Monika Sheppard
In the Budget, the Australian Government has responded to
the Productivity Commission’s Inquiry into Childcare and Early Childhood Learning.[1]
The existing child care system will be reformed, with a new system implemented
from 1 July 2016 to 1 July 2017. The budget measures providing for the new
system are set out in the Government’s $4.4 billion Families Package and
funding from existing programs will be absorbed into the new program structure.[2]
The Families Package also includes continued funding to
support the objectives of national partnership agreements (NPAs) that aim to
enhance early childhood education and care (ECEC).
Families Package—key child care
measures
A single Child Care Subsidy for
mainstream services
Currently, the Australian Government provides financial
assistance to eligible families to assist with the costs of child care via the means
tested Child Care Benefit, the non-means tested Child Care Rebate, and the Jobs,
Education and Training Child Care Fee Assistance programs. From 1 July 2017,
these programs will be replaced with a single means tested Child Care Subsidy (CCS).
The CCS will cover 85 per cent to 50 per cent of eligible
families’ actual or benchmarked fees (whichever is the lower). The maximum
subsidy (85 per cent) will be provided to families with an annual income of
$65,000 or less and the subsidy rate gradually tapers to 50 per cent for
families earning around $170,000 or more. A cap of $10,000 in CCS per child,
per year for families earning more than $185,000 annually will apply. Eligibility
criteria include that families satisfy an activity test, with the number of
subsidised child care hours dependent upon the number of hours spent in work,
study, training or recognised volunteering each fortnight. Families earning below
$65,000 annually, who do not meet the activity test, will be subsidised for up
to 24 hours of child care each fortnight, while those who receive income
support payments with participation requirements (for example, Newstart
Allowance) will have their level of participation recognised under the activity
test.[3]
Since the Productivity Commission (PC) recommended a single
means tested child care subsidy, much of the child care funding debate has
focussed on how the rate of the subsidy would be calculated. Initial concerns
regarding the hourly benchmark rate appear to have been resolved, with the
Government adopting a higher rate—based on a projected average price plus
additional loading for different service types—than that proposed by the PC,
which was based on a median price for the relevant service type.[4]
The benchmark is intended to exert downward pressure on child care fees (by capping
the level of subsidy available).[5] However, Ben Phillips from
the National Centre for Social and Economic Modelling warns that the long-term
impact of the Government’s significant investment in child care expenditure
will be inflation in child care prices.[6]
Some in the ECEC sector have expressed concerns that the activity
test will prioritise workforce participation objectives over the best interests
of children.[7] For example, Early
Childhood Australia has argued that ‘it is often the children whose parents
aren’t working that benefit the most from access to quality early learning’.[8]
The proposed activity test is designed to closely align the level of government
assistance with parents’ level of work participation, while retaining some
level of support to all families (as well as targeted support for disadvantaged
and vulnerable groups). Minister for Social Services, Scott Morrison, has
stated that ‘support for child care is not a welfare payment. It is a payment
that makes the cost of child care affordable for families who need to be in
work and choose to be’.[9]
Child Care Safety Net for
non-mainstream services
A new Child Care Safety Net program will be established to
provide targeted support to disadvantaged or vulnerable families who encounter barriers
to accessing child care. The new measure will partly replace the existing Inclusion
and Professional Support Programme with a new Inclusion Support Programme from
1 July 2016; the existing Special Child Care Benefit with an Additional Child
Care Subsidy from 1 July 2017; and the existing Community Support and Budget
Based Funded programs with a new Community Child Care Fund from 1 July 2017. Some
funding for these existing programs will be redirected to the Safety Net and
the CCS.[10]
The Safety Net will have total funding of $869 million over
three years: the Additional Child Care Subsidy ($156 million over two years),
the Community Child Care Fund ($304 million over two years) and the Inclusion
Support Programme ($409 million over three years).[11]
In general, this measure is consistent with PC recommendations aimed at
reforming child care services for families with additional needs, although the
PC recommended funding for operational capital costs be time-limited.[12]
Uncertainty of the additional funding
The Budget provides additional funding of $3.5 billion over
the forward estimates: $3.2 billion in respect of the CCS and $327.7 million in
respect of the Safety Net.[13] This funding has been
welcomed across the ECEC sector as an acknowledgement of the importance of
investing in ECEC.[14] However, the Government
has linked the additional funding with Family Tax Benefit savings measures
announced in the 2014–15 Budget which have stalled in the Senate.[15]
