There are over 2,000 people engaged in share fishing. This Bill will enable them to opt for social insurance protection for themselves and their families during periods of illness and unemployment and for dental and optical treatment under the treatment benefit scheme. The Bill, as initiated, provided for the introduction of a new optional scheme of social insurance for share fishermen. The Bill also provided for regulatory powers under which specified employers and contractors may be required to keep a register of employees, contractors and subcontractors engaged by them.
A number of amendments were made to the Bill on Committee and Report Stages in the Dáil. These amendments entitle volunteer development workers to the full rate of unemployment benefit and disability benefit on their return from abroad; bring forward by a year the date on which share fishermen who opt into the new scheme will become entitled to benefits; extend cover for treatment benefit to share fishermen who opt into the scheme and to their dependent spouses and provide for an amendment to the Pensions Act, 1990, relating to the selection of member trustees of occupational pension schemes.
Share fishermen were traditionally regarded as being employed under a contract of service and as such were insured as employees paying the standard Class A contributions. Arising from a case brought by the Director of Public Prosecutions and the Collector-General in 1986—the McLoughlin case — the High Court held that the skipper of a particular fishing vessel and his crew should not be regarded as employer and employees for PAYE purposes. This decision did not directly affect the insurability status of share fishermen but as they were no longer covered by the PAYE system, it was necessary to amend the regulations regarding the collection of PRSI contributions from share fishermen. The amending provisions introduced at the time, deemed the owner, bailee or lessee of the fishing vessel, as appropriate, to be the employer of the crew for social insurance purposes.
In a subsequent challenge to these provisions in 1992 — the Griffiths case — the High Court found the regulations to be ultra vires and held that a person could only be deemed to be an employer where an employer/employee relationship existed. This meant that in the absence of a contract of service, share fishermen could no longer be regarded as employees for social insurance purposes. They then became insured as self-employed persons, covered for widow's and orphan's pensions and old age (contributory) pension.
Following on the decision of the High Court, consultations took place with representatives of the fishing industry to discuss their concerns regarding the absence of cover for short term benefits. Share fishermen quite rightly regard themselves as being in a unique position in so far a social insurance is concerned. Their sudden exclusion from insurance as employees in 1992 arose as a consequence of the court's decision and not through any fault on their part. This Bill addresses the problems which arose from the court's decision by providing share fishermen with vital cover for unemployment and illness.
The proposed new scheme, which is provided for in Part II of the Bill, gives share fishermen the option of paying special additional contributions. Share fishermen who opt into the new scheme will pay special contributions at the rate of 5 per cent of their income in the previous income tax year, up to the PRSI earnings ceiling. A minimum annual contribution of £250 will apply and the contributions payable will be collected directly by my Department.
The Bill as published provided that contributions would be payable from the income tax year commencing 6 April 1994, thereby enabling share fishermen who opt into the scheme to qualify for benefits with effect from January 1996. This issue was highlighted by representatives of the fishing industry during the course of consultations they had with the Department following publication of the Bill. The issue was also raised by a number of Deputies on the Second Stage debate in the Dáil.
Recognising these concerns, an amendment was introduced on Report Stage of the Bill in the Dáil which will enable share fishermen who opt into the scheme to start paying the new contributions in the current income tax year. This amendment means that share fishermen will qualify for benefits a year earlier, that is, from January 1995 as compared with January 1996 under the Bill as initiated.
A second issue highlighted following publication of the Bill was that of the benefits to which share fishermen will be entitled. The Bill as initiated provided that those who opt into the scheme will be able to qualify for disability benefit for up to 12 months in any continuous period of illness. Share fishermen will also be entitled to unemployment benefit for up to 13 weeks in each calendar year.
Representatives of the fishing industry expressed concern, however, about the absence of cover for treatment benefit. The benefits available under the treatment benefit scheme are highly valued. I regard this as a particularly important scheme so far as women are concerned because the benefits are also available to dependent spouses, who are, by and large, women working in the home. I am pleased, therefore, that is was possible to amend this aspect of the Bill to provide that the optional contributions to be paid by share fishermen will also provide cover for treatment benefit. This special scheme of social insurance for share fishermen is an important development in the provision of comprehensive social insurance cover.
