Kathryn Reilly (Sinn Fein)

I welcome the Minister to the House. This is my first time to address her in her new role. I met her in her previous capacity as Labour Party finance spokesperson. I congratulate her on her appointment.

Sinn Féin will not be supporting this Bill. It does not want to be misrepresented as being opposed to the restoration of the minimum wage. The Bill, as originally drafted, had two main purposes, namely, to reduce the PRSI contribution on low wages and to raise the pension age to 68. At the 11th hour, however, the minimum wage restoration was inappropriately included. Its inclusion can be seen as a contemptuous effort to cover up the Government's attack on older people. I hope people can see through the spin and that they know the Bill is more about the 16% reduction in pension entitlements. This is the single biggest cut in pensions that has ever been contemplated. This Bill is supposed to be about social welfare and pensions, not the minimum wage. The clue is in the Title to the Bill.

The minimum wage should be restored immediately. I will not deny that and we are all in agreement on it. It was fundamentally wrong to cut the minimum wage in the first instance. Its restoration is not an act of progressive policy but essentially the undoing of a wrong. It is not a quid pro quo for attacking another vulnerable sector of society. We have been presented not with a choice but an ultimatum - the working poor or pensioners. It is a game we in this House should not allow ourselves to play. A pension is a worker's fundamental right and cuts to pension entitlements should not be introduced to pay for the failures, incompetence or corruption of a small discredited elite. The Bill will put in train a framework to raise the age of all State pensioners to 66 initially, then 67 and finally 68. The proposal to raise the pension age will have a worse effect on those on low incomes who do not have the option of an occupational or private pension or savings. These older people are often in more physically demanding jobs and will have no choice but to continue working until a later age regardless of the impact on their health. This in itself will have a negative impact on the labour market. It will force older people to remain in employment and will result in less employment for the younger generation.

The latest CSO figures show unemployment at 14.8% and recent figures from the Department for Work and Pensions in Britain show that Irish people moving to Britain increased by 25% to 13,920 last year. Senator Healy Eames mentioned the future 2:1 worker to pensioner ratio. However, if we export our workers there will be no benefit.

The Bill will abolish the State pension transition in 2014. When asked what is being done to support those whose contract of employment ceases at the age of 65, the response should not be that the person should join the dole queue like everybody else. Sinn Féin has argued that the State pension would be affordable for many years to come if the Government was willing to target the nation's wealth in a fair and progressive manner. For example, standardising all tax reliefs on private pension contributions could save €1 billion annually and lowering the cap on pension-earning contributions to €75,000 would save €100 million annually. We should not be speaking about making a single older person work a day longer in the absence of these two vital reforms.

Since Fianna Fáil proposed raising the pension age in 2010, a range of organisations and voices has expressed concern and opposition. Age Action is particularly concerned that raising the pension age will introduce poverty traps for those aged 65. Older and Bolder highlights the danger of the extremely short lead-in time. It is not only lobby groups which have raised concerns. The Minister of State, Deputy Róisín Shortall, when she was the Labour Party spokesperson on social protection in opposition was very vocal on the issue. She stated the proposal to raise the State pension age to 66 years in 2014 "should be abandoned". She also stated:

The move is particularly crude on those who have worked for nearly 50 years and have paid almost 50 years of social insurance. In such cases they have already met the qualifying conditions for the State pension and will, in effect, be making worthless contributions in their remaining years in the workforce.

As Senator Zappone also mentioned, we need to examine poverty rates. Poverty among older people, particularly those living alone and who do not own their own home, is unacceptably high. A pension and its associated benefits is the single most effective tool in reducing poverty among this group. If older people are forced to go on jobseeker payments instead of receiving a pension they will be hit with a cut of €40 per week. Jobseeker payments are below the poverty line and the Bill will condemn swathes of older people to poverty, something we should not condone in any way.

Like other speakers I wish to express the need to be wary of the proposal in the Bill to halve the rate of employer PRSI on jobs which pay up to €356 per week. We need to examine whether it is likely to create many new jobs and whether it is more likely to precipitate extensive wage cuts because employers will be strongly incentivised to reduce wages of approximately €400 to this level. The wage cuts which will inevitably ensue will have a serious and negative impact on finances. The revenue raised through employer PRSI contributions and taxes on employees will be reduced and the State will end up spending more on in-work benefits such as family income supplement.

Already, 90,000 workers live in relative poverty and it is madness to risk adding substantially more to this number because €356 is well below the poverty line for many family sizes. The current employer PRSI rate is not the reason there are so few jobs; the collapse in domestic consumer purchasing power is a far greater culprit. By incentivising lower wages, the Bill will compound this collapse and, in turn, the job crisis. We can see it in figures published today on the domestic economy which show a contraction in GNP of 4.3%. High energy costs and rent are two more significant factors which prevent employers from creating jobs, as we can see in the report of the National Competitiveness Council on costs and competitiveness.

The legislation seems to be following the depressing trend of the Government. To present the only choices as being which vulnerable group to target is unacceptable. The hope invested in the Government should not be squandered. Other options are available to deal with the economic crisis and they need to be effective and just.