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Dáil Éireann díospóireacht -
Thursday, 22 Apr 1971

Vol. 253 No. 3

Social Welfare (Remuneration Limit for Insured Persons) Order, 1971: Motion.

I move:

That Dáil Éireann approves the Draft of the Order entitled Social Welfare (Remuneration Limit for Insured Persons) Order, 1971.

It is proposed to raise the remuneration limit for social insurance which applies to non-manual workers and as required by statute the draft of a Government order giving effect to this proposal has been laid before each House. The existing limit of £1,200 has been in operation since 6th September, 1965. The new limit contained in the order is £1,600 and it is proposed to give effect to this from the 3rd May, 1971.

Since the first scheme of social insurance was introduced in this country in 1912, there has been such a remuneration limit for compulsory insurance in operation but only in relation to persons employed otherwise than by way of manual labour. The insurance position of workers employed by way of manual labour is not affected by their remuneration and they are compulsorily insured regardless of their earnings. The limit which was fixed at £600 in 1953 at the time of the introduction of the original social welfare system now in operation has since been raised twice, in 1958 to £800 and, as I have said, in 1965 to £1,200.

If the order receives the required approval of both Houses, I intend to make regulations providing for the granting of credited contributions to persons who are brought back into compulsory insurance by the raising of the limit to £1,600, and who might otherwise, in some cases, not be qualified for certain benefits such as unemployment benefit and disability benefit. I recommend the motion for the approval of Dáil Éireann.

I readily admit that the Minister has gone some of the way to help in regard to this Order but I want to say, as I expressed the view when the order was made last week, that the raising of the limit from £1,200 to £1,600 is not sufficient if we take the comparative values of money on the 6th September, 1965, and the 22nd April, 1971. The figure which I mentioned, of £2,000, would be much nearer the target and go much further in giving justice all round. The Minister mentioned the figure of £600 in 1953 but even taking comparative values I still believe that my figure of £2,000 would be much nearer the mark. We in Fine Gael have always expressed the view that we should have wage related contributions and benefits. I hope that at some future date some Minister for Social Welfare, whether he is from the Fianna Fáil side of the House or this side of the House, will introduce legislation which will be accepted by all as being nearer to justice in all cases. I suggest that the Minister study the Fine Gael policy in this regard, a copy of which I will send him if he has not got one.

Which policy?

The last one, The Just Society.

While this is an improvement it is not what the Government should have done and from remarks made by the Minister earlier I think he would be the first to admit that they have not gone far enough. There should be no limit and I see no reason why there should be. If the Minister feels that a limit is necessary so that it can be done on a graduated basis he could at the very least have gone to £2,000. Why he stopped at £1,600 beats me. The trade unions and the labour movement for years have been looking for wage-related benefits and this was a golden opportunity on which to introduce it. Perhaps this was something which the Minister wanted to do quickly and felt that he should wait until later on to do the whole job. If that is so I should like him to say so and we would be prepared to accept that from him. Not alone this Minister but previous Ministers for Social Welfare have been talking for years, or making noises, about wage-related insurance benefit and there is no reason why something should not be done about it. It is not as simple as it looks because you have a number of people who are not insured at present because they are over £1,200. The Minister makes a statement which he should clarify. He says:

If the order receives the required approval of both Houses, I intend to make regulations providing for the granting of credited contributions to persons who are brought back into compulsory insurance by the raising of the limit to £1,600, and who might otherwise, in some cases, not be qualified for certain benefits such as unemployment benefit and disability benefit.

How far is the Minister prepared to go back? Will he go back to previous insurance? This is a very big question and if he is going to link benefits then let us hear that that is being done. When something is left up in the air eventually when it sees the light of day it very often turns out to be entirely different from what we expetced.

With regard to the costings to the Department I am sure the officials have been working on this for some time. I feel that the costings would show that it would be quite easy and profitable to remove the limit because most of those in the higher income bracket who would then be paying social welfare insurance would not be drawing unemployment benefit. They are not the people who are out of jobs. The trouble here is that out of the 70,000 odd people unemployed the vast majority are people who had from £25 down as far as unemployment benefit is concerned; and as far as sickness benefit is concerned I am sure it could be arranged that the firm paying the wages could stamp the cards. If the Minister felt that this was the way to deal with this so that there would not be a double payment, many of those places which pay full salaries, again in the higher bracket, would not come on the fund at all. The Minister should look into the problem and get his officials working on this matter of having the limit removed and have wage related benefits and payments within the next 12 months. I see no reason why this should not be done.

