Wednesday, 15 December 1993
Seanad Éireann Debate
Minister of State at the Department of Social Welfare (Ms Burton): There are over 2,000 people engaged in share fishing. This Bill will enable them to opt for social insurance protection for themselves and their families during periods of illness and unemployment and for dental and optical treatment under the treatment benefit scheme. The Bill, as initiated, provided for the introduction of a new optional scheme of social insurance  for share fishermen. The Bill also provided for regulatory powers under which specified employers and contractors may be required to keep a register of employees, contractors and subcontractors engaged by them.
A number of amendments were made to the Bill on Committee and Report Stages in the Dáil. These amendments entitle volunteer development workers to the full rate of unemployment benefit and disability benefit on their return from abroad; bring forward by a year the date on which share fishermen who opt into the new scheme will become entitled to benefits; extend cover for treatment benefit to share fishermen who opt into the scheme and to their dependent spouses and provide for an amendment to the Pensions Act, 1990, relating to the selection of member trustees of occupational pension schemes.
Share fishermen were traditionally regarded as being employed under a contract of service and as such were insured as employees paying the standard Class A contributions. Arising from a case brought by the Director of Public Prosecutions and the Collector-General in 1986—the McLoughlin case — the High Court held that the skipper of a particular fishing vessel and his crew should not be regarded as employer and employees for PAYE purposes. This decision did not directly affect the insurability status of share fishermen but as they were no longer covered by the PAYE system, it was necessary to amend the regulations regarding the collection of PRSI contributions from share fishermen. The amending provisions introduced at the time, deemed the owner, bailee or lessee of the fishing vessel, as appropriate, to be the employer of the crew for social insurance purposes.
In a subsequent challenge to these provisions in 1992 — the Griffiths case — the High Court found the regulations to be ultra vires and held that a person could only be deemed to be an employer where an employer/employee relationship existed. This meant that in the absence of a contract of service, share fishermen could no longer be regarded as  employees for social insurance purposes. They then became insured as self-employed persons, covered for widow's and orphan's pensions and old age (contributory) pension.
Following on the decision of the High Court, consultations took place with representatives of the fishing industry to discuss their concerns regarding the absence of cover for short term benefits. Share fishermen quite rightly regard themselves as being in a unique position in so far a social insurance is concerned. Their sudden exclusion from insurance as employees in 1992 arose as a consequence of the court's decision and not through any fault on their part. This Bill addresses the problems which arose from the court's decision by providing share fishermen with vital cover for unemployment and illness.
The proposed new scheme, which is provided for in Part II of the Bill, gives share fishermen the option of paying special additional contributions. Share fishermen who opt into the new scheme will pay special contributions at the rate of 5 per cent of their income in the previous income tax year, up to the PRSI earnings ceiling. A minimum annual contribution of £250 will apply and the contributions payable will be collected directly by my Department.
The Bill as published provided that contributions would be payable from the income tax year commencing 6 April 1994, thereby enabling share fishermen who opt into the scheme to qualify for benefits with effect from January 1996. This issue was highlighted by representatives of the fishing industry during the course of consultations they had with the Department following publication of the Bill. The issue was also raised by a number of Deputies on the Second Stage debate in the Dáil.
Recognising these concerns, an amendment was introduced on Report Stage of the Bill in the Dáil which will enable share fishermen who opt into the scheme to start paying the new contributions in the current income tax year. This amendment means that share fishermen will qualify for benefits a year  earlier, that is, from January 1995 as compared with January 1996 under the Bill as initiated.
A second issue highlighted following publication of the Bill was that of the benefits to which share fishermen will be entitled. The Bill as initiated provided that those who opt into the scheme will be able to qualify for disability benefit for up to 12 months in any continuous period of illness. Share fishermen will also be entitled to unemployment benefit for up to 13 weeks in each calendar year.
Representatives of the fishing industry expressed concern, however, about the absence of cover for treatment benefit. The benefits available under the treatment benefit scheme are highly valued. I regard this as a particularly important scheme so far as women are concerned because the benefits are also available to dependent spouses, who are, by and large, women working in the home. I am pleased, therefore, that is was possible to amend this aspect of the Bill to provide that the optional contributions to be paid by share fishermen will also provide cover for treatment benefit. This special scheme of social insurance for share fishermen is an important development in the provision of comprehensive social insurance cover.
Share fishermen became insured as self-employed following the High Court decision in 1992. Many of those affected find this difficult to understand. A substantial number of the skippers involved regard themselves as employers and would wish to see their crews insured as employees. Representatives of the Killybegs Fishermen's Organisation, for example, have indicated that 50 per cent of the skippers in this area regard themselves as employers. At the same time, most of the crews involved in share fishing regard themselves as employees and wish to be insured as such.
My Department has no discretion in this, however, because the High Court decisions of 1986 and 1992 effectively rule out the possibility of treating skippers as employers for social insurance purposes, unless the crew are employed under a  contract of service. One suggestion put forward aimed at resolving this problem was to extend the scope of the new scheme so as to enable the skippers to opt to pay a contribution in respect of their crew equivalent to that payable by employers. In place of attempting to legislate for an optional scheme for the skippers, it would be preferable for them to organise their affairs in such a way that the crew are employed under a contract of service.
I wish to make it known that, following consultations with the Office of the Attorney General, guidelines aimed specifically at share fishermen as to what constitutes employment under contract of service will be made available. The advantage of this approach is that it will meet the needs of those skippers who wish to be treated as employers without having to enact legislation which might be challenged at some future date.
