Mary Hanafin (Dún Laoghaire, Fianna Fail)

Families with children who are dependent on social welfare will be fully compensated for the reduction in child benefit by getting an extra €3.80 per child per week in the qualified child increase paid with their main welfare payment. Approximately 363,300 children are expected to benefit from this. Families who currently receive a half rate qualified child increase because they have other household income and, therefore, are not totally dependent on welfare will receive an extra €1.90 per child per week in welfare payments. Approximately 128,600 children are expected to benefit from this.

The family income supplement income, FIS, thresholds are also being increased by €6 per child per week to compensate low-income working families for the cuts in child benefit. This will translate into a weekly increase in FIS payments of €4 per child. Approximately 57,380 children are expected to benefit from this. I appreciate cuts in child benefit will be difficult for families but it should be recognised that the payment will still be generous compared with other countries and that the Government will also make a substantial contribution towards child care provision, including the introduction of a free preschool year from January 2010.

The next cut is in the weekly rates of payments to people aged under 66, which are being reduced by 4.1% or an average of €8.30 per week. Proportionate decreases are also being made in payments for the qualified adult - dependent spouse - of the main welfare recipient but where a claimant is 66 or over and he or she has a qualified adult aged under 66, there will be no reduction in the rate of payment for the qualified adult. Over the past 12 years, Governments have delivered unprecedented increases in welfare rates. The jobseeker's allowance has increased by 130%; the disability allowance by 130%; the carer's allowance for those aged under 66 by almost 150%; the one-parent family payment by 130%; while over the same period the cost of living increased by 40%.

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%. However, prices have reduced considerably this year. By October 2009, prices, as measured by the consumer price index, CPI, had fallen by 6.5% and are now forecast to drop by an average of 4.4% over 2009 as a whole. I appreciate it is important to consider not just the overall change in the CPI but also the impact that this may have on different groups. A technical analysis carried out by the Department of Finance suggests that between Oct 2008 and Oct 2009 the CPI fell by approximately 3.25% for retired households, 5.75% for unemployed households, and 7.5% for working households. Prices are falling by approximately 7.5% for the highest income decile and 4% for the lowest. Year on year, food is down 6%, energy, 11%, and clothing and footwear, 13%.