Mary Hanafin (Dún Laoghaire, Fianna Fail)

I move amendment No. 1:

"To delete all the words after "Dáil Éireann" and substitute the following:

"recognising:

— the importance of the child benefit payment to all families with children, and particularly those on low incomes;

— that, since 2000, the monthly rates of payment for child benefit has increased from just €53.96 for the first child and €71.11 for the third and subsequent children to €166 and €203 respectively;

— that overall expenditure on child benefit grew from just €638 million in 2000 to €2.5 billion in 2009;

— that the rate of consistent poverty among children, as measured by the EU survey on income and living conditions, has almost halved since 2003 – from 12.2% to 6.3%;

— that funding under the 2 child care programmes, namely the Equal Opportunities Childcare Programme and the National Childcare Investment Programme, is expected to create some 65,000 child care places, the majority of which are already in place;

— that 98,000 places will be available next year under the new free pre-school scheme;

— that given the scale of the current economic crisis, failure to stabilise the public finances would lead to increased borrowing and jeopardise Ireland's ability to fund vital social services in future years; and

that, in that context, it is appropriate to examine the €2.5 billion being spent on child benefit and consider how savings might be made in this area; calls on the Government to consider the various options around child benefit and their implications for the needs of families with children, particularly those families on lower incomes, in the context of the forthcoming budget."

The forthcoming budget is being framed at a very difficult time for Irish families. As Minister at the Department of Social and Family Affairs, I am very conscious of the needs of the 412,407 people who were on the live register at the end of October 2009. I fully understand that a wide range of other groups - such as people with disabilities, carers and pensioners - depend on the welfare budget for vital support. I appreciate the importance of child benefit to all families with children, but particularly those on low incomes. I assure the House that this Government has done and will continue to do the very best that it can to protect the most vulnerable people in Irish society.

Over the past decade there have been significant increases in welfare payments. The State contributory pension has increased from €113 to more than €230 per week. The weekly rate of jobseeker's allowance has been raised from €93 to €204 per week and the carer's allowance has been increased from €89.54 to €220.50 per week. We have provided increases in welfare rates that were far in excess of increases in both prices and wages. Since 2000, the rates of child benefit have increased from just €53.96 for the first child and €71.11 for the third and subsequent children to €166 and €203, respectively. In fairness, Deputy Shortall in her opening speech, acknowledged that these were relatively generous payments. In the same period, overall expenditure on child benefit has grown from just €638 million to approximately €2.5 billion. As a result, approximately 12% of gross social welfare spending in 2009 will go on child benefit. It is not true, as Deputy Burton has said, that child benefit only gets looked at in bad times. Child benefit was significantly increased in the good times.

Currently almost 600,000 households receive child benefit in respect of 1.1 million children. Deputy Tuffy's contribution, where she outlined the reasons child benefit was introduced in the first instance in the 1940s, highlighted the fact that it was provided for third and subsequent children for large families as an anti-poverty measure. Poorer families were, and are today, more likely to have more children. As she quite rightly quoted, it was introduced in the first instance, not as charity, but to support such families and ensure it was an anti-poverty measure. Subsequently, it was to become available to all children and all families.

A family with four children now receives €738 per month, or €8,856 per year, in child benefit, regardless of how high the parents' earnings from employment are. As Deputies will be aware, in addition to child benefit, families dependent on basic social welfare payments may also receive an extra payment for each of the dependent children, through the qualified child increase, QCI. The current QCI rate of payment is €26 per child per week - up from €21.60 per child in 2006. More than €530 million is expected to be spent this year on QCI payments.

To ease the transition from welfare into work, people who have been in receipt of a jobseeker's payment, with a full-rate QCI for at least 12 months, can generally keep that increase for 13 weeks if they take up work that is expected to last at least four weeks.

While this, and other transition arrangements, can help people move back into employment, the family income supplement, FIS, was designed to provide ongoing financial support to low-income working families. Expenditure on this scheme has also increased dramatically in recent years. In 2000, just €39.4 million was spent on this scheme. By 2008, it had grown to €181 million and this year more than €200 million is being provided for FIS.

Between 2000-08, we significantly increased the income thresholds for FIS so that more families would qualify for it. For example, for a family with four children the income threshold increased from €372 per week in 2000 to €760 a week in 2008. As a result, the number of families benefiting from the scheme grew dramatically - from just 13,000 in the year 2000 to over 28,000 families last year. In the 2009 budget the FIS threshold were increased further to enable more families to qualify for it. To see how this works, take a family with one parent working full-time and the other working 19 hours a week - both on the minimum wage. Their gross income from employment would be €510.35 per week, leaving them with a net income after the income levy of €505.25. If they have four children, the improvements we have made mean they would now be entitled to a FIS payment of €176.85 per week, as a top-up to their wages, giving them a combined income from employment and FIS of €682.10.

