2. Marco teórico
2.3. Marco conceptual
2.3.2. Ventajas de la perforación de pozos Slim Hole
Objective 1: Children and Families
Programme Overview
Objective: To contribute to the well-being of children, especially their economic security, through the provision of income and other supports.
High-level strategy: To provide well-designed income supports to households with children so as to ensure their economic security in line with the objectives of the National Children‟s Strategy. Such supports to include universal financial support to families with children as a contribution to the cost of raising children and further targeted support to those who are at risk of poverty in a way that minimises disincentives for parents to take up paid work.
Key Outcomes: To reduce the risk of child poverty for households with children and to support parents on low income to take up or remain in paid work.
High-level indicators: Extent to which financial support for families with children at risk of poverty reaches National Anti Poverty Strategy (NAPS) inclusion target.
1. Tables 6.1 to 6.3 outline expenditure on schemes in this programme in recent years and Table 6.4 gives details of consistent poverty rates for families with children, 2007-2009
Table 6.1: Level of Child Income Support, 2007 to 2010
Year Child Benefit (Weekly Equivalent)17 € Qualified Child Increase (Weekly) € Total Child Income Support (CIS) € CIS as a % of the lowest rate of social welfare payment 18 2007 36.82 22.00 58.82 30.6 2008 38.20 24.00 62.20 31.4 2009 38.20 26.00 64.20 31.4 2010 34.52 29.80 64.32 32.9
17 Based on the Lower Rate of Child Benefit.
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Table 6.2: Children and Families - Inputs 2010 and 2011 2010 Provisional Outturn € million 2011 REV Estimate € million % change in 2011 on 2010 outturn
Programme Expenditure – Current 3,187.6 3,058.7 -4.0
Programme Administration
- Pay 6.6 6.5 -1.7
- Non-pay 4.2 3.9 -6.7
Gross programme expenditure 3,198.3 3,069.1 -4.0
Number of staff employed on programme (whole time equivalents) as at end of year.
- Department 170.1
Table 6.3: Programme Expenditure by Scheme, 2010 and 2011
Scheme Spend 2010 €m Estimate 2011 €m Child Benefit 2,213.5 2,066.7
Qualified Child Increase : Working Age Schemes19
664.6 664.6 Qualified Child Increase : Retired and Older People
Schemes 4.3 4.3
Back to School Clothing and Footwear 77.4 82.8
School Meals Schemes 35.0 35.0
Widowed Parent Grant 6.9 6.0
Family Income Supplement 185.9 199.3
Guardian‟s Payment (Contributory and Non-
Contributory) 16.2 15.4
Total Scheme Expenditure 3,203.8 3,074.1
19 Recipients of certain social protection schemes qualify for an increase in their payment in respect of qualifying children. The qualifying child increase is included in the expenditure and estimate for the underlying scheme
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Table 6.4: Consistent Poverty Rates for Families with Children, 2007-2009
Year All Children 0-17 %
One Adult with Child % Two Adults 1-3 Children % Other households with children % 2007 7.4 20.1 2.6 6.0 2008 6.3 17.8 3.0 4.1 2009 8.7 16.6 5.4 6.3
Source: CSO: Survey on Income and Living Conditions (SILC) 2009
Overall Policy Context – Child Income Supports
2. The following sections of this chapter addresses the main financial supports to households with children both in the context of measures to address:
the overall need for reductions in current expenditure through programme savings,
and
the ongoing desirability of structural reform to improve the effectiveness and
efficiency of programmes.
3. Ideally any measures to be considered under the Comprehensive Review of Expenditure would simultaneously address both the savings and the structural reform agenda. However, as structural reform measures can take a number of years to design and implement (including putting in place supporting information systems and processes) a reliance on structural reform may not deliver the required savings at the required time. By facilitating a better balance between universal and selective spending, structural reform measures would be expected to improve the chances of protecting recent improvement in outcomes (notably child poverty outcomes) while delivering sustainable savings. Where possible short and medium term measures identified in this Review would be broadly consistent with such a rebalancing. However, particularly in relation to FIS, the implications of such measures on structural reform would be more complex (and this is addressed in the section on FIS).
