Gay Mitchell (Dublin South Central, Fine Gael)
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Question 83: To ask the Minister for Social and Family Affairs the way in which increasing the child dependant allowance would result in a welfare trap; the welfare traps which would emerge; and if he will make a statement on the matter. [6036/05]

Olivia Mitchell (Dublin South, Fine Gael)
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Question 94: To ask the Minister for Social and Family Affairs if he intends to introduce a second tier support payment for children in unemployed or low-wage households; if so, the progress made to date; and if he will make a statement on the matter. [6035/05]

Séamus Brennan (Dublin South, Fianna Fail)
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I propose to take Questions Nos. 83 and 94 together.

Child dependant allowance is an additional payment made to social welfare recipients in respect of eligible child dependants under 18 years of age. This age limit can be extended to 22 years in specified circumstances where the child remains in full-time education.

While the loss of this additional allowance on gaining full-time employment can constitute a disincentive to work, the extent of the disincentive would vary according to the number of children in the family and the potential income from employment.

Social welfare recipients with larger families would therefore be most vulnerable in this regard.

In recognition of this fact, every Government since 1995 has held the rate of child dependant allowance at the same level while increasing child benefit, which is paid regardless of parental means or employment status. As such, it represents a substantial improvement in the State's contribution towards the costs of rearing children, a contribution which cannot be lost as a result of either parent taking up employment.

In line with this policy, monthly rates of child benefit will have increased by €103.51 at the lower rate and €127.78 at the higher rate since 1997 when Budget 2005 rate increases are taken into account, increases of 272% and 258% respectively. This level of increase is unprecedented and delivers on the Government's objective of providing support for children generally while offering real choice to all parents.

Since 1994, the combined income support of child benefit and child dependant allowance for those on social welfare payments has increased by more than double the rate of inflation.

As I stated in my budget speech, I was urged by many groups, both at and following the annual pre-budget forum, to reverse current policy on child income support by increasing the level of child dependant allowances on the grounds that these payments are made only to recipients of social welfare and, consequently, are targeted directly at those most at risk of poverty. I considered these arguments carefully but concluded that child benefit remains the most appropriate vehicle for tackling child poverty at the present time.

With regard to the introduction of a second tier payment in respect of children in low-wage or unemployed households and following its identification as an issue in the Sustaining Progress national agreement, the National Economic and Social Council, NESC, has undertaken a review of child income support and in particular the possible merging of family income supplement and child dependant allowances into a "second-tier" child income support payment. This review, which NESC expects to complete during 2005, will inform the development of future policy in this area.