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Childcare Support Bill 2017:

Second Stage Minister’s Opening Speech

**Check Against Delivery**

Wednesday 31st January, 2018

Childcare Support Bill 2017: Order for Second Stage

Bill entitled an Act to provide for the establishment of a scheme to be known as the Affordable Childcare Scheme under which financial support may be made available to persons in respect of childcare out of resources allocated to the Minister for the purposes of the scheme and to provide for related matters.

I am pleased to have the opportunity to introduce the Childcare Support Bill 2017 to the House. In October 2016 I announced that work was beginning on a new Affordable Childcare Scheme, to replace all existing targeted childcare subvention schemes with a single, streamlined scheme that will provide the framework for increasing public investment in childcare over the years ahead. The Childcare Support Bill will provide the critical legislative underpinning for the new Scheme.

The cost of childcare places a huge financial burden on many families – especially on parents who are trying to get out of poverty, who want to take up job opportunities or take part in education or training, but who cannot afford to do so because of the financial barrier of childcare fees.

The high cost of childcare is also a barrier to the participation of young children in high quality early care and education, which we know – from international research evidence – can make a lasting difference to children’s life-chances.

Ensuring children in Ireland have access to quality childcare has been at the heart of my time as Minister for Children and Youth Affairs and will continue to be. In order to ensure access, we must make sure that childcare is more affordable. Making childcare more affordable to families will bring many benefits. It will:

·    improve outcomes for children by providing access to quality, affordable childcare;
·    help parents transition from welfare to employment, making work pay for families with low and moderate incomes;
·    support lifelong learning, helping parents take part in education and training;
·    advance gender equality, supporting women’s labour market participation and helping to close the gender pay gap;
·    help to tackle child poverty; and
·    through all these effects, support economic growth.

In short, affordable, quality childcare can generate many important benefits – for children, for families and for society at large.  This is why I am so proud of the progress we have already made – introducing last September a universal childcare subsidy for all children under 3 years old for the first time, and increasing the value of existing childcare subsidies by up to 50%, thereby benefitting over 66,000 children and their families.  It is also why this Bill is so important.

Of course we are not starting from scratch. Many people have worked tirelessly over the last 20 years and more, to build the childcare services we have today. But it remains the case that Ireland lags behind other European countries on international indicators of affordability and public investment in childcare.

According to the European Commission, childcare costs in Ireland – relative to wages – were in 2015 the highest in the EU for lone parents and the second highest in the EU for couples.

The OECD’s 2017 report ‘Faces of Joblessness’ examined the barriers facing groups with particularly high levels of joblessness. As part of the report, the OECD compared the childcare supports previously available in Ireland with the expected impact of the Affordable Childcare Scheme. For a lone parent working full-time at the 25th percentile of the full-time earnings distribution, childcare costs in Ireland were the highest among all OECD countries in 2015. The Faces of Joblessness report estimated that the Affordable Childcare Scheme will bring net childcare costs down to make Ireland only 11th highest in the OECD – close to the OECD average.

Of course, we have already started that journey through the measures we took last September which sought to fast-track some of the benefits of the Affordable Childcare Scheme, without comprising on the rigour and time needed to develop and launch this landmark new scheme.  We would like to go even further, and the Affordable Childcare Scheme will provide the platform through which we can continue to make childcare more affordable for many families in Ireland and sustainably invest in the years ahead.

The Scheme will make childcare more affordable for parents by providing subsidies, paid on the parents’ behalf to their chosen registered childcare provider.  The provider must use the subsidy to offset the fees it charges parents. The Scheme will provide both:

·    income-related financial support (which targets support towards parents who face the greatest financial difficulty in affording childcare), and
·    non-income related (or universal) financial support (which allows a level of support for all parents with children of a prescribed age who use registered childcare services).

The Bill also allows for additional support for families where there is an identified need for childcare on grounds of child development or child welfare, naming 5 statutory bodies that may make referrals for free or additional childcare support. This, for me, is one of the most important aspects of the Bill, intended to help ensure we can meet the needs of the most vulnerable children and families, families that may be a long way from participation in the labour market and would otherwise benefit from only limited childcare support.


Benefits of legislation


The Childcare Support Bill marks the first time that any of our childcare funding schemes will have a statutory basis. The Bill is critical for good governance:

·    It will establish clear eligibility and Scheme rules.
·    It will create clear procedures – creating, for example, an appeals process for childcare funding decisions for the first time.
·    It will ensure that my Department and the scheme administrator have adequate powers to ensure that public funds are being used efficiently and to take action where public funds are misused.

Crucially, the Bill will also enable the introduction of a streamlined, automated income-assessment process, providing a statutory basis for data-sharing between the scheme administrator, the Revenue Commissioners, and the Department of Employment Affairs and Social Protection. This new income-assessment process will allow the targeting of childcare supports towards those with the greatest need – in particular families who are seeking to enter the labour market but have a low or moderate level of income. It will allow us to move away from the current reliance on social welfare payments and Medical Cards as the only means of assessing financial need for childcare.