The Minister should be thoroughly ashamed to come into this House in 1971 with a proposal to carry on the disgraceful system of limiting insurance to any ceiling when as far back as 1969, with a great display of progression and great applause for themselves, the Government announced in their now want-to-be-forgotten Third Programme for Economic Expansion, and their first programme for social development, that they had approved proposals of the Minister for Social Welfare for the preparation of legislation to provide for a scheme of pay related unemployment disability benefit.

That is correct.

In the 250-odd pages of the programme reference is made again and again to the need to bring more and more people within insurance. Three years ago we were told the Minister for Social Welfare was arranging for a detailed examination because the Government's White Paper pointed out that the existing social insurance does not cover non-manual workers earning over £1,200 a year. Neither does it cover self-employed persons, including farmers, who cannot, therefore, avail of such social insurance schemes to provide against sickness, old age or for survivor pensions. In 1969 the Government regarded as an urgent priority the extension of existing social insurance schemes to bring in these people, but there is no extension now. The Minister knows that all he is doing is going some of the way towards the 1965 figures. I have been unable to trace the answer to a Dáil question which the Minister gave me some months ago. Perhaps he would give the information in his reply.

I think it is 30,000.

I think it was 24,000 or 25,000 at that time. With respect, the Minister should have given that figure in his opening statement. This practice by the Minister and his colleagues of giving utterly inadequate opening statements on vital matters of this kind should cease. Clearly the most important figure for the Dáil is the number of people who are being affected by this. The 30,000 people to whom the Minister refers are those people who, because of the Minister's tardiness and the Government's delay, have gone out of compulsory insurance over the past six years. We are now in a position in which over one-fifth of the workers are not socially insured. It is proposed to remedy that to some extent by this proposal but even within the lifetime of the existing national wage agreement many of the workers who have been brought back into compulsory insurance for their own benefit today will be outside it. We know that the experience has been—and this is without regard to what Government held office—that the Oireachtas has delayed, time and time again, in making the necessary amendments. Once artificial ceilings are fixed for anything, social insurances, taxation, penalties for offences or any other purpose there is always delay on the part of the Parliament in bringing those ceilings up to contemporary money values. On that score, we believe the Government deserve to be very severely censured.

What has happened the Government's legislation? What has happened the proposals that we were told two years ago in a most expensively produced public document had already, presumably, reached the draftsman office? I do not want to go into the multitudinous distractions and disruptions in attention to duty which we know are afflicting the present Government but it is indicative of the terrible collapse of concern on the part of the Government that such a vital matter has been so long delayed. Here we have this patchwork legislation once again being brought before the House. I have no doubt that the Minister in replying will make the kind of specious promise which he and colleagues in the Government give, that it is now receiving active consideration and that we shall probably be soon considering proposals for the abolition of the ceiling on social insurance and he will probably capture the headlines with that statement in the same way as they captured them in 1969 and before that, but it is about as empty as the promises to do something about the ever spiralling demand on rates, particularly in relation to health services.

As Deputy Barry has already pointed out, so far as Fine Gael are concerned there is no justification for having any limit and, as more and more of our people pass from being self-employed into the category of being employed by others it becomes easier to insure our population. It is now acknowledged that it is much easier to have everyone within the insurance net. In that situation we accept as some measure of improvement the Minister's proposal but we cannot allow the occasion to pass without protesting about the Government delay in giving effect to the overhaul so vitally required in our social insurance code. If the Government do not do it there will be that kind of tragic situation of which we are all too well aware, such as has occurred in the past and is still occurring in which people drift away from insurance, even from making the voluntary contributions in relation to widows' and orphans' pensions and then with the inevitable experience of mankind in some cases, meet with terrible family tragedy.

The whole purpose of having social insurance is to organise our society to protect people against that kind of situation, against human frailty and the tragedies that arise out of forgetfulness, out of man's natural optimism in thinking that tragedy will not come his way but is the experience of others. That can be avoided by having an adequate social insurance system. It is not good enough today to be limiting this to what is estimated to be the equivalent of £1,200 six years ago. The ceiling must be removed once and for all. We regret the Minister had not some proposal of that kind today and if he had not, at least he could have gone to the figure of £2,000, which Deputy Barry mentioned. That might have led us to a situation where in three years time we would not be in the state of distress in which we have been for the past four or five years when, instead of increasing the limit, we left the matter in abeyance.

