Brian Lenihan Jnr (Dublin West, Fianna Fail)

The Lisbon Agenda is not driving child care. The Government has adopted a national children's strategy that has been highly commended by the United Nations organisation. The strategy envisaged that children should be at the centre of public policy decision-making. The Lisbon Agenda does not take priority over the interests of children.

I was endeavouring to explain to Deputies opposite why responsibility for this matter lies with the Department of Justice, Equality and Law Reform. The issue of the standards which apply in child care centres is a matter for the Department of Health and Children. I was intrigued by the canvassing of the Swedish model in this motion echoed by some speakers. There is no doubt the Scandinavian countries have a very good record in the area of child care provision, but I respectfully suggest to the Opposition Deputies that they look at the Finnish model ahead of the Swedish one. Finland has one of the best literacy and educational statistics in the world because its child care is integrated with the kindergarten system. We have not decided to adopt the Swedish model. It is universal and a very substantial increase in taxation would be required to fund such a model. That is a matter about which we can have political debate in this House but it is important to note that would be the implication of adopting the Swedish model. Our model is not perfect, far from it.

Deputy Finian McGrath spoke about relative poverty. Of course the Government is concerned about the bloc of children who remain in consistent poverty. Although the figures for consistent poverty have improved, the latest available figures show a group in that area. This is a matter which the Ministers for Social and Family Affairs and Finance must consider when preparing this year's budget. Despite considerable increases in child benefit in recent years, they have not reduced that number. We must adopt more wide-ranging policies and strategies to deal with that.

I refute the comments made by Deputies which failed to acknowledge the achievements that have been made since 1997 since the present Government configuration took office. The Government's implementation of a wide range of measures in accordance with the programme for Government has had a major impact on the child care needs of parents. Real choices have been offered.

There has been major economic and social change in the past three decades which has totally transformed the position and status of women in modern Irish life and the Government has responded to those changes. It was not until the early 1980s that in general women remained in employment following marriage and even then many women withdrew from the labour market on the birth of the first child. There were various reasons for this, including the lack of available child care options. Many of those who chose to remain in the labour force relied on family members or neighbours to provide child care.

Until the 1990s the provision of formal child care was somewhat limited with few centre-based child care facilities. Much of the so-called child care provision offered only pre-school education and socialisation opportunities in very small and unstructured settings usually for the academic year prior to the first year in junior infants at primary school. That was the requirement for most at the time. In the 1980s and 1990s as more mothers tended to remain in or return to the workforce the child care needs of parents continued to be most frequently met by family or neighbours. The Central Statistics Office survey of child care in 2003 shows that the involvement of the extended family to provide child care support remains the preferred choice for child care in many families. I welcome the fact that the Central Statistics Office made a detailed extrapolation from the 2002 census which is a very interesting document and I commend it to Deputies who are interested in this subject.

The potential of the female labour force as an impetus for further economic growth together with the economic needs of many couples continued to contribute to an increase in female participation in the labour force. EU equality legislation endorsed the need for expanded opportunities for women. The result of these changes was an increased awareness of the need for expanded child care services to support the participation of both parents in the labour market.

The first meeting of the expert working group on child care established under the partnership arrangements was held within a month of the Government changeover in 1997. All the evidence shows that child care has been high on the Government's agenda since then and the Government has moved to facilitate the development of top quality child care services across the length and breadth of the country. The social partners recognised the need to develop child care to meet the needs of working parents under Partnership 2000. The equality division of the Department of Justice, Equality and Law Reform chaired the expert working group on child care which reported in 1999. The group's recommendations were published in 1999 and the Government proceeded to implement them through the budget of 2000 and the National Development Plan 2000-2006.

