Dáil Éireann Debate, Tuesday - 16 April 2024
575. Deputy Rose Conway-Walsh asked the Minister for Children, Equality, Disability, Integration and Youth the corresponding saving to the Exchequer through the means-tested national childcare subsidy for every 1% decrease in the average fees using the universal national childcare scheme; and if he will make a statement on the matter. [16039/24]
View answerThe Deputy has requested the savings to the Exchequer through reducing the average fees using the National Childcare Scheme (NCS). It should be noted that the NCS reduces out of pocket costs, rather than reduces fees, at a cost of the Exchequer.
My Department does not hold individualised fee data for parents as these are local agreements between parents and providers; instead a reduction in the average out of pocket cost to parents is examined using data from Pobal on average weekly fees across the country.
To achieve the desired reductions in out of pocket costs, increases in the NCS minimum (universal) subsidy were used. Assuming a 45-hour week for all children, a new hourly minimum (universal) subsidy of €1.43 was derived to effect a 1% reduction in out of pocket costs.
The ESRI SWITCH model was used to estimate the cost of this increase to the minimum (universal) subsidy, the estimate from SWITCH was then applied to the Department's baseline cost of the NCS for 2024. Using this method, the cost of this change was estimated at €4.13 million.
As fees can vary from service to service and depending on parent’s usage, impact estimates must be made as an average of the overall parental financial contribution to fees for their early learning and childcare.
The impact of this change will also vary based on the income level of the applicant. Parents on the maximum subsidies under the income assessed subsidy, that is those on annual income of €26,000 and below will see no change in their fee, as they are already in receipt of the highest available subsidy. For remaining parents, with income above €26,000 under the income assessed subsidy, reductions in fees will vary according to income levels, with those currently in receipt of the lowest subsidies benefiting the most.
This estimate comes with some important caveats. Firstly, the above costing is based on the NCS as it operates currently and the subsidy rates as time of this PQ being asked. As part of Budget 2024 I announced an increase to the NCS universal subsidy from €1.40 per hour to €2.14 and an increase in the NCS sponsorship rate for children over 1 to €5.30 per hour from September 2024. As these are not yet implemented, the impact of these changes have not been factored into the above costing.
Finally, the costing is made on the basis of a static system; that is, the model assumes that the level of usage of eligible early learning and childcare remains static. Any changes to subsidies may create a change in behaviours in families, for example, women returning to workforce and using formal early learning and childcare for the first time.