If only one parent in the same family was working, and he or she was in full-time employment at the minimum wage, the gross income from employment would be €346 per week and their additional income from FIS would be €272.40 per week. The combined income from employment and FIS would therefore be €618.40. In both scenarios they would also be entitled to child benefit of more than €170 per week. That shows a real commitment to supporting not just people on social welfare. Conscious of the fact that there can be a poverty trap, we also support those low-income families through FIS.

Major improvements have also been made in recent years in the back to school clothing and footwear allowance. In 2000 the rate for 2-11 year olds was just €80 per annum, while €99 was paid for children aged over 12. This year, the payment rate is €200 for 2-11 year olds and €305 for those aged over 12, recognising that this is a particularly expensive time of year for families.

These improvements in child benefit, qualified child increases, the family income supplement and the back to school clothing and footwear allowance have had an enormously positive impact on the lives of Irish children and their families. The most recent EU Survey on Income and Living Conditions in Ireland published by the CSO last week indicated that the rate of consistent poverty for children had almost halved from 12.2% in 2003 to 6.3% in 2008. Other developments over the 2003-08 period, such as the increases in employment rates that preceded the current downturn, improvements in the minimum wage, and increases in basic welfare rates, also contributed to this decrease in poverty rates. However, there is no doubt that increases in child-related income support payments played a major important role in lifting so many children, and their families, out of poverty. The Government has pursued - and will continue to pursue - a comprehensive approach to tackling poverty.

Even throughout the economic difficulties of the past two years, the Government has done its best to prioritise social welfare. The October 2008 budget provided for increases of between 3% and 3.8% in the basic payment rates at a time when inflation for 2009 was expected to be 2.5%. In reality, prices have dropped considerably this year. By September 2009, prices - as measured by the consumer price index - had fallen by 6.5% and are now forecast to drop by an average of between 4% and 5% for the year.

While child benefit payment rates were not increased this year, a package of improvements in other child income support and family payments was put in place from January 2009, at a cost of €56 million. These included: an increase of €2 in the qualified child increases payable with social welfare payments bringing the rate up to €26 per week; an increase of €10 per week per child in all family income supplement income thresholds, giving an increase of up to €6 per child per week; and an increase of €50 per week in the income threshold for the back to school clothing and footwear scheme to enable more families to qualify for it.

In framing the April supplementary budget, very tough decisions had to be made across the whole range of Government expenditure. In that context, the provision of €21.3 billion for social welfare services in 2009 - 20% more than the amount spent in 2008 - was a clear demonstration of our commitment to protecting the most vulnerable people in society. Tax rates and borrowing had to be increased to fund this extra expenditure on social welfare.

Deputies will be aware that the Government expects to have to borrow €26 billion this year. It also estimates that 16% of all tax revenue next year will go on servicing the national debt, compared to 8.5% in 2009 and just 3.5% in 2007. This means that €16 out of every €100 that each person pays in tax next year must be spent on repaying loan interest instead of being used to fund social services directly. Clearly, the more money we borrow over the next few years, the more interest we will be obliged to repay in the future and the higher the proportion of people's hard-earned wages that must be spent on servicing the national debt.

The Government wishes to avoid an unsustainable increase in the national debt that could hamper Ireland's social progress for a generation. That is the reason it is determined to reduce spending, and consequently borrowing, by €4 billion next year. In framing next month's budget, the Government faces difficult choices. While it is aware it must reduce expenditure by €4 billion in 2010, it also is aware there is no easy or pain-free way of so doing. Deputy Shortall stated that the Labour Party acknowledges the €4 billion must be found. However, in addition to income, expenditure must be tackled also. Social welfare spending makes up the largest single block of Exchequer gross current voted expenditure, accounting for 37% of the total, at slightly more than €21 billion this year. Public pay and pensions, at €19.8 billion, accounts for 35%, while other programme expenditure, not including pay, at €15.8 billion, accounts for the remaining 28%. The scale of the savings required from public expenditure as a whole means that some reductions must be made in the social welfare area.

I appreciate that it will be hard for people to cope with any decrease in welfare spending. However, unless the Government takes steps now to reduce overall public expenditure and restore stability to the public finances, it risks making the economic situation far worse for everyone, including welfare recipients, in the long term.

See this speech in context