It would be useful to delay a minute or two to give Opposition Deputies an opportunity to indicate their attitude to the extension of the child dependant allowances for 13 weeks. This concrete measure, which will deal with poverty and unemployment, is an important reform of the social welfare system and will enable people to take up employment more easily in that they will be able to retain the support they receive for children for 13 weeks after they start work. If they qualify for a family income supplement obviously this will follow immediately after the end of the 13 week period. This is one of the many measures introduced by the Government to assist the unemployed. I do not propose to repeat the criteria which apply but this is an important section and Deputies should have an opportunity to comment on it.
I support this progressive measure and the section.
It should be noted that this concrete measure to deal with poverty is being virtually ignored by the Opposition Deputies.
The Minister is being his usual bombastic and hypocritical self but he will be brought back to reality very quickly. I said I support the measure and the section.
It is on the record.
If I said this as Gaeilge the Minister might be able to interpret it a bit better.
Ba maith liom tú a cloisteáil ag labhairt Gaeilge.
The Minister should not go down that road.
It is extraordinary that Fianna Fáil is so sensitive about the Irish language.
We are concerned about its abuse.
Abusing the language in the way the Minister has just done — and did a few weeks ago — does no service to those of us in the House who have a great love, understanding and knowledge of the language.
That is nonsense.
I ask the Minister to please desist from doing this in the future as it does not become him.
We are not here to discuss the Irish language.
Fianna Fáil wants to preserve the Irish language as a museum piece.
What about the second level all-Irish school the Government will not build?
It should be noted that Fianna Fáil has failed to welcome a positive measure to deal with poverty and unemployment.
That is nonsense and the Minister should stop being hypocritical.
The Minister is filibustering and trying to prevent us discussing other provisions in the Bill.
Having forced a vote on a nonsensical amendment a few minutes ago——
The Minister should go back to 1993.
——Fianna Fáil has failed to welcome a positive measure to deal with poverty and unemployment.
What is the Minister afraid of?
The Deputies opposite are afraid.
This concrete measure, which will assist people in low paid jobs, is an indication of the Government's determination to deal in a realistic way with poverty and unemployment. It provides for the changes in the rates of social insurance contributions payable by employers and employees. Section 8 (1) (a) increases from £50 to £80 the amount of weekly earnings on which social insurance is not payable by employees in full rate social insurance. Section 8 (1) (b) increases for £21,500 to £22,300 the annual earning ceiling up to which social insurance contributions are payable by employees. Section 8 (1) (c) provides for the following changes in social insurance payable by employers: a reduction from 9 per cent to 8.5 per cent in the lower rate, a reduction from 12.2 per cent to 12 per cent in the standard rate and an increase from £231 to £250 in the weekly earnings threshold up to which the lower rate applies.
Section 8 (1) (d) increases from £25,800 to £26,800 the annual earnings ceiling up to which contributions are payable by employers. Section 8 (1) (e) provides for the deletion of section 10 (7) of the Social Welfare (Consolidation) Act, 1993, which contains regulatory powers to exempt employees from having to pay social insurance contributions where their weekly earnings are below a prescribed amount, currently set at £60 per week. Following the increase to £80 in the amount of weekly earnings on which social insurance is not payable by employees, section 10 (7) of the 1993 Act is obsolete.
Section 8 (2) provides that these changes will come into operation on 6 April 1996. The increase in the earnings limit for the lower rate of employers' PRSI from £231 to £250 extends the lower rate to an additional 53,000 employments, almost two-thirds of all industrial, commercial and service employments. A total of over 655,000 jobs now attracts employers' PRSI at the lower rate which has been reduced from 9 per cent to 8.5 per cent.
All employees will see a reduction in their PRSI deductions at a cost of £70 million in a full year. About one million employees paying class A PRSI will see a reduction of £1.65 a week in their contributions. The cost of the PRSI budget package is as follows: an increase in PRSI allowance from £50 to £80 for full rate contributors, and from £10 to £20 for modified contributors and the self-employed, will cost £41.9 million in 1996 and £69.8 million in a full year; the threshold for the lower rate of employers' PRSI increased from £231 to £250 a week will cost £12 million in 1996 and £20 million in a full year; the reduction in the lower rate of employers' PRSI contributions from 9 per cent to 8.5 per cent will cost £9.7 million 1996 and £16 million in a full year; the reduction in the standard rate of employers' PRSI contribution from 12.2 per cent to 12 per cent will cost £9 million in 1996, and £15 million in a full year. That gives a total cost, or saving to the employer or employee, of £72.6 million in 1996 and £120.8 million in a full year.