The next amendment to the Bill deals with volunteer development workers. There are over 400 volunteer development workers in Africa, South America and Asia at present. Having worked as a development worker from 1983 to 1986 on the Irish development programme in Tanzania, I am especially pleased to be in a position to rectify an anomaly in the social welfare system which prevented numbers of returned volunteer development workers from qualifying for full rate unemployment benefit and disability benefit on their return home in the event of their being unemployed or unable to work because of illness. I know this provision will be welcomed by the many Irish volunteers working abroad and by the overseas development agencies.
Sections 11 to 13 of the Bill provide that volunteer development workers who would otherwise qualify for reduced rates of benefit, will now qualify for the full rate of unemployment benefit and disability benefit on their return to Ireland. Under existing provisions, volunteer development workers receive credited contributions while working overseas which enable them to qualify for unemployment benefit and disability benefit. To qualify for the full rate of payment, a  person must have earnings of not less than £70 per week in the governing contribution year. Reduced rates of benefit, which are related to the level of earnings, are payable to people whose income is below £70 per week.
Volunteer development workers are paid at local rates of pay in the developing countries and only qualify for the minimum rate of payment because of the low level of local payments, especially in countries in Africa and Asia. They then fail to qualify for the full rate of unemployment benefit on their return home. Sections 11 to 13 of the Bill will now entitle them to full rate unemployment benefit and disability benefits on their return from abroad. I am pleased to be a member of a Government which has provided for a substantial increase in overseas development aid in addition to extending full social welfare benefits to volunteers, including maternity benefits provided in the budget earlier this year.
The other amendment made relates to the Pensions Act, 1990. Section 15 of the Bill is designed to remove a legal uncertainty in that legislation. It confirms that the selection of trustees by members of occupational pension schemes requires a majority of members of the scheme who vote rather than a majority of the members of the scheme.
Regulations made last July to enable members of pension schemes to elect their own trustees become effective on 1 January next. The regulations provide that members of occupational pension schemes will be able to choose trustees to represent them. Under the regulations it will be mandatory for all schemes with 50 members or more, and directly invested schemes with 12 members or more, to have member trustees if at least 15 per cent of the members or the members' trade union request the appointment of member trustees.
Section 14 provides for regulatory powers under which employers and other people will be required to maintain certain records of employees and of contractors and subcontractors engaged by them. The section also provides that the required records will have to be kept in  a prescribed place. A person who fails to keep records as required will be guilty of an offence and liable on conviction to the standard penalties for offences under the Social Welfare Acts.
The various activities undertaken by my Department to combat fraud and abuse are highly effective. The results achieved to date highlight the need to target the building and construction industry in particular. The regulatory powers provided for in section 14 of the Bill will be used initially to require employers and contractors in this industry to keep records of their employees, contractors and subcontractors. These records will have to be kept in the site office and they will be available for inspection by social welfare inspectors.
Employers in prescribed industries, such as building and construction, forestry, security and road haulage, are already required to notify my Department of the date of commencement of all new employees and subcontractors engaged by them. The new regulatory powers in section 14 will complement these provisions and be of significant benefit in combating fraud and abuse.
The greatest concentration of our efforts in this area must be aimed at ensuring employers comply with their obligations under the PRSI system rather than at ensuring people at work are not concurrently claiming unemployment payments as has recently been suggested in the media. In the view of the Department of Social Welfare and the many expert staff engaged in fraud prevention, the main thrust of our efforts should be aimed at employers. We can massively increase compliance if we ensure all employers get all employees fully in the tax and PRSI systems.
On Second Stage of this Bill in the Dáil there was a good deal of debate on the question of fraud and abuse. In this context, it was suggested the social welfare code discourages unemployed people from taking up occasional work. This should not be the case. Earlier this year we introduced new provisions under which unemployed people who do occasional work can earn the equivalent  to their daily rate of unemployment assistance plus £15 in respect of each day worked and still qualify for the full rate of assistance for the remaining days of the week on which they are unemployed. For example, an unemployed person with a dependent spouse and three children can earn up to £37 for each day worked without affecting his or her entitlement to unemployment assistance for other days of unemployment in that week.
On the wider front, the new back to work allowance scheme is proving extremely successful. I draw the attention of the Seanad to the scheme. It provides unemployed people with the opportunity to pursue self-employment ventures or develop new opportunities in areas with potential for development, such as fisheries, local heritage projects, craft enterprises, local tourism and horticulture.
Participants retain entitlement to 75 per cent of their weekly social welfare payments for one year and 50 per cent of their payments for a second year. They also retain entitlement to secondary benefits, such as family income supplement, the Christmas bonus, medical card and the back to school clothing and footwear allowance. They do not have to sign on at their local office and there is no limit on the amount they can earn from employment or self-employment.
The work targeted under the scheme must be new and additional, it will not displace existing jobs and it has the potential for long-term sustainable employment. The new scheme will cater for 3,000 long-term unemployed people and lone parents during the pilot phase. Although it is still at an early stage of development, 340 new jobs have already been created and a further 222 people have taken up self-employment under the scheme.
In addition to these initiatives, about 4,000 people are participating in the vocational training opportunities scheme at present and over 700 are engaged in third level studies. Both these initiatives were extended to lone parents this year. Those Senators involved in daytime education will know the improvements to the  scheme have been extremely popular and that there has been a significant take-up.
The integration of the tax and social welfare systems is one of the areas for which I have specific responsibility as Minister of State. The issue is complex and I set up an expert working group last July to examine the area. The group includes academic experts, people with experience in administering the systems and people familiar with the effects of the systems on clients. The group has the task of identifying the problems arising from the interaction of the tax and social welfare systems and the steps necessary to achieve greater co-ordination and integration of the two systems with particular attention to the impact on people's incomes.
