Navigation: Previous Page | Index | Next Page

Chapter 4...(continued) - Impact of Changes to Child Care Funding on Child Care Services

Closure of services

4.87 Many witnesses pointed to the closure of centres as evidence of the impact of the changes to child care funding on fees, affordability and utilisation rates. [99] Closures have occurred in both the community-based sector and the private sector. The QCCC indicated that while it was difficult to get accurate and timely information on service closures, at March 1998 seven Queensland services were on the verge of closure and four centres had closed. [100] Other evidence indicated that further closures were anticipated. [101] The Child Care Industry Association of Queensland noted:

What we are finding is that [closure] happens very slowly. People shut one room. They shut two rooms. They shut three rooms, then they go a mixed age group, which is 21 children from nought to five. People are trying to hang on hoping that things will get better and they will turn the corner. But it is a big decision to walk away from a business. Many of these are retirees who have paid substantial amounts of money and they are loath to close the doors and walk away from these businesses. [102]

4.88 Surveys conducted by the Liquor, Hospitality and Miscellaneous Workers Union (LHMU) of community-based centres indicated that centres had closed in all States: Victoria 20 centres, South Australia 10 centres, NSW 10 centres, Western Australia 29 centres (both community based and private). [103] The survey also indicated that many other centres were unsure or did not believe that their centres would remain viable in the long term. [104] The Victorian branch of the Union noted `from information the union has, we anticipate there could be as many as 30 [centres] that may consider closing or amalgamating with other centres in their area over the next six months'. [105] The NSW Branch of the LHMU stated:

Our experience is that a number of centres are right on the edge. As we speak, they are haemorrhaging pretty badly: they might not have been forced to close, they might not have been forced to make people redundant at this stage, but they have indicated to us that, if the current funding levels were to continue, then their long-term viability would be in jeopardy. [106]

4.89 The Childcare Industry Association of Queensland added that while there had been closures in the community-based sector, in the private sector centres were changing hands at a considerable loss to the vendor. The Association stated that `many small business people have mortgaged their homes, invested their savings and taken out loans in order to maintain quality of services only to succumb to the downturn in the industry and sell at a loss'. It was also anticipated that many centres in the private sector will be forced to close or be placed in receivership in the near future. [107]

4.90 The Department stated that:

There has also been a lot of discussion about centre closures. It is true that a number of centres have closed over the last couple of years. However, these closures have been more than offset by the number of centres which have opened. Like any industry, the child care sector includes successful and unsuccessful businesses. Many of those centres which have closed were suffering from poor utilisation and were faced with marginal viability prior to the implementation of the recent reforms. There are many factors which contribute to centre closures. In a competitive market environment in which families, as consumers, exercise their right to choose those services that best suit their needs, it is not surprising that some providers fall by the wayside. [108]

4.91 Departmental information on the numbers of closures and openings since 1 July 1996 to 31 May 1998 indicated that there has been a net increase of 311 centres (see Table 4.3). During the period, 51 community-based centres opened and 42 closed, while 427 private centres opened and 125 closed. However, the net increase in openings was significantly higher between 1 July 1996 to 30 June 1997 (a net increase of 236 centre based services) than between 1 July 1997 and 31 May 1998 (a net increase of 75 centres).

 

Table 4.3: Openings and closures of centre based services, 1 July 1996 to 31 December 1996