This is an important reform of the PRSI system. It enables employers to ensure that they are in a position to compete, particularly with companies exporting into Ireland in particular categories of manufacture, and it ensures that the low paid in particular have a larger take-home pay as a result of the £80 disregard for PRSI purposes. That should be taken into account in tandem with the improvements in the tax system.
I want to speak specifically about those people who entered social insurance in 1988 and who were then aged 56 years or over. They are unfairly treated. In reply to a Dáil question recently I was told that those contributors subscribed about £90 million per annum to the fund but cannot qualify for a contributory pension. This is an inflexible and inequitable way of dealing with self-employed taxpayers who are obliged by statute to pay their contributions but do not qualify for benefit even though their money was tied up for several years. I raised this before on a number of occasions but got no concession on the matter. There is deep dissatisfaction about it.
A number of options has been suggested. The option I suggest is a pro ratapayment — if a person has paid contributions for up to seven or eight years he should be entitled to a pro rata pension. The National Pensions Board recommended that in their final report. There are other options, for example, that of buying in additional contributions or allowing contributors to pay contributions beyond the age of 66 in order to meet the requirements for a pension. I would like the Minister and the Department to have a further look at the possibility of giving self-employed people a pro rata pension based on their contributions. At the moment they are shabbily treated. Now that there is a sizeable amount of money in the fund, £90 million as against £20 million when it was first set up in 1988, people who contributed should be entitled to a contributory pension and further benefits on their payments.
I support Deputy Walsh's point. We are talking about a group of self-employed people aged between 64 and 72. These people have made a huge contribution and, as they constitute a contained group of people, it would not cost the State much money to give them a pension.
As I mentioned when we last had questions to the Minister for Social Welfare in the Dáil, these self-employed people also made a huge contribution to the State during their lifetime. Many of them are employers who created much employment in the State. We are not asking for huge amounts. We are talking about a set group of people who were 56 years of age in 1988 and who today are over 64 years of age. Something should be done for them.
The scheme is no more and no less inflexible now than it was in 1988 when it was introduced by the party sitting opposite. I am pleased they have learned something in the course of the last eight years. The contributions made by the self-employed are contributions to an insurance fund and, if one is to get a return from an insurance scheme, particularly one of this nature, there needs to be a basic level of contributions before one can benefit. To say that because a certain amount has been invested by the self-employed in social insurance, a small proportion of those who are not entitled to a pension because they do not fulfil the necessary criteria should get a pension is not a valid argument.
The figure of £90 million being quoted is the total amount being paid by the self-employed, including those who will qualify for a pension in time. It is wrong to suggest that the self-employed are being deprived of benefit when the law as it was introduced in 1988 stipulated clearly that a person must have entered the scheme by age 56 and that if they were above 56 years of age when they entered and did not have other contributions the contributions they made in the meantime would be refunded with a cost of living increase. This year I have introduced a further variation to make that less inflexible than when it was introduced in 1988 by disregarding the pre-1953 contributions which were, up to now, counted when assessing whether or not a refund would be made on the pre-53 contributions. We are putting in place arrangements to refund payments by people who have reached the age of 66 but who do not qualify for a pension because they do not have ten years' contributions. They failed to get a refund until now because they had paid pre-53 contributions and, therefore, under the regulations they did not qualify for one. We are changing that to enable them to get a refund despite the fact that they may have made pre-53 contributions. A person who may have had post-53 contributions, however, will still not qualify for a refund.
As I have said on many occasions in the Dáil, my Department is actively examining the national pensions board report to see in what way we may address this issue. I know it results in a great deal of lobbying of all Deputies. I am determined to come up with a solution to the problem although it may not be a cost free one either for the Exchequer or for contributors who have made less than ten years' contributions by age 66. It would be a mistake to breach the requirement of a ten year basic contribution period which has been applied in all cases since the scheme was introduced in 1961.
