Dáil Éireann Debate, Thursday - 26 May 2022
312. Deputy Kathleen Funchion asked the Minister for Children, Equality, Disability, Integration and Youth if staff salaries represent 70% of the cost 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. [27084/22]
View answerIn 2018, Crowe was commissioned by the then Department of Children and Youth Affairs to undertake an independent review on the cost of providing quality early learning and childcare (ELC) in Ireland. The brief for the Review included:
- analysing the current costs of providing ELC and the factors that impact on these costs;
- the development and delivery of a model of the unit costs of providing ELC 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 ELC sector in Ireland, including analysis of fee levels charged to parents.
The project has provided a robust evidence base for the development of policy and implementation of initiatives to support the delivery of high quality ELC in Ireland.
The final report, Independent Review of the Cost of Providing Quality Childcare Services in Ireland, was published in 2020. The draft final report, cost modelling tool and guidance were subject to peer review.
As part of the Review, the broad components of the full cost of delivering ELC 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 ELC across all services. 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 ELC, regardless of different provider types.
These figures relate to providers' total costs, regardless of the extent to which those costs are subsidised by public funding. Separately, the same review found that, on average 60% of the income to the sector is from public funding although this varies substantially across the sector.
Data on provider income and cost was also collected in 2021 and 2022 by Pobal to enable similar analysis. Analysis of data collected in 2021 shows broad consistency with 2018 data in relation to the proportion of costs driven by staff costs.
Income and cost data, now collected through the Sector Profile, is more important than ever to underpin important policy and funding decisions. A new round of data collection has recently been completed. This is opportune given the uniqueness of this point in time for the sector with the end of pandemic measures and imminent introduction of the major new funding stream, Core Funding. I am delighted that 83% of services have already completed the Sector Profile this year, which will provide a strong basis to inform future policy development and assess the impact of Core Funding.
As part of Budget 2022, I was pleased to announced Core Funding, a new supply-side funding stream available to ELC providers from September 2022. Core Funding amounts to €221 million in full year costs (€173 million of which is new investment). The €221 million Core Funding budget is distributed to services in a fair and proportionate manner, based primarily on the features that determine services’ operating costs, key of which is staff costs.
Importantly, Core Funding and this significant increase in investment to the sector is the vehicle through which the Government will deliver improved pay and conditions for staff through supporting the drawing up of Employment Regulation Order for different roles of the sector by the Joint Labour Committee and through introduction new mechanisms to control parental fees.
