Dáil debates

Wednesday, 12 December 2007

Social Welfare Bill 2007: Second Stage (Resumed).


3:00 pm

Photo of Barry AndrewsBarry Andrews (Dún Laoghaire, Fianna Fail)

Perhaps the Leas-Cheann Comhairle will let me know when there are 14 minutes remaining.

Much of the Opposition comment has been to the effect that this budget was mean-minded, lacked generosity and was not cognisant of issues of poverty and people on lower incomes. I made the point that the value of the social welfare was in the region of €12 billion but it is actually €17 billion, up from less than €5 billion in 1997. This is in the context of unemployment being halved in the same period. It runs counter to the direction one would expect social welfare payments to go.

This is a measure of Fianna Fáil's commitment to lower income families and to people in the margins of society. Much has been made in the debate about those in consistent poverty or at risk of poverty. It is worth noting that the office of social inclusion set down guidelines last year that were updated this year. They were designed to assess policies and their impact on those in poverty or at risk of poverty. That precludes the suggestions made by those in Opposition of the possibility that those on lower incomes have not been considered.

These poverty impact assessment guidelines assess the possible negative and positive impact of decisions made in this area, both on social inclusion and welfare issues and taxation. It is based on the ERSI switch model, a tax benefit model. According to the budget figures, there is a 5% to 6% improvement in the income of those in the lowest 20% bracket of income earners and a 0.5% to 1% increase for those in the top 20%. It is clear that in this budget and the previous five this process has been stitched into the assessment of increases and how increases would be brought about. As such, it runs contrary to the possibilities described by Opposition Members. An example is the early child care supplement which, in being assessed by the poverty impact assessment guidelines, passes muster because it has a much more positive impact on those on lower incomes in receipt of the flat-rate payment than those on higher incomes. Accordingly, the €100 increase is worth considerably more to those on lower incomes. The same could be said for a range of the benefits outlined in the Social Welfare Bill.

There have been great benefits in the area of child care in recent years. However, great reform is still necessary. The provision of community-based child care facilities is too limited. Most other countries have a much wider range of community-based child care facilities than we do. Child care is provided privately in the vast majority of cases and, accordingly, very expensive. The average EU percentage of income spent on child care is 12%, whereas in Ireland it is 20%. Nevertheless, there have been very significant increases, which indicates we have been dealing with a very low historical base in terms of direct support for people with children. In 2008 those with two children under the age of six years will receive direct payments of more than €6,000 during the course of the year.

We need to consider the issue of benefit-in-kind. Naturally, the benefits that an employee receives from an employer are taxed. There are provisions, whereby if an employer provides child care facilities on site, the cost can be discounted for tax purposes. However, this is not used in this country. It is virtually a redundant provision in the tax code. If the matter were approached in a more sensible way and we had a new system of ownership linked to the benefit-in-kind system, we would begin to get to the level of child care provision on a community basis in other EU countries. In the meantime, I welcome the increases and commend the Bill to the House.


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