The Independent Alliance has proposed the 'Grandparent and Grandchild Expenses Reimbursement Scheme'
The Finance Minister says there are big questions over how a proposed childcare payment for grandparents - a so-called 'granny grant' - would work.
The idea by the Independent Alliance is to give a self-assessed payment to those who mind their grandchildren for more than 10 hours a week.
If the proposal is introduced, eligible grandparents could receive €1,000 a year.
The alliance discussed the issue with Paschal Donohoe during a pre-Budget meeting yesterday, claiming it would "recognise the valuable economic and social contribution which grandparents make in helping with their grandchildren in order to enable a parent of those children to work".
Speaking on Newstalk Breakfast earlier, Paschal Donohoe said two immediate issues come to mind with the proposed Grandparent and Grandchild Expenses Reimbursement Scheme.
He observed: "When the State makes any payment to anybody, we have to ensure the payment is being made on the basis of an activity that has been delivered."
Minister Donohoe also suggested other family members and friends who also help out with childcare would ask 'what about us?' if payments are made available to grandparents.
He added: "It's fair to say there's really big questions in relation to that proposal that would need to be answered.
"But first and foremost I have to work with [Children's] Minister Zappone in relation to childcare policy."
Fianna Fáil, meanwhile, claimed the grant would not address the "crisis" in Ireland’s childcare sector.
Senator Lorraine Clifford-Lee argued: "Rather than put forward a well-thought out policy to increase the availability of affordable childcare, the Independent Alliance has thrown out what can only be described as an insult to the hundreds of thousands of parents and grandparents who are caring for children."
She added that Irish families should instead be afforded a 'well-funded' childcare sector that is "easily accessible and affordable for all".