I have asked the group to prepare an interim report focusing on poverty traps and disincentives as they affect groups such as lone parents. I regard the elimination of disincentives as a primary objective of integration. The problems of disincentives have been well documented. For example, in certain circumstances a married person with a large family can find he or she is better off on unemployment benefit or assistance than at work. Many factors contribute to this, including the level of family support paid to those on social welfare, the value of non-cash benefits such as medical cards and subsidised rents, and the limitations of the tax system in providing family support to those at work.
Poverty traps are not confined to traditional family types. Much attention is given to poverty traps facing married men with large families. Other families face similar problems. Lone parents may find there is little point taking up work when they take account of the sharp withdrawal rate of lone parent's allowance as well as child care and other work related costs.
I am concerned that the take up rate of family income supplement is relatively low because the FIS can offer a substantial boost to low income earners with children. Again, I have asked the expert working group to examine this in detail. An interim report of the group will be presented to the Government shortly.
 In terms of longer term integration, there are a number of ways in which the tax and social welfare systems are inconsistent. The income basis for tax and for social insurance contributions are not the same. It is interesting to note that the Commission on Taxation was of the view that social insurance contributions should be replaced by a social security tax on all income. While there was not unanimous agreement on that point, it merits further examination.
The unit of assessment is different for tax and social welfare. The tax system is based mainly on the individual where the social welfare system has a mixture of individual entitlements and household assessments. There are also inconsistencies facing certain household types and the Senators will be aware of the best known example. A cohabiting couple are treated as married by the social welfare system but in the tax system, they are treated as two single people. The current arrangements are complex from an administrative point of view. I know that measures such as basic income system are seen as a way of simplifying the overall system, but this would have major implications for redistribution and financing. We need an assessment of the advantages and disadvantages in this regard.
The answers to some of these questions have far-reaching implications for how we, as a society, distribute our wealth but I think the time has come for a fundamental rethink of this area. Ireland, like most other countries, has a tax system which is separate from the social welfare system. Our social welfare system, in common with other west European countries, is a mixture of insurance and assistance schemes. In recent years, the viability of such schemes is increasingly being questioned for a number of reasons. Taxation and social security can be seen as two sides of the same coin rather than as separate entities.
The social welfare model which we inherited was designed for an age of stable employment with relatively short bouts of sickness and unemployment. The weakness of the social insurance system, which was based on the assumption  of low unemployment, is becoming increasingly evident with rising unemployment rates and the system does not cope adequately with the move towards more flexible work patterns. Many young people, for example, now work on contracts or on a part-time and casual basis and these patterns seem set to grow. It is in this context that we need to look critically at the existing systems and structures. I have asked the working group to examine these issues and I look forward to receiving their main report and informing the Members of it in more detail in due course.
Another issue which is of relevance in achieving better co-ordination and integration of the tax and social welfare systems is the use of a common services number. In 1979, a joint collection system, the PAYE/PRSI system, was introduced and the RSI or Revenue and social insurance number, was adopted as a common customer number for tax and social welfare purposes. RSI numbers are now being issued to young people before they enter the labour force and it is the intention that every adult will have an RSI number that can be used when they wish to avail of a social welfare or related service, or perhaps make an inquiry from their local tax office. The basis of RSI registration is the Department's central records system and the client's RSI number is shown on a social services card on which the client's name is also printed. The person's RSI number, date of birth and sex are encoded on the magnetic strip on the card and this data uses up virtually all the available space on the strip. I wanted to make that point to the House because some people feared a lot of information might have been carried on this strip.
The social services card is designed to facilitate improvements in the quality of services provided to our clients, including the elimination of unnecessary queueing. Only the Department itself, health boards, FÁS and the differential rent section have access to the data base, and only for limited inquiry purposes. All access is governed by the Data Protection Act and the Data Protection Commissioner.  The card carries no identity. There is no photograph or identifying marks on the card. It simply has the person's name, RSI number and the date of issue. It is not, as has been wrongly described, an identity card. It is simply used for social welfare purposes. Effectively, it will enable us to bring, I hope, social welfare standards up to that of banking. It is equivalent to a bank card for social welfare purposes. I hope it will help to eliminate queueing, which is an unfortunate feature of the relationship of many people with the Department of Social Welfare.
I referred earlier to the poverty traps faced by lone parents. This is an area in which I have a special interest. Almost 40 per cent of women who become single mothers are in the 15 to 19 years age group. I am particularly concerned about the difficulties faced by these young women because there are obstacles to their participation in the labour force and in education. The Government has already extended the scheme for educational opportunities for the unemployed to include lone parents. We know that the earlier young women become mothers, all too often leaving the education system, the more likely they are to become dependent on social welfare for long periods. Interrupting this pattern is vital.
There is a perception however, that single parenthood means that the individual is consigned to a lifetime of dependency on social welfare. This is strongly contradicted by a study carried out in 1990 by the Department of Social Welfare. This study analysed a sample of new claims made in 1986 for unmarried mothers allowances, which has since been replaced by the lone parents allowance scheme. The study showed that a quarter of those who qualified for payment in 1986 received the allowance for less than one year. By the end of four years, nearly 60 per cent had ceased claiming the allowance. These results clearly demonstrate that, contrary to popular myths, entry into lone parenthood does not necessarily represent permanent  long term dependency on the social welfare system. Nonetheless, it is those young lone parents who are most at risk of long term dependency.
