Explainer: does investment in childcare quality risk pricing parents out of the market?

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In slightly better news for parents, the average price of long day care fell for the first time in two years in the December 2013 quarter figures, which have just been released by the federal government. They dropped from $7.65 an hour in the September 2013 quarter to $7.60. 

Q. But aren’t real costs to parents subsidised by government rebates and benefits anyway? 

Prices may be climbing, but parents are not paying for child care all on their own. According to the Productivity Commission, the federal government pays about two thirds of childcare costs. 

There are two main forms of government assistance for childcare. One is the Child Care Benefit for families with an annual income under $43,000. This provides $4.10 an hour for care for children under school age at an approved carer. 

The other is the Child Care Rebate, which covers 50 per cent of out-of-pocket childcare expenses up to a maximum of $7500 per child per year. The rebate is not means tested and more than 90 per cent of families who use childcare services are estimated to have received it. 

The AMP/NATSEM report suggests that if you take government subsidies into account, out-of-pocket childcare prices have not risen long term much more than the CPI. But the concern is that prices will continue to rise, out of step with the rebate cap.  At this stage, about 5 per cent of families reach the $7500 cap per child and most of these families are in central Sydney or Canberra and have kids in childcare for more than 40 hours a week.   

Q. What’s driving up costs: wage rises for low-paid workers or rising skills in the sector? 

.It depends who you ask – or rather, believe. Demand is one factor driving up the cost – with the rate of childcare use jumping by almost 80 per cent since the mid-1990s. 

It is also argued that the National Quality Framework has made childcare more expensive, although this is a more political argument. The NQF was introduced under Labor in 2012 and requires childcare workers to be better qualified (and therefore better paid) and  raised the ratios of childcare workers to children. However, it is worth pointing out that childcare workers are poorly paid to start with.   

The Abbott government has been sceptical about the NQF, with the minister responsible for childcare Sussan Ley saying that fees have increased by $5 to $20 a day under the framework. This figure is strongly disputed by Labor, which points to an August 2013 Department of Education report that finds the NQF is being rolled out “without any significant increase in fees”. 

Childcare centres are also opening for longer hours, which in turn increases costs when parents are charged per day rather than per hour. And besides, childcare centres are expensive businesses to run (even if they don’t offer iPads and French classes for every child). Centres need to rent large spaces for children to play, indoors and out and there is no shortage of regulations around food and safety to consider. The bottom line: looking after little people is not cheap! 

Q. Could rising costs price childcare beyond the capacity of poorer parents? 

Not necessarily, because those on lower incomes get more benefits than those on higher incomes. Then again, poorer parents in inner-metropolitan areas would be the most at risk on this issue: they live in areas where childcare fees are highest and where there is a mix of high and low income earners. 

It is also widely observed that the high cost of childcare, combined with the loss of some government benefits and an increase in income tax can mean there is not much financial gain for some parents (usually the mum) if they increase their work hours. The Productivity Commission has estimated there could be up to 165,000 parents who would like to work, or work more hours, but are not able to because “they are experiencing difficulties with the cost of, or access to, suitable childcare”. 

Q. So is there actually an economic benefit to keeping skills and costs down? 

Not in the long-term, according to one recent study. A September report by PwC found the Australian economy would benefit by up to $10.3 billion by 2050 if children received quality education and care while they were young. If vulnerable children attended a childcare or early learning program, the benefit to the economy would be $13.3 billion by 2050. 

PwC also found that children who receive a high-quality education when they are young “enter the labour market as more productive workers”. That is, while there was a higher upfront cost, in time, there would be more taxes collected, less spending on unemployment and a decrease in spending around remedial education, justice and health services. 

It is also worth noting that advocacy group The Parenthood found of 3000 parents surveyed, only 3 per cent said they would send their child to a centre that had less qualified staff and lower staff-to-child ratios if it made the fees slightly cheaper.

Q. The Productivity Commission recently released a draft report into childcare – what were its main recommendations? 

The PC released a whopping 900-page draft report in July (guaranteeing that even most of the experts have not read all of it). Among its many recommendations, it suggested that the government’s multiple childcare subsidies be replaced with a single means-tested payment that would go to a parents’ provider of choice. It also suggested changing the means testing of payments, with a family on an income of $60,000 or less getting 90 per cent of their childcare costs covered by the government, while families on $300,000 or more, would get 30 per cent back.  

The PC grabbed headlines with its suggestion that nannies and grandparents could be eligible to receive government payments if they had proper early childhood qualifications. It also indicated that qualifications could be watered down for those looking after children under three. 

Q. How did the government respond to the draft findings: where is it likely to head on childcare? 

The government’s official line is that it will respond to the final report after it is handed down on October 31. But that hasn’t stopped it making some initial grunts of approval/disapproval.  Ley has appeared open to the idea of government-funded nannies if they were employed within the “existing regulated system”. She also thinks the commission has made a “good point” about removing the requirement for degree-qualified educators for kids under three.

But she has firmly said the government has “no plans” to means test the childcare rebate, noting that “affordability is a problem at every income level”. And she has flat out rejected the commission’s suggestion that money from the Coalition’s $5.5.billion paid parental leave scheme be diverted into childcare. 

Importantly, the government has also restricted the PC to making recommendations within “current funding parameters” – meaning they don’t want to spend any extra money on childcare.

Source Article from http://www.brisbanetimes.com.au/federal-politics/political-opinion/explainer-does-investment-in-childcare-quality-risk-pricing-parents-out-of-the-market-20140918-10fxfp.html
Explainer: does investment in childcare quality risk pricing parents out of the market?
childcare – Yahoo News Search Results
childcare – Yahoo News Search Results

カテゴリー: Childcare   パーマリンク


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