Dáil Éireann debate -
Wednesday, 15 Mar 1989

Vol. 388 No. 4

Social Welfare Bill, 1989: Committee Stage (Resumed).

Debate resumed on amendment No. 10:

In page 6, before section 6, to insert the following new section:

"6.—Where, under the provisions of section 50 (1), 51 (2), 81 (3), 86 (3), 91 (3), 95 (2) or 103 (2) of the Principal Act an increased rate of payment in respect of a prescribed relative is payable, such payment shall be made directly to such relative.".

—(Deputy J. O'Keeffe).

Mr. J. O'Keeffe

Now is the time to take a major new initiative in relation to those caring for elderly relatives at home. The purpose of my amendment is to ensure that the prescribed relatives' allowance which heretofore had been paid in addition to a pension to an elderly relative should now be paid direct to the carer. I hope that in time we will have a situation where the qualification for this allowance will be extended and that the allowance — at present £28 — will be increased at least to the minimum of the supplementary welfare rate. The prime change needed is to ensure that the allowance is paid direct to the person providing the care.

I had a reply yesterday from the Minister for Finance to a question I put down on this issue. I asked him whether the prescribed relative's allowance payable to a person in receipt of an old age contributory pension who was being cared for by a relative is assessable for income tax purposes when calculating the income of the person in receipt of the pension. I had come across a case where an elderly pensioner who was being cared for by a relative was being assessed for income tax on the small additional amount being paid as well as his contributory pension.

The reply I received yesterday from the Minister for Finance shocked me. He stated that the Revenue Commissioners have advised him that the prescribed relative's allowance is paid as an increase in certain taxable social welfare pensions, including contributory old age pension, and as such forms part of the taxable income of a recipient. If any additional corroboration was required of the need for a change, this certainly provides it.

I urge the Members of this House and the Minister in particular very strongly to make this major change. It is now 21 years since the prescribed relative's allowance was introduced and now is the time to ensure that it is paid to the prescribed relative. It is right and proper that elderly and incapacitated relatives should, if at all possible, be cared for at home. The change I am proposing would encourage that development and is an additional reason to support the change. Accordingly, I commend the amendment to the House.

Miss Harney

I would like to support the amendment and if Deputy O'Keeffe presses his amendment the Progressive Democrats will vote for it. At a time when it costs up to £1,200 per week to maintain a geriatric patient, of which there are many, in an acute hospital we need to do everything to encourage care within the community, and in particular care within the family. This would be better for the person concerned and cheaper as far as our social welfare and health services are concerned. It is a disgrace that for so long we have not recognised the role of carers in maintaining people who are not able to look after themselves in their own homes and for keeping them in their own homes in a more humane and caring environment.

Many organisations, such as the National Council for the Aged, who are concerned about this issue have for a long time urged that greater recognition be given to the role of those looking after elderly or sick relatives. It is not open to us in an amendment to suggest an increase in the prescribed relative allowance — and Deputy O'Keeffe said if he could he would have done so — as a first step in recognising their unique role and the great care they give to members of their families. The State should go down the road of paying this allowance directly to the person concerned. I would be interested to hear the Minister's comments on this because, except for the financial implications in the future, I cannot see any argument for not paying the allowance directly to the person concerned.

Last evening Deputy O'Keeffe gave the example of a tax bill arriving in relation to this payment. That is very strange and very wrong. Many people would be prepared, with some small recognition from the Department of Social Welfare, to cease employment and stay at home to look after an elderly parent, brother or sister as the case may be. Given the health care and the care generally which would be provided, and particularly the financial savings which would accrue if this measure were to be introduced, this would be a welcome change and one I would like to see us give due recognition to. Perhaps the Minister will accept the amendment, but if he does not and it goes to a vote we will be delighted to support it.

Mr. Bell

I share the sentiments expressed by Deputy Harney. As the Minister is aware, I raised this matter both last year and the year before. If I recall correctly, the Minister indicated that he would give consideration to this proposal which I raised on the Second and Committee Stages. I share the view that this money should be paid to the person providing the service. I do not see any logic in paying it to the elderly person because at present it is deemed to form part of their individual allowance and effectively amounts to a payment for services provided by another person. It is that carer who should be given the payment. The necessary safeguards would have to be introduced to ensure that there would be no abuse — I think the Minister referred to this issue last year. Like Deputy Harney, I appeal to him to accept the amendment. If Deputy O'Keeffe puts it to a vote, we will have to support it.

Proinsias De Rossa

I too support this amendment. It proposes to transfer the money paid to a pensioner at present in respect of care provided by a relative at home to the carer. This would be an important change primarily because of the dignity it would confer on the carer. Mainly women take on the job of caring for elderly relatives. It has to be said that, even if we were to agree to this change and I hope the Minister will, people who find themselves in this position cannot live on dignity alone. It is proposed to raise the allowance from £27.30 to £28, but this sum is not adequate to live on. A woman who provides this care even if she has adequate contributions, is not entitled to unemployment assistance or unemployment benefit, and a whole range of other benefits she would be entitled to receive if she chose not to be a carer. This is not acceptable given the alternative costs which would be imposed on the Government if all these women were to withdraw their services and the consequent costs of providing care in institutions, as well as the actual rights of the individuals concerned.

While I agree with the concept of community care, in this country this largely means care by women in the home. Not many back-up services are being provided for women who find themselves in this position. It is true there is a skeleton service of nurses who call, but their workload is so great that they can make only a limited number of visits to a home where a sick elderly person is being cared for. A woman who cares for a relative on, virtually, a 24 hour basis needs a holiday break at various times of the year. I am aware that in some parts of the country a very good service is provided in this regard, but in other areas such a service is non-existent and no respite is given to the women concerned.

There are many factors involved in this issue and, as I said, I fully support the amendment which proposes that the money paid at present to the claimant should be paid directly to the carer. The amount of money being paid and the back-up services provided for carers need to be seriously examined.

Mr. Dempsey

I agree with much of what has been said in relation to this allowance. It is mysterious that the person who is caring for the elderly person, the carer, should not receive the allowance. Some of these people give up jobs to look after elderly members of their families. With so much emphasis now on community care in general, we should change to a system of making the payment to the carer. Community care should be provided primarily by family members. If this allowance were paid to the carer, the family member, that would be a move in the right direction, a real move towards underlining the emphasis we place on community care.

The aspect Deputy O'Keeffe mentioned about tax had not occurred to me. I was not aware of it. Again it underlines the need for a change immediately and I hope the Minister will be able to undertake to make that change in the Bill. With other Deputies I see this as a very valuable first step. The rates of allowance could be looked at in future Bills. There is a double argument here. We are saving money by paying this allowance to the carer and possibly cutting down on the bill for care of geriatrics in institutions. We save also in that if the allowance is attractive enough the carer will opt for the prescribed relative's allowance and possibly will opt out of receiving other higher payments he or she might be entitled to.

I support these moves and urge the Minister, if at all possible, to incorporate these changes into this Social Welfare Bill.

Mr. O'Dea

I want to say a word in support of what Deputy Dempsey said. I see a great deal of sense in this proposal. Against that there is a very powerful incentive for the person in receipt of prescribed relative's allowance to hand over the allowance to the person caring for him or her. Deputy O'Keeffe is no doubt aware that if the person in receipt of the allowance does not hand over to the person looking after him or her, a sum at least equivalent to the amount of the allowance, that person can approach the local labour exchange and make the point that he or she can no longer afford to look after the prescribed relative, that they are now available for work and actively seeking work. That would entitle the person to unemployment assistance. Therefore, there is an incentive for the person getting the money to hand it over to the person who is looking after him or her. On balance it would make more sense if Deputy O'Keeffe's proposal were adopted, but I have no particularly strong feelings on it one way or the other because the incentive is there when the person can claim unemployment assistance. If he is not getting the prescribed relative's allowance he can then claim unemployment assistance which I understand is higher.

Proinsias De Rossa

It is difficult to prove.

Mr. J. O'Keeffe

They would not be available for employment. That is the problem.

Mr. O'Dea

They could be available for employment if they said they were no longer caring for the prescribed relative, were actively seeking employment and produced evidence to that effect.

Proinsias De Rossa

I have found it is quite difficult to prove to a social welfare officer that a person is available for work when the social welfare officer knows that person is living at home with a parent or other relative who needs care and has in the past been providing that care, and the relative is in receipt of prescribed relative's allowance. It would be far better for this allowance to be paid directly to the carer.

Miss Harney

In the main when people, particularly elderly people, receive a payment themselves they regard it as their own. The Deputy is asking members of families to enter into argument with perhaps sick elderly people——

Mr. O'Dea

No, the Deputy is misrepresenting what I said.

Miss Harney

That would be the consequences of the Deputy's suggestion that they should go to the employment exchange and say they are not receiving the allowance and therefore are available for work. They do not wish to do that. They wish to receive the allowance in their own right, and in my view they are entitled to do so. Therefore, I think it unreasonable to put them to the trouble of having to go to the employment exchange and say they are available for work because they are not getting their due prescribed relative's allowance. It would be much more sensible if they were paid what is their due regard directly by the State.

Mr. M. Brennan

I agree with my colleagues here. People caring for prescribed relatives should try to get the allowance for themselves. I urge the Minister to try to give the prescribed relative's allowance to bachelor farmers in particular who live with their fathers or mothers and who have almost no income. They probably had an income on unemployment assistance but the social welfare officer may have gone to them and found that their means were in excess of the guidelines. I am talking about very small farmers. Their income from farming does not have to be very much to put them over the limit which is approximately £45 per week. Any bachelor who is looking after his father or mother and running a small farm is entitled to prescribed relative's allowance because of his small income. I ask the Minister to speak to social welfare officers in this regard and to ask them not to be so hard on these people. By caring for their parents, they are keeping them out of institutions. Consequently, they are saving the State money. I ask the Minister also to provide that people who qualify for the prescribed relative's allowance qualify also for the free electricity allowance. The people I am talking about are debarred from this allowance by reason of the small incomes these bachelor sons derive from farming.

