John Paul Phelan (Fine Gael)

I move recommendation No. 4:

In page 17, before section 11, to insert the following new section:

"11.—As respects the year of assessment 2005 and subsequent years of assessment the Principal Act is amended by the insertion of a new section 473B:

'473B.—(1) In this section—

"approved child minding services" means an institution which is registered by the Department of Social and Family Affairs on such terms and conditions as the Minister for Social and Family Affairs determined by regulation;

"approved child minding" means a full or part-time child minding service provided by an approved child minding service provider;

"qualifying expenses" means the amount of fees or charges chargeable in respect of approved child minding.

(2) Subject to this section where an individual for a year of assessment proves that he/she on his or her own behalf or on behalf of his or her dependant made a payment to an approved child minding service provider in respect of approved child minding for a child who is the child of the person making the payment, or in respect of whom the parent making such a payment is in loco parentis or is an adoptive parent or the child is a child of a dependant of the person making such payment, relief from income tax at the standard rate shall apply on such payment up to a maximum of €7,000. The income of such person to be charged income tax for the year of assessment shall be reduced by the amount which is the lesser of——

(a) an amount equal to the payments so made,

(b) €7,000, or

(c) The amount which reduces the chargeable income of such person to nil.'.".

This recommendation concerns child care, an issue raised by most Senators who spoke yesterday on Second Stage. It proposes a system of tax relief for child care expenses. In recent days there have been rumblings from Government about possible proposals on child care and support for young families with major child care expenses. It is a significant expense which, for many young families, is equivalent to a second mortgage.

The Government's previous policy focused primarily on children's allowances and child benefit as a mechanism to cover the cost of child care. Although children's allowance has increased substantially in recent years, the monthly sum would not pay for a week's child care.

This recommendation provides the first step towards creating a system of tax relief for these expenses. The most suitable system is the French voucher system to which Senator Henry referred yesterday. The Australian system is similar. All families, regardless of income, receive vouchers to spend on child care, special tuition and so on.

My proposal would set us on the road to acknowledging the crisis in this area to which Government policy has not responded. I hope the Minister of State can take on board at least parts of this recommendation to provide relief for people faced with these large bills.