Share fishermen became insured as self-employed following the High Court decision in 1992. Many of those affected find this difficult to understand. A substantial number of the skippers involved regard themselves as employers and would wish to see their crews insured as employees. Representatives of the Killybegs Fishermen's Organisation, for example, have indicated that 50 per cent of the skippers in this area regard themselves as employers. At the same time, most of the crews involved in share fishing regard themselves as employees and wish to be insured as such.
My Department has no discretion in this, however, because the High Court decisions of 1986 and 1992 effectively rule out the possibility of treating skippers as employers for social insurance purposes, unless the crew are employed under a contract of service. One suggestion put forward aimed at resolving this problem was to extend the scope of the new scheme so as to enable the skippers to opt to pay a contribution in respect of their crew equivalent to that payable by employers. In place of attempting to legislate for an optional scheme for the skippers, it would be preferable for them to organise their affairs in such a way that the crew are employed under a contract of service.
I wish to make it known that, following consultations with the Office of the Attorney General, guidelines aimed specifically at share fishermen as to what constitutes employment under contract of service will be made available. The advantage of this approach is that it will meet the needs of those skippers who wish to be treated as employers without having to enact legislation which might be challenged at some future date.
The next amendment to the Bill deals with volunteer development workers. There are over 400 volunteer development workers in Africa, South America and Asia at present. Having worked as a development worker from 1983 to 1986 on the Irish development programme in Tanzania, I am especially pleased to be in a position to rectify an anomaly in the social welfare system which prevented numbers of returned volunteer development workers from qualifying for full rate unemployment benefit and disability benefit on their return home in the event of their being unemployed or unable to work because of illness. I know this provision will be welcomed by the many Irish volunteers working abroad and by the overseas development agencies.
Sections 11 to 13 of the Bill provide that volunteer development workers who would otherwise qualify for reduced rates of benefit, will now qualify for the full rate of unemployment benefit and disability benefit on their return to Ireland. Under existing provisions, volunteer development workers receive credited contributions while working overseas which enable them to qualify for unemployment benefit and disability benefit. To qualify for the full rate of payment, a person must have earnings of not less than £70 per week in the governing contribution year. Reduced rates of benefit, which are related to the level of earnings, are payable to people whose income is below £70 per week.
Volunteer development workers are paid at local rates of pay in the developing countries and only qualify for the minimum rate of payment because of the low level of local payments, especially in countries in Africa and Asia. They then fail to qualify for the full rate of unemployment benefit on their return home. Sections 11 to 13 of the Bill will now entitle them to full rate unemployment benefit and disability benefits on their return from abroad. I am pleased to be a member of a Government which has provided for a substantial increase in overseas development aid in addition to extending full social welfare benefits to volunteers, including maternity benefits provided in the budget earlier this year.
The other amendment made relates to the Pensions Act, 1990. Section 15 of the Bill is designed to remove a legal uncertainty in that legislation. It confirms that the selection of trustees by members of occupational pension schemes requires a majority of members of the scheme who vote rather than a majority of the members of the scheme.
Regulations made last July to enable members of pension schemes to elect their own trustees become effective on 1 January next. The regulations provide that members of occupational pension schemes will be able to choose trustees to represent them. Under the regulations it will be mandatory for all schemes with 50 members or more, and directly invested schemes with 12 members or more, to have member trustees if at least 15 per cent of the members or the members' trade union request the appointment of member trustees.
Section 14 provides for regulatory powers under which employers and other people will be required to maintain certain records of employees and of contractors and subcontractors engaged by them. The section also provides that the required records will have to be kept in a prescribed place. A person who fails to keep records as required will be guilty of an offence and liable on conviction to the standard penalties for offences under the Social Welfare Acts.
The various activities undertaken by my Department to combat fraud and abuse are highly effective. The results achieved to date highlight the need to target the building and construction industry in particular. The regulatory powers provided for in section 14 of the Bill will be used initially to require employers and contractors in this industry to keep records of their employees, contractors and subcontractors. These records will have to be kept in the site office and they will be available for inspection by social welfare inspectors.
Employers in prescribed industries, such as building and construction, forestry, security and road haulage, are already required to notify my Department of the date of commencement of all new employees and subcontractors engaged by them. The new regulatory powers in section 14 will complement these provisions and be of significant benefit in combating fraud and abuse.
