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The Proposed 2nd Free Pre-School Year and cuts to Child Benefit. What's Up?

category national | miscellaneous | opinion/analysis author Thursday May 16, 2013 20:04author by T Report this post to the editors

Are parents going to come out better or worse?

In the last week or so it was announced by the government that they were seriously considering extending the current free Pre-School year to a second free pre-school year. The government has been giving it a positive spin but also on the table as part of the deal is the suggestion that child benefit would be reduced by €20 per month. A lot of figures have been bandied about but the real question is: are the government trying to pull a fast one yet again and how do the numbers stack up? We attempt to look at the figures here.

In Ireland much of the protection or provision for children known as Child Income Supports (CIS) is provided to families for raising children comes in the form of cash payments which is the child benefit paid every month for each child to the parents regardless of their income. There are also some additional payments for people on low wage or who are unemployed in the form of additional social welfare payments known as Qualified Child Increases (QCI) (for things like Back to School Clothing and Footwear Allowance which was cut in the last budget) and Family Income Supplement (FIS). But that's mainly it. Clearly those on higher incomes do not receive QCI and FIS payments, but for those at the lower end of the income bracket this rapidly increases. Overall though about 50% of support is in the form of child benefit and the rest provided through QCI and FIS, which means there are a lot of children in low income families. In fact in 2010 25% of Irish child lived in jobless households. The Survey on Income and Living Conditions shows that from 2009 to 2011 consistent child poverty increased from 8.7% to 9.3%, and child deprivation rates rose to 32% from 25%. And for lone parents with children, deprivation levels reach an unbelievable level of 56%. The result is that over 100,000 children now experience consistent poverty in Ireland. At during the same period the top 10% got richer.

So to remind ourselves the purpose of state support for children is to help families with the cost of raising children and ensuring that poverty is reduced as much as possible. Endless studies have shown that the earliest years in a child's life are critical in every aspect in relation to their future development whether this be getting access to healthy nutritious food (not really on the agenda with the government), exercise, mental stimulation, access to health services and of course education, although it must be emphasized quality education rather than drudge. Thus the government proposal to introduce the 2nd free pre-school year would seem it is all in the right direction since not everyone can afford to send their children to pre-school whilst others can and the small gains made in these early years have lasting impact and are greatly amplified in the years ahead. Hence it explains why the children of wealthy parents tend to consistently do well because their parents have the financial and other resources at their disposal.

However, how do we know that the government is not giving with one hand but taking more with the other? It is inconceivable in the economic crisis that we are in where with the EU & IMF dictating every aspect of government expenditure with the overall trend being cuts, more cuts and then more cuts, that the government could be actually planning to spend more on children. It just doesn't happen that way. Lets go back a little in history to 2006 during the boom years. In that year the government introduced the Early Child Supplement which was an extra €250 per quarter (or €1,000 per year) for each child under the age of six. Now some people might think this was excess but regardless once the bust happened and it was time to bailout the wealthy, this scheme was abandoned and it was replaced with the free pre-school year in 2010 which they are now talking about extending. Many parents thought it was a fair deal due to government PR & spin and had not realized the government was replacing 6 x €1,000 payments with just the equivalent approximately &euro2,375 because this is what it is costing the government (per child) as they are paying pre-schools €62.50 for 38 weeks per year for each child although admittedly the payment was slightly higher and since been reduced to €62.50. So are they pulling the same trick? On past record and given their squeeze and relentless pressure to cut then it has to be the case. So lets see.

Earlier this year the government published the "Advisory Group on Tax and Social Welfare Report on Child and Family Income Support" otherwise known as the Mangan Report and there were numerous proposals in it. It's remit was to reform the child welfare / payments system but in the current climate this only amounts to one thing and that is cuts and then more cuts. There is no way the total expenditure will stay the same even if they rebalance it and reduce the child benefit cash payments in lieu of additional services although the spin is more or less that. One of the suggestions or rather new polices the report proposes is to tax child benefit and they expect to net around €300 million. They are also suggesting a two-tiered payment system whereby less would be paid out to the top earners and more focus on the bottom earners. The general idea is that the payments are more targeted. A PDF copy of the report is available below for those who wish to do their own citizen investigation in the spirit of acting as an informed citizen.