Mr. O'Donoghue

I agree strongly with Deputy Brennan on this. The scope of the prescribed relative's allowance is far too narrow. The scheme could be usefully employed to save the Exchequer moneys. There are considerable numbers of people in public institutions today at considerable cost to the State who would perhaps be maintained at home if people close to them were in a position to maintain and care for them at home. I suppose it is easy to say these people should do that anyhow but very often, particularly in rural Ireland, one finds the people concerned, the relatives, have extremely low incomes and have to work at least a few days a week outside the home to supplement their incomes. More often than not, therefore, they are in no position to give full time care and attention to a very close relative. It is nonsensical when one considers that for perhaps an additional £30 a relative could be maintained at home for a full week whereas that relative could be in an institution at the expense of the State at a maintenance cost of not £30 a week but a minimum of £30 a day. I urge strongly the payment of the prescribed relative's allowance to people who are caring for their relatives and find themselves unable to maintain them out of their own resources.

Mr. Bell

Are we dealing strictly with the amendment? I want to make a comment on the section.

An Ceann Comhairle

We should deal with the amendment first and we shall have an opportunity on the section proper at a later stage.

Minister for Social Welfare (Dr. Woods)

Obviously this is an area which interests Deputies generally. One might ask why nothing has been done about this for some 21 years since the scheme was introduced. It was introduced in a very particular way. The relatives were described very clearly and the circumstances were clearly defined and limited. This morning's discussion shows that Deputies see a lot of other things associated with it and, of course, I see these things as well. Deputy O'Keeffe pointed out that there is really a need for a carer's allowance. This is not as broadly based as a carer's allowance which would obviously be much wider. The number of people who would be covered, the additional cost and the fact that the payment is a supplementary payment would have to be considered. When we see these parameters we can understand how over the past 21 years it has never been paid directly.

If the prescribed relative's allowance is paid to the pensioner then the pensioner has at least some leverage and control in ensuring that the care is provided. This must be borne in mind. The State does not have the continuing control. That is another reason it is paid specifically to the pensioner, who would have control of it in the first instance. I know that among my own backbenchers and Members on the other side of the House there is a wide interest in having even this payment paid directly. It is paid to a brother, a sister, a half-brother, a half-sister, a son, a daughter, a step-son, a step-daughter, a grandson, a granddaughter, a son-in-law, a daughter-in-law, a nephew, a niece, a brother-in-law or a sister-in-law of the pensioner. The prescribed relative must not be a married person who is wholly or mainly maintained by a spouse.

Various criticisms have been made of the scheme. They include the claim that many pensioners who require constant care and attention do not receive the allowance because entitlement is conditional on care being provided by a prescribed relative. Married persons who are wholly or mainly maintained by a spouse cannot qualify as prescribed relatives for the purpose of the scheme. Although the allowance is only payable where the prescribed relative is not engaged in employment outside the home and in receipt of, or entitled to, any other benefit, pension or allowance from the Department of Social Welfare, the rate is a restricted rate, which will be £28 from July.

The scheme is open to further extension and further cost. Deputy O'Keeffe's amendment is put in such a way that it does not in itself involve additional expenditure. As far as cost is concerned, it makes no difference whether the prescribed relative's allowance is paid to the pensioner being cared for or to the person providing the care, apart perhaps from some minor additional administrative cost. It would require additional pension books to be prepared for the prescribed relatives. It is clear from what Deputy O'Keeffe had to say that while his amendment confines itself to this aspect, he also has in mind other changes in this scheme He referred to the low level of the allowance, and to the need for improved arrangements to assist people in keeping elderly relatives out of institutions. Any discussion of the prescribed relative's allowance scheme inevitably raises the broader question of payments to people looking after elderly relatives generally and the need for improvements in this whole area.

The prescribed relative's allowance scheme is quite restricted in its application. It is an increase in pension payable to pensioners who are incapacitated and who need full-time care and attention. The care and attention must be provided by a prescribed relative who must not be engaged in employment outside the home, must not be entitled to any other benefit or allowance and must not be a married person being maintained by his or her spouse. The purpose of the allowance is to provide some degree of support to a pensioner towards the additional cost of having a relative in the household. In this regard it is akin to an increase in pension for an adult dependant. It was never intended as compensation to the relative for the service which he or she is providing. It is based on need and not on providing payment for services rendered.

A recent report commissioned by the National Council for the Aged estimated that there are currently some 24,000 elderly persons living at home and requiring full-time care and attention. The number receiving the prescribed relatives' allowance is about 2,000. The council have recommended that where an elderly person is medically certified as requiring full-time care and attention an allowance at the same rate as the prescribed relative's allowance should be payable, irrespective of who provides the care and attention. Secondly, they recommend that persons providing full-time care who but for this would be eligible for unemployment benefit or assistance should be entitled to the equivalent of these payments as a right. Clearly, these recommendations would change the whole nature of the existing arrangements and would have very significant financial implications. They would involve two payments, one to the pensioner and another to the carer.

The Commission on Social Welfare took a different approach. They recommended that the prescribed relative's allowance be replaced by a social assistance allowance payable directly to the carer, which would be at the same rate as unemployment assistance. It can be inferred from this that the commission's approach was that the allowance should be based on need and not be a payment for services. This issue will have to be addressed also by the National Pensions Board in the context of their examination of pension arrangements generally.

I have not come to any final conclusions as to how the prescribed relative's allowance scheme should develop in the future. I am satisfied, however, that we need to reappraise in a fundamental way the role of the scheme in the context of arrangements generally for looking after incapacitated elderly people. In the light of the various reports on this matter, I hope to bring forward proposals in this whole area in the fairly near future. In the meantime, I am somewhat reluctant to make changes in the scheme pending a fundamental reappraisal of it. I agree there is a case in certain circumstances for paying the existing allowance direct to the carer rather than to the pensioner. I would be concerned, however, that it would not automatically withdraw the allowance from pensioners who already have it, as this might not be appropriate or desirable in all cases. What I propose, therefore, having listened to the various points made, is to bring forward an amendment on Report Stage which would give me power by regulation to pay the allowance direct to the carer in certain circumstances to be prescribed. The solution I have in mind is that for all new cases after a certain date the allowance could be paid to the carer but that for existing cases this would require the agreement of the parties concerned.

In any of the changes we have made, as Deputies will be aware, we have tried to include a saver so as not to upset people. That was done in the free fuel scheme and in other schemes. The purpose of the saver is to ensure that we do not do anything we would not like to see happening. It is probable that in most cases the option could be taken up. As Deputy O'Keeffe pointed out, it is true to say that the Revenue Commissioners consider the prescribed relative's allowance as an increase in what is a pension and is a taxable social welfare payment. As such it forms part of the taxable income of the recipient and, therefore, stands to be taxed. In many cases it is not taxed but where the question is raised it has to be taxed. The change will be of benefit to the pensioner and will be welcomed.

I agree with the principle in Deputy O'Keeffe's amendment. He recognises that there is widespread agreement about it in the House. If he agrees I will bring forward an amendment on Report Stage to make the changes he has in mind. We will have to look into this to see how we will make arrangements for those who get the allowance at present.

Mr. J. O'Keeffe

In some ways we are witnessing a maturing of the parliamentary process. It is refreshing that a well argued case from the Opposition for constructive change can secure all-party support, including that of the Government party. In the light of what the Minister has said we can embark on a new era where proper recognition can be given by way of direct payment to those caring for elderly relatives at home. The attitude adopted by the Minister confirms my faith in the parliamentary process. Since the principle I have proposed is acceptable to the Minister I am prepared to follow the course proposed by the Minister. The best procedure is to withdraw my amendment on the undertaking given by the Minister to bring forward on Report Stage an amendment covering the principle I have proposed.

Proinsias De Rossa

I should like to welcome the Minister's agreement to the principle proposed. I look forward to seeing the amendment by the Minister on Report Stage.

Amendment, by leave, withdrawn.

Amendment No. 11 not moved.

Proinsias De Rossa

I move amendment No. 12:

In page 7, after line 52, to insert the following subsection:

"(3) Where the Minister proposes to make regulations under this section, a draft of the regulations shall be laid before each House of the Oireachtas, and they shall not come into effect until a motion approving of the draft has been passed by each such House.".

I should like to refer to the fact that amendment No. 11 was ruled out of order on the basis that it would impose a charge on the State, a matter I will deal with when we are debating the section. In amendment No. 12 we are proposing that the regulations which the Minister makes under section 6 be brought before the House for debate by the House by way of a positive motion. Section 6 provides for allowances for widowers and deserted husbands. I have raised this matter on a number of occasions. Most regulations made by Ministers are by way of a negative motion. That means that the Minister makes the regulations and then puts a motion before the House to the effect that unless the regulations are annulled by the House they will stand. The effect of that is that there is no option for Deputies to move a motion to annul the regulations. It can only be done in Government time of Private Members' time. Clearly, such a motion would not be moved in Government time because it would be a Government Minister who would be proposing the regulation. Private Members' time is so scarce and sought after by the various parties that it is impossible to have a motion of that type moved in Private Members' time. The reality is that parties like The Workers' Party do not have access to Private Members' time and, therefore, cannot move a motion.

In view of the importance of this new section, and of the amendments to the social welfare system, the Minister should introduce any regulation under this section by way of a positive motion. In other words, I want the regulations approved by the House and that would require a discussion and a vote by the House. I have made that suggestion in relation to other Bills and pointed out that I do not expect that every regulation should be brought before the House by way of positive motion because, clearly, that would mean that we would spend all our time approving regulations. However, in this instance the issues involved, and the way the section will be implemented, are so important that it would be worthwhile for the Minister to bring the regulations before the House for debate and approval.

