Richard Bruton
Question:6 Mr. R. Bruton asked the Minister for Finance if he has satisfied himself that young parents who require child care obtain sufficient financial support from the State with this cost. [30147/03]
Ceisteanna – Questions. Priority Questions. - Child Support.
Over the past number of years, the Government has considered carefully the whole area of child care. The core objective of Government policy in the area of child support is to provide assistance which will offer real choice to parents and which will benefit all children. In that context, it has been decided that, as a matter of policy, child benefit will be the main fiscal instrument through which support will be provided to parents with dependent children. Child benefit provides assistance to all parents in whatever caring choices are most appropriate for them and their children. In addition, unlike tax relief, it provides support to parents irrespective of their income status.
In line with this policy approach, the Government commenced a major initiative to substantially increase the rates of child benefit. In 2001, the rate for the first and second child was increased by almost €32 per month and by €38 per month for the third and subsequent children. This represented an increase of over 50% on the rates prevailing in 2000. Similar monetary increases were provided in 2002. Further increases were implemented in 2003 and in my recent budget I announced additional increases of €6 and €8 per month, respectively, in 2004, which are approximately double the projected inflation rate for next year. All this means that, since 1997, the child benefit rates have increased by over 230%, compared to a projected increase in inflation of only 28% over the period 1997 to 2004.
My colleague, the Minister for Justice, Equality and Law Reform, has overall responsibility for the formulation of national policy on child care The supply of formal child care places is being supported through a programme of investment under the national development plan equal opportunities child care programme, with funding of almost €437 million being provided. The purpose of this capital and staffing support funding is to provide almost 27,000 new child care places and to support existing places. I am satisfied the Government is providing substantial support to parents to assist them in meeting child care costs and also acting to increase the overall supply of child care places.
Is the Minister living in a very different area from the one in which I live? I know of parents who go out to work on the basis of an income of approximately €500 per week. Having paid for their child care, their tax and their share of the mortgage, they are left with approximately €70. That provides no incentive. I know it is the Minister's wish that people should have the choice of going out to work. However, if one is paying €200 per week for child care, which is the current rate, one would need a pre-tax income of €19,000 to afford that.
Against that level of costs, the Minister has said he will give a child benefit of €30 and mortgage relief, which is currently only €10 per week. Does he regard that as a realistic level of support to families who are going through their very difficult formative years? Will he accept that we need to offer more financial support to those families and to develop a proper child care infrastructure suited to a modern economy which is now one of the richest in Europe? Does he agree that we are failing either to make it affordable or to develop the necessary supply network?
Prior to the budget of 2001, all those matters were considered at length by the Government over the preceding three years. In particular, that included tax incentives, allowances and benefits in a wide variety of areas. The debate went hither and thither and the Government ultimately decided to follow the universal child benefit approach, while also increasing child care places. After considerable debate over the years preceding that decision and having considered all relevant factors, the Government took the view that the route I have just outlined was the most equitable one. That is the reason we announced the considerable increases in child benefit payments at that stage.
As I pointed out to the Deputy, child benefit will have increased by over 230% from 1997 to 2004, as against a cumulative inflation rate of approximately 27%. That is a fairly dramatic increase for that period. At the same time, in the equal opportunities area of the last development programme, we decided to make money available to increase child care places. Other changes in the tax code have also helped. The matter was fully considered by the Government and it decided to go down the universal child benefit route.
Will the Minister shed some light on those recent figures because under freedom of information legislation, we will not now be able to see the debate that took place on the matter? Will the Minister agree with me that all the research in this area has shown that the zero to five years old age bracket is the most difficult for a family? In that period costs are at their highest, children are least able to provide for themselves, there is no primary school support, no capitation and no structured support from the State in the area of child care. Will the Minister set out why children in those early years, and their families who are paying expensive mortgages, are not justified in getting additional support?
There was a considerable debate that ranged over wide areas in the three years leading up to that decision. The Deputy will recall there was also a debate on the tax proposal in a particular budget that brought into play the issue of people who make the lifestyle choice not to get paid employment and stay at home. It was decided that the best route was universal child benefit. Universal child benefit with increases is more expensive than the alternatives. It was more expensive than the taxation route because that would have only benefited those in paid employment. Instead, the Government chose the most expensive route. There was a system of universal child benefit and for the reasons outlined at that time, it was chosen.
That is not something to boast about.