Willie O'Dea (Limerick City, Fianna Fail)
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30. To ask the Minister for Social Protection his plans to change the PRSI system to extend benefits to the self-employed; and if he will make a statement on the matter. [11905/16]

Leo Varadkar (Dublin West, Fine Gael)
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The new partnership Government aims to create an additional 200,000 jobs by 2010, including 135,000 outside Dublin. This will be achieved by continuing and enhancing a supportive environment for enterprise and employment.

In particular, the role of entrepreneurs and the self-employed will be central to this ambition. The new programme agreed with our partners in Government contains a commitment to introduce an improved PRSI scheme for the self-employed. In addition, we will also ensure that the earned income tax credit available to the self-employed will match that available to employees, over a number of budgets. This process commenced in budget 2016 with the introduction of a €550 tax credit for the self-employed.

I want to ensure that appropriate sustainable supports are available to the self-employed in the event of certain contingencies arising. The self-employed already have access to the State contributory pension, the contributory widow’s, widower’s or surviving civil partner’s pension, the contributory guardians payment, maternity benefit and adoptive benefit on the same basis as employees. It is also my intention that they will also gain access to the new paternity benefit, which will be introduced later this year. They can access jobseeker’s allowance on a means-tested basis. However, unlike the position with employees, they are not covered for certain contingencies such as long-term illnesses or disability and may not avail of treatment benefit. The former Advisory Group on Tax and Social Welfare published a report in 2013 which examined the options for extension of cover to the self-employed. This is a valuable contribution to the issue and my Department will be examining all of the available options in the coming months. This examination will have to include the level of appropriate additional contribution the self-employed may have to make for additional benefits. I look forward to making progress on this issue in the next few months.

Willie O'Dea (Limerick City, Fianna Fail)
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I take it from the Minister's reply that he is endeavouring to introduce a safety net for self-employed who fall ill or whose businesses collapse in the same way as employees have the jobseeker's benefit or illness benefit. The tenor of the reply appears to indicate that he will do this on a compulsory basis. I acknowledge that is what the advisory group recommended but I disagree respectfully with the recommendation. However, is the Minister aware that countries such as Denmark, Germany, France, and Spain and even in recent EU entrants such as Lithuania and Romania have a voluntary system whereby if self-employed people wish to pay additional contributions, they will be included and nobody is compelled to enter the scheme? There is not a compulsory additional tax on the self-employed as a whole but those who want to sign up to the scheme are allowed to do so.

Leo Varadkar (Dublin West, Fine Gael)
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There is an under-used voluntary scheme in existence in Ireland, the class P, under which people can make voluntary contributions but very few do. That is often the difficulty with voluntary contributions. Only small numbers will contribute and the contributions often have to be high to cover the inevitable risk that occurs. When something is voluntary, those who are most likely to avail of it are the ones who are most likely to contribute. That is why universal schemes generally work better and that is why PRSI for employees is not voluntary. I imagine many employees would love it if PRSI was voluntary and they did not have to pay into the fund but the effect of that would be make contributions much higher for those who do and there would be a risk issue in that those more likely to avail of it would be more likely to pay into it. The point could be reached that contributions were so high that nobody would make them.

I was self-employed and I took out voluntary income protection, which is expensive.

Willie O'Dea (Limerick City, Fianna Fail)
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I am aware of that. I am also aware of the position as it pertains to employees. On the basis of conversations I have had with a number of self-employed business people and their representatives, they would love the option if the contributions were reasonable. We have produced figures on this. The report the Minister mentioned estimated that to bring in a scheme for illness benefit and then gradually extending it to jobseeker's benefit for the self-employed would require an additional PRSI contribution of approximately 1.5% across the board. According to our figures, in so as we can calculate them, an additional 4.5% to 5% would be required if the scheme were voluntary. We are examining how this operates in other countries. Will the Minister confirm that he intends to proceed to bring in a protection system or safety net, particularly for self-employed people who fall ill? Will he confirm that he will give equal consideration to both options?

Leo Varadkar (Dublin West, Fine Gael)
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I have asked my officials to draw up an options paper immediately. I want to publish a proposal before the recess and I want to consult the 300,000 people who are self-employed to ask them what they think. I am conscious that this is part of the agreement between the Deputy's party and mine and, therefore, I want to do this. I will seek the Deputy's support in doing this because that will be necessary to get the legislation through. Perhaps we will meet about it again when I have something more solid.

There are different benefits and I am considering both compulsory and voluntary options. It may be the case that some benefits could be extended on a compulsory basis and others such as jobseeker's benefit might be done on a voluntary basis. It is not even an either-or but I have asked for an options paper. I intend to publish proposals, ideally before the end of July, with a view to consulting fully with people who are self-employed and other parties because legislation will require a majority in the House.