Joanna Tuffy (Dublin Mid West, Labour)
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We now move on to the report on child benefit, namely, the Advisory Group on Tax and Social Welfare Report on Child and Family Income Support.

We have two groups with us today. From the End Child Poverty Coalition we have Ms Edel Quinn, Ms Caroline Fahey, Ms Camille Loftus and Ms June Tinsley. From the National Women’s Council of Ireland we have Ms Ann Irwin and Ms Orla O’Connor. In the Gallery I understand we have Ms Frances Byrne and Mr. Timothy Chepkwesi Katiba - my apologies if I have mispronounced the name - Ms Naomi Feely and Ms Marie-Claire McAleer.

I welcome the organisations. We had a meeting already about the report with Ms Ita Mangan, who chaired the advisory group. She went through the report with us and this is the second stage of our deliberations. The committee might make recommendations on foot of the deliberations. I invite the spokesperson for the End Child Poverty Coalition to make its submission. I understand Ms Camille Loftus will speak.

Ms Camille Loftus:

I thank the Chair and committee members for allowing us to come before it today. The End Child Poverty Coalition is a coalition of eight organisations. We have copies of our submission for members.

We have been working for some time on various measures to try to eradicate the scourge of child poverty in this country. Our perspective on the reforms is that we are very much pro-reform. We have been advocating for reform for a number of years, and we have been advocating for much more progressive reform than has been implemented. We have put on the record on numerous occasions our opposition to flat-rate cuts in child benefit, which are highly regressive in nature. We note that in recent years nearly €500 million has been taken from child income supports. Cumulatively, when we examine the impact of child benefit cuts, smaller families have suffered a cut of more than a fifth in their child benefit payments and larger families have suffered a cut of one third in child benefit payments.

Probably with the exception of young people who are unemployed, no other group in society has been asked to carry as heavy a burden of adjustment as this country’s children. The cuts have gone far enough and we cannot sustain any further flat-rate cuts to child benefit. We are broadly in favour of reform. We have advocated for a two-tier structure of child income support for a number of years. However, we offer that support with a number of very important caveats, the first of which relates to low-income working families. They are currently eligible for family income supplement, FIS, a vital support within the social protection system to ensure that work does indeed pay and that it is capable of providing a route out of poverty for low-income families. Every single report in recent years – they go back more than 20 years – which has examined a two-tier type structure for child income support has always identified that a residual FIS-type scheme would be required, as a two-tier payment cannot be a simple replacement for something like family income support because it plays a very specific role in the social protection system. We are deeply concerned that the Mangan report proposes to replace one of the child income supports with the second-tier payment. That would mean a number of families that are in receipt of family income supplement, for whom it is an even more vital supplement now than it ever was, would face losses five to six times higher than families at the very top end of the income distribution. It is a fundamental structural adjustment to the social protection system which reduces the incentive to participate in paid employment and would undoubtedly reinforce child poverty and trap families who are unemployed.

The ESRI considered the impact of securing higher take-up rates on FIS and the impact that would have on child poverty. Its estimate a number of years ago was that it would secure a 3% reduction in child poverty rates. The Mangan report, by comparison, achieves a reduction of 0.2% in poverty. There are much more efficient ways we can go about doing this. We believe that if a second-tier payment is to be introduced it is critically important that FIS is retained within the system until a better in-work benefit has been identified. We cannot get rid of FIS until a better alternative is in place.

We are also concerned about the withdrawal cut-off point that was identified in the Mangan report, which is as low as €25,000. We had an opportunity to meet with the Minister for Social Protection yesterday and she indicated to us that the Mangan report has been asked to examine different cut-off points. We take some hope from that because we feel the cut-off point is far too low and will result in hardship for a number of families on low incomes.

The final point we wish to make is about investment in child services. We know from work internationally and in this country that if we really want to achieve a meaningful impact on child poverty that it is investment in services for children that is likely to achieve the best results. We look, for example, to initiatives such as the free preschool year for children as being progressive measures in terms of achieving much better child welfare outcomes.

I mentioned that over €500 million in savings has been accrued so far from cuts to child benefit. We would like to see some of that directed towards enhanced services for children. We give a couple of examples in our paper such as investment in schoolbooks for children, a second year of preschool education or after-school provision, and resources to strengthen primary health care to ensure children have access to the health care they need at an early stage in their lives. These are the measures we would like to see some investment in, and we would like to see some of the savings accrued to date clawed back to ensure we get better outcomes for children because there is no doubt that unless we move in that direction, the legacy of this crisis will continue for many years to come. Those children who have been asked to carry a disproportionate share of the cost of adjustment will bear that cost for many years to come in terms of restricted development opportunities. Those are our three key points. I thank the members for their time.