The Opposition, the Greens and most crossbench senators
have warned that they will not support cuts to family payments to fund the
child care measures, particularly Family Tax Benefit Part B (FTB-B), which
provides support to single parent and single earner families.[16]
Some Nationals senators have signalled their opposition to the FTB-B cuts and
that their support for the child care measures is contingent on more financial
support for stay-at-home parents.[17]
A pilot program for in-home
services
The Budget provides $246 million for an Interim Home Based
Carer Subsidy Programme (Nannies Trial), a two-year pilot, commencing
1 January 2016, that extends child care fee assistance to in-home care
provided by nannies.[18] The pilot targets
families who are not able to access mainstream child care services, such as
emergency services and shift workers, and is expected to subsidise the cost of
4,000 nannies providing care to 10,000 children.[19]
Eligible families with income up to $60,000 will receive subsidies worth 85 per
cent of the capped hourly rate ($7 per hour, per child), with the subsidy rate
tapering to 50 per cent of the capped rate for families with income up to, and
above, $165,000. Families with income over $250,000 per annum will not be
eligible. With the typical hourly rate for nanny services estimated to be between
$20 to $35 per hour, and the subsidy providing only a percentage of $7 per hour,
the cost of nanny services is likely to remain prohibitive for many families.[20]
National Partnership Agreements
The key ECEC NPAs are those for the National Quality Agenda
for Early Childhood Education and Care (NQAECEC) and Universal Access to Early
Childhood Education (UAECE). The Budget provides $61.1 million over three years
from 2015–16 to continue the Government’s support for implementation of the
National Quality Framework (NQF), and $843 million under the UAECE NPA for the
2016 and 2017 calendar years was previously announced.[21]
The NQAECEC NPA provides a national system for the
regulation and quality assessment of ECEC services. The NPA was reviewed in
2014—the final report may impact government funding in the next budget, as well
as state and territory funding allocations which are yet to be determined for
2015–16 and over the forward estimates.[22]
The UAECE NPA is aimed at providing universal access to
quality early childhood education programs for all children in the year before
full-time school for 600 hours per year.[23] While the 2015–16 Budget
provides clarity for the short-term, the long-term future of the Australian
Government’s funding for preschool programs is unclear.
[1].
Productivity Commission (PC), Childcare
and early childhood learning, Inquiry report, 73, PC, Canberra, 2014.
[2].
Australian Government, Budget
2015–16: families package, p. 4.
[3].
T Abbott (Prime Minister) and S Morrison (Minister for Social Services),
Jobs
for Families child care package delivers choice for families, media
release, 10 May 2015; Budget
2015–16: families package , op. cit., p.
7.
[4].
T Abbott and S Morrison, op. cit.
[5].
Ibid. See also: S Morrison (Minister for Social Services), Address
to Early Childhood Australia Forum, speech, 16 April 2015.
[6].
L Wilson, ‘Federal
Budget 2015: Mums who volunteer can keep childcare’, Newscorp Australia
Network, 14 May 2015.
[7].
Early Childhood Australia, Working
families to benefit from historic reform of early childhood education and care
subsidies, media release, 10 May 2015; Goodstart Early Learning, Families
package great for working families, needs to work for all children, media
release, 10 May 2015.
[8].
Early Childhood Australia, op. cit.
[9].
T Abbott and S Morrison, op. cit.
[10].
Australian Government, Budget
measures: budget paper no. 2: 2015–16, p. 155; S Morrison (Minister for
Social Services), Abbott
Government delivers child care safety net for disadvantaged families,
media release, 8 May 2015.
[11].
Budget
2015–16: families package, op. cit., p. 8; Abbott
Government delivers child care safety net for disadvantaged families,
op. cit.
[12].
Productivity Commission, op. cit., p. 45.
[13].
Budget
measures: budget paper no. 2: 2015–16, op. cit., pp. 154–5.
[14].
Early Childhood Australia, op. cit.; Goodstart Early Learning, op. cit.
[15].
T Abbott and S Morrison, op. cit.
[16].
E Griffiths, E Borrello and M Clarke, ‘Budget
2015: childcare package headed for Senate stoush; more public service cuts on
the way’, ABC News, 11 May
2015.
[17].
P Coorey, ‘Nats
seek more cash for home childcare’, The Australian Financial Review,
7 April 2015.
[18].
Budget
measures: budget paper no. 2: 2015–16, op. cit., p. 154; S Morrison
(Minister for Social Services), $246
million Nanny Pilot Programme to support families in work, media
release, 28 April 2015.
[19].
Budget
2015–16: families package, op. cit., p. 10.
[20].
Productivity Commission, op. cit., p. 455.
[21].
Australian Government, Federal
financial relations: budget paper no. 3: 2015–16, p. 32; T Abbott
(Prime Minister), C Pyne (Minister for Education and Training) and S Ryan
(Parliamentary Secretary to the Minister for Education), Funding
certainty for preschools, media release, 3 May 2015; Australian
Government, Budget
2015 overview, p. 13.
[22].
Federal
financial relations: budget paper no. 3: 2015–16, op. cit., p. 32.
[23].
Federal
financial relations: budget paper no. 3: 2015–16, op. cit., p. 35.
All online articles accessed May 2015.
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