Childcare Policy

Childcare needs to be simple, affordable, accessible and flexible. Reliable, affordable, high quality childcare is critically important for children’s development, parents’ social and economic participation, and broader social and economic well-being. There are some major difficulties in the new childcare package that commenced on July 1 2018.

Simplicity is important in controlling costs for providers, and in making it possible for parents to understand and to access the services. The three tiered activity test makes it difficult for parents to know their entitlement to subsidy from week to week. There are 17 types of activity used for assessing eligibility under the activity test. Complex activity testing across work, study and voluntary activities imposes a heavy burden on providers. The rules for assessing children “at risk” are burdensome for providers.

Affordability is important in providing access to services to all children including those whose parents are on low and middle incomes. It is also important that the government subsidies do not have an inflationary effect. Benchmarking fees is a means of controlling costs. It is important that benchmarks reflect the actual costs of delivering high quality services to different age groups
(including infants), in various locations. Affordability of childcare is a critical factor in the threshold for workforce participation, and unaffordable fees are a disincentive to women’s workforce participation in particular, with all the implications reduced workforce participation has for lifelong earnings and retirement incomes, among other disadvantages.

Accessible childcare means services are available to all children irrespective of parents’ income, location, workforce participation, cultural or ethnic background. Activity tests can mean that parents with lower workforce involvement have less access to childcare. Activity tests that favour regular and predictable hours of work disadvantage parents with insecure, unpredictable or variable hours of work. That is an increasing group of parents, where work is increasingly casual or on variable “zero hours” contracts, and working at weekends or on shift work is common.

Flexible services are needed to meet the needs of parents with a wide range of levels of workforce participation. Where parents do not meet the activity test, the subsidised period of care is 12 hours. Since most long day care centres charge a full day rate, this effectively amounts to one day a week, which is insufficient for children to form bonds with educators and peers. While nanny services can provide flexibility, the maximum subsidy $7 an hour means it is not an option for most families.

Some of the major problems in the provision of childcare arise from the operation of the “private market”, with its incentives for profit maximisation and pressures to reduce quality. The “private market” is actually heavily dependent on the public purse, through the childcare rebate. In reality, childcare would be better provided like free public education. Consideration of how childcare could be provided without all the perverse incentives in the current system is overdue.

Recommendations
There are six important conditions Government needs to ensure in order to ensure that access to early childhood education and care is simple, affordable, accessible and flexible. They are listed below.

* A seamless transition from parental leave to childcare
* Guaranteed free access to at least two days free high quality childcare per week for all pre-school children
* Capped fees
* Planned provision to ensure availability of services
* Improved pay and conditions for early childhood educators, with appropriate incentives and rewards and requirements for minimum qualifications (at least Certificate III). This is a critical condition for workforce retention and quality
*A range of providers, to meet the need for variable, non-standard and unpredictable hours of care

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