1 July 1996 – 31 December 1996
	NSW	VIC	QLD	SA	WA	TAS	NT	ACT	TOTAL	NET CHANGE
Community Openings Closures	1 0	0 4	2 0	4 2	2 2	0 0	0 0	0 0	9 8
Private Openings Closures	53 8	43 11	14 3	10 1	14 6	1 0	1 0	1 1	137 30
Total Openings Closures	54 8	43 15	16 3	14 3	16 8	1 0	1 0	1 1	146 38	+108
1 January 1997 – 30 June 1997
	NSW	VIC	QLD	SA	WA	TAS	NT	ACT	TOTAL	NET CHANGE
Community Openings Closures	4 1	10 4	4 0	0 2	0 2	1 0	0 0	3 0	22 9
Private Openings Closures	64 5	44 18	21 3	1 0	11 3	2 0	1 0	1 1	145 30
Total Openings Closures	68 6	54 22	25 3	1 2	11 5	3 0	1 0	4 1	167 39	+128
1 July 1997 – 31 December 1997
	NSW	VIC	QLD	SA	WA	TAS	NT	ACT	TOTAL	NET CHANGE
Community Openings Closures	0 3	1 11	0 0	2 0	0 4	3 0	0 0	0 0	6 18
Private Openings Closures	23 9	14 23	20 5	3 2	9 5	0 1	1 1	1 1	71 47
Total Openings Closures	23 12	15 34	20 5	5 2	9 9	3 1	1 1	1 1	77 65	+12
1 January 1998 – 31 May 1998
	NSW	VIC	QLD	SA	WA	TAS	NT	ACT	TOTAL	NET CHANGE
Community Openings Closures	5 3	7 0	0 1	1 1	0 1	0 1	1 0	0 0	14 7
Private Openings Closures	27 3	18 7	15 3	4 0	6 3	2 0	0 1	2 1	74 18
Total Openings Closures	32 6	25 7	15 4	5 1	6 4	2 1	1 1	2 1	88 25	+63
Totals from 1 July 96 – 31 May 98
Openings Closures	177 32	137 78	76 15	25 8	42 26	9 2	4 2	8 4	478 167	+311

These figures exclude: sale/transfer of ownership; amalgamations; change of sponsorship; change of organisation structure; relocation; renovation; administrative reasons; owner no longer seeking Childcare Assistance for families; changed from private to community or community to private.

In providing the Committee with figures on opening and closures, the Department noted that this was a very volatile area and Departmental records are unable to accurately trace in all instances the links between centres closing and re-opening.

Source: Submission No 894, Additional Information, 30.7.98, Revised Attachment 1 (DHFS).

4.92 In evidence witnesses questioned the Department's information on closures. In this regard the Committee notes the Department's acknowledgment of the limitation of its data on openings and closings in particular that its records are unable to trace in all instances the links between centres closing and re-opening. [109] Witnesses also stated that closures were occurring first in low-income areas as low-income families could no longer afford child care fees and were withdrawing children from care. It was also stated that some centres could no longer afford to cross-subsidise low income families which had an impact on utilisation and therefore viability. A further reason given was that the 20 hour limit impacts heavily on centres catering for areas with high unemployment. [110]

4.93 However, the Department indicated that oversupply was the principal reason for closures:

What we have found is that the closures are resulting from the oversupply situation. More often than not they are closing in areas of oversupply. Basically it is market forces coming into play. If you have a centre in an area that is offering a better service, then it is going to attract the children and the parents. The ones that are not offering that service in the area are tending to close. [111]

Quality of care provided

4.94 Extensive evidence was received that the quality of care provided had fallen because of changes to child care funding and because of changes in utilisation rates. Many witnesses emphasised staffing as a key area impacting on quality pointing to issues such as staff/child ratios, qualifications and experience and continuity of care. For example, the Sydney Day Nursery noted that `the research shows that it is adult to child ratios and qualifications and experience that are critical to the experiences of children'. [112] However, as staffing costs are a major component of the cost of providing centre-based child care, staffing had been the area targeted by many centres in efforts to contain costs.

4.95 Witnesses pointed to changes in staffing areas:

• staffing cuts including loss of support staff;

• changing the use of staff and the conditions under which they work including rostering changes;

• reducing the hours of or excluding altogether, ancillary staff such as cleaners, cooks, clerical assistants and domestics;

• increasing casualisation and the tendency to employ younger inexperienced staff;

• employing less qualified staff, for example replacing trained early childhood teachers with group leaders who hold a two year TAFE certificate;

• reducing opportunities for staff development and non-contact time for curriculum development;

• combining age groups (for example, caring for babies in the same session and physical space as four and five year olds) to cut the number of staff required; and

• increasing the amount of time directors are required to work with children. [113]

4.96 Other areas where cuts have been made and which were given as examples of elements undermining quality of care included shorter opening hours; a reduction in the range of services available including meals and nappy services; and cuts to equipment, materials and resources available to staff and children.

