John McGuinness (Carlow-Kilkenny, Fianna Fail)
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22. To ask the Minister for Social Protection her plans for the future of child benefit; and if she will make a statement on the matter. [18958/13]

Joan Burton (Dublin West, Labour)
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Child benefit is a universal payment that assists parents with the cost of raising children and it contributes towards alleviating child poverty. The estimated expenditure on child benefit in 2013 is around €1.9 billion and it is currently paid to around 611,000 families in respect of some 1.16 million children. The social protection system also provides assistance to low income families with children through the payment of qualified child increases on primary social welfare payments and through the family income supplement payment. Both of these provide a level of assistance which is directly or indirectly linked with a household’s income situation. The social protection system also provides assistance to low income families with children through the payment of qualified child increases on primary social welfare payments and through the family income supplement payment. Both of these provide a level of assistance which is directly or indirectly linked with a household’s income situation.

Achieving a better design of the overall system of child income supports, including child benefit, raises complex issues about the effectiveness and the efficiency of the full range of income supports currently provided to families and their children. In this context and in line with a commitment in the Programme for Government I established an Advisory Group on Tax and Social Welfare, which has been tasked with recommending cost-effective solutions as to how employment disincentives can be improved and better poverty outcomes can be achieved, particularly child poverty outcomes. The Advisory Group prioritised the area of family and child income supports and its report on this issue was published in February.

This report makes important recommendations on how child benefit could be maintained as a universal payment while reforming the current system of child and family income supports so as to better target those who need these supports most. The Group concluded that there is no one perfect method of targeting child and family income supports. While some members of the Advisory Group found that taxation of child benefit is an attractive reform option, it was recognised that this approach, being limited to only one child and family income support payment, does not contribute to a better overall design of the child and family income support system. For this and other reasons, there was a strong preference in the Group for another approach based on a two-tier child and family income support payment. The Group considered that this approach would allow for a rationalisation of the overall child income support system while minimising work disincentives and allow for better flexibility in the targeting of support for different household types.

Given the range of complex issues involved, including fiscal, operational and legal considerations, as well as the implications for reforms in terms of child poverty and employment incentive outcomes, the Government has made no decision at this time on the core recommendations of the report. It is the Government’s intention that the report will now contribute to the policy debate on the matter. In considering the proposals to reform the structure of child and family income support payments, including the balance between income supports and services, such as childcare, I expect that Government will also take into account further work by the Advisory Group on the issue of social protection and taxation supports for working age persons and more general developments in the budgetary and fiscal situation.