Mr. Bell

I support the sentiments expressed by Deputy De Rossa. It may be said that the various regulations are listed on the Order Paper when they are made by the Minister concerned but I do not think that is good enough. Members must read the Order Paper and try to secure copies of the regulations. Usually it is possible to obtain copies of regulations from the Library but the position is not that simple at local level. When social welfare recipients are debarred from receiving benefit under regulations they approach Members at their local clinics to question the decision and the Member must go to the local employment exchange to ascertain under what regulation the payment was stopped. I suggest to the Minister that copies of social welfare regulations should be circulated to Members before or at the same time as they are issued to local employment exchanges. I do not think it is right that when a constituent raises a question with a Deputy about a regulation the Deputy must go to the local employment exchange to get the information. Members, who are responsible for making the laws, should be given all relevant information about changes in regulations. It would be a simple matter of putting copies of the regulations in the post boxes of Members. In my view that would meet, to some degree, the points raised by Deputy De Rossa.

The Minister should bear in mind that some of the regulations made in the last two years have affected the entitlement of social welfare recipients. I am asking the Minister to undertake to instruct his officials to make the regulation orders available to the Members at the same time as they appear on the Order Paper.

Dr. Woods

I am opposed to the motion because it could create practical difficulties. It is a motion that is normally suggested by financial administrators who are concerned to prevent me from straying too much and being too flexible in looking after the people for whom I am responsible. I know that is not the Deputy's intention in this case.

On the question of ensuring that people are aware of the regulations which are made in social welfare generally I would like to assure the House that before a regulation goes anywhere it is laid on the Table of the House.

Mr. Bell

I know that.

Dr. Woods

It may turn up in the newspapers the next morning but the Deputy can be sure it has been laid on the Table of the House the day before.

Mr. Bell

I accept that.

Dr. Woods

I could undertake that, at the same time as it is laid on the Table of the House, a copy would be sent to the spokespersons of the parties so that they are alerted.

Having a regulation which has to come before the House first to be approved is normally only done in extreme circumstances such as when there is a question of imposing a new liability, like increasing rates of contribution, or where civil rights are involved on the justice side. These special arrangements are made when there is concern that they might not operate very well in practice anyway.

Section 6 (2) provides that the new schemes for widowers and deserted husbands will come into operation on such day or days as may be fixed by order. In addition there are various other regulatory powers contained in the section which will be used to apply a number of the provisions of the widow's non-contributory pension scheme to the new schemes for widowers and deserted husbands. These include technical and administrative provisions in relation to the making of claims, the time and manner of payment of pensions, provisions relating to the recovery of overpayments, prosecutions and dealing with instances in which a claimant has an entitlement to more than one payment. The regulatory powers contained in section 6 will also be used to apply the disqualification provisions which exist in the case of the widow's non-contributory pension and deserted wife's benefit and allowances schemes to the new schemes for men. These provisions relate to cohabitation, residence outside the State, detention, legal custody etc.. Finally, the regulatory powers will also be used to specify the circumstances in which a man will be regarded as having been deserted by his wife for the purpose of entitlement to the new deserted husband's allowance.

The amendment proposed by The Workers' Party, amendment No. 12, would mean that all of these regulations would require a motion of approval by each House of the Oireachtas so it would be administratively quite inflexible, would require a good deal of time and could cause a great deal of delay. I do not accept that there is any need for this amendment. Most of the matters to be covered by the regulation are technical administrative provisions which, incidently, are already being applied in the case of widows and deserted wives. I would also point out that the regulatory powers relating to the existing schemes available to women do not require a motion of approval. If we were to do this we would be saying that in relation to schemes for men we have to have a motion passed by both Houses whereas this would not apply in the case of women.

I have already outlined on Second Stage the principle features of the new schemes including the conditions of entitlement, the rates of allowance and the means of assessment which would be applied. As I have said, the proposed regulations will deal with technical administrative matters and the provisions of the regulations will be the same as those currently applied in the case of the existing schemes available to women. I do not accept, therefore, that there is any need for the proposed amendment. Finally, I would envisage the new schemes being brought into force by October next. I would be concerned that their introduction would be delayed in the event that the necessary regulations required a motion of approval. It is open to Members, if they do not agree with any of the regulations laid before the House, to come forward and say so and to have a vote on them. I appreciate that since Deputy De Rossa's group in the House is very small they might have difficulty in succeeding in such a motion; but that is the democratic arrangement. It is still open to the Deputy to raise the matter in the House or in any other number of other ways. If the Deputy had any difficulty in relation to any technical administrative measures I would certainly be prepared to listen.

Here we are dealing with a situation where we have a scheme that is operating satisfactorily. Our problem was that there were people who did not come within the scheme but who could benefit substantially from it and I am making the arrangements to bring them in under the same technical and administrative arrangements as apply under the existing scheme. There will be an opportunity at a later date to consider the whole question of the alone parents' allowance which is a much wider area with a lot of ramifications. At this stage I appeal to Deputy De Rossa not to press this amendment because it would make life more difficult for us in implementing the scheme and I am anxious to have it in as early as possible in October. I believe it is reasonable that the arrangements for this scheme should be similar to those which apply to women.

Mr. J. O'Keeffe

The debate on this amendment is interesting. It highlights the difficulty of reconciling the theory of parliamentary democracy with practical application. On an abstract level I would tend to favour the approach outlined by Deputy De Rossa and I understand his reasons for tabling this amendment. On the other hand, the case made by the Minister is fairly convincing, that because of the timetables in the House the result of strictly applying this approach might involve a failure to implement a progressive move. Therefore, in this case the practical arguments win. However, it would be helpful on this amendment or on the section if a few of the worries that some of us have about this particular scheme were put to rest by the Minister.

Perhaps I would just mention one matter which particularly concerns me. The regulations will relate to the new scheme of allowances for deserted men who are caring for children. I am glad this proposal is being implemented at this stage. I am concerned about the regulation which will specify the circumstances in which a man is regarded, for the purposes of the section, as having been deserted. I am concerned in particular about the grey area of men who may be separated from their wives by mutual agreement or because of mutual incompatibility and it would be helpful if the Minister could give an indication of the circumstances in which he proposes a man will be regarded, for the purposes of the section, as having been deserted. That would put a lot of our fears to rest. I hope the Minister will give a fairly liberal interpretation.

An Ceann Comhairle

I would much prefer to hold——

Mr. Bell

Are we now discussing the section?

An Ceann Comhairle

No, I was going to say that I would much prefer to stay with the amendment under discussion, No. 12. Let us dispose of that first. I wish to dissuade you from widening the matter at this stage.

Proinsias De Rossa

At this point I do not propose to press the amendment. I raised the matter because I am concerned that we do not have the opportunity to discuss regulations which are brought in by way of a negative motion. I made this point before and I hope to continue to make it. Some way has to be found for this House to deal with regulations which are brought in by way of negative motion. In theory, we have a system at present but it does not operate for all intents and purposes. I have been in this House for almost seven years and a negative motion has never been debated in that time. I know, from going back over the records, that a motion of that kind has not been debated in this House since 1973 or some such time; it goes back quite a long time. There clearly is a need to look at our procedures to see how this problem can be overcome. The only way I have of raising the matter is by introducing amendments for positive motions for regulations and Bills that come before this House.

I take the point the Minister has made that having positive regulations in relation to this matter could create more practical difficulties than is worthwhile. We do not know at this point what specific regulations the Minister will be bringing in. He said they will be of a technical nature, and that may well be, but technical regulations in this area affect very directly the way in which a person can qualify for or be excluded from a benefit. Various regulations have been introduced over the years which are of a technical nature but have the effect of confining benefits and assistance to particular categories or excluding particular categories from allowances and benefits.

I do not propose to press the amendment but I would urge the Minister to seek ways to have the regulations he is proposing to bring in discussed in some way.

Dr. Woods

I want to assure the Deputy that the technical and administrative arrangements and regulations will be broadly similar to those which apply to women at present.

Amendment, by leave withdrawn.

SECTION 6.

Question proposed: "That section 6 stand part of the Bill."

Proinsias De Rossa

I proposed two amendments — Nos. 10 and 11 — to section 6. Basically they proposed to convert the proposed widower's and deserted husband's allowance into a lone parent's allowance which would include widowers and deserted husbands and also would include single fathers who are caring for children. The single fathers could be unmarried fathers or men who have been divorced — obviously not in this State because we do not have divorce — in Britain or elsewhere. Because these people are divorced they would be considered as single.

I have a particular case in mind of a man who was divorced in England and was given custody of his child. He is an Irishman and came to Ireland to raise and care for the child because he felt it would be better to bring the child up here. That man found he was not entitled to unemployment assistance. He told the labour exchange, quite honestly, that he was caring for the child and they said they could not give him unemployment assistance because he was not available for work. He was told he could get supplementary welfare allowance, which he claimed and got, but found it was so inadequate for himself and his child that it was not possible to live on it. That man and his child returned to London. He is quite sore about the fact that he was unable to get an adequate income to keep himself and his child in Ireland. That is a specific case that came to my attention, but there are not too many individuals in that circumstance.

There is obviously the single parent's allowance which is paid to unmarried mothers, and I have argued in the House that that should be payable to men in the same situation. The Minister has indicated that that would have financial implications, and that is true to some extent. It has been quite difficult to locate statistics of how many men would be involved, but I got a reply from the Taoiseach to Question No. 46 of 7 March 1989 in which I asked him the number of households where unmarried and divorced men are caring for dependent children in the State and the number of children involved. The reply was:

Whereas the precise information requested by the Deputy is not available the following data from the 1986 Census of Population may be of help. The analysis is based on the family cycle coding of individual family nuclei as enumerated at the Census.

It goes on to say that where the marital status of the father is single, there are 83 families with children under 15 years of age and the number of children involved is 106; the number of families with some children under 15 and some over 15 is four, and the number of children is 13.

That gives a figure of 87 families — 119 children — of single men who are caring for children. If you include families with children over 15 years of age — they could be a lot older than 15, they could be in their twenties but some of them may be dependants — the number in that category is 23 and the number of children is 25. There is a total of 110 families of single men caring for children, and the total number of children involved is 144.