4.97 Witnesses noted that the recent surveys, including that conducted by the QCCC and NCOSS, also indicated that there was a general belief by families that there had been a decline in the quality of services. The Queensland Government also noted that these trends had been observed by staff conducting licensing visits to both the community-based and private sectors and `in some instances, services are testing the boundary of minimum standards'. [114]

4.98 In response to questions concerning possible infringements of licensing regulations concerning staff/child ratios due to enforced cost cutting, witnesses were unable to give examples of centres which did not meet the regulations in this regard. The Australian Local Government Association (ALGA), while noting that local government centres had experienced change, some deleterious, stated `from Local Government's perspective, it is not yet possible to gauge the full impact of the reforms as insufficient time has elapsed since their implementation. However, to the best of ALGA's knowledge, there are no child care centres either directly operated or sponsored by Local Government that have fallen below the minimum required standards of care.' [115]

4.99 The Northern Territory Government in its submission, however, indicated that reports had been made by parents that two year-old children are being moved into the older 3-5 age group prematurely. This was not permitted under licensing conditions and it noted that `this can have a deleterious impact on the quality of care provided for 2 year olds, in that the staffing ratios for children under three years are 1:5, while ratios for the 3-5 age group are 1:11'. [116]

4.100 General concern was expressed that for `quality' child care the minimum staff/child ratio requirements may be too low:

In our state we have a ratio of one adult to five children. You have to go and see it. I did some calculations when I was sitting here this morning about how many nappies those people change. Five children to one carer means about 7,500 nappies that they do in a year. They have to do that not only in a healthy way but interacting in a way that promotes that child, and I think they do a fantastic job. I actually see the regulation base as inadequate because a one to five ratio for babies is almost unworkable. [117]

And:

In relation to quality, I wanted to endorse the comments that have been made by others where services, including ourselves, need to look at issues of reducing the numbers of qualified staff, looking at the ratio of staff to children, and looking at providing less comprehensive services. It is worth noting that some of the consultants, not all, that have been funded by the federal government to provide advice on how to make this work have come down with the lowest common denominator approach of just meeting your licensing requirements, thus reducing your staff to the absolute minimum, of providing less comprehensive services,perhaps you do not provide the meal on the site, and the parents bring the meal. [118]

4.101 Children were seen to be the most affected by the decline in quality of care:

Finally, the biggest impact of all, we feel, is going to be on the quality of care for children, with services leaner, fewer staff, children being moved into informal arrangements of uncertain quality, or into a range of arrangements: some time in centre based care, some time in informal care, some time in a preschool,again, a mix of arrangements that may not be best for children,and, in the case of outside-school-hours care, children left home alone. [119]

The impact of the changes to child care funding on children is discussed further in Chapter 5.

4.102 The changes impacting on quality were not restricted to community-based centres. Some private sector witnesses noted that because of viability problems, private centres had also sought to contain costs by changing the age mix of groups and decreasing the employment of ancillary staff including cooks, cleaners and gardeners. Licensees were also taking on the work of teachers and bookkeepers. Licensee's wages have been cut and working hours extended. [120]

4.103 The Department responded to assertions of a decline in the quality of care, particularly in relation to the impact of the abolition of the operational subsidy, by noting that both private and community centres have achieved quality accreditation at essentially the same rate of around 90 per cent (90 per cent in the private sector and 92 per cent in the community-based sector). It also noted that there had been no significant shifts in the staffing profiles of services since 1995, with the proportions of qualified to other staff, senior to junior staff and full-time to part-time workers remaining stable. [121]

4.104 The Department also stated that the Government `is committed to maintaining the accreditation system for Long Day Care centres and to introducing appropriate quality assurance systems to other sectors'. The Child Care Advisory Council is undertaking a review of the Quality Improvement and Accreditation System for long day care centres. It is anticipated that the Council will report on the review in December 1998. [122]

Conclusion

4.105 The evidence presented to the Committee indicates that the child care industry is going through a period of great change. Both community-based and private long day care centres are faced with increasing costs, falling utilisation rates and, in some cases, such a decline in viability that centres must close.

4.106 The Committee considers that there are a number of variables interacting in a complex way within the industry. These variables include some that are the direct outcome of Government changes: the abolition of the operational subsidy for the community-based sector; the 50 hour limit and changes that impact on families' ability to pay for formal child care. However, there are other variables that have emerged over time as influencing factors, these include the decrease in the number of children in the target age group of 0-4 years and rapid growth of the private sector since 1991 which had resulted in oversupply of child care places in many areas. It should also not be forgotten that long day care centres operate under State regulations which may result in cost increases. Centres also face other cost imposts through wage rises, employee costs such as worker's compensation, insurance, council rates etc. Shifts in parents' choice of care will also have an impact. All these elements must be factored into any analysis.