This Bill is important legislation. It addresses the problems faced by share fishermen arising from the decision of the High Court last year. It gives share fishermen cover for unemployment benefit, disability benefit and treatment benefit. The Bill entitles volunteer development workers to the full rate of unemployment and disability benefits and provides for new regulatory powers to tackle fraud and abuse of the PRSI and social welfare system.
Mr. Cregan: I welcome the Bill and recognise what the Minister is saying with regard to giving facilities to part-time fishermen. I cannot understand why other organisations or bodies working on a part-time basis do not operate under similar standards. I also cannot understand why the Minister spoke so little about part-time workers, especially in the fishing industry, who bring in enormous amounts of money.
I congratulate the Government on this Bill. However, I have a question. Taking into account the High and Supreme Courts decisions that these people are self-employed, have their PRSI contributions paid before the court decisions been refunded or will they lose these credits?
Mr. Cregan: The Minister can reply to that later. I welcome the key features of the scheme but any person who made contributions, whether or not they were recognised as an employee, should be in benefit from those contributions, even if they were only contributors for half or part of the year before and the year before that. I am confused about this. I cannot understand how it can be said that these people are not entitled to benefits before an opportunity is created for them to come under social welfare schemes. There is only dental and optical benefit if one is prepared to wait — but one would be without one's teeth if one was waiting for dental benefit.
I welcome the recognition at long last that people who are working on a part time basis, particularly people who have dangerous occupations such as fishermen, deserve benefits and most importantly that their spouses and families deserve them. At the same time I am confused about the court's decision and I would like it clarified.
The Minister said that share fishermen who opt into the new scheme will pay special contributions at the rate of 5 per cent of their income in the previous income tax year, up to the PRSI earnings ceiling. The Minister also said that a £250 contribution will apply. This would also be relevant to people who work on a part time basis and there should be an  opportunity for them to avail of it. Why is it that only fishermen are mentioned and that the Bill does not recognise everybody?
The Minister's officials are very much aware that I have made the point for many years that the best way forward regarding social welfare, PRSI and tax is that everybody should get the same benefit. The Minister is now recognising this and the point has been proved over the years. When we first discussed social welfare here there were 32 different sections dealing with payments for children and that is now down to six. The number was lowered over the years and there were many arguments about it. When Fine Gael was in Government and former Deputy Barry Desmond was in office the number was reduced to 16.
I strongly question the Minister's statement regarding share fishermen being able to opt for a 5 per cent rate. Any person can now argue that they are entitled to and should get the same benefits. The Minister should not just give it to share fishermen and say that it may be relevant to the construction industry. For many years I have spoken about the black economy in the construction industry. The Minister also mentioned an identity card. I said in this House in 1985 that there should be a plastic job card and that every person leaving their local exchange should get one.
I am seriously concerned about the Minister's statement regarding employers. The biggest disincentive contained in the statement is that full responsibility must be put on employers. Incentive must be given to people who have the initiative to create employment. Whether we are socially, communist or liberally minded, some people can create employment while others are there to be employed. The Minister should not create a situation where employers are told that they have the full responsibility. That is a large disincentive for anybody to employ and the opposite should be the case.
The Minister later stated that every possible incentive must be given to people to look for work. She said that the greatest concentration of our efforts  in this area needed to be aimed at ensuring that employers comply with their obligations in relation to the PRSI system rather than, as has recently been suggested in the media, aimed at ensuring that people at work are not concurrently claiming an unemployment payment. The responsibility should not be on the employer to say that a person is claiming benefits or not. The responsibility lies on us, the Government and the Minister to create a situation where the person who is working is doing so legally.
The Minister later said that a person can look for part time work and still draw part time unemployment assistance. That is there since 1985 under the social employment scheme, which was introduced by former Minister Gemma Hussey, and there is nothing new about it. The impression should not be given that there are new benefits available. These benefits are already there.
Employers must keep everything up to date and certain files must be made available. This is the one point we have heard today regarding jobs. I would do anything to ensure that even five extra jobs become available and I do not mind who is in Government. A situation should not created whereby a person is constantly in a hut on a construction site making special provisions so that when a social welfare officer comes certain matters will be available. That is no incentive for a person to create jobs. It is creating a situation whereby a person who is claiming unemployment assistance and going to work can do what he likes, but if the employer is found out he is in big trouble. It should be done both ways. Employers can bring the Government to the High Court and prove it wrong. This is what people in the fishing industry did and it prompted the introduction of this Bill.
The Government should be saying that it wants to give every incentive possible to people to employ others, but the Minister is saying quite the opposite. The Minister is saying that a person can work three days a week and receive another four days' unemployment assistance. A  person will get four days because it is benefit for seven days and that should not be forgotten. People who are unemployed only get benefit for five days and if a person is employed they only get five days' wages, or perhaps six days if they work in the service area, such as a shop. The impression being given frightens me and I cannot let it pass. I ask the Minister to clarify the position because it is unfair to people who want to create employment.
If we are talking about the construction industry and contractors coming on site, are we saying that the major contractor must be responsible for all the subcontractors' people or just the subcontractor? Otherwise no incentive is created. The Minister is saying that the person who is employing these people, whether they are subcontractors or otherwise, must account in detail for everybody on site.
Mr. Cregan: The Minister said that employers in prescribed industries such as building and construction, forestry, security and road haulage are already required to notify the Department of the date of commencement of all new employees and subcontractors engaged by them. Does “subcontractor” mean a name or people? The Department should be informed about the company, not the people employed by that company. Subcontractors are responsible for their employees, whether in the black economy or otherwise, and that is dangerous. We must ensure all subcontractors on sites have job cards to show the main employer that they cannot draw benefits at the same time.
