James Reilly rules out €5k crèche tax breaks for families

Children’s Minister James Reilly has ruled out tax breaks worth up to €5,000 a year for struggling families whose children are in crèches because it may only benefit the rich and be wiped out by linked increases in facility costs.

The deputy leader of Fine Gael outlined the Government stance, and again said a second free pre-school year will take place before 2020 despite not saying when, during the first night of a two-day Dáil debate on childcare services.

Speaking at an evening debate put forward by Fianna Fáil, the party’s children’s spokesperson Robert Troy said there is a vital need to focus on the “critical sector” which he said the Fine Gael-Labour coalition has “ignored”.

The Longford-Westmeath TD said the Government needs to provide “critical action” to assist families who are spending up to €16,000 a year — the “equivalent of a second mortgage” — on crèche services every year.

Noting some cases where annual fees have gone up by 11% a year, Mr Troy said there is now an urgent need to offer tax breaks, a second free pre-school year previously promised within the lifetime of this government, and to increase state capitation fees for crèches so they do not have to increase their own costs.

The Fianna Fáil spokesperson said the measures must be introduced now to tackle a growing problem that is “crippling” young families and hurting people in need.

Mr Troy specifically said his party wants to introduce a tax credit that would see people earning less than €34,000 a year see “€5,000 a year put back into their pocket” and to see the immediate introduction of the second free pre-school year which was promised to take place during the lifetime of this Government before the last general election.

However, responding to the comments and claims from Fianna Fáil Mayo TD Dara Calleary that “we don’t value” the childcare sector, Children’s Minister Dr Reilly said the options put forward are shortsighted.

He said while a creche user-linked tax break is widely discussed, evidence from the OECD strongly suggests that would only benefit better-off families.

Instead, Dr Reilly said this move would in fact lead to an increase in the cost of crèche fees these families are asked to pay as the facilities would believe parents can afford to pay more — effectively wiping out the benefit.

Addressing the apparent delay on introducing the second free pre-school year within the lifetime of this Government as promised, the Children’s Minister said the coalition’s Better Outcomes Brighter Future plan has confirmed the move will be made between 2014 and 2020.

About 68,000 children are in crèche services.