Planned Cuts to Child Benefit Introduction to Marketing Katie Anne McCarthy 22 nd October 2012

Child Benefit The child benefit payment is a universal payment to all families with children regardless of financial circumstances. It has increased sharply in a very short time. Between 2000 and 2009 child benefit rose far more rapidly than economic growth, somewhere in the region of 15%. This has made it the main focus for the Government, which must cut spending by €2.25 billion in the latest budget in order to lower the deficit, and meet the terms of the bailout agreement. With the upcoming budget in December Social Protection Minister Joan Burton has been told that she need to bring her departments spending down €540 million. Currently child benefit payments are paid to 600,000 households costing the state €2 billion a year. The current child benefit payments are: €140 for each of the first two kids. €148 for the third child. €160 for each of the subsequent children.

Child Benefit The proposal The plan is to cut the payments by €40 a month. This would save the government over €200million a year. This proposal was made by an advisory group on tax and social welfare set up by Minister Burton back in June In Burtons own words the purpose of this group was: “to harness expert opinion and experience in order to address a number of specific issues and make cost-effective proposals for improving employment incentives and achieving better poverty outcomes, particularly child poverty outcomes” Burton has suggested means testing every family as a fair alternative. This would require examination of an applicant’s sources of income in order to establish whether they are eligible or not. However the administration cost might well exceed any savings made by the government. “

Other Options Tax Higher Earners Also under a means-tested system, those families most in need of child benefit may fail to get it if they fail to apply on time. A recent online opinion poll conducted by the Irish Times shows that ¾ of the voters would support means testing. However the government has said that it is too expensive to implement. A lot of people have raised the issue asking is it fair that very high income earners are getting the same as people on lower incomes/social welfare payments?? TD Kevin Humphreys has argued that wealthy families did not need as much financial aid as poorer families living off a limited income. Minister Burton has said that they will offer “top ups” to families on lower incomes.

Child Benefit Director of the Anti – Poverty group Social Justice Ireland Sean Healy has come out saying reductions in the payments would be unjust, unfair and unnecessary especially for people especially the middle class families who are receiving little or no help from the government and are struggling to get by. Many people have argued over this saying that the payments have become an essential part of the household budget for many families.