Joan Burton (Dublin West, Labour)

The Irish tax code is a funny thing. It can recognise, and has recognised, Pino Harris and his yacht Christina O. It recognises stallions at stud. It also recognises high-achieving sportsmen, heritage properties, writers and artists. However, it does not recognise children, the cost of raising a child and the burden that places on the incomes of parents who are taxpayers. That is why child benefit is supposed to be a universal payment, paid to the caring parent - usually the mother. It is this way because the tax code contains no recognition of children. A person or couple who work and have a child pay the same amount of tax as an individual or couple with no dependent children.

Many years ago, at her inauguration as President, Mary Robinson spoke of mná na hÉireann. Child benefit is, has been and will continue for a long time to be mainly an issue for mná na hÉireann and their children. That is why it is so vulnerable. Since 1944 when Seán Lemass introduced the children's allowance, every time there has been an economic crisis one of the suggested solutions has been to tax or means-test the payment. This goes in cycles. It disappears when the economy is going well and comes back as a critical debating point when the economy is in crisis.

Given that it is so valued by women and their children, in a way I have been quite touched by the number of young fathers, particularly in the ranks of Fianna Fáil, who have stood up and stated manfully that they do not need child benefit. It is always open to them to return it to the State. Male journalists and male economists have similarly suggested, because they are middle class and relatively well-off in salary terms, that they are not convinced they need child benefit. I would like to hear the views of the mothers of their children on child benefit.

When the early childhood supplement was abolished earlier this year, many parents accepted the decision, knowing it had been introduced by former Taoiseach Deputy Bertie Ahern as a payment in the run-up to the last general election and that it was a bribe which drove up child care costs in every crèche and child care service in the country.

Child benefit is keeping many families afloat. We all know many of the hundreds of thousands of young families where the dad worked in construction among the legions of chippies, sparks and brickies, all of whom did well and worked terribly hard during the boom. Mr. David McWilliams described them as breakfast-roll man and they voted in large numbers for the Minister's party. Most of them have two children and a reasonably large mortgage and now they have little or no work. Child benefit is keeping bread on the table. It is paying the food bills of a significant number of families who have had a massive reduction in their income. Often the grandparents are helping to pay the mortgage to keep the wolf from the door, put food on the table and keep the house from being repossessed. That is true of so many families in so many parts of the country to which I have spoken recently and it constitutes a kind of stimulus in the current extraordinarily difficult economic conditions for so many families.

The Minister's proposals, those of the various groups to which my colleague, Deputy Shortall, referred, involve either means testing or taxing child benefit. These date back to 1944. I received a report on that as Minister of State at the then Department of Social Welfare in 1995. It is like a wheel, where the same suggestion comes up over and over again. Those horses - means testing and taxation - will not gallop.

This is important to our future. The critical problem with means testing or taxing child benefit is that it would constitute another significant poverty and unemployment trap. People who are surviving on the margins make economic decisions as to what maximises the money in the house for them and their children, and what puts the food on the table.

If the Minister wants to reform child benefit, then she should integrate the tax and social welfare systems. That is the action to take. We have never had refundable child tax credits even though we now have tax credits throughout the system. I recognise that they are technically extraordinarily difficult to implement, but they are implementable and they have been implemented in other countries. This does not work well for the reasons about which Deputy Shortall spoke. Much of FIS is used for low-paid employees in public service jobs, for example, in hospitals. Many private employers will not touch FIS because there is too much bureaucracy involved and they prefer to throw an employee a few bob under the counter. That is the reality, as the Minister will hear if she goes out to speak to small firms about FIS and the bureaucracy involved.

Child dependant allowance is a poverty trap. People argue for it in easpa an mhalairt. Everybody knows that if a person gets stuck on social welfare, child dependant allowances, rent supplement, etc., he or she would need to earn €500 to €600 a week net, or €700 gross taking account of tax, PRSI, getting to work, etc., in employment in order not to be out of pocket. If the Minister goes down this road, she will create more poverty and unemployment traps. What we do not want building up in the economy is the disaster we saw in the 1980s that lasted right up to approximately 1995 where one found on going into local authority estates, whether in the Minister's constituency or mine, large numbers of people on the dole because they did not have much of a paying alternative. The Minister is proposing to make poverty and unemployment traps worse.

In terms of work incentives, the advantage of the child benefit system is that, whatever the family and whatever the parent, if one wants to go out to work or if one wants to stay at home with one's children, child benefit is not impacted on. If the Minister decides to means test or tax child benefit, where next year many of these families with two children and a large mortgage will have one income only and individualisation will come back to bite the Government badly, it will make economic sense for many couples simply to separate and for one parent to become reliant for a long period on the State. Doing that will give families an economic incentive to part rather than the Government providing an incentive for children to be raised and nurtured in a family of two parents, which is probably best for most children.

If the Minister continues in this way, many couples who might otherwise get married will not take the plunge because they will lose too much in social welfare benefits if they enter into a committed long-term relationship. At present, if a woman on lone parent's allowance goes to live with somebody who is working, she may lose her housing benefit and her lone parent's allowance. She will become the dependant of the person who is working. In that situation, particularly if one adds in rent allowance, such a family could lose more than €300 a week. If the Minister proceeds to tax or means test child benefit, that situation will become worse.

In this country, child benefit is society's contribution to the rearing of the next generation. In almost all Scandinavian countries child benefit is a universal payment. In fact, there are many other benefits for children worked into the welfare codes of those countries. In many ways, those are the countries which we ought to aspire to be like. Those are countries where there is a high quality of provision of services for children, including preschool. Rather than a race to the bottom as regards children's welfare, we should try to model ourselves on best practice throughout the European Union.

In looking at the forthcoming budget the Minister, along with her colleagues, has the difficult task of finding approximately €4 billion. There is general agreement to find approximately €1 billion of that in savings in public sector pay. We know that about another €1 billion will probably result as savings in the capital programme. We are also aware that there are a number of efficiencies and savings available from the McCarthy report that are not particularly contentious and which would probably yield €600 million or €700 million. In the revised programme for Government, the Government seems to have agreed to a carbon tax, which will yield somewhere around €500 million. That leaves a gap. The Labour Party's suggestion, as set forward by Deputy Shortall, is that the gap could be bridged by reducing thresholds for various tax reliefs embedded in our system, some of which relate to property. Those property tax reliefs currently amount to about €435 million per year. The Minister's colleagues are probably asking her to offer up something like €300 million plus in child benefit. That seems to be the suggestion in the media, even though the ESRI has suggested a larger figure.

Property-based tax reliefs are what helped our economic bubble to burst. The Government should consider passing on them because they are basically a dead-weight in the system. Similarly, pension benefits for some very high earners are essentially a form of tax-saving and investment strategy, rather than savings for pensions and retirement. We will have plenty of suggestions as to where the Minister can find an alternative to this.

It should be remembered that child benefit is spent in this country - on children's shoes, food and school books. It is probably one of the best stimuli. I strongly recommend the motion moved by my colleague Deputy Shortall.

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