There is a determination to find a solution which will not cost the earth to the Exchequer or the contributor. It may be a pro rata arrangement or, as has been suggested, it may involve an extension by a number of years so that the pension will not be claimable until at least ten year’s contributions have been paid — whether that would be at age 69 or 70. We may have to apply some actuarial criteria to contributions to make up the gap between how many contributions have been made and the ten year requirement. There is a range of options which is not easy to choose from.
I am waiting for my Department's assessment report on the National Pension Board's recommendations. As soon as I have considered it I will make a decision on it and will inform the House.
I support the point made by Deputy Walsh. The Minister is not being entirely accurate in his response. First, this was a new scheme in 1988, a breakthrough that took a lot of negotiation, argument and estimation. Therefore, it was not possible to say how the scheme would work and there was great concern from the financial point of view. The actuarial studies were not particularly helpful to us at that time. However, we wanted to support pensions as well as extending that support later to invalidity pensions. That should be pursued.
The difference now is that the Minister has the experience of those eight years, and the situation is not the same as it was then. To make the comparison the Minister made with the position eight years ago is false because there was no information at that stage. That was negative information. The Minister is aware that the scheme has consistently been turning in approximately £90 million a year, and it is not a once off. He must know what the payments from that are because, as yet, they are relatively small.
What is the cost of the payments to the self-employed? What were they running at in 1995 and what are the 1996 estimates? How many people did not qualify then and will not qualify now? The Minister must have this information because the ages and other facts are known about applicants. Even if the information is not readily available it should not be too difficult to find out just how many people are involved. The position has changed dramatically in eight years. Those people are now in, the Minister knows who they are and what the circumstances are likely to be. Therefore, the Minister can re-examine the position.
The actuarial estimates at that time suggested it would cost £750 million to bring those people in. Two groups were involved, one aged between 56 and 60, and another aged from 60 to 65. Both groups should be looked at again to see if it would be possible to bring any of them in, perhaps by continuing payments up to ten years, or by some other means of making up the payments where necessary.
We need to know the figures and what the possibilities are. It is a matter of considerable urgency because, as Deputies Wallace and Walsh pointed out, people will be withdrawing money and will be leaving the scheme. Once they take back the money it will be difficult to retrieve the situation subsequently.
Whenever a new scheme was introduced there was usually some arrangement for retrospection. People who were just over the ten years mark could enter the scheme when they were just under 56. We should continue to examine the position of people who were just over 56, to see if it feasible to bring them in, or to bring in groups in certain circumstances on some kind of payments. We should not close our minds to this because it is urgent.
The Minister should give us two figures, the total amount of money which will be contributed by the end of 1996 by the self employed, and, second——
Section 8 does not deal with the self-employed, it deals with employment contributions.
Yes, but it deals with contributions by the self-employed.
It does not; section 8 deals with employment contributions.
Perhaps that should be dealt with later but it is relevant to people who make contributions and whether they may or may not make them.
We are dealing with employment contributions in section 8. I have allowed a great deal of latitude.
The Chairman allowed the issue to be discussed now rather than later. The amendment to this section was tabled by Deputy Walsh.
We are going into great detail on something that is the subject matter of an amendment that is not before the House.
It relates to the section.
I have given great latitude on this matter which is completely out of order. Members should not go too far. We are discussing section 8 which deals with social insurance and provides for increases in the social insurance rate.
Yes, but I am referring to social insurance contributions.
Section 8 deals with employment contributions. Section 9, which we have not yet come to, deals with contributions by the self-employed. We must not discuss the details of section 9 when we have not disposed of section 8.
When we dispose of section 8, members can have all the time they require to discuss section 9.
Sir, the Chair allowed the matter to be taken at this stage and the Minister has contributed on it. Would it not be better to allow us to finish on it?
I allowed Deputy Woods to make the point but there seems to have been a very extensive and detailed discussion on the subject of an amendment that was ruled out of order. I confess to being guilty of allowing the matter to be raised and developed. We have been having a full debate on the matter and I ask Members to confine themselves to the section.
May we discuss the two sections together and vote on them separately?
We are dealing with section 8 and members will confine their remarks to the content of section 8 and related matters.
They do not want to have to welcome this section either.
That is petty.
That is the next point. I think it might be useful to discuss the two sections together since we have discussed section 9 already.
The question before us is: "That section 8 stand part of the Bill."
