increased by X per cent, X pence or X pounds during the next number of years when there will be a further review of the situation.
That is the way it looks to me at this stage. In three years' time when the fund has been established it will be possible to see more clearly where we are going. I emphasise that in my opinion not alone should there be a three-year review but there should be annual reviews after that. The figures will be shown in the Estimates and in the figures from the Department, but it would be necessary to have a professional reassessment of the scheme not only after three years but annually after that.
I know from experience that pensions schemes can go wrong in a very short time if a proper check is not kept from an actuarial point of view. If the Minister of the day is satisfied with the advice he gets, that 3 per cent, 4 per cent and 5 per cent should be the figures decided on for the first three years, we will agree with that, but we will be keeping a very close eye on this and constantly inquiring into how the scheme is going.
If the farmers are asked to pay too much they will not pay anything. The fact is the farmers do not want to pay anything, no matter what they are asked to pay. I do not mind Deputy Enright making this point because he obviously has many farmers in his constituency. Probably if I had as many farmers in my constituency I would be saying the same thing. There are farmers in County Louth and I will be telling them that this is a fair introduction to the scheme to which they are being asked to make a contribution and we will not support them if they try to opt out of it. They opt out of too many things. The roads in County Louth are in bits because they opted out of the rates on agricultural land and then they did not want to pay the land tax. Now they want to pay it.
I will give a typical example. The president of the ICMSA on the radio last night said he had met with Fine Gael, the Progressive Democrats and Fianna Fáil. The decision of his members — and he was speaking for the majority of the members of the IFA as well — wanted the land tax, £10 per adjusted acre index-linked. That is what the Labour Party were saying five years ago. That is what the Coalition Government were saying. Now the bulk of Irish farmers are saying that is what they want because they do not like the system they have.
If we had a land tax this new proposal would be easier to implement.
The PAYE workers do not like the system but they are stuck with it and they have to pay. The scheme cannot work if a man does not make a voluntary contribution but can benefit by a non-contributory pension. We do not have to go into the farming and rural areas to find examples of this. We see it in the urban areas too. Millionaires with very large businesses transfer them to their sons, and six months later they are granted non-contributory pensions for the rest of their lives. That should be stopped. That can be stopped because when these people transfer their businesses to a family member they should be considered as having an income.
Let us take a young boy who comes to see us in our clinics and tells us he was awarded £8 unemployment assistance. We check with the Department and they tell us his means were X amount because his father or mother is working. At the other end of the scale, a man owning £1 million of property can transfer it to a family member and get a full non-contributory pension, having paid nothing into the system. Yet the young schoolleaver who cannot get a job is given £5 or £8 a week — it is impossible to live on such a small sum — because his father or mother is working and is deemed to be providing board and lodging. That loophole has to be plugged.
My hair stood on end when I heard what Deputy Mitchell had to say. I agree with him. The message should go out loud and clear from Dáil Éireann that if this Bill is brought in, the farming community and the self-employed will be included and that loopholes as regards non-payment will be plugged. We should join forces to stamp out this abuse. No section of the community should say they will not pay and that the PAYE sector will have to carry the can. We can stamp out this abuse very easily under the regulations. That is another reason I supported the extraordinary level of regulations in this Bill by comparison with other Social Welfare Bills. Those regulations should be used to close loopholes and the self-employed should be told that if they do not contribute to the scheme they will be pursued through the courts the same as anybody else who does not pay what he is entitled to pay.
The scheme cannot, and will not, succeed if any sector of the community is allowed to opt out because other people will have to pay, that is, the PAYE sector. There are many thousands of people in small businesses who are only making a living. They are not rich men by any means, but they have to contribute to this scheme the same as a farm labourer or a corporation worker who is taking home £95 or £100 each week to keep his family. We can make all the excuses we want. We can say this person or that person cannot afford to pay, but if everybody pays his fair share it will be cheaper for all.
I take the point raised by a number of Deputies that we do not know what the outcome of this scheme will be. This is a new ball game. Every new pension scheme ever introduced in the commercial, industrial or any other sector has to be constantly monitored and reviewed because there will be problems. There will always be the sharks who try to beat the system and the regulations have to be strong enough and fair enough to deal with that minority.
