Emer Currie (Fine Gael)
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There are myriad interconnected issues that are contributing to our fragile childcare system. Let us be in no doubt the Government is working to address them all, one by one. I want to take a look at core funding. The pay freeze has undoubtedly worked for parents and we are very grateful for it, with a reduction of 25% in fees to grow to 50% in September 2024. That is reforming policy. We should only build from there. I congratulate the Minister on the concept of core funding, but it does have to evolve.

In my view, our existing operating model, a model which needs to be developed further and further defined, has particular positive legacy characteristics that we should protect. One of them is the variety of providers that we currently have. We have large-scale providers, chains, medium-sized and small providers, childminders and a network of neighbourhood ECCE providers. We have them all and need them all in Dublin West. Right now, the small and medium providers feel like the Government is turning its back on them. They feel we are changing the operating model, fledgling as it is, towards large-scale centre-based provision, which requires a level of administration that small to medium providers are just not built to manage. Economies of scale are required to make core funding work, and smaller providers just do not have them. Regulator requirements are conflicting and very confusing and are not fostering a supportive environment in which these small to medium providers can thrive.

The reality is that we are losing good early childhood and care educators. I know the official data paints a picture whereby the closure of operators is slowing down, and the Minister feels there is more sustainability overall emerging in the sector. However, intelligence on the ground speaks to uncertainty and a lack of confidence in the future. I am being told it is too hard to make core funding work, that providers are leaving the sector early and the opportunities to grow and expand are not there. Providers are feeling squeezed out and are unsure of where Government policy is really going and if they have a place in it. I am speaking on behalf of all providers today, bar the very large providers as I have not really engaged with them on this.That is not to say they do not have issues of their own. However, it is startling when one speaks to so many operators on the ground who question whether they are going to fit into the direction we are going. The answer I give them is that they will, and that they do, and that we need them and so do our parents. However, they do need to see action with regard to core funding to back that up.

I would very much appreciate if some assurances could be given to them today. For instance, in significantly increasing core funding, allowing services to reach equilibrium with inflation, their income has remained static in the last couple of years despite perhaps a 15% to 20% increase in their operating costs. They need to pay their staff more. The administrative burden is too much and so is the need to deal with so many different agencies. Can we provide wraparound services and centralised services? There has to be more fairness because not all operators are the same and their cost base is different. There cannot be a simple one-size-fits-all solution. More than anything, what they ask me for is partnership and to be part of a sustainable vision that works for everyone.

Eugene Murphy (Fianna Fail)
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Go raibh maith agat, a Sheanadóir. Cuirim fáilte roimh an Aire Stáit.

Thomas Byrne (Meath East, Fianna Fail)
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Core funding, which is a significant achievement of this Government, was first introduced in September 2022. It is designed and has worked to support improved quality of provision, improved pay and conditions for staff, a fee freeze for parents and sustainability and stability of income for services. Core funding makes a significant additional contribution to services' income, allowing them to better absorb increased costs.

In year 1 of core funding, €259 million was allocated to the scheme and 99% of services that signed up to the scheme saw their income increase. Less than 1%, or close to 60 services, received top-up payments to ensure their income did not decrease for the same level of provision offered.

Core funding in its second year has a budget that has increased by 11% to reach €287 million, providing a sustainable platform for investment with increases for all services. To date, more than 94% of eligible providers have now signed up to year 2 of core funding.

This year, all services will have seen further increases to their core funding allocations from the second year due to the increased allocations towards non-staff overheads and administrative staff and time. In addition, the Government introduced a number of targeted supports for small and sessional services in year 2 of the scheme to improve sustainability of these services, specifically a flat rate top-up of €4,075 for sessional-only services and a minimum base rate allocation of €8,150. These measures saw the average allocation under core funding for sessional-only services increase by 32% this year.

Currently, through early childhood care and education, ECCE, capitation and core funding combined, services receive a minimum of €79.20 per child per week and a maximum of €95.85, with additional funding for graduate lead educators and graduate managers, with sessional only services also receiving an additional sessional-only flat rate of €4,075. In a continued commitment to supporting small and sessional services, the targeted measures introduced in year 2 of the scheme will continue to apply in the 2024-25 year.

As announced in the most recent budget, the allocation for year 3 of core funding, from September 2024 to August 2025, will increase by €44 million or 15% to €331 million. This will support the delivery of a range of enhancements in year 3 of the scheme to support improved affordability and accessibility for families, improved pay and conditions for the workforce and continued improvement in sustainability for providers. Enhancements to the targeted measures for small and sessional services, including the option to raise the minimum core funding base rate, are under consideration for year 3. Any change to the allocation model for year 3 will be informed by financial returns data due from services next month.

Emer Currie (Fine Gael)
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The Minister of State will have noted that in my opening remarks, I congratulated the Minister on the concept of core funding because I think the concept does work. There are issues on the ground, however, and they need to be addressed for people in this sector of the industry to have the stability and security they are looking for. There does need to be an ongoing partnership with them with regard to their specific challenges. As I said, that will only be done by not just having a model that works overall and not with a one-size-fits-all approach, but by supporting them as much as we can individually with their concerns. The problem with the financial sustainability supports is that the providers feel penalised then whenever they are looking for more loans or assistance. That is very real. The funding opportunities are just not there to the extent that they need. Overall, we have to protect their place in our operating model.

Thomas Byrne (Meath East, Fianna Fail)
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The announcement in September 2022 regarding early years education and childcare was really significant and in later years will be looked back upon with huge pride as a major achievement of this Government. It was a significant focus of the previous general election. All of us in government should be really proud of what we have achieved with regard to core funding. It is a massive step forward. However, the Minister does not want any services to be faced with financial sustainability issues and is fully committed to working with any service to support it in delivering early learning and childcare for the public good, which is what we are all here for.

Special supports are available from the Department where a service is experiencing financial difficulty or has concerns about viability, accessed through local childcare committee. This support can take the form of assisting services with interpreting analysis of staff ratios and cashflow, as well as more specialised advice and support appropriate to individual circumstances. In some instances, financial supports may be deemed appropriate in tandem with the case management process. Once a service engages with its local childcare committee, it will be able to avail of supports through the case management process. Through this process, the local childcare committee and Pobal work together to assess and provide support to early learning and childcare and school age childcare, SAC, services experiencing difficulties. The Minister encourages any service experiencing financial difficulty that would like support to contact the county or city childcare committees to access case management supports.

Eugene Murphy (Fianna Fail)
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I hope Senator Currie has a cure for that cough or cold. I have one myself; it is going around.