Willie O'Dea (Limerick East, Fianna Fail)

This matter was debated at some length on Committee and Report Stages in the Dáil. As the Tánaiste and Minister for Finance indicated in those debates, the position is that existing law already provides an exemption for an employee benefit-in-kind charge where employers provide free or subsidised child care to their employees. However, the exemption applies only on certain conditions. I will not go through the conditions now but essentially, for the exemption to apply, the employer must be involved in the provision, management or funding of the facilities.

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

In regard to the second proposal in the recommendation, namely, that employees be given a benefit-in-kind exemption where their employer purchases child care 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, there are a number of difficulties, the first of which relates to cost. The second one is that allowing employers to buy child care for employees from third parties is unlikely to have any significant impact on the supply of additional child care places. Indeed, it could lead to some displacement with employers buying up most of the convenient child care places for their employees, and with those not getting such a benefit being forced out to less convenient child care facilities. Third, there could 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. Certainly, those providing it probably would be inclined to charge even more. Fourth, 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 that have sourced child care places from the existing complement. Such a policy would be of no benefit to those without taxable income, for example. Fifth, ultimately, such a provision, if introduced, very likely would lead to pressure for full tax relief for all those paying their own child care costs, with the associated costs being borne by the Exchequer. Current Government policy is designed to increase the supply of child care places through the creation of additional places, not to use the resources to grant tax relief for child care costs per se.

Over several years, the Government has sought to support parents with children. These support measures, introduced in tandem with significant increases in child benefit payment, include the early child care supplement scheme, the national child care investment programme, the supply of a further 50,000 child care places, the national child care training strategy which aims to produce 17,000 additional child care training places by 2010, increased maternity leave, and a tax exemption for those who mind children in their own homes.