News John Downing

Wednesday 27 August 2014

In backlash against austerity, targeting child benefit might be the least worst option

Published 09/06/2014 | 02:30

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Brendan Howlin spoke of debates on cuts to child benefit
Brendan Howlin spoke of debates on cuts to child benefit

IF THEY got a chance to do things again – they would be different. There's a long list – but the "children's allowance", as it was known to generations, rates pretty highly on it.

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Public Expenditure Minister Brendan Howlin said this quite frankly in a little-remembered interview with this newspaper late last year. Howlin is the one not contesting the Labour leadership and tipped to stay with his fellow moneybags, Michael Noonan, in charge of the national finances irrespective of who becomes the new party leader.

"We've had long debates about that, whether we should tax it, whether we should rebalance it, either you give a core payment and then a top-up payment to people below a threshold," he admitted at the time.

The Labour TD also said baldly that he favoured a tiered system giving more to poorer parents. "I suppose, in general terms, I would have preferred a system, personally, where there was a core payment and a greater payment for people of more limited means," he said.

But when push came to shove in Budget 2013, the Government had cut a tenner across-the-board from the payment we now call "child benefit", reducing it from €140 per month to €130.

Howlin is not old in the game of politics for nothing, and he said quite frankly that times were tough and even better-off people were factoring in the child benefit to their tight family budgets.

Even at that stage, the Public Finance Minister knew the party was facing a backlash from having to break the reckless pre-election promise not to cut child benefit.

He promised that there would be no further cuts in the lifetime of this Government – a promise likely to be kept given the woeful kicking given to both coalition parties little over a fortnight ago in the local elections.

The interesting finding in today's tranche of our Irish Independent/ Millward Brown opinion poll is that two out of three people believe that child benefit should be means-tested. We also know that the Social Protection Minister Joan Burton has been sitting on a report for some time that recommends a tiered system, which her senior government colleague, Brendan Howlin, alluded to.

In fact it is now widely accepted that the Social Protection Department has the know-how and the technology to means-test and implement what most people say they want about child benefit. But we are not likely to see it happen anytime this side of 2016.

There are, admittedly, two points in favour of the child benefit status quo. One is the fear that any changes might cost more in administration than what might be saved and become available for re-distribution as extra to poorer parents.

The other is that there is a social benefit in having one payment available to all sectors of society and signalling children as a priority is also good in itself.

But there is a growing view that a tiered system of child benefit can tick most, if not all, boxes. There is surely now merit in this Government setting things in train with action to follow after the next election.

For the rest, this opinion poll confirms what we know anecdotally about Irish people's growing weariness of austerity. After eight years of hardship, there can be no great surprise here. Most people do not believe it is necessary, or a good idea, to hack another €2bn out of the economy in 2015.

Again, given the May 23 local elections, we are less and less likely to see another serious hardship Budget next October – though by now hardship is a very relative phrase. Even the usually cautious Minister for Finance Michael Noonan said as much last week.

The Finance Minister said the EU target of getting the Budget deficit below 3pc was what counted – cutting €2bn might not be necessary. Of course, everything depends on how tentative or real the economic pick-up really is.

An interesting feature of the findings was what was aptly described as "a hawkish minority" still favouring austerity. Here again we see how easier things are for the senior coalition partner as 45pc of Fine Gael supporters say finish the job – but six out of 10 Labour backers say enough of your austerity. There can be little surprise that one in three in the well-heeled "AB" social classes believe that austerity is still required.

Another finding that is problematic is that the bulk of people say we should cut services rather than increase taxes in future. Human nature being what it is, those of us who agree would also add "but not the services we and those close to us use most often".

There is also a certain inevitability about yet another finding. More than half of us believe that the only way is up for the new property taxes into the future.

Here we may well be looking at an amendment to Benjamin Franklin's adage that "nothing is certain except death and taxes" by adding the words "especially rising property taxes".

John Downing

Irish Independent

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