Ms Ita Mangan:

I will take the questions in the order in which they were asked. In this report we did not try in any way to suggest this was a perfect solution. In fact, we clearly state that there is not one perfect solution and we recognised, as Deputy O'Dea quoted from the report, the downsides of the consequences of the two-tier system we are proposing. However, I would make two comments about that. First, any change to any system that is proposed within a cost neutral structure inevitably results in losses to some people.

It just is not possible within a cost-saving structure. I would have loved Deputy Ó Snodaigh’s scenario of being able to design a child income-support system from scratch with no restrictions on cost but that is not the world we live in and that was not the remit we were given, which would have been nice. However, I wish to make the point that some people have to lose. The big losers from the proposal we have made would in fact be middle and higher income earners because they would not get any part of the second-tier payment. Within the lower-income group there would unquestionably be losses in particular for parents with one child who are getting FIS but that would be counterbalanced by significant gains for people who do not qualify for FIS, at present and, for example, self-employed people who do not qualify for FIS, and also people who do not meet the hours requirements for FIS.

The group has gone on since then to examine working-age payments. Within that context we are looking closely at some type of new in-work benefit to replace FIS. As we all know, FIS has had a chequered history. It took years before it was accepted and for people to apply for it in any great number. It is still the case that most commentators say that not everyone who qualifies for FIS is applying for it for whatever reason, which we will not necessarily examine today. It is generally accepted – I am of the view – that it is not a satisfactory in-work payment in its present form and that some form of in-work payment is required. That is one of the areas on which the group is working at present.

Deputy Ó Snodaigh raised the number of children getting child benefit. I cannot make predictions for the future but I can point out that one of the problems for us as a country – it is also one of the benefits for us as a country – from a child income-support point of view is the increase in the number of children. For example, between 2005 and 2012 an extra 100,000 children qualified for child benefit. In 2012 we were paying child benefit in respect of 100,000 more children than we paid in 2005. That obviously has resource consequences for the Government in terms of financing it.

On the subject of where the report goes from here, it was presented to the Minister in April last and the advisory group does not have any function in publishing the report or making any decisions about it. That is entirely a matter for the Government. We have discussed the report with the Minister and a number of different bodies but it is not my function to comment on the precise timing of the publication of the report. That is a matter for the Minister.

In response to Deputy Joan Collins on the question of taxation, we did not say taxation is necessarily a bad solution; we said we preferred the two-tier option because it produced a much better level of reform of the system and because it had better poverty and incentive outcomes. The effect of taxation would be severe for certain low income families because, for example, at the current rate of child benefit, which is €130 a month, if one was on the 20% tax rate one’s child benefit would effectively be reduced to €104 and if one is on the 41% tax rate it would reduce to €77. Given that the 41% tax rate kicks in at a relatively low level of income one would have much more significant losses under the tax system if one were to introduce a tax on child benefit than one would under the model that we have set out. I repeat again that the model we have set out is only one model.

As Deputy O’Dea pointed out, the poverty outcomes for the model we produced were marginally better but it seems to me that any improvement in poverty outcomes is worth trying to achieve. Depending on which particular model one picked, the poverty outcomes might be better in some models. I agree with the Deputy’s analysis that finding the right mix of amounts and tapers would be difficult but it still can be done. Improvements in poverty outcomes are always desirable and worth pursuing. I will invite Dr. Sweeney to add to what I have said.