With a traditional emphasis on social redistribution combined with a greater willingness to employ public sector resources, the Left should be leading the agenda on childcare issues. A few months ago it looked as though Labour was going to do just that with a comprehensive policy document on childcare and family-related issues. It argued for a number of positive measures, most notably a guaranteed early education place for all children.
But the centrepiece of the policy was ill-judged: the Early Years Subsidy.
This policy would see parents of children three years and under receiving €50 per week, with payments of €25 in respect of children between four and twelve years. This is, in effect, an enhancement of Child Benefit with an age-related supplement. The proposal comes at a hefty price: over €1 billion in 2005 – or 2/3 of the cost of Labour’s entire child-related package.
There are three problems with this proposal. First, it is extremely unfocused.
- If it is intended to target parents’ childcare costs it fails, as a very high proportion of the expenditure will not be used for that purpose (e.g. parents caring in the home).
- If it is intended to subsidise general child-related costs it ignores the fact that such costs increase as children grow older (hence, the Commission on Social Welfare’s proposals to provide a Child Benefit supplement for children over the age of 12) .
- If the question is how we provide resources to parents who use childcare facilities, over and above what all parents receive, it doesn’t have an answer.
The proposed Early Years Subsidy may have the perverse effect of actually increasing the childcare costs. There is always the danger of inflationary pressure in subsidising demand in a market of low supply, just as in housing. No wonder, then, that – according to news reports – crèches increased their prices the day after last year’s budget, which announced the very policy Labour was seeking, an Early Years Subsidy (and they didn’t even wait for the payments to kick in). So parents using childcare facilities will have some of that Subsidy eaten away by price increases whereas parents who don’t purchase such services will not experience that erosion.
Thirdly, the ‘step-effect’ phenomenon was not addressed. Traditionally, this process involves an increase in gross income resulting in reduced net income (the Family Income Supplement is an example, whereby as income grows the payment is withdrawn, leaving less money in the pocket). With the Early Years Subsidy, the reduced net income arises from children growing older. Under Labour’s proposal, a family with two small children will, in a very brief time, find their net income reduced by €2,600 a year when they turn four years. When they turn thirteen, the household loses another €2,600. Here’s the problem:
- Losing income prior to entering primary school means that families are without any support when it comes to back-to-school costs, something that Labour has campaigned on quite successfully.
- Losing income when children become teenagers means they have no support during a very high cost period. In ‘The Cost of a Child’, the Family Studies Centre of UCD, estimated that weekly teenage costs are 80% higher than those of children under the age of six.
So the withdrawal periods of the Early Years Subsidy do not match the cost patterns of families – indeed, they may exacerbate them.
The problem with these ‘throw-money-at-the-problem’ solutions is that everyone can play the game – especially a government that happens to have a lot of cash swirling about. Last year’s budget trumped Labour’s headline proposal when Cowen brought in its own Early Years Subsidy-equivalent of €20 per week. Ever since, Labour has found it difficult getting traction on the issue.
The frustrating thing is that Labour had the answer in the palm of their policy hand –childcare as a public, rather than a private service. The guaranteed pre-school places put the care and learning of children completely in the public sphere. And the cost? 15% of the price tag of the unfocused and inflationary Early Years Subsidy. Indeed, much of the cost of developing a national network of childcare facilities would only mean a redirection of money now being spent on subsidies, grants and tax-breaks.
There has been a recent shift in emphasis in Labour’s campaign. First, Senator Kathleen O’Meara has quite rightly emphasised the need for a stronger regulatory regime. With several cases of substandard childcare facilities being highlighted in the media, we certainly need more. The problem is that the more effective the regulation, the fewer childcare places, again driving up costs. This was certainly the experience when new fire and building regulations were brought into the sector back in the late 1990s – a number closed down because they couldn’t afford the capital or running costs of the mandated improvements (of course, one could adopt the Fine Gael line whereby ‘quality’ in childcare shouldn’t be ‘mandated’, only ‘encouraged’; . . . yes, well . . . ).
More importantly, Labour is starting to focus on state provision of childcare places. Such provision need not be statist. It can be operated through childcare centres – ideally attached to national schools, thus forming a ‘children’s’ campus’; it could be delivered through local authorities (but this mean having fully democratic authorities buttressed by independent revenue raising powers – and that, as they say, is a whole other story); through partnership with the voluntary sector and even incorporate the private sector. We don’t need to revert to a command model just to deliver high quality, affordable public services.
But we need to be clear about the core of the dilemma: childcare places distributed on the basis of need, not income, staffed by qualified professionals and delivered at affordable prices is something that the private sector by its every nature cannot do. Except at prices that few can afford. Its not that private providers are necessarily ‘greedy’ or ‘profit-grubbing’. It’s just that the nature of such care is highly labour-intensive and professionally sensitive.
If we can grasp this, we can begin to experience the benefits that our counter-parts on the continent enjoy at a fraction of the cost here. For the issue of the quality, accessibility and cost will continue to run, and Fianna Fail and the PDs have no interest in structural reform. But first we have to cross the market Rubicon and accept that childcare is first and foremost a public service.