Budget to favour public services with €4bn extra for core spending
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A significant cut to childcare costs, along with structural changes to the sector, will form part of October's budget.
As the Government today prepares to unveil the broad parameters of the budget, it is understood Children's Minister Roderic O'Gorman is pushing for a cut of up to 25% in childcare costs, as well as Deis-style scheme for early years care.
Final discussions on the Summer Economic Statement (SEC), which sets out the budget spending envelope each year, went on late last night as Finance Minister Michael McGrath and Public Expenditure Minister Paschal Donohoe met with the three Government leaders to hammer out what is expected to be a near €100bn autumn package.
It is understood that the budget will be heavily weighted in favour of spending on public services, with as much as €4bn extra going towards core spending, compared to an additional €1bn on tax cuts.
Fianna Fáil has been pushing hard for a significant pot to spend on public services, to address the rising cost of living, and to allow the Government to focus on the areas of education, health, and housing.
Fine Gael has already made it clear that the party would like to see a €1,000 tax cut for workers, but Fianna Fáil favours tax measures that would target lower- and middle-income earners.
Childcare is one area that the Green Party has set as a priority.
While Taoiseach Leo Varadkar had said a cut in childcare fees was likely, he recently warned that it "all needs to add up". But Government sources this week insisted that Mr O'Gorman has not abandoned his desire to see a further 25% cut brought in this year.
Mr O'Gorman is understood to be targeting structural changes to the childcare system in a bid to ensure stability in the sector.
He has tasked his department with exploring the establishment of a Deis-style system for childcare. This would see additional supports given to areas of disadvantage in the area of childcare.
The fee reductions and other changes will also come, along with what a source said will be "real supports" for childminders.
Mr O'Gorman earlier this year received Cabinet approval to change the legal status of childminders to allow them to be brought into the National Childcare Scheme (NCS).
At present, those whose children attend creches can avail of the NCS, but those who use childminders cannot. It is estimated there are 15,000 childminders in Ireland, but fewer than 100 are registered.
An ESRI report last month said that this move will cost between €35m and €122m per year, depending on uptake. If it was taken up at the higher end, parents who use non-relative childminders would see a cut of €100 a month to their fees.
The issue of childcare cuts has been identified by some in the Coalition as a key area of delivery for this year's budget, given the popularity of last year's moves. Mr Varadkar also said that a cut would be part of the budget as a move to "put money back in people's pockets".
Ahead of the publication of the SEC, Mr Donohoe said that the Government aimed to continue “to not spend a level of corporate tax receipt that we fear might not always be available, while also try to make progress on the issues the country wants us to make progress on”.
Meanwhile, Mr Donohoe is to claim back responsibility for Sipo, which he had recused himself from earlier this year. A memo on the Transfer of Functions will go to Cabinet in the morning, taking back responsibilities that had been given to Finance Minister Michael McGrath.
Mr Donohoe recused himself from all matters relating to Sipo and ethics legislation in January while an investigation was under way into undeclared expenses relating to both the 2016 and 2020 election campaigns.
Mr Donohoe was cleared by Sipo in May over failure to declare donations in previous general election campaigns.