Prime Minister Scott Morrison has announced free childcare for more than one million families, with a funding boost that aims to keep more than 13,000 childcare services across Australia open.
In doing so, the government has backed its earlier recognition of early childhood education and care being an essential service.
Estimates suggest about 650 early childhood education and care services have already closed in Australia due to falling enrolments.
The government plans to pay 50% of the sector’s revenue up to the existing hourly rate cap, based on the enrolment numbers before parents started withdrawing their children because of the COVID-19 pandemic.
It will only do this so long as services remain open and do not charge families for care.
The funding will apply from April 6 based on the number of children who were in care during the fortnight leading into March 2, whether or not they are attending services.
The plan will cost A$1.6 billion over the coming three months.
Today’s announcement is a much needed lifeline for the early education and care sector, which was on the brink of collapse.
By last week, drops in occupancy at childcare centres were estimated to be between 15% and 50%.
Normally, the childcare subsidy is paid directly to early childhood services, which then pass it on to families as a fee reduction. Today’s announcement effectively increases the fee reduction to result in zero fees.
Last month, the government also increased the time families can stay away from childcare without losing their access to subsidies, from 42 days to 62 days. The new plan waives gap fees, so families don’t face costs for keeping children at home.
Previously, families would face fees even when their child was absent from childcare, so services could keep operating. While this made sense in the pre-COVID world, many families discontinued enrolment when they were not sure when their children would return to care.
Federal education minister Dan Tehan said families that discontinued their enrolment since February 17 were encouraged to re-enrol their child:
Re-starting your enrolment will not require you to send your child to child care and it certainly won’t require you to pay a gap fee. Re-starting your enrolment will, however, hold your place for that point in time when things start to normalise, and you are ready to take your child back to their centre.
Finding a place in quality childcare remains a struggle for many Australian families, so support to stay enrolled is a significant benefit.
The funding boost means many centres can stay open and early childhood educators (including the 72% who are part-time or casual workers) will be able to keep working.
JobKeeper payments will be available for those who cannot keep working. This is welcome respect from government for the importance of these workers, who are risking their health to give children continuity of care.
The announcement caused initial confusion about whether free childcare would apply to all families. Education minister Dan Tehan asked that services prioritise vulnerable families and those who can’t care for their children safely at home.
The Prime Minister said “working parents” would be prioritised, not just those working in the most critical jobs.
Tehan later clarified that the support applies to all families who have an existing relationship with a childcare centre.
While families struggling to care for young children while working from home will welcome this announcement, it still leaves uncertainty about how “prioritisation” will occur.
It is also not clear whether the call for prioritisation was expected to limit the number of families using childcare services, to allow educators to implement strategies like extra cleaning and physical distancing to protect children and staff from infection.
Benefits for children’s learning are also largely missing in the political spin. The Prime Minister is right that “children need as much familiarity and continuity as we can help provide”, but early childhood services do more than provide familiar spaces for children.
When it comes to school education, the global focus has remained on keeping children learning, even for those not at school. But research shows learning is even more important in the early years, so governments also need a plan to support educators and families to keep early education going.
Another glitch is that Goodstart Early Learning, Australia’s largest early childhood service provider, is technically ineligible for the government support announced so far. The company’s annual revenue is just above the A$1 billion eligibility limit for access to the new package.
Goodstart itself was born from the last major crisis in Australian childcare, when ABC Learning went bankrupt, placing more than 1,000 services at risk of closure. Goodstart, a not-for-profit social enterprise, was created from a consortium of community organisations and government support, to provide a new model of childcare that prioritised learning over profit.
It would be a cruel twist of fate if the solution to the last childcare crisis was left out of the solution to the current one.
Education minister Dan Tehan has described today’s reforms as “turning off the old system” of childcare funding. When Australia reaches the other side of the crisis, governments will face tough decisions about whether the clunky pre-COVID system – with childcare funding pieced together from a complex mix of government funding and vastly variable fees – should ever be turned back on.
A broken system will crumble to pieces at the first sign of crisis. Australia has seen childcare come close to the brink of collapse twice now in just over a decade. Governments owe it to children and families to never let it happen again.
The government will provide free child care in a move aimed at ensuring parents, especially in essential services, are able to keep working.
More than 945,000 families with 1.3 million children will benefit.
The new arrangement will scrap, after Sunday, the present funding system – including the means test and the activity test – and instead the government will pay half the sector’s revenue up to the existing hourly rate cap.