In regard to the divorced category, the number of families with divorced men caring for children under 15 years of age is 88 and the number of children involved is 136; the number of families with some children under 15 and some over 15 is 35, and the number of children involved there is 100. The total of those two categories amounts to 123 divorced men caring for children, with 236 children involved. Of the two categories, of single and divorced men caring for children — in some cases children under 15 years of age and in others over 15 — that is a total of 210 families and 355 children. If one includes the divorced category with children over 15 years of age then the figures rise to 330 families with 515 children involved. As a rough guide, if one includes the first two categories — those families with children under 15 and others over 15 — one is talking of expenditure of less than £1 million, or approximately £700,000 or £800,000, in order to pay the same rate as will be paid under the new deserted husband's and widower's allowance.

I know the Minister indicated that he was considering the implications of paying a lone parent's allowance which I very much welcome. However, he indicated that there were some complexities involved. There may be complications involved that I do not see at present, but I cannot see that it is any more complex than the issues involved in providing a widower's or deserted husband's allowance. If we are to ensure the kind of equality to which this State, at least in theory, is committed, then we should ensure that all men have the same rights and opportunities to raise their children, whether they be widowers, deserted husbands, divorced or single unmarried fathers. They should be given the same opportunity of rearing their children as mothers in similar circumstances. I would press the Minister for his views on the question of a lone parent's allowance.

By way of a general welcome for the provisions of section 6 I should say that the concept of a widower's allowance is long overdue. I have argued on a number of occasions on Finance Bills that widowed men are treated unfairly under our taxation system. They are also clearly discriminated against under our social welfare system. The same is true of deserted husbands. Probably there are not large numbers involved but, nevertheless, they do exist. There was a famous case of a Mr. Denis Dennehy in my constituency who took his case to the High Court seeking a deserted husband's allowance. Strangely enough, he failed in his case on the basis that our Constitution provided that the woman's place was in the home but did not provide that the man's place was in the home, which was an odd interpretation. Nevertheless, that is what our Constitution provides.

Mr. Bell

I might make a general comment on this section. The extension of these payments for one parent families to fathers is welcome as far as the Labour Party are concerned. The Minister will be aware that I raised this matter on every occasion on which we discussed a Social Welfare Bill.

The provisions of this Bill repeat the condition that the parent living with and caring for the children must be deserted by his or her spouse. That aspect needs to be examined. For example, under the present definition of "desertion" the other spouse must have left of his or her own volition. That involves proving to the Department of Social Welfare that the marriage had broken up, proving that it had not broken up by agreement but rather unilaterally on the part of one partner. In my opinion that is irrelevant to the financial needs of either spouse. Yet the difference in the terms of payment is substantial. For example, in respect of a lone man or woman bringing up two children there are payments of £74.80 per week under the new rates of deserted wife's or husband's allowance and £62 per week in respect of supplementary welfare allowance. I raised this matter before. I might bring to the Minister's attention again, that, effectively, the same conditions are enshrined in this Bill even though the change in the rate of benefit is to be welcomed.

Very often it is found that a husband and wife will agree to separate rather than go into court and wash all their dirty linen there, whether it be a family court or elsewhere. Rather they will go to a local solicitor and agree mutually to draw up an acceptable agreement. Very often there is substantial abuse of the female partner who, rather than suffer the trauma of court proceedings, will agree to separate. There may be other grounds for separating, such as the wife being involved with a next-door neighbour or whatever, when, again, rather than resort to court proceedings, they may agree mutually to separate. I really do not see any difference in the circumstances in which they agree to separate because we do not have legislation providing for divorce. Therefore the only remedy available to them is to agree to separate. They probably agree to do this as the lesser of two evils rather than continue a life of misery together with the children suffering in the process. I would ask the Minister to examine that aspect, on the basis that they agree mutually to separate, always provided there are acceptable reasons for their doing so and tell us when the case should be treated as desertion.

Miss Harney

The Minister's proposal is welcome and long overdue. It is time widowers and deserted husbands were granted an allowance under the social welfare code. I take the point made by Deputy De Rossa in relation to unmarried fathers caring for their child or children. The social welfare code should look after persons and children, regardless of whether they be male or female; they should be treated equally. However, it has to be said that this provision maintains a distinction between the way women and men are treated under our welfare code.

Now the irony is that on the death of a man who has been paying social insurance, his wife is entitled to claim a non-contributory widow's pension on the basis of his contributions. But if she dies, he is not entitled to make the same claim on the basis of his insurance contributions. That seems to me to be discriminatory. It also appears to highlight something I have maintained for a long time — that in no sense is social insurance what it is purported to be. Rather does it lead to many anomalies. It does not necessarily afford people who pay contributions higher entitlements at given points when they apply for welfare payments. We should recognise once and for all that it merely constitutes another form of taxation. Indeed in many-circumstances, it does not confer additional entitlements on persons in given categories. This is one such category within which it will not entitle a widower or deserted husband to any additional benefit.

On Second Stage the Minister referred to the need to move towards the concept of a lone parent family allowance. I would urge him to move in that direction. There are at present six different rates payable to lone parents caring for children and it is time to have a single allowance for the woman or man who is looking after the dependent children. Will the Minister clarify that the proof that is required of women to show that desertion has taken place will be demanded from the man also? Presumably, the new provisions we will deal with later in the Bill will also apply to deserted husbands, in particular.

Last evening I said there were long delays in the processing of applications for deserted wife's allowance. The assistance claim seems to take an undue length of time to process. The Minister promised that he would review the procedures for the processing of applications for deserted wife's allowance, and I urge him to do so. Obviously, similar delays will apply to the processing of the deserted husband's allowance. I urge the Minister to ensure that these applications are processed as quickly as possible. In a later section we will talk about the definition of a qualified child, but it is relevant here where there are anomalies between the different age groups and as to when a dependent child is a dependant. All children in full-time education, regardless of their age, should be regarded as qualified children for the purposes of a dependent child allowance. Whether the child is 22 or 23, that child should be considered as a dependent child if the parent has to survive on social welfare payments in order to maintain the family. It is wrong, particularly nowadays when university courses take four or five years or even longer to complete, that a child in full-time education should not qualify as a dependent child after the age of 21. However, I will deal with this in the next section which deals with the definition of "qualified child" because it is more appropriate to do so.

Mr. J. O'Keeffe

My main concern with this section is to ensure that in tackling a very obvious anomaly we do not create another one. I have indicated earlier that I welcome the provisions introduced by the Minister. However, I wish to raise two points with him. Section 6 provides for the payment of a non-contributory allowance for widowers and deserted husbands. What is the position of a widower, a deserted husband, a separated husband or indeed a lone father who has a contribution record and who cares for the dependent children? I am anxious to ensure that somebody in that situation would not be in a worse position than somebody who did not have a contribution record and was in a similar position.

My second point relates to the scope of the provisions for a deserted husband's allowance. The key would be the regulation which would specify the circumstances in which a man is to be regarded for the purposes of this section as having been deserted by his wife. The Minister is aware that in legal terms the definition of desertion can be quite narrow. I can foresee situations where in general terms men will be regarded as having been deserted but in strictly legal terms they may not be so regarded. As has been mentioned by Deputy Bell there is also the question of a separated husband, who may have separated by mutual agreement or because of some basic incompatibility with his wife. The answer lies in the manner in which the regulations specify the circumstances in which a man is to be regarded as a deserted husband. It is quite essential that the regulations governing this be drafted in as wide and liberal a way as possible. This may resolve my concerns that in clearing up an anomaly by introducing this section, further anomalies will not be created.

Mr. O'Dea

I add my voice to the welcome extended by the Opposition speakers to this innovation on the part of the Minister. The concept of a widow's pension and a deserted wife's allowance are long standing. In my opinion the Minister is moving a great distance forward in introducing the concept of payments to deserted husbands and widowers. That will stand as one of the most fundamental reforms of Irish social welfare law since the foundation of the State.

I wish to raise one or two technical points. First, with regard to the regulations that will be introduced to cover such circumstances as desertion, will they be similar to those which currently apply to the deserted wife? If not, why not? I cannot see any good or fundamental reason for such differences but perhaps there are such reasons and if so I would like to hear them.

I take the point made by Deputies Bell and Jim O'Keeffe on the question of voluntary separations, but we have to bear in mind that the concept of a voluntary separation is a vague concept. Do we introduce a definition of desertion to cover a situation where people sit down and decide they are incompatible and while there is nothing fundamentally wrong they decide they will not live together any longer and so they seperate? I hardly think the term "desertion" can be so broadly defined as to include that concept. However, on the other hand, people may agree, in a moment of sanity, that because of the mental or physical cruelty suffered by one or both they will separate — in other words the concept of a constructive desertion. I ask the Minister to make the definition of desertion as broad as possible to cover a concept like constructive desertion.

On the question of the second last amendment — amendment No. 11 — proposed by Deputy De Rossa, I fully agree with the thinking behind it and I see exactly what he is trying to achieve. However, I do not know if the Minister will be in a position now or on Report Stage to give us some indication of what the definition of desertion in the regulations to be made under this section will mean. If the Minister cannot give us some indication at this early stage, I would like him to assure the House that the definition would be as wide as possible. I ask the Minister to give some indication as to when those regulations will be introduced. As I have said, the legislation involves fundamental reform of social welfare law, which has been welcomed by all sides of the House. I, too, welcome it but I would like to see it implemented as quickly as possible.

I note that on the question of a widower's non-contributory pension, a widower is defined as a person with at least one qualified child living with him. Qualified child is defined later in the Bill. When the qualified child who is living with the widower ceases to come within the definition of a qualified child, for instance, because he goes over the age limit, does the widower's pension cease at that stage? If the answer is "yes" there could be a serious anomaly in that a person in his late fifties or early sixties who had been in receipt of a widower's pension for some considerable time would suddenly lose the pension and have to fall back on unemployment assistance. That would involve a dramatic drop in income as the rates stand at present. I do not know whether the answer to my question is: "yes he will lose the pension, if the child ceases to be qualified". If that is the answer I do not know whether it is possible to avoid the anomaly that will thereby arise for those elderly people. It is our duty in this House to try to head off these anomalies in so far as we can foresee them.