Joanna Tuffy (Dublin Mid West, Labour)
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I invite Ms Orla O'Connor to make her remarks on behalf of the National Women's Council of Ireland.

Ms Orla O'Connor:

I thank the committee for inviting the National Women's Council to come before it. We are the leading national women's membership organisation in Ireland and we represent over 165 member groups from a diversity of backgrounds, sectors and locations throughout the country.

For families, particularly women and children, child income supports, and particularly child benefit, are critical. We know that child benefit clearly recognises the role played by women as care givers and that income may not be distributed equally within the home. Research has shown that the vast majority of child benefit is spent either directly on children or indirectly in terms of household bills and supports.

In the Irish context, because of the lack of investment in child care, child benefit is seen as a key mechanism in supporting costs around child care. When the Government introduced a series of increases in child benefit it stated that it was about recognising child care costs.

Through successive budgets we have seen a reduced level of child benefit. The National Women's Council estimates that families with four children have already seen a cumulative loss of over €2,600 per annum. While some compensatory payments have been made in terms of dependent children, that is not extended to the vast majority of families.

We welcome the unanimity in the advisory group's report on tax and welfare in terms of its view that there should be a continued role for universality within the system of child income support. That is critical, but we are concerned about the ratio indicated in the report between a universal payment and a targeted payment.

While it is acknowledged that families on very low incomes may be compensated for any reductions to the universal element of the payment, it is the experience of the National Women's Council and our members that families on low and middle incomes are struggling to pay for essential household items. We are aware it is the only support in terms of paying for the costs of child care. We believe that any further reduction to the current levels of child benefit are unsustainable for the majority of families.

With regard to the thresholds recommended in the report, it is recommended that the second-tier payment would be withdrawn when gross income reaches €25,000. That is too low, particularly in terms of the needs of many women on low pay or reduced working hours.

Assessing gross income is also problematic as it does not take into account families' levels of expenditure commitments. For example, income could be assessed where expenditure such as accommodation costs, child care costs and health care costs for children might be excluded.

Regarding family income supplement, we are at one with the anti-poverty coalition in that we believe it is critical that an in-work support is maintained within the system. We are concerned about the recommendations in the report in that regard.

With regard to reducing levels of child income supports and trading off with services, from a National Women's Council perspective it is critical that services are put in place for children, particularly in terms of child care and also health care services. We have reached a point in this country as a result of austerity where it is not possible for families to sustain further cuts, and we must see those investments in services being made before any further cuts are considered.

In terms of the National Women's Council's recommendations on the report, the current levels of the universal payment must be maintained. We do not agree with the ratios suggested in the report. The entrance level at which families become eligible for the second-tier payment must be significantly higher than the €25,000 suggested. The exit levels or cut-off points must be higher. It is critical that an in-work support is maintained and clearly linked to employment rather than child supports.

Aengus Ó Snodaigh (Dublin South Central, Sinn Fein)
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Gabhaim buíochas leis na finnéithe as ucht an méid atá ráite acu. I met representatives of the End Child Poverty Coalition last week and therefore I have had a discussion on this topic already. A number of questions arise in this regard but also with regard to some of the pronouncements on child benefit in the past week in particular. I am one of those who believes in the universality of child benefit. The argument that we can have a universal child payment and a second-tier payment is a dangerous road to go down because the same argument can be used for the universality of the free preschool education place, a second year of free preschool education, free schooling or anything else. What are the witnesses' views on that? The National Women's Council might prefer that if there is to be a change, at the very least it would happen at a different ratio but I would be concerned if we go down that road.

I will not dwell on Labour Party election promises - we have had that debate - but last week the Minister for Education and Skills, Deputy Ruairí Quinn, stated that the money from a further cut in child benefit could be used to invest in a second year of free preschool education. In the following days, however, the Tánaiste stated there would be no further changes to child benefit. Have the witnesses any indication of what is happening in that regard? They stated that they met the Minister for Social Protection and if she is suggesting that committee should further examine the Mangan report, that suggests the Tánaiste is out of step with either the Minister, Deputy Burton, or the Minister for Education and Skills. We do not know where we are on that.

On the €450 million the witnesses stated has been taken out of child supports to date, do they agree that that €450 million has not been reinvested in child services, which would be contrary to what the Minister, Deputy Quinn, suggested? He may have been talking about doing that in the future but the existing €450 million cut in recent years has not improved services. Currently, social welfare payments are viewed as a social transfer and it has been shown that social transfers work in terms of dealing with poverty, especially child poverty. Is investment in preschool places regarded as a social transfer or an investment in education? Can they be grouped together?