But first some figures. Child Benefit is paid out for about 1,148,000 children and with the payment at €130 per month, this comes to 130x12x1,148,000 or approximately 1,790 million or €1.8 billion with administration costs putting this a bit higher. According to the Mangan report, the total expenditure is just over €3 billion down almost €600 million since 2008. It should be noted that the monthly child benefit has been reduced since 2009 from €166 per month to the present €130 resulting in a loss of €432 per child. Whilst the top earners probably haven't noticed, for families in the lower end of the income bracket this is a significant reduction and adds up when you consider many households will have 2 or 3 children. This reduction in child benefit of €432 per child per year multiplied by the total (1,148,000) comes to €495 million indicating the bulk of the €600 million has come from there.

The introduction of the second free pre-school year would be available to at least 65,000 children but the government own figures suggest up to 130,000 would avail of it. But just using the 65k figure and the current cost of the free year (€62.5 x 38 weeks) €2,375 gives €154 million which means at 130k the cost would be double at 300+ million and it tallies with their own internal estimates which hover around the €200+million mark. So have the government gone soft or something? No. They are suggesting a reduction of €20 per month to pay for it. The figures then are: (20 x 12 months) x1,148,000 = €275 million which should more than cover the cost of the 2nd year and result in a significant cut of the overall expenditure for the government. However, Labour because they fear a wipeout at the next election, are saying no reduction -a promise the ECB/IMF will not allow. Anyhow where's the catch? The catch is that the government will be under pressure to make more reductions in the overall child income support costs and that means they will likely introduce taxation on child benefit and or bring in a bigger reduction than €20

If they tax child benefit then the top incomes will be hit harder and on face value that looks good. The downside is where will the actual cut-offs be? You can be sure they will make such mileage out of how they are hitting the top earners that the low mark will be set very low and huge swathes of the middle and slightly below middle income earners will be hit particularly hard. But all this is not in a vacuum. We have all been hit by the hated property tax currently set at 0.18% but this is set to rise to 0.21% and water charges are to be introduced which should come to around €600 per year. Another benefit for the government once it brings in the two tier system is that it splits the population. The right wing media will then be able to relentlessly claim that social welfare spongers are getting generous child benefit payments and the people in Latvia get 10 times less or something like that. It will make further attacks easy and trivial and the true agenda will be to shrink the total cost of child income payments lower and lower. So it is important that everyone regardless of income gets some portion of the child benefit because that way everyone has a vested interest to stop further attacks. After-all the IMF caused devastation to social budgets throughout Africa in the 1980s and 1990s the period during which the mega-slums grew, so why would things be any different now? It is right though that people on the higher incomes should pay more and be taxed more but the way to do it is not through child benefit but to introduce a more equitable tax system whereby the tax rate is higher for higher incomes. The government has consistently refused to do this. At the moment we just have two tax bands at 20% and 40%. There is no reason in the world why we can't have another at 50%, 60% and 70% as you go up. This is how you rebalance the system. Having said that we shouldn't been paying any of the banking, speculator & developer private bailout debt that was made public by placing it on the back of the people. It should also be realized that many on low incomes given all the other cuts, are absolutely in dire need of the current child benefit to get them through the week.