I refer to the structure and system which the Minister has set up. Every employee of a company should have an RSI number and card. That card should remain with the employer if the employee remains in employment for the next 40 years. By so doing people could not claim benefits because their cards would not be at the local employment exchange.  Current technology allows a card to be checked in a local employment exchange and this will determine if a person is breaking the law. The Minister has spoken about this on many occasions on radio. This responsibility should not be placed on employers, it should be placed on people who do not withdraw their cards. These people, whether subcontractors or contractors, should be brought to court if discovered on a site. We must not create disincentives for those with initiative — for example, people who want to build 50 houses or someone who wants to go fishing. It is not fair to give the impression that an RSI card is only for RSI facilities.
I was amazed the Minister did not say that only the Department, health boards. FÁS and the differential rent section of Dublin Corporation have access to the database for limited inquiry purposes only. It was unfair of the Minister not to say that and why did she not do so? We must not give the impression that people do not have information about such cards. I am not saying they should not have this information, because people drawing benefit from the State must be upfront. We must not create the impression that this Bill is relevant because people working on a part time basis are getting the same facilities.
I refer to social welfare benefits and facilities available to people such as lone parents. I am conscious of problems faced by lone parents. The Minister in her speech gave the impression that lone parents do not receive social welfare benefits for a long period, and I quote:
This study analysed a sample of new claims made in 1986 for unmarried mother's allowance, which has since been replaced by the lone parent's allowance scheme. The study showed that a quarter of those who qualified for payment in 1986 received the allowance for less than one year. By the end of four years, nearly 60 per cent had ceased claiming the allowance.
In other words, nearly 40 per cent continue to claim the allowance after four years. Obviously, the remaining 60 per  cent married — and we should be glad, because that is what life is about — but we must not give the impression that these people are working.
I agree with the Minister when she said every possible benefit should be given to lone parents. Everyone should receive as many benefits as possible. We should not differentiate between people. Those on social welfare should be treated equally and benefits should be relevant to men, women and children. All children should receive the same benefit; so too should payees.
While I congratulate the Minister of State on her commitment to social welfare and to voluntary workers abroad, I also congratulate her on giving the impression that the reductions in benefits introduced by the last Minister for Social Welfare, Deputy McCreevy, have been reversed. Nobody should say the “dirty dozen” have been reversed. I do not want to be political in this regard.
Mr. Cregan: I dealt with a case of a person on disability benefit. Investigations were carried out by the Department and, after an argument, it was agreed the individual was entitled to disability benefit because he had been seriously injured. People must be investigated by the Department because there is a shortage of money and if we can save £0.5 million in interest, then why not. However, if a person being investigated by the Department ends up worse off, the Department and the Government have a responsibility to own up.
Before the person I referred to sought disability benefit, he was unemployed, with a wife and three children. Although I was not worried about him, I was worried about his wife and children. He was given disability benefit, after a two year argument with the Department, doctors and officials, at enormous cost, because the doctors had to be paid and the investigation cost money. However, he was only entitled to a graduated disability benefit as it was one of reductions in the “dirty dozen”. I would like the Minister to reply, if that is not the case.
Mr. Cregan: The Department told me it is true and I have it in writing. It was implemented in January 1993 as part of the reductions which the last Minister for Social Welfare introduced. The Minister should make sure she has the correct facts before she replies.
This person now receives a graduated disability benefit. He has a wife and three children and he gets £72 per week. How can anyone say we are a caring society? He was told to go back on unemployment assistance because there was no job for him and he was entitled to it. If he went back on unemployment assistance and did not turn up at his hatch on a Tuesday because he was injured, who would be responsible? Although the Department has admitted that he is seriously injured, his wife, three children and himself must live on £72 per week. If that is not part of the cuts implemented on 1 January 1993, I would like it clarified.
That man could decide to apply for long term invalidity benefit because the Department said he is injured and is not able to work. This would cost the State a further £22 per week because he would be entitled to benefits which he would not get while on disability benefit. That is what I call cuteness.
Everyone should be entitled to the same benefits; there should be no classification or distinction between one claim and another. This person will have to receive a long term invalidity pension because the Department has admitted he is badly injured. He will then have free electricity, free television and free travel for his wife and himself, which he would not have on disability benefit, as well as other benefits. This man has been very badly injured and the way he has been treated is despicable. The Minister gives the impression that every possible benefit is being given. That is welcome because people who cannot provide for themselves  should receive every possible benefit.
The amount of money being spent by the State on social welfare is enormous. If the general public knew the real figure they would ask what was going on. I have no objection to investigations being carried out into fraudulent claims. However, we should not create a situation where a person employing two people can have 16 different Departments calling to see if everything is up to date. No wonder people do not want to employ staff. The Minister, however, said the opposite about employees. Let us go back to her comments on incentive schemes. She said that:
...an unemployed person with a dependent spouse and three children can earn up to £37 for each day worked without affecting his or her entitlement to unemployment assistance for other days of unemployment in that week.
In other words that person could work for three days earning three £37 or £111, and receive four days' extra unemployment assistance. When the social employment scheme was implemented in 1985, I was able to prove to this House that people could earn £1,000 in three days and still get tax free benefits and relief for the other four days. People denied it and said it could not be done but it can be done. People can earn £1,000 for three days and still receive unemployment assistance for the remaining four days of the week. That has been on the record of this House for a long time. Many people are still doing it, and rightly so, because they are working part-time. Fishermen can make £1,000 in three days; in fact, they can make £30,000 in six months. No one should say Killybegs is a poor place because it is not nor should anyone give the impression that all our fishermen are very poor because they are not. While individual part-time fishermen may not be doing well, the skipper is. Let us not give the impression that sub-contractors working on a part-time basis are poor because they are not.
