The Minister for Social Welfare is in possession.
Private Members' Business. - Social Welfare Bill, 1992: Committee Stage (Resumed).
Question again proposed: "That section 6 stand part of the Bill."
Before the debate was adjourned I was dealing with the points raised by the Deputies opposite in relation to the family income supplement. I think I had more or less dealt with most of them apart from those raised by Deputies Bell and Kavanagh, who suggested that this scheme should be administered by the Department of Labour. I will consider this suggestion. Even though I have not given the matter any thought, I will not simply hold onto a scheme just because it is administered by my Department.
Last night I outlined my views on the carer's allowance, and think I will follow this principle in respect of that allowance. I can consider this suggestion as there is a connection with the Department of Labour. The scheme is administered by the Department of Social Welfare to raise the incomes of those who are working to a certain level. Therefore it is not a social welfare scheme and I will have the matter considered. I do not know whether my colleague in the Department of Labour would want to administer this scheme, but this is a suggestion that we can consider. Even though I have not considered it, good ideas present me with few problems and I am always willing to consider them.
There is an element of noise intruding into the chamber and it must cease.
I asked the Minister if he had taken on board any of the recommendations made by the Commission on Social Welfare in their report, but he did not reply. As only a small number of people were taking up the family income supplement they suggested that the net income of applicants should be taken into account rather than their gross income. I also asked him for some statistics, which I subsequently found. These are disturbing and provide an extra dimension to the picture. They point to a low uptake in 1990, when only 6,569 people availed of the scheme.
While I appreciate that the Minister would be happy to hand this scheme over to the Department of Labour, and he has mentioned that he would be happy to get rid of the carer's allowance to the Department of Health, I do not know whether I could support a proposal that this sum of £9 million, which is made available to needy families, be transferred. Despite the fact that there has been a low uptake, those of us on this side of the House, should be happy that at least £9 million is being made available to these families.
However the statistics which provide a breakdown of the figure of 6,569 recipients are disturbing. One might presume that they were all getting substantial payments but instead, it is disturbing to see that the weekly rates for some of the families can range from £1 to £10 and that of the 6,000 recipients almost 1,000 fall into that category. The second lowest payment band between £11 and £20 has the highest uptake at 1,700. At the top end of the scale there are very small numbers involved. There are only 210 families in receipt of the maximum payment.
We all have our reservations about this scheme. We feel that more families who are entitled to it are not getting it because they are not aware of it or because we have not convinced them to apply for it. Bad as the scheme is, the Minister should try to improve it for existing recipients and for those who should apply for it. Rather than wish this on to some other Government Department we should improve the scheme. We should not talk about abolishing the carer's allowance or passing it to some other Department either. The Minister should not suggest that this is not a very good scheme and that he really only wants good schemes in operation. I would remind the Minister that £9 million at least filters its way through the system to deserving families. The carer's alllowance is a foundation stone for the future. It is not something that should be transferred from one Department to the other because the Minister might get too much flak because of the nature of its application. I hope the Minister shares my concern that so many people only benefit from £1 to £10 and that the take-up is so small. It will only be improved if the Minister improves the terms of the scheme, possibly along the lines suggested by the Commission on Social Welfare.
The suggestion of transferring the FIS scheme to the Department of Labour did not come from the Minister but from my colleague, and I support it. We suggested that it might be more appropriate for the scheme to be transferred to the Department of Labour, not because we want to eliminate the underspending of £9 million but rather because we want to supplement that sum with support finance from the European Social Fund. Another reason why the scheme should be transferred is because the bulk of the work in relation to lower paid workers is carried out through the agencies of the Labour Court, the joint industrial councils, the joint labour committees, the hotel and catering organisations and through the farm workers JIC. Rather than trying to save £9 million, we hope to get additional moneys through the European Social Fund to assist the lower paid by doing this, not to be a prop to employers or a subsidy for bad employers who pay low wages. We want to assist those who for one reason or another earn low pay. The Minister will obviously have to consult with the Department and he might decide that this is not a good idea, but we look forward to hearing from him on it. We make our suggestion for positive reasons only.
It is not because £9 million is being paid out from the Department of Social Welfare that I am considering transferring the scheme to the Department of Labour. I am not trying to save money. If £9 million is being provided in the Estimate for the Department of Social Welfare it will also be provided in the Estimate for the Department of Labour. I was just taking up the point made by Deputy Kavanagh, which was supported by Deputy Bell, that the FIS might be more appropriate to the Department of Labour. I have not given it a lot of thought, but I am prepared to consider it.
It is disingenuous for Deputy Byrne to suggest that I thought the FIS and the carer's allowance were not good schemes. I am for those schemes in principle and I want the carer's allowance to become a proper carer's allowance. An appropriate carer's allowance could save the State a vast amount of money. During the break at 7 p.m. I provided Deputy Byrne with this document and told him on which page he would get the figures. In future, if the Deputy goes on like this, I will not be as helpful. I will have to be careful about that.
Earlier, the Deputy made a point about tax and whether the family income supplement should be assessed on net pay. That is being considered in the Department. The consultant to whom I referred earlier who did a report for the Department on the take-up of the FIS suggested that up to 12,000 recipients could take up the scheme. The consultant concluded that there was a possibility of proceeding along the lines of using the net income but on balance he thought it was better to stick with gross income. If we transferred from gross pay to net pay some people might lose out. However, the suggestion is being considered.
The family income supplement scheme is a good scheme. The report of the Commission on Social Welfare concluded that in the long term, as resources permit, family income supplement should be discontinued and that children's allowance payments and realistic marginal tax rates for low paid employees should be the instruments of incentives policy; but in the short term they were forced to conclude that the family income supplement should be retained and modified, as its abolition or abatement would reduce the incomes of low income families. Since that report was compiled we have simplified the scheme.
I will just give the figures with regard to the take-up of the family income supplement. The take-up in 1991 was 7,200 families. The uptake of this scheme was quite small at the start. The scheme was introduced in September 1984 and the take-up was 1,424 families. This grew in 1985 to 4,664 and now the figure is 7,200. In 1988, for some reason that is not obvious to anybody, the figure was down on 1987. We wonder why there has not been a greater take-up of the scheme. Since I became Minister I saw various newspaper articles saying that people are not taking up the scheme and various groups have concluded that not everyone who is entitled to it has taken it up. The Department have advertised it and made it well known. We have done all we can. There are families who should be taking advantage of the scheme but are not doing so. About £9 million was spent last year and we expect the figure this year will be roughly the same. We are still well short of the 12,000 families who could be taking up the scheme. We have advertised it and made it well known, yet people have not taken advantage of it.
I have tabled an amendment in this regard but it was disallowed, for reasons which I fully understand. I did not expect to get an answer to all of the questions I posed earlier. The issue is as difficult and involved as when we started. Publicity about the scheme may have reached saturation point but I welcome Deputy Bell's suggestion regarding the posting of leaflets.
A married man with two children, earning £175, could claim the FIS, yet another family where there is no unemployment would be entitled to only £112. It is difficult to understand why there is such a huge margin. For many years I was of the opinion that the FIS could be the vehicle by which thousands of people would go back to lower paid work. I do not want it to be a crutch for employers. The longer this debate continues the more I am convinced that the FIS will never achieve what I had envisaged. The most we can expect is the inclusion of a further 4,000 or 5,000 families in the scheme. Even 10,000 or 12,000 would have little impact on the 280,000 who are out of work. I am not certain but the transfer of this scheme to the Department of Labour would improve the position but it should be considered.
I suggested earlier that eligibility for the FIS should be based on net income rather than gross income. The Minister replied that there would be winners and losers in that system. I do not believe there would be too many losers. A spouse earning a gross income of £175 might have to pay the usual costs such as mortgage interest and travelling expenses, as well as a certain amount of income tax. If income tax of, say, £25 or £30 were to be disregarded in the application for this FIS, it would make it far more attractive for that man to continue in employment. We are losing jobs all over the country. Some jobs have simply become too costly for the employer. Would it not make sense to increase the FIS by about £25? Families at a certain level may qualify for a supplement of £5 but that does not serve any purpose.
Department officials have suggested that if small farmers were allowed into the scheme it would cost a total of £10 million. It must be remembered that 6,500 or 7,000 are already in the scheme at a cost of £9 million. There are about 13,000 farmers in receipt of farmer's dole, at a cost of about £36 million. I find it difficult to understand how so many small farmers would qualify, given that they are in receipt of unemployment assistance. The Minister knows that a great number of people with small and medium sized farms who are not entitled to unemployment assistance are on the poverty line. How can the Department calculate that it would cost an extra £10 million? All the farming organisations have been clamouring for this for some time. It would seem to be an answer to a particular problem. Those people are in situ and have a so-called job. They are, of course, under-employed and if this trend continues they will not be living in the same place in three or four years' time.
The social implications might impel the Minister and his officials to consider this question. His predecessor floated the idea last year of making £1 million available for distribution to small farmers at a certain level and it was announced by the Minister for Finance in the budget. That money was never paid out because a scheme could not be devised for disbursing it. A modified version of the FIS might be more appropriate.
A constituent of mine who telephoned me this evening went to great trouble to become self-employed as a precision engineer and put his redundancy money into this project. He found himself in a valley period and applied for unemployment assistance but was told he had the capacity to borrow his way out of a bad patch. He was actually up to his ears in debt. If he could establish his entitlement to unemployment assistance he would be eligible for the enterprise scheme. One is dependent on the other. Many people would agree that the family income supplement would be very useful for the self-employed. I was very surprised to overhear the officials tell the Minister that it would cost £25 million to fund the scheme for the entire self-employed sector, and I admit that we do not have that money. However, a variation of the scheme could be considered. I would like to hear the Minister's views on this matter.
Since we spoke about this matter earlier I contacted two people in my constituency who qualify but did not apply for the family income supplement. One family is entitled to about £25 per week while the other is entitled to the minimum supplement. When I asked these people why they did not apply for the family income supplement they said they believed they were not entitled to it because it is social welfare. People associate the FIS scheme with unemployment benefit and believe that to qualify they must be on the dole. I told these people that while the scheme is administered by the Department of Social Welfare it is a supplement to a person's income. People generally believe that the supplement is social welfare and that if they are employed they are, not entitled to it.