Fidelma Healy Eames (Fine Gael)
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The witnesses are very welcome. I have some questions for Ms Loftus. Will she give us a financial example of the way family income supplement, FIS, will be reduced according to the Mangan report? She said that would put a family into poverty. She stated also that she believes in keeping FIS until a better in-work benefit is introduced. What has she in mind?

Surely, work should pay and Ms Loftus should elaborate on what are the better cut-off points.

To follow up on Deputy Ó Snodaigh's comments on the proposal from the Minister, Deputy Quinn, I agree it is wise to put money into services for children and that this can benefit parents in a way that an additional €20 or €30 per child also might. However, given the number of families which need child income supplement at present, I do not wish to see cuts to every family's child income supplement just to provide a second year of preschool for some children. I am pleased to put this point on the record. This next question is also directed towards Ms Orla O'Connor and the National Women's Council of Ireland. Have the witnesses done their sums in this regard? For example, were child income benefit to be cut for just those families which would benefit from the second year of preschool while leaving all other families alone, how much would that provide? That would be fair and equitable. How much of a service could be provided by simply reducing the payment for those children who would actually benefit from the preschool education?

I will turn to Ms O'Connor, as I am uncertain of what exactly she meant in one of her recommendations. It states, "The entrance level at which families become eligible for the second tier payment needs to be significantly higher than the €25,000 suggested". Ms O'Connor should state precisely what she means in this regard. The next question also is addressed to both Ms Loftus and Ms O'Connor. There is a chance that the more welfare supports we have, the less attractive we will make the quest for work. In their view, where is the cut-off point at which one proofs against poverty and simultaneously makes work attractive? I would be grateful were they to provide some financial examples in this regard.

Brendan Ryan (Dublin North, Labour)
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In Ms O'Connor's contribution regarding high-earning families, I think she has indicated she would maintain current levels. A debate is under way nationally as to whether, at a time of scarce resources, we ought to be paying this to higher-earning families and I would be interested in Ms O'Connor's thoughts in this regard. As for the recommended threshold of €25,000, when Ita Mangan appeared before the joint committee to present her report she went to great lengths to state this was not a recommendation but was simply an example drawn up by the report's authors. As a committee, members told her that because it was the only example given, it tends to be perceived as the recommendation. The joint committee then asked her to draw up some other examples and I believe that is the reference, as members asked her to do that.

I have a question for Ms Loftus on cut-off points. She has indicated the End Child Poverty Coalition is in favour of reform. Had the coalition not been asked to appear before the joint committee to respond to the Mangan report, what would be its own proposals, were it simply appearing to outline what the State ought to be doing in this regard?

Marie Moloney (Labour)
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I apologise for being obliged to leave the room but I was called out momentarily. Deputy Ryan has asked one or two of the questions I had intended to ask, as to what were the witnesses' proposals for reform. As the witnesses are aware, the Mangan report drew on contributions from many organisations. Did they feed their proposals to the team that drew up the report? I have my doubts about universality of payments. For example, without identifying the person concerned, I spoke to someone only last night who recounted an earlier conversation with a chief executive officer of a company who is on big money. Last year, when €10 was cut from child benefit, he went berserk giving out about it, even though he earns a huge amount of money. A point members discuss every day in respect of every Department is that many people are being paid what sometimes are immoral amounts of money but they also have an entitlement to child benefit. My worry is that people who merely are PAYE workers on low to moderate incomes discern that such people still have the same entitlement to child benefit as they themselves enjoy. It is very hard to understand the reason this is allowed to happen. As for the €25,000 threshold, that simply was an indicative figure used to state that were one below it, one would be in poverty. However, to be honest, one would want to be earning considerably more than that to be out of poverty these days. The sum of €25,000 is very low and I am sure it will not be the figure used because it is too low.

During a debate on this issue in the Seanad, the Minister for Social Protection stated she would not make further cuts to child benefit until proper child care was in place. I hope she will honour this commitment and this is the reason the Tánaiste has stated there will not be changes. I will take up this matter with the Minister again to be sure she will honour that commitment. As everyone is aware, education probably is the best investment one can give a child but as Senator Healy Eames noted, although the preschool year will benefit families with younger children, it will not be of any benefit to children aged five and upwards who are going to school and so on. If their money is to be cut, it will be seen to be subsidising people with younger children but families with older children need the money for school expenses and so on. I thank the witnesses for their attendance and members have noted and will take on board their comments. I apologise for being obliged to leave during the presentations but members have the full transcripts to hand and will give them due consideration.

Joanna Tuffy (Dublin Mid West, Labour)
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In a reversal of the order of speaking, I invite Ms Orla O'Connor to respond first.

Ms Orla O'Connor:

If it is okay, Ms Ann Irwin will make a start on some of those questions.

