Seanad debates

Wednesday, 3 July 2019

Social Welfare Bill 2019: Second Stage

 

Question proposed: "That the Bill be now read a Second Time."

10:30 am

Photo of Regina DohertyRegina Doherty (Meath East, Fine Gael)
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I am delighted to present this Bill to the Seanad. It has a single straightforward purpose - to give effect to the announcement made in the Budget Statement 2019 to establish a new scheme of jobseeker's benefit for the self-employed from November of this year.

This new scheme will provide a social insurance support to self-employed contributors who lose their businesses and will provide them with the support and breathing space they need to reassess their next steps. The Bill is very much in keeping with this Government's policy of supporting self-employed people and entrepreneurs

The new benefit we are introducing reflects the Government’s aim of creating a supportive environment for entrepreneurship, including providing an income safety net to employees and self-employed alike. This Government has sought to encourage enterprise and, in particular, has sought to introduce a new deal for the self-employed when it comes to accessing their benefits.

Senators will recall that we extended treatment benefits and invalidity pension to the self-employed in recent years to ensure that they reach some parity with employees in the benefits they can access from the social insurance contributions. The introduction of a new jobseeker’s benefit scheme for the self-employed represents the next step in the Government’s work to extend PRSI benefits and will provide an income safety net to thousands of small and medium businesses throughout the country. For the first time, this gives the self-employed access to the safety net of income supports if they lose their self-employment, without having to go through the rigours of a means test.

Many of the features of the existing jobseeker's benefit scheme, which provides support to employees who have lost their jobs, will apply to this new scheme. For example, the personal rate of payment of €203 per week will be the same for both schemes. The duration of payment, for six months or nine months depending on the claimant’s social insurance record, will also be the same. The scheme has been designed to take into account the fact that PRSI contributions by the self-employed are paid by way of an annual lump sum.

The activation of self-employed workers who have had to close their businesses, and their re-engagement into employment, whether that is again in self-employment or as an employee, will be a priority in my Department. We are currently examining the activation supports available for this cohort, but in any event, claimants of the new payment will have access to the full range of activation supports currently available to all other jobseekers. This includes, for instance, referral to group information sessions, one to one interviews and subsequent caseworker support.

Self-employed people who are operating businesses at low levels of income can continue to access the means tested jobseeker's allowance scheme. There are almost 7,000 self-employed in receipt of this payment as of today.

I would now like to briefly outline the contents of the Bill, which contains nine sections in three Parts. Part 1 comprises section 1, which provides for the standard provisions setting out the Short Title of the Bill, its construction and citations, and commencement provisions.

Part 2 deals with amendments to the Social Welfare Consolidation Act 2005. Section 2 is again a standard provision which defines the principal Act used in this Part.

One of the consequences of introducing the new scheme is that it is necessary also to amend some of the provisions of the Act governing the existing jobseeker’s benefit scheme. These changes are provided for in sections 3 and 4. Section 3 extends the qualifying conditions for the existing jobseeker's benefit scheme by providing that the first condition to determine eligibility for payment can now be met by having 104 employment or optional contributions, for example PRSI class A contributions, as has always been the case, or by having have 156 self-employment contributions PRSI class S, which is being added. This positive change recognises that some people will have engaged in both employment and self-employment in their working lives. By recognising that either form of employment gives rise to entitlements within the social insurance system, this change will help to ensure that an individual will not be at a disadvantage as a result of a move from employment to self-employment.

Section 4 provides that where a claimant who is in receipt of jobseeker’s benefit, self-employed, also satisfies the qualifying conditions for jobseeker’s benefit, periods spent in receipt of jobseeker’s benefit, self-employed, will be treated as though jobseeker's benefit is being paid. This is a standard provision to ensure that a claimant does not secure a double benefit.

Section 5 is the key element of the Bill and provides for the introduction of a new Chapter 12A to the principal Act, which sets out all of the provisions governing the new jobseeker’s benefit, self-employed, scheme.