The plan will cost the government $1.6 billion over three months – compared with $1.3 billion if current revenues and subsidies had continued, based on the existing system and the big reductions in enrolments that have taken place.
The funding will be paid direct to the centres, with the condition they remain open, so parents do not have the disruption of having to seek out another provider. There are some 13,000 childcare and early leaning services. The new arrangements will also extend to after school and school holiday services.
Priorities will be set for access, with the first in line being working parents, vulnerable and disadvantaged children, and parents with existing enrolments.
Centres should “re-engage with those parents who have taken their children out of care, to see whether they can be accommodated as necessary as well,” Education Minister Dan Tehan said.
“But there is a clear priority list that we want centres to take into account, and the most important of those are those essential workers and the vulnerable children.”
Scott Morrison said: “In this ‘new normal’ that we’re living in, it’s no longer about entitlement. It’s about need.
“And we’re calling on all Australians to think about what they need, and to think about the needs of their fellow Australians who may have a greater need when it comes to calling on the many things that are being provided.”
For parents who have removed their children from childcare, centres can waive the gap fee, dating back to March 23.
The payment to centres will start to be made in a week’s time, and will run initially for three months, after which it may be extended.
Morrison and Tehan said in a statement the plan would provide “planning certainty to early childhood education and care services at a time where enrolments and attendance are highly unpredictable”.
Childcare centres can also get assistance under the JobKeeper program announced this week and the cash and loan schemes also available for businesses.
The Australian Childcare Alliance, the peak body for early learning services, welcomed the announcement as “extraordinary”. It said an overnight survey it had done had shown 30% of providers “faced closure this week due to as massive, shock withdrawal of families – either from fear or unemployment – and another 25% were not sure they could ever recover, even once the virus crisis has passed”.
But with the new financial measures , plus the JobKeeper payment and other existing support mechanism the early learning sector should be able to continue to play its essential role, ACA said.
Labor’s proposed A$4 billion reform to the childcare subsidy on Sunday confirms that early childhood is a key policy issue this election. This is on top of Labor’s previous announcement of 15 hours of funded preschool for every Australian three-year-old.
The latest announcement will no doubt be welcomed by families balancing the costs of childcare against the benefits of participation in paid work. In 2015, the Productivity Commission estimated around 165,000 Australian parents would like to work more, but were prevented due to poor accessibility or affordability of suitable childcare.
Under Labor’s proposal, families on incomes up to A$174,000 with children under five would be better off on average by A$26 a week, or A$1,200 a year per child. Most families earning up to A$69,000 would get their childcare free. Currently, they receive a subsidy of 85%. Labor’s proposal would save them up to A$2,100 annually per child.
The current subsidy gradually tapers down as earnings increase. The lowest subsidy available is 20% for the highest-earning families, before it cuts out at A$351,258.
Families on incomes above A$174,000, under Labor’s plan, would continue to receive the same level of support as under current arrangements.
The current subsidy was introduced as part of the Coalition’s major childcare reforms (worth A$3.5 billion) in 2018, which included a means-tested subsidy and removal of annual caps. The reforms benefitted an estimated one million lower-income families – but also left around 280,000 families worse off, including families with neither parent in work.
This is where early childhood policy gets complicated. Policies can be motivated by different goals. The Coalition reforms were aimed at encouraging parental workforce participation. Labor’s proposal for the childcare subsidy seem similarly motivated.
But parents are not the only beneficiaries of childcare subsidies. Quality childcare also benefits children’s learning. Many childcare programs for four-year- olds (and increasingly, three-year-olds), incorporate preschool. For children of all ages, Australian childcare providers must provide a play-based learning program, guided by the national framework.
That’s why childcare and preschool services are all known as early childhood education and care: whenever children are being cared for, they are also learning. Even a nappy change offers opportunities to support children’s learning, as skilled educators use playful, caring interactions to help young children develop skills like communication, trust and well-being.
Educators can also help families recognise these opportunities, so learning continues at home. Children in low-income households often have fewer opportunities to learn, due to factors such as stress and limited resources for investment.
By supporting access to quality early childhood services, governments can help families learn everyday ways to enhance their children’s learning.
To maximise benefits for children, all early childhood services need skilled, professional staff. Labor’s promised wage increase of 20% over eight years for early childhood educators addresses an issue that has been in the too-hard basket for too long.
