Notes on the Front

We are on the verge of avoiding the fundamental issue
regarding the childcare crisis; namely, that a private sector model of delivering
childcare will keep the service beyond the reach of most parents (except at an exceptionally
high cost) and will undermine the quality of care for children. Fintan
O’Toole gets it:

‘Preschool education is a vital public good. There is an
overwhelming public interest in the provision of high quality early education
to all children, regardless of their family circumstances. . . Childcare is a
public project, an expression of a shared social commitment to common values. .
. .This was recognised in the commitment of public resources to the provision
of one year of free preschool education. But that commitment is trumped by a
very different imperative – the logic of profit. Instead of childcare being a
collective public project, it has been turned into just another business. . . The
outrageous practices of some of the biggest commercial childcare providers are
not throwbacks to the past. They are harbingers of the future.’

In the weekend media there was a fight back against any idea
that childcare should be a public affordable service accessible to all parents
regardless of means.  We had Brendan
O’Connor with these bon mots:

‘What was most evident from last week’s discussions is that
the State is not even able to get it together to properly inspect crèches. How
this proves it should be running them instead is beyond me.’

Ooookkkkaaaayyyy – let’s see if I get the logic of
this.  Public sector inspections cannot
keep up with the negligence of certain commercial childcare providers.  This is proof that we must continue to rely
on . . . those same commercial childcare providers.  Geez, it must be great to write for the
Sunday Independent.

In the Sunday Business Post, Niamh Connolly writes (firewall):

‘The State’s finances makes a Scandinavian-style system
unachievable and untenable.  This means
that the for-profit model adopted for the bulk of childcare in this country is
here to stay for the foreseeable future.’

We get a lot of that these days.  Someone on the Pat Kenny show last week
kept pointing out that a public-provided childcare system – on a par with other
European countries – would cost a scary €1 billion.  And another someone on the Marian Finucane show claimed
that you wouldn’t want the state to run childcare since they are no good at
running anything (sigh – I can’t be bothered to look up who said this; I’ll just
rely on a tweet by social policy researcher Camille Loftus:  ‘Oh
good lord. #marian comes to us this morning from 1950.’).

Let’s cut through all this and return to the main
point.  Currently, childcare costs are one
of the highest in Europe.  This is because
we rely on a market-based system whereas in other countries childcare, like
education in general, is a public good provided at below-market rates.  In a market-based system, an indiviual firm must make up their total costs (plus profits if its a comercial concern) through fees.  In a public service, the costs are socialised either through the taxation system, social insurance – though even in these public services, fees from parents play role.  To put it in perspective, imagine the cost to households if primary
education was charged at market rates for each pupil – who could afford that?

This is the dilemma. 
If regulations are tightened and inspections increased, if wages are
increased and more professional qualifications required, if ratios are reduced
to allow for individual attention – all these will lead to higher costs.  In a market-based operation they will be
required to increase fees – which will make the service even more expensive and
beyond the reach of even more households. 
Or you will get a spate of closures, as happened when the
state started inspecting crèches over a decade ago.  These closures will, again, result in higher
fees as more people seek fewer places.  We
may end up with a perverse result:  as we
seek to upgrade crèches – to ensure a quality service to children and parents –
it will become more expensive and less available.

Take the example of wages: 
much commentary has focused on the low wages paid in the sector. Labour costs make up 70 percent of total operating costs of a creche.  If we want to increase qualifications we will
need to see wages rise (we should them rise anyway as they are scandalously low).
 Using the Deloitte cost model, which is still
relevant though developed prior to the crash, if payroll costs rise by 10
percent – which would still leave workers on extremely low wages –this would
equate to an additional €800 per child, per year.  That would be on top of already
extremely-high fees.

None of this is contentious or controversial; this is just
how it works.

Second, let’s deal with this €1 billion cost.  That is the gross cost, yes, were the state
to roll out a network of high-quality childcare places at affordable rates – a service
which would ideally combine care and education (what’s termed as ‘educare’).  But let’s look at the return on this
investment:

• Given that 70 percent of the service cost is labour, there
  will be a substantial increase in tax revenue (income, PRSI, USC, VAT &
  excise, etc.).  For each job created at a
  wage of €25,000, the state immediately gets back a quarter of this in direct
  tax revenue.

• Unemployment costs are reduced as more people find work in
  the new network.  This can save up to
  nearly €10,000 per newly employed.

• With higher employment, there will be increased spending in
  the economy – benefitting domestic businesses (with a knock-on effect for
  employees in those businesses) and the state, again, through higher consumption
  taxes.

• Private sector business benefit as well:  crèches need to buy in food, toys, crayons,
  equipment, etc.  These are not produced
  by the state.  They are produced by the
  private sector and sold into the system.

That’s one part of the return.  Another source of revenue for the system
would be the affordable fees – and this has a two-fold effect.  First, are the fees coming into the system
(say, €250 per month per child) which helps reduce the socialised cost.  But
this also provides a benefit to households which  currently pay high fees – up to €1,000 a month.  The reduction in crèche fees will
result in households spending the savings in other sections of the economy; or help households
get out from arrears which will help our banking system.  Indeed, an affordable public service would
constitute a mini-stimulus for thousands of households and, so, will benefit all
of us.

But all this is trumped by the long-term returns of
investing in children.  Proper care,
combined with early education opportunities – even those who are pessimistic
about public investment accept that investment in education and children offer
substantial returns to the economy and society. 
Children who are better cared for, who receive education opportunities
in a more engaging social environment – these are the real drivers of prosperity tomorrow.

This puts that scary €1 billion cost in perspective.  The fact is that an affordable, public service-based
childcare system is absolutely affordable. 

What is not affordable is to continue with the current system
whereby profitable childcare operations – subsidised by the state – of necessity
charge such high fees that people can’t access them, or only on penal terms;
with continuing questions over quality care.

During each term, Governments have the opportunity to make
their mark.  For instance, the Lemass
Government of the 1960s will always be remembered for free secondary education.  Today’s Government has a similar opportunity –
to transform the way we care and educate young children.  This is a great opportunity.   It would be a shame if they let this go by the boards.

A shame for our children. 
A shame for society.

For an example of how this could be work, please see
my post here which outlines the cost and benefits of introducing a new childcare public
service.