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Review of Working Conditions for Staff in Early Learning and Care

International Approaches to Funding ELC and SAC to Reduce Costs for Parents

December 1, 2020

On 13 November, the Department of Children, Equality, Disability, Integration and Youth (DCEDIY) published the first suite of research commissioned to support the development of a new funding model. Five papers were produced by Frontier Economics. This week, The Big Picture summarises and comments on Working Paper 2.  Last week’s article on Working Paper 1 can be found here.

The aims of the paper are twofold: to provide a description of the range of approaches used to publicly fund Early Learning and Care (ELC) and School Age Childcare (SAC) in seven jurisdictions: Canada (Ontario); England; France; Germany (Bavaria); the Netherlands; New Zealand and Norway; and to summarise the key features alongside those for Ireland. The seven comparison jurisdictions were selected on the basis that their early education systems include some form of childcare market. They were also selected to cover a range of contexts. Only policies and programmes which seek to directly reduce the amount that parents pay for Early Learning and Care and School Age Childcare are included in the scope of the report.

The policies reviewed were categorised in three types: free hours or places; subsidies which are paid directly to providers; and tax support such as refundable tax credits or as deductions to tax liabilities.

The main findings of the report are:

  • Almost all jurisdictions offer free hours for the years preceding school entry on a universal basis;
  • Apart from England, all jurisdictions offer subsidies, and these are targeted towards lower-income families in three jurisdictions. Even when eligibility for subsidies is universal, the level of support is typically heavily targeted towards lower-income families through the design of income-related fees;
  • Refundable tax credits are offered in only half of the jurisdictions and tax deductions in less than half. With the exception of Bavaria, all are targeted to working parents;
  • Most jurisdictions have mixed approaches, which include at least one universal offer, one targeted to low-income families and one targeted to working parents. Only France has entirely universal approaches and only New Zealand and Ireland do not have approaches solely for working parents;
  • Different funding approaches reflect the division in the purposes of funding for Early Learning and Care and School Age Childcare: free hours are most closely related to supporting child development and preparation for school for all children; subsidies reflect a primary purpose of reducing inequality by reducing costs and enhancing work incentives for these families, and tax support reflects a primary purpose of supporting parental work.

The report also indicates a few “potentially useful features”. They point out that tax credit schemes can be generous. They argue that these schemes target support quite effectively, supplementing incomes and improving incentives to participate in work for lower-income families.

The report provides an interesting and valuable descriptive exercise of the various Early Learning and Care/School Age Childcare policies being implemented in some other countries. However, an evaluative dimension is still missing; for example, which policy approaches are the most effective in reducing costs and making high-quality Early Learning and Care/School Age Childcare services available to all children? This is still an unanswered but very important question.

In addition, despite the fact that there are no explicit policy recommendations, the text seems to suggest that the use of tax credits can be beneficial. Early Childhood Ireland and others have highlighted that while tax relief for parents may seem like an attractive option at first glance, there are serious hidden costs and consequences to this approach in terms of service quality and fairness.

Early Childhood Ireland will continue to examine these reports in the coming weeks and months and keep members apprised of our analyses.

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