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Dáil Éireann debate -
Wednesday, 13 Dec 2000

Vol. 528 No. 2

Priority Questions. - Social Insurance Fund.

Frances Fitzgerald

Question:

26 Ms Fitzgerald asked the Minister for Social, Community and Family Affairs the impact the abolition of the ceiling on PRSI payments will have on the social insurance fund; the net cost of the social welfare increases announced in the budget, when these extra receipts are taken into account; and if he will make a statement on the matter. [30016/00]

My colleague, the Minister for Finance, announced, as part of Budget 2001, a package of PRSI measures. These included a reduction of 0.5%, to 4%, in the main employee rate; the abolition of the employer ceiling; a reduction of 2% to 3%, in the rate of social insurance applicable to the self-employed, and the abolition of the annual earnings ceiling for the self-employed.

The abolition of the employer ceiling will yield £24 million in 2001 and £159 million in a full year. The abolition of the self-employed ceiling will yield £40 million in 2001 and £97 million in a full year. When the reductions in PRSI rates, which I mentioned earlier, are factored in, the overall impact of these changes is a cost of £7 million to the social insurance fund in 2001 and a yield of £117 million in a full year. The budget also made provision for unprecedented levels of increase in the rates of benefits and pensions payable from the fund. These will cost nearly £203 million in 2001 and more than £270 million in a full year. Accordingly, the net cost of all the changes relating to the social insurance fund introduced in the recent budget is £210 million in 2001 and £153 million in a full year. As the Deputy is aware, the fund is in a healthy financial state at present. This is due to increased levels of employment, lower levels of unemployment and the buoyant economic climate generally. This surplus will not continue indefinitely as ageing of the population will greatly increase demands on the fund over the medium to long term, an issue to which the Deputy referred earlier in regard to social protection. Clearly, it is important that the fund's surplus should be used to best advantage having regard to emerging demands and the overall interest of its contributors. As announced recently, the Minister for Finance and I are arranging to have an early examination of possible strategies in this regard.

The Carers' Association is more concerned at what the Minister has not done rather than what has been done in this budget. As regards the social insurance fund, with the great resources we have at present, does the Minister accept there is need to enhance benefits for recipients? Many people see PRSI as a tax. The benefits they receive are not what they should be, particularly in the dental, optical and medical areas. Has the social insurance fund board been established? What is its task? Who is on the board? Have decisions been made? As regards the surplus money and the need to introduce new benefits, is the Minister considering further paid parental leave so that parents, often it will be mothers, have an opportunity to take longer time off work in the early years and get benefit as happens in many other countries? That was recom mended in a number of reports. Is it not time to grasp this issue and give parents of young children a real opportunity to have a choice as to whether they stay at home or go out into the workforce, particularly during the early years of their children's lives? Other countries have gone down the road of paid parental leave and extended periods of parental leave. With the surplus in the social insurance fund, is it not time to consider this?

Obviously the Deputy was not listening to the Minister for Finance when he made his budget speech. I suppose it was because she was mesmerised by all the goodies he announced.

I was listening.

There was reference in it to paid parental leave and the Government will bring forward proposals in that regard in the future. As regards benefits, I am surprised at the Deputy saying we should bring forward benefits when again looking at the Minister's budget speech, there was a record increase in benefits in this budget and a record delivery of money out of the social insurance fund to those recipients.

A record surplus.

It was a record budget package of £850 million, about 50% of which would be from the social insurance fund. The social insurance fund is in a very healthy state but it will not remain that way forever. One only has to look at the position in Italy, for example, which is spending a huge amount of its GDP in proportion to the overall situation on the elderly, whereas we are spending an awful lot less because of demographics. One does not have to be a rocket scientist in this regard.

The Minister for Finance has indicated that both himself and myself will be looking at the situation in relation to the social insurance fund. There are commitments in the PPF in relation to the future of the social insurance fund to which we will obviously adhere.

The Minister is setting his sights too low. There is an incredible surplus. Inflation also has to be dealt with. The reality is that a widow under 66 years on a contributory pension will now get £89.10, the carer's benefit is set out £96.50 and so on. I do not think the Minister should be as satisfied as he appears to be in relation to the level of these benefits. If one looks at the response of many of the agencies like CORI and St. Vincent de Paul, which are working with people experiencing poverty and who are just above the poverty line, including those on low incomes, I do not think the Minister should be as satisfied as he is saying he is. There is a real need for further improvements in relation to benefits and social welfare.

We are over time. We must proceed to Question No. 27.

I fully agree with the Deputy but she would have to check the record in relation to what was done during her party's time in office and—

Question No. 27.

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