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Child Support

Dáil Éireann Debate, Tuesday - 18 June 2013

Tuesday, 18 June 2013

Questions (193, 199, 200, 205, 206)

Martin Ferris

Question:

193. Deputy Martin Ferris asked the Minister for Social Protection her views on the impact on families receiving family income supplement if the proposals contained in the report of the advisory group on tax and welfare on reforming child income supports were to be implemented. [28643/13]

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Aengus Ó Snodaigh

Question:

199. Deputy Aengus Ó Snodaigh asked the Minister for Social Protection if her attention has been drawn to the End Child Poverty Coalition's response to the proposed reform of child income supports as set out in the report of the advisory group on tax and welfare; and if she will make a statement on the matter. [28677/13]

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Aengus Ó Snodaigh

Question:

200. Deputy Aengus Ó Snodaigh asked the Minister for Social Protection if she will outline the impact of the implementation of the report of the advisory group on tax and social welfare on child and family income supports using the illustrative scenario contained in the report on each of the following family types: single earner, couple with three children, earning €100,000 per annum and receiving child benefit; single earner couple with three children, receiving family income supplement and child benefit earning €26,000 per annum; and one parent family with one child, working part-time and earning €20,000, receiving the one parent family payment, child benefit and family income supplement. [28678/13]

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Pearse Doherty

Question:

205. Deputy Pearse Doherty asked the Minister for Social Protection her response to the claim by the End Child Poverty Coalition that the implementation of the reform of child income supports as proposed by the advisory group on tax and welfare will result in a low paid married couple with two young children losing more than five and a half times more of their income than a high earning family of the same size. [28735/13]

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Pearse Doherty

Question:

206. Deputy Pearse Doherty asked the Minister for Social Protection if she will outline the alternative scenarios she has asked the advisory group on tax and welfare to look at with regard to reforming child and family income supports. [28736/13]

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Written answers

I propose to take Questions Nos. 193, 199, 200, 205 and 206 together.

In line with commitments contained in the programme for Government, I established an Advisory Group on Tax and Social Welfare in June 2011, with the aim of harnessing expert opinion and experience to examine a number of specific issues. These include making cost-effective proposals for improving employment incentives and achieving better poverty outcomes, particularly child poverty outcomes.

The group commenced its work programme by prioritising the area of family and child income supports and its report on this first module of work was published in February. The report makes important recommendations as to how child benefit could be maintained as a universal payment while reforming the current system of child and family income supports through a two-tier payment so as to better target those who need these supports most while minimising work disincentives. In its report the Advisory Group looked in detail at issues around the design and financial implications of a number of specific packages for the two-tier payment proposal, in terms of payment rates and withdrawal thresholds and tapers. Under this two-tier payment approach, the Advisory Group suggests rebalancing and integrating child and family income support payments as follows:

A universal first-tier payment in respect of all children, which would replace the current child benefit payment.

A child income support supplement or second-tier payment for low-income families, which would replace the current qualified child increases components on all Social Protection weekly payments as well as the family income supplement (FIS). This second-tier payment would be proportionately reduced as income increases and would be withdrawn for families on a higher income.

The Group used a specific package (Package A) in a way that would illustrate the practical effects and operation of the payment. This package consisted of a rate of €25 per week for the first tier payment and €38 per week for the second tier payment. A threshold of €480 per week or €25,000 a year was set above which the second tier payment would be withdrawn at a rate of 20% as income increased.

The Group emphasised that it was not recommending a particular package for the two-tier payment as this is ultimately a matter for Government should such an approach be decided upon. In effect, I note that the Group’s report uses this illustrative package and other packages to explore the ways in which such a reform would operate and the effect on different household types. It was acknowledged in the report that under the proposals, certain households, including some low-income households currently in receipt of FIS, could lose out financially if the illustrative package was implemented in that way. This is because FIS has a dual role not only as a child income support but also as an in-work support for parents on low incomes. Given this dual nature of the payment, the Advisory Group undertook to give further consideration to this issue in the context of its examination of working age supports, an issue which the Group is currently progressing. It is also important to note that not all families would lose out as some low income families who are currently not entitled to FIS, due to the hours worked condition or the employee condition, would stand to gain. For this reason, I have no specific comments on the effect of the illustrative package on the family types mentioned in the questions but prefer to consider this issue when the final report of the Group is submitted to me and when the consultation process is complete.

The design of the proposed payment means that any number of variations of illustrative packages is possible. In order to ensure proper consideration of this approach and through my Department’s participation on the Advisory Group, I ensured that the effects of alternative scenarios would be considered and their impact is summarised in Appendix 8 of the Advisory Group’s report. Subsequent to the publication of the report, I also asked my Department to undertake further analysis particularly around using an income threshold of €35,000 a year (close to annual equivalent of weekly average wage) and €41,800 a year (income point at which the marginal tax rate is applied for a married/civil partnership couple).

In relation to the scenarios identified in question 28678/13, I attach a tabular statement summarising the results.

Consultation with stakeholders is an important source of views for the Advisory Group in fulfilling its mandate. It also provides interested parties with an opportunity to make submissions on this topic. The response of the End Child Poverty Coalition to the Advisory Group’s report on child and family income supports has been submitted to my Department. I also recently met with representatives of the Coalition to discuss their submission and listened to their views with interest as with part of the overall consultation process. Given a range of complex issues involved with this proposal, 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 broader policy debate on this important issue for families and their children.

Table: Alternative scenarios requested in Parliamentary Question 28678/13

Description of household

Child and family income support from existing payment structure

Child and family income support from proposed two-tier child and family income support payment

Potential loss from illustration of Package A

Couple, single earner earning €100,000 a year with 3 children and in receipt of child benefit

€5,040

€3,900

€1,140

Couple, single earner earning €26,000 a year with 3 children and in receipt of child benefit and FIS

€12,528

€9,628

€2,900

Lone parent with one child earning €20,000 a year and receiving the one parent family payment, including QCI, child benefit and FIS

€4,634

€3,276

€1,358

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