I move that the Bill be now read a Second Time.
The Bill is concerned mainly with the extension of the existing social insurance and social assistance schemes to implement the proposals in the budget for improvements in those schemes and consequential matters. The Bill also contains a provision relating to social insurance for the Garda Síochána, and other provisions designed to further improve the social insurance system. The explanatory memorandum circulated with the Bill is aimed at clarifying the provisions of the Bill, which, because of its technical nature, and the fact that it includes many amendments of existing legislation, tends to be difficult to understand in places. I trust that the memorandum will assist Deputies in their examination of the Bill.
The budget increases in the field of social assistance will give an extra 50 pence a week to non-contributory old age and blind pensioners making the maximum personal rate £5.15 a week. To meet the special needs of the very aged a further 50 pence a week is being provided this year for pensioners aged 80 or over, which will bring their maximum personal rate to £5.65 a week. The increased maximum rates of pension will enable the scale of means and rates of pension to be extended so as to give an additional rate at the bottom of the scale which will be payable to some persons whose means are outside the present limits for pension. The amounts paid to non-contributory old age pensioners in respect of qualified children are being increased by 40 pence for each of the first two children and 25 pence for each additional child.
Widows' non-contributory pensions and deserted wife's allowances will also be increased by 50 pence a week thus bringing the maximum personal rate to £5.15 a week. The amount paid to widows and deserted wives for qualified children will be increased by 45 pence a week for each child.
As in the case of old age pensions, the scale of means and rates of pension will be extended to give an additional rate at the bottom of the scale which will be payable to some widows and deserted wives whose means at present exclude them from receiving pensions. Orphans' non-contributory pensions will be increased by 50 pence a week to £3 at the maximum. The improved payments for orphans and for dependent children of widows and deserted wives will continue the upward trend in the special provision being made in recent years for those having the care of children. The maximum rate payable to a widow with a non-contributory pension or a deserted wife with two qualified children will go up from £6.45 a week to £7.85 a week; from £8.25 a week to £10.55 a week where there are four children, and from £10.05 a week to £13.25 a week where there are six children. I have also found it possible this year to make a further improvement in the scheme of allowances for deserted wives. Experience of the scheme in operation has shown that the age limit of 50 which applies at present to those who have no dependent children has operated harshly, particularly in the case of persons in the 40 to 50 age group who have difficulty in finding employment. To meet this situation the minimum age limit for deserted wives without dependent children is being lowered to 40 years.
The rates of unemployment assistance for persons in urban and rural areas are being increased by 40 pence a week for the recipient and by a further 30 pence a week where there is an adult dependant. The maximum rate will then be £4.35 for a single person and £7.75 for a married couple resident in an urban area. Outside urban areas the corresponding rates will be £4.05 and £7.35. Where there are dependent children, the rates payable in respect of each of the first two qualified children are being increased by 40 pence a week and in respect of each other qualified child by 25 pence a week. These increases in unemployment assistance will have the effect of automatically extending the means limit for qualification for unemployment assistance.
All of the increases and improvements in relation to social assistance will operate from the beginning of August next.
The increases in rates of social insurance benefits and pensions announced in the budget will come into operation at the beginning of October next. These will provide an extra 70 pence a week on the maximum personal rates of old age (contributory) pension and an extra 60 pence a week on the maximum personal rates of widow's (contributory) pension, disability and unemployment benefit, invalidity pension and maternity allowance. The maximum personal rate of retirement pensions is being specially increased by £1.25 a week to bring retirement pensions up to the level of old age (contributory) pensions. Persons aged 80 or over receiving retirement pension or old age or widow's (contributory) pension will get a further 50 pence a week on their personal rates. There will also be additional payments for dependants. An extra 30 pence a week will be paid for an adult dependant in the case of old age (contributory) pension, invalidity pension, disability or unemployment benefit. In the case of retirement pensions, the increase for an adult dependant will be 70 pence a week to bring the level of payment up to that of old age (contributory) pension. For qualified children there are increases of 45 pence a week in respect of each of the first two and 35 pence a week in respect of each other qualified child for recipients of old age (contributory), retirement and invalidity pensions and disability and unemployment benefits. Recipients of widows' (contributory) pensions will get increases of 50 pence a week per child in the amounts paid to them in respect of qualified children. Orphans' (contributory) allowances will be increased by 50 pence a week.
Finally the rate of death grant payable in respect of an adult will be increased from £25.00 to £35.00 and there will be proportionate increases in respect of children.