The Minister's excuse for this was that he was preparing more comprehensive proposals. We now find the proposals are not before us. We still have the old system and there is no political, economic or social indication that the Government will have any time in the foreseeable future for the necessary overhaul of our whole social outlook. On that account, we accept the Minister's proposal with reluctance because it is not better and we hope this is the last time we shall try to patch the quilt and that it will not be too long before Dáil Éireann, with a different Government, is considering the sort of social revolution that is necessary if we are to have what we can well afford to have, a society in which all these calculable risks and inevitable experiences of mankind can be provided for. We have all the necessary techniques and skills and it is high time that this was done.

We do not think the decision of the Minister to raise the limit to £1,600 is good enough and we have just reason for saying so. Already there are thousands of people who, over the years, have been deprived of social welfare benefits because at various times in their working lives they exceeded the limit and were forced to discontinue paying social welfare insurance. The other day I came across a case of a man who had been employed as a paperkeeper in the Department of Industry and Commerce. He did an examination at one stage and went over the maximum and was told he could not continue paying social welfare insurance. After some years, the limit was increased and he was back on social welfare insurance. This man retired in 1968 and he has spent three years writing to the Department trying to have his case examined sympathetically by the Minister. He was deprived of contributory old age pension, not through any fault of his, but because on so many occasions in his working life he went over the maximum. In years to come we shall see people deprived of normal contributory old age pensions because the Minister is setting a ceiling on the upper salary limit at which people must pay social welfare insurance contributions. We have got to consider what will happen to those people outside the limit who will subsequently be deprived of contributory old age pensions.

I have brought to the Minister's attention the case of a man working in CIE who was promoted, but as a result of his promotion he was brought outside the limit. This means he is now getting less than his colleagues who were not promoted and remained inside the limit. It is hard for a man who worked hard and got promotion to find himself at a disadvantage compared with his colleagues. This is what happens when ceilings are fixed.

There are too few people paying social welfare contributions. The net should be spread right across the board and even people earning £3,000 should be included. If they do not want to avail of social welfare benefits and prefer to pay for private medical services let them do so but everyone should pay social welfare contributions the same as they do in England. They do not have to collect the benefits, but if we made them pay we would be able to provide more for the disabled, old age pensioners, widows and unemployed persons.

We cannot expect to obtain more money if we do not enlarge the numbers paying. A ceiling of £1,600 at today's rate of inflation is not sufficient. If we made everyone contribute the Minister would not have to go to the Minister for Finance demanding extra for those in need of it. Although the Labour Party are accepting this new limit we do not believe it is sufficient. The only answer to the problem is not to fix an upper limit and until that is done we shall never have a proper social welfare service.

All that is happening here is that people who were allowed to fall out of the scheme are being brought back in. They fell out of the scheme because their wages had been increased to cope with increasing inflation even though their real standard of living has not risen. We are not making any extension or improvement; we are merely retrieving the situation.

Since 1966 30,000 people have gone out of the social insurance net because their wages have risen above the limit of £1,200 to compensate them for the increasing cost of living. Within a few months some of the people we are now bringing back will go out again because their incomes will rise above the £1,600 limit. The Government waited too long before increasing the limit. This is something which should be reviewed regularly. I share the views of other Members of the House who think that £1,600 is inadequate; a figure of £2,000 would make a real extension to the scheme. The Government took a long time to make this decision. Early last session I had questions about it, and I am sure other Deputies had as well, because pressures were being brought on me to bring this forward. The Minister has shown a marked reluctance to take a decision on this question and I cannot understand why. It was quite evident a decision was going to be taken, yet no actual decision was made. I should like to know the reason for the delay.

There has been talk in the air about introducing a system of pay related unemployment and disability benefits with pay related contributions. Mention was made of this in the Third Programme for Economic Expansion published in 1969 and at that time the Minister was asked by the Cabinet to prepare legislation to provide for a scheme of pay related unemployment and disability benefits. How far have the Minister's preparations gone in this regard? Why are we not at this stage having a fundamental reappraisal of the whole situation instead of this palliative measure? Deputy Geoghegan, the Parliamentary Secretary, got very good milage in the Irish Press when he adverted to the introduction of a pay related contributions and benefits. I should like to know why they are not appearing before the House today instead of this inadequate measure which will not mean a real increase in coverage. It is really only patching up what inflation has done.

