Seán Crowe (Dublin South West, Sinn Fein)
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Question 445: To ask the Minister for Social and Family Affairs the rate of relative poverty here in relation to the EU average. [12425/07]

Séamus Brennan (Dublin South, Fianna Fail)
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The 'at risk of poverty' indicator, also referred to as the rate of relative poverty, measures all those who fall below a certain income threshold, which in the EU has been set at 60 per cent of median income, adjusted for family size. The latest comparative figures from Eurostat refer to 2005 when Ireland had an 'at risk of poverty' rate of 20 per cent compared to an average of 16 per cent for the EU 25. It should be noted that these figures are calculated using a methodology that differs from the one used by the Central Statistics Office (CSO) to calculate the national rate of 'at risk of poverty'. Using the CSO methodology shows an 'at risk of poverty' rate of 18.5 per cent in 2005, down from 19.7 per cent in 2003.

It has been acknowledged that the 'at risk of poverty' indicator is not suited to making comparisons between countries at different stages of economic development. The problems inherent in using the indicator for international comparisons have been stated on a number of occasions and in various expert journals.

It should also be noted that the indicator does not measure poverty as such, but rather the proportion of people below a certain income threshold who may be 'at risk of poverty'. Whether persons below the 60 per cent threshold are actually experiencing poverty will depend on a number of factors, including the degree to which income is below the relevant thresholds; the length of time on this relatively low income and the possession and use of other assets, especially one's own home.

The 'at risk of poverty' indicator has particular limitations as a measure of poverty in the case of Ireland in recent years. It takes no account of overall living standards and fails to reflect the fact that in Ireland the 60 per cent median income threshold increased by 104 per cent between 1997 and 2005. Over the same period, prices (CPI) increased by 30.6 per cent, average industrial earnings increased by 56.4 per cent and basic social welfare payments increased by 79.1 per cent. The high levels of economic growth led to an increase in the number of women in the workforce and, consequently, in the number of two income households. Incomes in these cases outpaced the incomes of those who were not in the workforce and of some single income families. All groups in society have benefited from economic growth, therefore the main value of the indicator is in identifying particular groups which may have difficulty keeping pace with living standards generally.

In order to establish the actual extent of poverty, Ireland has developed an indicator, known as consistent poverty, which identifies the proportion of people 'at risk of poverty', who are also deprived of certain goods or services considered essential for a basic standard of living. The overall goal of the new National Action Plan for Social Inclusion 2007-2016, published in February, is to make a decisive impact on remaining levels of consistent poverty. This is underlined by the fact that a new target has been set, using an updated set of indicators, which is more realistic and in keeping with living standards today. The new target is to reduce the number of those experiencing consistent poverty from the 2005 level of 7 per cent to between 2 per cent and 4 per cent by 2012, with the aim of eliminating consistent poverty by 2016. I am confident that this new NAP inclusion will build on the achievements of the last decade and deliver greater social inclusion and a society in which remaining consistent poverty is eliminated.