The IT-driven approach at the heart of the Affordable Childcare Scheme will also improve administrative efficiency and will streamline the application and registration procedures for both parents and childcare service providers. My goal is the creation of a world-class system that is user-friendly for parents, efficient for childcare providers, and excellent value-for-money for the public exchequer and society.

While I am keen to introduce the Scheme as soon as possible, the IT system required is complex and I want to be sure that it is robust and long-lasting. The development of the IT system, which is being carried out in close cooperation with the Office of the Government Chief Information Officer, is well under way and I have approved the publication of a Request for Tender for the IT system. While any delay is regrettable, the changes we introduced last September, which are broadly on a par with the supports that are planned for the Affordable Childcare Scheme, mean that more than 66,000 children and their families are already benefitting from increased childcare subsidies.


Impact on quality


An important aspect of the Bill, and one that has so far been under-estimated, is its importance for raising quality standards in childcare. We know that childcare must be of high quality if it is to improve outcomes for children.

While the primary focus of the Affordable Childcare Scheme is affordability, the approach embodied by the Scheme reflects the international evidence that supply-side funding gives the Government greater leverage to improve quality standards than demand-side approaches such as tax credits:

·    Firstly, the Bill limits participation in the Scheme to childcare providers that are registered with Tusla, providing assurance that critical quality standards are met by all providers in the Scheme.
·    Secondly, all childcare providers who wish to participate in the Scheme will have to sign a contract with my Department, and Section 8 of the Bill allows quality conditions to be specified in the contracts which are more rigorous than those required by the Early Years Services Regulations.
·    Thirdly, the Bill allows for future development of the Scheme, with Section 13 allowing the possibility of quality-raising incentives to be built into the formula for determining how much funding the Scheme provides.

More broadly, the flexibility of the Bill allows changes to subsidy-rates over time, enabling Government to adjust the Scheme in response to the findings of the Independent Review of the Cost of Quality Childcare, as well as in response to the ongoing professionalisation of the early years workforce. If we are to support the move to a professional workforce with wages and working conditions that reflect the importance of the work carried out by early years educators, inevitably the cost of delivering childcare will rise over the years ahead. Subsidy-rates will therefore have to rise too, if childcare is to remain affordable to parents.

Finally, in requiring all participating childcare providers to be registered with Tusla, I am very aware of the historical anomaly that school-age childcare remains unregulated. To address this anomaly, I recently announced that I would introduce regulations – in advance of the Affordable Childcare Scheme – to enable school-age childcare services to register with Tusla and thus participate in the Scheme.

In the first instance these new regulations will be limited to registration requirements. Work will then commence on the drafting of full regulations that will cover quality issues such as qualification requirements, minimum adult-child ratios, the physical environment, and programmes of activities.


The Bill


With regard to the preparation of the Childcare Support Bill, Deputies will recall that, in January 2017, I published the Heads of Bill and General Scheme. In February 2017 the Joint Oireachtas Committee for Children and Youth Affairs carried out Pre-Legislative Scrutiny of the Heads of Bill and General Scheme. The recommendations made by the Committee were very helpful and have helped to shape the Bill that I am presenting today, and I thank Committee members for their input.

To a large extent the Bill is in line with the Heads of Bill and General Scheme. Changes made in drafting the Bill include:
·    modification of the residency requirements for eligibility, to comply with EU rules on freedom of movement;
·    providing the scheme administrator with the power to examine compliance and to safeguard public funds;
·    changing the minimum age for a child to participate in the Scheme to 24 weeks as opposed to 26 weeks;
·    limiting the Scheme to childcare providers registered by Tusla so as to provide quality assurance of all participating providers; and
·    providing for a limited number of detailed elements, which were in the Heads of Bill, to be addressed in secondary legislation instead, subject to policies and principles set out in the primary legislation. In particular, the Bill provides for regulations to determine the subsidy-rates and income-thresholds for the Scheme, as this will enable these elements to be adjusted on an annual basis through the Budget process.

I will now set out the provisions of the Bill.

Section 1 provides definitions of key terms.

Section 2 provides for the establishment of the Scheme, to be funded out of monies provided by the Oireachtas each year, and states that the Scheme will be operated by the scheme administrator.

Sections 3 to 6 provide for the appointment of the scheme administrator and describe its functions and governance arrangements. Section 6 allows for the scheme administrator to outsource certain functions while retaining responsibility for administration of the Scheme.

Section 7 sets out the eligibility criteria for parents seeking to apply for financial support under the Scheme. The residency requirements allow for applications, not only from parents who are ordinarily resident in the State, but also from EU/EEA citizens who are not resident in the State and from other categories of parents who are formerly employed or self-employed in the State. However, financial support will be limited to childcare services registered under the Child Care Act 1991, which must be located in the State.

