Government won’t do right thing on childcare
LAST Friday when I asked Social Protection Minister Regina Doherty whether billionaires should get children’s allowance payments, she said she was open to thinking about a more targeted use of resources.
Given that there has been almost no discussion of changing the universal nature of the benefit since a report looked at the matter more than half-a-decade ago, her willingness to consider change generated much comment, first in this newspaper and then across the broadcast media. That spooked the Government.
Then this week came an announcement that the status quo would prevail.
The Government’s fear of even considering change is noteworthy, not least in what it says about the near political impossibility of reforming the welfare system in any significant way.
That, in turn, means that decisions on expanding the breadth and depth of the system need very careful consideration because, if they end up not achieving their objectives, there is little chance of reversing them.
Before looking at some of those issues, let’s start by saying that the social safety net is one of the great achievements of economic development. When economies create as much wealth on an on-going basis as the world’s high-income countries do, taxes can be raised to fund a system that ends hunger and guarantees most basic needs.
One only needs to drive out of an airport in any less developed country to see the sort of misery that can be so commonplace in the absence of a comprehensive social welfare system. However, if such systems bring huge societal benefits, it does not follow that they never have downsides or that they never need reform. Consideration always needs to be given to how resources are used to achieve the best possible outcomes.
What is clear from Friday’s discussion with the Minister is that the way Ireland deployed resources towards children is very unusual when compared to other rich countries.
That is because cash benefits per child are among the highest in the world, while very little money is allocated to pre-primary programmes, including childcare. In most peer countries, state provision for children is the other way round, with more money going into provision or subsidisation of services and less spent on cash benefits.
It should be said that for those who want to look after their young kids at home, and are in a financial position to do so, the current system is fine. However, for those on lower incomes, things are more difficult.
It makes little sense, for instance, for someone on or near the minimum wage to work while paying someone else the same amount to look after their kids.
That all too often causes problems down the line as the longer a person doesn’t work, the more difficult it is for them to get back to work once their children have started school (that is because skills degrade over time and employers tend be less likely to take on people with big gaps in their CVs).
This is a particular problem for single parents, as comparative figures show. Among the 28 members of the EU last year, Eurostat data shows Ireland had the second lowest proportion of its lone parents at work, and that was the case despite a strong jobs market.
Given that Ireland has more single-parent households than most other countries – more than one in 10 of all households, according to the last census – this is a considerably bigger issue in Ireland than among our peers.
The decisions of successive governments to focus resources on cash payments for all parents over a more targeted use of funds is all the more regrettable given what evidence shows can be achieved.
James Heckman, a Nobellaureate in economics, has worked with psychologists, neuroscientists and others over years to identify and quantify the effects of the sorts of policies that make a difference to children over the course of their lives. His work, and the work of others, shows that education and other programmes targeted at children from birth until three years have the biggest impact on life outcomes.
EVEN more regrettable is the fact that there was a golden opportunity to move in this direction in the recent past. In 2000, less than €10bn was spent on all social programmes, including schemes of various kinds not administered by the Department of Social Protection, such as those for housing and health. Seven years later, spending had grown threefold, to almost €30bn. This historic expansion of the welfare state in such a short period happened with little thought.
Civil servants believed that their main role was to dispense whatever monies their political masters allocated them.
Ministers in those years did not have strong views on the overall shape of the system and how its different parts interact with each other. Too often in the years of plenty, they were happy just to announce higher benefit payments at budget time each year.
A better use of scarce resources would be a radical shift in spending from cash benefits to Heckmanstyle early intervention policies, such as the Early Start programme designed to help kids from disadvantaged backgrounds and the Early Childhood Care and Education scheme.
However, as the past week has shown, no government would be brave enough to go down that route.
The best that can be hoped for now is that all new resources go into rebalancing the system towards more targeted services.
That would be a much better investment in future generations than increasing cash benefits, including to those aforementioned billionaires.
What was clear was that the way Ireland deploys resources towards children is unusual compared to other rich countries