The Abbott Government’s upcoming “familes package”, foreshadowed at the Prime Minister’s speech last week to the National Press Club, looks as if it could become outdated before it has even begun.
This package will reportedly take on the recommendations of a Productivity Commission (PC) report into childcare, which proposed means-testing the childcare rebate, paying subsidies directly to providers, and expanding payments to include nannies. The PC’s reforms are estimated to cost the Government some $8 billion per year, $1 billion more than the $7 billion currently spent on childcare assistance, and are designed to make childcare more affordable and flexible for most families.
As noted last week, a major problem with expanding childcare subsidies is that they risk being inflationary – much like the first home buyers grant or private health insurance rebate – and pushing-up childcare costs. That is, any policy that makes childcare more affordable via raising subsidies raises parents’ ability to pay, is then usually capitalised into higher fees, thus cancelling-out much of the benefits to families from the policy change.
Already, we are seeing supply-side factors beginning to work against more affordable childcare, some of which are directly related to the upcoming rise in subsidies.
Last week, The Australian reported that regulations requiring greater staffing numbers per child could raise childcare fees by up to $60 per day for some children.
And today, The Australian is reporting that the childcare union is demanding pay rises of up to 70% for their 150,000 strong workforce, along with a doubling of public funding for Childcare:
The United Voice union, in its 2015-16 budget submission, wants public funding for childcare doubled to $14.7 billion a year within a decade.
It says taxpayers must pay for any wage rises for childcare workers flowing from an equal-pay case to be heard by the Fair Work Commission this year…
The union has asked the FWC to grant pay rises ranging from 39 per cent to 72 per cent, on the grounds that the female-dominated childcare workforce is paid less than men doing comparable jobs…
United Voice states that without extra public funding, “any claim for wages imposes additional costs on parents…
Clearly, something has got to give. While I don’t dispute that childcare workers are underpaid, given full-time diploma-qualified staff earn only between $40,000 to $60,000, it is also unsustainable and unrealistic to both: 1) raise childcare workers’ wages; and 2) increase staff-to-child ratios. You can do the former (raise wages) at the expense of the latter (lower staff-to-child ratios), but not both.
It is also yet another example of why childcare is a minefield for the government, which faces a never ending cycle of fee inflation creating pressures for greater subsidies, which then lead to more fee inflation.
Unfortunately, there are no easy policy answers.