FÁS offices are located in virtually every urban area in the country, which is where the vast majority of people entitled to the family income supplement live. These offices operate near all the main industrial areas throughout the State, although there are not as many in rural areas as in urban areas. FÁS deal with the registration of apprenticeships and operate schemes designed to get people back to work. If the Minister transferred responsibility for the FIS scheme to FÁS people's attitudes would change. Therefore, I strongly recommended that he consider that suggestion.
There should be greater co-operation between the Revenue Commissioners and the Department of Social Welfare as regards the FIS scheme. There has been a great deal of talk about the whole question of tax and social welfare. The classic example has been given by Deputy Connaughton of people paying tax to the Revenue Commissioners while the Department of Social Welfare pay them back money by way of the family income supplement scheme. Single people earning £3,700 or more and couples earning £7,000 or more are taxed at present. It is a waste of money to collect taxes from people on the one hand while paying the same people money by way of the family income supplement on the other. I have advocated for a number of years that single people earning £5,000 or less and couples earning £10,000 or less should not be taxed. We should concentrate on taxing the higher levels of income at a greater rate. At present the reverse is happening; we are reducing the higher levels of tax. People earning £150,000 a year save about £16,000 in tax as a result of a reduction in the higher rate of tax.
I am not convinced that it would be acceptable to transfer responsibility for the FIS to the Department of Labour. I believe the Department of Social Welfare are a much more caring Department and know more about poverty than do the Department of Labour. There is a great case to be made, however, for the transfer of the carer's allowance to the Department of Health. In those circumstances the Department of Health would realise the great value of allocating more money to carers, thereby saving enormous sums of money in hospital and nursing home charges.
(Carlow-Kilkenny): At this stage of the night I think we may be hallucinating, and I too am affected. We are talking about transferring responsibility for schemes but it is the schemes that matter. I do not care whether the Department of Foreign Affairs operate the carer's allowance from the embassy in Athens as long as they improve on it, or whether the Department of the Marine operate the family income supplement from a boat at Inishvickillane as long as the scheme is improved. I do not know why Deputy Byrne is concerned about this matter. I have a suspicion that he has a burning ambition to be Minister for Social Welfare in the future and he wants all this money under his control.
Amazement was expressed at the fact that 1,000 people will gain only from £1 to £6 on the family income supplement. I think that is marvellous. I was shocked to learn that one of my constituents was entitled to £40 family income supplement. Therefore, he was working for slave labour. I was glad he was able to avail of the £40 extra. Unfortunately, having worked for so little for many years he lost his job about a month later.
I will hallucinate again and agree completely with all members of The Workers' Party that the idea of paying income tax on the one hand and getting money back under the family income supplement scheme on the other, is crazy. As long as the schemes work that is all that matters. The more people who avail of even small amounts of money under the family income supplement the more we will be convinced that people are not working for slave labour. Therefore, the fewer people who are entitled to £40 or £45 in family income supplement the better.
I will deal first with Deputy Connaughton's point. One of my predecessors in this Department considered the possibility of extending the FIS scheme to farmers. It has been calculated that a total of 9,000 farmers would avail of the FIS scheme at a full year cost of £9 million — I incorrectly gave the figure of £10 million earlier. If the scheme was extended to the whole self-employed sector the cost would be £25 million. That proposal was considered but it was not taken on board. The Departments of Social Welfare and Agriculture and Food were anxious to extend the scheme to small holders but that did not prove possible because of the extra cost involved. However, I will consider that matter again.
Deputy Bell referred to the family income supplement. He gave possibly the best answer to the question as to why there has not been a greater uptake of this scheme. It is probably because people assume that it is social welfare and that in order to avail of it they must be unemployed. That is probably a factor why a certain percentage of people have not taken up the scheme, but I do not know how to overcome that problem. I do not know whether Deputy Tomás Mac Giolla was in the House when I spoke about the carer's allowance last night, but I spoke in exactly the same terms and for the same reasons as he spoke tonight.
Those on the Opposition benches have come up with an idea in relation to the Department of Labour. I am considering both sides of the argument. I recognise the Deputies' concerns that the Department of Social Welfare could be more caring than another Government Department.
I agree with much of what has been said about tax. There are so many circular transfers of funds that this system is mindboggling. We have tax, social welfare assistance, FÁS and the Department of Labour. I spent a few hours one day talking about such matters with officials at departmental level. The same money is going around different agencies. We tax people and then we give it back to them. It is illogical that we tax people and then assist them with family income supplement. The answer could be to provide higher tax exemption limits. The fact that I am now in Cabinet has not changed my views in relation to tax rates. I went on public record some time ago with those views, but in deference to my Cabinet colleagues of another party I shall keep my mouth shut in that regard and confine myself to social welfare issues. I am not saying that I necessarily disagree with the Deputy in that regard, but I am not the Minister for Finance and other people have other views on that matter.
(Carlow-Kilkenny): The Minister should wait until next year.
Deputy John Browne also talked about these schemes. The person to whom he referred, who earned up to £40, seems to be in an extraordinarily low paid job. As I have said, we have to guard against the scheme being open for exploitation by employers. There is a danger that employers could exploit people in very low paid jobs and the Department of Social Welfare would be required to top up their earnings. A balance has to be struck in relation to limits and so on, otherwise the scheme would be completely exploited, particularly in certain industries. That is something I spoke about earlier today.
I wish to make a brief point in relation to the Minister's final comment. I hope that the Minister corrects me if I am wrong, but I understood him to say that if the scheme were extended to the self-employed and farmers a cost of about £25 million would be incurred.
I said that the total cost would be £25 million.
Much is heard about slave labour and people being paid paltry wages. However, to me this issue demonstrates what happens when people try to do something for themselves. If the scheme as it stands at the moment costs the State £9 million and would cost another £16 million if it were extended to the self-employed, there must be an awful lot of people in this country working for themselves who earn much less than those earning wages. That point should be taken on board; it is part and parcel of the problem of people being unwilling to make the effort to start up in business for themselves. In this country the system is geared towards those who work for someone else, and the figures prove me to be correct in that. The Minister is now saying that it would cost £16 million extra to extend the scheme to the self-employed, which implies that there are many people out there——
(Carlow-Kilkenny): Nearly twice as many.
——who are self-employed and earn less than those who are employed by others and in receipt of family income supplement. That is what is wrong with the whole structure of our country. There is no incentive whatsoever for people to try to start up their own business. Those who are young and have no assets and go to the banks cannot get the money required. For those who do start up their business and make a very small income in the early days it is much easier to go back on the dole — there is no scheme such as family income supplement to support them. Everything is geared towards those who are employed.
Ireland has nearly 300,000 unemployed. The only way that the unemployed problem will be eased to any significant extent is to get people to do things for themselves. The Minister knows as well as I do that there are thousands of people who are willing to do things for themselves, but unfortunately they are outside the system and they are not being encouraged into the system. Those people move into the area of the black economy with the result that their businesses never grow properly or expand because they fear that the authorities will find out about them. They are forced to keep their enterprises small, to put the money in their pockets and to say nothing to anyone.
Our nation is losing glorious opportunities because of the way we think when it comes to benefits. If there are nearly double the number working for themselves who earn less than those who are employed and are eligible for FIS, then we should seriously consider the benefits to the Exchequer and the economy in extending the scheme to the self-employed. The £25 million paid out to get the self-employed into the system would bring back twice as much in the long term through various taxes.
I am glad that Deputy Barrett, rather than myself, made the case for the self-employed. If it had been me, Deputy Eric Byrne might be encouraged to think that I was standing up for my former profession. Deputy Barrett has made some very good points. However, I have to say that for the very near future I cannot visualise approval being given to bring another £25 million into the FIS scheme under the present circumstances and I should not like to give the impression that that is likely. The Deputy's comments in relation to the economy and employment have been self-evident to me for a long time. If the unemployment problem is ever solved it will be solved by those in business taking the responsibility to create employment.
Earlier today Deputy Byrne talked about tax evasion, tax avoidance and the collection of large sums of money. However, the reality for most self-employed is that they scrape together a living by working harder and longer hours than most of those in any other form of employment. Most of the self-employed do not make great fortunes; they are not in the category which earns £40,000 or £50,000 a year and they do not have offshore companies. Politicians sometimes give the impression that all self-employed are involved in tax evasion and other kinds of abuses. That is not correct, but I am afraid that the public perception is otherwise.
I would like to be able to extend the scheme. Before I gave the figures, however, I said that someone had to pick up the tab. I am glad that Deputy Barrett made the point that many self-employed people are worse off than those who are employed and in receipt of FIS. The Deputy's comments emphasise the fact that many of the self-employed are in much more difficult circumstances and have more headaches than those in paid employment. I do not honestly foresee that in the next few years it will be possible to extend the FIS scheme to the entire self-employed sector. As I promised Deputy Connaughton, I shall again examine the issue of extending the scheme to farmers. However, in principle, if the scheme were extended to farmers then it should be extended to include all self-employed. The costs are such that I would be wrong to give the impression that that will happen. I do not visualise the Government being flush with money in the next few years.
Question put.
The Committee divided: Tá, 63; Níl, 57.
Tá
- Ahern, Bertie.
- Ahern, Dermot.
- Ahern, Michael.
- Aylward, Liam.
- Brennan, Mattie.
- Brennan, Séamus.
- Briscoe, Ben.
- Calleary, Seán.
- Clohessy, Peadar.
- Connolly, Ger.
- Coughlan, Mary Theresa.
- Cowen, Brian.
- Cullimore, Séamus.
- Daly, Brendan.
- Davern, Noel.
- Dempsey, Noel.
- de Valera, Síle.
- Leonard, Jimmy.
- Leyden, Terry.
- Martin, Micheál.
- McCreevy, Charlie.
- McDaid, Jim.
- McEllistrim, Tom.
- Molloy, Robert.
- Morley, P. J.
- Nolan, M. J.
- Noonan, Michael J.
- (Limerick West).
- O'Connell, John.
- O'Dea, Willie.
- O'Donoghue, John.
- O'Hanlon, Rory.
- Ellis, John.
- Fahey, Frank.
- Fitzgerald, Liam Joseph.
- Fitzpatrick, Dermot.
- Flood, Chris.
- Gallagher, Pat the Cope.
- Hillery, Brian.
- Hilliard, Colm.
- Hyland, Liam.
- Jacob, Joe.
- Kelly, Laurence.
- Kenneally, Brendan.