Where parents are separated, Section 7 allows both parents to receive financial support, but each parent may only receive support for the days or times that he or she has care of the child.

Section 8 limits participation in the Scheme to “approved” childcare service providers, which must be registered with the Child and Family Agency, Tusla, and also have signed a contract to participate.

Section 9 specifies the process by which parents may make applications for financial support under the Scheme, including the information they must provide as part of an application. When applications are for income-related financial support, in most cases the income-data will be gathered through an automated process involving the Revenue Commissioners and the Department of Employment Affairs and Social Protection.  Income data will be gathered with the consent of the applicant and on the basis of PPS numbers supplied by the applicant. However, this section also allows the scheme administrator to require an applicant to supply additional information – including income information – where needed.

The Bill allows for the maximum number of hours of income-related financial support to vary depending on the parents’ participation in the labour market. As a result, Section 10 requires employers and training providers to verify information provided by an applicant on their labour market status, when asked to do so by the scheme administrator.

Section 11 provides for the income-assessment process, which must use the definitions of “income” and “allowable deduction” in Schedule 1.

Section 12 provides for the determination of applications by the scheme administrator and specifies the information that the scheme administrator must provide to the applicant after determining the amount of financial support (if any) for which the applicant qualifies.  It also stipulates that a determination may be valid for 12 months at most, after which the application must be renewed.

Section 13 provides for the calculation by the scheme administrator of the amount of financial support for which an applicant qualifies, and sets out the factors to which the Minister must have regard when making regulations on the calculation of financial support.

Section 14 allows for additional support where there is an identified need for childcare on grounds of child development or child welfare. It builds on existing arrangements under the administrative schemes being replaced. Additional support may take the form of higher rates of payment (e.g. provision of childcare at no cost to parents), or additional hours of financial support each week, or provision of financial support for children who would otherwise be too young or too old to participate in the Scheme.

This section allows for agreements with statutory bodies that specify the procedures by which those statutory bodies may refer children for additional childcare support, and the additional support to be provided. Schedule 2 lists the relevant statutory bodies and the purposes for which they may make referrals.

Section 15 provides for procedures relating to the payment of financial support to approved childcare service providers, and for conditions to be prescribed that apply to payments.

Section 16 requires an applicant to notify the scheme administrator if he or she is no longer eligible for financial support under the Scheme, or if he or she ceases work or study (which may affect the number of hours of financial support paid each week).

Section 17 allows for parents and childcare service providers to request reviews of decisions made by the scheme administrator and of the amounts paid under the Scheme. In cases where an application has been assessed through an automated process, a review allows a parent to request an administrative officer to examine the application. A review is the first stage of the appeals process. This section also allows the scheme administrator to carry out reviews of its own initiative, for instance to verify information provided by a parent or by a childcare service provider.

Sections 18 and 19 allow the appointment of authorised officers who may enter the premises of childcare service providers in order to examine attendance records, financial records and other documents relevant to the Scheme, to ensure the proper use of public funds. These sections also make it an offence to obstruct an authorised officer or to fail to comply with requests for information.

Section 20 establishes the appeals process which follows completion of the review process under Section 17. Though appointed by the scheme administrator, the Minister’s consent is required for their appointment, and they will be required to be independent in the performance of their functions. Parents and childcare service providers will also have recourse to the Ombudsman, and to the High Court (on a point of law).

Section 21 allows the scheme administrator to recover money from parents and from childcare service providers, both in cases of fraud or misrepresentation and in cases of overpayment.

Section 22 amends the Social Welfare Consolidation Act 2005 so as to refer to the Scheme as a “relevant purpose” for which specified bodies may share information on the basis of a PPS number. This amendment will, for example, allow the Department of Employment Affairs and Social Protection to transfer information on an applicant’s income to the scheme administrator, on the basis of the PPS number provided by an applicant for income-related financial support.

Section 23 allows the sharing of data between the bodies specified in Schedule 3 for specified purposes, which include assessing an applicant’s income, registering a child, making payments, verifying children’s attendance, and carrying out a review, an appeal or the prosecution of an offence.

Section 24 describes the regulation-making powers under the Act.

Section 25 allows for reviews of the operation of the Scheme.

Section 26 allows beneficiaries of the administrative schemes being replaced by the new Scheme to continue receiving the same level of financial support for a transitional period. While the vast majority of beneficiaries of current schemes will see their level of support either increase or remain unchanged under the new Scheme, some will see their level of support fall. Section 26 protects the latter group from the fall for a transitional period.

Section 27 provides for expenses incurred by the Minister in the administration of the Scheme to be paid out of monies provided by the Oireachtas.

Section 28 creates sanctions for persons guilty of offences under the Act.

Section 29 allows commencement of different provisions of the Act at different times.

I look forward to hearing the views of my fellow Deputies and to working with you to formulate the best possible legislation to help families to access affordable childcare. I commend the Bill to the House.