Christopher O'Sullivan (Cork South West, Fianna Fail)
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I thank the Minister for taking this Topical Issue matter. He will remember that I intended to submit this matter a number of weeks ago and the Minister was not available to take it at the time, so I said I would come back to raise this important issue, which I am doing now. I know the Government is motivated to reduce childcare costs and that the Minister is motivated to do so as well. Since he Minister has taken office, a key goal of his has been to make childcare more affordable and accessible. In doing that, we have to ensure there is a childcare and early education service in place that can provide the service we are looking to provide to parents and guardians, which is very important.

I know the Minister says that, under the core funding model, an overwhelming majority of service providers will see an increase in funding and that only 1% will not see an increase. However, the bottom line is that if the new core funding model was fit for purpose, we would not have had a situation where hundreds of early childcare providers, early education providers, crèche operators and Montessori school operators descended on the gates of Leinster House like they did last week. I know the Minister went out to meet, address and listen to them, but the message I was getting is that the core funding model is not fit for purpose. It will be suitable and it will increase funding for a number of operators, which is right and merited, but we have to make sure nobody is left behind in this. That is incredibly important.

It is also important the smaller early childhood care and education, ECCE, operators are not left behind and I consider that they are. They are the people who were outside the gates of Leinster House last week. They were joined by many of the bigger chain operators in solidarity but it was mainly those smaller operators. My fear is that if we lose the smaller ECCE operators, we will leave gaps in services, especially in rural parts of Ireland. I am not being parochial and I know the favourite hobby of some Members is to list the towns and villages in their constituencies, but last week we had people from Skibbereen, Clonakilty, Aghyohil and Aghadown at the protest. The reason I mention those areas is not just to list off names but because if these ECCE operators find it hard to maintain and sustain their businesses under the new model, which they say they will, there will be gaps in services and parents and guardians will have to drive 7 km or 8 km to avail of childcare, Montessori and early education services. It seems to be affecting those smaller operators in rural areas more than in the bigger urban areas.

It is also not right that we have situations where many members of staff are signing on during the summer months simply because their work is not sustainable. That is something they do not want to do because many of the staff, and I am not trying to call anyone out with this, are having to say they are available for work when they essentially are not because they will join the service again in September when it reopens. It is also not fair that there are situations where the early education operators may have received €80 per child under ECCE because they had graduates and they are now dropping down to €69 per child. They are essentially being penalised for having graduates on their books. It is not fit for purpose and I am asking for an amending of the core funding model and some bit of movement. All the providers are asking for is to bring that payment per child from €69 up to €100. It is a big ask but surely we can meet them somewhere in between so that we can keep that service available.

Roderic O'Gorman (Dublin West, Green Party)
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I thank the Deputy for raising this issue, which he has done one on one with me on a number of occasions, and he has been a strong advocate for the sector. The Deputy is right that one of my goals as Minister is to reduce costs for parents, but I have always set out two other goals. My second goal is to ensure childcare professionals get properly paid, and we are about to achieve that through an employment regulation order, ERO. My third goal is to protect the sustainability of services. I want to reduce costs for parents, get better pay for staff and protect sustainability. Those are the three goals.

Core funding is the new funding stream to support the delivery of early learning and care, ELC, and school age childcare, SAC, for the public good, quality and affordability for children and families, sustainability and stability for providers and staff, and, importantly, accountability, transparency and value for money for the State, considering it is an investment of €221 million in the first year. Services that sign up for core funding will become partner services, working with the State to deliver SAC and ELC. Core funding is designed to improve quality for children, including through support for better terms and conditions for staff, underpinned by that ERO, improved affordability for parents by ensuring fees do not increase and the full benefits of the national childcare scheme, NCS, are felt, and offering stability to providers with an income that contributes to the cost of delivery and does not fluctuate with child attendance.

