Committee Reports::Report - The Impact of State Tax and Social Welfare schemes on the Family::07 February, 1996::Appendix


Responses of Government Departments to Consultant’s interim report

Office of the Minister for Social Welfare

Oifig an Aire Leasa Shóisialaigh

Ref: 958725

Mr. Paul McGrath T.D.


Oireachtas Committee on the Family

Leinster House

Dublin 2

17 January 1996

Dear Paul

Thank you for your letter of 19 December 1995 referring for my Department’s observations, a copy of Mr. Colm Rapple’s Interim Report for the Joint Committee on the Family, about elements of the taxation and social welfare systems which may discriminate against families. I attach some observations which may be helpful to your Committee in its consideration of the Report.

The Report when published by the Committee, will make an important contribution to raising awareness about the issues which need to be addressed to improve the responsiveness of the state services for families in different circumstances. It will also assist my Department’s Commission on the Family with which I know you are developing close liaison.

The areas identified in the report such as child income support, the tax treatment of couples in different circumstances, the problems encountered by young people living outside the family home and the whole area of “adult dependancy” and what it means in the different systems, raise complex issues for the Department in trying to provide a more responsive service to meet different needs. Apart from financial and administrative constraints, the disincentive effects and poverty and unemployment traps which can arise for families in certain circumstances must also be considered by us.

As you know the Expert Group on the Integration of Taxation and Social Welfare has been considering ways of improving the interaction of tax and social welfare with particular reference to the impact on peoples incomes and administrative and budgetary implications. Among the issues it has considered are: income support for children, methods for reducing unemployment and poverty traps, family income supplement and adult dependant payments. I have been informed that the Group expects to complete its Report shortly.

Please feel free to contact me at any time on any matter relating to your Committee’s work with which you feel my Department can be of assistance.

Yours sincerely


Minister for Social Welfare

The Impact of State Tax and Social Welfare Schemes on the Family

A Report to the Joint Committee on the Family

Colm Rapple

Observations of the Department of Social Welfare

Page 3 - Last paragraph - The researcher states “there is no evidence that policies are geared to favouring the family with children. .etc” - and stresses that the figures can be distorted by a range of factors.


Analysis of the 1987, Household Budget survey suggests that the comparison between ‘adult only’ households and households with children as shown in the report is distorted. Pensioners are over-represented in ‘adult only’ households. The 1987 HBS shows the proportion of household heads over 65 years for different categories of household:


Adult households:










Adult households:



Adult + 1 child



Adult + 2 ch


This is likely to be the main explanation for the fact that state transfers to households with children are lower than those without children.

TAXATION - Tax Treatment of lone parents and cohabiting couples Page 4 - 8


In comparing the income situation of a lone parent with a couple, the researcher may also wish to consider that low-earning lone parents can combine lone parents allowance, earnings and FIS to create a higher total income from employment than other types of workers on similarity low incomes.

The rationale behind this is to encourage lone parents to pursue a course into employment and thus away from dependency.


The Expert Working Group on Taxation and Social Welfare is considering the treatment of cohabiting couples under the tax system and in the social welfare services. Their report is expected shortly.

SOCIAL WELFARE -Child Benefit, Child Benefit Supplement and Family Income Supplement

Page 18 - 20


The Expert Working Group is also considering the future overall direction of child income support and the roles of Child Benefit, Child Benefit Supplement and Family Income Supplement (including payment based on net income) in that context.

Take up of Family Income Supplement and the advertising of the scheme.

Page 21 -


The Department continues to actively promote the Family Income Supplement scheme but there has been a move towards more targeted measures to increase take-up. These measures include, promoting the scheme as a work incentive measure via the Departments’ Job Facilitators; fact packs and leaflets disseminated through Health Boards, National Social Services Board, Society of St Vincent De Paul, . .etc, information circulated with Child Benefit Books, and mail shots to employers. These measures have proved to be more effective than ‘blanket’ advertising and the number of claims for FIS has risen sharply in recent years. For example the number of families in receipt of FIS rose by over 40% between the years 1992 and 1995 (from 7,735 in 1992 to 11,079 in 1995 (November). Low take up levels have also been experienced in other countries with schemes similar to FIS.

Page 31 - 32

Adult Dependants


In relation to removing the concept of Adult Dependant, problems arise for consideration which are far more complex that the text might suggest.

Some of the issues for consideration in relation to removing the concept of Adult Dependant, include

the circumstances in which adult dependants are paid (ie the labour force status of the claimant/partner),

means testing,

the position of people who currently qualify as adult dependants, but who would not qualify for any payment in their own right because they do not fit into any of the contingencies for which social welfare payments are made, and

the implications for work incentives arising from increases in adult dependant allowances.

