In the new system, working parents only need to pay a small part of the costs for childcare. The rest is paid directly by the government to the childcare organization. This eliminates the childcare allowance and future repayments will be a thing of the past. This makes it much easier for working parents. It also no longer matters how much they earn: the government pays the same part for everyone. As a result, working more hours will become more rewarding. The bill that regulates this will be made public next month.
Spending Tax Money on Working Parents
The contribution that the government pays for affordable childcare will significantly increase in the new system, to about € 9 billion per year. This is more than one and a half times what it is now. There is a risk that this will lead to price increases. The government wants to prevent this. It considers it essential that tax money benefits working parents. The future financing of childcare organizations also affects European state aid rules. To prevent unlawful state aid, the government deems it unavoidable to designate childcare as a service of general economic interest (SGEI) in the new system.
To prevent excessive profits, rules will be established in the new system. The government considers it very important that entrepreneurs in childcare can continue to achieve reasonable returns and innovate. They are also crucial for good care in the new system. The starting point is that entrepreneurs must retain the freedom to operate and invest in good and accessible childcare. Therefore, the government wants to shape the implementation of the SGEI in a way that aligns well with the entrepreneurial character of the sector. The government will actively involve the childcare sector in the further elaboration to ensure that the SGEI continues to stimulate entrepreneurship and does not create unnecessary administrative burdens.
Secretary of State Jurgen Nobel: “Childcare will be almost free for working parents. I will continue with this unwaveringly. We are now taking steps to keep childcare affordable for working parents. Especially now that the government is going to invest so much more in childcare, this tax money must reach them. Therefore, we are coming up with extra rules. At the same time, entrepreneurs are the driving force behind our good childcare. Therefore, we ensure that they can continue to operate and make sufficient profits. Work must pay off, and childcare must remain affordable.”
Due to the large degree of public funding and the public task that childcare organizations perform, childcare will also fall under the Act on the Standardization of Top Incomes. This will prevent possible excessive remuneration for executives.
Increasing Demand
As childcare becomes cheaper, demand may increase significantly. This can lead to higher prices and longer waiting lists. Therefore, the government is gradually making childcare more affordable. The first steps for this have already been taken this year. This allows supply to adapt to the increasing demand. The government is also monitoring price developments. Additionally, the government is focused on reducing the staff shortage. For middle-income earners, almost free childcare already means a significant reduction in costs. Municipalities also receive more opportunities to reimburse the own contribution of working parents with low incomes.