Core funding is worth €221 million in full-year costs, and that allows for an estimated 19% increase in the total cost base for the sector in the first year. That is a significant public investment in services so that services income may now include core funding, ECCE and NCS capitation, and parental fees. Core funding will be allocated based on the capacity of services being offered. Capacity is determined by a service's opening hours, a service's opening weeks, the number of child places, and the age group of the children being cared for. These are the primary drivers of services' costs of delivery and this is, therefore, a fair, reasonable and logical method for distributing funding. Core funding is a new way of providing funding for the sector and it addresses some of the disparities in the previous system of funding. There is no solid foundation in evidence for the concerns that core funding will undermine the viability of services.

Every year a number of services close and others open. Current data show the closure trend is less than in previous years. These data also show services close for a wide range of reasons and few of those closures relate to sustainability. They are mainly to do with retirements and the like. The vast majority of services will see an increase in funding with the introduction of core funding, and less than 1% of services will see no change. No service will see a decrease in funding. For any service that experiences financial difficulties, we have put in place the safety net of the sustainability fund. This new strand of the sustainability fund is directly linked to core funding and, for the first time, it is available to private services as well as to community services.

Core funding is designed to facilitate a partnership between the State and early learning and childcare services for the public good. With 94% of services currently participating in the transition fund and associated fee management, and with 83% of services having completed the sector profile, services have already shown considerable openness and willingness to engage. I have met providers, including meeting them at the Dáil last week, and I will meet their representatives. We will continue to work, listen and engage. This is the first year of core funding and this will deliver for the entire sector.

Christopher O'Sullivan (Cork South West, Fianna Fail)
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I appreciate the Minister's response and I do not question his motivation on better pay for staff involved in the sector and in making childcare affordable and accessible for parents. We have to come back to the facts of the matter. We had hundreds of people protesting outside Leinster House last week. Many of these operators were being sustained on the employment wage subsidy scheme, EWSS, which has been removed, and they are finding it difficult to retain staff without that support. As well as that, the Minister mentioned the fact that core funding will lead to an increase in funding for the vast majority of service providers.

The Minister says many of these providers, the 1% and those outside that 1%, will not be any worse off, but these same staff, operators and business owners protested in February 2020. At that point they were already unhappy with the status quo. Why would they all now suddenly be happy with it? They still believe this core funding model is not fit for purpose and it will not lead to the increases that would be appropriate to keep their businesses open.

There is a final, incredibly important point. As part of core funding there is a sustainability fund of approximately €20 million, if I am correct. That is in place to kick in if businesses are having difficulty remaining open and viable. With all due respect, why would there be a sustainability fund if we are not concerned about the viability of operators? That is an important point. All I ask is that we look again at the figure of €69. The operators are seeking €100. Surely there is a middle ground in between in the €221 million budget whereby we can keep everybody happy and keep the smaller operators in rural areas open to ensure we do not have a gap in services.

Roderic O'Gorman (Dublin West, Green Party)
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I look at the sustainability fund in another way. I do not know many other sectors where the Government provides a safety net for private providers. We are doing that because we recognise the importance of this sector. Where there is a situation where a private provider has a sustainability issue, the Government is ready to step in. There are not many other sectors of private enterprise where the Government provides that safety net. That is how I look at the importance of the sustainability net - it is a final level of protection.

I emphasise that the ECCE two years and ECCE-only services remain a fundamental part of the offering. We recognise that different parents have different needs and terms. Some want full childcare and some just want the ability to do the early learning and care, the three hours per week or the sessional element. As part of our commitment to ECCE, we are undertaking a significant evaluation of it at present. It is an evaluation I believe will result in ECCE being put on a statutory basis and enshrined in law, further copper-fastening the place of ECCE in the system. In terms of the access and inclusion model, AIM, which everybody recognises, last week I increased the capitation for AIM workers. AIM workers are only in ECCE services. I increased the capitation from €210 to €240, a 14% increase.

We are continuing to look at the system and where there are pressures. In the case of AIM workers, ECCE services were experiencing a pressure there, and we have responded to that pressure by increasing the capitation. We will continue to look at, address and refine core funding. Fundamentally, core funding is going to deliver for the sector, for services, for parents and for children.