The new Chapter 12A provides for the general qualifying conditions for receipt of jobseeker’s benefit, self-employed, the social insurance contribution conditions, the rate of benefit payable, including reduced rate benefits payable where the average reckonable weekly earnings of the claimant fall below certain thresholds, the increases payable where there is a qualified adult or qualified children, the duration of payment, and the requirement to engage with activation services and disqualifications. These provisions mirror, to a great extent, the existing provisions governing entitlement to jobseeker's benefit. I do not propose to go through the detail of all of these aspects at this time, but we will have an opportunity to examine these in greater depth on Committee Stage.

Section 6provides for a range of amendments to the general provisions of the Act which cover all social insurance schemes and are required to reflect the introduction of the new jobseeker’s benefit, self-employed, scheme. The amendments are set out in the form of a Schedule to the Bill. Part 3 of the Billprovides for amendments to the Taxes Consolidation Act 1997 as a result of the introduction of the new scheme.Section 7 provides for the definition of the Taxes Consolidation Act 1997 used in this Part. Sections 8 and 9amend section 3 and 126, respectively, of the Taxes Consolidation Act 1997 to provide for and confirm the tax treatment of payments under the new jobseeker’s benefit, self-employed, scheme. Jobseeker’s benefit, self-employed, will provide an insurance-based safety net which has not, until now, been available to those setting up or running their own businesses. As Senators will know, the people about whom we are talking are, in very many cases, engaged in small family-run businesses. During the recession everyone took a hit, but I particularly remember how small businesses suffered. Almost overnight, there were fewer vans on the road; many office units shut down and small businesses such as mobile hairdressers literally went out of business overnight. Now that the economy is starting to hum again, it is positive that we are seeing more and more vans on the road, not that we welcome the queues for breakfast rolls, but it is good to see them on the road, fewer empty office units and more shops with entrepreneurs taking a chance. That is a great indicator of our national spirit and culture and the recovery is starting to bed in. We talk a lot about multinational companies locating in Ireland and the welcome jobs they bring to all counties, but the backbone in creating employment is small and medium-sized enterprises which, in the main, are started by Irish entrepreneurs. By providing for greater fairness and support for these job creators, we can continue to build the best possible environment for growth and prosperity for all citizens. I hope to be in a position to introduce a small but important amendment to the Bill on Committee Stage. It relates to a separate matter from that covered in the Bill. It concerns the procedures governing appeals in relation to social welfare payments against decisions of deciding officers appointed as bureau officers under section 8 of the Criminal Assets Bureau Act 1996. In practical terms, the purpose of the amendment will be to provide that such appeals will always have to be submitted to the Circuit Court. The amendment is being drafted by the Office of the Attorney General and we will have an opportunity to deal with it in greater detail on Committee Stage. I know that I can expect to hear valuable contributions from Senators. I look forward to speedy passage of the Bill in the Seanad and bringing it to the Dáil with the aim of having it enacted and starting the payment of jobseeker's benefit for the self-employed in November.

Photo of Maria ByrneMaria Byrne (Fine Gael)
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I thank the Minister. Before I call on Senators to speak, I welcome Senator Leyden's wife, Mary and her brother Joe and Phil Burke from Westport to the Gallery. They are most welcome.

I invite Senator Catherine Ardagh to speak. She has six minutes.

Photo of Catherine ArdaghCatherine Ardagh (Fianna Fail)
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I too join in welcome Mary Leyden and her guests to the Gallery. I hope they have a lovely day.

I thank the Minister for Employment Affairs and Social Protection for introducing this Bill in this House. As a small business owner since 2006 and as a Fianna Fáil Senator I am very happy to support this Bill, the purpose of which is to provide for the introduction of a new social insurance scheme, jobseeker's benefit, which will be payable as the Minister said, to individuals who lose their self employment and have the required number of PRSI contributions to qualify for the payment.