I do not believe this debate is about the difference between farmers and industrial workers. I welcome this Bill because for the first time we have legislation which to some degree brings the industrial worker. the farmer and the self-employed under one umbrella. It is a great pity that this cannot be done in all walks of life. The farmers should not use their political muscle to get what they want. If they do, industrial workers, and those in the PAYE sector will have to ask themselves, "what is the point in us paying if the self-employed and the farming community are not prepared to pay their fair share"? Most of the self-employed are in favour of this proposal. As a result of consultations I had with some of them I am satisfied that the 3 per cent, 4 per cent and 5 per cent is acceptable to them. A small minority are advocating that they should not have to pay anything but they should not be allowed to influence or dictate to Dáil Éireann.
It is not often I agree with my colleague from Louth, Deputy Bell, but having listened to his contributions in the debate I can agree with most of what he has said. Like Deputy Bell I welcome the decision to have a statutory review after three years. I accept that we will have an opportunity to review the scheme when dealing with the Estimate for the Department but it is important that the Department should monitor the scheme. In effect, we are looking into a crystal ball to try to discover whether we will be in the black or in the red in 50 years time but, as Deputy Dennehy said, we will have to take the plunge at some stage. I understand that we are one of the few west European countries whose self-employed are not liable for PRSI.
It is important that people at the end of their working life should get a pension. It is important that they should know they will be paid a minimum sum to help them make ends meet. Very often it is pointed out to me that those who contribute all their lives to such a fund get a certain return when they retire while a person who retires here after working in England, having invested his or her money, is entitled to a non-contributory pension once he or she proves they are entitled to it. The decision to extend the scheme to the self-employed will eliminate a lot of the means testing for contributory pensions and that is to be welcomed.
The Minister has mentioned a figure of £360 million after ten years and the Government have set the rate of contribution at 3 per cent, 4 per cent and 5 per cent over the next three years with a promise of a review then. Last weekend I received a deputation of farmers who saw this as the thin end of the wedge. I do not know if it is but I am happy that a review will take place after three years. The Government will have a better understanding of how the scheme is progressing and will be better able to give details of the position in regard to widows and orphans pensions.
The National Pensions Board suggested a figure of 6.6 per cent but acknowledged that the figure would have to be based on the ability of people to pay. The decision to taper the contributions was a good one. If those being brought in under the scheme were to be hit with a big demand in the first year they would find it difficult to make ends meet. The Minister has adopted the best system. At a later stage the rate may be increased to 6.6 per cent, or higher.
Opposition Deputies have placed a lot of emphasis on reports by economists questioning the Minister's figures. The Minister has responded to those queries but to date nobody has challenged the figures he has put forward.
The Minister's figures have been challenged.
The figures have not been challenged and they cannot be questioned.
The Minister should go back to the National Pensions Board for an up-to-date report.
All we have is a deafening silence.
The economists, who criticised the Minister's figures, have gone to ground. If their figures are correct they should have questioned the Minister's figures but they have not done so because their figures were based on wrong assumptions.
The Minister's figures were based on unearned income and on raising the ceiling from £15,500 to £16,200. I agree with Deputy Bell that some people will do everything possible to avoid paying their contribution. For that reason I welcome the decision to change the collection system. Too many people are not paying their health contributions or the youth employment levies. They are not being pursued in the courts because the amounts involved are small. I agree with the proposal put forward by the Minister that the Revenue Commissioners should sue for tax, youth employment levies and health contributions in the one action rather than making separate applications to a court or seeking warrants in respect of one sum that is outstanding. I do not agree with instituting separate proceedings for the different levies. This is the first time that the Revenue Commissioners have been brought into this and I think the move will prove worthwhile.
The decision to introduce self assessment for the self-employed was a good one. The estimate issued by the Revenue Commissioners to the self-employed will include the contribution to the new fund, and other levies. That is one way of ensuring that the money owed is collected on time and not left outstanding for years. Deputy Mitchell alleged that the scheme would cost millions but I do not accept his figures. Most Members have accepted the Minister's figures of £50 million annually which is very conservative. Even economists agree with that figure. Rates of 3, 4 and 5 per cent over the next three years are reasonable and I do not think anybody will quibble with them.