4.107 The Committee concludes that oversupply of places is a significant factor influencing the industry at the moment. The National Planning System will assist decision making in the future to ensure the growth of a viable child care industry. However, in the interim there will be continued rationalisation in the industry.

4.108 The Committee was concerned that evidence pointed to centres in low income areas as being the most affected by low utilisation rates and closures. The Department did not supply the Committee with any information in this regard and the Committee is wary of drawing a conclusion based on this anecdotal evidence. However, the Committee has made comments and recommendations concerning the special needs of low income families in Chapter 5.

4.109 With regard to quality, the Committee heard evidence that the changes to child care funding have impacted adversely on the quality of care being offered. There were also a number of comments comparing the quality of care offered by the community-based sector and the private sector. The Committee notes that the accreditation levels in both sectors are similar, around 90 per cent. Thus, the Committee does not believe that there is a major difference in the quality of care offered by both sectors in meeting accreditation standards.

4.110 Concerns about decreases in quality covered two areas: the staff/child ratio and loss of additional services. Many witnesses noted that the changes had resulted in changes to the staff/child ratio and the ratio of experienced to non-experienced or untrained staff. The Committee notes that the Department's evidence on this matter is at odds with the evidence received from other witnesses. The Committee considers that this may be another instance where the Department's data may not reflect a change that has recently occurred in the industry. However, while it is generally accepted that the staff/child ratio is a significant indicator of quality of care, the Committee did not receive any evidence that centres were not maintaining the prescribed ratio and were therefore breaching licensing regulations. Centres did however indicate that they had lost staff in excess of the regulated requirements. They viewed this as a significant decrease in quality of care provided, particularly as the prescribed ratio was believed to be inadequate.

4.111 The other issue raised in relation to the quality of care was the loss of additional services such as nappy services and the provision of some meals and snacks by the centres. The Committee does not agree that the loss of these services constitutes a decline in the overall quality of care. While the provision of these services is an added convenience to parents, they are also an added cost for centres.

4.112 Finally, in relation to the Department's analysis of the impact of changes taking place in the child care industry, the Committee acknowledges that there are complex relationships within the sector. However, the Department's understanding of the impact that the measures are having on the industry appears questionable. In Estimates in June 1998, the Department stated that the sector had gone from `a boom sector where people could see that they could come in and invest, to being a sector where there were some measures to be introduced, the impact of which was difficult to predict'. [123] The Department's data collection and analysis appear to have contributed in part to difficulties in predicting outcomes and in supplying up-to-date information to monitor the changes taking place. The Committee notes that the Department has sought to improve its data collection and to speed its analysis.

Out of school hours care

4.113 Out of school hours care (OSHC) is the second largest provider of child care in Australia. Ninety-nine per cent of the OSHC sector consists of community-based sponsorship. OSHC services did not grow out of government initiatives like other child care services, rather it `sprang from within the community as part of a growing need for safe play opportunities lost to children as society changed in the 1970s and the neighbourhood of backyards, streets, footpaths and mothers in starched white aprons disappeared'. [124]

4.114 Many witnesses noted that OSHC services are characterised by variable and casual attendance because of the range of activities school age children participate in and the greater use by many parents of a combination of formal and informal care. Because of these unpredictable attendance patterns, it is difficult to predict income. The operational subsidy was used by services to give some funding stability, to allow planning to proceed, to fall back on when numbers fluctuated and to allow the service to state with certainty that it would be available to families. [125]

4.115 Prior to the changes, OSHC services received an operational subsidy that amounted to approximately $14.50 per week per full time place (based on 57 cents per hour per place at 5 hours per day). More than 3,500 OSHC services received the operational subsidy.

4.116 As a result of the changes, the operational subsidy was abolished and families became eligible for Childcare Assistance for OSHC services. The new level of Childcare Assistance was implemented on 27 April 1998. For all school age children starting care in long day care, family day care or occasional care or moving to a new service and for all children in stand alone outside school hours care services the level of assistance is up to $40.50 ($1.62 per hour) for 25 hours of care per week ($54.00 for non-standard family day care hours). School age children already in long day care centres and family day care prior to 27 April will retain their entitlements of being eligible for up to the weekly Childcare Assistance amount of $47.70 per week for 25 hours per week ($63.30 for non-standard family day care hours) while they continue to use the same service.