Fianna Fáil has consistently supported extending on a phased and on a voluntary basis a full range of social protection supports to self-employed PRSI contributors as part of our commitment to foster an entrepreneurial culture as well as enhancing social solidarity. As part of the arrangement to facilitate the formation of a minority Government, Fianna Fáil extracted policy commitments under the confidence and supply arrangement to support entrepreneurs and the self-employed. Fianna Fail therefore supports this Bill and the creation of a social welfare safety net for the self-employed. However it is imperative that the Government ensures the legislation is enacted as soon as feasible and efforts continue to remove the systematic discrimination against the self-employed. As the Minister stated, small businesses and self-employed people are the backbone of our economy. There are currently nearly 250,000 small and medium sized businesses in this country, which account for more than 99% of all actual businesses, according to the CSO. Many hurdles are faced on a daily basis by job creators who keep delivering for their communities. The self-employed pay higher income tax and PRSI rates than those they employ while up until this point there has been no equivalent social protection support if the business failed. This treatment has crippled small businesses and low income earning self-employed persons who are trying to meet their financial responsibilities every week. Their endeavours need to be rewarded.

I am a solicitor in practice but I collect more money for the Government each year by way of taxes - I collect stamp duty, VAT, household charge, local property tax, but sometimes one thinks of oneself as a tax collector rather than a contributor. I am glad to see something is being given back to the self-employed because the are the people who put themselves out on a limb, take the huge risks and ultimately employ other people and give back to communities. It is the small businesses around the country in small villages who really get things going. Many small rural and urban communities are only running and viable because of the small businesses that are in the vicinity. I work in Crumlin village and Tesco and An Post are the two largest businesses in the area, the rest are small businesses ranging from the bike shop, the florist, hairdressers, charity shops. It is really important that they are acknowledged and their work for the community is rewarded. Fianna Fáil has consistently supported the extending on a phased and voluntary basis the full range of social protections. As part of the agreement to facilitate the minority Government, Fianna Fail looked for commitments for the self-employed. We have succeeded in getting dental and optical benefits extended to the self-employed, which I welcome and I thank the Minister for doing that, while PRSI contributors are now eligible to qualify for the invalidity pension. It is essential that the Minister continues to eliminate systematic discrimination against the self-employed. The Fine Gael led Government has failed to meet its commitment under the programme for Government for full equalisation with the PAYE tax credit by 2018. I hope that is something the Minister can examine.

Fianna Fáil welcomes the Bill and it is essential that more is done to tackle the issue of bogus self employment. Such situations arise where a working relationship is misclassified as a contract for services or a commercial agreement when it should be considered a contract of service or a contract of employment. In instances where people are forced to register as self-employed it circumvents basic employee rights in respect of holiday pay, sick pay and pension contributions and deprives the State of PRSI revenue. The practice needs to be stamped out to protect workers and the State finances. I hope this legislation does not have a knock on effect of increasing situations of bogus self employment but I am sure the Department is tackling it to ensure bogus self employment is eradicated.

Photo of Maria ByrneMaria Byrne (Fine Gael)
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I invite Senator Joe O'Reilly to contribute.

Photo of Joe O'ReillyJoe O'Reilly (Fine Gael)
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At the outset I welcome the Minister for Employment Affairs and Social Protection, Deputy Regina Doherty to the House. I salute her as a reforming Minister across a range of areas, whether it is the recognition of home workers, those unfortunate staff who were abused when their tips were taken and used as part of their wages or now the recognition of the rights of self-employed. The Minister is humane and brings a breath of fresh air to the Department. I salute that and I am very proud to do so. I do not think there is anybody who would challenge me on that proposition.

