Tuesday 11 December 2018

Squeezed middle, not the millionaires, would suffer in child benefit shake-up

(Stock photo)
(Stock photo)

Anne-Marie Walsh

Ryanair boss Michael O'Leary once revealed that himself and his wife Anita get a children's allowance of €530 a month.

Even he thought it was absurd for the State to be borrowing to provide for the rich, with what he called a subsidy to have sex.

A national poll previously showed most people support means-testing the payment, possibly to get multi-millionaires off the social welfare budget.

But the Government has clung to the policy of ensuring that even the rich and famous have something to show for their PRSI.

So it was surprising that Social Protection Minister Regina Doherty suggested she would look at cutting the child benefit payment for higher earners and put the savings into childcare.

What was even more unexpected was the fact that she appeared to be willing to look at it above an income threshold of €100,000.

Apparently the figure was mentioned by someone from Ibec to emphasise that €330m of the allowance goes to households with incomes above this level - not necessarily as the point to start cutting off the payment.

Ibec economist Fergal O'Brien said it was advocating the potential means-testing of the benefit and other options to improve childcare.

The problem is that as a minister, you can't really be saying that you're going to look at means-testing child benefit unless you actually intend to means-test child benefit. It's not something that's going to be taken casually by the 600,000-plus families who get it.

A combined income of €100,000 may have seemed like a lot not so long ago, but you don't get a lot of bang for your buck these days. You'd be lucky to cover a mortgage on a semi-D on the outskirts of Dublin plus childcare for three kids. You might buy the odd bag of gourmet crisps in Marks & Spencer, but chances are you may be doing your weekly shop in Aldi or Lidl. Child benefit might be paying the electricity bill rather than going into a college savings fund.

Although average earnings at €38,727 a year are below the €50,000 mark, you'd need to be close to the €100,000 income bracket to afford a home anywhere near Dublin under Central Bank rules.

Official figures suggest there are well over 150,000 households with incomes above €100,000.

The clichéd Coppers couple - the nurse and the guard - would breach a €100,000 threshold. The Garda pay scale starts around €30,000 but rises to just over €51,000 after 20 years.

A staff nurse's wages rise from around €28,000 to over €45,200 in increments, while clinical and public health nurses are closer to €60,000 a year at the top end of the scale. And that's just basic pay.

In the wake of Ms Doherty's remarks, one online survey suggested a possible shift in attitude, with most people saying they are not in favour of means-testing child benefit.

The Government spin machine was quickly on the case to distance itself from any association with such a disastrous policy for the people who get up early in the morning. Its emphasis on the squeezed middle was clear.

Means-testing child benefit would "very much go against the grain", it said.

"The average salary for somebody working full time in Ireland is now €44,000," said the Government statement.

"So a middle-income couple where both are working could easily have a combined salary of €100,000. This doesn't make them rich. They have high costs like rent, mortgage, childcare and all the cost associated with raising a family. Making life that little bit easier for families is what this Government is all about."

Irish Independent

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