Willie O'Dea
Ceist:1. Deputy Willie O'Dea asked the Tánaiste and Minister for Social Protection her plans to expand social welfare entitlements for self-employed persons; and if she will make a statement on the matter. [33329/15]
Amharc ar fhreagraWednesday, 30 September 2015
Ceisteanna (1)
Freagraí ó Béal (20 píosaí cainte)
I raise this question again to ascertain if there have been any developments in this matter since it was last raised with the Minister in May. As the House will be aware, we are trying to develop the indigenous sector and the extension of benefits to the self-employed is central to that project.
The self-employed pay PRSI at the class S rate of 4%. These contributions provide cover for long-term social insurance benefits including the State pension (contributory) and the widow’s, widower’s or surviving civil partner’s contributory pension. In contrast, a combined employer and employee PRSI rate of 14.75% is paid in respect of most employees, who can then access the full range of social insurance benefits.
The most recent actuarial review of the social insurance fund published in 2012 found that, in the case of the self-employed with earnings equivalent to national average earnings, a 15% contribution rate would be needed to provide the core full-rate State pension (contributory) to the self-employed. This compares very favourably with the 4% rate currently paid by the self-employed. The review also showed that the self-employed at all income levels got better value for money for their contributions in regard to the State pension than employees generally.
In its 2013 report, the advisory group on tax and social welfare found that almost nine out of every ten self-employed people who claimed the means tested jobseeker’s allowance during the three-year period from 2009 to 2011 received payment. Therefore, it was not convinced that there was a need for the extension of social insurance for the self-employed to provide cover for jobseeker’s benefit.
However, the group found that extending social insurance for the self-employed was warranted in cases related to long term sickness or injuries, through the invalidity pension and the partial capacity benefit schemes. In this regard the group recommended that the rate of contribution for class S should be increased by at least 1.5 percentage points, payable on a compulsory basis only.
While I am anxious to expand the level of social insurance entitlement for people who are self-employed - there are many such people and the number is growing - any such change would have to be funded by an appropriate level of contribution.
I do not detect from the Minister's response any developments since this matter was raised five months ago. It seems that the Minister is using the report to avoid making any decision that would assist the self-employed while, at the same time, the Taoiseach said it is central to Government policy to develop the indigenous sector. Reports report, Ministers decide. The Minister will be aware that the report recommended that the right to illness benefit, invalidity pension and so on, should be extended to the self-employed. I admit the report stated that should be done on a compulsory basis but there is no rationale to that because countries such as Denmark, Germany, Sweden, France, Lithuania, even Romania, are doing this, either for unemployment benefits or sickness benefits on a voluntary basis, such as we have proposed. Will the Minister indicate if she has given thought to extending this on a voluntary basis? If people are prepared to pay, surely they should be accommodated.
I recall when I came into the office of Minister for Social Protection the deficit on the social insurance fund was €2 billion, which was a cause of great concern. Through very careful management we have actually reduced that deficit or, as some people in the media used to call it, the hole in the social insurance fund, to about €180 million, compared to the €2 billion plus left to us by the previous Government. If the Deputy is talking about expanding social insurance then he should be aware that first, it has to be funded and second, it has to be funded in a way that is appropriate for the people who are interested. The Deputy's first point was whether it could be made voluntary. I do not think there is any example anywhere of a voluntary social insurance scheme because the people more at risk would pay and the people who appear not to be at risk, much younger people, might choose not to pay at all. It would cause an enormous problem, even for contributory old age pensions that self-employed people receive for a 4% contribution. Let me be clear about this, I am all in favour of extending it but it will have to be contributed to. I do not know what is Fianna Fáil's attitude on this issue. Having almost crashed and wrecked the social insurance fund it now wants to do that again.
The people will cast their judgment shortly on the Minister's management of the system. I look forward to it eagerly. The Minister made a statement which is patently false. She said there was no example anywhere of a voluntary contribution providing for extra benefits. I have named six OECD countries which operate just such a system on either the jobseeker's benefit side or the illness benefit side so I ask the Minister to retract that statement. It is perverse that the Government should announce, as it has done about 142 times, that it will encourage the self-employed sector by extending a tax credit to people who are already in business, while at the same time it is doing nothing to extend illness benefit, at a minimum, for people who want to become self-employed or those who lose their businesses because of illness.
Is that not perverse? Is the Minister also aware that the leader of her sister party in the United Kingdom, the Rt Hon Jeremy Corbyn, has now put this issue at the very centre of Labour Party policy in the United Kingdom?
We are facing an election. Many people are contacting me about this issue to find out if anything is happening about it. Can I now report back to those people that the Government intends to do nothing about this issue?
What we had in this country, and we were able to maintain it during the worst crisis in the country's history, was a contributory old age pension, which extends to all-----
I am not asking the Minister about that.
-----self-employed people.
Will she answer the question?
What I am saying is that when we make decisions about the Social Insurance Fund we have to be prudent so that we do not take away or undermine what is a very valuable item in people's lives, namely, the contributory old age pension, the widow's and widower's pension and the maternity benefit, which self-employed people get.
That has nothing to do with the question I asked.
The Deputy is throwing out suggestions that it is possible for us, as we should-----
Yes.
-----to extend, in particular, cover for illness-related issues-----
In the same way that six other countries have done.
-----to self-employed people. I strongly support that but, to be honest, that has to be paid for. The well-regarded expert group said it could not be sustained if it was voluntary-----
Even though other countries can do it.
-----and that for policy in Ireland it was not the best idea. We are talking about 1.5 additional contributions.
Thank you, Minister. We are over time.
I have given the Minister six precedents for doing it on a voluntary basis.