During the recession I became very emotionally involved with an individual. This young man had a business that failed. As a consequence of his business failing, he could get no social welfare. The barrier to him getting any form of social welfare was that he had a small plot of land and a house that had a large mortgage as an investment rental property, which he could not get out of it.He had a wife and children, and it was a pitiful sight. I was so emotionally involved with him at the time and I met him on many occasions because I thought the situation was dreadful. Such was his trauma arising from this that he let his business fold, almost involuntarily, and went on to become an employee in an area that does not challenge him. There is nothing wrong with his employment or his employer, but he works in an area where he is not challenged, accepts a much lower income than he is capable of earning and is, I suspect, frustrated. My point is he developed a fear of being self-employed and of anything entrepreneurial. His family felt the same and told their dad that they did not want him to be self-employed anymore. My involvement with him brought the social welfare situation home to me in a big way.

It would be wrong of me not to say that I am here representing my colleague, the party spokesperson on social protection, Senator Ray Butler. It would not be necessary to mention that were it not for the fact that he has been a pioneer and advocate in this field and a champion of the self-employed since the day he entered politics. It is his mantra, whether at our parliamentary party meetings or in this Chamber. He needs salutation and the work he has done to bring about this day merits public recognition. I am sure he is proud and happy that it is being brought forward by his county colleague.

A few other issues merit a mention. It is important that we do not lose entrepreneurs or make people afraid. This cushion will give people the courage to go into business and not be afraid for themselves and their family; it is crucial that that fear be removed. That is a very important point. I reference again the fact that they will also be supported in job activation. The Minister said that ways to support the self-employed in job activation are being looked at, which is important because they have so much potential and ability. As is recognised in America in a way that it is not here, when people fail in business, it is a significant learning experience and that learning can be brought to another business; that is why they should get the support to once again make the leap. Similar to the person who starts to drive again having been in a car accident, they need courage, personal development and to be unafraid to get into the driving seat once more and get going.

I am delighted that this is a continued recognition of the self-employed, to the extent that treatment benefits and the invalidity pension are now available to them. That is great, and this is a further progression of that. We cannot make Cinderellas of the people who, as the Minister said, sustain our small rural economies that cannot attract multinationals. It is good that the self-employed will have the same rate of €203 per week. Why should it be otherwise? The provisions take account also of the fact that, for PRSI, certain people pay a lump sum at the end of the year.

To go back to my original point, I am very keen on activation. I am a teacher by background and think that, from day one, there should be support, encouragement and learning to help people make the great leap and go back into business, bringing their brilliance, knowledge and experience to another business to further more job creation.

The Minister makes the point that, because of low incomes and the nature of their circumstances, 7,000 people will get jobseeker's allowance. That is how it should be and there is nothing to challenge that. It is reassuring that both Class A and Class S contributions are recognised, for obvious reasons, which is an important dimension.

No matter what way we look at this, it creates fairness and opportunity, supports enterprise and provides a bridge, safety net and soft landing for those in the self-employed sector. My friend who I knew during the recession was only one of many; I just happened to become involved with that case and there was something very pitiful about it. He must have felt a shocking level of alienation, unfairness and injustice. Why was he different? Why was he scapegoated for having initiative, when he could not possibly but fail in the role he was in?

This is a good day's work, one of many from the Minister, and I laud it. She said that it will begin in November, but this cannot happen quickly enough. I would love to know that we will have a good activation programme and will continue to support people who create jobs at a local level.

Finally, we talk about sustaining rural Ireland. We can do that only by keeping those who run our small businesses and who create jobs and infrastructure in those areas. A large pharmaceutical industry cannot be attracted to an isolated rural parish if there is no infrastructure. Let us keep the people who can keep those communities going.

Photo of Maire DevineMaire Devine (Sinn Fein)
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Sinn Féin welcomes the Bill and the extension of another social welfare support to the self-employed. Businesses can fail and, if that happens, it is crucial that we support those who take a gamble on self-employment. The loss of a business is difficult and lack of financial support can make a bad situation worse. During the economic crash, we learned that the effect on self-employed people was phenomenal; there was no safety net for them and many of them emigrated or went to the wall. I treated a lot of them. There were a lot of mental health issues at the time because there was no income safety net. The extension of jobseeker's benefit, which will at least assist them financially, is positive.