4. The expenditure on the various programmes in a multi-annual and multi-payment context is detailed in various tables below. The wider policy context in recent years is then outlined and, in particular, the result of earlier reviews of this spending line. The chapter goes on to examine the context for spending control/reform measures; firstly in relation to broader strategic options for reform that might be implemented over the medium-term; secondly in relation to specific measures which would be considered in the context of a specific budget. Spending Context
5. At the core of social protection spending on income supports to families with children are two significant spending programmes (Child Benefit (CB) and Family Income Supplement (FIS)) and a comprehensive system of supplementary increases paid with the main adult payments (Qualified Child Increases (QCIs)). While these payment programmes can be considered separately, it makes sense to view them as a single spending area given their
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shared objectives of providing financial assistance to families with children in a way that minimises disincentives to parental employment.
6. Expenditure under Child Income Support programmes forms a significant proportion of Social Welfare expenditure and has risen considerably since the late 1990s. Figure 6.5 shows
the trend in combined annual spending on CB, QCIs, FIS, Early Childcare Supplement20 and
the Back to School Clothing and Footwear Allowance (BSCFA) over the period 1997 to 2010. In 1997, total annual spending amounted to just under €900 million and this rose to just over €3.1 billion in 2010. The Figure also shows that much of this increase occurred in the period after 2000 when large increases in CB spending, particularly in 2001 and 2002 drove up the total. There were further significant increases between 2006 and 2008 largely driven by the Early Childcare Supplement. FIS has also shown strong increases since 2006 although from a lower base.
Figure 6.5: Total spending on Child Income Support programmes and associated programmes
Previous Policy Reviews
7. Child Income Support policy has been the subject of a considerable number of reviews by various commissions, working groups and statutory bodies. In 2007, the National Economic and Social Council (NESC) secretariat produced a report arguing for a new approach to child
20 This payment was introduced in 2005 and was replaced in January 2010 by the Early Childhood Care and Education Scheme.
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income supports based on combining a universal payment for all with a second-tier supplement for lower income households. All of these reviews have accepted the continuing relevance of child income support expenditure in itself and most of the analysis and recommendations have tended to focus on the balance between universal and targeted instruments. These reports tended not to question the existence of payments to households with children but emphasised instead the need to reform the range of selective instruments as a second tier of payments to produce better child poverty outcomes. Most recently, the tax treatment of the Child Benefit payment was considered by the Commission on Taxation (2009) and a Policy and a Value for Money Review of CIS policies and associated programmes took place in 2009 and 2010.
Commission on Taxation 2009
8. The report of the Commission on Taxation (COT) classified the non-taxation of Child Benefit as a tax-expenditure, the benefits of which go disproportionately to higher-income households. This formed the basis of a recommendation by the Commission to tax Child Benefit but to introduce a child tax credit for families in the bottom half of the income distribution. The then Government considered the feasibility of taxing or means-testing Child Benefit and the issue was considered in some detail before Budget 2010. However, that Government did not implement either approach because of a range of legal and logistical reasons.
Policy/Value for Money Review (2010)
9. The review examined the objectives of CIS policy, considered if they remain valid, if programme spending and associated administrative costs are well configured to meet these objectives, and if alternative approaches would achieve better outcomes and impacts. The review identified that the objectives of child income support payments are:
To provide some assistance to all households with children, and
Supplementary assistance to low-income households in a manner that
minimises disincentives to parents taking up employment.
10. The review concluded that the CIS package overall was moderately efficient at targeting resources at the lower half of the income distribution and that CIS spending contributed to the reduction in child poverty over the period of review (1997 – 2010).