Dr. Woods

First, in reply to Deputy O'Dea, the answer is yes. This is something that will have to be considered further in the future. We have a scheme which is based on dependence. Much of what Deputies O'Dea and De Rossa had to say demonstrates the point I made earlier, that in fact there are a great deal of ramifications when you talk of broadening the scheme. For instance, there is the lone parent allowance and all the implications of that.

Deputy Harney raised the question of the age relationship for the children. The age now will automatically immediately go up to 21. That is one of the hidden benefits. I know the Deputies want the same means test for everyone, but the fact is that the means test for widows is better. There will be a direct benefit in that area. There are other indirect benefits as well.

Deputies raised the question of separation, particularly separation by agreement, and the question of constructive desertion. Broadly speaking, constructive desertion is included at present, but separation is not. Separation is obviously quite different from desertion especially where there is separation by agreement. That is one of the matters that will have to be considered in a broader consideration of one comprehensive scheme which is what Deputy De Rossa proposes. Other Deputies are also interested in dealing comprehensively with the problems involved.

Deputies generally recognise that this scheme is a very substantial improvement. The section brings in a new deal for widowers and deserted husbands. In the case of a widower with two children curently on supplementary welfare allowance there will be an increase of £22.30.

A widower with five children will get an increase of £40.30. It is a very substantial, widely welcomed improvement. The section provides for payment to widowers and deserted husbands with dependent children on the same lines as the non-contributory widow's pension and deserted wife's allowance scheme. When I say "on the same lines" I mean that the lines will be similar, that the regulations will be similar, but I cannot say at this stage that they will be exactly the same in every aspect because there may be some technical reasons as to why there would be minor differences.

A widower with two children in receipt of supplementary welfare allowance currently gets £56.80 a week. Under the new scheme he will get £74.80 a week, an increase of £18 per week. Those with large families will gain even more. A man with five children would get £80.80 under the supplementary welfare allowance scheme and this will increase to £115.30 under the new arrangements, a very substantial increase of £34.50 a week. This is in addition to the increase in child benefit for large families which would increase the weekly gain to £36.05. It is, as Deputies have said, an improvement that is long overdue.

I estimate that 5,500 men will benefit from the new schemes. The introduction of these new schemes also represents a major standardisation in bringing about equality of treatment between men and women in this whole area. I also consider that there is scope for standardisation in this area. With the introduction of these new schemes there will now be six separate social assistance schemes providing income support for lone parents. These schemes will also differentiate between men and women. Accordingly, I am examining the possibility of replacing these schemes by one lone parent allowance scheme which would apply to parents bringing up children on their own. In this context the position of lone parents who are separated, of fathers who are unmarried or who have been divorced in another jurisdiction and who may not come within the scope of the existing schemes is being examined. Complex legislative changes will be required to provide for such a scheme but I hope to be in a position to bring forward proposals in the matter later in the year.

I would emphasise to Deputies that the step we are taking here, as Deputy O'Dea has said, is a major step. The fact that we are now going to cover deserted husbands is a major step forward. That, in itself, facilitates the development of a broader, more comprehensive scheme and in that sense it must be regarded as a major breakthrough. I am very happy with the progress I have made in this direction. It represents a major change in thinking.

I have been very concerned for some time with the special difficulties of men on low incomes left to rear children on their own. As Deputies are aware, entitlement to unemployment assistance is conditional on the claimant being available for work and proving that he is also genuinely seeking work. In many cases it is not possible for widowers or deserted husbands to satisfy these conditions when they have to look after young children on their own. In these circumstances the only fall-back is recourse to supplementary welfare allowance, the lowest level of social welfare payment. In recognition of the difficulties of men rearing children on their own, the Government have decided to introduce two new social welfare assistance schemes for widowers and deserted husbands with children. These schemes are provided for in section 6 of the Bill.

Section 198A (1) of the 1981 Act provides that a widower's non-contributory pension will be paid to a widower who has at least one dependent child residing with him and who satisfies a means test equivalent to that applying in the case of a widower's non-contributory pension.

A number of Deputies raised a question about the contributory scheme. A person with stamps would qualify here but on the same means test as would apply to the assistance scheme. It is not a contributory scheme. It does not come under the insurance fund. That is something which is being examined further. It is part of the overall equal treatment considerations which are being considered at European Community level. This is a separate scheme similar to that which applies to women in the assistance schemes. It only applies to widowers who have at least one child residing with them.

Deputy O'Dea wanted to know what would happen when the children were grown up and the person in question was older. The scheme carries on until children are aged 21 while they are in education. What happens then will be considered further in the future in the general context of other things. Now, of course there is the pre-retirement allowance which has come in at the other end and perhaps those two things will come to meet one another at some stage.

One could say that for women there is a single woman's allowance which applies from the age of 58 and that there is no single man's allowance at that level. Deputy Mattie Brennan earlier raised the question of single men in these circumstances. I am afraid there are many anomalies in the system, especially as far as equal treatment is concerned but we are making a great deal of progress in removing anomalies in a practical way. I hope to go on with that type of work.

Section 198 (2) of the 1981 Act provides that the rate of pension shall be the same as the rate which applies in the case of widow's non-contributory pension. With the increases provided for in section 4 of the Bill, together with the rates for children, a man with three or more children will have the benefit of the higher rate of child dependant allowance which applies in the case of widows. Section 198 A (4) provides that a widower who has remarried will be disqualified from receiving a widower's pension. That also applies to widows. Section 198A (4) empowers the Minister to make regulations in relation to widower's non-contributory pension which may apply any of the provisions of the Social Welfare (Consolidation) Act, 1981, or regulations made thereunder to the new scheme.

In assessing the income from employment an amount of £6 per week together with a further £6 per week in respect of each child dependant is disregarded in the means assessment for widow's non-contributory pension. In addition, deductions are also allowable in respect of travelling and child minding expenses which are incurred. These are indirect benefits which come to bear straightaway under this scheme. The cash value of any investments in property, other than the family home and bank deposits, etc., are assessed at the rate of 5 per cent of their total value to obtain the yearly income from investments. Having allowed a deduction of £200, plus £100 in respect of each dependent child, the income from the letting of land is assessed in the same way as earnings from employment. Therefore, the means assessment is similar to the means assessment for widows and in that sense is beneficial.

Deputies have covered a great deal of what is in the section as a whole. Deputy O'Keeffe raised the question of the lone parent's allowance and it was also raised in Deputy De Rossa's amendment which was withdrawn. When the legislation was being drafted, consideration was given to the possible introduction of a lone parent's allowance in place of the new schemes for widowers and deserted husbands. Any such scheme would have a much broader application in that it would include persons not covered by the proposed new schemes provided for in section 6, that is, unmarried fathers, prisoners' husbands and men and women who are unable to satisfy the criteria used to establish desertion. The introduction of the new schemes for widowers and deserted husbands must be seen, therefore, as a first step towards equality for men in the areas of survivors and family benefits.

Deputy O'Keeffe asked about the criteria to be applied. The criteria used in the case of the deserted wife's scheme to establish desertion are as follows: (a) the husband must have left of his volition and must not have lived with the claimant at any time during the three months preceding her claim; (b) the husband must have wilfully refused or neglected to contribute towards the support and maintenance of his wife and children; (c) the claimant must have made, and must continue to make, reasonable efforts, with the means available to her, to trace her husband and to prevail upon him to contribute to her support and that of her children and the husband must not have resumed living with the claimant.

In relation to the requirement that the woman must make reasonable efforts to trace her husband and prevail upon him to contribute to her support and that of her children, where she does not know of his whereabouts she is expected to inquire from his relatives and friends and his employer or the employment exchange, if he is unemployed, in an effort to trace him. If she suspects that he has gone to the United Kingdom she may be requested to contact the UK Department of Health and Social Security in this regard. In cases where a husband's whereabouts are known and where it is considered that he is in a position to support his family, the claimant will usually be required to have a maintenance summons served on him. These are the criteria which exist at present.

The regulatory provisions contained in section 198B (3) (c) empower the Minister to recover overpayments which may arise as a result of a revised decision of a deciding officer or an appeals officer taken in the light of new information coming to hand. A similar provision already exists in the case of the deserted wife's allowance scheme. In general, overpayments are only recoverable in cases where fraud is involved. On the introduction of the deserted wife's allowance scheme in 1970, however, it was considered that because of the possibility of considerable changes occurring in a recipient's circumstances, the Minister should have a discretionary power to recover overpayments arising for reasons other than fraud. It was envisaged at the time that such overpayments could arise in a variety of ways, for instance if the deserted wife received substantial maintenance retrospectively or if she received a substantial insurance payment on the death of her husband. It is considered that similar powers should be taken in the case of the deserted husband's allowance scheme.

In general the powers which are included here are similar to those which apply to the widow's allowance scheme and the deserted wife's allowance scheme. The question of the lone parent's allowance scheme is one which we are examining and we hope to come up with proposals later in the year.

Proinsias De Rossa

Can I take it from what the Minister has said that the question of an allowance for unmarried fathers is not, at this point, opposed on the basis of cost but rather because of the complexities of whatever regulations or legislation it would be necessary to introduce? May I also ask the Minister if it is possible for him to indicate what effect earnings would have on the new allowance for widowed men and deserted husbands?

The Minister said that the means test as applied to widows for non-contributory pension would be applied in this case but the argument widowed men have put to date in relation to this problem is that when they are unemployed they receive less, whether on benefit or on assistance, than the widow would receive on the pension. Where they are working they would not be entitled to any additional payment. By way of an example, if he has the information to hand, can the Minister tell us the effect this allowance would have on a man with, say, three or four dependent children? What amount would he be allowed to earn and still get the full rate of widower's allowance?

In relation to section 6(2), the Minister is taking the power to appoint days for the implementation of these sections, and he may introduce them on different days. He has indicated that he would hope to have this in place in October, but does he intend to introduce both the deserted husband's and the widower's allowance on the same day or, close to it, or does he foresee any difficulties at this stage which might delay its introduction?

