I am very pleased to meet the Committee this morning to discuss the
Affordable Childcare Scheme, before we begin the process of drafting the
legislation that will underpin the Scheme.
Given the urgent need to address the high cost of childcare, and the
requirement for this legislation to be in place before we can proceed with
the Affordable Childcare Scheme, I welcome the consideration shown by the
Committee in facilitating this meeting at short notice. We owe it to
parents to move as swiftly as we can in getting the Scheme up and running,
but it is critical that we take care to get the legislation right. That is
why I value the input of this Committee so highly, and I look forward to
detailed discussions on the legislation both today and when we bring the
Bill to the Houses of the Oireachtas in due course.
I believe the Affordable Childcare Scheme is a landmark measure. It signals
a comprehensive reorganisation of childcare supports, moving from a complex
mix of programmes to a single, user-friendly scheme. It will be the first
childcare support to have a statutory basis, so we are breaking new ground.
The funding secured in Budget 2017 will allow the Scheme to take a major
step forwards in improving access to affordable childcare, supporting the
objectives of reducing child poverty and enabling labour market
participation.
The initial income thresholds and levels of subsidy must not be seen as the
end-point. The Scheme provides a framework for future investment. We will
not achieve all our aspirations for early years care and education or
school age childcare provision when the Scheme is first introduced.
However, we will be creating an infrastructure – a new way of supporting
families with the cost of good quality childcare – within which we can move
progressively forwards over the years ahead.
Replacing current programmes
The Affordable Childcare Scheme will replace four targeted programmes,
which differ from each other in their eligibility rules, in the level of
subsidy they provide, and in how widely available they are. A major
limitation of the largest of the programmes – the Community Childcare
Subvention – is that eligibility is based on receipt of social welfare
payments. As a result, rather than supporting parents into employment, for
some parents the programme may be a barrier to labour market participation.
The Affordable Childcare Scheme is designed to remedy these concerns:
· It will replace four programmes with one.
· Eligibility will have a clear and fair basis in parents’ income,
which will support parents to enter the labour market.
· It will be open to all Tusla-registered providers, including
Tusla-registered childminders.
· 90% of beneficiaries of the current programmes will be better off
under the new Scheme. The remaining 10% will have their current level
of subsidy protected for a transitional period.
· Many families eligible for the current schemes, but who have
determined the existing level of co-payments to be too onerous, will
be more attracted to this scheme and therefore to enter employment.
Key features of the new Scheme
The Scheme is intended to be simple for parents, who will be able to apply
online. In the large majority of cases, eligibility will be determined
automatically through data-sharing with the IT systems of the Revenue
Commissioners and the Department of Social Protection. In cases where such
data does not reflect a family’s current income – for instance where a
parent recently lost a job – the scheme will allow for a “manual”
assessment of the family’s current income, which will be carried out by
Pobal (the “scheme administrator”).
The Scheme is also intended to be simple for childcare providers. Once a
subsidy has been approved, it will be paid directly to the childcare
provider, on the parent’s behalf. Any childcare provider that wants to take
part in the Scheme will have to sign a contract, which will include
financial controls to protect taxpayers’ money.
Subsidies
The Scheme includes both universal and targeted elements. The universal
subsidy offers a number of benefits:
· It will provide a degree of financial support for all those who face
the very highest childcare costs, namely those with children under 3
years old.
· It will remove the risk of stigma that can attach to targeted
schemes.
· It will encourage the participation of a wide range of childcare
providers.
The targeted element will focus subsidies on families with the lowest
incomes. The income thresholds set for the Scheme for 2017, combined with
“multiple child deductions” which benefit families with more than one
child, will ensure that all families with incomes below the relative
poverty line will receive the maximum subsidy rate.
In a limited range of cases that will be clearly defined by the bill, the
Scheme will provide for the full cost of childcare, with no co-payment
required from parents, such as when Tusla determines that childcare is
required on grounds of child welfare or child protection.
Hours
The subsidy is designed to “wrap around” school and ECCE provision.
Including the hours of school and ECCE, the maximum number of subsidised
hours of care and education will be either 15 hours or 40 hours per week:
· The “standard” 15 hours of subsidy will be available to all families,
whether or not the parents are engaged in work or study.
· The “enhanced” 40 hour limit will apply where both parents are
engaged in work or study, or, in the case of a one-parent family,
where the parent is engaged in work or study.
The definitions of “work” and “study” that we are proposing are
deliberately broad, reflecting an inclusive approach which recognises that
even a basic level of engagement in work or study can be a critical first
step towards the labour market.
Consultation
I was delighted to learn about the findings of the national public
consultation on the Scheme which my Department carried out in November, the
report on which has just been finalised and will be published shortly.
The consultation, which received more than 4,000 responses, revealed a high
level of support for the proposed Scheme. The Centre for Effective Services
which independently analysed the responses, found 60-70% support generally
for the proposals set out in the policy paper on the Scheme.
Of course there was not agreement on all questions, and in preparing the
Heads of Bill and General Scheme we have tried to take on board concerns
raised during the consultation process.
In particular, one concern that has been raised with my Department both by
groups of parents and by groups of childcare providers was the proposal
that no more than 48 weeks of subsidy would be payable per year. Concerns
were raised that this proposal would create funding difficulties for
providers, and would result in some parents being charged full fees for the
remaining weeks of the year.
