Paddy Burke (Fine Gael)
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I welcome the Minister of State, Deputy Humphreys, to the House.

Gerard Craughwell (Independent)
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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.

Paddy Burke (Fine Gael)
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The Chair has been generous to Senator Craughwell on an issue that is close to my heart and which I fully support.

Gerard Craughwell (Independent)
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Excellent. I thank the Cathaoirleach. As politicians, we all will be aware of the social risk associated with our profession, such as the risk of not being re-elected, the risk of long periods out of office and the consequent implications for every aspect of our lives and our financial situation.While it is true many local authority members have jobs in addition to their role as public representatives, increasingly many do not. Their job as a city or county councillor is their sole occupation.

Following the passing of the Local Government Reform Act 2014, councillors with an enlarged workload and extended electoral areas now spend even more time fulfilling their public office obligations, leaving less time for other paid employment. Most councillors make a lifetime commitment to the people they represent and are elected for many decades of their working lives.

In return for this and the PRSI they pay, they will never get anything back. We use the phrase “a career in politics" but who would want a career outside the protections of the Social Insurance Fund while contributing throughout that career to it? This exclusion is particularly relevant in the context of changes to the national pensions framework. We all know the qualifying conditions for State pensions include a standardisation in the State pension age at 66. Some councillors of 66 years of age are still paying 4% in PRSI.

Where will this leave councillors of the present and future who, having contributed for their entire career, will have no pension entitlements? Christy Burke, Lord Mayor of Dublin, with over 30 years’ service, will have nothing to show for it. Where does it leave those who take extended career breaks to take up mayoral or cathaoirleach positions in local authorities? Where will it leave those who find themselves unemployed following elections? Where will it leave women who are encouraged to enter politics in increasing numbers? It is a well-documented fact that women are traditionally known to have reduced contributions due to time spent at home caring for children. Women are now being disadvantaged as councillors as their time spent in the service to the public will not help them to accumulate one single PRSI contribution.

The argument can be put forward that a gratuity is provided for when councillors reach the age of 50. This, however, does not provide for them for the rest of their lives in the way a contributory pension does. When I recently attended a 1916 commemoration event, I was reminded again that the Proclamation declared, "The Republic guarantees religious and civil liberty, equal rights and equal opportunities to all its citizens". Elected members of local authorities are not only citizens. They are also citizens who devote hundreds of hours every week in service of their electorate and communities. By ensuring democratic accountability, encouraging active citizenship and developing valuable local services, city and county councillors provide the cornerstone for our democratic State. Discrimination against them is blatant and unnecessary.

Today, I appeal to the Minister of State, on behalf of all officeholders, particularly on behalf of our hardworking and dedicated city and county councillors, to revisit this issue and to address it as a matter of urgency.

Kevin Humphreys (Dublin South East, Labour)
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I thank Senator Craughwell for raising this issue of which I am very much aware, having served on Dublin City Council for many years. I have also had extensive engagement on this issue with Senator Denis Landy and Dublin City Councillors Mary Freehill and Dermot Lacey, who is in the Gallery. It is not a popular subject to raise and I compliment the Senator on raising it. He certainly will not get any brownie points with the public for raising this important issue.

Many councillors who work full-time for their constituents will be severely disadvantaged when they reach retirement age because they have not picked up enough contributions for their pension fund. I accept the gratuity in itself does not compensate for the hours of dedication and work they have given. Not many people in the public would understand the long hours put in by councillors, especially if one represents a disadvantaged area. One very much becomes a full-time advocate for the people one represents, often in difficult circumstances. I am glad the Senator pointed out that what is not often understood by the general public is that some councillors are financially disadvantaged by representing people in their area because they come from higher paid jobs in the private sector.Even councillors who work full-time give up career opportunities such as promotions. What person working in the private sector would give somebody a promotion knowing that person works long hours representing the people? Other councillors feel duty-bound when elected and by no means see it as an advancement. They are dedicated and want to work in local government. It would be very difficult to live on a full-time salary of €16,000 plus. I have had several meetings with different groups in this regard and I wish I could report progress but I have not made much. The Senator knows me long enough to know that I say it as I see it.

