Richard Bruton (Dublin North Central, Fine Gael)

I move amendment No. 4:

In page 13, line 22, column 3, to delete "€900" and substitute "€1,540".

This amendment deals with the home carer's credit which the Minister has increased by €130, from €770 to €900. Anything is better than nothing but Fianna Fáil made a commitment to double it. It should at least be the same as the PAYE credit. We must treat people who opt to care for someone at home as being entitled to be recognised as working in the home. Therefore, they should receive the allowance available to someone working outside the home.

This provision was introduced following the introduction of individualisation. At the time the difference between the amount of tax at the 20% rate allowed to two-earner and one-earner couples was approximately €7,000. After the exertion of much pressure by both Fianna Fáil backbenchers and the Opposition parties, the Minister moved to provide a special home carer's credit of €3,300. In the intervening period the differential at the standard rate between a one-earner and two-earner couple has expanded to €26,000, worth €5,500 in cash terms to individuals, but the home carer's credit was never increased. This is the first increase in a period of approximately seven years.

There is no doubt that those who opt to stay at home have been disadvantaged by this provision. Any practising Deputy knows the reality facing many couples. When they are strapped with a mortgage and a child arrives, they must look at the child care options. There is no tax relief for child care costs which amount to approximately €200 per week, to which child benefit comes nowhere close. When and if a second child arrives, the cost of child care is unsustainable. Only those on exceptionally good wages could afford it. People then decide to drop out of the workforce for a couple of years to care for their children in the home, to which they see many benefits in the early years. Experts also agree that it is beneficial for young children to have the company of a parent at home. However, parents are hit with a massive tax penalty, a potential penalty of over €6,000. What public policy tells a family that decides one parent will spend a few years caring for a child at home that it should be hit with a tax penalty of €6,000? No far-seeing public policy considering the situation we face would state that was sensible. According to the Minister, the provision resulted from a desire to provide tax relief for workers that would not be so costly, because people in the workforce who were married would have to be given double. We are left now with an extraordinary situation where families trying to care for children must face bills that are more substantial than their huge mortgages. This year there was only a 60 cent increase in child benefit, and nothing for those who specifically commit to child care. Public policy is effectively stating children are consumer goods and those who choose to have them must cope and hack it as best they can. That is so short-sighted it is unbelievable.

In countries such as France one sees posters on billboards stating having a child is not a huge burden. There the government is advertising on billboards to encourage people to have children and leaning over backwards to find a public policy that will support them. The reason for this is that the population of that country is in decline and the French Government knows it will not be able to support the pension burden in the long term, that the country will not have a vibrant workforce or be at the front end of innovation if it does not have strong growth in the young population coming through the education system. That is now public policy in France which may be 20 years further down the road than we are, in terms of the greying of the population but there is a relentless trend and that is the way we are going. However, we have the opportunity to have a much more positive policy towards promoting the welfare of children.

On introducing this provision, no doubt with good motives, Charlie McCreevy took a wrong turn. He wanted to encourage more people into the workforce. We have relatively high participation in the workforce but it is very noticeable that we do not have high participation in the 25 to 40-year age group because women in this critical age group are dropping out of the workforce. They are doing so partly out of personal preference but also because of the tax penalties we impose and the lack of support.

Taking the view of where Ireland needs to move to, this sort of approach to family support does not fit in with our long-term needs. The Minister and the rest of the Government must come up with an approach to families that regards child rearing as a very important responsibility that people take and recognises that the State is there to help. It is one of the most important investments the State and families make in the future of the country and we should be leaning over backwards to facilitate that investment just as we would lean over backwards if Google was talking about putting plant and machinery into the ground. Human capital is the future wealth of this country and we do not in any way lean over backwards to provide families with the sort of support they need.

Tax policy is only a tiny element of the overall mix. We need to think much more centrally about children. The rhetoric of many Ministers reflects an understanding of that but when it comes to practical policy, it does not materialise. Maybe the Commission on Taxation would provide the momentum to think again about this but I suspect it will look very narrowly at the tax code and will not see the wider picture.

I do not pretend that this is the "be all and end all" measure to address this but it is part of a policy towards children that regards achieving the maximum potential of children as a core objective of public policy. Under our current public policy on children, nothing is done until there is a crisis, we then come in too late with inadequate interventions and wonder why things go wrong and why children are at the margins in our community.

This is only a very small piece of a jigsaw puzzle that needs to be put together in terms of public policy. This was an error in the approach of the Minister's predecessor. We should recognise that having sternly resisted it for many years, Fianna Fáil in the last general election committed itself to increasing the home carers tax credit for the first time. It was the first crack in the approach adopted by the Minister and his predecessors when they came to face the people and realised the reality of what people must contend with. This is an important area where the Minister must not only accept this amendment if he is so disposed but, as the person who will soon lead the country across all Departments as opposed to just the Department of Finance, take this as an issue on which we must change our thinking. If the Minister is adopting a few areas where change must occur, it is in the approach to families and the important work they are trying to do.

This includes families of all shapes and sizes. We know that not all families are conventional families headed by married couples. As I mentioned earlier, our treatment of cohabiting parents where only one parent works is disgraceful and indefensible. I know the Minister will say that we are awaiting changes in other areas of law before we do anything about it, but that is the reality. We have to think more about family in the way we put together our tax and other codes. I do not wish to hold up the House but I believe this is a worthwhile amendment.

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