Last week I received a deputation of farmers. I was not invited on to the rostrum in Castlebellingham but that may be due to the fact that I do not represent as many farmers as Deputy Bell.
I will send them all to the Deputy next week.
This deputation came in and I took the wind out of their sails. They had not known until then that they would get the benefit of a widow's pension and an orphan's pension after three years. One or two were astounded at that. Obviously, they were not given the correct information. They then had to acknowledge that the rates of 3 per cent, 4 per cent and 5 per cent were reasonable. What they were worried about was that in three years' time or later on it might increase to a higher figure. We all have to acknowledge their fears. However, it will not go out of all proportion; it cannot. The Minister and the Government have shown that the National Pensions Board came up with a figure of 6.6 per cent. Obviously, there are other elements in that that they have to take into account, such as ability to pay and ensuring that it is reasonable in the circumstances, given the economic state of the country. Everybody who is involved with this, by and large, is in agreement with the extension. We quibble about the rate of payment but a medium has been agreed upon and that should be accepted by all in this House.
I want to make a few points on this amendment. First, it is clear that it was unfortunate we had not the time on Committee Stage of the Social Welfare Bill to discuss this area because of the guillotine that was applied yesterday. Many of the questions being raised on this section should have been answered by the Minister but he will not have an opportunity to do so because we are now on Report Stage. The question of a backlash was referred to by Deputy Enright. To my way of thinking, and as expressed by a number of other Deputies, if the backlash is to come at all it will come from the PAYE sector because they, at the end of the day, will carry any additional burden that might arise from this scheme. It will have to be drawn from general taxation.
The point has to be made that what has been proposed here is quite a generous scheme for the self-employed and the farming community. There is a limit to the income which can be taken into account after taking out all the exemptions. There is a limit on the earnings, which can be assessed for these contributions — I think it is about £16,000. It will be 3 per cent of £16,000 at a maximum. People cannot be asked to pay any more than that. It is reasonable to assume that anybody who, having taken all the discounts and exemptions into account, still has reckonable earnings of £16,000 is not a poor person by any means and can well afford the £9 a week which 3 per cent would work out at on earnings of £16,000.
I am a voluntary contributor to the social insurance fund. I was a Class A contributor for very many years before I came into this House. My sole income is the income that I get from this House. My contribution on social insurance is 6.6 per cent up to, I think, the first £15,000 and 1.9 per cent on £500 after that. It would be reasonable to expect other categories who are being brought into this scheme to pay at least that level of contribution. I do not claim for a moment that the contribution I am paying is insignificant — it leaves quite a hole in my income — but I have been advised by those who know the ropes in relation to pension schemes and bonuses that the value I will get at retirement age is far ahead of anything that I might get if I did not pay it and put the same amount of money into a private pension scheme. There is no comparison between the two returns.
I do not accept there can be an argument that people are concerned that if it was fixed at 6.6 per cent that would be an unwelcome burden on those who would have to pay. There is a maximum this year of 3 per cent on £16,000 which works out at about £9 a week. If you are in the tax net but have no tax return, the minimum amount payable is £208 which is £4 a week and those who are outside the tax net, who do not have to make a tax return, simply have to pay £2 a week. That is a very good deal in anybody's language. What I am arguing is not to eliminate the £2 or £4 a week, but simply to ensure that those who have significant incomes will pay a rate at least in line with the PAYE employee and the voluntary contributor, one of whom is myself.
It has been argued that the self-employed and the farmers should be equated in terms of rates of pay with the employee. It is said they contribute something around 2.4 per cent. That varies up and down. It is a fairly arbitrary figure in any event, not a specific calculation of X number of percentage points which an employee or employer pays into a pension fund per se. Leaving that aside, perhaps it would be fairer to argue that the amount which the Exchequer has to pay into the fund in order to subsidise the pensions should equate for the employee and the self-employed.
That would take about 20 per cent.
I understand from the pensions board that it would work out at about 11.6 per cent, that is, if my reading of the report is correct. I am not even arguing that that should be done because I can see it might be an unfair burden. In terms of equity, the 6.6 per cent should be plumped for.