Some of the following issues have been touched on by the Senator. City and county councillors are regarded as public officeholders for the purpose of charging PRSI. They are not employees and are not subject to the contribution applying to employees. PRSI charges on officeholders were introduced in budget 2011 and apply to public officers such as the President, Members of the both Houses, the Judiciary, the Attorney General, the Comptroller and Auditor General and city and county councillors. There is a very big difference between the salaries paid to the first group I mentioned and city and county councillors. From 1 January 2011, public officeholders pay PRSI on their incomes at the class K rate of 4%, providing their income exceeds €5,200. This is €100 per week, which is not an awful lot. All public officeholders are liable to pay the contribution, regardless of age. People with incomes of less than €100 per week do not pay PRSI and return their income under the PRSI class M stamp. PRSI payments by officeholders do not contribute towards establishing social insurance entitlements prior to 2011. All officeholders were exempt from PRSI on income received in their capacity as officeholders, which the Senator outlined in his contribution. The income and consequential pension and retirement gratuities paid to officeholders are funded by the Exchequer. The PRSI charges on officeholders' income were introduced as a measure of solidarity. It was seen that public representatives from the very high to the very low would take an income hit and this is what happened.

City and county councillors may establish an entitlement to social security benefits based on non-council related activities. Many councillors have their own businesses or are able to stay in employment and they keep their entitlement. However, as the Senator outlined, a number of councillors work full-time and are, therefore, not entitled to these benefits after many years of service. The public does not appreciate the sacrifices many county and city councillors make. It is certainly not for financial advancement. During my time on local authorities, I did not meet many wealthy councillors. They do it because of their dedication to the community. They often enter politics and local authorities through community activities and want to make their communities better.

There is a voluntary contribution system that helps in respect of pension entitlements and there are quite restrictive limitations. I participated in that system, which is probably one of the best investments I ever made. When I became an elected councillor, I read Barry Desmond's biography in which he said that from the time he entered full-time politics, he paid his voluntary contributions which then gave him his entitlement. This was only to the old age contributory pension and not to any unemployment benefit. Many councillors from all parties and none have faced extreme financial difficulties.Given that their salaries were not high, they had not accumulated savings and found themselves in very severe financial difficulties. Senator Landy has been engaging, not in a party sense but on behalf of everybody, and he is determined to continue to try to come forward with a resolution. If the Senator wishes to participate in this, I am happy to work with him and see if we can find a solution. Unfortunately, in many such cases, when one amends the Social Welfare Acts, there are unintended consequences. Therefore it must be considered very carefully.

I wish I were coming here with good news. I am not, and I do not want to spread false hope. I am happy to work with Senators and councillors to see if we can find some kind of solution that does not have unintended consequences. It must be limited and must target the councillors who are most disadvantaged. Councillors who can remain in full-time work, have their own businesses or who work in the legal or education sectors are different. This is a small group that is particularly damaged. They contribute but receive nothing. I take the Senator's points and thank him for raising them. While I cannot give a promise, I will work with interested parties to see if we can reach a fair resolution.

Gerard Craughwell (Independent)
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I thank the Minister of State. It is a difficult issue to raise here, given that to be in public service is almost regarded as a crime. I am not afraid to say these people are being treated very badly by the State. In anticipation of the Minister of State's answer, I have already alerted the Oireachtas Joint Committee on Education and Social Protection that I will be proposing a debate on this. People who are tied up with council work suffer a serious career disadvantage. We have let our councillors down extremely badly. Although some time ago, we promised to align their salaries with those of Senators, we have not done it. We are taking 4% out of their pockets, for which they receive nothing. We must devise an opt-in solution by which a councillor who is not employed and does not have an independent source of income can opt in for a class A stamp. It will cost them no more. It is an outrage to take 4% from somebody and give them nothing in return. The Minister of State is a man of his word and is always willing to try to achieve results, as is Senator Landy. I am very happy to join him and work on this. I call on councillors to lobby for this. Let us not be ashamed of the fact that we are serving the State and that we are entitled to some recompense for it.

Kevin Humphreys (Dublin South East, Labour)
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I will conclude the debate by paying tribute to the work county councillors and city councillors do. They do an extremely tough and thankless job and are often blamed for decisions that are made in these Houses rather than in the local chamber. A councillor is the face of democracy, and people often vent at them in the wrong manner when they bump into them on the street. The position of councillor is very undervalued. We do not speak highly enough of the public service local councillors do throughout the country. I thank the Senator for raising the issue.