11. However, in view of the significant level of spending and the current fiscal circumstances, it is unlikely that better outcomes would be attained with more spending, and that while less spending of itself will not lead to better outcomes, these might be secured if it resulted in better child-related services or in a rebalancing between universal and selective spending. The review found that there is a need to rationalise the current system of CIS payments and selective programmes in particular in order to provide more consistent assistance to low income families and to encourage parental employment. This would lead to the replacement of the existing separate payments (CB, QCIs, FIS) with an integrated and unified payment per child combining both universal and selective components.
79 Current Government Commitments
12. The CIS Review was referenced in The National Recovery Plan, 2011 -2014, within the context of identifying key areas of structural reform for the social welfare system. The Plan states that structured reform measures could include „The development of a rebalanced and
integrated child income support payment system. This would provide for a universal component to replace Child Benefit with one single payment rate per child. This payment will be supplemented with a further payment in the case of children of families in receipt of a social welfare payment or in low income employment. These supplements will replace qualified child payments and family income supplement as appropriate.’
13. The recently agreed EU/ECB/IMF Programme of Financial Support for Ireland contains specific commitments in the context of structural reforms and to better target income support expenditure, as follows: “that the Department of Social Protection will build on their recent
studies on working age payments, child income support and Disability Allowance with a view to producing a comprehensive programme of reforms that can help better targeting social support to those on lower incomes, and ensure that work pays for welfare recipients, after consultations with stakeholders. To this end the Department will submit a progress report by end-December 2011.”
14. The Programme goes to state that by the end of Quarter 1, 2012, “The Department of Social
Protection will submit to Government the comprehensive programme of reforms that can help better targeting social support to those on lower incomes, and ensure that work pays for welfare recipients”.
15. The Minister for Social Protection recently announced the establishment of an Advisory Group on Tax and Social Welfare in line with a commitment in the Programme for Government. The group will address the issue of family and child income supports as a matter of urgency. It is envisaged that the Advisory Group would propose a work programme based where possible on producing modular reports on the priority areas identified earlier in line with a timetable agreed by the Minister for Social Protection in consultation with the Ministers for Finance and Public Expenditure and Reform. Where possible, the aim is to provide recommendations that can be acted upon in time for the annual budget/estimates and legislative cycle and to allow the Government to best address its
commitments under the EU/IMF Programme of Financial Support agreed on 28th April 2011.
In this connection, it is intended that the Advisory Group would prioritise the area of family and child income supports by completing its work in time for the 2012 Budget and in order for the Government to report under the terms of the EU/IMF programme by the end of December 2011. In early 2012, the Advisory Group will put forward a programme of rolling reviews in order to address the remaining priority items.
16. Therefore it should be concluded that while a range of strategic reform options have been identified (see below), the precise policy context in which spending measures can be identified remains to be determined by the Government.
80 Strategic Reform Options
17. The two broad approaches to identifying expenditure savings/structural reform considered here are:
a) income testing or taxation of the Child Benefit payment or
b) moving to an integrated child income support payment.
While both could have the effect of facilitating increased targeting of support to lower- income households, they vary considerably in their effects and practical implementation and these are now discussed.
Income Testing or Taxing Child Benefit
18. Income/means testing or taxing of Child Benefit have been identified as possible approaches to making this payment more selective and thereby limiting the cost to the State. Both approaches were considered in the context of the CIS Review and a summary of the merits and principal difficulties associated with these approaches are set out in Tables 6.6 and 6.7 below.
Table 6.6: Taxing Child Benefit
Merits Difficulties
1. Taxing Child Benefit would have a positive impact on the public finance as it would increase tax revenue.
2. Taxing Child Benefit would still provide a level of payment to all families with children.
3. The impact of taxing or means testing of Child Benefit could have a favourable distributional consequences for those on lower incomes, although this would be dependent on the assumption that the resources raised were ploughed back into targeted payments.
a) The difficulties around taxation of CB relate to the definition of and aggregation of income which would determine the appropriate tax treatment including the differences in the treatment of married and co- habiting couples in the tax system).. Another key issue is how tax would be collected i.e. through deduction of CB through claw back on other income (“coding-in”) or through deduction of tax from CB payment at source.
b) Taxing Child Benefit could also affect financial incentives but this would largely depend on whether reform in other areas of CIS were combined with taxation of CB without which marginal tax rates would be added to especially for second-earners. If the correct balance is not achieved there is potential to worsen employment disincentives.
c) Taxation of Child Benefit would only address one of the main child income support payments and have no benefit in terms of a better design of the overall child income support system.