Many of these issues were identified by the Review Group on the Treatment of Households under the Social Welfare system (Report 1990). Research relevant to this topic is also found in the recent study on income sharing published by the Combat Poverty Agency. (Rottman study).

In relation to the text of these pages - it is not always the case that a spouse or partner is classified as an adult dependant. For all payments except supplementary welfare allowance, a spouse/partner who meets the conditions can claim in his or her own right, although, in some of the means-tested payments the overall payment to the couple is limited to the personal rate plus adult dependant allowance.

Page 25 - Rent Allowance

There is no automatic entitlement to supplementary welfare allowance or rent allowance for young people between ages 16 to 18. Responsibility for young people in this age group who are homeless lies with the Health Boards under the Child Care Act. Unemployment Assistance can become payable when a person reaches age 18. A young person at age 18 must satisfy the means test and other criteria to qualify for a rent allowance.

The Researcher acknowledges that there are many factors involved in a young person’s decision to leave home. The Report of the Review group on the role of Supplementary Welfare Allowance in relation to Housing, published recently, addresses all the issues in relation to rent and mortgage allowance, including the disincentives involved and the “drawback” provisions of the scheme. A copy of the Report is attached.

Page 32 - PRSI credits for child minding


The Head “PRSI credits for Child Minding” may be slightly misleading as what is involved is in fact, a disregard in the calculation of entitlements to pensions, of years spent out of the PRSI system, while caring for children or an incapacitated person. The ‘disregard’ also applies to those who provide full-time care and attention to an incapacitated or invalided person. It applies to all carers not just those receiving Carers Allowance.

Office of the Minister

2 January 1996

Mr Paul McGrath TD


Joint Committee on the Family

Leinster House

Dublin 2

Dear Paul

I wish to refer further to your recent letter and enclosed copy of the interim report “The Impact of State Tax and Social Welfare Schemes on the Family”. The report makes a number of references to medical card eligibility. I would like to outline the position of my Department in relation to these.

1. Medical card eligibility

Entitlement to health services in Ireland is based on means. Under the Health Act, 1970, the determination of eligibility for medical cards is the responsibility solely of the Chief Executive Officer of the appropriate health board. Medical cards are issued to persons who, in the opinion of the Chief Executive Officer of the appropriate health board, are unable without undue hardship to provide general practitioner medical and surgical services for themselves and their dependants.

Income guidelines are drawn up by the Chief Executive Officers to assist in the determination of a person’s eligibility and these are revised annually in line with the Consumer Price Index. However, these guidelines are not statutorily binding and even though a person’s income exceeds the guidelines, that person may still be awarded a medical card if the Chief Executive Officer considers that the person’s medical needs or other circumstances would justify this.

2. Persons taking up employment

The Chief Executive Officers have introduced a number of measures to assist workers in low and moderately paid employment. Assessment in now based on gross income less PRSI deductions. Weekly payments under the FAS Social’ Employment and the Community Employment Programme are excluded in assessing income. Also, persons who held a medical card while on the Live Register, who are in receipt of family income supplement, are allowed retain the medical card for a period of two years after securing a placement on any of the schemes applicable to the long-term unemployed. There are also special provisions for people participating in certain other schemes targeted at the unemployed.

The income guidelines are, at present, adjusted to take account of dependent children, rent\mortgage payments and expenses incurred in travelling to and from work.

I am, of course, fully committed to tackling long-term unemployment and to addressing any obstacles which prevent the long-term unemployed from taking up employment. I am also satisfied that the arrangements agreed with the Chief Executive Officers shows the good faith of the health services in this regard.

3. Matters raised in the report

(a)The report states that the guidelines may be applied differently by different health boards (page 22). The Chief Executive Officers of the health boards have agreed on a number of standardised procedures to ensure uniformity and consistency in all areas when the income of a medical card applicant in being assesses.

A number of factors would account for the difference in the percentage of persons holding medical cards in different health board areas. Differences in population structure would account for a major part of the difference in percentage, as the medical card guidelines are higher for persons aged 66-79 and higher again for persons aged 80 or over. Also, in areas of low economic activity persons means will be lower (eg small farmers) and, consequently, the percentage of the population entitled to the medical card higher.

(b)The report mentions that there are perhaps “occasional purges” on medical card holders and cites the example of the reduction in numbers of medical card holders in Longford between December 1993 and December 1994. I would like to point out that at that time the entitlement of students to medical cards was clarified. This resulted in the majority of third level students throughout the country losing their entitlement to medical cards.

