Joe Costello (Dublin Central, Labour)
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Question 93: To ask the Minister for Social and Family Affairs her plans to use the impending Social Welfare Bill to reform family income supplement to ensure that all low income families qualify at least in part for this scheme. [8894/10]

Mary Hanafin (Dún Laoghaire, Fianna Fail)
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The Family Income Supplement (FIS) payment provides income support for employees on low earnings with children. The manner in which the value of the payment is calculated is designed to preserve the financial incentive to take-up or remain in employment in circumstances where the employee might be only marginally better off on social welfare payments.

Fundamental to the design of the FIS scheme is that a person must be engaged in insurable employment for a minimum number of hours – currently 38 hours per fortnight. A couple may combine their hours of employment to meet the qualification criteria.

The payment amount is based on a fixed proportion of the gap between the assessable income of the household and prescribed FIS income thresholds. As these thresholds are linked with the number of dependent children in a household, FIS provides an important policy instrument in reducing child poverty in working households as well as improving incentives to work.

Considerable improvements have been made to FIS since the late 1990s. These have improved its effectiveness as an instrument of support for low-income employees. These changes include a change in how income is assessed (that is, from a gross to net basis) and, in recent years, the re-focusing of income thresholds to include additional gains for larger families. Partly as a result of this, and partly reflecting higher levels of employment in lower-wage jobs, spending on FIS has risen from €33 million in 1997 to an estimated €215 million in 2010.

Increases to FIS thresholds were already announced as part of the Budget 2010 package. These increases effectively compensate low-income households on FIS for the necessary reduction in child benefit rates. I do not propose to use the forthcoming Social Welfare Bill to make any further significant changes to the qualifying criteria of FIS at this time.

My Department is currently carrying out a review of policy and value-for-money review in the area of child income support. The review, which is expected to be completed later in the year, will address some of the broader issues raised around the FIS payment so as to ensure that overall policy in this area remains effective and efficient.