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Budget 2017 Analysis

Budget 2017 Analysis

October 12, 2016

The following is an initial briefing on the changes made in the Government’s Budget in the area of early years care and education (ECE). Early Childhood Ireland has compiled this information from a variety of sources including: the Budget speech by Minister for Public Expenditure and Reform, Paschal Donohoe TD, the subsequent Press Conference and Press Release by the Minister for Children and Youth Affairs, Katherine Zappone TD; and the Department of Children and Youth Affairs (DCYA) “Budget 2017: Q&A on the Affordable Childcare Scheme” document, which contains additional information that we recommend you read. 

How much money was allocated?

In Budget 2016, a total of €344 million was allocated to ECE. In Budget 2017, this amount increased by €121.5 million to €465 million. DCYA regards this as an increase of 35% in funding. However, as our Pre-Budget Submission explained, €85 million of funding provided in Budget 2017 is required to meet the full year costs of measures introduced in last year’s Budget, chiefly, the roll out of the expanded ECCE programme and the new AIM model within ECCE. As such, the amount of money available to fund new improvement measures and policies in the ECE sector in Budget 2017 is €35.5 million, representing an increase in “new money” of 10.3%. 

Having advocated for additional investment of €115 million in Budget 2017, to recognise and begin to address the three interconnected challenges of quality for children, sustainability for services and staff, and affordability for parents in ECE, Early Childhood Ireland is disappointed with the level of additional investment. We will continue our work to secure the significant and focused investment needed in future years, and to build upon the welcome strategic improvements secured by Minister Zappone in this Budget.

Breakdown of new measures

  1. A new Affordable Childcare Scheme (ACS) to deliver financial support for parents towards the cost of childcare will being in September 2017. As part of ACS, €19 million has been allocated to the roll out of two new nationwide childcare subsidies, one specifically targeting child poverty and low-income families and the other applicable to all children under 3. Both subsidies will be paid directly to Tusla registered childcare services. 
  2. €14.5 million for the payment of 7 additional ECCE days to services for non-contact time. 
  3. €1 million to support inspection of early years services (Tusla and DES).
  4. €1 million for a sustainability fund.

 

1 .  Childcare Subsidies

A new Affordable Childcare Scheme (ACS) to deliver financial support for parents towards the cost of childcare will begin in September 2017. Two new nationwide childcare subsidies will be rolled out under ACS and will be paid directly to Tusla registered childcare services. 

Targeted Subsidies
New targeted subsidies will benefit children between 6 months and 15 years of age living in consistent poverty or at risk of poverty. This will be achieved by applying the maximum rate of childcare subsidy to parents with a net  income of up to €22,700 per annum. The rate payable thereafter is means tested with the rate of subsidy tapering down as net incomes rise to the cut off income of €47,500.
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 maximum subsidy per hour will depend on the age of the child and the net income of the parents but will range from €5.11 for a baby under 12 months to €3.76 for a school age child. 

 

Table 1: Maximum Hourly Subsidy Rates (New rates as Jan 30th 2017)
Hourly rate for a child under 1 year €5.11
Hourly rate for a child aged 1-2 years €4.37
Hourly rate for a child aged 2-3 years €4.18
Hourly rate for a child aged 3-5 years €3.95
Hourly rate for school aged children €3.76
   
Average hourly co-payment for parents based on maximum subsidy rate €0.52 per hour or €21 per week based on 40 hour week

Further details on the scheme will be published by DCYA in the coming weeks and we will keep you informed. We will also be studying the Department’s calculations for arriving at the hourly rates for a child in the categories above against our own research in Doing the Sums: The Real Cost of Providing Childcare.

Parents will apply for subsides through a dedicated online application system from September 2017. 

ECI welcomes this measure targeting families most in need first. The scheme clearly benefits families and children, but it will also benefit services by addressing, and in many instances eliminating, the bad debts currently being sustained by services where parents cannot afford to pay the top-up fees, which can be as much as €80 per week.

 

Universal Subsidies
We also welcome the introduction for the first time of universal childcare subsidies. Universal subsidies will apply to all children between 6 months and 3 years/start of ECCE in Tusla registered childcare services from September 2017. Parents can expect assistance of 50c per hour of care. The subsidy is pro rata and will amount to €80 per month or €960 per annum for a child in full time 40-hour per week care.

