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Childcare Costs

Dáil Éireann Debate, Tuesday - 28 July 2020

Tuesday, 28 July 2020

Questions (738, 740)

Kathleen Funchion

Question:

738. Deputy Kathleen Funchion asked the Minister for Children and Youth Affairs if the finding of the Crowe report that the wage bill comprises an average of 70% of the total costs of the childcare sector is inclusive of ECCE-only providers or whether the referenced cost breakdown relates only to non-ECCE provision. [19108/20]

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Kathleen Funchion

Question:

740. Deputy Kathleen Funchion asked the Minister for Children and Youth Affairs if staff salaries represent 70% of the costs of the childcare sector; his views on whether this is 70% of providers' costs; and if not, if it is 70% of all costs, including costs that are covered by State funding, in view of comments by his official at the Oireachtas Special Committee on Covid-19 Response hearing on childcare on 23 June 2020. [19118/20]

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Written answers (Question to Children)

I propose to take Questions Nos. 738 and 740 together.

The data the Deputy refers to was derived from the Independent Review of the Cost of Delivering Childcare in Ireland, which undertaken by Crowe in 2018 on behalf of my Department. The brief included:

- analysing the current costs of providing childcare and the factors that impact on these costs;

- the development and delivery of a model of the unit costs of providing childcare that allows analysis of policy changes and variation in cost-drivers, including the potential impact of professionalisation; and

- providing an objective, high-level market analysis of the childcare sector in Ireland, including analysis of fee levels charged to parents.

The approach and methodology for this Review included:

- engagement with key stakeholders from the sector, including the Early Years Forum, provider representative organisations, the City and County Childcare Committees, statutory bodies, childcare professional training bodies, and academics;

- the administration of a survey to all centre-based childcare providers nationally, to provide the data on which the modelling tool would be based;

- the development of a cost modelling tool (and guidance document) to present the baseline cost data and enable the testing of the impact of a range of scenarios, namely changes to cost drivers on the unit costs of delivering childcare services; and

- a final report detailing the elements of the review, and the key findings.

This Review is intended to provide a robust evidence base for the further development of high quality childcare in Ireland. The outputs, including the costs calculator developed through this project are also intended to form a key input into the setting of capitation and subvention rates for future funding schemes and will be considered by the Expert Group convened to develop a new funding model.

The draft final report, cost modelling tool and guidance were subject to peer review. Arising from the external peer review, an additional piece of work was undertaken. Final outputs were received in January 2020, and preparation was underway to launch the report in April 2020. However, owing to COVID-19, its launch was postponed. Nevertheless, the data from this Review has already informed the work of my Department, in particular the Department’s funding response to COVID-19.

As part of this Review, the broad components of the full cost of delivering childcare was identified. This suggested a pattern consistent with those found in other jurisdictions, including England, New Zealand and Scotland, whereby a dominance of staff costs in the make-up of the overall cost figures. Specifically, on average, staffing costs were found to account for approximately 70% of the total cost of delivering childcare across all services, including ECCE-only services. The costing analysis did not include profit or surplus.

Whilst the average proportion of total cost represented by staffing costs varies marginally, it is at a minimum, more than two-thirds of the total cost of delivering childcare, regardless of different provider types.

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