A further point to consider is that the government have said the free pre-school year is about quality education. Already they have reduced the capitation rate paid to pre-schools (of which there are estimated to be 5,000) down to €62.50 per child per week and at the same time increased the teacher to child ratio from 1:10 to 1:11. The incentive will be to drive these payments down much lower. As it goes lower the smaller pre-schools will be unable to cover their costs as they will not have the space to take on more children to make up for the lower payments and will be driven out of business leaving the larger corporate type businesses that own multiple creches and pre-schools. In these bigger enterprises the people working there are just employees most of whom are on low wage and there will be far less incentive to perform well and provide quality education when the bulk of the profits will be siphoned off by the owners and or investors. For example in a recent survey of pre-schools by Early Childhood Ireland (representing 80% of pre-schools & creches), wage levels varied from approximately €9 per hour to €13 per hour for those with degree level qualifications. When you work this out for the 3 hours a day 5 days a week for 38 weeks of the year it means the salaries are €5,130 to €7,410 which is not alot considering the cost of college fees or rather administration fees are over €2,500 per year and rising and not including all the other costs. In the same survey financing and sustainability were key factors with over half (51%) of all members surveyed, expecting their financial situation to get worse in the coming year and 63% expecting expenses to increase. At the same time councils are continually increasing rates and water charges. The survey goes on to reveal that staff salaries are their biggest cost and there is huge pressure to cut down on this. In a similar vein an earlier salary survey by ECI elicited this response: The dichotomy for employers in the early year’s sector is that ‘parents want to pay less, but staff want pay rises’. So how is quality supposed to be maintained under these types of pressures?

The danger and the evident fact is that these trends mean the industry is going to become more concentrated resulting in a small number of larger enterprises and these will be under enormous commercial pressure to extract more from their customers and are more likely to push dubious foods, brands, ideology and general crash commercialism. In others little will remain of quality education after a period of a few years. In the meantime as the payments go down, there is less incentive for the wealthy to avail of the free pre-school years and they will withdraw their kids to a smaller set of private pre-schools providing real quality education with plenty of stimulation and learning to trigger the imagination of their youngsters. As usual the children of the low income parents will then be captive to a handful of large conglomerates controlling the market who will ensure through lobbying that the system is never reformed for the better.

So what is the conclusion. The conclusion is that government are going to continue cutting and use the one positive aspect -i.e. a 2nd free pre-school year act as the fig leaf while the support needed in the still important subsequent years of pre-school will see less state support and help since €20 x12 = €240 less will be paid per year. Incidently the reason why Ruari Quinn's other cabinet colleagues thought it was a great idea is because they are delighted his department will take the cuts leaving the pressure of them in their own. And what is the solution? The solution is to pay attention to what is being offered

author by Tpublication date Thu May 23, 2013 20:26Report this post to the editors

It seems like the points about quality of care and the most likely place for this to happen would be in the larger industrial / corporate entities has been proved with the story that broke today where a RTE Investigations Unit which seems to be part of Prime Time had someone in two creches and the researcher witnessed and videoed staff shouting at children in their care and mishandling them.

Apparently this will be shown on Prime Time on RTE on Monday (27th) night.

Related Link: http://www.independent.ie/irish-news/creches-are-probed....html
author by Tpublication date Tue May 28, 2013 22:35Report this post to the editors

The Primetime program on creches clearly shows that the system is broken and the whole concept is flawed.

It showed workers who were clearly stressed out working day in and day out being verbally abusive and rough handling of kids and leaving them in chairs for hours on end.

Yet the regulators and those associated with the industry seem to think more money and training is the solution. Yet it should be clear the best people to look after the kids is their own parents and if they want to put more money in it, then they should give much longer parental leave perhaps extending it up to 3 years.

author by fredpublication date Wed May 29, 2013 11:38Report this post to the editors

self centred "I want to have it all" people need to stop having "status symbol" children that they couldn't give a shit about and just farm out to the tv, playstation or some underpaid strangers to look after at the first opportunity.

Why is everybody acting so surprised that a "for profit" company will cut costs to the bone to maximise profits by paying minimum wages, taking people who are desperate and will accept the lowest renumeration, and cramming the kids into larger unmanageable groups.

Of course these stressed people will just get through the day any way they can.

And of course they will be scapegoated while the managers cream off the profits.

We need people to consider more carefully before having children. You need a licence to drive a car. Perhaps we should require one before being allowed to be a parent!!

And we need a system of state creching along the lines of that in Finland which, ironically, costs less than sub standard "for profit" creching in Ireland.

We'll never learn the lesson that privatisation does not provide better services.

author by davepublication date Wed May 29, 2013 12:45Report this post to the editors

The government should enable parents to look after their own children,cutting child benefit does not achieve this. I think more needs to be done here.

Throwing money at these creches,that seem to be a money making machine,is not the answer,our tax payers money should not go to supporting the management or mismanagement of these creches.