In 2017, the Department of Employment Affairs and Social Protection carried out a survey of Class S contributors to find out what they would like extended to them. It is good that we had that public consultation. Of respondents, 80% said that the range of social welfare benefits available was quite poor or very poor, and an overwhelming majority said that they would be willing to pay a higher PRSI rate in return for at least one additional social insurance benefit. The top three benefits sought by respondents were long-term illness, short-term illness and unemployment. Since the survey was published, the invalidity or long-term illness benefit has been extended to the self-employed, which is welcome. This Bill will extend unemployment benefit to jobseekers, but the short-term benefit has not been extended and it must be in our future plans to do so. It is wrong that if people who are self-employed become ill and unable to work, they have no access to any social welfare support, and this needs to be addressed urgently.

Recently, a family member of mine who is the earner in the household became seriously ill. They will recover, but they will be out of work for four months and are relying on the generosity of the credit union and family and friends to keep the household ticking over. There is nothing for them.

Yesterday, I attended the Department's briefing to be more informed on this. The big question being mulled over involved the 250,000 people who left this island during the crash. What would have happened if they had stayed? The public purse would have been bled even drier than it was. It was not sustainable and, in a way, they did us a favour by leaving because we had nothing to give. There was no support in place for them, they had no future and so they left. That ties into the different upcoming referenda, which are not for debate here.That haemorrhaging of our people certainly helped the public purse and prevented us from crashing out altogether. How do we future-proof these benefits so that they will still be available and will not be cut should another big economic crash occur? Such cuts led to the scenario from which we are only now recovering.

As I have said, the roll-out of additional benefits to the self-employed needs to continue. Illness benefit must be prioritised. Class S contributors spoke to us in this survey and we must listen to them. We are not naive to the additional costs associated with extending benefits to this cohort of workers, but the Department's own survey concluded that 88% of respondents would be willing to pay PRSI at a higher rate in return for additional social insurance benefits.

As I have said, Sinn Féin welcomes this Bill. It is good to see benefits being extended to the self-employed but I do wish to pick up on a point that at least one other Senator, Senator Ardagh, has raised. We need to be bold in tackling a very big issue facing the sector, namely, bogus self-employment. Bogus self-employment is where rogue bosses deliberately misclassify workers as self-employed subcontractors in order to dodge social insurance and pension contributions, pay rates, employment law and other responsibilities. They are dodging their responsibility to make contributions to this State.

At 6 a.m. on 28 June, at the site of the new national children's hospital, in whose shadow I live, Unite held a protest against the bogus self-employment it believes is going on at the site. This protest was attended by Patricia King and many other supporters. The noise of the protest competed with that of the workers, which is another issue I will take up. This is a big issue. It deprives the State purse of resources and spending power. We must act to end this practice. There are big financial gains for these employers. These classifications are fraudulent. This is not a victimless crime. The costs are paid by the workers, good employers and the State. Workers forced into bogus self-employment are also denied the rights and protection directly-employed workers are entitled to under employment law and collective agreements.

Last month, my colleague, Deputy Brady, introduced a Bill to tackle this very issue. This Bill stands up for these workers and for the State. It not only seeks to make it an offence to issue a self-employed contract to an employee, but it goes much further in ensuring that the self-employed receive the same basic rights and protections as employees, such as annual leave and pay.

I compliment the Minister on this Bill, which will have a positive impact for those who are self-employed. I ask her to address the issue of short-term illness benefit and the concerns I have expressed in respect of bogus self-employment in her response.

