Paschal Donohoe (Fine Gael)

I join my colleagues in registering my strong opposition to the changes proposed. I do so for a number of reasons. My colleagues have noted the effects the change will have for different members of society. I propose to focus on two sectors of society. The first group comprises those whose main source of income is derived from social welfare payments. The second group comprises those in the middle, above the income thresholds needed for social welfare payments or supplements but for whom the amount of income they generate from work is insufficient to provide security and peace of mind. The Society of St. Vincent de Paul's pre-budget submission accurately described this group of people as the working poor. They are a part of society we depend on to a great extent for tax, for the effort they put into the economy and the work they do. They are also under great pressure. I am concerned the pressure they are under is set to grow.

The main cause of that will be the change in interest rates. The main change in the past number of years to trigger large increases in the amount of disposable income for people who own homes and pay mortgages has been the speed at which interest rates have decreased and how long they have stayed at consistently low levels. For reasons we are all familiar with, change will happen and interest rates are likely to rise in the near future or soon after. The current interest rates are needed to keep the economy going but it is not at a sustainable level. In many cases rates will need to increase in order to generate profit for the banking industry.

There are three particular consequences of this. I have heard some people's comments on this and I wish to add my voice to it because it is very important. I agree with Senator Prendergast's point on poverty traps. Recent Governments were good at recognising that if levels of social welfare payments or allowances were dependent on levels of income, people lost allowances as they worked more. That reduced the incentive for people to work or to work more hours. An edition of The Irish Times contained brilliant analysis of this phenomenon, which I referred to on the Order of Business in this House a couple of weeks ago. This compared the social welfare payments for a two-parent family with two children, where one parent was at work and one was not at work. Social welfare payments, tax allowances and rates of tax meant the difference in the total amount of disposable income was very small. This is the thinking driving some of the changes made to social welfare payments but I am concerned the introduction of the half rate qualified child increase and the qualified child increase of €3.80 will reduce the incentive for people to move from social welfare payments and will reduce the incentive for people to increase their income for fear of losing these payments. This is creating the kind of poverty trap that many of the Minister's predecessors identified as something that must be avoided.

I deal with many families in constituency work who say they want to work even in the difficult times we are in. They seek ways to bring more income to the family but they are reluctant to do so because of the social welfare payments they will lose. They do not want to do it because they will lose money. This is an amazing source of despair. I am concerned at the re-introduction of measures that seek to offset the reduction in child benefit because it flies in the face of much of what we have learned about reducing poverty traps and getting people working.

I also wish to emphasise the working poor, those who are in the middle and are neither poor enough to receive the full support of the social welfare system nor well-off enough to be secure in their homes and secure in the future income they will have. These changes will reduce the amount of income coming in but will create a mentality that they will lose next year what they have now. Senator Doherty referred to this point in his contribution, talking about parents with kids in crèches. I have two kids in a crèche and my payment to the crèche is almost as much as I pay on my mortgage. I am surrounded by families in similar situations. Thank God I am so well-off and so well paid for what I do. I am so lucky to be able to do this and be well paid for it. We do not talk much about these people. They were dependent on child benefit and its maintenance into the future to get through these difficult times and to ensure they have enough money to keep their kids in crèches. The low levels of income many receive through work - affected by tax increases and falling wages in the private sector and the wage reductions in the public sector, which we will discuss tomorrow - is another source of pressure and anxiety.

The last point concerns the increase in family income supplement. This is a supplement I hear much discussion about and it is used a great deal, particularly by community welfare officers. I am surprised at the take-up of this supplement, which is much lower than I expected. I am concerned that although we are increasing the supplement by €6 per week, the number of people in receipt as opposed to the number that could be getting it is not high enough to offset some of the difficulties these reductions will bring about.

Some of my colleagues have made the same points I have made. These measures will create a poverty trap. What will happen to the family supplement and the increase in it? How we can drive the take-up rate of family income supplement? I emphasise the case of those in the middle, those who are lucky enough to work and lucky enough to have one, one and a half or two incomes coming into the family and the change this will have on the money coming into these people and the change to psychology and to what they expect in the future.

On the Order of Business I mentioned that I attended the launch of the Children's Mental Health Coalition yesterday morning. I went along not because I have policy responsibility for this area but because I have a deep interest in the area due to the number of children I deal with in terrible difficulty through no fault of their own. The vast majority of families are doing their best but find themselves in despair about how they will help and how they will support their children. These families are not just the families in receipt of social welfare payments and who use the community welfare officer and the families we expect to have these problems. They are our neighbours and friends and people who live in estates and on roads dotted all around the constituencies and communities we represent. The importance and beauty of child benefit was that it was the one payment that had a high degree of certainty of going to those who needed it the most, namely the children.

It is disappointing that in the number of weeks leading up to this debate we have had several discussions on the Ryan report, the Murphy report and the need to cherish our children. One of our colleagues quoted the 1916 Proclamation this morning. It refers to cherishing all the people of our country equally yet we find that those who have the least and have the least say in the future of our country and its direction are those who will suffer the most because of this change.