Deputy Bell is a little too generous in accepting that the figures arrived at were purely on the basis of actuarial figures, that the 3 per cent, 4 per cent and 5 per cent were calculated on a mathematical basis and that political considerations had no part to play. The 3 per cent is quite close to the figure which employees pay at the moment and it seems that was the figure the farmers and the self-employed were looking for. In order to defuse the opposition which could be expected to be mounted from the IFA and various other organisations of the self-employed against this measure, a lower figure was agreed on to start with. I can understand when the Minister talks about having a pragmatic approach why he did so, but I do not accept, in fairness to the rest of the community, to the people who pay the vast bulk of taxation, that we should pander in this way to the self-employed and the farming community. It is not a huge burden and the value which they will get at the end of the day in return for what they pay in will be way beyond the amount which will have been paid in.
There is one final point I wish to make. It is one which has not been referred to at all by any other Deputy, as far as I am aware. It arises in the report of the pensions board. It is that unless the self-employed are treated as the equivalent of both employer and employee for the purpose of PRSI contributions the self-employed will be at a competitive advantage in the labour market. Let me quote the National Pensions Board's statement:
. . . there will often be a choice between employing an employee to carry out a particular duty, or else contracting with a self-employed person to do so. Clearly there is no good reason why the choice should be other than neutral from the income tax and social insurance aspect, which in turn implies that the self-employed person should also assume responsibility for the employer's contribution that would otherwise be avoided.
That is a point worth keeping in mind when we are considering this matter.
Deputy Mitchell made a case in relation to switching a PRSI contribution based on income to a levy based on turnover on the basis that it would assist employment. If we fail to ensure that the level of contributions paid by the self-employed is at least in line with that of the employer-employee combined in relation to this matter, we will be giving the self-employed a competitive edge in the labour market. More and more people will be made redundant by firms and reemployed as contract labour which, in turn, deprives the contracting person of cover under a whole range of social legislation. For that reason I wish to press my amendment.
Is the Deputy pressing his amendment?
Yes.
I am putting the question: "That the words proposed to be deleted stand."
Vótáil.
Will the Members who are claiming a division please rise?
Deputies De Rossa, McCartan, Mac Giolla and Sherlock rose.
As fewer than ten Members have risen, in accordance with Standing Orders I declare the question carried. The names of those Members dissenting will be entered in the Journal of the Proceedings of the Dáil.
Question declared carried.
We will now proceed to deal with amendment No. 6 which was discussed with amendment No. 5. Is the amendment being pressed?
Yes.
I move amendment No. 6:
In page 8, to delete lines 35 to 49 and substitute the following:
"(i) with effect from 6th April 1998, to be of an amount equal to 6.6 per cent of the reckonable income or the amount of £208, whichever is the greater.".
I am now putting the question in respect of amendment No. 6.
Question: "That the words proposed to be deleted stand" put and declared carried.
I move amendment No. 7:
In page 9, line 36, after "contributors" to insert the following:
"and none of the entitlements, which would otherwise accrue arising from self-employed contributions made under this Act, shall accrue until the Minister arising from the review, tables before both Houses of the Oireachtas an actuarial report showing that over a 40-year period, the net outlay of the Exchequer on all old age, widows' and orphans' pensions will not be increased over and above the outlay that would have occurred had not self-employed contributory pensions been provided for under this Act and, if arising from this actuarial report, it is decided on grounds of cost not to continue with the self-employed contributory pension scheme any contributions made shall be rebated.".
We have already had an extensive discussion on the question of pay-related social insurance for the self-employed on amendments Nos. 5 and 6. Therefore, and in view of the short amount of time remaining I will just formally move the amendment and ask the Minister to accept it on the basis that it would give him an opportunity to vindicate his claim that his proposal will not cost hundreds of millions of pounds in the future as I contend it will.