4.117 The Government has also allocated $12.2 million to assist OSHC services to restructure in preparation for the new system and for minor capital upgrading including equipment. A further $8 million has been allocated to help services implement changes including setting up accounting procedures, staff training and assisting parents during the transition period. Ongoing funding of $15.7 million over four years has been made available for OSHC services in disadvantaged areas where no alternative services are available to ensure that families in these communities retain access to care. [126]

4.118 Access to Childcare Assistance for OSHC services was supported by witnesses. The NSW Government stated that it was a `positive move'. ACOSS also welcomed the changes to OSHC services noting that the move produced a consistent approach to payments for both pre-school and school-aged children in formal care arrangements. It added that this will assist many parents with children using OSHC services, who will now receive a higher payment than previously.

4.119 However, it was argued that there was a need for the continuation of the operational subsidy. The NSW Government stated that Childcare Assistance would `not replace the role of operational subsidies in providing a secure funding base for these vulnerable services'. [127] NCOSS stated that `base funding is crucial to OSHC services because of the ongoing infrastructure costs they face and the unpredictability of their income'. [128] The NSW Children's Service Forum also expressed concern about the future of OSHC:

Without core funding of some description, without any certainty about numbers of children and families eligible for child care assistance, and with large numbers of families still ineligible for child care assistance, the future for outside school hours care services still looks grim. [129]

4.120 ACOSS warned that `this positive development may well be negated by fee increases due to the loss of the operational subsidy'. Further, ACOSS questioned:

the assumption on which this change is based; namely, that consumers will be able to purchase services provided by `the market'. There is no guarantee that services will actually be there for people to buy at a price they can afford, and certainly nothing to ensure that they will be where demand is highest – in areas of high need and disadvantage. [130]

4.121 In other evidence it was noted that OSHC is different from the long day care sector and that the major difficulty with the Government's reforms is that it failed to take into account the differences between OSHC services and long day care services. It was stated that the imposition of the Childcare Assistance model on the OSHC sector is inappropriate and will have negative impacts on OSHC services. The negative impacts included increases in fees with some witnesses predicting that fees would rise between 25 to 50 per cent on the daily rate charged on 1 February 1998.

4.122 Evidence indicated that utilisation rates had been affected with parents now changing from permanent bookings, that remained the same from week to week, to casual care. Witnesses pointed to the increase in `self care' with children going home to empty homes and looking after themselves as families are no longer able to meet the costs of child care. There has also been an increase in the number of children being left in school playgrounds and using libraries. [131] NOSHSA and ACOSS indicated that fee increases had resulted in decreased utilisation and as services operate on a break even basis utilisation of services is critical for affordability.

4.123 Anecdotal evidence suggested that there had been reduction in quality and standards with changes to staff/child ratios, increased workloads for staff with no financial compensation and reductions in the level and quality of activities offered by services.

4.124 A major area of impact was seen as increases in administration. [132] It was stated that the Childcare Assistance system requires separate administration for each component of the services ie before school, after school and vacation care. As a result some services have had their administrative workload tripled, with the majority of services facing a doubling of workload as they implement the changes for before and after school care. Further, most OSHC services have little or no administrative infrastructure. Coordinators are part-time workers who are fully engaged in caring for children. Often there is little assistance from the host school. NOSHSA noted that `this additional administration for each component has proven an incentive for many services struggling with a component such as before school care to close the service, unable to meet costs of running care and paying for administration of Childcare Assistance'. [133]

4.125 Witnesses also pointed to closure of services as evidence of the adverse impact of loss of the operational subsidy. Between July 1997 and July 1998, 98 OSHC services (before school care/after school care/ vacation care) had closed. [134] NOSHSA indicated that further closures were expected by the beginning of 1999. It was also noted that many before school services have closed. NOSHSA concluded that `we are witnessing the decimation of school age care in Australia…the results of these reforms may mean that care though affordable for many is no longer available to any'. [135] The Queensland Government also noted that the sector was `focussed on survival due to funding changes'. [136]

