Affordability and availability the key issues when it comes to childcare services

Affordability and availability are the two key issues facing many parents when it comes to childcare services at the moment, according to Darragh Whelan, director of Childhood Services Ireland (CSI), the Ibec trade association representing childcare services across Ireland.

“Childcare forms the bedrock of society as it allows parents to undertake working responsibilities and provides for better learning outcomes for children,” he says.

“State under-investment in the sector has led to very high costs for parents. Improved universal subsidies will resolve many issues when implemented in tandem with fee controls, but the State should ensure childcare providers do not suffer financially from such controls.”

The controls he refers to are a quid pro quo contained in the recent increase in government funding for the sector. To avail of the funding individual providers must agree to freeze their fees at 2021 levels. However, Whelan points out, the sector has been unable to increase fees since 2019 due to the pandemic so this actually represents a three-year price freeze and a considerable burden on the sector.

He says progress is being made in terms of the funding of the sector.

“Huge reforms were taking place prior to the pandemic. European governments have invested in childcare for more than a century, but, when we look at Ireland there was no investment in it. It wasn’t until the 1980s that it was even thought about.”

That situation has changed for the better. “The government has rolled up its sleeves over the past two or three years and is undertaking a massive reform programme. There is a recognition that funding needs to improve.

"There is also a recognition that pay and career paths for people working in the sector needs to improve. The Government has committed to doubling investment in the sector by 2028 to €1 billion. That's welcome but it's still below the OECD average. It's going in the right direction, though."

Providers

The key issue of affordability is to be addressed through additional State funding for the sector. As Whelan points out, the way it is structured now any cost increases for providers must be passed on to parents in the form of increased fees. That represents a significant obstacle to improving pay for those working in the sector.

“Irish parents already pay the highest childcare costs in Europe, if not the world,” says Whelan. “It’s unsustainable. If we can bring down the cost of pay that should bring down the cost of childcare for parents.”

Budget 2022 delivered €221 million investment on an annual basis, of which €172 million is new funding. Of this €138 million is to be used to both support the current cost of pay and allow for improvements to pay. A newly-formed Joint Labour Committee (JLC) is to determine how this €138 million is to be distributed.

“The JLC is made up of employer and union representatives,” Whelan explains. “Ictu has six representatives on the JLC and Ibec has five of the six employer representatives, so we are right at the heart of the process. Talks have been ongoing for several months. In theory we will agree a rate of pay and the new funding will kick in from September.”

Naturally there are differences of opinion on how much will go to pay improvements and how much will be used to contribute to existing pay levels. That will be crucial for many providers.

The key issue is the fee freeze which the industry is not opposed to. An additional €20 million in core funding for the sector was provided under Budget 2020, but this must be spread across 4,600 providers.

“Philosophically we don’t disagree with a fee freeze, but some account needs to be taken of inflationary impacts. There has been no increase for three years and by the end of this year that could mean providers are facing an effective 10 per cent [rise in costs] due to inflation. Core funding should plug that gap.”

Planning system

The fear is that many providers may opt out of the new arrangements as they will need the freedom to increase fees. “That won’t be good for anyone,” says Whelan.

Even if these issues are resolved, changes to the planning system are required to provide new childcare places, according to Whelan. He explains that current guidelines result in developers providing facilities which in many cases are too small in scale to be viable for providers.

“We would favour a change which would allow larger scale facilities of over 60 child places to be provided without penalising developers. There also needs to be a financial incentive for providers to set up baby rooms.

“Ultimately if there is no return on investment for providers they won’t put their money into expansions or new facilities. That means waiting lists will just get longer.”