Willie Penrose (Longford-Westmeath, Labour)
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42. To ask the Minister for Social Protection his plans for reforms of the family income supplement scheme. [17591/17]

Willie Penrose (Longford-Westmeath, Labour)
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I understood that last year, when Deputy Varadkar became Minister, he indicated that he had significant plans to implement reforms of the family income supplement scheme. More particularly, I believe it was his intention to introduce a working family payment that would replace the family income supplement. Will the Minister let us know how far these thoughts and policy reviews have been advanced in his Department?

Leo Varadkar (Dublin West, Fine Gael)
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The family income supplement, FIS, is an in-work support, which provides an income top-up for employees on low earnings who have dependent children. FIS is designed to prevent in-work poverty for lower paid workers with child dependants and to offer a financial incentive to take up employment. There are in excess of 57,000 families with more than 126,000 children in receipt of FIS. The estimated spend on FIS this year is approximately €422 million.

The programme for Government contains a number of commitments to improve the take-home pay of families on low incomes. One such commitment is the proposed working family payment targeted at low-income families. My Department’s approach to developing the working family payment is being guided by two principles. First, that it should ensure that work pays and that no family is better off on welfare than at work, and second, and equally important, that it should have a positive effect on reducing child poverty.

Family income supplement is one of the in-work supports that contribute to Ireland having one of the lowest at risk of poverty rates for working families among the EU's 28 member states. Recent EUROSTAT data, based on the latest CSO survey on income and living conditions for 2015, show that Ireland has one of the lowest in-work poverty rates among the EU 28 member states. The EU average is 9.5% and Ireland ranks fourth lowest with a rate of 4.8%. I am satisfied that the family income supplement is fulfilling its role in assisting employees to take up employment opportunities and to remain at work but further improvements can be made.

Willie Penrose (Longford-Westmeath, Labour)
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I agree with the Minister. I and the Labour Party would be very supportive of FIS. The one concern we have is that it is not used as an addition to, or substitute for, very low pay, that employers can avail of at the State's expense. We must be careful. We have to try to balance that. I think that is what the Minister has in mind, in his own way - that it should not be used that way. It is very important.

The figure of €420 million signifies a significant element of low pay across the economy. That is what the starting figure is for this scheme. Of course, if a person has four or five children, or if a person was, like me, one of ten, that would certainly mean any such person would be a big recipient of this. If it had been out in the 1960s, my family would have been. I might as well be straight and honest with the Minister.

There are two aims with the introduction of a working family payment, namely, to reduce child poverty and to ensure no family is better off on welfare than in work, which would have a positive effect. How far advanced is the Minister in bringing forward this type of proposal for inclusion in the 2018 budget? What is his aim with these plans?

Leo Varadkar (Dublin West, Fine Gael)
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I share the Deputy's concern. As is the case with any in-work payment, there is a worry that low pay might be subsidised and facilitated. That is a big issue in the United Kingdom where I think they have very much gone down that road. We always need to guard against that.

FIS is, of course, about more than pay. It is also about family size, so there are people on low pay who do not qualify for FIS because they have no children or only one. There are people on low to middle incomes who qualify for FIS because they have a lot of children. It is important to acknowledge that.

My Department has given me an options paper on different options we could pursue in respect of the working family payment. I am considering that paper at the moment and I intend to share it with the Oireachtas joint committee this side of the summer. The approach emerging at the moment is to make amendments to the family income supplement rather than starting from scratch and designing a whole new scheme - to build on FIS, which seems to be working quite well. Anything that is done comes with a cost, but my intention is to share that paper with the joint committee before the summer recess.

Willie Penrose (Longford-Westmeath, Labour)
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I thank the Minister. That is a sensible way of progressing this. As I said, I support family income supplement very strongly. It is important for large families. It encompasses two things and must be balanced between the risk of aiding employers who only give low wages and the necessity of ensuring large families are maintained and sustained. In this context it is extremely important that the appropriate balance is struck with the working family payment when the Minister brings it forward.

Leo Varadkar (Dublin West, Fine Gael)
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I very much agree with what the Deputy has said. I look forward to engaging with the committee on this and talking to the various spokespeople in the run-up to the budget.