The expert working group looked at the supply and demand sides of child care. The supply side was supported through major investment in the national development plan as a result of which over 20,000 new centre-based child care places have been put in place. This represents an increase of at least 35% in the supply of child care places since 1999. The Government addressed the demand side through a series of fiscal measures. These included supporting the development of privately-owned child care facilities by making capital tax facilities for expenditure incurred in the construction, extension or refurbishment of a building or part of a building for use as a child care facility as well as for expenditure on the conversion of an existing building or part of a building for use as a child care facility. This incentive applies to facilities which meet the required standards for facilities envisaged in the Child Care Act 1991 for expenditure incurred on or from 1 December 1999 — 100% capital allowances are allowable in one year.

Certain free or subsidised child care facilities provided by employers are exempt from a benefit-in-kind charge on employees benefiting from the facilities as provided for in the Finance Act 1999. The benefit-in-kind exemption applies if the employer provides the facilities in-house or in premises made available by the employer in another location. The exemption also applies if an employer provides child care facilities jointly with others, such as other employers or a voluntary body. In such circumstances, the employer must be wholly or partly responsible for financing and managing the child care facility. This exemption was subsequently extended in the Finance Act 2001 to cover situations where an employer makes a contribution to the capital costs of an independent supplier of child care facilities. It is fair to note that a number of fine facilities have developed through reliance on that facility. The exemption from benefit-in-kind taxation does not apply where an employer simply pays for or subsidises the cost of child care provided by an independent child care provider. The cost borne by the employer is a taxable benefit and PAYE and PRSI must be applied accordingly.

The Government has continued to make increased child benefit available to parents to enable them to exercise child care choices for the care of their children while they are at work, in training or in education. Government policy in the area of child support aims to provide assistance that will offer real choice to parents and that will benefit all children. In that context it has been decided that child benefit will be the main fiscal instrument through which support will be provided to parents with dependent children. Child benefit provides assistance to all parents in whatever caring choices are most appropriate for them and their children. In addition and unlike tax relief, it provides support to parents irrespective of their income status. The Government's commitment to the policy of concentrating resources for child income support on the child benefit scheme is reflected in the significant resources invested in the child benefit scheme since 2001 as evidenced by increasing monthly payments to €131.60 for each of the first two children and €165.30 for the third and subsequent children — increases of 144% and 132% respectively. It is important to recognise that since 1994 the combined child benefit or child dependant allowance payment has increased by more than double the rate of inflation.

Unlike child dependant allowance, child benefit is neutral vis-À-vis the employment status of the child's parents and does not contribute to poverty traps, as the loss of child dependant allowances by social welfare recipients on taking up employment can act as a disincentive to availing of work opportunities. Consequently, universal child benefit, which is not taxable and is not assessed as means for other secondary benefits, has proved more effective than child dependant allowance as a child income support mechanism. I know there was an interesting submission on the demand side from the Irish Congress of Trade Unions on various tax measures the Government should consider in this area. I will draw them to the attention of the Minister for Finance, but in adopting any tax incentives in this area, we must be careful not simply to increase the cost of the provision of child care. By providing a particular tax relief, we must be careful not to indirectly increase the profits of the child care supplier rather than passing on the real advantage to the ultimate user of the service.

On the supply side, apart from the capital taxation incentives, the benefit-in-kind scheme for employers and increases in child income supports, the implementation of the equal opportunities child care programme 2000-06 represents the Government's major response to the development of child care in Ireland. The programme now has an investment package of more than €449 million over the eight year period 2000-07 during which expenditure will take place under the National Development Plan 2000-2006. The programme directly implements the supply side recommendations of the Partnership 2000 expert working group, which included the provision of financial supports towards the development of new services and enhancement of existing services, supports towards the development of quality awareness in Irish child care and the development of a co-ordinated approach to the delivery of child care services. The programme was launched as an element of the National Development Plan 2000-2006 and it is largely funded through the two regional operational programmes for the Border, midlands and western region and the southern and eastern region. The main objectives of the programme are to improve the quality of child care; to maintain and increase the number of child care facilities and places; and to introduce a co-ordinated approach to the delivery of child care services.

