€2 million children’s allowance increase targets low-income families

Low income parents with more than one child will be the main beneficiaries of a revision of children allowance rates announced in the Budget which will cost the government a meager €2 million which will be shared by 24,600 children living in families earning less than €20,000.

Although hardly a game changer for middle income parents with a single child; the impact on low income families –especially single parents and couples with more than one child – is more significant.

The measure retains a strong element of proportionality benefitting low income earners but hardly touching middle income earners.

A couple earning €15,000 a year or a single parent earning that amount will only get €57 a year for each child. A couple earning a modest income of €18,000 (the equivalent of two minimum wages) a year would only get an extra €2 for each child.

But a couple or a single parent earning the minimum wage (€8,600) will get an extra €89 for each child each year. This means that a single parent on the minimum wage who has two children will be getting an extra €192 a year. A couple earning €12,000 a year that has three children will get an extra €217 a year.

Children’s allowance, once considered a pillar of the welfare state created by the Labour government in the 1970s, was last boosted in the Budget presented by Lawrence Gonzi in 2007. 

Back then the government extended the benefit to middle-income earners by allocating €250 per child to 25,000 families previously deprived of this benefit. The government also readjusted rates in favour of families with more than one child.

In this way the Nationalist government effectively reversed its own 1996 decision to restrict what was once a universal benefit to families where both spouses together earn more than €23,929. Back then it decreased beneficiaries by 5,231 in one fell swoop. Expenditure on children allowance declined from €46.6 million in 1997 to just €30.3 million in 2006. This could be partly attributed to the declining birth rate and the decrease in those earning less than €23,929. In 2017 the expenditure on this benefit was increased by €11.7 million.

Introduced in 1971 by Dom Mintoff as an allowance for the first three children of every Maltese family, the benefit was extended to cover any number of children in a family when the PN was elected in 1987.