Ms Ann Irwin:

On the family income supplement payment, Senator Healy Eames is correct that work should pay. However, the reality is that for a large number of people in this country, work does not pay an adequate amount to enable them to live with a standard of living that is in any way acceptable.

Fidelma Healy Eames (Fine Gael)
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Is that because it is based on part-time work?

Ms Ann Irwin:

It could be a whole host of reasons. It could pertain to their rates of pay or it could be that for different reasons, they are engaged in part-time work. This could be a choice they have made or could be because their hours have been reduced. While there is a myriad of reasons, there is a large number of people for whom work does not pay an acceptable rate and this is the reason the State has an in-work payment, such as FIS. Our concern pertains to breaking the relationship between the FIS and work. Consequently, if the FIS payment is to be replaced by this selective second-tier payment, it means this relationship between work and the payment is broken. We think this is highly problematic because if one looks at all the statistics and all the reports, including the most recent one from the ESRI on jobless households, they tell one the best way to get and keep people out of poverty is to have them maintain employment. Essentially, this is what the FIS does. It helps people to maintain employment, even when it is not bringing in a huge financial gain and for the National Women's Council of Ireland, to break that relationship is highly problematic. Many people might ask for what they were working if they would receive the same level of child benefit in any event, even if they were not working. Consequently, the maintenance of the relationship between work and the in work payment is vital.

With regard to Deputy Ryan's point on cut-off points, he is right. It has emerged since the report was published that these figures were indicative and are only given as suggestions. I am aware that Ita Mangan is working on different scenarios and we are glad to hear that because we fully agree that €25,000 is a low level at which people would become eligible for the cut-off of payment. In addition, the withdrawal of payment, once one goes above a certain threshold, is problematic for us because women, for example, on hourly rates from time to time, may be offered additional hours, which would mean additional income. Consequently, they may lose child benefit as a result of taking up additional hours of work. However, those additional hours may well be temporary and consequently, there are all kinds of reasons, in terms of our work on women and economic independence and of maintaining women in employment, when that is their choice or perhaps not even a choice. In terms of our work in that area, it is vital that women are supported to work and that nothing disincentivises women from holding onto work.

We also look forward to looking at the future scenarios that Ms Ita Mangan will produce.

Ms Orla O'Connor:

I want to respond to the other question asked by Deputy Ryan and Deputy Ó Snodaigh. It was the issue of investment in services. To be clear, the National Women's Council supports a second year of preschool. We think that is very important. Our position, and what is being said so often by women over the past few years, is that it cannot be introduced at the expense of child benefit. On the conversation that took place in the women's council, we were in a different place about eight years ago and people were looking at, if the Government made a reduction, what else might happen, particularly around medical cards for children and child care. It has completely changed. The members of the women's council are in a completely different position in terms of saying how much women need child benefit for basic household bills. It cannot be a trade-off now. We are not in that scenario.

On the point about high earners getting child benefit, from our perspective child benefit is important as a payment for all children and we believe that it needs to be maintained in that way. We completely accept the argument on redistribution of wealth in Ireland. What we have been advocating in the National Women's Council is that we need to look at other ways of doing that. Consistently, in pre-budget submissions, we have been advocating a third rate of tax as a way of doing it, which would bring in far more revenue than looking at, for example, what we were looking at previously which was the taxation of child benefit. There are other ways of redistributing wealth, but once one starts cutting child benefit, one will cut back on families who need it.

Ms Camille Loftus:

I will address some of the more technical aspects and I might invite some of my colleagues to supplement my answer. There are a number of overlapping themes in the questions and I will try to address them it that way.

There is a question about universality, both whether it is good or bad. From the End Child Poverty Coalition's perspective, we are strongly in support of a universal child income support. It is critically important for the State to deliver that kind of support in respect of all children.

There are questions about distribution. It is one of the reasons we have supported a second-tier payment, which is to maintain the bedrock of universality but to deliver a higher level of support to the families which would need it most. That is the basic theory behind it.

Specifically, in answer to Senator Marie Moloney's question, if there are concerns about very high earners receiving child benefit, the simple solution to that, without getting into overall complex mechanisms, is to apply higher tax rates to very high earners. If I were a very high earner, in the absence of having any children whatsoever, I would not consider it at all unreasonable that I should pay more tax in order to contribute to the welfare of children who did not get raised in as good a circumstance as I did. That is a fair social trade-off.

On making work pay, I strongly endorse the comments by the women's council. Child poverty is strongly related to joblessness in Ireland, and it was so even during the so-called boom years. There are many who are concerned about that.

Senator Healy Eames asked does more welfare support make work less attractive. The point of the family income supplement is that it addresses that specific problem. That is why FIS is such an important payment in the system.