We responded to these concerns and adjusted our proposals accordingly. The
Heads of Bill and General Scheme therefore allow for subsidies to be
payable on a 52-week basis. To ensure this change is budget-neutral, hourly
subsidy-rates have been adjusted downwards slightly from what was
originally proposed in the policy paper. The two changes offset each other,
and the combined changes in total annual subsidy to parents per child are
small.
Independent Review of Cost of Quality Childcare
As I have said, we will not achieve all our aspirations for childcare
overnight, but this is a significant beginning.
A particular concern in the childcare sector at present is the fact that
wages in early years care and education and school age childcare are low.
The Affordable Childcare Scheme will not, by itself, and at its outset,
change that. However, the infrastructure it will provide can assist in
contributing to resolution in the future.
Internationally it is accepted that if we want high quality services for
children, leading to best outcomes for children and families, valuing the
workforce is critical. The European Commission has published a quality
framework that recognises this. Current terms and conditions for childcare
practitioners do not reflect the importance of the work they do.
My Department is not an employer but is a significant funder and it has an
interest in working with the various stakeholders to see how this challenge
can be resolved. Further investment in childcare is essential to address
not only affordability for parents, but also to ensure that the best
quality services are provided to children by professionals who feel valued
and respected for their work. We know that high quality early years care
and education services benefit the economy and society by several multiples
of the investment provided. The Programme for Government has over a dozen
commitments to improve access to affordable and high quality services. I
hope that the annual Estimates process will enable us discuss this in
further detail and make the investment necessary to address affordability
and quality using the ACS as a significant mechanism.
In this regard, one of my priorities for the coming months is to carry out
an independent review of the cost of delivering quality childcare, which
was a commitment in the Programme for Government. This will greatly inform
the level of subsidy required in the future to fund quality and sustainable
childcare services.
Sustainability of community services
Another issue that the independent review may look at is the costs that
arise for providers that operate in areas of disadvantage and that support
families with high levels of need.
I acknowledge that the financial situation of many community services has
been further stretched by the move to require Level 5 qualifications of all
staff who work directly with children. The impact is large for community
services that previously relied on Community Employment schemes.
But a large part of the financial challenge that community services face is
low revenue. The highest subsidy rate available under the Community
Childcare Subvention is €95 per week, which is well below the cost of
delivering quality childcare, and many low-income families are simply not
in a position to pay the difference or the required co-payment.
I believe that the Affordable Childcare Scheme will make a large difference
to the financial position of such services. Parents on the lowest incomes,
who previously received a subsidy of €95 per week, may now receive a
subsidy of between €150 and €205 per week, depending on the age of the
child. The amount payable by a parent in such a case will – in an average
service – fall from €72 per week at present to between €0 and €17 per week
under the Affordable Childcare Scheme, again depending on the age of the
child. The increase in the level of subsidy will transform the finances of
many community services.
Childminding
As well as beginning work on the independent review of costs, officials in
my Department are examining the potential to bring more childminders into
the Scheme. Childminding is the preference of many parents, and many
childminders provide high-quality childcare.
However, just as with centre-based care, quality assurance of childminders
must be an absolute prerequisite for participation in the Affordable
Childcare Scheme. My Department has commenced talks with Childminding
Ireland in recent months to explore a number of options around how quality
can be assured within the childminding sector.
Stay-at-home parents
Of course, the “childcare” preference of many parents is neither
centre-based care nor childminding, but to care for their children at home.
The Scheme has faced some criticism for not meeting the needs of those
parents. Let me be clear that I am committed to the provision of childcare
options for families that respect parental choice.
It is important to recognise that the Affordable Childcare Scheme is only
one element of a broader set of commitments and supports aimed at parents
and children. Work is well advanced on drafting Ireland’s first-ever
National Early Years Strategy, which will take a joined-up,
whole-of-Government approach to support for all children and all families
during the early years.
In particular, while operational responsibility for these do not fall
within my policy remit as Minister for Children and Youth Affairs, I
support the extension of parental leave for parents, particularly in the
crucial first year. In addition, the Government has provided support for
stay-at-home parents through the Home Carer Tax Credit, which has been
increased to €1,100 per year, and I support an increase in the earnings
threshold for this.
Next steps
In parallel with the legislative process, officials in my Department and
staff in Pobal are already working hard to develop the business processes
and IT systems that will make the Affordable Childcare Scheme possible.
That work involves close cooperation with officials of the Department of
Social Protection and the Revenue Commissioners, as well as support from a
range of other Departments and agencies.
In addition, preparation for the Scheme has already involved consultation
with a range of stakeholders. Further detailed engagement with stakeholders
– including parents and childcare providers – will be critical as we
undertake the many tasks involved in developing the infrastructure required
and in making the transition to the new Scheme.
I would like to thank all those who have been involved in planning for the
Scheme, and all those who have shared their concerns and experiences with
us through consultation processes. I acknowledge that the Scheme is
ambitious, but it is hugely important.
I will be very happy to answer questions, and I welcome colleagues from my
Department and from Pobal who will join me in responding to specific
queries.