- Kirk, Séamus.
- Kitt, Michael P.
- Kitt, Tom.
- Lawlor, Liam.
- Lenihan, Brian.
- O'Keeffe, Ned.
- O'Kennedy, Michael.
- O'Leary, John.
- O'Rourke, Mary.
- O'Toole, Martin Joe.
- Power, Seán.
- Quill, Máirín.
- Roche, Dick.
- Smith, Michael.
- Stafford, John.
- Treacy, Noel.
- Tunney, Jim.
- Wallace, Dan.
- Woods, Michael.
- Wyse, Pearse.
Níl
- Ahearn, Therese.
- Allen, Bernard.
- Barnes, Monica.
- Barrett, Seán.
- Barry, Peter.
- Bell, Michael.
- Belton, Louis J.
- Bradford, Paul.
- Browne, John (Carlow-Kilkenny).
- Byrne, Eric.
- Carey, Donal.
- Connaughton, Paul.
- Cotter, Bill.
- Creed, Michael.
- Currie, Austin.
- Deasy, Austin.
- Deenihan, Jimmy.
- De Rossa, Proinsias.
- Doyle, Joe.
- Dukes, Alan.
- Ferris, Michael.
- Finucane, Michael.
- FitzGerald, Garret.
- Flaherty, Mary.
- Gregory, Tony.
- Harte, Paddy.
- Higgins, Jim.
- Higgins, Michael D.
- Howlin, Brendan.
- Kavanagh, Liam.
- Kemmy, Jim.
- Kenny, Enda.
- Lee, Pat.
- Lowry, Michael.
- McCormack, Pádraic.
- McGinley, Dinny.
- Mac Giolla, Tomás.
- McGrath, Paul.
- Moynihan, Michael.
- Nealon, Ted.
- Noonan, Michael (Limerick East).
- O'Keeffe, Jim.
- O'Shea, Brian.
- O'Sullivan, Gerry.
- O'Sullivan, Toddy.
- Owen, Nora.
- Pattison, Séamus.
- Quinn, Ruairí.
- Rabbitte, Pat.
- Ryan, Seán.
- Sherlock, Joe.
- Spring, Dick.
- Stagg, Emmet.
- Taylor, Mervyn.
- Taylor-Quinn, Madeleine.
- Timmins, Godfrey.
- Yates, Ivan.
Tellers: Tá, Deputies Dempsey and Clohessy; Níl, Deputies J. Higgins and Creed.
Question declared carried.
SECTION 7.
Amendment No. 23 not moved.
I move amendment No. 24:
In page 8, before subsection (2), to insert the following subsection:
"(2) Notwithstanding anything to the contrary provided elsewhere, the provisions of the Principal Act shall not be so construed or applied so as to exclude from entitlement to dental benefits under that Act persons whose income is equal to, or exceeds, the earnings ceiling for pay-related insurance contributions and who would otherwise qualify for such benefit.
This amendment deals with one of the most serious provisions in the Bill. It is proposed that persons who earn over £25,000 should be debarred from receiving dental and optical treatment. I consider this to be a very serious trend. Irish people believe that the PRSI system is what it is supposed to be, that is, a social insurance scheme.
The Government are basically proposing that people earning over £25,000 who contribute to this scheme in a mandatory way — they have no other option; it is the law of our land — will get no benefit. Anomalies seen to be arising in the system by the day. I am sure the Minister is aware of these. A number of people have contacted me about this issue and I am sure they represent only a quarter of the number who are contacting the Department. These people are annoyed for two reasons. It has been brought to my attention that if both spouses in a marriage are working and each is earning £24,000 both of them will be entitled to receive dental benefit under this Bill. However, if only one spouse is working and he or she is earning £25,001 they will not be entitled to any dental treatment. This is a huge anomaly.
Even more serious is the attack being made on the PRSI system. It is strange that the Minister's proposals seem to put a squeeze at both ends — on dental benefits at the top end and on people who are made redundant at the lower end whereby they will lose nine weeks' unemployment benefit. This is a very serious proposal. The Minister could have argued in isolation that people who earn over £25,000 a year can well afford to look after their teeth. However, the problem is that this is just the thin end of the wedge. A few evening ago I visted a factory where, apart from the manager, none of the workers earns anything like £25,000. These workers wonder what guarantee they will have that they will be able to benefit from the scheme when the need arises. If that factory closed in the morning and the workers who were made redundant were refused nine weeks' unemployment benefit they would be extremely angry and hurt, as I would be if I was in the same position. Basically what we are seeing is an attack on our social insurance scheme.
I mentioned some of the other problems associated with this scheme in my Second Stage speech yesterday. I understand that the Dental Association will ballot their members in a fortnight's time and it is significant that we are debating the omission of people earning over £25,000 from that scheme. It has been suggested to me that the deal being done obviously suits the Minister because he wants to save money. It is hard to blame a Minister for wanting to do that but it should be done in an evenhanded way. It also appears that the people earning over £25,000 will be expected to pay for their own dental care. I am sure everybody knows that the VHI do not cover that sort of dental care.
This scheme means that there will be a tax on people earning over £25,000 because they thought when they started paying it — it is my understanding that in 1979 when the scheme was introduced this was one of the pillars on which the scheme was built — that it would be there as insurance for the rainy day. Certain specified benefits were outlined which all PRSI contributors would get. However, in this Bill at both ends of the scale PRSI does not mean what people thought it meant.
There will be a credibility gap in so far as contributors to the PRSI fund are concerned. The Pensions Board will issue a report shortly and many workers are beginning to feel extraordinarily jittery in relation to PRSI contributions and what they will mean in future. It has come to my notice that all the weekly contributions taken from thousands of people are going directly to pay people retiring this very day. Indeed, much more money is involved because of funding from the Exchequer. The number of people who will be at work in the years to come will certainly not increase much and, because of the age structure in our society, in 20 years' time many workers will be at retiring age — all the sociologists and economists are agreed in that regard — which means that the workforce, the generators of wealth, those who will be paying PRSI for the next 20 years, might have to carry a far greater burden than they do at present because the economists say that we will be very lucky if we increase our workforce dramatically. After the year 2010, because of our decreasing birthrate, there will be a huge reduction of people coming to the workforce. That means we will have many more elderly people to look after. Are we now seeing a new trend in this Bill? The signs are ominous. It is very hard on people who genuinely believed — and who were entitled to do so because it was the law — that if they worked and paid PRSI contributions they were entitled to benefits at certain times. I would compare it to driving my car into a tree — I sincerely hope it never happens — but because I paid insurance on the car I expect to have it repaired. However, if it turned out that the law had suddenly been changed and I was told I was not covered obviously I would have to cry foul.
This matter is far more serious than the Minister seems to realise. I heard him speak on the radio recently defending his policies. My party and I will be strongly opposing this on a number of grounds. People earning under £25,000 will be nervous tonight because they will believe at the next budget the sum could be reduced to £20,000 or £15,000; that is the great problem in relation to this. The Minister should change his mind in regard to this entitlement. I will have more to say about it when we consider the aspect of redundancy later on, but there is a link between the two; it is an erosion of the benefits which people expect from their PRSI contributions. Many people will say that those earning £25,000 should be able to do many things. That would be all right if they had been told that was the case some years ago. A deal was made vis-à-vis the contributions made and people expect to get something in return.
Earlier I outlined the anomalous situation regarding both spouses earning £24,000. There will have to be a grouping of family income or something like that; I am not sure how it can be handled but something will have to be done. When the Pensions Board report is issued I hope it will clarify the situation. Unless people have a pension which was paid by their firm they may not be entitled to a contributory retirement pension, we do not know. The Minister should be aware that people are anxious in that regard. There are many other aspects of the scheme about which we will talk in the next half hour, because this is a very important part of the Bill and we want further clarification from the Minister.
(Carlow-Kilkenny): I agree with everything Deputy Connaughton said and, therefore, my next comment is not contradicting him. In practice I do not think it matters a tupenny damn what level is brought in for optical or dental treatment because the reality is that people earning less than £10,000 have to pay for their dental service at the moment. Having taught in primary schools for many years, I know that many of the children assessed as needing dental care at that stage have now reached 15 or 16 years of age and are still on a waiting list. Dental treatment has been non-existent. The principle is what counts in this situation. I agree with Deputy Connaughton that the sum of £25,000 has been established, but at any stage it can be reduced to £20,000 or less. If somebody joins a scheme it cannot be changed half way through.
The example the Deputy gave is quite relevant. If you have paid your insurance and are then involved in a car crash, your cover cannot be changed. However, the insurance companies can offer a newcomer anything; for example, they could offer people insurance to drive their car around the bedroom and confine it to that if they so wish. However, once you have established insurance, it has to be continued. The principle of changing your entitlement under PRSI is raised here but I doubt that it would stand up to constitutional challenge if we interfered with the standard. I will not repeat what has been said but I think the idea of limiting benefit to those with an income of less than £25,000 should be scrapped. While we are on the topic of PRSI payments perhaps I could refer fleetingly to something that I am not supposed to raise, but I will run through it.
Is the Deputy giving me notice that he will be out of order?
(Carlow-Kilkenny): No. I will just speak a little faster than I normally do. I was afraid the Chair might think I was getting excited. People who have paid PRSI contributions for ten years are entitled to a contributory pension but under the 1988 Act, people who have made PRSI contributions for seven years are not entitled to anything. We discussed this question at great length last year. I think the pension scheme should be extended to this group or else they should receive a pension on a pro rata basis. The Minister should consider this point. I am sorry that I had to rush.
The Deputy is as fleet of foot as Cúchulainn.
I am anxious to move on to some other area of the Bill which has more meat in it from my point of view. However, while I agree with the thrust of the amendment I do not feel any great sympathy for someone with an income of £25,000 being denied dental benefit——
It is a single income for the family.
Will the Deputy bear with me and the Minister may answer me if he wishes? The point I want to make is that I would like to see people on much lower incomes getting dental benefit. I hope the Minister will give us an assurance that the problems in this area will be solved quickly and that people who have to postpone dental treatment because they cannot afford it, would be able to avail of such treatment.
I believe that PRSI should be levied on all income, no matter what you earn. I would like to see everybody being eligible for benefit. I believe there should not be any class distinction and that health and dental treatment should be available for all on the same basis. However, if someone wishes to avail of private treatment, it is a choice if he wishes to pay for it. They should pay for public health no matter what their income is and if they wish to avail of it then well and good. I believe the same level of health and dental treatment should be available to all and people on low incomes should not have to wait for treatment.
