The Cost of a Cut in Child Benefit

The ‘family’ is at the heart of the Irish constitution but the child is not: this was the message from those present at the ‘1 Million Reasons to Oppose Cuts to Child Benefit in Budget 2010’ conference held in Dublin today.

Today, a coalition of organisations came together in Dublin to appeal to Government not to cut, or make any changes to, child benefit in the budget.  Present at the conference were representatives from Open and One Family, both lone parent groups, the Children’s Rights Alliance, the National Women’s Council of Ireland and PACUB (Protest Against Child Unfriendly Budget), an organisation set up earlier this year by concerned parents and citizens.

Representatives at the conference stressed the implications for the economy of a cut in child benefit. There is considerable evidence to prove that early investments in children yield a return that far exceeds the return on most public policies which are considered economic development. Treasa Dovander of PACUB children today argued that “for speculators looking for a good investment we have on tap in Ireland a huge natural resource, our children, studies show that an investment of €1in a child shows a guaranteed return of €8 when that child becomes an adult”. Maria Corbett of the Children’s Rights Alliance also used clear economic logic to appeal to Government. She explained that, in economic terms, children constitute a ‘merit good’ meaning that children have value to others, beyond their family, both as future taxpayers and workers. Therefore child benefit payment reflects a “lifecycle approach”, individuals without children pay into a universal ‘pot’, for a time when they may have children and will receive the payment, or for the time when children, who have become adults, will help pay their pensions.

The panel said that they did not support the withdrawal of child benefit for ‘high-earners’, arguing that the payment is reflective of societal values and based on the principle of horizontal equity whereby income is distributed from those without children to those with children.   Taxing or means-testing Child Benefit would also incur large administrative costs as it would require the policing of family and tax status of those in receipt of the payment.  Therefore such a scheme would likely generate more costs than savings.

The panel warned that any cut in child benefit, or the introduction Minister Minister for Social and Family Affairs, Mary Hanafin’s,  ‘three tiered’ scheme would send many struggling families spiralling into poverty and have the biggest impact on the poorest in society, a rapidly growing demographic.  The group claim that not enough is known about the tiered system and any such system would prove divisive.  Francis Byrne of ‘Open’ said it would separate “deserving mothers” from “undeserving mothers”.  Maria Corbett argued that the three-tiered system is flawed and “they (the government) know it is flawed.”

The group also expressed particular concern for the situation of lone parent families.  Currently, at least one in five lone parent families live in consistent poverty, with a further 36.4 per cent at risk of poverty.  Candy Murphy of ‘One Family’ argued that a cut in child benefit would severely reduce the ability of lone parents to move out of poverty, as it would make it more difficult to access education and less financially viable to work.

The coalition also drew attention to the already low standard of services the government affords children in Ireland.  In September of this year the OECD released it’s first-ever report on child well-being in its 30 member countries.  Ireland fared relatively badly.  The Irish Government invests €81,000 on children up to the age of 18, €7,000 less then the OECD average.  The material well-being of Irish children, this includes factors such as family disposable income, poverty rates and availability of textbooks, computers etc. ranks 17th out of the 30 OECD member states.  Ireland rated 25th, close to bottom in relation to health and safety.

Similarly, in a 2008 UNICEF report ranking 25 countries against 10 benchmarks related to early childhood services, Ireland came joint last.  Ireland was found to meet only one benchmark, that being that half of all staff in accredited early-education services have proper post-secondary qualifications.

The coalition received firm support from Fine Gael TD George Lee and Senator Francis Fitzgerald and from Labour’s Joanna Tuffy.  There did not appear to be a Fianna Fáil representative at the conference.  Maria Corbett of the Children’s Rights Alliance concluded that the Governments actions on budget day will prove how much the state really values children and childhood.

• Barnardos’ Estimated Cost of Raising a Child in Ireland in 2009:

The two measurements used in assessing the cost of raising a child are the Basic Minimum Standard necessary and the Modest but Adequate Standard. Both show that the largest cost for families with children is food, followed by clothes and personal care. In the Modest but Adequate Standard the diet for children is significantly improved through variety and the standard allows for outings, holidays in Ireland, pocket money, baby-sitting and pre-school. Pre-school costs have increased significantly since 1992 and are now among the highest in Europe at 45% of the average wage.

Basic minimum standard 1992 2009:

* Age 0-6 €26.28 €39.70

* Age 7-12 €36.18 €54.65

* Age 13-18 €47.48 €71.72

Modest but adequate 1992 2009:

* Age 0-6 €34.79 €52.55

* Age 7-12 €46.60 €70.40

* Age 13-18 €61.32 €92.63

• Child Benefit

- From 1990s, Child Benefit was government instrument of choice in reducing child poverty;

- Child Benefit levels moved substantially ahead of the Child Dependent Allowance (now the Qualified Child Increase) which was frozen from 1996 to 2006 (at €16.80 weekly) and only began to modestly increase in the last few years;

- Child Benefit rose from €4.63 weekly to €38.31 weekly (€166 monthly), significantly closing the gap of costs;

- For a child 0-6, Basic Minimum Standard:

Cost of a child Child Benefit

* 1992 €26.28 €4.63

* 2009 €39.70 €38.31