Perhaps the Minister will reply to the points I have made so that I will not have to repeat them.
The Minister has replied already.
Assuming that neither I, nor the Minister and spokespersons have to repeat what was said, we can regard those points as being in suspended animation until we get to section 9 and nobody will be upset.
The Minister will recognise that he is continuing the process initiated by the former Government. For the first time reductions were made in PRSI contributions yet the income to the social insurance fund was maintained. I think the Minister shares our belief that the strength and security of the social insurance fund must be maintained. Prior to this Government taking office, that issue was tested. The Minister wishes us to laud the steps he has taken which we, of course, support, in the context of maintaining the security of the social insurance fund. I believe this is also the Minister's objective, if not the Government's objective. That is an open question.
Is the Deputy opposing the reductions?
It is very much an open question as to whether the Government wants to maintain the security of the social insurance fund.
The Minister has stated on a number of occasions that he wants to maintain the security of the social insurance fund, as we do. We want to provide for reductions that are feasible in the context of maintaining the security of the social insurance fund and the benefits that are due as of right to the members who contribute.
Has the Minister an estimated figure for the number of jobs to be created as a result of the reductions in PRSI? The Minister said he expects reductions will lead to extra jobs. Can he indicate the estimated number?
Will there be a deficit in the fund for 1996 and is it anticipated there will be a deficit for the full year 1997? What is the transfer from the taxpayer to the fund in 1996?
I will stray a little into the next section in the context of the comments made by members. Deputy Woods seems to be trying to have the best of both worlds and is coy about the reductions, which are very significant. He is making sounds about the integrity of the social insurance fund. Is he suggesting that he does not agree with the reductions and that it should be done some other way? He cannot have it both ways. Either he welcomes these significant reductions, as I certainly do, or he does not. The reductions in the levels of payments and the exemption of the first £80 of income from PRSI is one of the most helpful measures to have been introduced in recent years. It has been long accepted by our party that our taxes are payroll related and that we tax work far too much. In so far as these measures reduce the cost of creating a job, they are extremely important.
The elements of this package targeted at low paid employment are particularly welcome. One tends to find women and the poorest in society grouped in low-paid employment. This employment is often labour intensive, home based or in the service sector and the profits are not there to pay the salaries available in other sectors of the economy. The huge taxation cost on employment and income hit hard at those groups. These concessions are extremely helpful and allow more employment to be created at an acceptable wage. These are welcome measures.
The issue in relation to the self-employed is very important. The Minister told the Deputy he was reviewing the pension board report with a view to responding in a number of ways to this issue. I was in Opposition when this proposal was introduced by the then Minister, Deputy Woods, and I thought it was a very smooth operation.
To date this fund has been a major contributor to the Exchequer. Deputy Woods, his party and the employers involved in the negotiations hold responsibility for the major contribution to the fund for the self-employed.
It is a good scheme.
Deputy Woods, when quoting figures, should realise he bears a great deal of responsibility for the introduction of that scheme. At the time of its introduction it was evident that those over 56 would be excluded as a ten year qualifying period applies to the scheme. It contained an attractive element of qualification for a widow's pension. I share Deputy Woods's view that matters do not stand still. The Minister indicated he is actively reviewing the scheme and considering all the options in consultation with representatives of employers and those affected. We should congratulate the Minister on this section and urge him to encourage his Department to move quickly to review the substantial issues raised by self-employed groups, where there are further refinements and developments on the proposals needed.
Deputy Woods raised an important point about invalidity pension. The security to the self-employed by the provision of such a scheme would be extremely valuable. Will the Minister, when replying to the next section, indicate if discussions are ongoing in that regard?
Tribute should be paid to Deputy Woods for being one of the most innovative Ministers for Social Welfare in the history of the State. This is one of the innovative schemes he introduced. He made the valid point that such schemes are open to review and amendment after a certain length of time to address anomalies and to respond to any injustices that may have developed. Having dealt with some constituents' queries on this matter, I am aware there is a basic injustice in the scheme in the treatment of certain participants. It is not satisfactory for the Minister to say he is reviewing the matter, awaiting reports and that there are a range of options to be followed. Other measures introduced in the past which involved cost implications were resolved much more quickly.
They were resolved after many years.