We will be opposing the amendment because we believe that health and dental treatment should be provided for all people on the same basis. We would like to see this as Government policy.
I support this amendment and I agree with the case my colleagues have made on this extraordinary decision that the Minister has made in relation to the Bill. I can only say that he allowed somebody to get his grubby hands on something that is very important. This concession to allow the spouse at home to benefit from their partner's PRSI contributions was hard won. The need to extend to spouses the rights to benefits which the income earner enjoys was very hard won. We were campaigning for a long time for this and I believe that in 1987, or some time around then, this benefit was extended to spouses. I am aware, as other Members said, that the scheme is not working and that only a fraction of dentists have participated in it. I know that the optical scheme is working. The dentists have not agreed to operate the scheme and that is a poor reflection on the dental profession. I do not know what conditions they are looking for before they agree to participate in the scheme and give the non-earning spouse, who is at home rearing the children and possibly looking after a relative, these basic benefits.
I know an attempt has been made to get at other Ministers but they have resisted touching this benefit. I am aware that a deal has been done with the dental profession and I wonder if those whose income is £25,000 and more have been ransomed in the interest of making the deal. I know the Minister said on radio that we were referring to only 18,000 cases but let me ask the Minister does he know what he is talking about? Where there is one income of £25,000 coming into the household, the mortgage and income tax have to be paid and one is left with a very modest income to divide between the wife and children.
When we discussed family income supplements it was pointed out that social welfare payments bear a relationship to the number of children in the family but in the case of the simple income, it does not matter how many children there are in the family. Whoever negotiated with the dental profession see people with an income of £25,000 to be in the goldmine category. In many instances these families are very hard put to cope and pay their bills. The effect of this measure is that families will be cut off from benefit and the woman, particularly in her child bearing years, will not spend money on her teeth and we will have gummy women all over the country. Women will give priority to their children's needs. I ask the Minister to look at this measure again. Perhaps the Minister would consider allowing benefits to enable either the husband or wife, to avail of them.
In most case you will find where this scheme is effective that the woman has more dental work done than her husband. By virtue of their maternal role they need more dental care. I appeal to the Minister to look seriously at this matter and see whether he can come back with something that is not so stark. When this group are being deprived of these benefits will they pay the same contribution or will it be reduced? Perhaps the Minister would clarify that issue. Why should they pay the full benefit after the Minister makes the regulations if they are not receiving anything in return? That could be seen to be a serious contravention of rights. As other speakers said, I think it is a very dangerous precedent. We believe we have insurance based benefits and rights and suddenly they begin to disappear. I view this very seriously. The criticism that has been made about this measure is correct and justified and it was either ill-thought out or else the Minister was caught napping as he was new in the Department.
I have not had an opportunity to welcome the Minister into his office until now. I hope this boyish good humour and joie de vivre continues in this Department. I hope by the end of this evening we may have blunted it a little when we highlight for him some of the pups he has been sold in this Bill. The principle of what he is doing here is an attack on the whole concept of husbandry and thrift and people providing for the rainy day. In one fell swoop the Minister has done away with the whole principle of insurance. If I buy my house insurance I know there is always a minor clause which states that you must cover yourself for the first £30. I would be very cross if when I make a claim to my insurance company they said: “Your salary is a bit high and we have decided, because you are a bit better off, to include a clause stating that you must cover the first £5,000 of the claim”. Essentially, the Minister has attached the whole principle of social insurance.
I should like to highlight some of the problems I see in it. I believe it is an extremely blunt instrument. The Minister has said that the cut off point for eligibility for free dental services is £25,000. He has made no provision for the size of the family or for the outlay of expenses where two or three children may be attending third level college or some other college. Because their income is too high they are not receiving any State grants and their actual disposable income of £25,000, on a single income, for the family may be much less than for somebody on a salary as low as £13,000 or £14,000. Because they are earning £25,000 they are considered to be in the high tax bracket and they are paying for everything such as education etc.
The present position is that somebody who has managed to reach a salary of £26,000 is exactly the kind of person who, perhaps, in the past 20 years has cost the State very little in claims for optical and dental benefit. This is a very mean provision — where after paying stamps for 20 years — and perhaps never having a claim — they cannot obtain dental and optical benefit. I have got to the age now where I am told I am supposed to have my eyes tested regularly. So far I do not need glasses, but I am told that from the age of 40 onwards a few of one's bits and pieces begin to deteriorate, particularly your eyes.
The Deputy can see enough.
I can see enough tonight in any case.
A Deputy
I hope the Deputy is not watching too much television.
Deputy Owen knows she is addressing the Chair.
Yes, your eyesight and your hearing is extremely good. When people get to the stage of their life when they will be able to benefit from the husbandry of paying their PRSI the Minister comes in with his big axe. I do not think the Minister has done this out of any malicious feeling. This is one of the kind of pet projects that some of the social welfare officials have had up their sleeve waiting for——
That is not true.
I have never been a Minister but I understand that very often when Ministers come into office pet projects are put on their desk and they are sold the particular concept. I would ask the Minister to look again at this provision. As other speakers have said, there could be an attack on the whole concept. If in unison with what is being done now the Minister were to say that from now PRSI would not be obligatory, that it could be voluntary and that at a certain stage people could opt out of PRSI and pay their own insurance policy to cover optical, dental and other benefits as they get older, there might be some argument to be made. Instead the Minister is telling people to continue paying PRSI when they are on £12,000 per year but when they reach a certain stage all the benefits disappear.
What would be the position of a person earning £26,000 or £27,000 who decides to take early retirement, thus freeing up a job for somebody younger in the system? They will have lost the benefit of their optical and dental benefit and the right to be in that scheme. Can they revert back to being eligible? If they retire they will no longer have paid contributions; they will be caught in the net where they will not have sufficient paid contributions in a certain contribution year to become eligible for such benefits. They could be in their mid-fifties, of dental or optical benefit until they become eligible for an old age pension. Has the Minister looked at the anomaly which might be created if he persists in this foolhardy approach?
The Minister is sufficiently tuned into what we are saying here to recognise that if he goes along with the idea he could be the Minister who goes down in history as having collected all the PRSI contributions and happily spent them on all sorts of things in his Department other than the reasons for which they were collected, which was to cover people in the rainy day when they need dental and optical benefit. I agree with my colleagues, particularly Deputy Fennell, that this is a bitter pill for spouses to accept when it appeared they might receive some benefit after 20 years of managing the home. The Minister, who is such a feminist and is so willing to see women take their place in society, turns around and deprives them of dental and optical benefit.
Flattery will get you everywhere.
Deputy Mac Giolla, I have not forgotten you, I will call you shortly.
I congratulate the Minister for being man enough to admit that it was not his officials — who have been attacked — who were responsible for this provision. When Deputy Fennell was on her feet and attacked the Minister's officials he was man enough to tell the House that they did not sell him a pig in a poke. This is his policy and he is man enough to stand over it. Having cleared that point I do not consider him to be a feminist if he consciously sets about doing this. In fact, it constitutes an absolute vicious attack on women in this country, albeit women who might have a spouse earning £25,000. That is not the key point. The Minister was saying he would like to make a name for himself in the Department and he outlined, both yesterday and today, some areas he had in mind. I suggested that unless he withdraws his proposals in this section he will go down in history — just as the Fine Gael Leader, Deputy John Bruton, went down in history for taxing children's shoes — as the man who set about dismantling the social insurance system.
There is one bible we can look to in determining what policies and plans we should follow in pursuing equality in society and that is the report of the Commission on Social Welfare. That report contains the only guidelines that are available to any group, including the Government, who claim that they are attempting to follow the commission's recommendations. Indeed, everyone uses it as a manual for developments in social welfare.
The commission suggest that there should be a differential of 10 per cent between the amount received in unemployment benefit and unemployment assistance. They also recommend, at page 277 of the report, on the grounds of redistribution, that the PRSI rate be extended to all employees' income without a ceiling. They further state that at present the imposition of a ceiling adds an element of regressivity in the insurance contribution across a wide range of gross incomes. They call for the removal of the ceiling and outline in great detail the reasons for removing it. They suggest that by removing the ceiling we could increase treatment benefits and the benefits payable under all other schemes covered in that document.
The Minister is undermining the concept of pay-related social insurance, and let me remind him that last night I stated he was introducing means testing into the system. We have already spoken about just how loathsome means testing is and how it is hated by those caught on the border line. The Minister is bringing degrading and unfair means testing to the social insurance scheme and putting it on a par with means testing in the case of unemployment assistance and many other services such as medical cards, for example. This is being done for the very first time and there is no place for it.
I am sure the Minister has read the recent publication entitled Selectivity Issues in Irish Social Services by Dr. Carney which was reviewed in The Irish Times recently under the heading “Means Testing Stuck in a Bureaucratic Quagmire.” The article points out that there are 50 such means testing schemes in operation across a wide range of areas: community welfare officers implement certain social welfare schemes; school principals administer education grants; and the Judiciary other schemes. I am very angry and I hope the Minister will take on board the points that I have already made. He should remove the ceiling of £25,000 and allow all those who pay their contributions to avail of dental and optical benefits.
The Minister has proposed that the ceiling should be raised by £1,000 for all categories, the self-employed, employees and employers. Normally, we would support such a move but because he has proposed that pay-related social insurance benefits should be means tested he is forcing us to vote against this proposal and the recommendations contained in the report of the Commission on Social Welfare. The workforce and employers are now being asked to accept that the ceiling should be raised by £1,000——
I think the Deputy is straying from the amendment.
The amendment deals with the question of——
Deputy Connaughton and Deputy Browne make a specific point in the amendment. The Deputy will be perfectly in order later when we come to discuss the section to treat of everything else in it but let us try, as we have to date, to adhere specifically to what is in the amendment. Presently, there will be an opportunity to discuss the section.
It is my firm belief that the Minister is going to weaken the PRSI system and that there will be a backlash from those who will be forced to pay. Who, for example, will want to pay PRSI at the rate of 5.5 per cent out of a total contribution of 7.5 per cent? Why would anyone want to pay money if they are going to receive no benefits? I can see the day when more and more people will question the reason they should make a contribution, and more than ever before they will consider PRSI, as it is already regarded by some, as a tax. If the Minister raises the ceiling by £1,000 and deprives a certain sector of benefits people will have to deduce that it amounts to a second layer of taxation, and that was not the intention.