The second-tier payment, in and of itself, does not deliver additional support to those who are in work. It treats all income the same. FIS states, "If you are in work, we will deliver a higher level of support to you because it is critically important that work pays".

I would broaden out this. If we look at the changes that have happened in social protection over the past couple of years and look at changes to both jobseeker payments and lone parent payments, in each instance those changes have reduced the return from participating in employment for those who are unemployed. They have made the transition from welfare to work less attractive than it was in the past. The answer from the policy system always was that FIS is there to ensure that work always pays. The alarming aspect about these proposals is that they propose to withdraw that very support.

Fidelma Healy Eames (Fine Gael)
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It is under threat.

Ms Camille Loftus:

On whether there would be better in-work benefits, over half the OECD countries now use an in-work benefit. A common mechanism that is used is to deliver a refundable tax credit. I will not go into the details, but a refundable tax credit has a number of advantages over a social assistance payment. It could be administered by the Revenue system. It helps with take-up. In the entire history of FIS, the upper estimates of take-up have been approximately 40%.

Fidelma Healy Eames (Fine Gael)
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Would this be instead of FIS?

Ms Camille Loftus:

As an alternative to FIS, it is an in-work benefit that is delivered via the tax system rather than via the social protection system.

Fidelma Healy Eames (Fine Gael)
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What percentage of such in-work benefits are a credit? Ms Loftus stated that over 50% of OECD countries use it.

Ms Camille Loftus:

There is a variety of different systems that are used. Some of them deliver higher levels of support at low-earning levels. Some of them come up and then decline again. There is a myriad of systems. More broadly, the point here is in order to get FIS at present, one must complete a very long and complex form, one must take that to one's employer to sign-off on it and then one must send it to the Department. With relatively small modifications to how employers file their returns, we could have this done almost automatically. I point to the fact that a number of years ago the ESRI stated we could reduce child poverty by three percentage points if we had full take-up of FIS. I do not believe that FIS is a generous enough payment but even if we left it within those limited parameters and had full take-up, we would immediately get a much better result.

Fidelma Healy Eames (Fine Gael)
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Why is there not full take-up?

Joanna Tuffy (Dublin Mid West, Labour)
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I will come back for more questions. I want to ask some questions as well.

Fidelma Healy Eames (Fine Gael)
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Okay, I am sorry.

Joanna Tuffy (Dublin Mid West, Labour)
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Perhaps we will let Ms Loftus finish.

Fidelma Healy Eames (Fine Gael)
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Ms Loftus was in full flow.

Marie Moloney (Labour)
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On the taxation issue, how would a low-income family benefit from a credit given that it probably would be outside the tax net?

Ms Camille Loftus:

One makes the credit refundable.

Marie Moloney (Labour)
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What if one is not paying tax?

Fidelma Healy Eames (Fine Gael)
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What if one is not paying it in the first place?

Ms Camille Loftus:

At present, if one does not earn enough to use up one's full tax credit, one loses it. Under a refundable system, if one did not use up all that credit one would be given the remainder. The Revenue system starts-----

Marie Moloney (Labour)
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It is much lower than FIS.

Ms Camille Loftus:

It depends on the parameters one sets it at. If one only made the current personal credits refundable, it would be much lower than FIS. Britain, before it started to deconstruct its system under a regressive series of proposals from the Government of Prime Minister Cameron, had a system which was not bad in this regard. It had a refundable tax credit in respect of children, a refundable tax credit in respect of child care and a refundable tax credit in respect of work. That allows one a great deal of flexibility in delivering exactly the kind of support one wants into households.

Fidelma Healy Eames (Fine Gael)
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However, those are only supports for those who are at work.

Ms Camille Loftus:

Yes. It is an in-work benefit.

Fidelma Healy Eames (Fine Gael)
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That is a key point.

Marie Moloney (Labour)
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Is it still in place in England?

Ms Camille Loftus:

No. They are trying to deconstruct this with a universal tax credit, which they will regret. It is a messy system and they will regret it.

Joanna Tuffy (Dublin Mid West, Labour)
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Deputy Ryan asked what type of model would Ms Loftus propose, if she was to start from scratch? If the report had never been published, what would she suggest?

Ms Camille Loftus:

Largely, what we are talking about here today. It was the End Child Poverty Coalition which has argued for many years for second-tier supports. This is exactly what we have done, but we have always said along the way there is a need for a residual FIS. It simplifies the system. It delivers a much more progressive system of child income support, but we always need to deliver those extra supports for low-paid families. Much as I would like to see wages increase and much as I would like to see people have access to much more work than they do at present, there will always be households which are not capable of earning what they need to support their family's needs and, therefore, an in-work benefit is an important support.