These increases will make very substantial improvements in the payments under the various schemes. From October next under the old age (contributory) pension and retirement pension schemes, a single pensioner will get a maximum of £6.20 a week, or £6.70 a week if he is aged 80 or over, while a married couple will get £10.35, or £10.85 if the pensioner is aged 80 or over. A widow without children will get £5.60 a week by way of widow's (contributory) pension at the maximum and £6.10 a week if she is aged 80 or over. The maximum personal rates of unemployment and disability benefit, and invalidity pension will then be £5.55 a week and, where there is an adult dependant, the rate will be £9.30 a week. The increased payments for qualified children will greatly improve the position of beneficiaries who have dependent children, particularly in the case of widows. For instance, a widow in receipt of a contributory pension and who has two children will get £8.60 a week instead of £7.00; a widow with four children, £11.60 a week instead of £9.00 and a widow with six children, £14.60 a week instead of £11.00.
As I have already indicated, these increases in rates of social insurance benefits and pensions will come into operation from the beginning of October next, but certain rates of unemployment benefit which are payable where unemployment continues after 156 days and which are the same as the maximum rates of unemployment assistance payable in urban areas are being increased from the beginning of August next when the assistance rates go up.
These increases in rates of payment and other improvements in the social insurance system are estimated to cost some £13,595,000 in a full year. The social insurance system is based on the principle that the cost is met out of the Social Insurance Fund to which employers, insured persons and the Exchequer contribute in approximately equal shares. For a number of years the Exchequer was required to meet considerably more than one-third of the cost of the system and steps were taken in recent years to bring the Exchequer's share of the overall cost down to that level. However, in the last year the Exchequer's contribution to the Social Insurance Fund has again risen well above the one-third mark and the cost of the improvements now proposed would increase that proportion. Consequently, in order to meet the cost of these improvements and ensure that the Exchequer is not required to bear an excessive proportion of the cost of the social insurance system, it is necessary that the rates of social insurance contributions should be increased substantially from the beginning of October next. The increase proposed in the ordinary rates of social insurance contributions is 40 pence a week. Lesser increases are being applied where some only of the benefits concerned are covered. The increase of 40 pence in the ordinary rate of men's contribution will be shared by the employer paying 22 pence and the employee 18 pence and the total social insurance contribution will then be £2.12 a week of which £1.09 will be borne by the employer and £1.03 by the employee. The increase in the rate of voluntary contribution covering widows' (contributory) pensions only will be 7 pence making it 44 pence and the increase in the contribution which covers old age and widows' (contributory) pensions, retirement pension and death grant will be 17 pence making it £1.08.
A table showing the present and proposed rates of contribution appears in the explanatory memorandum.
With regard to the increases in contributions it is scarcely necessary for me to say that real improvements in social welfare invariably cost money and substantial improvements in the social insurance system must involve substantial increases in the contributions payable by employers and insured persons if the basis of the system as a contributory one providing benefits free of means tests is to be preserved. While, therefore, it may seem that the proposed contributions for ordinary insured persons are heavy, it should be borne in mind that the contributions for purely social insurance from October next for the ordinary male worker will be £1.03 which represents 4.74 per cent of the average weekly pay of industrial workers in December last, £21.70, while the overall contribution payable by him for social insurance, redundancy and health services, £1.21, would be 5.57 per cent of that pay. These percentages are not excessive when compared with the position in other countries. For example, in Britain, at the same pay level, an insured man would be paying £1.26 or 5.8 per cent of his earnings in contributions for purely national insurance and £1.47 or 6.77 per cent in the overall covering health and industrial injuries. In the member countries of the European Economic Community, the latest figures available show that for insurance in respect of pensions and sickness and unemployment benefit, the insured worker was paying 6.58 per cent of his earnings in France, 7.05 per cent in Italy, 11 per cent in Luxembourg, 11.05 per cent in Belgium, 13.15 per cent in Germany and 17.95 per cent in the Netherlands. It must be remembered that the employer also is required to contribute heavily towards the cost of these benefits on the basis of the worker's earnings— 18.32 per cent in France; 30.66 per cent in Italy; 9 per cent in Luxembourg; 14 per cent in Belgium; 13.15 per cent in Germany and 15 per cent in the Netherlands.
Arising out of the increases and improvements in the general social insurance system provided for in the Bill, it is proposed also to improve the benefits payable under the occupational injuries scheme. The increases proposed are 60 pence in the rates of the main weekly paid benefits and allowances with proportionate increases in other payments. All benefits under this scheme are met out of the occupational injuries fund which is financed by contributions paid by employers only which it is not proposed to increase on this occasion.