4.126 In its submission the Albury City Council indicated that it operated all OSHC services in Albury. As a result of the removal of the operational subsidy it had closed two after hours programs and two vacation care programs. The Council noted that the justification for payment of subsidies directly to parents had been to increase choice and make the services more competitive, `instead, the likely result will be no choice at all, with services closing as has already occurred in Albury'. [137] Some witnesses predicted that rural areas were likely to be most severely affected by the loss of the subsidy. [138]

4.127 A further matter raised with the Committee was that the arrangements for access to Childcare Assistance for families using OSHC services were not the same as those for other childcare services: families using OSHC can only access Childcare Assistance based on the number of children in the family using OSHC services, which by its nature is restricted to school age children. In contrast, it was claimed, Childcare Assistance for families using long day care or family day care services is calculated at the multiple child percentage entitlement. For example, if a family has one child in FDC and a second using an OSHC service, the family will only be eligible to use the one child care rate in each service rather than the two child rate in each service. [139]

4.128 NOSHSA concluded that `the effect of this is that families with children in both early childhood (0-5) and middle childhood (5-12) are forced to choose for economic reasons either long day care or family day care for their school age child in order to be eligible for Childcare Assistance at a higher rate and a higher income cut off'. [140]

4.129 NOSHSA also noted that the reports from independent businesses and marketing plans provided to OSHC services revealed that services with daily utilisation of less than 23 are not viable and are `at threat' under the new system. NOSHSA went on to state that this outcome was supported by pilot research conducted by the Department in 1996 and 1997 of several funding models for OSHC services. NOSHA submitted that the research concluded that services benefited most from increased Childcare Assistance and a reduced level of operational subsidy. The Childcare Assistance only model, ie the model introduced by the Government, was shown to be best suited to services with high utilisation and a strong, supportive management structure. However, NOSHSA pointed out that OSHC services have average utilisations of between 20 and 30 children and voluntary management. [141]

4.130 A further matter raised in evidence was the impact of State and Territory policies on OSHC services. In particular, the use of school buses, the issuing of school bus passes, the use of school premises and tenancy. NOSHSA noted that greater cooperation and collaboration between State/Territory Governments and the Commonwealth would assist in the provision of OSHC services. [142]

4.131 Concerns were also raised about the welfare and safety of school age children who did not attend OSHC services because of costs or because there was no longer a service available. Witnesses spoke of a new generation of `latchkey' children. The outcome for rural areas and disadvantaged areas was also a concern. The City of Yarra noted that it was the only provider of OSHC services on the high rise estates within the city. It stated that from previous experience, any rise in fees resulted in low income families withdrawing from programs. It was feared that children from these families would not have the benefit of formal safe programs, that `they may be left to aimless, unsupervised activities in an environment where the rise in the anti social activities has recently been well documented'. [143]

4.132 The Salvation Army provided evidence about the OSHC service it ran in a disadvantaged area in southwest Sydney. The service is provided free of charge. Children used the service because of safety problems in the area. The service lost its operational subsidy, however, the Commonwealth has provided it with a recurrent grant to make up for the loss of the subsidy in recognition of the unique nature of the service and the high needs of the area. [144] Services provided to disadvantaged families are discussed further in Chapter 5.

4.133 In response to these matters, the Department noted that the new arrangements introduced a more equitable system of Childcare Assistance for children using OSHC. All existing OSHC funding will be pooled and redirected, together with an additional $11 million, into a new single income tested Childcare Assistance where the same rate of Childcare Assistance will apply to long day care and OSHC services. This `will provide a higher rate of Childcare Assistance for families using OSHC, improving affordability for about 19,000 families currently receiving Childcare Assistance and making an estimated additional 51,000 families eligible for Childcare Assistance'. The income cut-off for Childcare Assistance had been increased from $27,191 to $65,940 per annum for one child, $77,316 for families with two children and $94,378 for families with more than three children and thus many more families will become eligible. [145]

4.134 The Department added that while removal of the operational subsidy will result in new fee levels being set by most OSHC services, `fee increases should be more than compensated by the improved Childcare Assistance arrangements. The actual level of fee increases will depend on a number of factors including service utilisation'. The Department indicated that for services of 30 places with full utilisation an increase of approximately $1.75 per three hour session would be required to recoup the loss of the operational subsidy. If only 20 places were utilised the increase required would be $2.60. The maximum assistance available to families is now up to $1.62 per hour, a rise from 73 cents per hour. The Department concluded that `improved affordability should encourage more families to use services, thus contributing to maintaining and improving overall service viability'. [146]

