Head of Giraffe Childcare says Budget is 'regressive', writes Jane O'Sullivan, Markets Correspondent

Despite the focus on childcare in Wednesday's Budget, the head of the State's largest childcare company is far from happy.

"Regressive", "disappointed" and "concerned" were among the words used by Simon Dowling, joint managing director of Giraffe Childcare, in response to Brian Cowen's speech.

The Minister's decision to provide a €10,000 tax exemption to childminders working at home, but not to childcare staff operating in the formal sector, particularly rankles with Giraffe, which employs 170 childcare workers.

Dowling fears the tax move will empty his centres of qualified staff, who will now be tempted to stay at home and avail of the tax exemption.

"We are very concerned, particularly as there is no tie-in to quality assurance or training," he says.

"It is simply encouraging ad hoc childcare without proper supervision, quality assurance or accountability."

He believes the move will undo much of the good work done in the sector in recent years, particularly by formal operators like creches, who he sees as the drivers of training, standards and professionalism.

"We are going in one direction and Government policy is going in the direction of ad hoc supply and low standards," Dowling says, adding that policy is being driven by expediency and a perception of a shortage of childcare places.

In reality, Dowling believes affordability rather than the availability of good childcare is now the biggest issue facing working parents.

Waiting lists are no longer "three miles long", he says, noting that a growing number of childcare places are coming on stream in urban areas.

The Budget also included a provision for payment of €1,000 a year to parents of under-sixes, on top of their child benefit, but Dowling feels that this does not go far enough.

"It's too widely spread and it doesn't address the childcare issue . . . They are spreading money around under the guise of childcare but it is really just child benefit."

He points out that to keep a young child in full-time childcare in the Dublin area currently costs about €195 a week, or some €10,000 a year, all of which is paid out of parent's after-tax income.

For infants up to the age of 15 months, Giraffe charges €210 per week, resulting in an annual bill closer to €11,000. But interestingly, even at that level, Dowling claims the creche makes no profit.

The high ratio of staff required, with one carer necessary for every three babies, means that looking after very young children is at best "cash neutral", he says, an investment in the future rather than providing an immediate return.

While acknowledging that policy-makers face a dilemma - in wanting to support working parents without discriminating against those who choose to stay at home - he believes they can sidestep this by addressing the issue of childcare and early learning for all.

Dowling's targets are ambitious. He believes the Government should ultimately be paying up to 40 per cent of childcare costs.

"The difficulty is that if they keep spreading money around just to satisfy all the politically correct ideas that are floating around, they are not going to address the issue," he says.

"If they narrow the focus, and support the childcare issue, which is the issue, they could get to that level."

Giraffe, which opened its first purpose-built facility in Dublin's International Financial Services Centre (IFSC) in 2001, now operates nine childcare facilities in and around Dublin, catering for about 900 children.

Dowling, who came to childcare from the fashion business where he owned the Ashley Reeves chain, makes no bones about the fact that, despite the sensitive and important nature of its work, Giraffe is a business, run for profits.

"I see no contradiction in the idea of running a childcare service along commercial lines," he says.

"Hospitals have balance sheets. Maybe if our hospitals were in private hands, we would have better healthcare."

The company declined to provide The Irish Times with turnover or profit figures, citing competitive reasons.

However, Giraffe's latest set of accounts, recently filed at the Companies Office, show accumulated losses fell to €1.86 million from €2.37 million in the year ended April, suggesting the group made a profit of at least €500,000.

Following a buyout of British venture capital group 3i's 33 per cent stake earlier this year, the company is now owned equally by Dowling, its chairman Tony Kilduff, and joint managing director Mary Ann McCormack and her husband, and is bent on further expansion.

A new facility in Harcourt Street, Dublin, is due to open in January and further centres will open in Rathfarnham and Navan later in the spring.

According to Dowling, Giraffe plans to more than double in size over the next 18 months through the creation of a further 1,000 childcare places in 12 centres.

Its focus remains firmly on Dublin and the area around the capital.

In addition to locations in south Dublin, it is looking at opening in Clonsilla, Malahide, Naas and elsewhere in counties Kildare and Wicklow.

But although the childcare sector may have come on in leaps and bounds in recent years, Dowling believes it needs more targeted support from Government if it is to continue to grow and improve.

In addition to direct support to parents, he would like to see the Government relax the rules on benefit-in-kind (BIK) taxation in the upcoming Finance Bill to allow companies contribute to the childcare costs of their workers without adding to their tax burden.

He sees it as an obvious way of helping the working parent without alienating those who choose to stay at home to rear their children.

"Loosening BIK is not going to cause any political fallout and it brings the most important beneficiaries of people going back to work - employers - into the loop," he says.

Childcare providers such as Giraffe have a number of other gripes they would like to see addressed.

Unlike schools, childcare centres remain subject to rates in most areas. In Dublin for instance, Giraffe pays rates of up to €25,000 per annum on its larger facilities.

"That's €250 a year on a childcare fee," Dowling notes.

Dowling's other big bugbear is with the planning regulations. Under current rules, any new development of 75 residential units must include provision for 20 childcare places.

As a result, there is a massive proliferation of childcare centres in areas of development such as west Dublin, while there is a shortage in more mature, built-up areas, he says.

He also notes that the regulations do not take heed of existing provision in an area, or even the nature of the development. For example, an estate of 75 three-bedroom semi-detached homes is likely to need more childcare places than 75 apartments, which tend to attract young, childless first-time buyers.

"As they currently stand, the planning regulations are going to be an unmitigated disaster," he says.

"They are ad hoc and not based on any scientific findings."

Rather than dropping childcare "around like confetti", he believes the planners need to strategically place it where it is accessible and will serve the community on an ongoing basis.