Lifting 40,000 children out of poverty 'would cost as much as cutting hospitality Vat rate to 9%'
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Reducing the number of children in poverty is a “question of political priorities”, an Oireachtas committee has heard, as proposals to lift 40,000 children out of poverty would cost the same as reducing the Vat rate for the hospitality sector to 9%.
Trinity College Dublin’s Dr Barra Roantree addressed the Social Protection Committee on a report he recently co-authored with ESRI researchers on poverty, income inequality and income standards in Ireland.
That report found around 250,000 children under the age of five in Ireland and their parents are living below the poverty line when housing costs are taken into account, as inflation has eroded real incomes in recent years.
Dr Roantree told the committee: “Welfare payments have not kept pace with inflation. If we look at them today, and by the end of this year, we’d see they’re currently between 6-8% lower than their 2020 levels in real terms.
“And that poses a very real challenge to the Government in the upcoming Budget, given the limited resources that is allocated to tax and welfare measures in the Summer Economic Statements.”
The researcher said that the increases in welfare rates are unlikely to offset the eventual withdrawal of one-off payments that have characterised recent budget announcements, such as electricity credits.
Dr Roantree said that, for children in poverty, a means-tested second-tier of child benefit payment could take over 40,000 children out of poverty, or one quarter of the current number living in poverty.
“But reducing child poverty will require spending money,” he said. “Our proposal which is much more effective than other approaches would still cost just under €700m.
“Given the substantial body of evidence which shows the negative causal impacts that child poverty has on child and later life outcomes, there’s a very strong argument that it would be money well spent.”
When pressed by TDs such as Fianna Fáil’s Éamon Ó Cuív and Sinn Féin’s Donnchadh Ó Laoghaire on how such a system would work, Dr Roantree said our current welfare system “looks like the British one 30 years ago”, and is in dire need of reform.
While Taoiseach Simon Harris has ruled out a second, means-tested rate of child benefit in next week’s Budget, he has said he is open to the idea in the future.