I am making the point that they were resolved in agreement with the House. Pensioners, in particular, do not appear to be a priority with the Minister either in terms of basic rate increases or issues, such as this, which emerge from time to time. The Minister could have been more proactive in dealing with the self-employed and reviewing this scheme during the past year. By doing so he could have brought forward solutions before the introduction of this Bill, the major social welfare legislation introduced in any year. Reviews and analysis on this issue should have been carried out prior to the publication of the Bill and they should be before us. It is not good enough that we should have to await the completion of further reviews and reports before the position can be remedied. If they were to involve cost implications, so be it. If there is a basic injustice in a scheme to which people have been contributing, they are entitled to a genuine return on their contributions.
A similar problem arises in regard to old age and widow contributory pensioners who may not have applied for their pensions on reaching pension age. It is a blatant injustice that such pensioners, some of whom did not claim their pension for many years after reaching pension age, are not entitled to arrears in their pension payments from their date of eligibility. That is an historic evolution of the system. Ministerial parliamentary replies on the matter do not indicate any real progress on this issue. The Minister cannot say he was not forewarned about this problem because Deputy Walsh has been tenacious in tabling questions on this issue for some time. I do not understand why the options to which the Minister referred are not before us in the context of this important major legislation.
On a point of order, are we back to dealing with the issue of self-employment?
It would have been better to deal with the two sections together.
We are not dealing with the issue of self-employment.
The issue of self-employment was raised by Deputy Flaherty who made sweeping comments about it. The points made by Deputy Martin are relevant. He is concerned about the Minister's attitude towards pensioners. We are chiefly concerned with his attitude towards specific pensioners, the self-employed, including farmers. This issue was raised earlier in regard to the family income supplement for the self-employed, including farmers, when the Minister was condescending towards them and ruled them out. We do not appear to be able to make progress with the Minister on behalf of the self-employed, including farmers, who were over 56 years of age in 1988 when this scheme was introduced. Deputy Woods clarified that a review of the scheme is long overdue.
That is unfair. The Deputy's party made a mess of it.
When a scheme is introduced it is impossible to establish how it will progress.
It is an inadequate scheme.
We now know the position with regard to this scheme. We have all the facts and figures on it.
The Deputy's party cannot have the glory without the responsibility.
It is extraordinary that we are unable to get the Minister to make progress in addressing the needs of the people involved. We are dealing with self-employed people aged 64 and over. Deputy Flaherty appears to believe it is in order to await the completion of another Government review, consultation and report. We are not satisfied to continue to await further reports and reviews in regard to people aged between 64 and 67. People in that age group are not waiting to become pensioners, they are of pensionable age. They want to know their position regarding their pension entitlement and do not have the time to await the completion of more reports and reviews. Action is needed now — and can be taken — to address the needs of self-employed groups, including farmers because the needs of the people involved is a feature that can be pinned down, targeted and costed. As in 1988, their reaching pension age was not unforeseen, it can and should be pinned down in 1996. The Deputies opposite are wrong if they continue to hide behind reports and reviews on this important issue.
I am not confused about this issue. Some self-employed people who have contributed to the scheme are not receiving any benefits. Deputy Wallace said that we no longer need to await the completion of a report or the pension board's review, but I believe we do. If a former Minister for Social Welfare could not foresee that a person aged 56 in 1988 would be a certain age ten years later, obviously the matter needs to be reviewed by a committee. It is puzzling that the matter was not clarified when the scheme was introduced. At that time the fact that this issue would arise was as clear as a pane of glass about which we all appear anxious to speak.
One that is transparent and open.
One that is extremely transparent. Nevertheless, it appears that although it was obvious this problem would arise, it was not considered by a former Minister for Social Welfare. The anomaly in the system needs to be addressed, but I am puzzled that Fianna Fáil in the guise of Deputies Wallace, Woods and Martin should feign a false compassion and bleeding heart attitude towards this problem which could have been addressed in the past.
Pensioners are no longer the Deputy's responsibility. That is the problem.
That party also appears to have got matters wrong in determining the number of teachers required. It is easy to make calculations from when children are born.
The Deputy is Minister Bhreathnach's greatest supporter.
I am puzzled that that party has launched a bleeding heart campaign about something it instigated, got wrong and which will be put right now for the future. I cannot understand the changing of minds on the Opposition benches.
The Deputy's attitude appears to be more of the anti-farming, anti-self-employed attitude of the Democratic Left Party.
