The childcare package in Budget 2017 was never going to please everybody because there are so many permutations on how families structure their lives, depending on circumstances and personal preferences.
With the new Single Affordable Childcare Scheme, which will operate alongside the existing Early Childhood Care and Education (ECCE) programme, Minister for Children and Youth Affairs Katharine Zappone has taken a step towards reducing the cost of centre-based childcare for all parents, with bigger subsidies targeted at those earning less.
Here is what parents need to know and might be afraid to ask because, based on the current pattern of childcare use, less than a third of families whose children need minding will benefit.
Who will qualify?
Most parents who use centre-based childcare – that's roughly 30 per cent of families, according to Early Childhood Ireland. They will benefit either from targeted or universal subsidies, but the non-means-tested payment will apply only until the Early Childhood Care and Education (ECCE) scheme kicks in at age three.
Anybody using a childminder registered with Tusla, the Child and Family Agency, will also be covered by the scheme, but only about one per cent of these carers are registered. While all of the country's nearly 5,000 childcare centres must be approved by Tusla, registration among childminders is voluntary, unless they are minding four or more children from more than one family.
Who won’t qualify?
Based on the current pattern of childcare use, the other two-thirds of families whose children need minding. Just under a third use childminders and, in cases other than those specified above, the scheme won’t apply to them.
Then there is the estimated other 40 per cent of families who do the care themselves or use relatives to do it. Unless they change their arrangements, this scheme is not relevant to them either.
However, it is argued that lowering the cost of centre-based care would enable/encourage more parents to go out to work and/or not rely on relative care.
If families with a stay-at-home parent wanted and/or could afford to use some hours of centre-based childcare, they would qualify on the same basis as employed parents because working outside the home is not a prerequisite.
What are the income limits?
The maximum household income allowed for the targeted subsidies is €47,500 a year – that’s net income, so after tax, PRSI, the USC, pension contributions and any other allowable deductions, have all been paid.
The income thresholds increase where there is more than one child in a family, so a family with two children under 15 years of age would have a maximum net income threshold of €51,300 and a family with three children under 15 years would have a maximum net income threshold of €55,100.
The subsidies increase on a sliding scale as income decreases and the maximum rate will be paid to those with net incomes less than €22,700 per annum.
For families with incomes above €47,500, a universal subsidy worth up to €80 a month, depending on hours used, will be paid.
What age groups will it be open to?
For those below the €47,500 income threshold, care for children aged from six months to 15 years will be covered. The universal payment will stop at age three – or until the child qualifies for the ECCE programme, if that is later than 36 months.
Will a minimum number of childcare hours be required?
No. The subsidies, for both the targeted and universal, will be calculated pro-rata, based on the maximum of 40 hours childcare a week. However, the providers may well be fighting for a level they deem is workable for them, considering the demands of meeting the required child:staff ratios at all times.
How will the subsidy be paid?
It will be paid direct to the provider of the childcare.
How much is it going to take off my childcare bill?
That is going to depend on income, age of child and hours used but, in briefing notes from the Department of Children and Youth Affairs, the maximum subsidies per hour range from €5.96 for a child under one, to €4.40 for a child aged two-to-three, to €3.96 an hour for school-age children.
Take a family with two children, where a two-year old needs full-time childcare (40 hours per week) and a four- year-old in the ECCE scheme needs an additional 25 hours “wraparound” care per week.
With a net income of €33,697 (about €40,000 gross), a childcare subsidy of €205 a week would be paid for that family. If a similar family’s net income is €45,514 (about €60,000 gross), a payment of €81 a week would be paid.
The maximum families above the €47,500 net income level will get off their childcare bill will be €20 a week.
It all sounds very complicated.
Targeted payments inevitably are but an online application system to streamline it for parents and providers is promised.
What if my Tusla-registered childcare provider is oversubscribed?
The Minister’s office is confident that capacity will not be a problem and predicts that the 79,000 children it estimates will be covered initially by the scheme will increase to 90,000 in 2018.
When will the scheme come into effect?
From September 2017 – that gives the Minister 11 months to iron out the operational details with the childcare providers.
Might childcare costs go up as a result, with providers starting to budget the subsidy into the price?
There is nothing to stop that in a free market. While the Programme for Government promised an independent review of childcare costs, the reality is that most childcare providers operate in the private sector and the State does not control what they charge.
We know that many providers are operating on very low margins and Early Childhood Ireland has warned that the Budget 2017 investment in the sector is "not enough to solve the childcare crisis".
It will be up to parents to police prices and shop around if necessary – but of course that is much easier said than done with a service such as this because parents are loath to change childcare arrangements that they and their children are happy with.
Providers participating in the scheme will be required to publish their fees, so parents can compare providers and can see what they will have to pay after taking account of any State subsidy.
CASE STUDY: “I’m happy that they’re starting to do something as it has been left to the side for such a long time”
Sarah Tougher, a part-time accounts assistant and mother of one-year-old Hailey, says the “long overdue” affordable childcare scheme is welcome.
“I’m happy that they’re starting to do something as it has been left to the side for such a long time,” the Cabra, Dublin woman said.
“But it’s definitely a good start.”
Tougher, whose husband works full time, said that the €47,500 net household income cut-off point for the targeted payment is “quite refreshing” and may make things “a bit less tight at home”.
Although she thinks that the means tested element will “over-complicate it a bit,” the additional payments may allow her and her spouse to fulfil their wish to have a second child.
“From a financial point of view, we would have thought we have to put that off until our daughter is in school or close to school [age],” she said.
“But now that that’s coming in, looking at the figures, it’s something we could consider a lot earlier.”
Tougher’s daughter attends Aladdin’s Corner Créche and Montessori on Mountjoy Square, where owner Sinead Walsh is proud of their below average €200 a week fee.
However, she stressed this amount can still be difficult to pay for many parents. “€200 a week is a considerable amount of money, so any benefit that people can get from yesterday’s budget is great,” she said.
Walsh praised the decision to include the universal non-means-tested payment for those with children in full-time care as they are “outlaying the most amount”.
"I think the budget was a very positive budget. It's good for parents," she added. – NIALL SARGENT