The greatest concentration of our efforts in this area must be aimed at ensuring employers comply with their obligations under the PRSI system rather than at ensuring people at work are not concurrently claiming unemployment payments as has recently been suggested in the media. In the view of the Department of Social Welfare and the many expert staff engaged in fraud prevention, the main thrust of our efforts should be aimed at employers. We can massively increase compliance if we ensure all employers get all employees fully in the tax and PRSI systems.
On Second Stage of this Bill in the Dáil there was a good deal of debate on the question of fraud and abuse. In this context, it was suggested the social welfare code discourages unemployed people from taking up occasional work. This should not be the case. Earlier this year we introduced new provisions under which unemployed people who do occasional work can earn the equivalent to their daily rate of unemployment assistance plus £15 in respect of each day worked and still qualify for the full rate of assistance for the remaining days of the week on which they are unemployed. For example, an unemployed person with a dependent spouse and three children can earn up to £37 for each day worked without affecting his or her entitlement to unemployment assistance for other days of unemployment in that week.
On the wider front, the new back to work allowance scheme is proving extremely successful. I draw the attention of the Seanad to the scheme. It provides unemployed people with the opportunity to pursue self-employment ventures or develop new opportunities in areas with potential for development, such as fisheries, local heritage projects, craft enterprises, local tourism and horticulture.
Participants retain entitlement to 75 per cent of their weekly social welfare payments for one year and 50 per cent of their payments for a second year. They also retain entitlement to secondary benefits, such as family income supplement, the Christmas bonus, medical card and the back to school clothing and footwear allowance. They do not have to sign on at their local office and there is no limit on the amount they can earn from employment or self-employment.
The work targeted under the scheme must be new and additional, it will not displace existing jobs and it has the potential for long-term sustainable employment. The new scheme will cater for 3,000 long-term unemployed people and lone parents during the pilot phase. Although it is still at an early stage of development, 340 new jobs have already been created and a further 222 people have taken up self-employment under the scheme.
In addition to these initiatives, about 4,000 people are participating in the vocational training opportunities scheme at present and over 700 are engaged in third level studies. Both these initiatives were extended to lone parents this year. Those Senators involved in daytime education will know the improvements to the scheme have been extremely popular and that there has been a significant take-up.
The integration of the tax and social welfare systems is one of the areas for which I have specific responsibility as Minister of State. The issue is complex and I set up an expert working group last July to examine the area. The group includes academic experts, people with experience in administering the systems and people familiar with the effects of the systems on clients. The group has the task of identifying the problems arising from the interaction of the tax and social welfare systems and the steps necessary to achieve greater co-ordination and integration of the two systems with particular attention to the impact on people's incomes.
I have asked the group to prepare an interim report focusing on poverty traps and disincentives as they affect groups such as lone parents. I regard the elimination of disincentives as a primary objective of integration. The problems of disincentives have been well documented. For example, in certain circumstances a married person with a large family can find he or she is better off on unemployment benefit or assistance than at work. Many factors contribute to this, including the level of family support paid to those on social welfare, the value of non-cash benefits such as medical cards and subsidised rents, and the limitations of the tax system in providing family support to those at work.
Poverty traps are not confined to traditional family types. Much attention is given to poverty traps facing married men with large families. Other families face similar problems. Lone parents may find there is little point taking up work when they take account of the sharp withdrawal rate of lone parent's allowance as well as child care and other work related costs.
I am concerned that the take up rate of family income supplement is relatively low because the FIS can offer a substantial boost to low income earners with children. Again, I have asked the expert working group to examine this in detail. An interim report of the group will be presented to the Government shortly.
In terms of longer term integration, there are a number of ways in which the tax and social welfare systems are inconsistent. The income basis for tax and for social insurance contributions are not the same. It is interesting to note that the Commission on Taxation was of the view that social insurance contributions should be replaced by a social security tax on all income. While there was not unanimous agreement on that point, it merits further examination.
The unit of assessment is different for tax and social welfare. The tax system is based mainly on the individual where the social welfare system has a mixture of individual entitlements and household assessments. There are also inconsistencies facing certain household types and the Senators will be aware of the best known example. A cohabiting couple are treated as married by the social welfare system but in the tax system, they are treated as two single people. The current arrangements are complex from an administrative point of view. I know that measures such as basic income system are seen as a way of simplifying the overall system, but this would have major implications for redistribution and financing. We need an assessment of the advantages and disadvantages in this regard.
