Leo Varadkar (Dublin West, Fine Gael) | Oireachtas source

I thank the Chairman and other members of the committee for their questions, comments and suggestions. At the outset, some people asked me to give specific answers on what I am going to do in the budget. I am not being evasive, but I will not answer that question because I do not yet know how much of the fiscal space is coming our way. While I have had initial discussions with the Minister, Deputy Donohoe, we have still not made our formal submission to him. The Chairman knows how budgets work. There is always a squabble at the end over a couple of hundred million euro, but we have not even got to that point. I cannot tell the committee what will be in the budget. It is not that I am evading the answer but because I do not actually know yet. Needless to say, I will obviously seek an adequate social protection package which is not just about increased payments but also about real reforms, including those for the self-employed.

As regards Deputy O'Dea's questions, we do not have a figure for what it would cost to extend illness benefit to the self-employed. That is a short-term payment, as most claims are for a couple of days or one or two weeks. It would be a tricky one to do for the self-employed because self-employment by its nature is different from employment. If an employee who is paid hourly does not attend for work, it is very different from a self-employed person. In terms of certification or being paid per job or item rather than per hour, I am not saying it could not be done but it was not examined by the Mangan report.

That report did examine the invalidity pension and jobseeker's allowance. They worked out that extending the invalidity pension to the self-employed would cost €80 million, and the jobseeker's allowance would be a further €80 million. That calculation is based on self-employed people getting it on the same basis as employees. It is also based on them claiming it on the same basis as employees. I think that, for various reasons, self-employed people would be less likely to claim those things than employees.

Moreover, they would not necessarily have to get it on the same basis because self-employed people of course do not pay the same PRSI. They are their own employer but they do not pay employer's PRSI and consequently, one can bring down those costs by changing the basis on which they can claim. One thing the Deputy said with which I agree completely is that we should bring in these changes on a phased basis. We already have brought in paternity benefit for the self-employed and I would like to bring in new protections on a phased basis. I believe one important protection is the invalidity pension for people who get injured or incapacitated in the course of their work and therefore can no longer work. It could be a farmer in a major farm accident or a taxi driver who gets beaten up and cannot work any more. It could be a professional who for some reason gets very sick and cannot keep his or her business any longer. While self-employed people do not think it will ever happen to them, it actually happens all the time, and that is a measure that was recommended by Mangan. Something also must be done in respect of jobseeker's benefit, but it would be necessary to do it on a different basis because it is not straightforward to determine when a self-employed person comes unemployed. They do not get a P45. I have spoken to Ministers from other countries about what they do in their countries and, in an interesting point I had never even thought of, the Swedish Minister told me that in order to claim a jobseeker's benefit in Sweden when one is a self-employed person, one must close one's business. People actually are incentivised to close their businesses more quickly than they would otherwise because that is the only way in which they can get the benefits. Others want to get the benefit while keeping their businesses open and therefore want to receive it while still being self-employed. One has all these complicated matters. In Austria, to prevent people from being self-employed for six months and then being in receipt of jobseeker's benefit for six months and then back for six months, one can only claim the benefit when one has been paying in for eight or ten years. This then captures people who were paying in for a long time before something perhaps went wrong. There are many different options and, to be frank, I do not believe we will get it perfect. We will make a significant start on it next year and then we may be obliged to modify it as we go along.

The Mangan report recommended against such a scheme being voluntary for lots of reasons, but it is not that voluntary is impossible. Deputy O'Dea is correct to state that some countries do it, but when they do, this tends to be limited to certain sectors and the uptake can be quite poor. If one sets up a voluntary scheme into which very few people pay, one has not really achieved one's objective because people then do not have the social protection. They will regret not paying into it, but one still is telling them they are entitled to nothing. However, there are options in this regard. One could provide some benefits, such as the one on incapacity - that is, the invalidity pension - without it being voluntary. That one could be done on a compulsory basis but a scheme in respect of a jobseeker's benefit could be done as a voluntary scheme. There are many options in the mix and it will be interesting to learn what self-employed people would like to have done when the survey is returned. That will be really important.

Deputy O'Dea mentioned the proposed change regarding income limits for contributions in the tax strategy group document from €38 per week to €70 per week. That would not save any money in the short term. It actually would cost us money in the short term because we would have reduced contributions from employers. In the long term, however, it would help to make the Social Insurance Fund more sustainable. One must ask the question of what is a contribution, as 4% of €38 is not a big contribution. I do not know precisely what it is, but presumably it is a euro and something. Ultimately, one must ask seriously what actually constitutes a contribution. I am not sure how many people earn between €38 and €70 per week but I would say the number is relatively small. However, it is not something I am pushing in particular. It is just something that was presented as an option for it by the tax strategy group. I apologise - I should correct myself on that one. It is not 4% but would be the employer's contribution of 8%, not the employee's contribution.

A few members mentioned older people, and I must agree with the comments that were made. Even though poverty rates among pensioners are lower than among other groups and are much lower than among families or lone parents, and even though the pension was not cut, many things were. Prescription charges have really had an impact on pensioners. It comes up all the time when I am doing the doors. Two or three years later, the cut to the telephone allowance still comes up, and obviously, the impact of the local property tax on somebody who is in receipt of €200 or €230 per week is highly significant. While it is a week's pay for very few people, for pensioners it often is. However, one must bear in mind that in a fiscal space of €1 billion, with €660 million going on spending and €330 million going on tax relief, that means €660 million on spending to be divided among health, education, housing, the Garda and social protection, and never mind any other Department.

