Minister for Children Katherine Zappone has commissioned an independent study into the cost of childcare in an effort to secure more funding for a subsidy scheme for parents.
The review will prepare the ground for a pitch for increased funding when the Government has more money to spend in the final budget of the confidence and supply deal with Fianna Fáil, due in October 2018.
Under EU fiscal rules, the amount of money for increasing spending and reducing taxes will increase for the budget that will be outlined in October 2018, and for subsequent budgets.
It is expected that the final report of the childcare study will be completed before the last budget of the confidence and supply deal, with an interim report due to be published next spring.
The room for manoeuvre in the package to be introduced by Minister for Finance Paschal Donohoe this year will be tight.
Ms Zappone and Taoiseach Leo Varadkar had said they will allocate more money towards childcare in this budget, but Ms Zappone believes substantial investment is needed over a number of years.
The childcare review, which is a programme for government commitment and goes out to tender on Friday, will seek to ascertain why Irish childcare costs are among the most expensive in Europe.
Long term
It will also examine how potential Government policies could increase or decrease costs, as well as the impact of the “increased professionalisation” of the sector.
Ms Zappone says she will be seeking more money for the childcare scheme in this October’s budget, but added: “We must plan beyond that.”
Current estimates of the scope for new tax and spending measures in this budget are about €500 million, but this is likely to reduce further if the new public pay deal passes.
Mr Varadkar has said extra money may be found by raising some taxes, such as those on cigarettes, as well as making some savings across government or reallocating money across departments. Changes in how the fiscal space is calculated are also likely to create extra resources.
The room for manoeuvre in the budget after next – which will be the final one of the confidence and supply deal between Fianna Fáil and Fine Gael – will be much wider.
Subsidy scheme
The summer economic statement, published last month, said there will be €3.2 billion for tax cuts and spending increases for the budget that will be outlined in October 2018.
The subsidy scheme, which takes effect from September, sees universal subsidies of up to €1,040 per year being made available for each child aged between six months and three years.
The maximum universal payment works out at €20 per week for a child in full-time childcare, classified as at least five hours of childcare per day with a registered childcare provider. It reduces pro rata for less time.
In addition, targeted subsidies of up to €7,500 per annum per child will be delivered to those families in most need.
It was initially intended that an IT system that would link the Revenue Commissioners and the Department of Social Protection in order to give parents an indication of exactly what subsidies they could be entitled to.
The universal payments will still be allocated from next month and lower income recipients will be determined by those in receipt of social welfare payments such as the community childcare scheme and the training and employment scheme.