Tax credits are a matter for the Minister for Finance.
The Childcare Support Act 2018, which provides the statutory basis for the National Childcare Scheme, specifies that the Scheme is only open to Tusla-registered providers. This ensures that public funding is provided where there is assurance of the quality of provision.
The National Action Plan for Childminding 2021-2028 set out a pathway for the extension of regulation to childminders. As a result of the commencement of the relevant parts of the Child Care (Amendment) Act 2024 and the Childminding Services Regulations, which came into effect on 30 September 2024, childminders are now able to apply to register with Tusla and thereafter take part in the National Childcare Scheme.
Under the amendments made in the 2024 Act, the definition of a childminding service:
"(a) entails an individual taking care, by himself or herself, of children under the age of 15 years, in the home of the individual, and
(b) is provided to children (other than that individual’s own children) for a total period of not less than 2 hours per day."
The regulation of childminding services is critical to the safeguarding of children. The route to registration under the new regulations requires childminders to undertake pre-registration training, as well as meeting certain regulatory requirements including Garda vetting, proof of insurance, first aid certification and child safeguarding training. The Childminding Services Regulations place a number of requirements on the childminder's home.
While the Department has successfully completed Phase 1 of the National Action Plan, considerable challenges lie ahead during Phase 2 in supporting the large number of unregistered childminders to register with Tusla and take part in the National Childcare Scheme before the end of the transition period in September 2027. Given the scale of the challenge that still remains, my priority is to deliver on the remaining phases of the National Action Plan in the coming years.
The Department has committed to undertake a review of the initial implementation of the Childminding-specific Regulations during the transition period. The review will commence in 2026 and will include consultation with childminders and other stakeholders. Following conclusion of this review, I will give consideration to the appropriate next steps.
On the particular issue of tax credits, I would like to advise the Deputy that tax credits have previously been considered in the context of work by the Department to reduce the cost of early learning and childcare to parents.
Research by an Inter-Departmental Group back in 2016 showed that supply-side measures (such as subsidies paid directly to providers to reduce fees to parents), rather than demand-side measures (such as tax credits to parents), represented the most effective use of Exchequer investment. This conclusion was based on international experience and on the ability to leverage quality and control fees for parents through supply-side measures.
“Demand side measures” (i.e. funding directly to parents to reduce their fees, potentially including taxation based measures such as tax credits/deductions) and “supply side measures” (i.e. funding directly to providers to assist in the meeting the cost of provision and/or to reduce parents fees) were also explored in the context of the development of National Childcare Scheme (NCS).
The 2016 policy paper, which informed the subsequent development of the NCS, concluded that supply-side measures offer the State greater “steering capacity" in terms of ensuring equity of access and driving quality in early learning and childcare service. This is because a well-designed supply-side measures offers the State several policy levers (e.g. subsidy levels linked to quality, conditions for provider participation, regulation of co-payments etc.) through which policy objectives can be pursued.
More recently, the independent Expert Group convened to develop a new funding model for early learning and childcare considered tax deductions/credits as part of their work. In their 2021 report, ‘Partnership for the Public Good’, the Expert Group concluded that ‘there are downsides to channelling any of the promised additional investment into tax deductions/credits as a purely demand-side subsidy. They cannot be used to leverage quality in the same way that payments directly to providers can. It is clear from our Terms of Reference that the new funding model should operate with the NCS and the ECCE programme. To recommend further demand-led funding, like tax credits, would increase the scale of demand-side funding of the sector and would not help to guide the sector towards a more publicly managed service, where policy levers can be used to support quality, affordability, availability, access, and sustainability. Additionally, lower-income families would not benefit as much from tax deductions/credits as those with higher incomes”.
