Willie O'Dea (Limerick City, Fianna Fail) | Oireachtas source

I thank the advisory committee members for their work and for the excellent research which will be useful for the group's further work. I take the point that child income support is not the only determinant of child poverty. I also take the point that in most other OECD countries a relatively smaller amount of expenditure seems to be yielding better results certainly in respect of child poverty. This is because a much greater proportion of expenditure on child support is expended on services in those countries as opposed to direct income.

The terms of reference of the advisory group are quite narrow. It has been asked to consider the fixed amount to be spent on child support and to recast it in such a way as to make it more equitable. I understand the point made by Ms Mangan that just one figure of €63 has been examined and that this is based on the benefit plus the qualified child income support. That being said, if those figures are applied even with the change in child benefit, the results come out pretty much the same.

My party has examined a few models of payment. In some cases the difficulties - if I can put it like that - to which the report gives rise when using this figure are reduced and in other cases they are exacerbated. I cannot imagine any government, taking into account the national finances and people's circumstances, would be able to work off a figure which is very different to the figure proposed by the advisory group. For example, it would be unthinkable for the Government to decide to work off a much lower figure in view of the fact of the large and growing proportion of our people who have very little and consistently less disposable income on which to live. If the figure is too high it will not be cost-neutral, as is the mandate of the advisory group, with the result that the State might have to spend even more on child income support with very marginal results for our extra expenditure.

I refer to the figures used by Ms Mangan and any of the figures my party has used in our study. These show that it would help people who are solely dependent on social assistance payments, in other words, means-tested social welfare payments. The problem is that it will hit working people in the lower income bracket as well. These people might be in receipt of stamp-related social welfare payments and a partner might be working part-time or in low income employment.

For example, I refer to page 28 of the report which deals with family income supplement. This is an income supplement paid to people on very low incomes to encourage them to stay in work rather than depending on social welfare. These workers will have dependent children and they are at the lowest end of the income bracket. The report states:

More significantly, however, families in receipt of FIS, particularly those consisting of only one child, will experience a reduction in their overall income [these are the lowest income earners in the country]. Analysis carried out by DSP in the case of parents in receipt of FIS shows that over 80% would lose a portion of their income supports as a consequence of introducing a two-tier CIS payment. ... The analysis shows that over two thirds of parents in receipt of FIS would lose between €1 and €100 per week and less than 20% would gain in the region of €1 to €50. Likewise one-parent families in receipt of the OPF and FIS will see their income reduced given that these payments can be paid concurrently.

The report indicates that there are other categories in the low-income bracket, namely, people who cannot qualify for family income supplement because they are self-employed or because they are not working the requisite number of hours, and they will gain in this respect. Many people on low income who are in employment will be hit in this respect. It is also true to say that the squeezed middle, with whom we are all only too familiar, will also be disproportionately hit. Page 23 of the report states:

Either option [that is, the taxation option or the two-tier system option] would mean that middle to upper income deciles would on average experience losses in their weekly disposable income, with the most significant losses being experienced by those in the middle income deciles, which is where most households with children are located in the income distribution.

Therefore, in order to get desirable results on one side, one will have some very undesirable consequences on the other side.

One of the terms of reference of the advisory group was to bring in a system which would help to incentivise people to work. The advisory group's report states that the effect of such a system or incentives to work would be mixed at best.

On the general question of child poverty and taking the model the advisory group has used, page 23 of its reports states: "Poverty levels would reduce marginally under the two-tier CIS [system]". I recognise the work the advisory group has done. While I applaud its research and the findings and I am sure they will be useful and helpful to the advisory group's future work, I have found that using this model - or any model I have tried to put through the system - gives rise to as many, or sometimes more, problems as it tends to solve.