I want to express my disappointment at the inadequate order which the Minister has brought before the House. The provision does not mean any significant improvement in the general coverage of our social security system. It means that some thousands are being brought back again into social insurance coverage. That can hardly be regarded as a major improvement. In 1965, the limit was raised from £800 to £1,200. Since then wages and salaries have rocketed. In 1964, we had the ninth round of wage and salary increases, an increase of 12 per cent with a minimum of £50 per annum. In 1966, we had the tenth round which averaged £50 per annum. In 1968, we had the eleventh round which averaged £75 per annum. In 1969-70, we had the twelfth round; one could add £200 per annum generally for that increase. The thirteenth round, 1971, gives an initial £100 per annum. Since the date of the last adjustment there have been, at a conservative estimate, increases of the order of £500. The figure therefore should have gone up to £1,700 in order to retain its current applicability. This figure of £1,600 is quite out of balance. It is most inadequate and it will deprive many, many thousands of workers of coverage, assuming it will be some considerable time before the limit will be raised again. Not only does it barely bring back into coverage those previously covered and now out of benefit but it fails to take cognisance of the increases in wages and salaries which might reasonably be anticipated in the first half of the 'Seventies. This is a retrograde step.

On the basis of departmental estimates there are some 5,000 wage and salary earners in the income bracket £1,600 to £1,800 eligible for insurance. They are now out. If one takes the modest salary of £1,800 to £2,000 another 4,000 wage and salary earners are excluded. Between £2,000 and £2,500 there are another 5,000 who could be brought within the scope of social insurance. On the basis of estimates from the Department of Social Welfare there are 14,000 persons between £1,600 and £2,500 a year who could have been brought within the scope of social insurance. This large number of middle income group families will now be denied the benefit of compulsory insurance. Admittedly, it is open to anybody to become a voluntary contributor. When I went over the limit I became a voluntary contributor and, should I drop dead, my widow would get a contributory. pension. I am covered for other benefits as well. Unfortunately many people do not do this. I think only 5,000, or thereabouts, have opted for voluntary insurance.

This decision of the Government exposes the failure by the Government to introduce in the early 'Seventies the major transformation necessary in our social insurance system. Deputy Bruton has quite rightly pointed out that we must bring into operation a wage and salary related system of contribution rates and of general benefits. That is the only way we can get rid of this quite dreadful position. I would urge the Minister to go with all haste to the Cabinet and there insist that all employees, irrespective of income, are brought within the scope of the social insurance compulsory system. Unless we do that there is little hope for a radical reform of the system. I am quite convinced that, despite the difficulties with regard to social insurance, the health services, housing grants and so on, both the Minister and the Minister for Health will be able to devise an adequate and effective integrated system.

I have no option but to accept the order, and I accept it subject to these criticisms.

I am generally satisfied with the acceptance of this order. I am not disappointed when Deputies say the limit should have been higher. I should have liked to have made it higher. I hope to abolish the limit altogether. Deputies are not so naive that they do not know there are other things involved. One Deputy referred to the delay in making the change. There was delay because other things are involved. Adjustment of the limit is always a problem. One has to take into consideration income limits in relation to health benefits, scholarships under the Department of Education, and so on. These are all based on the social insurance limit. No doubt the problem will be overcome.

I want to thank the House for discussing this in such a responsible manner. A pay related scheme is making progress. It is being drafted. Every year when the Budget is introduced the Department of Social Welfare has to deal with a new set of changes. Allowance must be made for this. As I say, progress is being made in regard to a pay related scheme. The scheme has been approved. Indeed, it got my blessing when I was in the Department of Social Welfare on a previous occasion. Progress will be as rapid as possible. I hope that the progress will be as rapid as possible. On a previous occasion when I mentioned the increase in this limit, I said that I hoped to abolish the limit completely. We may have incorrect ideas about the number the abolition of the limit will bring in If we do not bring in local government employees and civil servants generally, the abolition of the limit will bring in 30,000 people fewer so that there are not many on the fringe now.

Can the Minister state how far he will go back with his link benefits?

Any person who lost out since the last increase, which I think is very generous.

The Minister is not giving them anything.

The Deputy must be fair and give consideration to what is involved here. I think it is reasonably generous to link up those who went out the last time.

Motion put and agreed to.
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