I will also be putting before the House the Redundancy Contributions (Variation of Rates) Order, 1972, which will provide for the weekly redundancy contributions for men to be increased by 3 pence to 8 pence and for women by 2 pence to 6 pence. These contributions are collected by way of the social insurance stamp for those classes of employees to be covered for redundancy purposes and are additional to the rates of social insurance contribution I have mentioned earlier.
The schemes under which allowances or increases of pensions both contributory and non-contributory are payable in respect of certain prescribed female relatives who give full-time care and attention to incapacitated persons aged 70 and over are being extended from October next to cover such male relatives as will be prescribed and will also be payable with invalidity pensions and retirement pensions. This is being done because cases have come to light in which it has been shown that the necessary care and attention is being provided on a full-time basis by male relatives and there would, accordingly, be a certain inequity in confining the scheme to female relatives only. In addition the rates of payment are being increased in all cases from £2.75 to £3.00, the increased rate being payable from August in the case of payments on the social assistance side and from October where the payment is on the social insurance side.
Apart from dealing with the budget proposals and matters consequential on those proposals the Bill proposes to implement the recommendation contained in the Report of the Commission on Garda Pay and Conditions to the effect that gardaí should be brought within the scope of the social insurance system. Employment as member of the Garda Síochána will, from a date to be appointed by order, become insurable and regulations will enable me to modify the Acts in relation to gardaí in the same way as is done for established civil servants who are insurable only for widows' and orphans' pensions purposes. The garda will also be excluded from occupational injuries coverage as the employment involves risks above and beyond those normally encountered in employment which is covered for such purposes and, in any event, the force have their own scheme of compensation for injuries received in the course of duty.
It is also proposed in the Bill to deal with a number of matters which have given rise to problems in relation to the operation of the social insurance system.
The first, which has caused distress from time to time, is the failure of some social welfare beneficiaries to make any provision for their families. This may be due to any of a number of reasons but where it happens, it is the family which suffers and hitherto the Department have been almost powerless to remedy the situation. In connection with the old age contributory pension scheme, however, power was taken in 1963 to enable that portion of the pension payable in respect of a dependant to be paid directly to the dependant or to some other person on her behalf where the circumstances of the case seemed to warrant such action. This provision has proved to be beneficial in operation and it is proposed in the Bill to provide similar powers in relation to other social insurance benefits and occupational injuries payments where dependants are paid for. It will be possible to extend those powers to the social assistance schemes by regulation.
The second matter relates to the recovery of arrears of social insurance contributions where an employer goes bankrupt.
Health contributions and redundancy contributions are, by virtue of the Health Contributions Act, 1971, and the Redundancy Payments Act, 1967, respectively, deemed to be social insurance contributions. These Acts also give to redundancy and health contributions a period of 12 months priority in the disposal of the assets of a bankrupt or an arranging debtor. Under the Social Welfare Act, 1952, however, a period of only four months priority is accorded to social insurance contributions in similar circumstances. The Bill proposes to remove this anomaly by amending the Social Welfare Act, 1952, so as to give social insurance contributions the 12-month period of priority which applies to redundancy and health contributions.
A further matter concerns the contribution conditions for receipt of maternity allowance which is payable on a woman's insurance only. At present, eligibility for the allowance depends on the woman's insurance record in the last contribution year before the commencement of the sixth week prior to the expected confinement. This has been found to cause difficulty where a claim is made just after the end of a woman's contribution year because until the relevant insurance card has been surrendered to the Department, the claim cannot be decided. In the case of maternity grant, this difficulty does not arise as eligibility may as an alternative be determined on the insurance record in the previous contribution year and the Bill proposes that a similar alternative should operate in the case of maternity allowances.
The final matter relates to the position which will arise in August next, when non-contributory pensions are increased, where for the period up to the end of September next, when contributory pensions are increased, there will be cases where the non-contributory pension to which a pensioner might be entitled would be temporarily more favourable than the corresponding contributory pension which he holds. It was never the intention that the option which was given to contributory pensioners by the 1966 Act to switch to non-contributory pensions where it would be to their advantage, should operate for very short periods and there is provision in this Bill, as in previous years Bills, to prevent such switching where the advantage would only be temporary. The right of pensioners to switch where the advantage would be permanent will remain.
To conclude, I will summarise the cost of the various proposals in the Bill. On the social assistance side there is £3,884,000 for old age and blind pensions, £610,000 for widows' and orphans' pensions, £165,000 for deserted wife's allowances and £2,751,000 for unemployment assistance, the total cost being £7,410,000 in a full year, all of which will fall on the Exchequer. The gross cost of improvements on the social insurance side will be £13,595,000 in a full year, of which the increases in contribution rates will provide some £10,424,000.
I have much pleasure in recommending this Bill to Dáil Éireann for speedy and favourable consideration.