Róisín Shortall (Dublin North West, Labour)
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Question 143: To ask the Minister for Social and Family Affairs when a formal review of child dependent rates last took place; the outcome of same; the research upon which he bases his current policy of not increasing child dependent allowance rates; and if he will make a statement on the matter. [9653/06]

Séamus Brennan (Dublin South, Fianna Fail)
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Since 1994, successive Governments have followed the policy of holding the rate of child dependant allowances constant while concentrating additional resources for child income support on the child benefit scheme. Child benefit is neutral vis-À-vis the employment status of the child's parents and does not contribute to poverty traps, whereas the loss of child dependant allowances by social welfare recipients on taking up employment can act as a disincentive to availing of work opportunities. As a universal payment, which is not taxable and is not assessed as means for other secondary benefits, child benefit is therefore more effective than child dependant allowances as a child income support mechanism when account is taken of these incentive issues.

While the appropriate mix between universal and targeted child income support instruments has been regularly reviewed since the introduction of the children's allowance in the 1940s, the most recent and comprehensive research which underlies the current approach is found in the report of the expert working group on the integration of the tax and social welfare systems which reported to the then Minister for Social Welfare in 1996. While the focus of the report extended considerably beyond child income support policy, the report concluded in section 12.4(b), page 133 that: "reform of income support for children, with the aim of making it more neutral between work and unemployment, must be a major part of any reform package".

These policy conclusions were also supported by the report to the then Minister for Social Welfare of the child benefit review committee in January 1995 which on page six concluded that: "the committee accepted that moves away from CDAs and towards child benefit can improve work incentives; [the committee] recommended that, in view of the severe level of unemployment in this country, some reduction in disincentives must be given serious consideration by adjusting CDAs even though there are other arguments — based on redistribution, poverty and a subsidy towards the costs of children, for not making this adjustment". The Government's commitment to this policy is reflected in the substantial resources invested in the child benefit scheme since entering office. Since 1997, expenditure on child benefit has increased from €505.8 million to an estimated €2,044.6 million in 2006.

While circumstances have changed dramatically since these reports were completed, the need to provide support to low income families with children without worsening incentives to take up employment is still highly relevant. The ESRI report, Reforming Child Income Support, in Callan, T. et al, Reforming tax and Welfare, ESRI research series No. 42 October 2001, page 72, concluded that: "child dependent additions to regular weekly social welfare payments do reach many of those on low incomes, but can contribute to serious unemployment traps".

The broad approach over the last ten years in relation to child income support policy was recently commended in the document, NESC Strategy 2006: People, Productivity and Purpose, December 2005, page 154, which said that: "in many respects this approach was a success, as shown in the now relatively small number of children whose parents-guardians are in unemployment and on whose behalf CDAs are added to UB or UA adult payments". However the NESC has also raised the question of a new instrument which would target low-income families across the welfare-work divide and is, I understand, currently working on a more detailed report on this approach.

While leaving many of the detailed parameters to be addressed by Government, I expect that the NESC's finalised report will be of significant assistance in informing the future direction policy in this area. On receipt of the report I will consider how this approach can be brought to address the problem of poverty in families with children in a practical and effective way.