I thank the Deputy for his co-operation. I now call Deputy Barnes. I am very conscious of the isolated position——
I would like to speak to the section rather than to the amendment.
Deputy Mac Giolla is anxious to speak to the amendment and I will call him after Deputy Barnes has concluded.
As I do not want to delay the House I will not dwell on what has already been covered so eloquently by other speakers in relation to the proposal that pay-related social insurance benefits should be means tested even though people have no choice. This is a major constitutional issue. The Minister may not be aware that the principle that spouses of PRSI contributors should receive benefits was hard won. As I know many of the Minister's officials — I always refer to them and compliment them for helping Ministers in introducing legislation in recent years to reform the system — they are aware of the arguments to be made in relation to this matter.
First, under the law and the Constitution, there is no guarantee that a proportion of a husband's income will be given to his wife and children. The only way in which this can be done is for the spouse, under the inadequate free legal aid system, to wrest maintenance in overcrowded courtrooms. As we are all aware, regardless of what a husband's income may be, his wife is not guaranteed a proportion of that income. She has to rely on his good will and generosity. There are women in families on high and middle incomes living in poverty in this city, women who outwardly seem to have an affluent lifestyle but the reality is that the fridge is locked, the coal and fuel is rationed and both they and their children do not have enough to buy basic commodities.
We had two or three surveys over the years which showed that married women's teeth and eysight are neglected more than those of any other category in our society. A woman, unless she is in a high earning capacity, does not choose to pay for expensive optical and dental treatment for herself because, especially where there are children, there is always something that claims the money first. Women, being the sacrificing, generous people that they are, always leave themselves last. We do not need surveys and research to know that. Society does not credit or acknowledge financially the caring work of women in the home. We have a miserly carer's allowance which is means tested. I agree with Deputy Byrne on the obscenity of some of the means testing we have here. The means tested carer's allowance totally denies the intrinsic value of the work being done. That is the greatest obscenity of all. It does not take into account the nurturing, round-the-clock caring and responsibility that goes with those jobs.
This leads to the devaluation of work outside the home that continues to be done by women, work called "women's work". We have turned decent work values on their heads. By denying free access to optical and dental treatment for married women who are not earning in their own right, means that we are turning the clock back pre-1972. Deputy Byrne referred to one report of the Commission on Social Welfare. I would refer the House to the first report of the Commission on the Status of Women, published in 1972. We have lobbied with regard to the recommendations in it since. It concluded that one of the most important supports and services which should be given to women in the home who are without earning capacity, was dental and optical treatment, even if it was only to be extended to the spouses of contributing husbands. The Minister has turned the clock back pre-1972. I cannot understand it.
The women's right committees, at European Parliament level and at national parliament level, are lobbying strongly for women's rights. We hope to meet the Minister soon to make the point that women should be credited in their own right for the work they do in the home. Until that is recognised positively, this proposition is removing one of the few supports and acknowledgements they have. When the Minister reconsiders this he cannot possibly allow it to stand.
The Minister rightly defended his officials. Every Minister must do that, particularly when there are five of them around him. The Minister cannot take the credit for this himself because his predecessor, who was only a short period in office, Deputy Daly, announced the introduction of means testing for PRSI and he announced that optical and dental benefit would not be allowed for those earning over £25,000. He also announced the means testing of the deserted wife's benefit. This was on the table before this Minister came into office. It is hard to know whether this idea was Deputy Daly's or his predecessor's or the officials' idea, but I agree with everything that has been said about this. The Minister, before he was appointed was known as a caring, liberal person whose views we would all agree with. However, he has introduced the most hard-nosed Social Welfare Bill ever put before this House. The Minister is turning everything upside down.
Like another speaker, I wonder is the means testing for PRSI constitutional. Under the PRSI scheme people pay for benefits. All entitlements under it are now at risk. Unemployment benefit after redundancy is at risk in this Bill for nine weeks. Sickness benefit for those on unemployment assistance is at risk as well. Sickness benefit will be means tested and free dental and optical benefits, things which were paid for over the years, are to be lost. Under the VHI system one pays for benefits. One may have to increase payments but one knows what benefits one will get. One can also get annual reports from the VHI. I wonder if there is any PRSI scheme at all. Do the Minister and the Government regard PRSI contributions as just another tax? Does it all go into the Exchequer to be paid out later? Is there a pay-related social insurance scheme? Is the Minister saying that more is going out than is coming in? Has the Minister had an actuarial assessment done and reported? Are there annual reports? Can the Minister tell us how much he is taking in each year and how much he is paying out each year? One can get that information from the VHI or from any other insurance scheme. I have never seen such a report and I doubt if there is such a thing.
If means testing is introduced it will be a disaster. As in every case of means testing, the PAYE worker will come off worst. When one is paid a wage or a salary it cannot be concealed. Before a person gets his wages the deductions are made. There is no hiding it. It is more difficult to discover the earnings of professionals and self-employed people and to discover at what precise stage they reach £25,000, or whatever figure is put on it. Means testing will hit the PAYE person straight away. The Minister has not assessed the enormity of what he is doing. I agree with this amendment but this system if means testing goes right through this Bill. Once it starts there is no end to it. Next year and in the year after, it will be easier to adjust the ceilings and to make other cut-off points for a whole series of things in the PRSI scheme. This will destroy the PRSI system.
When introducing the Bill the Minister said that one of his aims would be to try to ensure that the system caters for everybody who needs it, that it will actively encourage enterprise and will enable people to improve their situation. The PRSI system gave people a certain independence, a feeling that they were paying their insurance and getting their entitlements. Now that is all gone. In the current climate jobs are not for life any more. People are paying PRSI and they will have something in the kitty if they lose their job. Now they are not covered for these benefits. There will be very strong reaction against paying PRSI as a result of this Bill. People will want to pay into their own insurance schemes for dental and optical benefits. The whole system will break down.
The Minister should reconsider. How much does he propose to save by this measure? Let him give us some figures to show why it must be done. What is the purpose? Is it to save money or to provide a better system? The Minister has not shown that this system will work better than the other system or that people will be better off and improve themselves. Their situation will be much worse.
It might be appropriate for me to say that it would be unfortunate and undesirable if in this friendly atmosphere we were to establish a precedent whereby we would differentiate between any Minister and his officials. Reference has been made to it in a friendly fashion. Traditionally we do not say anything either complimentary or derogatory about officials who are in attendance or who are absent. If the Minister wears the palm he also carries the can. That is the way it should be.
You actually took the words out of my mouth. We should not refer to people who have not the right to stand up to defend themselves. Officials are paid by the State to do a job. The Minister must be responsible for the contents of a Bill. The officials do not have the right to change it, but he does. They are powerless and can only advise the Minister. We must direct our firepower at the Minister.
Agreed.
The Minister is taking a retrograde step in this matter. We have been told that 18,000 people will be affected because they earn more than £25,000. A single earner in a family with an income of £25,000 may have to bear heavy expenses after the deduction of income tax. These might include mortgage repayments, VHI contributions and life assurance premiums, on which tax relief is to be abolished. Children going to university may have to be supported and an income of £25,000 may be rather small in these circumstances. As salaries increase, so do standards of living. The only perk enjoyed by many people as a result of PRSI contributions is optical and dental benefit. People on reasonable salaries make a generous contribution to the social insurance fund and we should not lose their confidence. We should acknowledge their contribution, but unfortunately the Minister is doing the opposite by introducing a cut-off point at £25,000. There is also the fear that it will be reduced in future years to £23,000 or £22,000.
I referred last night to automatic entitlement and the whole question of the social insurance fund. The proposal in the Bill is reasonable. It was announced by my predecessor last December but it is a decision I am prepared to stand over. The announcement was made in the context of the Estimates for 1992 and if I wanted to change it I could. I do not.
There is no section in the Bill dealing with treatment benefits, although Deputy Connaughton has mentioned them in the amendments. Existing regulations will be sufficient to deal with any changes.
(Carlow-Kilkenny): Backdoor methods.
All politicians want to have it both ways. The extension of the scheme to dependent spouses of qualified insured persons was hard won. Deputies who have spoken fought to achieve this. When the extension was established in theory, the scheme could not operate because most dentists refused to co-operate. An extra 300,000 people were theoretically covered for dental benefit, bringing the total eligible number to 1.3 million. It was a wonderful idea and a hard won battle, but the rules were changed by the dentists.
Much work was done before I came to the Department to resolve the dispute with the dentists. I had three choices. I could have scrapped the scheme of treatment benefits in its entirety and let people with medical cards rely on the GMS. That was one option which would have saved money for the State. I could have let the scheme trundle on in its unsatisfactory way. A pyrrhic victory had been won in that the dentists would not operate the scheme. The third choice was to attempt to sort out the problem with the Dental Association. That is what I have decided to do.
I would point out that the social insurance fund is not self-financing. In reply to Deputy Tomás McGiolla, the accounts of the social insurance fund are published and are available in the Government Publications office. The appropriation accounts that are laid before the Dáil affect the social insurance fund. This year the State will pay about £143 million into the social insurance fund. Therefore, the fund is not self-financing. There are restrictions in many areas of social insurance. In some areas there is automatic entitlement but in those cases people have to build up a level of contributions. That system has always operated. Some people pay high rates of PRSI but get nothing from it while others pay less and get a lot from it. Therefore, there is a redistribution element in regard to pay related social insurance, as is self-evident from the figures. A later section of the Bill deals with increasing PRSI but there is a ceiling on this insurance. Deputy Byrne pointed out that the party of which he was formerly a member have been in favour——
Yes. The Workers' Party.
The Deputy's party are behind him.
Deputy MacGiolla has constant board meetings with himself and arrives at unanimous decisions, which was not possible heretofore. The party of which Deputy Byrne was a member always believed that there should not be a ceiling on pay related social insurance and I see the logic of that.
We did not take that matter in isolation from the other recommendations of the report. The Minister has taken only one element of the report.
There is logic to the argument that there should be no ceiling in that whatever income one earns one would pay pay-related social insurance at a corresponding rate. However, if that system applied I would not be able to defend the introduction of an income limit in relation to treatment benefits. Whatever about Deputies in the middle of the Floor, the Deputies over there would be the first to say that we would be introducing an extra tax, thus taking more money out of people's pockets. We cannot have it both ways.