Research has shown many Australian early childhood educators are paid so little they are financially dependent on others in their households — ironically while enabling financial independence for other working women.
Low wages place downward pressure on the quality of early childhood programs. Educators’ qualifications are lowest in low-income communities, where families cannot afford to meet the costs of higher wages. Government subsidies can help to break the link between educators’ wages and families’ ability to pay fees, so the best educators can reach the children who most need them.
Of course, the devil is in the detail when it comes to policy implementation. Labor has not specified how the wage increases will be delivered, instead committing to further consultation with the sector. Big questions remain about how government subsidies – to parents or educators – will be absorbed into a sector with for-profit and not-for-profit providers.
Close monitoring of the impact on childcare costs will be essential. Labor’s plan includes asking the Australian Competition and Consumer Commission to investigate “excessive” childcare fees. But can support for families be increased without stimulating an increase in fees? Can educators be supported to earn a fair wage, while keeping prices fair for families?
There is much to be gained by engaging with these questions. When parents are working, the economy benefits. When children are learning, everyone benefits, as the impact of early learning lasts throughout school and beyond. Countries like Sweden and Finland show what may be possible when parents’ and children’s needs are prioritised equally.
We owe it to Australia’s children to keep these issues on the election agenda.
In a big hit announcement before the start of pre-polling, Bill Shorten on Sunday will pledge a A$4 billion boost for child care, making it cheaper for every family earning up to $174,000.
From July 2020, 887,000 families would benefit from the ALP plan, with some being up to $2,100 better off.
Under the initiative:
families with children under five on incomes up to $174,000 would be better off on average by $26 a week – $1,200 a year – per child
the majority of families earning up to $69,000 would get their child care free. This would save them up to $2,100 annually per child.
Families on incomes above $174,000 would continue to receive the same level of support as under current arrangements.
The plan is central to Labor’s campaign on cost of living, with Shorten describing it as “massive cost of living relief for nearly one million families struggling with the costs of child care”.
“Under the Liberals, the costs of child care has gone up 28%, costing families using long day care $3,000 more a year.
“Labor will increase the subsidy families receive, we will kick start the process to limit out-of-control child care price increases, and we will review the impact of the system on vulnerable and very low-income families,” Shorten says.
“This is a $4 billion investment in early education, in working parents and in helping families with the rising cost of living. Labor can pay for cheaper child care for working families because unlike Scott Morrison and the Liberals, we aren’t giving bigger handouts to the top end of town,” Shorten says. The $4 billion cost is over three years.
The main elements of Labor’s plan include:
The subsidy rate would be increased from 85% to 100% up to the hourly fee cap (currently $11.77 per hour for long day care) for families earning up to $69,000 who meet the activity test. This would make child care free, or almost free, for up to 372,000 families.
The present tapered reduction would be updated to reflect the higher subsidy rate.
Families earning between $69,000 and $100,000 would receive a subsidy rate between 100% and 85%, up to the hourly fee cap.
Families earning between $100,000 and $174,000 would receive a subsidy rate between 85% and 60% up to the cap – an effective increase of 10%.
Families accessing approved Centre Based Child Care, Family Day Care and Outside School Hours Care, including holiday care, would all benefit from the higher subsidy.
Labor would give the Australian Competition and Consumer Commission a new role of investigating excessive fee increases and unscrupulous child care providers. Findings would be made public through mychildcarefinder.
The ACCC would also look at mechanisms to ensure greater controls on child care fee increases to keep child care affordable.
Labor says that in the nine months of the current subsidy system, the number of vulnerable and very low-income families using it has fallen.
“Reports suggest the numbers accessing the Childcare Safety Net have fallen by almost half, from 35,000 to 21,000.
“Labor will urgently review the new system to make sure that vulnerable and low-income families and children aren’t falling through the cracks,” Shorten says.
Labor has already committed to every three-year-old child being able to receive 15 hours of subsidised preschool. It has also said it would extend the current arrangement for four-year olds.
Shorten says this would create “a two-year program to support the most important years of a child’s development and ensuring our kids don’t fall behind the rest of the world”. For many children this would be free or nearly free.
Labor is also set to make an announcement on boosting the wages of child care workers, who are among the low paid.
The first votes will be cast at pre-polling stations on Monday, as the campaign ramps up in its final three weeks. Scott Morrison and Shorten will meet in Perth late Monday for their first face-to-face debate.