Wednesday 19 June 2019

Donohoe faces tightrope act in Budget moves on childcare


Finance Minister Paschal Donohoe. Photo: Gareth Chaney/Collins
Finance Minister Paschal Donohoe. Photo: Gareth Chaney/Collins
Cormac McQuinn

Cormac McQuinn

Paschal Donohoe has a high-stakes balancing act to perform in the Budget with the competing needs of a string of issues from housing to health.

When it comes to any childcare measures in Budget 2019, the Finance Minister will have to deliver a particularly astute performance politically.

On one side are squeezed middle families - Taoiseach Leo Varadkar's people who "get up early in the morning". Those who are paying childcare costs that often amount to what is akin to a second mortgage. Those people, many of whom are Fine Gael supporters, will want to see some support in the form of an increase to the €80-per-month universal subsidy for those with children under three.

Add to that Fianna Fáil demands to double that subsidy and there is considerable pressure on Mr Donohoe to make moves in that area. Micheál Martin's party will want some wins in the last Budget of the current confidence and supply deal.

On the other side are those parents in both the public and private sector who aren't quite eligible for increased targeted subsidies that start at €50-per-week.

Their combined household net income may be slightly above the €47,500 cap for eligibility. Some are gardaí, nurses or teachers at the start of their careers who could use the extra cash to help with childcare costs.

Children's Minister Katherine Zappone is pushing for an increase in the threshold to help more families in this category.

In an ideal world, Mr Donohoe would be able to grant an increase to the universal subsidy as well as raising the threshold for those on lower incomes.

Sources say nothing has been ruled out in this regard.

But Mr Donohoe and others have repeatedly warned of the limited scope for new spending and tax relief measures so it remains to be seen if the resources will be there to do both.

When pre-committed expenditure is taken into account, there is around €800m available in Budget 2019 unless additional revenue-raising options are pursued. Fine Gael must split that in at least a 2:1 ratio of spending measures to tax cuts under the confidence and supply arrangement with Fianna Fáil.

Taoiseach Leo Varadkar gave a reminder of the limited scope the Government has this year when he was asked about the upcoming Budget at the National Ploughing Championships yesterday.

He said the Budget numbers are "tighter than people may expect" due to pre-committed spending on housing, public sector pay restoration and other areas. He said the "room for manoeuvre" on October 9 "is quite limited". He also rolled out the phrase used by governments at this time of the year, every year, that "no Budget decisions are made" and they won't be finalised until the days leading up to October 9. In making decisions on childcare, Mr Donohoe will have to make sure he doesn't fall off the tightrope.

Irish Independent

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