(c)The report refers to the possibility of introducing graduated income guidelines. The number of eligibility categories for entitlement to health services was reduced from three to two as a result of the Health (Amendment) Act 1991. This followed the detailed analysis of the eligibility system by the Commission on Health Funding and their recommendation of measures to simplify the system and make it more equitable. In particular, the Commission found that there were major problems and inequities inherent in allocating non-medical card holders to more than one eligibility category on income grounds. These problems were removed when the new eligibility system came into effect.

A graduated system of entitlement for non-medical card holders would presumably have to be based on income and would thus reintroduce these problems. In addition, it would make the system far more complex than at present and could greatly increase administrative costs because of the increased number of persons to be means tested.

If there are persons who do not hold a medical card and who are experiencing difficulty in paying for general practitioner services it is open to them to apply to the Chief Executive Officer of the appropriate health board on hardship grounds. I am satisfied that health boards take a sympathetic view of applications when the circumstances warrant it. In view of the contents of the report I would like to emphasise in particular that family income supplement is excluded in assessing all applicants.

I hope that the foregoing clarifies the position.

Best wishes.

Yours sincerely

Michael Noonan TD

Minister for Health

Oifig an Aire Talmhaíochta, Bia agus Foraoiseachta


Baile Átha Cliath 2


2 January 1996

Mr Paul McGrath TD


Joint Committee on the Family

Leinster House

Dublin 2

Dear Paul

Thank you for your letter of 19 December 1995 regarding an interim report commissioned by your Joint Committee from Mr Colm Rapple.

There are no proposals in the interim report which fall within the direct responsibility of my Department. While the proposals relating to tax-free farm leasing income, the 80% farm asset rule for Agriculture Relief and the inclusion of the family home in the definition of “gross assets” for Agricultural Relief affect farmers and the agricultural industry they are essentially taxation matters which are the responsibility of the Minister for Finance who will be replying separately.

If you have any more queries, please contact us again at your convenience.

Yours sincerely

Ivan Yates TD

Minister for Agriculture Food & Forestry

Oifig an Aire Oideachais

Sráid Maoilbhríde

Baile Átha Cliath 1

Office of the Minister for Education

Marlborough Street

Dublin 1


873 4700


873 4700


872 9093


872 9093

Mr Paul Mc Grath, T.D.


Joint Committee on the Family,

Leinster House,

Dublin 2.

12 January 1996

Dear Paul,

I have read with interest Colm Rapple’s report on the impact of tax and social welfare schemes on the family.

My Department welcomes the proposal to establish a Family Affairs Unit as proposed in the Report.

I do not accept that my Department and FÁS are “backing away” from the problem of young early school leavers in the 16-21 age bracket (Report, p. 29). The Youthreach programme was introduced in 1989 jointly by FÁS and the VECs to address the needs of unqualified early school leavers in the 15-18 age group, and the programme has been expanded on a continuing basis since then. In addition, a network of Traveller Training Centres is supported to meet the needs of early school leavers in the Traveller community. Total provision for under 19s in Youthreach, Traveller and other FÁS programmes is of the order of 6,750 places, and an additional 450 Youthreach places in the education sector are being brought on stream at present.

However, I agree that there is a gap in the current provision in that

-Youthreach needs to be re-focussed to include young people who have left school with only junior cycle qualifications (in addition to those with no qualifications)

-that the length of the programmes for Youthreach and Travellers need to be extended, and that second chance educational provision needs to be extended to early school leavers in the 18-20 year age group inclusive (VTOS caters for those over 21)

-that a wider range of education and training progression options need to be developed for these programmes, including second chance access to Leaving Certificate qualifications.

Proposals in this area are being examined in the context of the 1996 budgetary preparations.

I might also add that measures have been put in place which are designed to ensure the retention of young people in the school system. These include:

the Junior Cycle Schools programme, which is designed to meet the needs of a small proportion of pupils in the junior classes of second level schools who do not benefit from the Junior Certificate Programme. This programme is being developed at pilot level for introduction, on an expanded basis, from September 1996.

The Leaving Certificate Applied programme, which I introduced from September 1995, will prove an attractive option for those who find the existing senior cycle curriculum unsuitable.

One of the main objectives of educational policy is to encourage and facilitate as many students as possible to continue in full-time education after the end of the junior cycle. A major objective, as outlined in the White Paper on Education, is that the percentage of the 16-18 year old age group completing senior cycle will increase to at least 90% by the year 2000. This objective will be achieved through providing an effective foundation of general education and a strengthened and expanded vocational orientation in a restructured senior cycle.

Yours sincerely,

Niamh Bhreathach, T.D

Minister for Education