We certainly cannot have it both ways.
I have explained the background to this measure. The Government should get some credit for resolving the long running dental dispute. I was very impressed with what Deputy Monica Barnes had to say. I know that she is deeply concerned about these matters, but she is raising them with the wrong person. I know of married couples on incomes well in excess of £25,000 where the husband locks the phone before he goes out in the morning. There are many such cases, and I am not referring to people in the more affluent parts of Dublin or Kildare. I spoke earlier today about child benefit and so on. There are avenues open to the Minister for Social Welfare and the Government to deal with these matters. Is it not the Government's place to interfere in relationships, be they between husbands and wives or whoever. However, I agree with what Deputy Barnes has said.
Deputy Connaughton and Deputy Browne, who put down this amendment, referred to the dependency ratio. As I said last night, if money was plentiful I certainly would not be making restictions in this or any other area. However, money is not plentiful. If we were to introduce dependency ratios, as suggested by Deputy Connaughton and others, it would result in greater State expenditure and consequently there would be a greater burden on the taxpayers. Social Welfare expenditure is estimated at over £3.36 billion for 1992 and therefore corrective action must be taken. I will deal later with people earning £24,000 as referred to by Deputy Connaughton. Deputy Liam Kavanagh referred to treatment claims. The Department estimate that roughtly 4 per cent of the 450,000 treatment claims — 18,000 claims — would be affected if we change the system. At present I am anxious to bring into the system wives whose husbands earn £10,000 but who receive no dental benefit because dentists will not operate the scheme. As a result of the dispute, which went on for a long time, many people are not getting dental benefit. We brought into the system dependent spouses of insured workers but because of the dispute the system never came into operation.
Deputy John Browne referred to a scheme for children. The scheme to which he referred is a Department of Health scheme. I have nothing to do with that and I have no great desire to be Minister for Health. However, I am aware of the growing problems in the Eastern Health Board area with regard to that scheme and I hope my colleague will do something about it.
Deputy Fennell put forward a great case which I answered in referring to social insurance generally. She and other Deputies believe that we are introducing a dangerous precedent in the social insurance system. As I said last night, and I will spell it out again tonight, we have to consider these matters in the context of overall State expenditure. There will have to be some rationale in the system; otherwise, expenditure will keep rising. It is only fair to point out to Deputies now that in next year's budget there may be proposals with which they will not be pleased.
Such as old age pensions and widows pensions. Once the Minister starts the ball rolling it is inevitable that other areas will be affected.
I do not think the Minister or anybody else interrupted Deputy Byrne when he was making his contribution. There is no need to introduce any note of that kind, to wave fingers or to make threatening gestures. The Deputy should listen to the Minister and he will have an opportunity of contributing again if he so wishes.
I thought it was important to warn the general public of the inevitability of the proposals in next year's budget and consequent budgets.
The Deputy should please contain his emotions and let the Minister proceed.
Deputy Nora Owen, in a flowery and entertaining speech, said that this would be a bitter pill to swallow. She said very nice things about my boyish good humour. I think I have aged a lot since I came to this Department. At least I feel a lot older. I do not know whether the strains would be the same, but I do not feel much different about it. What I am about to say might be a bitter pill to swallow: if I do not make savings in areas in which I think people can afford to carry the cost then it is possible that in ten years it could be that we will not have the money to pay old age pensions. If the costs relating to unemployment and everything else keep on increasing then Deputy Byrne will be right, it is quite possible that in ten years there will not be the money needed to pay those who really need assistance, the elderly. Anyone with a social conscience would realise that it is better to restrict the entitlements of a small number of people at the upper levels. In that regard I am not saying that those who earn £25,000 and pay taxes are very well off. However, they are a damned sight better off than a man earning £8,000 who lives in Daragh Park, Newbridge, County Kildare, and whose wife does not go to a dentist operating within the scheme, and they are better off than those living in Clondalkin or Ballyfermot. Some restrictions must be made, and this provision is more than reasonable.
What about the cost?
I have already dealt with the queries raised by Deputy Mac Giolla about the annual accounts. The Government are adopting a reasonable approach. Although I cannot anticipate what the Dental Association will do in the next few weeks, I hope a decision will be made very shortly. I understand that association members will be balloted in the very near future. It is to be hoped that the dental dispute will soon be at an end and that dentists throughout the country will be operating the scheme. A small percentage of dentists will be affected by the measure I am introducing. At the moment the majority of people cannot get dental treatment because very few dentists are operating the scheme. The measure proposed is reasonable and fair and I am prepared to stand by it.
What is the position of the retired person?
I said that I would come back to a point made by Deputy Connaughton and I have not done so. Deputy Connaughton raised the position of a two-income family in which both spouses earned £24,000. Regulations are being drafted in the hope that the dentists' dispute will soon come to an end and they will take account of some anomalies in that regard. At the same time, and as Deputy Barnes will be aware, the position is complex. I could give the House many examples of difficulties. If a wife earned £28,000 and her husband earned £24,000, the gross income of that couple would be £52,000, and the wife in her own right would have entitlements. Deputy Barnes, others and the present distinguished Uachtarán na hÉireann fought long and hard in the courts of Ireland and in the courts of Europe for equal treatment. I recognise the anomalies that Deputies are referring to and we have discussed such anomalies in the Department in the past week, but we must also guard against unfair advantage. I am sure that Deputy Barnes would be one of the first to say that women who earn £28,000 in their own right do not need too much assistance.
Too right, I would.
Deputy Fennell would also make that point, and the Deputies would be right. In that instance, I am sure that we would be found to be in breach of the equal treatment legislation.
Deputy Owen spoke about redundancy. In the regulations to be prescribed by the Government in the very near future we will try to take account of the issues to which the Deputy referred. Much consideration has been given to this because the matter is quite complicated. On the one hand, we have to ensure that women get equal treatment and, on the other hand, we have to have equity in the system. As Deputy Connaughton pointed out, there has to be a balance to provide both for single-income families with an income of about £27,000 and two-income families with a combined income of £48,000 or more. We shall try to frame the regulations in a way that will clear the anomalies in the system. The Government have recognised the difficulties, which is why the drafting of the regulations is proving somewhat difficult.
The Government could get rid of the difficulty by getting rid of the section in the Bill.
There is no section in the Bill.
Then get rid of the concept.
I should like to ask the Minister a question. It is possible that he has already answered it, I am not sure. My query relates to PRSI payments. Under the means test system the income of an individual is reckoned to be divided in half, with one half belonging to the dependent spouse. Would the system pertaining to the self-employed paying PRSI not be looked upon in the same way, with half of the income of a self-employed person reckoned to belong to the spouse, and PRSI should be paid that basis?
(Interruptions.)
Under the social welfare means system half of the income is reckoned to belong to the spouse.
Yes.
Would it not be equitable to look upon the payment of PRSI in the same way and introduce equality into the system wherein it would be optional for a dependent spouse to pay PRSI on the half of the income reckoned to belong to him or her.
Say, two incomes of £13,000 instead of one income of £26,000.
I understand what it is that the Deputy is getting at, but it is a little removed from the extension of treatment benefits to women.
Is it?
The Deputy is actually entering a minefield. This is in line with comments made by Deputy Barnes about the group leading the march to meet me down at Aras Mhic Dhiarmada. The whole issue of individuated payments is one mentioned in questions that I answered in the Dáil quite recently. It is a different issue. I understand the point that Deputy Cotter is making. To get over the problem raised by Deputy Connaughton and others, we shall try to make appropriate provisions in the regulations.
Some Members expressed concern that this measure was an attack on the social insurance system. The points made by Deputy Cotter would be construed as an attack on the principle of social insurance. They lessen the arguments put forward yesterday by Deputy Bell and others.
I do not want to enter a minefield.
I advise the Deputy to exercise care in regard to his ideas.
The Minister is dealing with flawed logic tonight. I am glad the Minister gave us the opportunity for the past 20 minutes to hear his thoughts in this regard. The longer I listen to the Minister and the more that I hear him say in defence of this matter, the more I believe that the dentists have had an unusual sway in the past couple of weeks. I genuinely believe that the dentists must have negotiated a deal with the Minister or his Department to ensure that the cream of their profession — those in private practice — flourish.
That is as clear as day.
That is a twist that I did not think would crop up. I shall not get into the argument of whether it is the Minister or his predecessor who was involved. Basically, a section of our community has been sold short at the behest of the dentists.
Yes, those who want to cream.
The people who are most likely to have to pay will accept that in so far as it goes. Those who earn £25,000 or £26,000 may, under certain conditions, be better able to pay than those who earn only £6,000 or £7,000. The Minister made that point himself. This is quite serious. Is it not significant that after three or four years the Dental Assocition——
I do not want to interrupt the Deputy, but in fairness to the dentists I would have to point out that the dentists did not seek that particular restriction. It was a totally separate decision. I want to place that on record so that it will not appear we have been criticising the dentists or receive such adverse commentary in tomorrow's press. I want to place that on record before the Deputy goes further in that regard.
The Minister has sacrificed those earning £25,000 or more.
This is a particularly legitimate observation for me to make particularly since the Minister's predecessors — how many I do not know — endeavoured to make a deal with the dentists. Is it not amazing that suddenly the whole thing is centralised?
The Deputy is underestimating the Minister.
The Minister for the Environment should not engage in salesmen's antics. I will tell him something; he should not endeavour to sell it to the people either because they will not buy it. Of course we all knew the PRSI system was self-financing; we were fully aware of that. Would the Minister tell us how much money he expects to save on this by imposing a ceiling of £25,000? What does he expect to save in this year?
The total cost of the treatment benefit provision this year will be of the order of £14 million. May I point out that there will be considerable additional costs to the Exchequer in years to come if the dental dispute is resolved because there will be a greater take-up of these schemes. Therefore, there will be considerable additional costs to the State in 1993, for example, if the dental dispute is resolved because all of the people who theoretically have been within the system but who have been unable to find any dentist to treat them will, if treated henceforth, will incur considerable additional cost. That was part of the thinking in having an income limit at this stage or having some restriction on it. There will be considerable cost implications in 1993et sequiter on account of resolving the dispute.
