Call for a one-size-fits-all childcare subsidy

Australia’s complicated childcare rebate system should be simplified into one subsidy to provide fairer outcomes and greater value for money, according to a submission to the Productivity Commission.

The childcare benefit and childcare rebate should be rolled into one ”Early Learning Subsidy” that covers up to half of the ”reasonable” hourly costs of childcare, according to the submission by Professor Deborah Brennan from the University of NSW’s Social Policy Research Centre.

Professor Brennan also wants a medium-term plan devised to provide ”universal, high-quality, low-fee” childcare for all families.

The submission by Professor Brennan and researcher Elizabeth Adamson to the commission’s inquiry into childcare says Australia’s funding regime ”could be structured to achieve more equitable outcomes and value for money”.

The Early Learning Subsidy which they propose would cover between 35 per cent and 50 per cent of the reasonable cost of childcare.

Children from low-income families would receive a full subsidy.

Under the scheme, those using childcare priced at $70 to $100 per day would be better off, or no worse off.

However, those using high-cost childcare – $150 per day or more – for one or two days a week would be worse off.

Professor Brennan and Ms Adamson say the average price for long day care before subsidies is about $70 a day and few families pay $150 or more a day.

The subsidies would be paid directly to childcare providers in return for keeping fees at a reasonable level.

This would ”improve the simplicity and transparency of funding for parents and providers alike,” the submission says.

The researchers also propose a 10-year plan for the introduction of a universal, low-fee childcare system. This would bring childcare more into line with the entitlement to school.

Research by the Economist Intelligence Unit found children in 29 countries have a legal right to preschool education, but there is no such legislation in Australia. Professor Brennan and Ms Adamson suggest the universal system could start with children the year before school and progressively extend along the age range.

”This option is the most likely to deliver a firm platform for women’s labour force participation, quality services for children and affordable provision,” the submission says.

The universal system proposed by Professor Brennan and Ms Adamson is similar to the model working in the Canadian province of Quebec, where childcare costs $7 per day for all except low-income families, for whom it is free.

The federal government is likely to spend more than $20 billion on childcare subsidies over the next four years and has asked the Productivity Commission to suggest how the system could be more ”flexible, affordable and accessible”.

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Call for a one-size-fits-all childcare subsidy
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