PARENTS should be paid child benefit in the form of a smart card that can be used to buy local goods and services, as a way of stimulating consumer spending, employers' group IBEC has said.
And for families that want to continue receiving it in cash, the benefit should be cut by a quarter, IBEC has recommended in its pre-Budget submission to the Department of Finance.
The groups said a high proportion of the €2.2bn paid in child benefit is probably put into savings accounts by middle and upper income households.
"EU nationals working in Ireland are eligible to claim benefits for children living elsewhere in the EU, and this money is largely repatriated," the submission says.
The card would not work outside the State. "The technology is readily available to do this, and shops would probably offer users a discount on purchases," said IBEC director-general Danny McCoy.
"There is no doubt that further cuts to child benefit are being considered for the December Budget. We think it would be better for the Exchequer if the payment was maintained for lower-income households, who will spend it, with an incentive for others to take the cards and not save the money."
IBEC is also seeking incentives for people to buy houses, and more mortgage credit to help them do it. Any purchase before the end of next year should be exempt from property tax for six years, it proposed.
The current 1pc stamp duty should be increased to 2pc in 2013 and 3pc in 2014, to encourage people to buy now. "We are seeing about 10,000 transactions this year, where a 'normal' figures should be more like 40,000," said IBEC chief economist Fergal O'Brien.
IBEC believes there is demand for housing among younger age groups, but they are worried about further price falls and are having difficulty getting mortgages.
"The real financial stress is among the 35-50 age group," Mr McCoy said.
"Even with them, there is scope for growth and job creation from home improvements. We would like to see a tax credit of 20pc, similar to a scheme in Canada, for improvements carried out by approved contractors."
The group also believes there is no need to make December's Budget tougher than the €3.6bn adjustment already planned.
Finance Minister Michael Noonan has hinted that something closer to €4bn may be needed to achieve the target of a deficit equal to 8.6pc of 2012's GDP. "We think that is too pessimistic," said Mr McCoy, a former ESRI economist.
"The Government should concentrate on improving confidence. Making the Budget more severe will damage confidence and is probably not worth it for the sake of €400m. As the saying goes, they should concentrate on helping Main Street rather than Wall Street."