Dr. Woods

To take the last question first, we hope to introduce the two at the same time. When bringing in the Bill we have to make provision for every conceivable thing that might happen because we do not want to find out later, when we are ready to implement it, that there may be some difficulty and that the two cannot be introduced at the same time. It is the intention to introduce the two schemes at the same time, but if there is any technical reason this cannot happen, that eventuality would be covered.

In assessing the income from employment an amount of £6 per week together with a further £6 in respect of each child dependant is disregarded in the means assessment for widows non-contributory pension. If she has five children that would amount to £36. In addition, deductions are also allowable in respect of travelling and child minding expenses which are incurred. That would be a further allowance. A man with four children could still get the maximum pension allowance and have an income of £1,560. In addition to that he could receive the child minding allowance, which could be up to £30 per week, and travelling expenses so there is much to be teased out in this area but basically what I want to do is provide similar arrangements to those applying in the case of widows. We will be working out the detail and providing scales and advice in relation to the amounts which can be earned. This would be a very important element for somebody who has, for instance, three, four or five children and who would still be able to earn a certain amount on top of the payment. It is a very good scheme in that sense; there is no question about that. The allowances are generally regarded as among the best allowances in the case of widows and they will apply in these cases also. The Deputy was right in saying that a number of men do not realise that their earnings can be of a reasonable level and they still qualify for the allowances, including the child minding allowance. Beyond that we go into the area Deputy O'Keeffe spoke about, that is, the insurance based scheme, which is another question.

Question put and agreed to.

SECTION 7.

Acting Chairman (Mr. Wyse)

Amendment No. 13 has been ruled out of order because it would involve a potential charge on the Revenue.

Amendment No. 13 not moved.

Dr. Woods

I move amendment No. 14:

In page 8, subsection (1), line 30, before "over" to insert "or".

Section 7 provides for the payment of child dependant allowance up to the age of 19 years as against 18 years under existing provisions in the case of all recipients of long-term social welfare payments where the child continues in fulltime education. The purpose of this amendment is to correct a minor textual error in section 7. It is purely a technical amendment. The section is, of course, very important in that it allows the increases to be paid for children up to 19 years. I know Deputies will generally welcome this provision. I would regard it as a first and important step towards bringing the age up to 21 years, something I hope to achieve in the future. I ask the Deputies to support the amendment.

Mr. J. O'Keeffe

The Minister said that the amendment is purely of a technical nature. I want to tease this out. Am I right in thinking that subsection (1) (c) (ii) will now read "is of or over the age of 18 years"?

Dr. Woods

It will read "is of or over".

Mr. J. O'Keeffe

Will that read correctly? It seems a rather strange way of expressing the intent and perhaps while I am saying a few words the Minister and his officials might check that we are not compounding this by ending up with a worse form of phraseology.

I very much approve of this proposal. It must be a fundamental part of our social policy that we encourage so far as we can our young people to remain in school, and this should certainly extend to the children of those who are in receipt of social welfare payments. One of the most outrageous anomalies I have seen since I have taken over as spokesperson on social welfare for Fine Gael was denying people on social welfare a free fuel allowance because their children happened to exceed the age of 18 years and were at second level schools. That was absolutely outrageous. However, this is a step on the way to rectifying that anomaly. Deputy Harney's amendment has been ruled out of order but I think we can all subscribe to the principle of it. The Minister said that this is a first step on the way to raising the age further. It would be helpful if he could give us an outline of the cost involved in that process. I should like to see the age raised further as soon as possible and if the cost involved is not too great I would encourage the Minister to introduce such a change at the earliest possible opportunity.

Miss Harney

I, too, welcome the improvements which are being made in this amendment. Many people on long-term unemployment assistance were in a difficult situation and were forced to go onto supplementary welfare benefit when their child reached 18. Because of the longer school programme many school children do their leaving certificate examination at 19 years so it is right that the anomaly in regard to the allowance should have been corrected. However, this brings me to a more general point, and I sought to do something about this in an amendment which, as Deputy O'Keeffe has said, was ruled out of order on the grounds that it would have Revenue implications.

In the social welfare code generally, where children are in education, regardless of their age, and where social welfare, is the sole source of income for a family such children should be considered as qualified children. Different ages are now used for the purpose of paying different allowances. In relation to widows and widowers' non-contributory pensions and so on the age is for dependent children to be 21 years and for other categories like long-term unemployment benefits and so on the age is to be 19 years. Different ages apply to different categories of welfare recipients but we need to rationalise this system. We need to make it fairer, more consistent and have one definition of what a qualified child is so far as age is concerned.

If a child is still in full-time education this should be good enough for the purposes of paying the dependent child allowance. God knows there are not many children of social welfare recipients in full-time education at 21, 22 or 23 years because if that is the sole source of income for a family and given the disgraceful grants system operating in this country, it is only in very rare cases that children of that age are in a position to be in full-time education. However, where a child is in full-time education and a grant is payable to help that child stay in full-time education, the obvious demands which are placed on a family by way of additional living expenses and the maintenance of the family should be regarded in our social welfare code and the qualifying age with regard to education should be for as long as a child remains in school studying for a primary degree, a certificate at a regional technical college, a diploma or whatever or is in formal schooling in the sense of secondary schooling or whatever.

I should like to hear the Minister comment on this and tell us what the likely cost would be of removing the age prohibition which exists at present. I am sure the Department must have some statistics in relation to this matter. These statistics might not exactly be bang on because we are not good at keeping statistics in relation to these matters but I imagine the departmental officials would have a fair good idea of the cost implications that might be involved of disregarding the upper age limit for the purposes of paying child dependant allowances and describing as a qualified child, the child of social welfare recipients generally.

Mr. O'Dea

At the risk of repeating myself, I compliment the Minister on this further humane reform of the social welfare code. I take the point that Deputy Harney is making and agree with it. Who does not? The Government have moved to correct a very serious anomaly here. I would like to see a million different things done today, as I am sure would be the case with the Minister and with Deputy O'Keeffe and everybody else, but there is the question of limitation of financial resources. Apart from his fantastic grasp of the subject and the reforms he has managed to introduce today, I want to compliment the Minister on how he has managed to get such a large slice of the cake for social welfare at a time of financial stringency, when the Government are trying to pay the interest on a colossal national debt which doubled in size between 1982 and 1987. He is to be congratulated on getting such a large allocation, which shows his commitment and that of the Government to the poorest section in our society.

I know that the age up to which parents can claim for children will be extended as financial circumstances improve. In the light of what the Minister is doing, there is one small, and perhaps niggling, point that I want to make. All sides of this House have paid lip-service from time to time to attaining simplicity in legislation and have stressed the undesirability of legislating by reference. If it would be technically possible, I would prefer that a section be inserted which would simply set out the categories of social welfare recipients who can claim for children up to the age of 19 and those who can claim for children up to the age of 21 years. The section as it stands is practically indecipherable to the average layman. If technical limitations allowed, the insertion of such a section would make much more sense.

Dr. Woods

There are a number of answers to the last point. First, this change refers to all long-term social welfare recipients, whereas previously it applied, for instance, only to widows and deserted wives. This makes matters much simpler.

The question of simplicity generally is one on which I am very keen. We have brought in a consolidation Bill and I would be anxious that by next year we would address again the matter of consolidation. This takes much technical time in the Department but I am very concerned that we consolidate once again. The consolidation carried out in 1980 and finalised early in 1981 took a great deal of time. A ten year gap should be more than enough. On the other hand, we are doing a great deal of regularising and streamlining. It would be better if consolidation came after much of that work was accomplished, so that further change would not be necessary. That is something I shall keep in mind.

Deputy O'Keeffe asked about the cost of this measure in the first instance. This is £2.2 million for extension up to 19 years. We are talking only about the amendment at the moment; the Deputies will have an opportunity later to raise questions on the whole section. In line 30, page 8, the phrase "of over the age of 18 years" is used. This is technically to ensure similarity to a phrase which appears in line 23 of "on or over the age of 18 years". This is purely a technical drafting matter. Deputy O'Keeffe asked about extension up to 21 years. The cost of that change would range between £6 million and £8 million, depending on who were included. If children of all social welfare recipients were included it would be an estimated £8 million; if the change were restricted to long-term recipients the cost would be approximately £6 million. They are the estimated figures.

Mr. J. O'Keeffe

Is that in addition to the £2.2 million?

Dr. Woods

No, that would be the total figure including the £2.2 million. This would be for extension from 18 years to 21 years.

Acting Chairman

May I suggest that the Deputies agree to the amendment and then discuss the section?

Mr. J. O'Keeffe

We might all learn a little discipline because there are a number of other sections to be discussed and time is running out.

Amendment agreed to.

Amendment No. 15 not moved.

Question proposed: "That section 7, as amended, stand part of the Bill."

Mr. Bell

I would like a little more progress to be made on many other sections which need to be discussed. On this section, to follow up the point made by Deputy Harney, it would be desirable that the age be extended. We welcome the Minister's proposal of an extension from 18 to 19 years for children of long-term social welfare benefit recipients who are in full-time education, leaving the age at 18 years for the children of recipients of unemployment and disability benefit and unemployment assistance. There should, however, be an extension to take in all children up to the age of 21 years, as is at present the case of children of widows.

One can see the thinking in the educational system that children of working-class people, generally speaking, did not continue on to post-primary education level. Thankfully, that situation has improved, although at the present time the matter may be at a standstill, to say the least. Children are staying on longer at school and in many cases it is not possible for children whose parents are in receipt only of social welfare benefits to get that opportunity. They should be encouraged. I know the Minister made the point that this was a start. I assume he would have intentions eventually to extend the scope to 21 years. I make a special appeal on that basis.

Dr. Woods

I did not deal earlier with a question raised by Deputy Harney. The question of extending the benefit to 21 years is very important. I regard this as a first step towards such extension across the board. It is a matter of resources in future budgets.