I am talking about the lack of incentive for people to go out and work for a few  days. A person can earn £37 a day and receive benefits for himself, his wife and children for the other four days. Tell that to the person who is on £190 a week or £9,500 a year, and who has to pay the 1 per cent levy. It must not be forgotten that the person on £140 a week does not have to pay the 1 per cent levy. Even if one with three children is earning over £9,000 a year, where is the incentive to work? One would be better off not working, although the opposite is being said to employers. Anyone who is employed and earns £10,000 a year will have a take home pay of approximately £130 a week. There is no incentive in that.
There is no logic in the family supplement allowance either because of the poor uptake, and I have been listening to arguments about that since it was implemented in 1987. The reason for the poor uptake is that the person who is working does not draw it. If a person with three children is drawing the family allowance and earning £160 or £170 a week, his employer has to take PRSI contributions from him. If he is earning £164 or £168 a week he would also be taking tax from him, even though he has three children. Yet, we give a family allowance book to his wife telling her to draw the money from the post office. What is wrong with the employer giving the employee the whole amount? Why insult the little wife? Why insult the family?
Mr. Cregan: The Senator may laugh but there are many people who have a lot of pride. We should give the allowance to the person working because he is the person entitled to the benefit. He should be bringing it home to his wife and family, although many of them might not bring the whole amount home. That is a problem that everybody has to put up with. I do not understand why we have to provide a family income allowance book to pay out £20 or £22 a week. Why should we take the PRSI from an employee and from the employer who sends it on to the  State which in the meantime pays the supplement out through another section? Why can the employer not give the employee the full amount instead of paying the PRSI contribution to the State?
Mr. Cregan: I apologise but I doubt if I am losing my hearing. I will speak on particular sections on Committee Stage. I am sorry if I was a little forward but I do not like anybody giving the impression that everything is rosy in the garden when it is not.
Mrs. McGennis: I welcome my colleague, Minister Burton, to the House and I am pleased with the tone of her speech. I am glad she has broadened the debate because the legislation is a bit restrictive and I welcome the opportunity to debate the whole area of social welfare in a broader context. It would be unfortunate if a court challenge on the specific aspects of the Bill relating to share fishermen resulted in people losing their entitlements under the social welfare code. Perhaps those who took the case did not anticipate this result but it has meant share fishermen losing their entitlements to unemployment and illness benefits.
In the Dáil, the Minister referred to the share fishermen's occupation as being particularly hazardous. It is an area which, while providing a good deal of work at certain periods of the year, leaves the fishermen unemployed for quite a large part of the year. I welcome this Bill because it will restore unemployment benefit to this section of society.
I have a few questions for the Minister. In relation to the point raised by Senator Cregan about PRSI eligibility, I presume the fishermen will retain those contributions. The fact they have been in this social welfare limbo since the court ruling means they have broken their contributions and they may think they have lost their eligibility. Could the Minister clarify this? Under the new scheme, if the fishermen pay special contributions at the rate of 5 per cent of their income in the previous year, they will be eligible for benefit and will have to pay a minimum annual contribution of £250. The Minister may have a difficulty with this. This income, because of its nature, will be varied. The contributions may be difficult to collect because some fishermen's catches in the previous year may have been huge and they may not be able to pay the contributions in the current year based on their income for the previous year. Would the payment of the £250 entitle them to benefit?
The amendments passed by the Dáil have probably strengthened the legislation. This point was made during the  Order of Business. No matter how foolproof legislation seems to be when it is drafted, it can only be improved by debate and amendment by both Houses. I compliment the Minister for taking on board many of the amendments; a number of amendments were introduced by the Minister herself.
Bringing eligibility forward to January 1995 is worthwhile. The Minister can confirm if I am right in believing that fishermen had lost benefit and would have been entitled to benefit from 1996 but she has brought this forward to 1995 to ensure they are restored to eligibility for benefit as quickly as possible.
Another improvement provided in the Bill is the extension of benefits to spouses, who are mainly women. We have said our legislation will be gender neutral but even the Minister refers to “fishermen”. I welcome this extension of benefits.
The Minister spoke in detail about treating skippers as employers. I am sure there are skippers who want to be restored to their previous position as employers and share fishermen who want to be restored to the position of employees. The Minister said the Attorney General has drawn up guidelines. I am unclear whether this can be done. If skippers were able to draw up contracts, the income of share fishermen could be reduced. Treating skippers as employers may be possible but the Minister said this area can still be extended.
The last time the Minister was in the House, when I spoke on the budget, I complimented her on her work. At that stage legislative changes were introduced to improve the situation of volunteer development workers when they return home. The Bill provides further improvements in this area. The people of Ireland would not approve of those who give willingly of their time, services and expertise — as the Minister did when she was a lecturer in Tanzania — being disadvantaged on their return home. It is totally unacceptable to those who do this work and to the general population that we discriminate against such workers. The Bill provides they will be entitled to  the full rate of benefit on their return home. I welcome this.
The amendment to the Pensions Act relates to trustees. Last week there were references in the media to voluntary pension schemes. The Bill may not apply to them. In England people who opted out of State pension schemes and joined voluntary ones were severely disadvantaged. The Minister is nodding, so I take it the Bill has nothing to do with such schemes. People who are considering optional pension schemes should be aware there is a possibility of losing entitlement to benefit. It appears the State is more than looking after the needs of employees in this area. I take it this is a technical adjustment to ensure trustees can be elected by the particular form of majority the Minister described.