 

2.    Non-Contact Time

Driven by the increasing anger at the lack of paid non-contact time and the growing administrative burden of schemes in the sector, ECI made non-contact time a central tenet of our Pre-Budget Submission. We sought, as a starting point, three additional weeks to support the payment of non-contact time and holiday time for service providers and staff. An additional 7 ECCE days in total with no children present was announced to support services with their administrative workloads. This annual payment, reckoned by DCYA to amount to €2,257.50 and €2,625.00 at the lower and higher capitation rates respectively, for an average ECCE service with 25 children, will be paid to services. CCS/P and TEC will receive a similar pro-rata payment. 

To calculate the payment you will be entitled to:

  • Lower Capitation: Multiply the number of children by €90.30
  • Higher Capitation: Multiply the number of children by €105.00

 

While the payment will be backdated to January 2017, we do not have a definitive date for payment. We do not anticipate payment before the summer and will keep you advised. In relation to the new Affordable Childcare Scheme, non-contact time has been built in at 5% of contact hours.

We are delighted to see the formal recognition for the first time of the considerable additional unpaid work that providers and staff are undertaking. We see this as a very positive first step that can be built upon. 

 

3.    Preschool Inspection

€1 million has been allocated to support inspection of early years services (Tusla and DES).

 

4.    Sustainability Fund

€1 million has been set aside to investigate and design interventions to assist community/not-for-profit childcare services with their business model/financial management challenges. ECI will follow-up with DCYA to get a fuller picture of the scope and remit of such a fund. 

 

Conclusion
While there are a number of positive measures included in this Budget, the reality is that the ECE sector is in the midst of a sustainability crisis with the majority of services operating on a breakeven basis. The level of new money for the ECE sector in Budget 2017 does not allow sustainability or pay and conditions for staff to be tackled in a meaningful way. This is a major strategic challenge as the sector’s ability to deliver on the expansionary measures of Budget 2017 is dependant on the availability of qualified staff to ensure their delivery. 

We will follow up with additional analysis of Budget 2017 measures in the next edition of Early Times Weekly. 

We are also looking for clarification on a range of issues, including how the measures announced in the Budget will be implemented, for example: 

>>   How the administrative and IT systems and supports being designed for the Affordable Childcare Scheme will reduce the burden on providers, and make it easy for parents.
>>   What will be required of parents to avail of the targeted supports.
>>   How the recognition of seven days ‘non-contact time’ will be administered and paid to providers.

If you have additional queries that you would like us to follow up, please drop a line to our Policy Officer Amy amcardle@earlychildhoodireland.ie
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Media Watch
There were a number of articles in the media since the budget that may be of interest to you. Here is a sample:

Irish Examiner
Budget 2017: Katherine Zappone admits it will be a challenge to keep costs down

Quote: “Early Childhood Ireland welcomed the new childcare scheme but warned that the overall package would not address the sectors’ sustainability crisis. Its chief executive Teresa Heeney said they were concerned that the budget would increase parents’ childcare expectations, putting pressure on a sector unable to cope due to the inability to attract staff.”

Irish Independent
Budget voices: ‘I often have to forgo my own wages just to pay the bills’

Quote: “I know we hear time and time again that the childcare costs here are the highest in Europe,” she said.” But investing in the early years is going to be our future. “These children are the doctors, teachers, politicians and taoisigh of the next generation, but they need to be given that support in order to get that first start.” “Childcare professionals don’t deserve only the living wage for what they do.”Just like any other worker with good qualifications, they deserve more.”

BreakingNews.ie
Up to €8,000 in childcare subsidy for families earning less than €47,500

Quote: “Mothers and creche operators have warned that the new childcare subsidies are stepping stones that do not go far enough. Joan Sheehan, owner of Nan’s Place Créche in Leopardstown (& ECI member), bemoaned the poor wages for qualified staff working demanding hours – about 10.25 euro an hour for college-educated professionals “We need recognition for the job that professional childcare workers do.”‘ —-Well said Joan!

Irish Times
Budget 2017: Zappone defends new early childcare scheme

Quote: “Early Childhood Ireland, while welcoming some aspects of the package, said it was “of significant disappointment”that the capitation levels for the free preschool scheme have still not increased. It said this was impacting on the sector’s ability to attract and retain quality staff. The group had sought a €10 increase in the capitation rate. Ms Zappone said she was “extremely concerned” about low wages in the sector…”

 

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