For instance, a €5 increase in the pension could be achieved, but that is pretty much all that could be done. I just need to bear that in mind and to be honest about it. When we divide €660 million among health, education, housing, the Garda and social protection, we are not talking about a lot of money, quite frankly, and I need to be honest about that.

Poverty rates are very high among lone parents. However, I do not think the most effective way to bring down poverty rates among lone parents is by tweaking the benefits system or by providing an extra €3 to €5 a week but by facilitating entry to the labour market and allowing people to work. Work is not always but is generally better in terms of income than being on welfare. There are barriers to education but the main barrier is the phenomenal cost of child care. The most effective thing we could do for lone parents is in the space of child care, which does not fall into my brief but, obviously, I have to take an interest in it because it impacts significantly on my brief and my budget. We had some progress this year with the second early childhood care and education, ECCE, year, but a lot more can be done. I do not need to tell anyone here that if we compare child care costs in Ireland with those in continental European countries, the difference is phenomenal.

Deputy Brady mentioned that according to Social Justice Ireland 750,000 people are in poverty. How these things are defined is important. Social Justice Ireland states that there are 750,000 people below the poverty line. However, when they use the term "poverty line," they include those who are at risk of poverty and not just those in poverty. Of course, by definition, if one is at risk of poverty one is not in poverty. One of the interesting things that happens is that when poverty rates go down the at-risk-of-poverty rate goes up because people move from the category of being in poverty to being at risk of poverty. It is important when we use these terms that we are clear as to what they mean. However, we have plenty of consistent poverty and deprivation in Ireland - no one is denying that - and the objective is to ensure that it goes down and keeps decreasing every year. Both deprivation and consistent poverty are consistently higher than they were in 2007 and 2008. We have to aim to get back to those levels. If the economy is fully recovered and GDP is back to where it was and all of that, surely poverty rates should be back to where they were at that point. We must bear in mind that the most recent figures we have are from the survey of income and living conditions, SILC, in 2014. Therefore, when people say the poverty rate in Ireland is x, y or z, they are not correct. That is what it was in 2014. We will have the figures for 2015 in October or November and we do not have the figures for 2016 yet, so we actually do not yet know what the impact of the past two years of real economic growth and falling unemployment have had on poverty, but we will know it sooner or later.

The study on lone parents and their access to education is being led by the Department of Education and Skills and is being carried out by NUI, Maynooth. It is not yet complete but an initial presentation has been made to officials. I have not seen that yet. I hope that out of that study will come some ideas and suggestions that my Department and the Department of Education and Skills could implement to improve better access to education for lone parents.

There is often confusion about the back to education allowance, so it is important to say that the allowance is for those who are on a weekly welfare payment and go to college or back to school. The allowance allows them to keep the weekly payment while they go back to college or school because to get a jobseeker's payment a person has to be looking for a job full-time. All the back to education allowance ever is, ever was and probably ever will be is saying to someone who is already dependent on a weekly welfare payment that he or she can go back to education and keep getting the payment while in education. The aim was never that working people could give up their jobs on Thursday, take up a course the following week and get €188 a week from the State to do so. That is not practical. We could not possibly afford to allow people to just give up their jobs and the following week suddenly expect to get €188 a week for education. It would not be affordable and I am not sure it would be fair. However, I will come back to that issue another time.

To give the committee an idea of the figures, to increase the fuel allowance by €1 would cost €10 million and to extend it by another week would cost €9 million. All of these things are options, but if one were to extend it by a week and increase it by €1 it would cost €19 million, which is a lot of money.

Similarly, on back to school payments, it is always important to point out that the payment the Department of Social Protection makes is the back to school clothing and footwear allowance. There is a school book rental scheme and most schools are now availing of it. The former Minister, Ruairí Quinn, led on that. We have put more than €50 million into school meals and school breakfasts already - I hope to expand that - and school transport is heavily subsidised as well.

The Department of Education and Skills provides the back to school clothing and footwear allowance. If one looks at the clothing and footwear element of the Barnardos survey on what it costs to send a child to school, Barnardos states that the cost for a primary school pupil is approximately €150 and the cost for a secondary school pupil is €250. We pay €100 and €200, respectively, which is approximately €50 short of the actual cost of clothing and footwear.

With regard to paternity leave, I am advised by my officials that a father is entitled to paternity leave where there is a stillbirth and the child has reached 24 weeks' gestation. Obviously, one must pick a cut-off point at a certain point. The same applies for mothers. I will double-check that to ensure we are not wrong about that, because I agree there should not be an anomaly.

With regard to lower payments for young jobseekers, Deputies John Brady and Gino Kenny and Senator Alice-Mary Higgins, who raised this, stated that the €100 for the young jobseekers is discriminatory. I would point out that it does not apply to lone parents. If one is on the one-parent family payment, one gets the full amount.

We need to bear something in mind. Senator Alice-Mary Higgins correctly mentioned that we do not know the impact that this low payment may have on emigration among young people, but young people coming to Ireland get off the plane from Eastern Europe, from countries such as Poland, probably with neither good English nor good qualifications, and within a week or two they find a job. Even a job at or just above the minimum wage in Ireland pays €400 a week, and we must ask why any young person in Ireland, particularly in this economy where jobs are not that hard to find, is in a situation whereby he or she cannot find employment. Such a person may well have personal or individual issues, but he or she also may not wish to take up employment. I do not want to be the right-winger at the table here, but somebody needs to say that.