The programme originally made available €317.4 million in funding, including €177 million in European Social Fund support. This was subsequently augmented by a further allocation of €33.6 million of Exchequer funding from the Programme for Prosperity and Fairness social partnership agreement together with transfers of almost €86 million from other Departments. This brought the total allocation for the development of child care over the seven year period to 2006 to €436.7 million. The mid-term review of the national development plan brought a further increase in funding provision for child care of about €9 million in funding from the European Social Fund while the mid-term review of the BMW regional operational programme led the Assembly to transfer about €2.7 million in funding from the European Regional Development Fund and €0.9 million of Exchequer matching funds to the child care measure. These constant increases in funding illustrate the demand that speakers from the Opposition have highlighted this evening and I accept that. They also show that the Government has not been lacking in imagination in seeking additional financial resources to match that increased demand. The increase brings the total funding now available over the lifetime of the programme to €449.3 million and the total allocations committed to this multi-annual programme will always be a matter under consideration by the Government.

Each of the operational programmes referred to the lack of centre based child care and pointed out that this was a significant contributor to exclusion from available education, training and employment opportunities, particularly at a time when increasing numbers of women were choosing to remain in or return to the labour market. The regional operational programmes noted that this lack of centre based child care impacted most severely on women, in particular disadvantaged women and single parent families. Accordingly, the programme is structured to have both a labour market and a social inclusion focus, where labour market participation is seen as a key medium to break the cycle of disadvantage. This parallels European Union social policy and must be adhered to as an emphasis for the programme because of the important contribution to the funding that comes from the European Social Fund.

The programme is structured into two measures of the regional operational programmes. The facilities measure makes capital grant assistance available to create new and enhanced child care facilities, with significant European Regional Development Fund and Exchequer support. The staffing and quality sub-measures make European Social Fund and Exchequer supports available to assist with the staffing costs incurred in child care facilities that support disadvantaged parents in employment, education and training and towards projects that enhance quality awareness in the child care sector. The equal opportunities child care programme makes capital grant assistance available to community based not for profit child care groups and to private child care providers to facilitate the creation of new and enhanced child care places. Community based not for profit groups that meet the programme criteria can avail of 100% funding, subject to the availability of funding. Private providers can receive a grant of up to €50,790 towards the cost of developing a new or enhanced facility. This level of funding to the private sector is capped because of competition and State aids issues. Community based not for profit groups that provide services for very disadvantaged families can also receive grant assistance towards their staffing costs, to enable them to support parents who would not be able to afford the full costs of child care.

To date, the Department has allocated more than €222 million in funding to child care providers under the programme through a mix of capital funding for community based, not for profit and private child care facilities as well as staffing funding for community based and not for profit groups. This funding allocated to date will lead to the creation of 31,200 new child care places, showing that the original target of 28,300 new places will be exceeded. The original programme targets were set on the basis of what was thought possible with the funding package available and did not aspire to address the full child care needs of Irish parents but to take a step in that direction. Of these 31,200 new places, the latest statistics covering the period to June 2004 show that 20,500 of these new places are already in place. These include 8,000 new full time places that offer child care services for more than three and a half hours per day, and 12,500 new part time places that offer less than that amount per day. Every county in Ireland has already benefited from the creation of additional child care facilities under the programme. All groups benefiting from the programme are encouraged to provide services to the maximum allowed in respect of their particular service under the child care regulations and to remain open for at least 46 weeks per year to facilitate parents in employment.

As a result of the high adult carer to child ratios that are essential to ensure the delivery of a safe, quality child care service, the cost of delivering child care is necessarily high. One of the key objectives of the programme has not just been to increase the quantity of child care available, but to increase the quality. It is in this context that the programme helps new community-based facilities with their staffing costs in their early days as they move towards sustainability. It is likely that a number of community based services located in areas of significant disadvantage will require ongoing contributions towards their staffing costs. Given the importance of labour market participation in breaking the cycle of disadvantage, the advantages to society in the long term of these supports will outweigh their costs in the short term.

See this speech in context