Leo Varadkar (Dublin West, Fine Gael) | Oireachtas source

How many only received small or nominal payments, as Senators Kieran O'Donnell and Colm Burke mentioned? A self-employed person with a working spouse on a modest income may not meet the means test and, therefore, receive no benefit for any period, whereas an employee on becoming unemployed would have access to non-means-tested jobseeker's benefit for nine months. That seems unfair. The scenario I encountered frequently on the doorstep during the general election was that of a self-employed person who, having lost a job, was not entitled to jobseeker's benefit because he or she had a spouse who was working. I hope I am not being sexist, but the classic example is of a man who worked in construction and whose wife or partner was a public servant, perhaps a nurse or in a part-time position. Because they had a second income coming into the house, the person who had been the main breadwinner received nothing as a result. This seems unfair and could be changed. I am sure the reverse also happens - for example, a self-employed small businesswoman with a husband who is working as a garda or something else.

It is difficult to figure out what unemployment means in the context of self-employment. I have been speaking to other Ministers from around Europe to find out what they do in their countries. Senator Kieran O'Donnell pointed to the experience with which we are all familiar, that of a self-employed person with a small business doing everything he or she can to keep it going, often depleting his or her own savings, mortgaging his or her own house and going to the gates of Hell in the hope business will improve. My Swedish counterpart has told me that, because Sweden offered jobseeker's benefits for the self-employed, people are incentivised to close their businesses sooner. One must bear in mind some of the effects any change would have. My Austrian counterpart touched on something which Senator Kieran O'Donnell referenced and is close to my thinking, namely, that we could extend jobseeker's benefit to self-employed persons but not necessarily on the same basis as it is applied to employees. It could be for a shorter period, meaning a lower cost, or it could require self-employed persons to pay into the system for longer than an employee, meaning that a person who has been self-employed and paying for ten or 15 years might receive a benefit that someone who has only been self-employed for a few months would not. We could design it in that way.

I intend to extend over a period the range of benefits the self-employed can access through the social insurance system. I wish to start by providing access to benefits in cases of long-term illness and incapacity, as well as to treatment benefits which Senator Maria Byrne referenced. This would assist a self-employed person who was injured or incapacitated during the course of his or her work, for example, a taxi driver or someone involved in a farm accident. It would provide people with a much stronger safety net to protect them in the event of injury or disablement. To pay for these benefits, the Mangan group recommended that the rate of contribution for class S self-employed persons should be increased by at least 1.5 percentage points, payable on a compulsory basis. The group concluded that "extension on a voluntary basis, through either an "opt in" or "opt out" basis, could lead to the selection of bad risks and would undermine the social solidarity and contributory principles that underline the social insurance system". While I agree with its rationale as to whiy it should be compulsory, a percentage point increase of 1.5 would be too much, especially if we were to attempt to do it in one budget. In her report Ms Mangan suggested it be phased in over a period.

My Department is examining the cost of financing an extension of benefits, as well as how to phase them in and put in place the practical and administrative arrangements that would be required. The examination includes a survey of a random sample of self-employed persons who rely on class S social insurance benefits. The survey will be carried out by my Department to obtain the views of self-employed persons on which benefits they would want first and the extent to which they would be willing to pay more for them. The results of the survey will help to inform and shape the development of future social insurance policy for the self-employed. Therefore, I encourage any self-employed individual who is invited to take part in the survey to do so.

The cost of extending certain short-term social insurance benefits was considered in the actuarial review of the social insurance fund as at 31 December 2010. Overall, the report found that social insurance benefits offered excellent value for money for those at the lower end of income distribution, those with shorter contribution histories and the self-employed. Regarding the self-employed specifically, the report found that the effective annual rate of contribution required to provide the full-rate State contributory pension was approximately 15% of national average earnings. This compares favourably with the rate of 4 at which the self-employed currently pay. An incremental increase of 1% in contribution rates would be required if jobseeker's benefit, in addition to the core State pension, was to be provided. The average contribution rate required for payment of the core State contributory pension, plus invalidity pension, was estimated to be in the region of 2%.

The programme for Government's commitments on income tax and PRSI are a clear signal of the Government's determination to cultivate a positive and productive entrepreneurial environment. The extension of social insurance entitlements is a fundamental cornerstone of this. I look forward to providing political leadership on this issue. I welcome the motion and the Seanad's support and interest in it.