Mr. Ian Martin:

I concur with what Mr. Fielding from ISME has said. I would not like to see a compulsory charge imposed on anybody. The nature of self-employment and trying to create one's own business is to make a profit. One intends to make money at the end of the day and not to fail. A percentage of people will automatically opt out of anything because they think that they will be very successful and become multi-millionaires so we cannot put restrictions in place. When one starts a business - and it does not matter what it is - cashflow is crucial in the early years. If one must suddenly pay an extra 10% in PRSI, for example, it will kill the business from the outset. We must encourage people instead.

I suggest that we look at what happens throughout Europe. Other European countries have an opt-in or opt-out situation. Why make it compulsory in Ireland when we must compete with the rest of Europe? Let us look at what is happening in Europe, take the best of what we think is in Europe and introduce it in Ireland. We do not have a system that is fit-for-purpose at the moment. If we are, as the Taoiseach has said, to become the best small country in the world in which to do business then we must take best practice from other countries and adopt it here.

With regard to means testing and similar issues, the self-employed situation can be easily changed to automatically include business assets. For various reasons a lot of people in small businesses - mainly to provide for their old age or avoid paying tax - were encouraged to buy properties by their accountants, for example. They bought properties to save them from paying capital gains tax and all of the other bits and pieces such as corporation tax. Let us explain what happens if a limited company goes wallop but the assets are privately owned and there is a mortgage of €0.5 million or €1 million. One cannot pay the mortgage because the business is gone and one cannot sell it because nobody wants to buy the property. If one has a property worth €200,000 then it is deemed that one has a notional income of €8,000. The reality is that one cannot sell the property, nobody will rent it, one cannot get rid of it and one owes the bank money, yet one is still deemed to have a notional income. That property should be excluded when a self-employed person seeks means testing under the present system.

Let us compare the extra benefits an employee has with those for a person who is self-employed. As Mr. Fielding has said, every extra benefit that we want costs approximately 1% extra. That is a simple way to look at the matter. We cannot afford what is being argued for. If we all became employees and paid the same PRSI because every self-employed person joined a large company or whatever, the country would not be able to afford it.

The argument put forward by the Department of Social Protection is that everybody will fail. We know that only a small percentage of people will claim so I think that it will be a net win. It is a bit like reducing income tax. Everyone would benefit from reduced income tax and would, therefore, spend a little bit more money. If we all contributed a small amount of money only a very small number of people would make a claim. Over the past 20 or 30-year period businesses have survived, apart from the past couple of years of the recession where lots of businesses have failed. The majority of small businesses have survived and not failed so there will not be major claims.