Photo of Alice-Mary HigginsAlice-Mary Higgins (Independent)
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I thank the Minister for bringing this Bill for discussion before the summer. I hope that we will have a chance to engage further in respect of amendments in the autumn. I see that it is planned to ensure there is space and time to allow Senators to supplement or contribute to the Bill. Issues have been raised in respect of short-term illness benefit. There are some other practical issues on which I will engage, for example, the ability to make voluntary contributions. As we know there are constraints on those who wish to make such contributions such as thresholds that must be reached. I look forward to engaging with the Minister on a few technical issues of that nature on Committee Stage.

I will speak to some of the more general concerns and questions I have. It is very important that the State offer a safety net and support for everybody who needs it at the time they most need it. I recognise that many people have moved back and forth between employment and self-employment. It should not be the case that people find themselves at a distance from the State. I refer not only to State support payments, but to associated supports in respect of activation and access to training and employment. It is also important to be clear that self-employment takes a wide variety of forms. While the kind that has been discussed at great length today is the entrepreneur who is an employer, European figures show that only 23% of self-employed people in Europe are employers. The Minister may have comparable figures for Ireland. While the small businesspeople we have discussed do exist, they comprise less than a quarter of the self-employed cohort in Europe. Perhaps the figures for Ireland could be found.

Almost as many people across Europe are vulnerable workers. We know that this is also an issue in Ireland. I sit on the Joint Committee on Employment Affairs and Social Protection and I have seen it. The term "vulnerable workers" refers to those classed as being particularly vulnerable to exploitation and who may not have control over the circumstances of their work or employment. In many cases such people fall into the category of what has been called bogus self-employment. I would divide this into two categories: false self-employment and forced self-employment. As the Minister will be very aware, the Joint Committee on Employment Affairs and Social Protection has heard very strong and striking testimony on these issues. Senator Nash, who is not here today as he is at the conference of the Irish Congress of Trade Unions, has tabled legislation on this issue, as has Deputy Brady. I know the Minister has asked to see the results of the committee's discussions to assist her in potentially progressing her own legislation on this matter.

This issue needs to be tackled alongside, if not in advance of, the issues addressed by today's Bill. They must be progressed in parallel. We cannot be seen to provide any further incentive for employers engaged in bad practice to press or force people into the type of bogus self-employment seen at present where employers effectively determine whether people are employees or should be considered as contractors. There is a question as to the definition of a worker. The European figures I mentioned suggest that determining what is a worker or an employee is an issue Europe-wide.

This Bill also has very significant economic implications. Those who are classed as PRSI employees make contributions at the rate of 14.75%. In many cases the self-employed pay 4%. The employer is, of course, not required to make an equivalent contribution. We have to be very cognisant of ensuring that this Bill gives people the protection and support they need while not contributing to the problem of employers who have been involved in bad practice being let off the hook for contributions to the public Exchequer. That is an issue. I say that in the context of wanting to support people by giving them access to these payments but also wanting to ensure that employers feel pressure from the State. I urge the Minister to ensure that legislation to address bogus self-employment and to ensure that all those categorised as self-employed have chosen self-employment and are accurately categorised is progressed at least in parallel with, if not in advance of, this Bill. Unfortunately, we cannot say that all those categorised as self-employed in the State are accurately categorised.

We are looking at a smaller level of PRSI contribution, although I have made the case that some contributions are made which are not measurable in the same way as a direct PRSI contribution, such as the contributions made by carers from which the State has benefitted so much. The State may have to provide supplements to balance out these contributions. This relates to other issues in our pension systems such as the idea of a care credit. If such measures are to be included in budget 2020, it will require the Minister for Finance to recognise that a general taxpayer subsidy needs to be provided and increased. Bringing self-employed persons into this net of safety and protection, which is important, and recognising and supporting such people, should not come at the cost of other social welfare payments but may require instead an additional contribution from the Exchequer and the State as a whole. That is a financial question. A case can be made for such action. The case for such measures for carers can certainly be made. Others have made that case. I say these things in the context of the Minister's plans to progress this Bill in the autumn, when debate on the budget will be under way.

Additional debate to follow.