M J Nolan (Carlow-Kilkenny, Fianna Fail)

I do not envy the Minister in the challenges which she and her Government colleagues face trying to frame the budget. It must be acknowledged that since the introduction of child benefit over 65 years ago there have been significant changes in its payment regime. Initially introduced in 1944 for a third and subsequent children, today child benefit, as it known, is paid for all children. The Minister is correct in reviewing the benefit, not just because of the budgetary situation the country faces but for calls for an overall review.

For many families, the household budget is framed around the salaries of the parents. Child benefit payment day also marks a significant date in the household monthly budget, particularly those which are restricted or on a low income. Mothers have always earmarked the payment for particular expenditure items, be it for children's clothes and footwear, school uniforms and books, and it is seen as an important part of their income stream. I hope this remains so.

However, I was particularly struck by the Minister's comment that for a family of four children, the payment of child benefit represents €738 per month or €8,856 per year. For a family in the high-income bracket and paying the higher income tax rate, this would represent an annual salary of between €17,000 and €18,000 in order to get a net payment of €8,800 per year. This must be taken into account.

One area not referred to in the debate so far is the abuse of claims. We hear anecdotally, particularly from constituents, of abuses in claims for child benefit, particularly in respect of those from Europe and overseas. They came to Ireland during the good times of the boom and were entitled to claim child benefit for their children in their home countries. Following the downturn in our economy, these individuals have returned home. Claims are made that they return to Ireland on a regular basis to keep their record to claim child benefit. I understand 7,000 EU nationals currently claim child benefit for 11,000 children living outside of the State. It might be worthwhile in this economic climate to examine that area of expenditure. It costs approximately €20 million a year for the State to pay child benefit for 11,000 children outside the State.

The April budget provided for €21.3 billion in social welfare payments for 2009, representing a 20% increase on the 2008 level. While much of that increase may be attributed to the significant increase in unemployment, there have been increases across all social welfare payments. This is put into context when one considers the State will borrow €26 billion this year, effectively 95% of social welfare expenditure. This is unsustainable. Changes have to be made and child benefit will be one of these areas. Some time ago, the Minister referred to a three-tier level of payment which could be examined. I am pleased to note the Government's decision will be informed by various interest groups such as the Society of St. Vincent de Paul and other voluntary organisations which have a particular interest in lower paid workers and low-income families.

The ESRI and the McCarthy report suggested a 20% cut to the benefit, which is a bit clumsy, while the Commission on Taxation recommended it should be taxed. All of these can be taken into the mix but I believe each individual family must be examined. The Department of Social and Family Affairs has streamlined its means test process. If PPS numbers can be tied in, there should be enough information in the Department to have an effective means test for social welfare payments without going to any more expense.

Many families are feeling the effects of pay cuts and job losses. This will bring the payment of child benefit to them more into focus. It is a challenge we have to face. The budget, currently being drawn up by the Government, will not be easy with no area of expenditure escaping. The tax generation side has been exhausted. From the increases in taxation introduced in the past year, we have seen a fall-off in the revenue stream. There will have to be changes in expenditure and I will support the Government on this.

The Government's amendment to the Private Members' motion states, "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". This must be recognised if we are to protect social welfare payments and be positive in our commitment to the less well-off. The Government will protect the country's finances to achieve this.

I accept the Labour Party's motion is well-intended and I see its merits. Knowing the individual Ministers in the Government I am confident that whatever decision is taken will be in the best interests of the country, and therefore, in the best interests of families.

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