Gerard Craughwell (Independent) | Oireachtas source

The Minister is welcome and I thank him for coming to the House on the issue of class K PRSI contributions and the lack of benefits accruing from those contributions. I raise the issue mainly on behalf of the countless city and county councillors, the lifeblood of local democracy, who have approached me on this subject.

Councillors are paid a representational payment of €16,590, described as a salary type payment, which is subject to deductions including PAYE, the pension levy, the universal social charge, USC, and PRSI at 4%. For most councillors these deductions will mean a take-home payment of a little over €8,000 per annum plus fixed allowances for travel and membership of committees, where appropriate.Unlike their non-officeholding counterparts in industrial, commercial and service-type employment, however, who are employed under a contract of service and who also pay 4% PRSI class A, local authority councillors get no benefits whatsoever from their contributions. For the same 4% level of contribution, those in class A get jobseeker's benefit, illness benefit, maternity benefit, adoptive benefit, health and safety benefit, invalidity pension, widow, widower's or surviving civil partner's contributory pension, guardian's payment, contributory State pension, treatment benefit, occupational injuries benefit, carer's benefit and access to schemes such as the community employment scheme, having served their community and, perhaps, not been re-elected. The disparity between the two groups could not be more stark. It is a case of everything versus nothing at all.

I am aware of the historical development of this situation and that up to 2011, officeholders, including Members of this House, did not have to pay PRSI. I am also aware that the Social Insurance Fund currently has a significant shortfall in income compared with expenditure and therefore I believe that the widening of the social insurance net to include officeholders is welcome and fair. However, it is both unwelcome and unfair that those new contributors do not get any benefit from their contributions. It is discriminatory and flies in the face of everything we hold true about equality and justice.

The Minister may argue that the Social Welfare Consolidation Act 2005 provides that there are two categories of persons who are compulsorily insured - employed contributors and self-employed contributors - and that councillors are neither. They do not have a contract of employment and what is generally understood as a master-servant relationship where the worker is subject to direction, control and dismissal, but neither are they self-employed. They have a unique status as public representatives, but why should they be penalised for being so?

I am not alone in expressing these views. In 2011, the Minister for Health, Deputy Varadkar told the Irish Examinernewspaper that he believed it was always wrong that politicians did not pay PRSI and that he had no difficulty with paying it. However, he went on to state: "[I]t’s unfair that there is no benefit accruing. There are many different classes of PRSI, but we are now the only ones who pay and get nothing back."

In explaining the Government's decision to include officeholders in the PRSI scheme, the former Minister, Deputy Éamon Ó Cuív, cited the solidarity principle of the Social Insurance Fund as a reason. According to internationally and nationally accepted definitions, the solidarity principle stems directly from the recognition of the individual's right to social security protection. The principle of solidarity is what justifies the existence of social security schemes in the first place and ensures that most vulnerable categories of citizens enjoy access to the social protection they require. However, while officeholders are upholding their side of the solidarity principle by paying 4% PRSI, the State is not upholding its side of the same principle because the charge will not generate any subsequent benefit entitlement.

The Minister for Social Protection, Deputy Joan Burton, speaking at the launch in September 2012 of the 2010 actuarial review of the Social Insurance Fund, stated:

A core principle of sustainable social insurance systems in advanced economies is that citizens receive benefits in proportion to their contributions. I am very pleased that the philosophy of social insurance which is based on solidarity continues to hold true.

Sadly, in the case of city and county councillors, this does not hold true. The Minister, Deputy Burton, went on to state, "Social insurance offers excellent value for those on lower incomes, people with shorter working lives". It might be worth pointing out here that quite a number of councillors are now unemployed or are stay-at-home housewives or house husbands, having devoted their entire lives to their councils. We must remember that the solidarity principle applies not only to those on low income but also to all those who, through the occurrence of social risks, lose a substantial portion of their earning capacities.

As politicians we all will be aware-----