I did understand that the scheme would be fairly costly. I now understand it will cost £14 million in this year. That is not the question I asked. I want to know what will be the actual saving on the scheme as against having an openended one if people were treated. For example, we are talking about £500,000, £1 million or whatever?
If the dispute is resolved any calculation would depend very much on the numbers of extra claims that will be lodged. It is difficult to make an estimate of those numbers. If the dispute with the dentists ends in the near future, as I announced at the Fianna Fáil Ard Fhéis, the hope would be that the scheme would be up and running from July next. That is the tentative provision, that it would come into operation and be applicable for the half year only. The Department had to estimate the number of additional people who would be eligible under this scheme. We are not too sure what will be the saving as a result of this decision because we do not know the actual additional numbers who will be eligible under the provisions of the scheme. Theoretically there were 300,000 extra persons, but we do not know how many of them will take up the provisions.
The longer this debate continues the more I am convinced that there is an altogether hidden agenda behind the reason for this proposal. It is my firm belief that it is undermining the PRSI system. I predict that next year, the following year and the one thereafter will bring a gradual lowering of the ceiling and erosion of benefits for PRSI contributors. I have no doubt that what the workforce in that factory in Galway said to me the other evening is true: that they can foresee the time when they will lose substantial benefits. I could understand if the Minister could tell me he expected to save £X million but he does not know how much he will save. This means that the Minister and the Department are buying a pig in a poke because they do not know how many people will enter the system. Therefore, they could not have based their assessment on that fact.
I have also noted the Ministerial regulation proposal. I should have thought the Department would have their minds made up once the Bill had been introduced here and would tell Members exactly what they proposed doing. I contend the ministerial regulation proposal is passing the ball across very quickly. I cannot understand why the Minister cannot tell us openly in the House exactly what he intends doing because we will not have a chance of discussing this again. Irrespective of what we do this evening — and I will be putting this to a vote in a few minutes' time — from the Minister's point of view it would appear that that is all anybody can do about it. However, that is not good business.
The Minister said he was satisfied that no more than 18,000 persons would be eligible. Yet in the same breath he told me he expects a great deal more people to avail of the provisions of the scheme because the dentists will be operating it this year. Therefore, by definition there will be considerably more than 18,000 people dissatisfied; in fact, I have no doubt whatever that there may be twice that number. I want to put on the record that what the Minister is doing is an absolute reversal, an about-turn, on the whole question of eligibility and benefits people believed they had under the PRSI system. I believe it involves a breach of contract with people who entered the scheme in good faith, that is, between the Minister's Department and contributors. I predict it will be seen for what it is, that there will be nobody in this State paying PRSI contributions who will not have the jitters this evening because they will know their turn will come. I predict that that will be the Minister's experience in coming weeks nationwide.
I want to seek clarification for one of the 18,000 people who contacted me. Let us examine the position at present. The person in question has an income of £25,000 annually and has been receiving dental and optical benefit for himself; luckily he has found a dentist who will treat his spouse in addition to her receiving optical benefit. After the introduction of the regulations will that man be paying the same percentage of his salary in PRSI contributions? This is an unprecedented proposal. That person has asked me to ascertain exactly what will happen. Will the Minister say whether he will be paying exactly the same amount, or does the Minister propose to reduce the contributions?
Deputy Fennell is trying to get me to say that I am going to reduce PRSI. I am not, and she knows very well that I do not propose doing so. That would be a total reversal. I am introducing this particular restriction for the reasons I have outlined, reasons which are reasonable and fair. I contend it is better to have greater numbers of people eligible under the system — that is dependent spouses — receiving these benefits than having them all theoretically insured. I hope this dispute will be resolved in the very near future with the proposal advanced.
Deputy Owen referred to people being gummy, inferring that they would be blind as well.
I spoke about the bits and pieces.
I do not anticipate people marching to Kildare Street or to Aras Mhic Dhiarmada to show me all their bad teeth over the next couple of years. I do not anticipate that will happen or that people will be left outside the scheme. If that is all Deputies are worried about, it is not much.
(Carlow-Kilkenny): Given that many people with an income of £25,000 or more may be civil servants, teachers or perhaps TDs, would the Minister say whether they will benefit from PRSI payments?
No, they do not pay the full rate of PRSI contribution.
(Carlow-Kilkenny): I have to admit to knowing the answer in advance. From where then does the Minister get the 18,000 people?
The Deputy wants to know how we arrived at that figure. I remember that in previous years there were 450,000 claims. It is estimated that 3 or 4 per cent of that number will be affected. This is how the figure of 18,000 has been arrived at.
I want to put the points made by the Deputies into context. The cost of treatment under the scheme is between £50 and £60, and we are asking people with incomes of over £25,000 to pay £50 or £60 for their treatment. I think these figures speak for themselves.
The Minister must have different figures.
I should like the Minister to clarify a point. The Minister has said three or four times that it is better for people on lower incomes to be able to benefit from the system brought in a few years ago. I should like to remind the Minister that great savings have been made by his Department because the system has not worked very well. The Minister referred to the amount he will have to spend to get the system up and running but, of course, the State has saved a considerable amount of money under the system brought in a few years ago. I hope those savings have been stored in the Department and will be spent on this scheme.
The Minister has repeatedly said that it is better to bring more people into the scheme and that by setting the ceiling he will be able to get the system up and running. The only logical connection between what the Minister is saying and what he proposes to do is that somebody somewhere must have said to the Minister, "we will operate the system and bring those people into benefit if you do certain things". Otherwise there is no logic to what the Minister is doing. He has not yet drawn the connection between setting the ceiling and bringing people on lower incomes into the system. If the connection is not the dentists, what is it? I have not yet found the connection.
If in years to come the scheme is extended to include the dependent spouses of qualified insured people for whom the Deputies on the opposite side of the House have fought a great battle, the battle will be won but no one will gain. I think I know what Deputy Owen was getting at. I recognise the anomalies in the scheme to which Deputy Connaughton and others have referred. Three hundred thousand extra people have been brought into the scheme since 1987. I have decided to set a limit because I anticipate some considerable funding costs arising from 1993 onwards. I do not expect 300,000 people to suddenly visit their dentists when this dispute is over. That is not going to happen but if dentists operate the scheme considerable numbers of people will avail themselves of it in years to come. To use football jargon, which Deputy Reynolds will understand, I am getting the retaliation in first. I have to set some limit because I anticipate funding costs arising in years to come. I am setting a reasonable income limit in this respect. That is the rationale behind the thinking here.
What the Minister is saying does not wash.
The dilemma we are faced with tonight is that if more people are brought into the scheme other people will be taken out of it. The Minister says he wants to bring more people into the scheme. Leaving the dentists and the Dental Association aside, the hidden agenda is that the Minister wants to make savings. He cannot give us any figures on the savings. However, there will be major savings in a few years time when the Minister moves the ceiling down to £20,000.
If the scheme is to be effective the ceiling will have to be brought down.
As I said earlier, it is much better to bring in the people in, say, in Clondalkin who are earning £8,000 to £10,000.
Is that what the ceiling will eventually be?
It is better to bring in people who are not able to avail themselves of any scheme at present. I do not know how many people will join the scheme from 1993 onwards but I anticipate that there will be a significant increase, which will have considerable cost implications. I do not know if the Fine Gael Party have fully thought out what they are proposing. Are they proposing that a person who is earning £100,000 should be able to get dental and optical benefits under the scheme? Are they saying that chief executives of State boards——
Greencore.
——should be able to avail themselves of these benefits? Surely the Fine Gael Party are not proposing this. I will shortly think of a term to describe what they are proposing.
The Minister's back is against the wall. He has no answers.
What is the Government ceiling? They paid over £500,000 to the two inspectors to investigate the Greencore affair.
What is the Fine Gael ceiling?
(Carlow Kilkenny): The Minister has got his retaliation in.
We are afraid the Government will lose their teeth.
Let us hear the Minister without interruption.
I will try by way of regulation to rectify the anomalies to which Deputy Connaughton has referred and make the system as easy as possible. I want to establish the principle of a ceiling at this stage.
I wish to refer to another anomaly in the system. The Minister said he believed that the less domestic interference there was in households the better.
By the State.
This frightens me. I agree entirely that people who have the most should be the first to take a cut. I believe everyone would agree with that. However, I cannot reiterate often enough — the Minister agreed with me on this point — that some women married to men who earn £60,000-£100,000 do not have one penny of their own and they do not enjoy the goodwill or generosity of their husbands to be able to go to dentists. I do not want people to have it both ways; I am in favour of fairness. If the Minister brings in this provision which will work against women in the home, then a legal provision will have to be introduced which will guarantee women a portion of the incomes of their husbands so that women could choose how to spent the money which would then be legally hers. This is the position in other countries. The Minister should remember that many women have no financial independence, regardless of their husband's income. The Minister knows what I am talking about. We are hanging these women out to dry at present.
We rest our case.
With regard to the income limit being proposed, does the Minister have figures on the net disposable income of the various people who earn £25,000? Obviously a single cut-off point is inequitable as people in this category will have different levels of disposable incomes. Has the Minister carried out any investigation into the net disposable incomes of people in this category?
My colleague on my right is concerned that we will have a Government without teeth. However, some people would say we already have a Government without teeth. I have children attending university and I would like to know what Member in the House wears size nine and a half so that I could pick up some old shoes to wear. That is the way is works out for people who have heavy family commitments. What investigations did the Minister make in relation to setting this income limit? Does he feel that all the people who will be affected by it will have an income to pay for benefits? Will people in five years' time be showing their gums? They will not have any teeth——
The Minister is very difficult to understand at present.
Deputy Barnes was referring to gummy people and Deputy Owen referred to people who had lost bits and pieces. Just now, Deputy Cotter referred to people who did not have any shoes. If this continues——
They will have no clothes.
I will try to abolish the anomalies in the regulations to which Deputy Cotter referred. I know the problems of people earning over £25,000. A Dáil Deputy does not pay a full stamp and anyone living on a Deputy's salary——
Leave that to me, I will be talking about it later.
Deputy Bell has done great work in that regard and I know he is not well off. I also know that if Deputy Cotter is sending his children to university on his salary it must be a strain. Of course the perception of the public is that we are all milking the system, but that is not the case. We debated the salaries of TDs and Ministers before Christmas. I am now a full-time politician, but when I was a Deputy I could not have survived on the salary. As I said, I will try in the regulations to improve things.
Amendment put.
