Doherty urged to cut child benefit for high earners to fund more childcare
Social Protection Minister Regina Doherty has indicated she’s prepared to examine cutting child benefit for higher earners to pay for childcare for all.
The minister will get her officials to look at households earning more than €100,000 that are also getting child benefit.
Ms Doherty was responding to proposals she shift part of the €2bn children’s allowance away from higher earners, by means-testing, to help fund childcare services.
The move will revive memories of a 2012 push by the Troika to means-test children’s allowance that was eventually parked as the bailout ended.
Ms Doherty was speaking on a panel last Friday on social affairs.
Employers group Ibec and trade union Siptu both spoke in favour of changing the child benefit system.
Tony Donohoe, the head of education and social policy at Ibec, called on the minister to means-test children’s allowance and transfer the saving to childcare services.
“Childcare is talked about a lot, but is very expensive and has to be paid for – €330m [of children’s allowance] goes to households where the income is over €100,000 a year,” he said.
In response, Ms Doherty said she intended to examine the payments to higher earners, and indicated she was prepared to look at the options for shifting part of the universal child benefit to fund childcare instead.
“I have just made a note – to look at the counties where households earn over €100,000 and are paid the children’s allowance,” she said.
“We need to invest heavily in childcare, and [if] we can’t have a good quality childcare and a universal payment system [child benefit], we need to weigh that,” the minister said.
In the past, politicians had gone “halfway down that road”, she noted.
They were speaking at an event organised by the Institute of International and European Affairs (IIEA) and the European Commission Representation in Ireland. The event was hosted by Dan O’Brien, Irish Independent columnist and chief economist at the IIEA.
Trade unions have traditionally opposed any shift from a universal system of child benefit. However, Siptu chief economist Marie Sherlock, also on the panel, said the system needed to be looked at.
Raising child benefit had been used in the past instead of reforming the system, she said.
That was a “lazy way out” to increase the cash in people’s pockets, she said.
There was scope within the system to shift some funds away from the direct transfers, she said, but added that the Advisory Group on Tax and Social Affairs – which produced the Mangan Report – recommended that a minimum universal benefit be maintained when it reported to then-minister Joan Burton in 2012.
The Government is under pressure to fund better childcare provision on a number of fronts.
Ireland’s poor delivery of affordable childcare was singled out by both the IMF and the European Commission in their latest reports on the economy here – with both noting that lack of provision means fewer women in the workforce with implications for gender equality and skills shortages.
On the same panel, Joost Korte, the most senior European Commission official responsible for Social Affairs, warned access to affordable, full-time quality childcare in Ireland was unacceptably poor.
Ireland was the most expensive country in the EU for lone parents and second highest for couples when it comes to childcare, Mr Korte said.
“Of course, that has a negative impact on women’s employment.”
Ireland’s model of supporting those with children through a direct cash payment was “very unusual” in Europe, he said.
Across the EU, countries offer cash supports, direct provision of childcare, voucher systems and mixes of all three, he said.
While he didn’t identify a preference, he said Ireland’s model was not working.
“The current system is not the right one,” he said.
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