There was one owner of a few creches who was on the board of about 60 companies.

It seems to me the running of a creche is a profit making excercise,look at the food the children were eating,it was not nutrious and had no vegtables in it.

But should we really be that suprised?Care doesn't mean care,it is a company just like any other and we should see it as such.

Ive worked from creches to nursing homes,and i have seen the food they have in the kitchen/canteen,it is just horrible stuff all i cans or jars straight from the cash and carry the cheapest of food you can buy.

I would not be suprised if some of these parents insist on using the same creches for their children after watching the primetime report on these creches.

I know a couple who live near me and they say its hard to get a place in a creche a lot of them are full up.

Parents working have no other place to leave them but in profit making creches..Gone are the days of the extended family where an aunt or a granny could look after these kids and get quality care with an engaging carer who actually cares.

author by Rational Ecologist.publication date Wed May 29, 2013 13:16Report this post to the editors

Fred is absolutely spot on when he says that people need to think more carefully before they have children. There are 7bn humans on this planet, so it's about time to grasp the nettle on population. Creches support a system and a way of life that is anti Nature, anti human and definitely anti kids.
This is a system that is utter madness, where we all become cogs to satisfy the megamachine and Feminism is co-opted by Capitalism to confuse women( and men) with the message of participating in the insanity of Capitalism as a right.
If you want to have kids, rear them and love them.

author by fredpublication date Wed May 29, 2013 16:37Report this post to the editors

thanks RE
Normally when I suggest a parent licence or population tax disincentives on child number 3 onwards etc, I get pilloried

Of course nobody cares to talk about the resource use of each new white western child.

Stupid irrational short term thinking. And it can only end up one way. Easter island. The supersized version. Not pretty.

Like RE said, there are 7billion humans on a planet which it has been calculated can only support 2 billion at most, when the oil runs out. And even that only if they adhere to a strict vegan diet!!!

it'll be 10 billion by 2050

We are totally irrational on the whole subject. Everyone feels they have a right to reproduce themselves. That the world needs more of them. Often it's just ego and vanity and nothing more. We think we are so intelligent, but as a species as a whole, we act no smarter than a destructive mindless virus which multiplies out of control until it kills its host

At the very least, we should have annual limits to new births and a lottery system to see who is allowed to reproduce.

Unless you are one of the 1%, It's not as if we have anything to offer these kids anyway. Most end up as indentured serfs (if they are lucky). Or if they don't manage that, then the state doesn't want to help feed, clothe, house or give medical aid to anyone and only does so very begrudgingly. Despite all the pro life bullshite we hear about the sanctity of life, the fact is, once life gets here, nobody gives a shit about it.

If they did then 100+ kids would not have gone missing / died on the HSE's watch or more of those priest paedophiles would be breaking rocks in the sun on a chain gang. And I didn't hear any shrieks for them to be excommunicated. did you?

As one english Parliamentarian once said:
"over the years I have gotten many letters about homosexuality and abortion from pro life people but never once did I get a letter about child poverty"

TBH, I feel most sorry for all the other innocent species we will wipe out in the path to our own destruction. Someone should. Humans mostly don't give a shit about anything except themselves.

There were no doubt some truly wonderful individuals, but for the most part we are a failed and rather stupid experiment. We will be destroyed by our own stupidity, arrogance, greed, selfishness and hubris. A blip on the geological scale compared with even the dinosaurs.

author by Rational Ecologist.publication date Thu May 30, 2013 11:33Report this post to the editors

I'm afraid the primacy of the human has led to all of this. James Lovelock reckons that there'll only be a handful of us in 100 years; I'm sure the Bison, Badger, Beech and Conifer will be glad to see the back of us.
Read Derrick Jensen, a straight shooter, who is clear on his thinking.

author by davepublication date Thu May 30, 2013 14:15Report this post to the editors

''Of course nobody cares to talk about the resource use of each new white western child.''

why are you intent on picking on white western children?you have singled them out.

you know there are chinese,african,and arab children living in western countries,and asian countries,that use our modern resources,such as cars,buses etc..

what is it you have against white children,fred?

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