The Committee divided: Tá, 41; Níl, 64.
Tá
- Ahearn, Therese.
- Allen, Bernard.
- Barnes, Monica.
- Barry, Peter.
- Belton, Louis J.
- Bradford, Paul.
- Browne, John (Carlow-Kilkenny).
- Byrne, Eric.
- Carey, Donal.
- Connaughton, Paul.
- Cotter, Bill.
- Creed, Michael.
- Currie, Austin.
- Deenihan, Jimmy.
- De Rossa, Proinsias.
- Doyle, Joe.
- Dukes, Alan.
- Durkan, Bernard.
- Finucane, Michael.
- FitzGerald, Garret.
- Flaherty, Mary.
- Gilmore, Eamon.
- Harte, Paddy.
- Higgins, Jim.
- Kenny, Enda.
- Lowry, Michael.
- McCartan, Pat.
- McCormack, Pádraic.
- McGinley, Dinny.
- Mac Giolla, Tomás.
- McGrath, Paul.
- Nealon, Ted.
- Noonan, Michael. (Limerick East).
- O'Keeffe, Jim.
- Owen, Nora.
- Rabbitte, Pat.
- Reynolds, Gerry.
- Sherlock, Joe.
- Taylor-Quinn, Madeleine.
- Timmins, Godfrey.
- Yates, Ivan.
Níl
- Ahern, Bertie.
- Ahern, Dermot.
- Ahern, Michael.
- Aylward, Liam.
- Brennan, Mattie.
- Brennan, Séamus.
- Briscoe, Ben.
- Callely, Ivor.
- Clohessy, Peadar.
- Connolly, Ger.
- Coughlan, Mary Theresa.
- Cowen, Brian.
- Cullimore, Séamus.
- Daly, Brendan.
- Davern, Noel.
- Dempsey, Noel.
- de Valera, Síle.
- Ellis, John.
- Fahey, Frank.
- Fitzgerald, Liam Joseph.
- Fitzpatrick, Dermot.
- Flood, Chris.
- Gallagher, Pat the Cope.
- Harney, Mary.
- Hillery, Brian.
- Hilliard, Colm.
- Hyland, Liam.
- Jacob, Joe.
- Kelly, Laurence.
- Kenneally, Brendan.
- Kirk, Séamus.
- Kitt, Michael P.
- Kitt, Tom.
- Lawlor, Liam.
- Lenihan, Brian.
- Leonard, Jimmy.
- Leyden, Terry.
- Martin, Micheál.
- McCreevy, Charlie.
- McDaid, Jim.
- McEllistrim, Tom.
- Molloy, Robert.
- Morley, P.J.
- Nolan, M.J.
- Noonan, Michael J. (Limerick West).
- O'Connell, John.
- O'Dea, Willie.
- D'Donghue, John.
- O'Hanlon, Rory.
- O'Keeffe, Ned.
- O'Kennedy, Michael.
- O'Leary, John.
- O'Rourke, Mary.
- O'Toole, Martin Joe.
- Power, Seán.
- Quill, Máirín.
- Roche, Dick.
- Smith, Michael.
- Stafford, John.
- Treacy, Noel.
- Tunney, Jim.
- Wallace, Dan.
- Woods, Michael.
- Wyse, Pearse.
Tellers: Tá, Deputies J. Higgins and Creed; Níl, Deputies Dempsey and Clohessy.
Amendment declared lost.
Question proposed: "That section 7 stand part of the Bill".
It is late, but having waited nine years for this opportunity tonight, I will leave a little bit over for the morning when Deputy Byrne and I will take over. I will now tell Members a little about the history of the PRSI system. I was elected to this House in November 1982 as a rookie backbencher. I was full of ideas about social welfare having been involved at senior level in the trade union movement at Congress and I was also general secretary of my own union. As the Ceann Comhairle knows — he was formerly a member of the national executive that pioneered the PRSI system in this country, we fought for a system similar to that which operated in Great Britain at that time. It was the policy of Congress and the trade union movement to put pressure on Government to introduce the PRSI system. PRSI did not come from Government but was introduced as a result of pressure from the entire trade union movement, of which I was proud to be a part. When I took my seat on 25 November of that year, the Government had prepared the Social Welfare Bill, 1981. Very reluctantly I found that I could not vote for that Bill and the reason that I could not vote for it is emerging in this House tonight. I will explain the reason in greater detail tomorrow morning.
The PRSI system had been introduced and workers who unfortunately lost their jobs and were on unemployment or disability benefit received a payment of 30 per cent of their wages. That Bill, which proposed to reduce the level of PRSI from 30 to 20 per cent, was handed from one Minister to another, as is happening on this occasion — it is history repeating itself. I do not even have to look at the record of that time but I spelled out the consequences. I warned Members on every side of the House, but they did not understand the PRSI system and they still do not understand it.
The PRSI systems means you get what you pay for. We did not vote simply for that reason because there should not be any floor or any ceiling. That is the concept of the PRSI system as introduced in Great Britain and adopted here. We are not constructing houses, we are talking about the income of working class people who pay for the system. Therefore, you should pay on what you earn and you should be paid accordingly when you are unemployed. Because the system was messed up in 1981 we are now faced with confusion. I have been listening to the debate and I do not think anybody in the House understands what PRSI is about. They are talking about putting ceilings here and there. You can argue until the cows come home. Unless you have a system where every worker, irrespective of the level of his earnings, pays a certain percentage which is matched by the employer, so that when workers are unemployed or sick they are paid in accordance with the level of contribution they make, the system does not exist. That is the reason it is going down the sink. I have waited for nine years to tell the House that. I am tired now, it is late at night, but I will be in better form in the morning to explain the detail of it.
The situation is simply this. If you continue to raise and lower ceilings you will simply destroy the system. As I said in my opening remarks two days ago, it would be better to scrap the PRSI system altogether, increase the level of contribution rate and increase the benefit and have one straight payment of social welfare for people who are unemployed. The problem is that the administration of the system is expensive and workers and employers alike are confused. Money is being taken out of industry and out of labour intensive industries that cannot afford to pay. Companies are going down the sink every day and we find they are £250,000 in the red in PRSI and tax. In one company in my own constituency a sum of £400,000 was not paid. When companies go into liquidation the largest portion of outstanding moneys is always PAYE and PRSI. If you go to the trouble of examining that you will see that millions of pounds are not going into the system.
I worked a three day week. I do not have any professional qualifications. I am not an architect, a solicitor or a farmer. I depend on what I earn here. The Ceann Comhairle knows because he worked in the same industry as I did. At one stage I was his union official so we can talk in the same language. The situation was——
I am concerned that the Deputy is making what might be regarded as a Second Reading speech.
I have waited a long time to say what I have to say tonight. I am speaking to the section. I am not speaking to the amendment. I was given to understand I could do that because I could not say all I want to say in relation to the amendment in the name of Fine Gael. I have to say it on the section. Please try to bear with me. I do not often offend the Chair and I will not do so tonight either.
Labour Party policy is clear on this matter. We think a worker should pay on his total earnings, whether he is a solicitor, a carpenter, a plumber, a factory work or a lorry driver; but when he is sick and out of work he should be paid accordingly. That is the principle of the PRSI system. That is the principle we should start looking at. If we got back to that principle workers and employers alike would be far better off.
We used to go to the labour exchange in the local community, whether in Dundalk or Drogheda, and sign on every day. At the end of the year you got a card and bought a stamp which was put on the card and presented to the employer. The worker could go into the wages office, take out his card and see how many stamps were on it. The employer had to go to the post office, buy the stamps, lick the stamps and put them on the card. The workers and the shop steward could walk into the office an say "Listen, manager, I want my card. How many stamps are on it?" He could walk down to the labour exchange, hand it in and he would know his money was paid. We then introduced this high falutin' technology which was going to solve all our problems, but it has messed up the whole system completely. Nobody knows now until the examiner goes into the company or until the company goes into liquidation whether the money has been paid. A worker on the factory floor has no way, good, bad or indifferent, of knowing whether any money is paid in. That is the situation and the mess that has been created by this high falutin' system. When the system was kept simple workers knew where they stood. If anybody went to the labour exchange with unpaid stamps it was their own fault or that of the shop steward or the local branch committee operating on behalf of the union. That is what we got away from and that is where we made the mistake.
The more computerisation we have in the Department the more racketeers will be going around in industry and the more money that will be lost to the system. I was pleased when the Minister announced yesterday that he hoped to get a central system where one could see the record of each worker. Under the old system of cards one could see whether the money was paid in or not. I and most Deputies on all sides of this House spend a great deal of time checking with the records section of the Department of Social Welfare to see how many stamps were paid for last year and the year before. One person who understands the system is Deputy Barnes. If we were to do as suggested by some people, Mná na hÉireann would not be covered for insurance because the men would not pay; instead they would spend the money on drink, cigarettes or gambling. Women are not covered as equal partners in the social welfare system; they are called dependent spouses and are paid a reduced amount of money. Deputy Monica Barnes was perfectly correct when she made that point. She has my full and absolute support. She understands what would happen in the social welfare system if we introduced the minefield suggested by one Deputy. I know it was not done with any ill intent but if we were to adopt that approach we would destroy the social welfare system for the women of Ireland.
We should get down to talking about the social welfare system in the morning. I have a few suggestions to make and a few facts and figures to present. I will present them in the morning after I and everybody else have had a few hours sleep and have the patience to listen to me. The social welfare PRSI system was destroyed in 1981 by the then Government who introduced that Bill. I have been trying for nine years — the Ceann Comhairle is well aware of this as I have raised it at the Committee on Procedure and Privileges and elsewhere — to pay into the PRSI system but the Minister's Department will not allow me. Before I became a Dáil Deputy I paid stamps for 30 years, all of which are gone down the sink. If I was unemployed in the morning I could not even draw unemployment assistance because I would have £130 of a pension, which would be the maximum, and on a means test basis I would not qualify for unemployment assistance even though I have worked for 30 years in industry and represented workers all over the country. After nine solid years and four Governments I still cannot pay into the system. Everybody should be in the PRSI system and should pay in full. Then the Minister would have the money to compensate and pay the lower income groups who need to be supported and so get the lower income families off the ground. He can only do that if everybody pays their fair share in equal amounts based on the total level of their earnings. I will explain in the morning how that should be done.
Progress reported; Committee to sit again.