The purpose of the proposed amendment is to ensure that the introduction of social insurance for the self-employed would not give rise to a net increase in the burden on the Exchequer in financing social welfare. However, the manner of achieving this aim as proposed in the amendment would be unacceptable on a number of grounds. It would create uncertainty for contributors and would introduce a serious degree of uncertainty into the system as far as self-employed persons are concerned. Those who paid contributions in the early years would have no guarantee that these contributions would ultimately be reckonable for social insurance pensions. They would not know whether they would have to settle for a refund of the contributions paid. As a result, persons with private pension cover would be left in a position of not knowing whether and to what extent they should adjust their level of cover to take account of the social insurance entitlements they would be acquiring. Others would be left in a position of wondering whether it would be necessary to take out private pension cover and, if so, what level of cover they should obtain.
The second reason is that it could have a negative effect in relation to compliance. Contributors might be reluctant to make their contributions or might delay paying them until they were sure that such contributions would be reckonable. This in itself could have such an effect on the contribution income that it would not be possible to forecast with sufficient accuracy the ultimate net cost of the scheme to the Exchequer.
The third reason is that it would have an effect on individual claimants and it would also have a serious effect on them at a time when they would be vulnerable. For example, a widow whose husband had previous insurance as an employed person and who with the addition of the self-employed contributions paid prior to his death would qualify for a contributory pension could have to spend up to two years not knowing whether such pension would actually be payable. Similarly, self-employed persons with previous insurance on reaching the age of 66 would also have to undergo a period of such uncertainty. This would be contrary to the basic aim of the scheme and social insurance generally which provides guaranteed benefit if the contributions and other conditions laid down are satisfied.
The review provided for would enable the Government to determine what the financial implications of the new scheme would be for the Exchequer. It would then be possible to make whatever adjustments were necessary and these would operate over a 47 year period. The outcome of the review could be no change or, if changes had to be made, an adjustment in the rate of contribution or in the level of future increases in the benefit or some combination of both. It has to be emphasised in this context that there would be no additional cost to the Exchequer in absolute terms for at least 13 years and that in the early years of the scheme the Exchequer would benefit significantly. Deputies on all sides of the House have recognised this fact. Accordingly, there is plenty of time and scope to make whatever adjustments may be necessary to ensure that the cost to the Exchequer of the proposed scheme over the 50 year period referred to in the National Pensions Board's report would not exceed the cost of continuing the present arrangements.
Given such a timespan the short term safeguards provided for in the proposed amendment are not necessary. Apart from all the other considerations which I have referred to and which would be damaging to the scheme, any adjustments would be of a minor nature. The homework has been done by the National Pensions Board, by the Revenue Commissioners, by the Department of Social Welfare and by the Government. All have done their homework on this scheme. Actuarial studies have been carried out by the best experts in Ireland who have high international standing. The Revenue Commissioners have estimated the income and they are conservative estimates. I emphasise again that the estimates on the income side are conservative. I support them and so, too, should this House. We are introducing a major scheme and we must have confidence in our own experts, in those who serve us within the public service and in those from outside who have assisted us in the work we have done. We must have confidence in them and there is plenty of time for review.
There is no need for this amendment which has been put forward by Deputy Mitchell. It would have the effect of undermining confidence in the scheme. I have confidence in this scheme and I am happy that the scheme is more or less right at this stage. I think other Deputies recognise that we should go ahead and get this scheme up and running and see how it will perform. We have our own experts and rely on them. We will continue to rely on them. In that context, since we are coming to the close ——
On a point of order, I was deliberately brief in my comments. Will the Minister not show me the courtesy of allowing me time to reply, even for a minute? The Minister is going on at great length.
The point I wish to make at this stage is that I want to thank all the contributors for their contributions. It was a very valuable debate on what turned out to be a major Bill despite some of the concerns of Deputies about the importance of the Bill. I thank all the contributors and especially the officials in my Department who put so much work into it, the officials on whom we in this House rely so heavily. Their work is of a high standard.
As it is now 5 o'clock I am required to put the following question in accordance with the order of the Dáil of this day in respect of Item No. 16, Social Welfare Bill, 1988. The question is: "That Report Stage is hereby completed and the Bill is hereby passed."
Question put and agreed to.
I want to put on the record——
The matter is disposed of now, Deputy.
—— that I am totally opposed to Part III of the Bill. We are entitled to make that objection.