I agree with Deputy Bell that education is of paramount importance. Anything we can do to encourage children whose parents' circumstances are very restricted and where incomes are low should be done. It is with that in mind that we have made the extension to 19 years at this time. It will cover children doing repeat leaving certificate examinations and also cover others going on to third level education in whatever form. The cover is broader than just those doing repeat leaving certificate examinations. One suggestion was that we would cover only those doing those examinations, because that is fairly common nowadays, but we have gone further than that and the extension is to 19 years across the board.

To come back to Deputy Harney's point, I cannot give a figure for continuing with those in full-time education. There is a figure of £6 million to £8 million in relation to continuing up to 21 years of age and, using that as the basic criterion, it obviously would have further cost implications but I do not have an estimate of what they would be.

Deputy Harney also referred to the fact that the grants are inadequate. This was one of the main reasons against increasing payments on social welfare to those aged 19, 20 or 21 because at that stage if, by definition, the parent of the child was on social welfare the grants should be taken up——

Miss Harney

They are not taken up.

Dr. Woods

It shows the complexity of these matters. You must look at the overall picture and ask what social welfare could achieve and what could be done through the grants system. Deputy Harney's point rang a bell with me because that argument has been used against doing this. It was also an argument used in favour of doing it for children at secondary level because, at third level, the grants came into operation and different circumstances applied. That was one of the arguments in favour of extending cover to people who were repeating the leaving certificate.

This is an important development in relation to the section generally because there was an anomaly in relation to widows. They had been covered up to 21 years of age and now widowers and deserted husbands will be covered up to the same age. The other long-term social welfare payments will apply up to the age of 19. The payments covered by this provision are: the old age contributory pension, the retirement pension, invalidity pension, long-term unemployment assistance, pre-retirement allowance, the old age non-contributory and blind pensions and the disablement pension to persons in receipt of unemployment supplement. It has a fairly wide application and has been broadly welcomed. There is no need to go into the different sections at this stage but if there are any questions about subsections I will be glad to answer them.

Question put and agreed to.

SECTION 8.

Acting Chairman

Amendment No. 16 is out of order as it involves a potential charge on the Revenue. Amendments Nos. 17 and 18 may be discussed together.

Amendment No. 16 not moved.

Dr. Woods

I move amendment No. 17:

In page 9, subsection (1) (c), line 25, to delete "subsections (1) (c) and (cc)" and substitute "paragraphs (c) and (cc) of subsection (1)".

These are minor technical amendments which have been made on the advice of the parliamentary draughtsman. I ask the Deputies to accept them.

Amendment agreed to.

Dr. Woods

I move amendment No. 18:

In page 9, subsection (1), line 39, to delete "subsections (1) (c) and (cc)" and substitute "paragraphs (c) and (cc) of subsection (1)".

Amendment agreed to.

Question proposed: "That section 8, as amended, stand part of the Bill."

Mr. J. O'Keeffe

This is an appropriate section to stress the need for a much more serious reform of our social welfare system. We are dealing here with pay related insurance contributions and the Minister has provided for increases in the ceilings. I am totally of the view that there is considerable room within the social welfare system for reform which will encourage job creation. I take this opportunity to press the Minister to get these necessary reforms under way. At the moment, insurance contributions are paid by employers and employees and, very simply, they are a pay roll tax and a tax on employment. We must see how they can be changed, varied or modulated to encourage job creation.

The most consistent criticism of the social welfare system — which strikes a strong responsive chord in me — is that people on social welfare cannot in many instances afford to take a job offered to them. That particularly applies to people with large families. There is a duty on all of us to ensure that that kind of disincentive to employment within the social welfare system should be removed.

Very high on the list is the need to reform the PRSI payments. I do not want to go into full detail at this stage, but I very strongly urge the Minister to seriously consider a number of proposals. The first is in relation to the employer's social insurance contribution. As the system is framed at present it favours capital intensive industry as opposed to labour intensive industry. There is a way in which the employer's social insurance contribution system can be changed to reverse the trend and favour labour intensive sectors. That on its own will encourage more employment and does not necessarily mean a cost factor. The rates can be changed to cover the point.

The Minister should introduce a system which would allow a lower rate of RSI payment for employers in certain labour intensive sectors which would be a start. It has been done in other countries but nothing has been done here to change the trend of RSI contributions on employers favouring capital intensive employers. The system should be changed so that labour intensive sectors are charged at a more favourable rate for employers. I am also totally of the view that the employee RSI contributions must be modulated. There should be a low rate for the low paid. This too has been done in other countries but not here. Why? Any changes made can be paid for by varying the rate generally. It could be paid for in relation to variations of the upper limit. There are a number of ways of doing it and if we are committed to helping the low paid it is absolutely essential that this change takes place. Bluntly, there should be a system whereby the low paid are exempt or pay at a lower rate.

I saw that the British Chancellor of the Exchequer, Mr. Nigel Lawson, in his budget speech yesterday focused on this point. On the first £43 per week the rate is 2 per cent as opposed to the higher rate of 9 per cent. That is one way of doing it. Another way has been proposed by a number of my colleagues in this House. They propose exempting from PRSI contributions the first £1,000, £2,000 or £3,000 of income in a year. The figures involved would be fairly substantial. Exempting the first £1,000 of income would give a figure of £43 million, to be doubled and trebled in exempting the first £2,000 or £3,000 of income respectively. I would like to see us move in that direction but this may be difficult given the financial constraints, but one way or another I would like the principle to be accepted, that for the low paid a more favourable regime should be applied.

The third point I wish to make in relation to PRSI payments is that some favourable provision must be introduced to encourage the long-term unemployed to come off the dole. There should be an exemption for a short period or a lower rate should apply in respect of the long-term unemployed. This would encourage such people to work and an employer to take a person in receipt of long-term unemployment assistance off the dole.

The final point I wish to make on this issue which arises indirectly is that there should be a single means test, but I will not go into detail on this now. I urge the Minister very strongly to take on board those four points, for us to take our courage in our hands and look at the system of pay-related social insurance and to accept and appreciate that these pay roll taxes amount to taxes on jobs. If we are seriously interested in job creation let us make the necessary changes so as to ensure that, so far as possible, the disincentives are removed from the social welfare system.

Miss Harney

Like Deputy O'Keeffe, I very strongly believe that pay-related social insurance amounts to a tax on labour. The fact that some of the proceeds from PRSI contributions are applied in a certain way does not change that. The irony is that the more one earns the less one's income is subject to PRSI contributions because of the exemptions in place at the higher income levels. Because of the way the present system is operated and the present ceiling, employers are encouraged to take on highly paid workers at the expense of lower paid workers as a certain proportion of one's income is exempt from PRSI contributions. I believe this is wrong. I equally believe, at a time when almost 20 per cent of the workforce is unemployed, that the last thing we should do is place a tax on employment.

At present the family income supplement is not being taken up by all of those entitled to receive it. It is estimated that up to 20,000 families are entitled to receive it, as outlined by the Minister recently, rather that the 25,000 families initially estimated. At present just over 5,000 families are taking up this supplement and this indicates that it is not possible through that mechanism to target assistance at low income families. This may be due to the complicated nature of the system and the fact that it is not possible to find out who these people are and so on.

The most effective way to help low income families would be to stop taxing them. The findings of the ESRI survey carried out on behalf of the Combat Poverty Agency indicate, at the 60 per cent level of income, that 17 per cent of the families living in poverty are headed by a person in employment, but what do we do? We tax them into poverty. Even if a person earns only £500 a year they still have to pay tax in the form of PRSI. The Government made great play of the changes they made in the budget which will be implemented in the Finance Bill but those taxation benefits for low income families will be of no use to somebody who earns £3,000 or under per annum as they will still have to pay PRSI at the same level. The Minister will probably say that they will get some marginal benefit because of the changes in the family income supplement but they certainly will get no benefit from the tax changes proposed in the budget.

I do not believe there is any justification for having PRSI distinct from the tax system. We should amalgamate the two with a proportion of taxation being set aside. A social security tax should be applied right across the board with no exemptions at the higher income levels, but whatever justification there may be for moving in that direction there is no justification for subjecting even the first £1,000 of income to PRSI contributions while exempting income from PRSI contributions over and above a figure of £16,700.

In a reply to a parliamentary question last week the Minister informed me that it would cost about £82 million to exempt the first £2,000 of income from PRSI contributions. I would like to think that the Minister would do this as it would provide an incentive for people to find work and help low income earners. The money could be recouped by making other changes, through removing the ceiling and by extending PRSI to other categories of workers. I see no justification for exempting public servants or Dáil Deputies. Either everyone pays or no one pays. It is wrong that some people have to pay while others do not.

We need to do everything we can to encourage job creation. A more effective way of getting a contribution from employers would be to place a tax on turnover rather than on employment. Incentives should be given to labour-intensive industries to expand and take on more labour. A social security tax could be applied on employers on the basis of turnover rather than on the number of employees on their payroll. The fact that we give a special PRSI allowance to PAYE taxpayers is an indication of the detrimental effect this tax has had and we do this because we recognise that it acts as a huge disincentive and represents an additional tax on those in this category.

I am aware that PRSI has now been extended to the self-employed but we recognise that it acts as a disincentive to work. Given the extent of poverty arising out of the high levels of unemployment we should, rather than penalise employment, do everything we can in the social welfare system and tax code to encourage the creation of jobs. I strongly believe that PRSI amounts to nothing more than another tax but regardless of the perspective with which one looks at this and even if one says that it amounts to a social insurance contribution and is necessary from the point of view of welfare, there are better and fairer ways of raising the same level of revenue which do not act as disincentives to employment and do not discriminate against low income earners.

In relation to the extension of PRSI to farmers and the self-employed, I would like the Minister to tell us the amount of money he expects to collect this year. I understand that the figure contained in the Book of Estimates for 1989 is below the figure given by the Minister last year when the proposal went through this House. I would like him to indicate how the system has worked. Perhaps information could be more formally sought by way of parliamentary question but I would like the Minister to give some broad indication of the success of this move and to indicate whether or not the collection mechanism in place at present is operating effectively.

