James Reilly (Dublin North, Fine Gael)
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Question 206: To ask the Minister for Health and Children the proposals she has to reduce the burden of child care costs on parents; if she will examine innovative ways such as the VAT system for reducing such costs; and if she will make a statement on the matter. [17247/07]

Brendan Smith (Cavan-Monaghan, Fianna Fail)
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The Government has introduced a number of measures to support parents with the cost of childcare and to increase the supply of quality child care places available to parents. To stimulate the provision of quality childcare places the Government established the EU co-funded Equal Opportunities Childcare Programme 2000-2006 (EOCP) and the National Childcare Investment Programme 2006-2010 (NCIP). Together, the two programmes have a combined budget of almost €1.1 billion and are projected to create over 90,000 child care places, with some 34,000 of the new places already in place. These places are provided either through community based/not for profit childcare groups or by private providers.

Under the programmes applicants can apply for capital grants for the building or expansion of childcare facilities. The maximum funding available under the NCIP for community based services is €1.2 million and for private providers there is a maximum of €100,000 per facility and a maximum of €500,000 for multiple services in different catchment areas subject to programme criteria.

Furthermore under the EOCP, community based providers have also been able to apply for staffing grants to assist with the costs of employing childcare workers in community based childcare centres with a focus on disadvantage. This ensures that less advantaged parents have increased access to quality childcare and that they are charged fees which are less than the economic cost of providing the service. Under the NCIP a successor scheme to support childcare costs for disadvantaged parents is being developed and is expected to be announced shortly.

This Government is committed to providing enhanced childcare supports to ensure that there are quality services available to parents throughout the country while also offering real choice to all parents in relation to the care of their children. In Budget 2007, the Minister for Finance announced the Government's commitment to invest an additional one billion euros in Child Benefit over the course of the next 5 years, to support all parents with the cost of caring for their children. Child Benefit has been increased in successive budgets and in Budget 2007, it was increased by €10 per month for the first two children to €160 per month; and by €10 per month for the third and subsequent children to €195 per month. The total cost of Child Benefit in 2007 is expected to be €2.258 billion.

In addition, in Budget 2005 the Minister for Finance announced the introduction of the Early Childcare Supplement of €1,000 per annum. This is a direct, non-taxable payment of €250 per quarter year, in respect of each child less than 6 years of age. The total cost of the Early Childcare Supplement in 2007 is expected to be €406 million. Child Benefit and the Early Childcare Supplement mean that a family with 2 children under the age of 6 years is now in receipt of a direct payment per annum of €5,840 at a total cost to the Exchequer of over €2.6 billion.

To further support parents, major increases in Paid and Unpaid Maternity Leave was introduced in 2006 and 2007. In March 2007 Paid and Unpaid Maternity Leave was increased in total by a further 8 weeks bringing the total duration of Paid Maternity Leave to 26 weeks and the total duration of Unpaid Maternity Leave to 16 Weeks.

In relation to Value-Added Tax (VAT) the position is that the provision of pre-school childcare services is already exempt from VAT under the First Schedule to the Value Added Tax Act 1972 (as amended). This means that such services are not subject to VAT.