Robert Troy (Longford-Westmeath, Fianna Fail)
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243. To ask the Minister for Children and Youth Affairs the reasons for not introducing demand-side measures for making child care more affordable, such as child care tax credits or direct child care subsidies; for a list of the research studies that his Department has considered, as evidence that such child care tax credits or cash subsidies to parents and guardians for child care have led to systematic cost inflation in child care in other jurisdictions. [37078/15]

James Reilly (Dublin North, Fine Gael)
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I am aware of the relatively high cost to parents of childcare in this country and of the difficulties that this presents, particularly where both parents are in employment outside of the home.

Prior to Budget 2016, my Department provided funding of more than a quarter of a billion euro annually to support the implementation of a number of childcare support programmes that assist parents in accessing quality childcare. This funding, which is in addition to the direct support provided to all parents in the form of Child Benefit, provided support to more than 100,000 children each year.

In Budget 2016, I announced an €85 million package of additional investment for the childcare sector which will provide for a range of significant enhancements to the childcare support programmes. These include an expansion of the Early Childhood Care and Education (ECCE) programme and increased provision under the Community Childcare Subvention (CCS) programme that supports low income and disadvantaged families.

The question of tax allowances for parents was considered prior to the introduction of the childcare support programmes. A number of issues emerged at that time which did not favour the introduction of a childcare tax credit. For example, the introduction of a tax credit would not help to support quality improvements within the early years sector and would not help those families on low pay who may not have any tax liability. There was also concern at that time that the application of tax credits could lead to increased prices and therefore have limited impact in terms of savings to parents.

Experience in other countries has shown that demand side supports such as subsidies and tax relief can result in increasing cost for parents. This was the case in both Australia and the Netherlands, where childcare costs continued to rise despite the introduction of tax reliefs and/or subsidies. The policy trend in most European countries is to provide support through supply side measures such as have been implemented in Ireland over the last number of years.

The Inter-Departmental Group, which I established earlier this year to consider options for future investment in childcare, did examine both supply and demand side measures. The report of the Group, which included an evaluation of the value of the introduction of tax relief measures, outlined concerns that the value of the tax credit would be capitalised into the cost of childcare and that little or no benefit would accrue to the parent. The Group concluded that investment in supply side measures was strategically optimal in achieving the combined objectives of affordability, accessibility and quality.

The additional investment in the childcare sector which I announced will have a significant impact on the affordability of childcare services with the extended provision under the free pre-school year programme reducing on average parent's annual childcare costs by a further €1,500 approximately.