On the question of fraud and abuse I welcome the requirement to maintain records. Not only will all PAYE workers welcome this but so will contractors and employers, with the exception of those who are defrauding the system. A huge number of people work within the system. They pay their contributions, employ people and pay their PRSI. Before the safeguards mentioned by the Minister and the requirement to have a register on site were put in place, employers and contractors to whom I spoke felt very hard done by because slick building contractors were allowed to tender; at one point they were tendering for Government work. There is a general tendency to tar all employers and contractors with the one brush and say they are wealthy, they are defrauding the system and they are cutting corners. Not all the self-employed or those who provide jobs are bad. They provide jobs for those who need them. Before the regulations were put in place, some contractors could tender and outbid others who were paying full tax and PRSI contributions to ensure——
Mrs. McGennis: ——their employees were fully covered. They lost public contracts to contractors who took people  from the dole queues and gave them time off on a Tuesday or Thursday morning to collect their dole. The taxpayer and the State supplemented their income. This was wrong and unacceptable. I welcome the keeping of records on site.
I disagree with Senator Cregan when he says the responsibility should be on the employee. I am not sure why this should be the case. The employer would surely have to make sure those he was hiring were available to work. There is a joint responsibility. Previously frauds and abuses were perpetrated by employers. They hired these people and probably made it clear to them that if they were not unemployed they were not wanted. Their wages were reduced by the amounts they received in social welfare. This was the black economy at its worst.
There is a lot of media hype about the fact that the Department of Social Welfare is watching out for fraud and abuses. There is a tendency to highlight that it is ordinary people doing nixers who are caught. We all know of cases where people who paid their PRSI contributions from the age of 16 have discovered their contributions were not paid to the Department of Social Welfare. I know of a specific case where somebody paid his PRSI for 30 years and worked for the same company until it went out of business overnight. The Minister highlighted this problem. It is one of the most despicable forms of fraud for employers not to pay the Department and the Revenue their employees' PRSI and PAYE contributions. Employers who do not make those contributions should be liable to the most severe penalties. I welcome the changes in this area.
I welcome the fact that the speech of the Minister of State was broader than just the content of this Bill. It is important to look at the broad picture when we deal with areas of social welfare. There is no doubt of the perception that there are disincentives to take up employment, the Minister of State highlighted various examples in her speech.
I am not fully aware of how well the back to work allowance, to which the Minister referred, is working. It may be  somewhat restrictive to say that it must be new work and “develop new opportunities in areas with potential for development such as fisheries, local heritage projects, crafts enterprises, local tourism and horticulture”. Perhaps those of us who wish to encourage the scheme are looking at it in too restrictive a manner.
I know the Minister of State is aware that the local authority of which she was a member, Dublin County Council, and most other local authorities, are strapped for cash. There is no doubt that a large amount of work needs to be done and some of the areas listed here could be taken in under those schemes.
The previous Government considered ways in which the local authorities could provide employment. There are huge areas of County Dublin, which I and the Minister of State represent, which are in an appalling condition and need remedial schemes. The social employment schemes which continue to be operated by the local authorities allow some leeway and flexibility but to mention that is to be accused of proposing workfare schemes.
The local authorities should employ a large number of people on the unemployment register who want to work and supplement their social welfare entitlement by £30 or £40 a week without the loss of benefits. That is vital because prior to this, if someone took a job they lost all their social welfare entitlements and there was no incentive to work. I believe the local authorities could see themselves as huge employers but they feel restricted by trade unions and other factors and, perhaps, are looking at these schemes in far too restrictive a way.
The Minister of State also referred to the scheme which allowed people to work for a certain number of days and still retain their benefit. I welcomed this when it was announced in the budget but unfortunately, perhaps in common with the Minister of State, all I have seen in my own constituency is people who claim  they worked for one day but lost their entire social welfare entitlements.
Mrs. McGennis: I wish to cite a local case for the Minister of State, where a woman claims her husband worked for one day and was caught — bear in mind it is two weeks before Christmas. The local labour exchange is investigating the case which is on appeal and the family's entitlements have been cut off. A week and a half later, that family has been refused any kind of welfare from the relieving officer in the local health centre, which seems very punitive. However, I am not aware of the full details of the case. The Minister of State's Department has suggested that the labour exchange must be quite certain that the person is self-employed and has been defrauding the system for quite some time.
I also know of cases where people doing small amounts of work lost their benefit and were heavily fined. However, even if someone is defrauding the system, there must be some way of ensuring that their families do not suffer hardship. I know the family to whom I referred will not receive an income before Christmas. The system of relieving officers or welfare officers was set up to ensure that such hardships were not inflicted on families. I am afraid that some of the families of which the Minister of State and I are aware will continue to suffer hardship while the system is so rigid.
The statement of the Minister of State that entitlement to benefits such as family income supplement, the Christmas bonus, medical cards and back to school clothing and footwear allowances can be retained is eminently sensible. It is responding to requests by employers and employees that this should be done. If it is not then, as Senator Cregan said, people will have no incentive to work. The system is crazy if people end up paying more tax and PRSI and lose their benefits and people are right to criticise it.
The Minister of State might enlighten me in her reply about how the back to work system, to which she referred, can  be better used. I do not think it is being used or that there is much awareness about it. The only aspect which seems to have worked well, and about which I am extremely complimentary, is the educational area. There has been a tremendous response by the Departments of Social Welfare and Education to the fact that unless people are provided with the opportunity to get back into the education system the cycle of disadvantage will never be broken.
Great strides have been made in getting people into the education system and preparing them for a return to the workforce if jobs become available. Statistics prove that those with further education get jobs. If we do not provide opportunities for people who opted out for various reasons such as social disadvantage, lone parents or being made redundant they will end up as an excluded minority in society, a system we should not encourage or support. That is an area in which I have a particular interest.
