Brian Cowen (Laois-Offaly, Fianna Fail)

As the Deputy is aware, we debated this topic on Committee Stage. It was also discussed at some length during previous Finance Bill debates. As I indicated to the select committee, the position is that the existing law already provides an exemption from an employee benefit-in-kind charge where employers provide free or subsidised child care services for their employees. The exemption applies where the child care facilities are made available solely in-house by the employer, or are made available by the employer jointly with other participants, or are made available by other persons and the employer is wholly or partly responsible for financing and managing the child care service, or are made available by other persons and the employer is wholly or partially responsible for capital expenditure on the construction or refurbishment of the premises. Essentially, in order for the exemption to apply, the employer must be involved in the provision of the facilities, their management or funding.

Concerns were expressed previously that the relief was not available to small and medium-sized enterprises by virtue of their size. Where the individual small and medium-sized enterprise might not be able to facilitate the provision of child care facilities on its own, the legislation allows it to join with other small employers to provide co-located facilities, contribute proportionately to costs and jointly provide the child care service. In this way, SMEs can collectively address the differences of scale in the provision of facilities. The proposal, in so far as it relates to direct provision of child care, is addressed in existing legislation.

The second proposal in the Deputy's amendment suggests employees be given a benefit-in-kind exemption where their employer purchases child care services for them from third parties. A core requirement of the current exemption is that employers must be involved in the provision, management or funding of facilities. Apart from this, the main difficulty with the Deputy's suggestion would be the potential cost to the Exchequer. Allowing employers to buy child care services for employees from third parties is unlikely to have any significant impact on the supply of additional child care places. It could lead to some displacement, with employers buying up the most convenient child care places for their employees, with those not getting such a benefit being forced out to less convenient child care facilities.

There could also be a knock-on effect on the cost of child care, as people being subsidised might be prepared to pay even more for the service. Therefore, it would not be a legitimate policy objective to provide tax relief for some taxpayers who have been lucky enough to be employed by an employer or group of employers which have sourced child care places from the existing complement of places. Such a policy would be of no benefit without taxable income. Ultimately, such a provision, if introduced, would lead to pressure for full tax relief for all those paying their own child care costs, with the associated cost being borne by the Exchequer. As the Deputy is aware, current Government policy is designed to increase the supply of child care places through the creation of additional places and not to use resources to grant tax relief for child care costs per se. He will also be aware that in the past few years, the Government has sought to support parents with children. These support measures include the early child care supplement, the national child care investment programme which is aimed at increasing the supply of affordable child care places by 50,000, a training strategy for national child care aimed at producing 17,000 additional child care training places by the end of the decade, increased maternity leave and a tax incentive for those who mind children in their own homes, a matter we discussed earlier. It is for these reasons that I am, unfortunately, not in a position to accept the Deputy's amendment.

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