These were relatively new a number of years ago, although there are well-established systems in liberal welfare systems or Anglo-Saxon welfare systems, the United Kingdom and the United States being two of the primary examples in this regard. As I stated, over the past number of years, with globalisation pressures and the kind of issues with which most welfare states are now engaging, they are an extremely common mechanism, but the tax system, rather than the social welfare system, is increasingly being used as the way to deliver. We also have consistently made the argument that much better investment in services is required.

The focus at present is on a second year of early childhood care and education. There are real issues in terms of withdrawing money from families which will not benefit. As Senator Healy Eames pointed out, some families would lose an income support and not benefit from the service. Those are real issues.

It is one of the reasons we have given the examples of free schoolbooks, better health care and after-school care, which are the kinds of things we need to look at to shift the balance of support for children to a services approach rather than to concentrate solely on child income support.

Joanna Tuffy (Dublin Mid West, Labour)
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Ms Loftus answered a question Deputy Ó Snodaigh asked and said that in principle she agreed with the two-tier system. Does the National Women's Council agree with it in principle? That is what Deputy Ó Snodaigh asked.

Ms Orla O'Connor:

There is already a two-tier system as all families receive the universal payment while there is also a system of child dependant allowances.

Aengus Ó Snodaigh (Dublin South Central, Sinn Fein)
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Would it not then be more logical to increase the child dependant allowance or the qualifying child allowance rather than to introduce another tier of bureaucracy and a second child benefit? The means test will already have been done in respect of the qualifying child allowance. An increase in that payment could be made while leaving child benefit alone.

Ms Ann Irwin:

One of the issues with doing that is that the only children who receive that benefit are the children of people on social welfare. There are many other people who are on similar or marginally higher incomes who do not get it, which is part of the problem. There has been a trade off as child benefit has been reduced whereby the qualified child allowance has been increased. That has only happened for those on social welfare, however.

Aengus Ó Snodaigh (Dublin South Central, Sinn Fein)
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I am not suggesting it should be left as it is. If the payment was increased and made allowable in respect of increased FIS thresholds, that would capture those who are struggling on low pay. The Department indicated to the committee two years ago that it would try to reduce the number of payments into a single working-age payment as it did not want to have additional add-ons. We are now discussing an additional payment and all that goes with that, including means testing.

Marie Moloney (Labour)
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In case I was taken up incorrectly, I did not say that high earners would resent people. I said that people on low and middle incomes with children over five years of age, who would not benefit from the free pre-school year, might have a resentment that they are paying for it but not benefiting. I certainly am not worried about the high earners and whether they would resent it. That is tough luck in my view.

Brendan Ryan (Dublin North, Labour)
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To summarise, End Child Poverty is in favour of reform, increasing the threshold and maintaining FIS. The National Women's Council wants to leave it as it is and feels there is no real case for reform.

Ms Orla O'Connor:

We think there should be reform but universality must be maintained. Reform is required in terms of services but not at the expense of universality. We must reform FIS to increase eligibility and take-up.

Joanna Tuffy (Dublin Mid West, Labour)
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There was an issue about the National Women's Council. We have perhaps the highest level of child benefit payments in the world and certainly within the European Union. The argument is that we do not have the services that obtain in other member states such as free GP care or extensive child care. One cannot increase the services and leave the payments at the same level given that there is not a great deal of money out there. If we introduced free GP and after-school care, free books and other services, the logic would be to cut child benefit payments in tandem.

One of the issues about universality is that somebody earning €100,000 who has no children pays the same tax as someone on the same salary with four children. Children's allowance was introduced to recognise the child as a unique individual with his or her own needs. It was recognised initially in the tax system but is not now due to the issue of whether people are in the tax net and so on. I am in favour of people who earn over €100,000 receiving child benefit but I would like people on incomes of that level to pay more tax whether they have children or not.

When Ms Rita Mangan was here, she made the opposite argument on FIS to the one Ms Camille Loftus is making. She said reforms are to deal with the issues and to avoid disincentives to leave social welfare for work. There are problems with FIS, which many people, including the self-employed and those who work more than 19 hours a week, do not receive. Our FIS system is problematic as it stands. Do the witnesses have any feedback on that?

Ms June Tinsley:

To follow on from Deputy Ryan's comments summarising the position, End Child Poverty is in favour of reform, wants to maintain FIS and wants to increase the thresholds. The other key component is investment in services. While we recognise that there is not much money available, €450 million has already been saved on child income supports but children are not necessarily seeing the day-to-day benefit of that. It is a question of political leadership and investment in our children and their futures. That means provision of quality early years services, including a second free pre-school year while ensuring that high quality is maintained. It also means the provision of quality after-school care. While 6,000 after-school places were provided for in budget 2013, there are quality and quantity issues given that there are many thousands of children who would benefit from such a service, which would facilitate their parents to take up employment and, where such parents are in low-paid employment, maintain or become eligible for FIS payments. End Child Poverty believes child poverty can only be eradicated through a combination of quality income supports and quality services and is a question of investing in those.