The Minister of State and I share not only a constituency but also an interest in the alleviation of poverty and the integration of the tax and social welfare systems. I welcome her remarks but I would point out to her, and I am sure that her expert working group will be aware of this, that to suggest we do not have an integrated tax and social welfare system is only partly true. The Minister of State said in her speech that there has been a slow takeup of schemes such as FIS and medical cards. People are reluctant to apply because they are afraid that instead of receiving a benefit they will be penalised.
While we do not have child allowances in the tax system, as I know the Minister of State is aware, we have child benefit in the social welfare system. The cost of child care is not allowable for tax purposes but we have family benefit. I am not suggesting that we should disallow any of the benefits but we have to address them in the tax system. There is a slow takeup of schemes such as FIS because people do not see them as benefits and are afraid they are traps to make them pay more tax.
Mrs. McGennis: There are people who do. I am glad the Minister of State said that lone parents do not remain dependants of the State for their lifetime. The name of the allowance may have changed from “unmarried mother” to “lone parent” but there is no doubt that it is usually a lone mother's allowance. I ask the Minister to examine the responsibility of the absentee father because, unless we address that and somebody is given financial responsibility, we will not see any improvements in this area.
I welcome the limited areas covered by this Bill and the Minister's speech. We can continue to tinker with aspects of social welfare regulations and legislation where necessary and in this instance we had to respond to the court case but, unless we examine the area in its entirety, the £3.7 billion being paid this year in social welfare may not be spent in the best way. It is imperative for those in need that we spend this money wisely.
Ms O'Sullivan: I welcome the Minister to the House. I also welcome the Bill which removes anomalies in the social welfare system and moves towards a comprehensive social insurance system. The issues covered in this Bill needed to be addressed but I also welcome, as others have, the Minister's widening of the debate by mentioning social welfare genreally and particularly the integration of the tax and social welfare systems. I hope that the interim report of the expert working group to be presented to the  Government shortly will recommend a radical restructuring which will integrate the two systems in a manner which does not catch people in poverty traps.
The first specific aspect covered by the Bill is share fishermen, the Minister mentioned there are 2,000 of them. It is probable there will be a larger number in the future because the Government intends to encourage the fishing industry in various ways. We already had an indication of that in this House three or four weeks ago when we debated the issue. This part of the Bill takes account of the two court decisions mentioned. Like Senator McGennis I welcome the fact that the Minister accepted amendments in the Dáil which ensure that people will benefit by January 1995 instead of January 1996. I also welcome Part II of the Bill which rectifies a number of anomalies and ensures that people who work in this area — and their spouses — will have full insurance cover.
We have all welcomed the provision dealing with volunteer development workers. The Minister knows from personal experience the problems experienced by volunteers who return to this country. I worked for a brief period of time for Concern, in Ireland, not abroad. I met many people who were concerned that the worthwhile work they had done in other countries meant they were not fully covered by the social insurance system because they had been working for relatively low wages compared to the wages they would have earned if they had stayed at home. It is unfair that they worked as volunteers for the benefit of people who were less well off than themselves and were then penalised when they came back. I welcome the fact that this is being addressed in this Bill.
I am a little confused about the pension provision but I gather it tidies up existing provisions and ensures that people in pension schemes are properly represented in the legislation. I welcome section 14 which deals with keeping records in the construction industry. Senator Cregan does not agree but I tend to favour placing the onus primarily on  the chief employer as opposed to the subcontractors and various tradesmen working in the system. The buck has to stop with the person at the top and placing the onus on employers ensures this.
Those operating legitimately in the construction industry have been penalised in the past as many others have been able to operate in the black economy and, therefore, undercut prices. The person genuinely trying to operate in the system and protect his employees has often not been able to match those prices. This should be monitored to ensure that it works adequately because, if it does, it will guarantee an even playing pitch for everybody working in the construction industry. That is the only way to protect workers in the long term. While the onus is to be on the employer, the protection will benefit the employee.
The Minister referred to a number of other areas which need to be examined. She will be doing this when she receives the report from the working group. The system must be examined in a general way which takes account of the radical changes in society and work practices. There are more part-time workers now, much more job sharing and less work available. In the past the system presumed that there was work available and that it was only necessary to direct people to that work. This is no longer true and there have been a number of radical proposals from the Conference of Major Religious Superiors, the Combat Poverty Agency and, in relation to rural development, Mr. Jim Connolly of the rural resettlement organisation which address the changes in society which will affect the social welfare and tax systems.
I support what other Members said about examining options such as the back to work scheme mentioned by the Minister and the CEDP schemes which operate in many local authorities and which have changed in the recent past through pilot schemes which are now broadly applied. They now include an educational and training element. These schemes do not simply employ people to provide cheap labour, a practice which some felt was encouraged by the original  SES schemes. The concept of allowing people to work in their communities while setting it against social welfare must be seriously addressed in the light of changes in our society. I support what Senator McGennis said about the VTOS schemes and the opportunities for unemployed people to get back into the educational system. Statistics show that is the best opportunity people have to gain meaningful and gainful employment.
There is still much to be done in the consolidation of the social welfare and tax systems but a considerable amount of progress has been made, even in the recent past, in relation to the schemes mentioned. Senator Cregan referred to the “dirty dozen”. In the 1992 scheme if one went from unemployment assistance to disability one had to have 13 contributions in the previous year. That has been removed and is an important reversal for people who, inevitably, have to move at times from one system to another if they get sick while unemployed. There are other similar areas of which Members of the House are well aware.
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