Joanna Tuffy (Dublin Mid West, Labour)

I wish to focus on the importance of the principle of child benefit as a universal payment. There is a danger in the current climate that we will begin rolling back on progressive initiatives taken over many years. Child benefit, formerly known as children's allowance, was introduced in 1942 for third and subsequent children. It is interesting to read the speech made by the Minister who introduced it, Sean Lemass. He gave several reasons for his decision not to means test for the allowance, one of which was that the Government wished to ensure there "was not the slightest suggestion of charity associated with the allowance". A means test, he said, would "involve an inquisition into the affairs of families which is often resented and which is generally undesirable". He also argued that a means test would be cumbersome and would involve a substantial additional cost. His main argument for the allowance was that having a large family would mean greater financial hardship for households. He reasoned that because wages are based on productivity and supply and demand, they did not relate to family size. The only way, he contended, to ensure parents had sufficient income to provide for the additional needs which come with having larger families was through the payment of an allowance for children. He concluded his speech by pointing out that the introduction of a children's allowance would result in all taxpayers, whether they had children or not, paying more tax.

It is surprising how progressive that debate was compared with some of the debate taking place on the issue today. The reasoning Mr. Lemass offered in 1942 still stands in 2011. The same issues apply when one considers the arguments for means testing, namely, that there is a cost associated with it and that children have no means. Introducing means testing would necessitate scrapping the existing child benefit payment and introducing an entirely new allowance which would instead be called a family supplement or something like that. This would dilute the idea of supporting children in themselves. Academic research has shown that where there is means testing, some of those who are entitled to an allowance under those criteria will be deterred by the existence of a means test from applying for it. This is borne out by experience in regard to family income supplement.

In regard to proposals for taxing child benefit, a constituent of mine made a good point in an e-mail to me. Taxing child benefit, she argued, would create an inequity. Take, for example, two households each earning €100,000, one of which comprises two adults and two children and the other comprising two adults and no children. Taxation of child benefit would reduce the income of the former while having no effect on the latter. In other words, the two-person household would maintain its income while the four-person household would see a reduction in income. There is an inequity there.

Some have argued that people like Michael O'Leary do not need child benefit. The question we should ask is why he, and others like him, should not be taxed more highly on their income. I do not mean to single out Mr. O'Leary, but it was he who put himself forward in this regard. The way to get the wealthy is to tax them on their wealth and income. Child benefit is an income for the child and we should not go near it in terms of taxation.

It is also important to bear in mind, when considering any move to subject child benefit to means testing or taxation, that it is middle-income families who will lose out. Benefits which are means tested do not go to middle-income families. Middle-income families with children are the people with the high mortgages, where both parents have go out to work, the people with the high child care costs which can amount to €150 a week per child. This is what the child benefit is expected to cover. These families have endured many cuts already. Child benefit was reduced to cover only those aged 18 and younger. The early child care supplement was reduced to the first five years from six years and then it was finally scrapped. There was also a straight cut in child benefit. Many other countries have universal child benefit payments and those countries also provide free health care for children. These are the progressive countries where there is not the type of inequalities we experience and neither have they broken economies. It is given to all children because all children are valued equally.

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