The problem is in Dublin, that is the area the Deputy should look after.
That is why the Deputy's party is running a candidate in Dublin-West.
I want to respond to a number of the points made. We seem to be getting from the Opposition benches an attempt to rectify a list of Fianna Fáil failures while they were in office. They referred constantly to the pension scheme for the self employed. Deputy Walsh has taken up and parroted the cry that the system is inflexible. The point I made is accurate, contrary to what Deputy Woods said. The scheme is the same scheme Deputy Woods introduced in 1988. As Deputy Lynch said, Deputy Woods knew in 1988 that some of the pensioners obliged to pay from 1988 would reach pension age before the full ten years had expired. Fianna Fáil knew that when introducing the scheme so to come in here——
The Minister is misrepresenting the situation as usual.
Sorry, will the Deputy have manners and let the Minister speak?
Allow the Minister to reply.
He is misrepresenting the situation. I did not mind Deputy Lynch going on like that but not the Minister.
Many people have been going off at a tangent. Could we have some respect for the Chair?
I have listened with patience to waffle from the other side and I would like to respond with facts. The scheme is no less or more inflexible than it was when it was introduced in 1988 by Fianna Fáil. When Deputy Walsh denigrates the scheme because it is inflexible, he is simply criticising his own——
The issue is what the Minister will do about it.
What about the old shibboleth "making a difference"?
It is very bad manners.
Allow the Minister to make his contribution.
The Deputies obviously do not want to hear the truth.
What about making a difference?
We are making a difference. We have been in office 15 months and we have rectified a considerable number of the failures of Fianna Fáil. After 15 months in office, Democratic Left has done more rectifying the Fianna Fáil failures in office since 1987——
Behave like a Minister.
The Minister's party looked after itself with jobs for the boys and girls.
Do I have to list the dirty dozen social welfare cuts?
Does "dirty dozen" refer to the Minister's advisers?
For Deputy Martin to say we should no longer wait for a consideration of the National Pensions Board's report is a criticism of his colleague who was Minister for Social Welfare when that report was received in December 1993. The report lay on his colleague's desk for a year before he went out of office and it apparently did not seem urgent enough to address. I have been addressing it. If it were possible to introduce in this Bill the necessary changes following a consideration of that report, I would have included them in this Bill. It has not been possible precisely because I have been working so hard rectifying the errors and failures of Fianna Fáil in office.
In other words the Minister just did not bother. These people are not a priority with him.
The Minister is confused by his advisers.
The section with which we are dealing is extremely important and it should be noted yet again that Fianna Fáil has refused to welcome the important advances being made in developing the social insurance system.
Tell the truth. The Minister is not capable.
They say they support it but they are only interested in being negative. On every occasion we have discussed a section which is positive and dealing with the issue of poverty, all we have had are attempts by Fianna Fáil to bring the debate down another road and deal with other issues which are a reflection of their own failures.
With all due respects, we are not bringing the debate down anywhere.
Specific questions were asked about the fund. I was asked whether there is likely to be a deficit on the social insurance fund at the end of 1996. The revised Estimate on page 197 states that the figure for payment to the social insurance fund under section 7(9) of the Social Welfare (Consolidation) Act, 1993, will be £81.9 million and there will be a further payment to the social insurance fund to cover the costs of equal treatment payments. Should I remind the Deputies of those? That does not embarrass them.
Not in the least.
That will require an additional £55 million.
I was asked what impact the changes in PRSI would have on employment. Employees will have more money in their pockets as a result of the changes in PRSI we have introduced. What impact will this have on job creation? There is no way of measuring that. There is a range of factors in the economy which impinge on whether new jobs are created.
I have indicated that the increase in the earnings limit for the lower rate of employers' PRSI from £231 to £250 extends the lower rate to an additional 53,000 employees. Almost two-thirds of all industrial, commercial and service employments, a total of 655,000 jobs or 655,000 employees, will now attract the lower rate of employers' PRSI, which has been reduced from 9 per cent to 8.5 per cent. The total cost of the package is £120 million and it is of significant assistance to employers, despite the cry from Deputy Wallace that I am anti-employment or anti-employer. This is a direct benefit to employers and employees for the maintenance of jobs.