Ms Caroline Fahey:

Regarding FIS, I think Ms Rita Mangan's point was that one must not be any worse off in a job than on social welfare. We would say that one must be better off in a job than one is on social welfare. There is a range of costs associated with going to work, not least of which is child care. Costs also include food and transport. It is not good enough to give people the same support whether they are in work or out of it as that fails to recognise the extra costs they face. FIS rewards work and does not merely ensure that one is no worse off if one is working. Working might not be a hugely enticing prospect to somebody who is considering leaving two children with a childminder to go and stack shelves in Tesco for the day. People must be able to feel that their family will be better off as a result.

It is becoming clear that with the changes to the one-parent family payment, FIS will help some of those lone parents who are in work to make the transition when their child turns seven. It is a really important payment to keep in the system from that point of view to assist lone parents, who have the highest rate of poverty, to keep the jobs which make a huge difference to their families.

Ms Camille Loftus:

It is very difficult to get a sense from the Mangan report of what the scale of losses to households in receipt of FIS will be. I give the example of a couple with two children and earnings of approximately €300 per week, which is not uncommon for someone working close to full-time hours in the retail or service sectors. The losses that couple faces under the Mangan proposals exceed €100 per week. While one might not be any worse off than when one was unemployed, to say it is fine that somebody on that low a wage should lose €100 per week while someone earning €1,000 loses about one tenth of that is a highly regressive proposal.

Ms Orla O'Connor:

We are in a different place now, which is the crucial problem. Huge cuts have already been made. Child benefit has become a much larger part of families' incomes on foot of unemployment levels and reduced working hours.

It is not possible to say that one can consider further cuts in services. One point that resonates with me from telephone calls to the women’s council is that there is no trust in the reforms that could emerge. I concur with the Deputy that we need to find the revenue through the taxation system by looking at those earning over €100,000 and we need to see services developed. Then some years down the road we might be in a place to review the level of our universal payment. We cannot do it now, however, because child benefit is much more significant than it ever was due to the wider economic circumstances.

Marie Moloney (Labour)
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What about the council’s input into the Mangan report? What are the council’s thoughts about the fact that child benefit is paid abroad to families with one parent working here? It is a question I have brought up with many, including MEPs, but have never got a straight answer on it. I believe that in such an arrangement the child benefit should be paid at the rate of the home country. Much money is going out of the country through this arrangement.

Brendan Ryan (Dublin North, Labour)
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I agree with the sentiment on the need for taxing those earning over €100,000 a bit more to pay for these services. However, how does one make that an attractive idea to the electorate? From the Labour Party’s experience in past elections when it proposed higher taxes for better services, it was targeted by opponents as the party of high taxation. In short, they said do not vote for Labour because they will screw one on tax. How does the council feel such a proposal would go down with the electorate?

Ms Orla O'Connor:

Part of it is about building support and trust that we will get those services. It is the situation in so many other countries but there is not a sense here that reform will be delivered. We are in a difficult place because of austerity and the cuts that have been introduced. It is partly the politicians’ job, but ours too, to put out what these services would entail. The National Women’s Council of Ireland is working with Open and Start Strong in putting forward a Scandinavian model for child care and building public support for that. We must make it possible to see that good quality child care services are possible.

Joanna Tuffy (Dublin Mid West, Labour)
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Deputy Ryan is correct. In the 2002 general election, Labour proposed to take money out of the National Pensions Reserve Fund to put into the health service. I remember when canvassing a woman on the doorsteps, she told me Labour was going to raid the pensions - little did she know what was going to come down the line. I tried to explain to her that it would lead to more public health care and free general practitioner care but she told me she wanted the money in her pocket. Possibly, after what has happened to the economy, people may be more open to the council’s proposals but there is still an inbuilt belief in Irish society that we would rather the money in our pockets than the services. It is a problem that we need to bear in mind.

Ms Camille Loftus:

Ms O’Connor’s point about trust is important in this regard. The three previous Governments broke down people’s trust in the system’s ability to deliver services which were of use to them. People prefer the money in their pocket because they know they can bank on it. Accordingly, there is a real challenge to deliver the services that will make a real difference in people’s lives. It is not an easy challenge but an important one to step up to.

Regarding Senator Moloney’s question on the Mangan report, each of the member organisations of the coalition made separate submissions to the report. The broad thrust of each of them, however, is that we are in favour of a restructured system of child income support that delivers more progressive outcomes, that family income support needs to be in place and more needs to be invested in-----

Marie Moloney (Labour)
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So, the coalition suggested the two-tier system.