It seems strange that we apply the youth employment levy at a flat rate on all incomes but do not do so when it comes to PRSI. I do not know what the justification for this is. These sections as suggested by the Minister should be opposed because they are anti-employment, put more people into poverty and are in no strict sense a social insurance fund. Throughout the discussion on this Bill to date we have seen how many categories of workers who pay PRSI will not be entitled to any additional benefits. Some long-term recipients of unemployment assistance will now get more than people on unemployment benefit. Widowers who have made contributions will not be entitled to claim on the basis of those contributions. There are many such examples in the social welfare code. We seem to be restricting benefits all the time. It is about time we recognised this for what it is. It is time that we were more honest in how we described it, that we amalgamated it into the tax system, levied it across the board and raised it on the basis of turnover and not of employment.

Proinsias De Rossa

My amendment to this section seeking that the income cutoff point should not be raised was ruled out of order. I put down that amendment not because I do not believe people on incomes higher than that specified at the moment should not be paying it on that other income but because of the way in which the Bill proposes to reduce the benefits available in relation to pay-related benefit. I would not argue that the present PRSI system is perfect, but I do not go down the road proposed by Deputy Harney and Deputy O'Keeffe who argue that PRSI is a tax on jobs.

Two things are being confused here. I think what they are putting forward is probably the employers' argument — that because they have to pay an employer's contribution this is a tax on them creating jobs. I would accept that argument if there was any evidence that Irish capital was in any way breaking down doors to invest in jobs, but the figures available to us from the IDA, for instance, point out that of all the investment they have sanctioned for grant aid in 1987 and 1988, only 26 per cent is coming from indigenous capital and the rest from abroad. Clearly, those who invest from abroad do not see the PRSI system as an obstacle to coming here creating jobs.

As other speakers have said, capital is more beneficially treated with regard not necessarily to the social welfare system but to the tax system. There is an imbalance with regard to labour and capital intensive investment, but I would argue, contrary to what the other two speakers have said, that there should be a neutral position between one and the other. We do not want to go down the road of encouraging labour intensive industry at the expense of upgrading and introducing the most up-to-date technology. We can see the effects on industry which failed to modernise in the banking industry at present. Jobs are being lost there and fairly harsh decisions are being made in relation to letting staff go because over the years the baking industry refused or failed, for whatever reason, to modernise and ensure they were competitive. The same happened in previous years in the milling industry, when Ranks closed their doors. I do not think the argument made by Deputy O'Keeffe and Deputy Harney really holds up.

For instance, only one in every five companies in this State pay any tax because of the nature of the tax system. Therefore it cannot be argued that that is a discouragement to creating jobs. I agree there needs to be a more neutral régime between labour and machines, but I would be very loath to see us going down the road of encouraging the employment of people simply because there is tax benefit or PRSI at the end of the road, regardless of the effect that may have on either the pay of those who would be employed or the future prospects for the industry concerned.

For those who are concerned about low pay, the simplest and most straightforward way of dealing with that problem is to introduce minimum pay legislation. It has been done in other countries. In the United States, which one might call these days the home of capitalism minimum pay legislation has been introduced. The problem of people being trapped in poverty as a result of low pay would be eliminated by the introduction of minimum pay legislation.

The question of competition from companies in various labour intensive industries who are using part-time labour needs to be looked at because that is probably a much greater disincentive to employers paying their PRSI contributions. At the moment if you employ a person for less than 18 hours a week you are exempt from having to make your PRSI contribution. You are also exempt from a whole range of protective legislation for employees. It would be better to concentrate on that area and on the minimum wage legislation as a way of dealing with the problem of low pay and unfair competition with those who are paying full PRSI.

Let me draw the Minister's attention to my amendment No. 27 which, unfortunately, will not be reached. It deals with a person convicted of social welfare fraud. I have come across a case of a person who was convicted and fined and automatically had benefit withdrawn for six months. To my horror I discovered there is no——

Acting Chairman (Mr. Hilliard)

Could I interrupt the Deputy? Did you mention amendment No. 27?

Proinsias De Rossa

I am just mentioning it. I am about to conclude.

Acting Chairman

It is out of order, and Deputy Bell wishes——

Proinsias De Rossa

I wish to draw attention to it. It is an area the Minister needs to look at. I propose he give himself the discretion to disqualify or not. I have come across cases where there is a double penalty on a family because, for whatever reason, and we can debate for the rest of the term the reasons behind it, a person charged, convicted and fined then finds his benefit is withdrawn for six months. As things stand the Minister has no discretion whether this should be withdrawn. I am asking him to change the legislation so that he will have the discretion to grant the benefit in certain circumstances.

Mr. Bell

The list of amendments shows amendments put down by me to sections 9 and 10. There is a typographical error there which is not the Minister's fault. It should be amendments to sections 8, 9 and 10.

We are opposed to those three sections on the basis that they impose a further tax on employees, employers and the self-employed. The level of taxation is too high as it stands. The reduction in PRSI payments means that workers generally would be better off saving that money, on which they would get a much better return. A large section are paying PRSI for nothing since they do not qualify for anything. It states in the explanatory memorandum that the rates of contributions are not being increased. I find that difficult to understand when we are talking about raising the ceiling for both employees and employers. If the Minister can demonstrate to me that the changes in sections 8, 9 and 10 mean that nobody will have to pay any more, naturally we will support those sections. The explanatory memorandum states:

Section 8 provides for an increase from £16,200 to £16,700 per annum in the ceiling for contributions payable by employees and from £16,200 to £18,000 per annum for contributions payable by employers. The rates of contributions are not being increased.

If that is correct we will be supporting the Bill but it is an error and if employees, employers and the self-employed will have to pay more as a result of these sections, we will be opposing the Bill. Perhaps the Minister would clarify the position.

Dr. Woods

There is a difference between the rate, the amount and the ceiling. The things which contribute towards the amount are the rate and the ceiling or some exemptions. The rate is not being increased. It remains at 5.5 per cent. People always think in terms of 7.75 per cent because in addition to the 5.5 per cent there is the youth employment levy and the 1.25 per cent health levy.

Mr. Bell

It does state that the rates of contribution are not being increased.

Mr. J. O'Keeffe

The percentage is not being changed.

Mr. Bell

Surely the amount of money will be increased.

Dr. Woods

The rates remain unchanged but the ceilings are changed. I would point out that this is the lowest percentage increase in the PRSI ceiling for the past eight years. We are not doing badly. We have to maintain the social insurance fund. If it is claimed that we should not have a social insurance fund, that is a different argument. I want to have such a fund because it is good for workers. If something much better can be suggested and well provided for, we can look at that. I would want more than one bird in the bush and I would want to be assured that we had good social security for workers on which they could rely.

In 1982 the increase in the ceiling was 11.8 per cent; in 1983 it was 37 per cent — that was the first year of the Coalition Government. In 1984 they must have felt they had done enough in the previous year and there was no increase.

Mr. Bell

I had voted against it.

Dr. Woods

In 1985 the percentage increase in the ceiling was 6.2 per cent, while it was 6.5 per cent in the following two years. The increase in 1988 was 4.5 per cent and now it is to be 3.1 per cent, the lowest of the increases in the past eight years. It is certainly very reasonable. This, at a time when all the rates are being increased, is a fair achievement.

Social insurance provides comprehensive occupational protection for workers and their families. A broadly-based system of financing ensures that the risks of unemployment, sickness, etc., are spread as widely as possible across the working community.

The use of the PRSI system to regulate the labour market has been examined on a number of occasions. A number of general points should be noted. In gross terms, employers' PRSI costs only amount to about 6.5 per cent of overall costs. Labour costs in general and employers' PRSI in particular are low in Ireland when compared with most European and OECD countries. Labour-intensive industries in Ireland already enjoy a significant competitive advantage in this regard. The most recently published OECD comparisons — 1986 — indicate that Government revenue from social welfare contributions amounts to only 5.7 per cent of GDP compared with the EC average of 11.6 per cent and an OECD average of 9.3 per cent. The employers' element of PRSI contributions, currently 12.4 per cent, reducing to 12.2 per cent from April, is the second lowest in the EC. Any reduction in PRSI contributions would have to be met by higher taxation or increased PRSI rates.

In 1986 the National Economic and Social Council was particularly struck by the absence of conclusive evidence on the likely employment impact of reducing employers' PRSI contributions. A 1983 EC study entitled Social Security Financing and Effects on Employment concluded that the role of PRSI in employment creation is very narrow. An OECD report in 1985 on labour market flexibility concluded that cutting pay-roll taxes is unlikely to increase employment. Employer contributions are very much an integral part of this system, reflecting employer obligations as part of the community.

Any exemptions of income or variations in the rate of contribution would lower the yield to the social insurance fund. The estimated cost of selected exemptions in 1989-90 is as follows:

	Employee	Employer	Total
	£m	£m	£m
First £1,000	43	88	131
First £2,000	82	168	250
First £3,000	117	240	357

The estimated additional yield of abolishing the PRSI ceiling would not even "pay for" an exemption of £1,000.

The estimated effect of abolishing the ceilings for employers for 1989-90 is as follows:

	1989-90
	£m
Employers	48
Employees	28
Self-employed	10
Total	86

The rates structure is such that the percentage contribution does not increase as income increases, which is the position in the UK. It should be noted, however, that there is no employer ceiling in the UK. We have introduced a differential in that the employer ceiling is being raised to £18,000, while the ceiling for employees is being raised to £16,700.

Acting Chairman

As it is now 1.30 p.m. I am required to put the following question in accordance with an Order of the Dáil on this day. The question is: "That the amendments set down by the Minister for Social Welfare for Committee Stage and not disposed of are hereby made to the Bill; in respect of each of the sections undisposed of that the section or, as appropriate, the section as amended, is hereby agreed to in Committee; that Schedules A and B and the Title are hereby agreed to in Committee; and that the Bill, as amended, is hereby reported to the House".

Question put and declared carried.

Sitting suspended at 1.31 p.m. and resumed at 2.30 p.m.