Budget 2019: biggest losers were working families and children
Income tax measures only favour high earners and will do nothing to ease the burden of childcare costs, writes Michelle Murphy
‘Ireland has the highest proportion of young people aged 0-14 across the entire EU...’
THIS year’s Budget has yet again failed to significantly alleviate the crippling pressure on young families. Access to quality and affordable childcare and after-school care is a significant challenge facing families with young children in Ireland.
As a percentage of wages, net childcare costs in Ireland are the highest in the European Union. Measures introduced in Budget 2019 will fall far short of easing the cost of childcare for working families.
Ireland has the highest proportion of young people aged 0-14 across the EU-28. The provision of quality, affordable, accessible childcare for parents is essential, particularly for families who have moved away from their home base (towns and counties), and familial support structures, to take up employment.
High childcare costs are a barrier to employment, particularly among young women with children.
Childcare is also essential for those who are furthest from the labour market to gain the skills and confidence necessary to participate fully in society and to take advantage of employment and training opportunities.
Lack of community and affordable childcare presents a significant barrier to labour-market participation for low-income families — particularly women who wish to return to employment following the birth of their children.
A significant proportion of one- and two-parent families rely on childcare outside the home. Two-thirds of lone parents of pre-school aged children who work full-time rely on non-parental child- care, and 70pc of couples with children of pre-school age who work full-time rely on non-parental childcare.
As a proportion of average earnings, the cost of full-time care at a typical childcare centre accounts for almost 23pc of the full-time earnings of a couple.
The group established to advise the Government on early childcare presented their report in 2015 with a number of recommendations — including investment at all levels to ensure families can access universal, quality and accessible services.
Ireland has significant ground to make up compared with our OECD and EU counterparts, and government investment in budgets 2017, 2018 and 2019 has simply not been enough.
Yes, the introduction of the Single Affordable Childcare Scheme in Budget 2017 was very welcome — but in order to create a real impact, significant and sustained investment is required over successive Budgets. Measures introduced in Budget 2019 to increase the net income thresholds for the affordable scheme are welcome, meaning an additional 7,500 children in the scheme and providing improved subsidies for others.
However, in order to reduce the costs for working families, far more than subsidies are required. Reports since the introduction of the affordable childcare scheme noted that some childcare providers increased their fees in line with the amount of subsidy, making no net difference to parents.
The Government needs to review the application of the scheme across childcare providers to ensure that it is not being abused, to publish the findings of that report and to impose sanctions on those providers seen to be taking advantage of a policy intended to support working families, particularly those on low incomes.
Furthermore, there is geographical disparity across the country in terms of both the affordability of childcare, and also the type of childcare which families are using.
The latest Central Statistics Office survey on childcare shows that in the west and midlands, for example, of those families of pre-school children who are using non-parental care, childminders are the most common type of childcare used.
When designing measures to support families, it is important that we recognise the need to support childminders and other arrangements — and that, ultimately, investment in universal and quality services are best for everyone.
So what could have been done last Tuesday to ease the financial burden of childcare for families?
The Minister for Finance announced an income tax package at a cost of €356m. The changes made are skewed and provide the largest gains to those on highest incomes and will make little real difference to working families. A couple with two earners on a combined €50,000 per annum will be 87 cent a week better off as a result of these changes — a drop in the ocean in terms of easing the financial burden of childcare.
With the cost of childcare such a huge burden for families, could such a large amount of annual taxation revenue have been used in a better way? Think of the difference to families if the Government had invested that €356m into delivering a comprehensive childcare package.
Budgets are about choices and priorities. In Budget 2019, the Government chose not to prioritise children and families. Michelle Murphy is a research and policy analyst with Social Justice Ireland
CAUGHT IN A TRAP: As a percentage of wages, net childcare costs in Ireland are the highest in the European Union