81 Table 6.7: Income/means testing Child Benefit
Merits Difficulties
1. Means testing Child Benefit would still provide a level of payment to all families with children. However, this would depend on the design of the means test and the extent to
which specific elements
associated with the cost of child raising are factored into the means test.
2. Means testing Child Benefit would have the potential to improve the targeting available resources to those on low income and therefore most at risk of poverty.
a) There would be considerable uncertainties about the precise impact on the public finances with regard to income/means testing Child Benefit. The specific implications for the level of spending would depend on the various design features associated with how assessable income is defined, the threshold at which payments are reduced and the rate at which this takes place. Other important issues such as how to treat households with different numbers of children would need to be decided upon as would how to address the issue of changed income or household circumstances within the assessment period. Issues around the likelihood of establishing all relevant income and the collection of arrears and repayment of underpayments would also need to be taken into account.
b) Means testing Child Benefit could have „dynamic‟ effects insofar as persons may adjust their behaviour (such as hours worked) in order to minimise the reduction in their Child Benefit payment. There would therefore be the potential for very significant disincentive effects for income earners as it would add to marginal tax rates especially for second- earners in households.
c) If an income/means test was introduced for Child Benefit, it would have to be introduced as a new mechanism with very considerable administrative consequences, as the scale (circa 600,000 claims) would be significantly greater than anything required by the current system (around 200,000 tests annually). An exercise undertaken by DSP in 2009 estimated that it could take between 300-500 staff to administer a means tested CB payment system.
d) Using income data from the Revenue Commissioners as a basis for an income test would prove to be difficult as these data are gathered on a tax unit basis (or on a joint basis for most married couples) rather than household basis. As the Tax Code currently requires it to be submitted to Revenue after the end of the year in which it is earned (e.g. almost twelve months after the year end for the self-employed), further work would be needed to make it usable for the purpose of an income test.
e) There would be significant difficulties in collecting household income data and keeping these up to date.
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These issues would be compounded by the scale of Child Benefit payments and the fact that many payments are in respect of children living outside the state. In many cases One-Parent may also be living and/or earning income outside the state. This approach also raises issues around control procedures. f) Adding a further means-tested payment to the social
welfare code runs the risk of adding to the complexity of the system as a whole. The current social assistance system is often criticised as being overly complex and often results in people making poor decisions – adding another means-tested payment to this system would only serve to compound this situation, particularly for people who are in receipt of another means-tested payment.
g) For the client there is also a potential stigma associated with means tested payments.
h) Means testing of Child Benefit would only address one of the main child income support payments and have no benefit in terms of a better design of the overall child income support system.
An Integrated Child Income Support Payment
19. The Policy/VFM review of CIS payments identified an alternative approach based on an integrated and unified payment per child combining both universal and selective components, which would replace the existing separate CIS payments (CB, QCIs and FIS). Such an integrated approach would have the following features:
i. A reformed Child Benefit payment would provide the basic universal platform on which selective supports would be built;
ii. A successor to the current QCIs could be paid as automatic supplements to households in receipt of a social welfare payment;
iii. Full coverage of all other low-income families could then be provided through an income tested supplement to remaining low-income households (i.e. those not receiving a social welfare payment). This latter payment would replace the FIS payment; and
iv. The BSCFA could at some future stage be integrated into the selective element by paying an extra amount in August/September.
20. In this way, the various parts of the current system of child income supports would be brought together to ensure a better balance between its various components and ensure flexibility into the future for the balance between universal and selective supports; a balance that is not provided by the current system. This approach could be considered as a move in a similar direction as the second-tier child income support payment but reusing the existing