I thank the Chairman for giving me the opportunity to address the select committee at very short notice on the revised agreement. Deputies will have received the briefing note we circulated in which we outline the purpose of the new agreement and the main changes. I will be brief in my statement to the committee.
Since 1992 we have had a bilateral agreement with Australia which protects the social security rights of persons who move between Ireland and Australia, particularly their pension rights. In the case of Ireland, the benefits covered under the agreement are: social insurance long-term benefits such as invalidity pension, old age contributory pension, retirement pension, widow's and widower's contributory pension, orphans' contributory allowance and the bereavement grant. On the first page of the briefing note we have outlined the number of pensions paid under the existing agreement. In total, there are just over 800 — 600 under the Irish system and 200 under the Australian system.
How does the bilateral agreement affect workers and their families? For example, if an Irish person who has paid social insurance but does not qualify for a minimum social insurance pension has worked in Australia, he or she can benefit from the agreement. I have given the example where a person paid Irish contributions for five years and was resident in Australia for 20 years. Under the agreement, we can calculate the pension by taking account of Irish social insurance contributions for five years and residence in Australia for 20 years. The person concerned receives 5/25ths of the Irish pension, instead of having no pension entitlement.
Australian pensions are residence-based and subject to a means test. Australia does not operate a PRSI system as we do. Australians who move to Ireland will continue to receive their Australian pension by virtue of the agreement. The Australian authorities restrict the countries to which Australians can export their pension. Article 12 of the agreement ensures any Irish social assistance payments to which persons are entitled will not have the effect of reducing their Australian pension entitlements.
In 2003 the Irish and Australian authorities decided to review the existing agreement to take account of changes to the each of their systems during the past ten years. On examination, it was found necessary to make certain changes to update the terminology used in the Irish system and to harmonise provisions in minor ways with our social security agreements with other countries. This resulted in a new agreement which was signed in Dublin by the Minister and the Australian ambassador on 9 June. This agreement is now subject to ratification by the Dáil.
The key changes include extending the period for posting of workers from two years to four, whereby workers in one state who are sent by an employer to work for a short time in the territory of another state remain attached to the social security system of their original state. It also ensures employers and employees do not become liable to pay insurance contributions simultaneously in both states. This is a new departure because while the Australian authorities have a means-tested social security system, in 2002 they introduced a mandatory second-tier pension which made it mandatory for all employees to have such a pension. Where an occupational pension was not provided by their employer, employees had to make a mandatory contribution to the revenue commissioners payable into a fund of their choice. The Australian authorities also introduced an insurance contribution system to ensure employees would not become liable for insurance contributions in both states.
Other changes involve adding to the list of social assistance payments disregarded for the purpose of calculating Australian pensions. We have included a provision whereby if a person is resident in Australia for a short period — less than one year — we can take account of this when calculating the Irish pension. We have also included a provision which will help in processing claims by allowing a person to make his or her claim for a pension in either country. There will be co-operation between the Irish and Australian authorities in this regard.
As regards ratification, preparations can be commenced once the agreement has received the approval of Dáil Éireann. This means the new agreement will be brought into force by means of a ministerial order and will become operable on the first day of the second month following the month in which the instruments of ratification are exchanged.