The answers to some of these questions have far-reaching implications for how we, as a society, distribute our wealth but I think the time has come for a fundamental rethink of this area. Ireland, like most other countries, has a tax system which is separate from the social welfare system. Our social welfare system, in common with other west European countries, is a mixture of insurance and assistance schemes. In recent years, the viability of such schemes is increasingly being questioned for a number of reasons. Taxation and social security can be seen as two sides of the same coin rather than as separate entities.
The social welfare model which we inherited was designed for an age of stable employment with relatively short bouts of sickness and unemployment. The weakness of the social insurance system, which was based on the assumption of low unemployment, is becoming increasingly evident with rising unemployment rates and the system does not cope adequately with the move towards more flexible work patterns. Many young people, for example, now work on contracts or on a part-time and casual basis and these patterns seem set to grow. It is in this context that we need to look critically at the existing systems and structures. I have asked the working group to examine these issues and I look forward to receiving their main report and informing the Members of it in more detail in due course.
Another issue which is of relevance in achieving better co-ordination and integration of the tax and social welfare systems is the use of a common services number. In 1979, a joint collection system, the PAYE/PRSI system, was introduced and the RSI or Revenue and social insurance number, was adopted as a common customer number for tax and social welfare purposes. RSI numbers are now being issued to young people before they enter the labour force and it is the intention that every adult will have an RSI number that can be used when they wish to avail of a social welfare or related service, or perhaps make an inquiry from their local tax office. The basis of RSI registration is the Department's central records system and the client's RSI number is shown on a social services card on which the client's name is also printed. The person's RSI number, date of birth and sex are encoded on the magnetic strip on the card and this data uses up virtually all the available space on the strip. I wanted to make that point to the House because some people feared a lot of information might have been carried on this strip.
The social services card is designed to facilitate improvements in the quality of services provided to our clients, including the elimination of unnecessary queueing. Only the Department itself, health boards, FÁS and the differential rent section have access to the data base, and only for limited inquiry purposes. All access is governed by the Data Protection Act and the Data Protection Commissioner. The card carries no identity. There is no photograph or identifying marks on the card. It simply has the person's name, RSI number and the date of issue. It is not, as has been wrongly described, an identity card. It is simply used for social welfare purposes. Effectively, it will enable us to bring, I hope, social welfare standards up to that of banking. It is equivalent to a bank card for social welfare purposes. I hope it will help to eliminate queueing, which is an unfortunate feature of the relationship of many people with the Department of Social Welfare.
I referred earlier to the poverty traps faced by lone parents. This is an area in which I have a special interest. Almost 40 per cent of women who become single mothers are in the 15 to 19 years age group. I am particularly concerned about the difficulties faced by these young women because there are obstacles to their participation in the labour force and in education. The Government has already extended the scheme for educational opportunities for the unemployed to include lone parents. We know that the earlier young women become mothers, all too often leaving the education system, the more likely they are to become dependent on social welfare for long periods. Interrupting this pattern is vital.
There is a perception however, that single parenthood means that the individual is consigned to a lifetime of dependency on social welfare. This is strongly contradicted by a study carried out in 1990 by the Department of Social Welfare. This study analysed a sample of new claims made in 1986 for unmarried mothers allowances, which has since been replaced by the lone parents allowance scheme. The study showed that a quarter of those who qualified for payment in 1986 received the allowance for less than one year. By the end of four years, nearly 60 per cent had ceased claiming the allowance. These results clearly demonstrate that, contrary to popular myths, entry into lone parenthood does not necessarily represent permanent long term dependency on the social welfare system. Nonetheless, it is those young lone parents who are most at risk of long term dependency.
This Bill is important legislation. It addresses the problems faced by share fishermen arising from the decision of the High Court last year. It gives share fishermen cover for unemployment benefit, disability benefit and treatment benefit. The Bill entitles volunteer development workers to the full rate of unemployment and disability benefits and provides for new regulatory powers to tackle fraud and abuse of the PRSI and social welfare system.
I commend the Bill to the House.
