Goodstart Early Learning’s claim that the cost of childcare will universally rise under the model proposed by the Productivity Commission Report into Childcare and Early Learning, needs to be viewed in context.

Goodstart is a not-for-profit company that owns and operates 641 childcare centres across Australia. It provides a valuable and high quality service to parents. It has also benefitted from the model established under the Howard government, whereby all parents receive a non-means tested Part B tax payment of up to $7,500 for each child in care, in addition to any Part A means-tested support they may receive.

When it took office, the Abbott Government asked the Productivity Commission to undertake a public inquiry into future options for childcare and early childhood learning, with a focus on developing a system that supports workforce participation and addressed children’s learning and development needs. Of the six items it was specifically asked to report on, only one was, “options – within existing funding parameters – for improving the accessibility, flexibility and affordability of childcare for families with diverse circumstances.”

The final report has made it clear that greater overall affordability requires additional government funding, a request which Minister Scott Morrison has said he will take to Cabinet.

However, its recommendations are essentially about redistribution of the current funding envelope. Indeed given these constraints, the report is a quality document which takes apart the complex tangle of spaghetti that Early Childhood Education and Care (ECED) has become, and refashions it into something more digestible.

A core premise is the need to make a cumbersome and over-regulated system with more than 20 Australian Government assistance programs – and a somewhat over-done National Quality Framework – simpler, more accessible and flexible. In other words, the sector is ripe for some disruptive innovation which may upset the status quo.

Key reforms proposed include:

· Extending the range of services approved for assistance to regulated in-home care.

· Removing the cap on occasional care places.

· Giving primary schools responsibility for outside school-hours care for their students, where demand exists for a viable service.

· Targeting assistance to low and middle income families through three priority areas:

1. A single child-based subsidy that is means and activity tested, paid directly to the family’s choice of approved services, for up to 100 hours per fortnight, and based on a benchmark price for quality ECEC.

2. Supports the inclusion of children with additional needs in mainstream services, delivery of services for children in highly disadvantaged communities and the integration of ECEC with schools and other child and family services.

3. Funds approved preschool programs on a per child basis, for all children, regardless of whether they are dedicated preschools or part of a long day care centre.

Setting the benchmark for ECEC is where the devil will be in the detail for the Abbott Government. The report found that of the 5% of families that reach the $7500 per child cap on CCR contributions to out-of-pocket costs, most of these use ECEC in central Sydney or Canberra and/or have children in care for over 40 hours per week. Modelling by NATSEM has shown pretty conclusively that the highest prices for childcare occurs in CBDs and close-in suburbs in Sydney, Melbourne and Canberra (up to $150 and $200 per day), while the remainder of the country remains at an average of around $80 per day. The latter generally do not offer ‘services with frills’ such as drama and dancing lessons which are available at some more costly centres.

It would be hard to argue that either these fees or level of additional services should inform a national benchmark for ECEC services. Neither would it serve the tax payer well if academic arguments about the level of degree qualifications being mooted for people caring for 0-2 year olds was taken into account when setting the benchmark for care.

Any such benchmark needs to be based on a reasonable cost of production, which is further compounded by the fact that many childcare providers are cross-subsidising the 0-2 age group (higher carer to child ratios) with fees from the 3-5 age group or after-school care. So the cost of production is not being truly reflected in the price.

Instead of the argument that it is not fair to set a national benchmark as some mid-city childcare services have to charge more because their property prices are higher (true for every industry one would think) being put by Goodstart Early Learning chief executive Julia Davison, it would be more useful to look at three separate benchmarks. This would more accurately reflect the cost of the service and inject some clearer price signals into the system.

Instead of arguing about the findings, Goodstart and others would be better placed welcoming the recommendations in the PC report and engaging in how our childcare system become more efficient and flexible, better suited to the changing needs of an increasing agile workforce and paid for on a needs basis rather than as a universal benefit.

This article was originally published at Women’s Agenda.

Tags: Childcare
Sectors: Government