Amendment No. 3a, in the name of Deputy Joe Walsh, is out of order.
SECTION 7.
Amendment No. 3a not moved.
Question proposed: "That section 7 stand part of the Bill."
My amendment was to insert the following subsection:
Persons who contribute social insurance contributions under this section shall be entitled to invalidity pension if they meet the qualifying conditions for that benefit.
As the Minister knows, this is not asking for a great deal because the requirements to obtain an invalidity pension are quite stringent. I ask the Minister to consider, between now and Report Stage, a concession in this regard.
Section 7 provides for changes in the rates of social welfare contributions payable by the self-employed. Subsection (1) (a) and (b) provide that self-employment contrbutions will not be payable on the first £520 of annual reckonable income or emoluments. Together with subsection (1) (d), these subsections also provide for a reduction, from £250 to £230, in the minimum annual social insurance contribution payable by the self-employed. Subsection (1) (c) provides for an increase from £20,900 to £21,500 in the income ceiling up to which contributions are payable by the self-employed. Subsection (2) provides that these changes will come into effect on 6 April 1995. The cost of exempting the first £520 of annual income and the reduction from £250 to £230 in a minimum annual contribution is in the region of £2.5 million in 1995 and £4 million in a full year. The additional income from the increased ceiling is estimated at £0.5 million in 1995 and £1 million in a full year. There are currently some 130,000 self-employed contributors.
In relation to the amendment tabled by Deputy Walsh, which is out of order, the position is that social insurance was extended to the self-employed by the introduction of the class S rate of social insurance in April 1988. At that time the National Pensions Board, in its report on the extension of social insurance to the self-employed, expressed the view that it would be inappropriate to apply to the self-employed the current eligibility conditions for invalidity pension which applied to employees.
The National Pensions Board in its final report, "Developing the National Pensions System", considered this matter further. They estimated that the cost of extending invalidity cover to the self-employed would be £67 million per annum in 1992 terms — obviously, it would be higher in 1995 terms — and concluded that this could require more than a doubling of the contributions currently payable by self-employed contributors. The board did not, therefore, recommend the extension of invalidity cover to the self-employed.
The board considered that cover for permanent incapacity in the case of the self-employed and other persons who are permanently incapable of work and not eligible for a social insurance payment should continue to be provided by means of social assistance payments, subject to a means test. In this regard, it suggested that there is a strong case for bringing all the schemes which provide this type of cover and which are currently administered by health boards under the direct administration of the Department of Social Welfare.
The board recommended that a new disability assistance scheme and a new invalidity allowance, which would correspond to the disability benefit scheme and the invalidity pension, should be introduced. They were unable to establish the likely cost of these schemes. They also recommended that the question of introducing social insurance cover for invalidity for the self-employed should be reviewed not later than five years after the introduction of the proposed schemes and in the light of the experience of their application.
The contents and recommendations of the final report of the National Pensions Board are under consideration in my Department. I intend to bring forward proposals in due course for consideration by the Government. The recommendations in relation to invalidity cover for the self-employed will be considered in this context.
There is not much time to discuss this matter. However, I am sure the Minister is aware that many people who were previously employed, for example, bricklayers or wookworkers who are now in C45s, have been forced to make self-employed contributions by changes in industry. This has put them in a most invidious an unfair situation. Many of these people paid full rate PRSI contributions up to the age of 45, 50 or over and they were covered for short term and long term benefits. Suddenly, they find themselves without that type of cover or occupational injury cover.
This does not just concern well-off self-employed people. There are many who are not well off. One of the great concerns is that they are not covered for invalidity or occupational injury. There are also many other things for which they are not covered and this is a most unfortunate development in the employment area. It has had repercussions in the social security system and needs to be addressed.
I clearly indicated in my reply that I and my Department are conscious of the need to provide some assistance to people who do not qualify on the basis of insurance contributions if they fall ill. The position is the same if they are unable to return to work as a result of illness. The issue is being examined in my Department and when the examination is concluded, I will bring forward proposals to Government.
We are conscious that people are falling through the net due to illness because they do not have the necessary contributions to qualify for disability benefit or invalidity pension. However, if we were to introduce invalidity pension, one is talking about costs in the region of at least £67-70 million. Given that the total increase provided for in the social welfare budget this year was £90 million, one would not only be unable to give an inflation rate increase across the board to social welfare recipients, but one would also be unable to provide for the child benefit increases. It is a significant amount of money, but there are provision for reviewing it. We will be bringing forward proposls, having carried out that review.
I thank the Minister for his commitment to review this matter. I put down the amendment so that this important issue could be aired. We look forward to some development and progress in this area.
I welcome the commitment in this area. One of the Government's priorities is to create an environment which will encourage people to go back to work. There are quite a number of disincentives in this regard. For example, one needs to provide privately for adequate cover if one goes to work as a self-employed person. Many self-employed people cannot afford to do this and it is put at the bottom of the list of expenses which must be met. The tax and social welfare codes are often interrelated and this is another issue which arises in that context.
There was a period when the approach to taxation of the self-employed was very lax. Self-employed people paid tax much later than PAYE workers, who were caught in the current year. However, the changes introduced in recent years have led to a situation where the self-employed pay tax in advance. Nobody else does this and they are paying tax on work which may be ongoing and which may yield a result.
There is much pressure on people in this area who are taking risks. These type of social security matters are often put to one side, especially given the time at which tax demands arrive in the tax year. This could be an important element in creating a pro-work environment and supporting those who take risks and become self-employed.
Question put and agreed to.