asked the Minister for Social Welfare if she will consider introducing a simplified method of collecting social insurance and income tax from employers in respect of short term temporary employees.
35.
Ceisteanna—Questions. Oral Answers. - PRSI and Income Tax Contributions.
9.
asked the Minister for Social Welfare if she is satisfied that the present system of PRSI payments is fair and equitable; if she has any proposals to make any alterations in these payments in the near future; and, if so, the changes proposed.
I propose to take Questions Nos. 9 and 35 together.
I take extreme exception to the Minister's decision to take my Priority Question No. 35 with No. 9. I have tried to be extremely co-operative in matters of this kind with you and with the Government side, but I have lost my right to my Priority Question, which relates to the present system of PRSI payments——
The Deputy's right to his Priority Question has not been taken away. He will get every opportunity to ask supplementaries.
This procedure undermines the whole purpose of the Priority Questions which is to ensure that there will be answers.
The procedure of the Priority Question is to ensure that it will be answered orally on the day for which it has been put down.
It is very unsatisfactory.
The present system of PRSI contributions which are collected by the Revenue Commissioners through the PAYE income tax system has been in operation since April 1979 and is much more equitable than the previous system of mainly flat rate contributions which was regressive for employees with low earnings including temporary employees. Contributions are paid by both employers and employees which entitle the insured population to a wide range of benefits and services. The system has proved satisfactory over the years and there are no plans for any major changes.
However, the Commission on Social Welfare were specifically requested to review and report on the system of pay-related social insurance and health contributions and their effects on the provision of social security and employment and the matter will be reviewed on receipt of the commissioner's report.
The Social Welfare Bill, 1986 which will be circulated shortly will provide for the PRSI exemption scheme for employers announced by the Taoiseach in his statement to Dáil Éireann on tax reform and employment on 23 October 1985 and for the changes in PRSI contributions announced in the recent budget.
I am disappointed that the Minister decided to take the two questions together. Although there is a relationship between the two, the motives behind them are different. We have moved into a period when there is much short term and part time employment and we must ask whether, because of the volume of bureaucracy involved, there is not a very strong case to be made for a simplified system of collecting social insurance on behalf of such employees.
The Deputy will be aware of the existing system and the rates of PRSI contributions. They are designed to enable the Exchequer to meet annual outgoings on the administration of the scheme. The Exchequer subvention is £373.1 million. Therefore, any changes in the system have to be considered carefully so that there will be no change that will affect ability to meet all outgoings. I refer the Deputy to the part of my reply in which I said that the Commission on Social Welfare have been requested specifically to review and report on the system of pay-related social insurance and health contributions. It may be that the commission will recommend change in this area.
Would the Minister refer my question to the commission?
The matter has been referred to them already.
In the light of the Taoiseach's statement on 22 October that alterations in PRSI contributions were being considered and that they would be referred to the NESC for consideration, have any developments arisen since then, and are there any immediate plans to alter the method of payments or the percentages of payments?
The Taoiseach also said on that occasion that the Government had in mind proposals to modify employers' PRSI contributions in order to favour labour intensive industries. We will be consulting with the NESC in relation to these matters. We wait for the NESC to respond to us on these issues.
I am happy to know that the NESC are examining this. Has particular emphasis been laid in a report to the NESC on the potential value to employment, particularly in labour intensive industries, if employers' contributions were to be reduced? Even if this is not to be on a broad scale, would the Minister consider reducing the employer's contributions for a short term, for a year or so, in labour intensive industries in particular?
The proposal currently with the NESC is to examine the transfer of social insurance costs from labour intensive to capital intensive industries, the intent being to reduce employment costs in labour intensive sectors where there is the greatest potential for additional employment. There are differing views on this among economists and statisticians as to how changes in PRSI might affect employment. That is one of the reasons why we have to take as many expert views as possible in order to reach a conclusion on it. The Deputy was right when he said that was the thrust of the submission to the NESC. We now await the views of all the social partners.
I am pleased that the labour intensive industries are being considered seriously. In their consultations with the NESC, have the Department had any consultation with the CII as to their views on whether increased employment would result from a reduction in the employers' contributions?
I do not have information to that effect, but I imagine the Confederation of Irish Industry are represented on that body and that their views will be taken into account.