Dr. Claire Keane:

That figure of 10% to 29% was indexing pretty much everything in the tax and welfare system. Therefore, it was increasing tax bands, as well as welfare rates. If we look at what other countries do, there are not many countries that index up everything, for example, indexing both tax and welfare bands, tax credits, along with welfare rates. My opinion would be that ideally one would index everything, otherwise the system would start to get out of kilter. Therefore, if there are increases in social welfare rates but not increases in tax bands and tax credits, then one starts to possibly create disincentives to work. This is because a person would effectively not take home as much, if the tax system does not keep pace.

Ideally, we would think about the system as a whole. A couple of years ago, it was pointed out that social welfare increases might result in some people losing their medical cards, for example. The then Minister for Health weighed in on this at the time. If the income limits for the medical card do not grow at the same rate as welfare increases, people could lose medical cards. The same applies to childcare subsidies. We have really seen this with student grants. Research has shown the student grant rates and income limits for student grants have really not kept pace with inflation. What has happened is that fewer and fewer third level students have been qualifying for grants as a result of their parents just getting average wage increases. Back in the 1970s, the student grant was roughly equal to the unemployment payment. It could be seen as a minimum amount needed to live, but it has fallen massively behind because it has not kept pace with inflation. Ideally, we would index-----