Joan Burton (Dublin West, Labour) | Oireachtas source

The purpose of the measure provided for in this section of the Bill is to apply PRSI to the income of modified rate employees that is earned as self-employed income, but without providing for additional entitlements to social welfare benefits. This restriction on entitlement is necessary to ensure no additional costs accrue to the Social Insurance Fund. I understand why people are concerned. Modified rate contributors are already covered for occupational pensions by virtue of their public sector employment. These are not people without cover. They are public service employees. They already have entitlements to public service pensions. Therefore, there is no need to provide for additional cover for them. In addition, modified rate contributors are already covered for most of the other social insurance benefits that accrue from class S contributions, such as contributory pensions, or widow's, widower's and surviving civil partner's pensions. Similarly, modified rate contributors do not require separate cover for maternity and adoption benefits which are covered by class S contributions. As they are public servants, they are entitled to full pay for such periods. Restricting the social insurance entitlements of those who already have access to Exchequer-funded pension entitlements, as proposed in the Bill, is necessary to protect the long-term viability of the fund.

I will give an example. There are a number of extraordinarily well-paid professionals in the public service. Consultants, for instance, are paid significant amounts of money through the HSE on their public contracts. We know from the VHI that they may also earn very significant amounts from their private practices. My party colleague from Waterford, Deputy Conway, has been quoting recent figures from the VHI to the effect that 301 hospital consultants receive annual payments of more than €200,000 from the VHI, in addition to what they may earn in the public sector. An anomaly relating to ceilings, which probably dates back to when the PRSI structure was set up, means such people are charged PRSI on their public service employment only. This measure will extend the PRSI base to ensure it covers all the income of these people from their trades, professions or other employment. It is anticipated that this will yield up to €12 million a year. As these people are covered by public service entitlements, and because they are such high-paid people, they generally have significant pension entitlements. In addition, many of them invest in further pension funds through pension arrangements that benefit from tax breaks. Admittedly, many of those funds might not have done very well in the crash. This measure will expand the forms of income that are covered by the PRSI system. I would expect Deputies to welcome it from that point of view.

I would like to respond to Deputy Naughten's query about civil partnerships. My understanding is that the Deputy is correct in what he said. I will get one of my officials to give him a copy of my more detailed briefing note on the matter.

The proposal made by Deputy Ó Snodaigh in amendment No. 1, which relates to unfair dismissals, is worth examining. The Department of Jobs, Enterprise and Innovation is responsible for the legislation that governs unfair dismissals. The Deputy will appreciate that the Department of Social Protection has assumed responsibility for making redundancy and insolvency payments. In fairness to the staff of the Department, they have cleared a massive backlog that they inherited. Responsibility for the legislation continues to rest with my colleague, the Minister for Jobs, Enterprise and Innovation. The Deputy might want to raise this matter with the Minister. He has made a fair point about the recovery of costs to the State.

Can I respond to the comments that were made about people who are self-employed? That matter is being examined by the advisory group on tax and social welfare. I anticipate that the group will produce its report on self-employed people and the PRSI system before the budget. I believe that is the undertaking. I think the group is on course to do that. The actuarial review that was published last year pointed out that the self-employed make a current contribution of 4% and get a significant benefit from the PRSI system. They get access to contributory pensions and to widow's, widower's or survivor's pensions.

We should certainly be looking to them coming in to the full social insurance system and, in the long term, as the country recovers, the concept of jobseeker's payments must be considered. However, in a lot of cases it is difficult to ask people to pay more contributions. The actuarial study suggested they would need to pay at least 14.5%, but in fact a little more, to cover the cost of the benefits. It might be that this can be addressed through the period for which they would get benefit being somewhat more restrictive, given they are self-employed people when it might be suggested they would be back working in a shorter timeframe.

I am very sympathetic to this, as I said in response to the Deputy and other Deputies. It is important that we look at the concept of jobseeker's payments. Years ago, there was a social welfare concept that people who paid in got proportionately more in the period immediately after unemployment - in other words, that it operates as an income protection. As a country, we do not have the resources to do that now but I personally consider it is one of the ways in which the social welfare system should move, as resources permit down the road. We are now in a system where somebody who has paid contributions gets, at best, roughly the same level of payment as somebody who has no contribution record at all. The difference between the two was eroded during the period of the Celtic tiger. The income protection concept, up to a maximum similar to that which exists in a number of other European countries, is something to which we should give full consideration as resources permit and the economy recovers.

With regard to self-employed people, this is an issue we will be looking at in the context of the budget. However, I am conscious of the fact many of the organisations representing self-employed people have expressed some reluctance about additional contributions being made at a time when people are still finding the going quite tough. We will await the report of the advisory group but we will also have to look at the resource issue.

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