Thursday, 16 December 2021
Social Welfare Bill 2021: Second Stage
The Minister is very welcome to the House. I pay compliment to her and the Department on how quickly they reacted over recent years with the Covid-19 crisis. It cannot have been easy but by God they turned it around very quickly when they were asked to do so. On a personal note, when a member of the Cabinet needed maternity leave the Minister stepped up to the plate and took on two very difficult Departments. She is to be congratulated on this and I hope that in the near future proper legislation will be in place to facilitate maternity leave for members of the Cabinet, Members of both Houses and local authorities.
I could not let the day go without having something to moan about. It is the nature of the beast. I take this opportunity every year to speak about class K PRSI. Class K PRSI for officeholders was introduced in 2011 under the Social Welfare and Pensions Act 2010. For the first time, all officeholders, including Members of both Houses of the Oireachtas, judges, the Attorney General, the President and those in receipt of non-earned income, were subjected to pay class K PRSI. It is deducted at a rate of 4% from salary but there are no entitlement to social protection benefits. As soon as I was elected to the Seanad in 2014, I raised this issue on a regular basis and began work on a rapporteur's report with the Oireachtas Joint Committee on Education and Social Protection at the time. The report was laid before both Houses of the Oireachtas. I understand a second rapporteur's report has since been delivered on class K. To date there has been no progress on the matter despite numerous debates and reports.
When a number of local authority members and I challenged this in the courts the then Minister with responsibility for social protection, Deputy Leo Varadkar, anticipated the outcome of the legal challenge and introduced an amendment to the Social Welfare Bill 2016 on Committee Stage to remove city and county councillors from the officeholder category. Their PRSI contributions were changed to class S. It is my contention the continued imposition of class K PRSI on all officeholders, including Members of the Oireachtas, is unconstitutional as officeholders are paying for a social welfare fund without a right to benefits from it. Would any of us take out an insurance policy on our home or health if we could not draw down in it?
There is a misconception that Members of the Oireachtas leave here with cushy pensions and that we are well looked after. All of us in the House know how precarious the profession of politics has become. At the last election, a number of one-time Deputies and Senators lost their seats. In doing so at a time of a national pandemic they found they could not get employment. When they were unable to get employment, they were unable to draw on social welfare contributions. They found themselves in dire straits. This is not the comfortable golden handshake job people think it is. Many of our former colleague suffered badly when they left the House after the last election.
There are several problems with class K PRSI of which I am sure the Minister is aware. The insurance benefit that accrues to a person paying class K PRSI are nil. The terms and conditions of employment of elected Senators and Deputies carry no entitlements to illness benefits if a person falls ill after the end of the Dáil period and an election is called. They have nothing to draw down on. They are not entitled to any benefit with respect to unemployment. More important, their social welfare record is broken. This will impact people in years to come. It may not be today or tomorrow but it will impact them in years to come.
The argument has been made that we can make voluntary contributions and that we should do so as Members of the Oireachtas. The voluntary contribution is not as simple as it sounds. The cost of voluntary contributions is exorbitant. For people on class S PRSI when they come in here a voluntary contribution is approximately €500. If people are on a class A when they come in here and wish to keep the class A up and running they pay €5,000. People would be a long time on social welfare before they saw that back.
From the perspective of a Member of the House, the class K PRSI is a tax on public service. This is the only way it can be interpreted. The same applies to members of the Judiciary and the President.One can argue that they are all well paid, but that is not the point. Social protection insurance is not where that money should be deducted. If the Government wants to take 4% off me because I am a well-paid Member of the Oireachtas, it can take that in tax. It can put in a special tax rate for public servants and do it right but, for God's sake, it should take class K contributions out of the Social Welfare Bill. They should not be there.
I have received countless letters and emails from people on the issue of unearned income. I refer to a married couple. One of them is paying class S contributions on rental income and the other is paying class K contributions on that income. This is because of their different employment circumstances. In one case, the rental income they have is unearned income, while, in the other, it is part of their income stream. I agree that people who benefit from share purchases and the like should make a contribution to society, but doing it through the Social Welfare Bill is not the way to go. I understand that it takes time to move these things along but we have been talking about this since 2014.
I am not going to submit amendments at this stage. This is something that can be done by the Minister in collaboration with her staff. She can find a way to rejig that section. It is just wrong. As I stated, I am in no way against someone paying 4% of their income as a result of holding a particular office, but it should be done through the tax system and leave us with our social protection in place. Several former colleagues who left here in 2020 suffered badly as a result of the situation relating to class K contributions. I will leave it at that. I again ask the Minister to pass on to her staff our gratitude for the tremendous work they have done in the past two years.