George Lee (Dublin South, Fine Gael)

I welcome this important motion. As it states that cutting child benefit would be far more deflationary than alternative revenue, it is about choices. While the Government clearly has tough choices to make, I urge it not to make this choice at all. Child benefit already has been cut for next year. It was announced in the budget of October 2008 that child benefit for children over the age of 18 would be halved in 2009. That measure will cost each family with an 18-year-old €1,000 in 2009. In addition, from 2010, any family with an 18-year-old in full-time education will receive no child benefit for that person. In 2010, this will cost each family with an 18-year-old the enormous sum of €2,000. It constitutes a huge disincentive for such families, many of whom need this money to keep those children in education and some of whom cannot afford to do so without this support. This measure is akin to shooting ourselves in the foot economically, because people must be trained and educated and everyone values the impact of so doing on the economy. Consequently, making the choice to take away that support is not good for anyone and I urge the Government not to do so.

The position of families with children has deteriorated relative to families without children throughout the boom, because the economic boom was all about individualisation of the taxation system and individualisation of society. In the budget for 2000, the then Minister, Charlie McCreevy, announced individualisation of the taxation system to give £900 million in tax breaks to double-income families and to single individuals. None of this money was given to families with children, which in many cases had only one person earning. The resulting backlash meant the Minister was obliged to rewrite his budget twice. He introduced the home carer's allowance to appear to rebalance it in favour of families with children. Subsequently, in the following year, he announced that he would double child benefit payments to rebalance the system as it had become clear that the effect of the Government's actions had been to disadvantage people in single income families with children and who face big bills.

However, over the years, the doubling of child benefit payments, which was to have taken place over three years, was never delivered on. At the same time, individualisation of the taxation system was continued, first by increasing the individual tax band to such an extent that a second earner in a family who does not have small children to support and who can afford to go out to work can now earn an additional €25,000 for the family at a marginal tax rate of 25%. While this is a good benefit about which no one is complaining, the issue pertains to the actual choice. In addition, more was given for such families. In reality, this was a huge disincentive for those with larger families or with single incomes. The increased child benefit was not delivered, which strikes me as being particularly unfair because a consequence of the changes to the taxation system changes is that the Government is now short of money. It now complains that not enough people are in the top tax rate. Only 10% of workers are in that rate, which is due to individualisation. However, when this fact hit home, the Government's first act is to hit the families with children on single incomes. It seeks to cut child benefit payments and make such families pay for the mistake of individualisation of the taxation system.

One major issue is that our international financial reputation has been damaged by the Government's management of the economy because we have a major deficit and this message has gone out to financial markets. However, our reputation is not the same as our character. A famous American college basketball coach, John Wooden, coined the phrase that failure to prepare is to prepare to fail. Another of his many maxims is that reputation is what others think we are but that character is what we really are. Our character has demonstrated down through the years that we defend children and families with children. This has been evident in the Supreme Court and elsewhere. Article 41 of the Constitution states:

The State recognises that by her life within the home, woman [these days, it can include man] gives to the State a support without which the common good cannot be achieved.

The State shall, therefore, endeavour to ensure that mothers [and I presume fathers these days in some cases] shall not be obliged by economic necessity to engage in labour to the neglect of their duties in the home.

Cutting child benefit goes to the heart in undermining the character of the Irish nation and is a big mistake. One cannot say from the outside which families need the money. For example, I know one businessman, supporting employment, with a business mortgage of €1 million from the bank. He lives on €200 a week and supports his family. Cutting child benefit to such an individual would bring his business down, causing others to become unemployed and further deflate the economy.

Cutting child benefit will be a deflationary and bad choice. The country needs the support it provides for families. Families with children are the ones with the least money to spend in general. When their money is cut, so is their spending. If money is taken from those who have much spare money, many of whom do not have children, it will tend to affect their savings. This in essence is less deflationary a measure and will not have a knock-on effect on the rest of the economy.

The motion is correct that there are other alternatives to attacking children by cutting child benefit to raise moneys for the Exchequer. These would be less deflationary. I urge the Minister to take note of the motion and make different choices in how the State raises revenue. It is critical to our character and character is everything.

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