On a point of clarification, I did not say that. Being anti-farmer and anti-self employed is a different issue.
Deputy Woods suggested that in some way this Government was less committed than Fianna Fáil to the maintenance of the social insurance fund and the social insurance system. There is a specific commitment in the programme for Government to maintain and defend the social insurance system.
That means nothing.
We know it is there.
In addition I am in the process of preparing a discussion document on the development of the social insurance system.
This will be ready for publication before the summer. It is important to debate the issue of social insurance, what direction we want it to take, the impact it has on labour costs and the impact it might have on competition. These issues have all been thrown up in an undeveloped way.
It has been argued that PRSI inhibits companies in Ireland from competing with companies in Britain because of the differences between the two country's social insurance rates. To a significant extent the argument is false because they are not comparing like with like. The argument ignores very real differences. For instance, there is no ceiling on employers' contributions in the UK while there is a ceiling on employers' contributions in Ireland. That is a major significant difference between the UK system and ours which is to the advantage of Irish employers. As I said, 655,000 jobs or employees will now be covered by the lower rate of employers' PRSI.
These are important developments in our system which should help to maintain employment and ensure employees have more money in their pockets arising from work. This is part and parcel of the pro-employment measures the Government is actively introducing. It would be no harm, and it would not be too difficult for Fianna Fáil to welcome these important developments.
All the speakers here said they welcome the developments.
That is not on the record.
The record will show that we did welcome them. They were welcomed by Deputy Wallace and me and I asked the Minister for information.
The Deputy said he supports the developments, not that he welcomes them.
We are back to hair splitting again. As with "advertisement" and "vacancy", the Minister is implying that "support" and "welcome" are different. His precision is admirable, it got him into trouble previously.
This section provides for changes in the rates of social insurance contributions payable by the self-employed. Section 9 (1) (a) increases from £520 to £1,040 the amount of annual reckonable income or reckonable emoluments in respect of which PRSI contributions are not payable by self-employed contributors. Section 9 (1) (b) provides for a reduction from £230 to £215 in the minimum annual social insurance contribution payable by the self-employed. Section 9 (1) (c) provides for an increase from £21,500 to £22,300 in the income ceiling up to which contributions are payable by the self-employed. Section 9 (2) provides that these changes will come into operation on 6 April 1996.
The cost of exempting the first £1,040 of annual income and the reduction from £230 to £215 in the minimum annual contribution for the self-employed are in the region of £2.7 million in 1996 and £3.6 million in a full year. There are currently 138,000 self-employed contributors and the estimated income to the social insurance fund from the self-employed in 1996 is £87 million which represents 5 per cent of total income. I suggest to Deputy Wallace that is an example of the support I as Minister for Social Welfare and Leader of Democratic Left am offering to the self-employed, in addition to a range of other measures I am introducing.
I asked the Minister for information on the total income to the fund from the self-employed since 1988. He has given the figure of £87 million for 1996, but does he have the other information?
This matter relates to pensions. The self-employed contribute a greater amount towards pensions and they qualify for widow's or widower's and orphan's pensions. The contribution was £73 million for 1993 and £91 million for 1994. The contribution for 1996 is expected to be £87 million. The difference probably results from the concessions I have outlined relating to the reduction in the size of contributions those people are expected to make.
Will the Minister give the cost of pensions to the self-employed to date?
I do not have that information but I will try to get it for the Deputy. It must be borne in mind that people who have paid contributions since 1988 as self-employed may have had an underlying entitlement from earlier PRSI contributions. Figures are not, therefore, easily discernible for entitlements strictly relating to contributions made purely under the self-employed category. It is probably unlikely that many people would have no contributions other than the self-employed contributions they made since 1988. The number who may not qualify as a result of not having ten years' contributions paid by the time they reach age 66 is about 50,000. The number who will receive a refund this year as a result of the change in assessment of contributions, the disregarding of the pre-1953 contributions, is 400. That figure will be indexed in line with the cost of living.
Will the Minister give a recent actuarial estimate of the cost of bringing in those people? The actuarial estimate in 1988 was £750 million. There has been a good deal of factual information since then which should allow for a better estimate of the present cost.
I do not have that information. The information available to me is the same actuarial information to which the Deputy referred, which was available to him as Minister. The updating of that information must be taken into account in considering the options for dealing with the issues that have arisen.