LAST UPDATE | 20 Jun 2022
IT IS THE Government’s objective to cut childcare costs for families before Christmas, Taoiseach Micheál Martin confirmed today.
Speaking to reporters at the National Economic Dialogue at Dublin Castle, where key stakeholders and unions will submit their thoughts on the forthcoming Budget, the Taoiseach said:
“Childcare is a big issue. It’s a very significant cost pressure on families. And we’re going to look at that.”
When asked if some measures in the Budget will be felt by parents before the end of the year, the Taoiseach said:
“That is the objective of the Government.
“We’re very clear across government, that the next budget has to look at affordability issues around childcare. So that certainly is an issue that will merit consideration.
“We have to do it with obviously within the fiscal framework.”
Speaking at Dublin Castle, Tánaiste Leo Varadkar said the Government “can reduce the cost of services that are influenced by Government”.
“Next year, increased subsidies for childcare should be used to reduce costs for parents. This will increase disposable family incomes and make it more attractive for parents to return to the labour market thus helping to fill vacant positions and moderate wage inflation.
“Investing in childcare makes sense now and for the long-term,” he said.
Key pillar
The Journal reported in April that childcare costs will be a key pillar in October’s budget.
The Department of Children has worked up a proposal that has is being sent to the Department of Public Expenditure this summer.
The idea of core funding was introduced last year by Children’s Minister Roderic O’Gorman, which he said at the time was the key to unlocking some of the most challenging issues in the current funding system and offers a new basis on which to build partnership between the State and providers.
Core funding to the tune of €220 million will help improve pay and conditions in the sector, and in turn, enable parental fees to be controlled by the State, so that the full affordability benefits of the Early Childhood Care and Education Programme (ECCE) programme and the National Childcare Scheme (NCS) can be realised.
Varadkar said he wouldn’t put a timeline on when parents could see a reduction in their childcare costs, but added that the three parties in Government are “determined to make a significant move on the cost of child care”.
“We’ve already brought in two years of free preschool which is already childcare and education. But it’s an enormous cost for a lot of parents, for a lot of young families in particular,” he said.
It is preventing people getting back into the workforce, added Varadkar.
“So it makes economic sense to to substantially reduce the cost of childcare,” he said.
Varadkar also said that it is possible that social welfare increases will kick in almost immediately after the Budget day announcement in October, rather than increases being rolled out in January, as is often the case.
“The budget is announced on Budget Day and then there’s the Finance Act. There’s a Social Welfare Act as well. But actually a lot of the weekly rates can be increased by ministerial order,” he said, stating that legislation is not needed for the implementation of the increases.
“So that can be done more quickly,” he added, adding that some tax measures can also be brought in on the night of the budget.
Pension hike
He indicated that pension hikes will be higher than they were last year, when 5 Euro was added on the weekly payment.
“That was on the basis that inflation was running at around 2% or 3% and inflation is now running at around 7% or 8%. So I think it stands to reason that the pension increases in the social welfare package will have to be greater in 2023 than they were this year,” he said.
Speaking about the wider budget today, the Taoiseach again dampened down suggestions that the Government will bring in measures to address the cost-of-living before October.
He said the immediate priority of this year’s Budget will be the cost-of-living, adding that the Government cannot run the risk of “chasing inflation”.
“We do not want to repeat the mistakes of the 1970s,” he added.
Taoiseach says he is confident the country can face the challenges and turbulence ahead ‘if we act responsibly’. pic.twitter.com/ZpwgfGSu7W
— Christina Finn (@christinafinn8) June 20, 2022
Martin said that winter could be the most challenging period, and that the Government has to ensure it is prepared.
“Russia has cut off gas supplies to Germany and Germany is talking about the activation of dormant coal plants – that is serious stuff,” he said.
“And the indications russia is endeavouring to levy significant pressure on European states with respect to supply of gas. That’s the context we have to plan.”
He added that a “month-to-month approach isn’t the ideal approach”.
“We understand the pressures on people. But we’ve got to accept that the winter period could be the most significantly difficult period of this crisis so far.
“And therefore we’ve got to make sure that we have enough in reserve to deal with that and to keep the pressure off people, to enable people to have some quality of life and get through the winter,” he said.
Services delivered ‘effectively’
Addressing the National Economic Dialogue later, Martin said the Government “must ensure that our people are supported in the face of rising costs of living, that the services they expect are effectively delivered and enhanced, and that we are making the investments necessary to ensure a prosperous future”.
However, he added:
“Our resources though are not limitless, nor is our capacity as a small country. We need to prioritise and manage carefully our resources, while ensuring we protect those most vulnerable.”
Tánaiste Leo Varadkar used his speech at today’s event to speak about the need to look after middle-income earners in this year’s Budget.
“Workers should not have to rely on their employer being profitable enough to get a pay increase. Some simply won’t be able to pay. We shouldn’t say to those workers that they will get no help to improve their disposable income.
“And middle-income people getting pay increases should not lose 52% in Income Tax, USC and PRSI. They should be able to keep most of it. This, in turn, can help moderate demands on employers for bigger increases. So it makes economic sense,” said Varadkar.
The Tánaiste said a comprehensive anti-inflation strategy is needed.
“Central Banks will do what they have to do, unwelcome as it is. Governments can do more by helping to reduce some of the underlying high costs that Irish people endure.
“We can continue to reduce the income tax burden on workers and middle income families by indexing tax credits and tax bands. I think the case for this is stronger than ever,” he said.
Public pay talks
Minister for Public Expenditure and Reform Michael McGrath was asked by reporters if the Government would be increasing the offer it made to unions at last week’s talks.
“I do hope we can get back into discussions, I think it is in the interests of everyone that we have a collective agreement,” McGrath said.
“It helps to provide industrial peace and also gives us certainty over a very large area of expenditure.
“I think the offer that was made by the Government was a good offer, it went a long way towards matching the projected level of inflation but we have to ensure that any deal is affordable and sustainable.
“I do hope we can get back into discussions and the Government’s door is very much open but there has to be a realistic basis for reaching agreement.”
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