Ms Camille Loftus:

We did much of this work in advance in the National Economic and Social Council, NESC, which many years ago published a report on a second-tier payment system. We already had done a lot of the running in developing this as a key alternative. The maintenance of an element of universality would have been a key component of it. There is much about what is in the Mangan report that we are in favour of in terms of structural reform with those caveats.

On the point of the payment of child benefit to foreign nationals working here but whose children may not be residing here, that payment is part of our EU commitments. Any Irish citizen working in another EU member state benefits from exactly the same measures.

Marie Moloney (Labour)
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I would not say benefits because most other countries have a much lower child benefit rate than ours.

Ms Camille Loftus:

That may well be true but that is how we as a member state have chosen to structure our income support. I do not believe we would be very appreciative if Britain, France or Germany told an Irish citizen in such circumstances that he or she will get less than their citizens. It must also be remembered that those parents are working here, suffering the absence of their children yet making a contribution to our tax coffers.

Marie Moloney (Labour)
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Yes, I know. I just wanted the council’s thoughts on it.

Ms Camille Loftus:

Not being a parent myself, I cannot imagine the stress and the trauma of having to be away from one’s children and working in another country to provide an income for them. I know this issue is a popular item in the tabloid press, etc., but I do not believe the foundation of our problems is the payment of child benefit for children of non-Irish nationals working here and contributing to the tax system. They get little enough out of our tax system as it is.

Joanna Tuffy (Dublin Mid West, Labour)
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The Minister has raised this issue too. While I do not have evidence on this, there is a concern that some are taking advantage of this arrangement. I agree with Ms Loftus that if an Irish citizen goes to Britain, then he or she has access to the National Health Service, NHS. I can understand the concern being expressed, however.

Ms Camille Loftus:

It must be borne in mind that most of those non-Irish nationals will not claim pensions in this country. They will return home to their families in time. Pensions would be the most significant draw from one’s contribution over one’s working life.

Marie Moloney (Labour)
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Why would they not draw down a pension from this country?

Ms Camille Loftus:

Most of them will retire home as many Irish nationals did.

Marie Moloney (Labour)
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With all due respect, that is not going to stop them drawing a pension. There are many Irish people living in England drawing pensions.

Ms Camille Loftus:

Yes, but they are not going to be drawing on the associated services that come with that such as drawing on the Irish health care system, getting the free travel pass and so on. Even what we have seen over the past several years in terms of the number of people who worked in Ireland who contributed into the tax system and what they have taken back out in social security support, the balance is very much in our favour.

Marie Moloney (Labour)
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Yes, but I would not say they will not be able to draw a pension as there is a bilateral agreement with most countries in this regard.

Ms Camille Loftus:

That is assuming they have 40 years' history in payments.

Marie Moloney (Labour)
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No, not at all. Up to 520 paid contributions is enough. Under the bilateral agreement with other countries, the contributions they pay in their home countries will give them a pro rata pension from Ireland.

Ms Edel Quinn:

There is a cumulative effect in all the cuts. It is not just the savings made in social protection but there have been cuts in other areas which have been more subtle in their effect. For example, there has been the tightening up of the criteria for certain other payments. These affect the bottom lines of families which are already struggling with what they have at the end of the month.

Children have certain rights and the Government has voluntarily taken on human rights obligations for children from the UN Convention on the Rights of the Child. The committee that oversees that convention would say that in times of recession or when countries are struggling, we must protect the most vulnerable. We see that these groups have been disproportionately affected and it is time to say that enough is enough and put the argument about children's socio-economic rights on the table. Children's rights have not been the focal point in discussions about reform.

Joanna Tuffy (Dublin Mid West, Labour)
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I have a question for Ms O'Connor. My understanding of what she is saying is that it is the timing of the reform that is the issue for her and that now is not the time to make cuts because people need the income so much but that she is not saying that it should never happen. Am I right in saying that?

Ms Orla O'Connor:

I would not say that it is about timing. What we are saying is that right now, it is totally inappropriate. People just cannot afford it. We do not know where we will be in ten years' time in terms of the economic situation of the country. What I would be clear on is that when we look back to when child benefit was at a much higher level eight or nine years' ago, we were having those conversations within the National Women's Council around the possibility of reform. It is important to remember that child benefit has been reduced so we are in a very different place. The question of whether the scope is there is part of the question.

Joanna Tuffy (Dublin Mid West, Labour)
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I thank our guests for briefing us. We had a very good discussion with them, which is part of the committee's ongoing look at the report. We will certainly take on board the points the witnesses raised with us.