4.135 In response to comments concerning the multiple child entitlements, the Department stated that families using OSHC services were not treated differently to those using long day care centres or family day care with respect to access to Childcare Assistance. It indicated that `for all service types the Childcare Assistance is calculated taking into account the number of children in the family using a particular service type'. [147]

4.136 In relation to closures the Department stated that:

there is no evidence to suggest that the OSHC sector is being decimated by the funding changes. Some 70 components…closed between 1 December 1997 and 31 May 1998, generally as a result of low utilisation. This represents less than 2% of all service components. [148]

The Department concluded that the impact on services will vary depending on a range of factors such as utilisation, the venue (in some circumstances, temporary tenure), rent, social-economic factors and the relationship with the management committee and/or the school principal. Further, `preliminary analysis indicates that there is a range of urban and rural locations represented in the spread of closures across the States'. [149]

Conclusion

4.137 The changes to the OSHC sector are still in their early stages and services are continuing to adjust to major changes in arrangements. The Committee is concerned that so many OSHC services have closed since December 1997 and that some witnesses predicted further closures before the end of 1998. While the Department has assured the Committee that the new arrangements do increase affordability of OSHC services, the anecdotal evidence and number of closures appear to contradict the Department's stand.

4.138 The Committee considers that OSHC services are disadvantaged by the introduction of the Childcare Assistance only model of funding. The majority of OSHC services do not have full-time staff or permanent offices and are run on a very small budget. While the Childcare Assistance arrangements work well for pre-school age care where attendance patterns are stable, OSHC services are characterised by fluctuating utilisation which reflect the attendance patterns of school-aged children.

4.139 A further matter of concern was the number of changes to administrative arrangements that the OSHC sector is required to deal with. OSHC services must now complete paperwork for each component of a service: before school care, after school care and vacation care. Many services must purchase computerised management systems to undertake the administrative tasks required. This situation has been exacerbated by changes to implementation dates and changes to agencies involved. The Committee considers that the implementation of the changes to the OSHC sector could have been handled in a more efficient manner, taking into greater account the magnitude of the changes the sector faced. The Committee considers that further funding for administration of services is required to meet the particular circumstances of OSHC services.

4.140 The Committee considers that OSHC services should have greater access to school facilities. This would ensure that high cost facilities provided for the community by the taxpayer are used to a greater extent for the benefit of the community and children. In some instances OSHC services may have to be amalgamated or situated at a school central to the area to ensure their continued viability. This would require children to travel from schools to the service. The Committee considers that funding should be provided to ensure that the cost of travel is not an increased burden on families.

4.141 In evidence, the problem of differing access to the Childcare Assistance was raised. The Department responded to concerns by stating that OSHC services were not treated differently as for all service types Childcare Assistance is calculated taking into account the number of children in the family using a particular service type. The Committee is satisfied that families using OSHC are not treated differently to those using other services. However, the Committee considers that the response from the Department highlights an anomaly in the provision of Childcare Assistance: that families with more than one child, using a combination of types of care, are treated differently from families using only one type of care. The Committee considers that the justification for not taking into account all service types used by a family in calculating Childcare Assistance should be investigated further.

Recommendation: The Committee recommends that:

• the Commonwealth provide all stand alone OSHC services with a payment to cover the costs of increased administration at the beginning of each school year;
• where OSHC services amalgamate or are established in a school central to an area to ensure future viability, funding for travel between schools and services be provided if suitable transport arrangements already exist. If no suitable travel arrangements are available, capital grants be made available so that OSHC services may operate their own transport;
• the Commonwealth seek the assistance of the States and Territories to ensure that OSHC services maintain access to school premises free of charge or at a low or nominal fee; and
• the Department of Family and Community Services address the apparent anomaly whereby Childcare Assistance is provided on a different basis for families using more than one type of care.

Vacation care

4.142 Vacation care centres were developed in the late 1970s under block grants from the Commonwealth or from the States. In evidence it was also noted that vacation care services have many of the same characteristics as OSHC: an extremely high level of irregular and casual attendance resulting in fluctuations of attendance and problems with viability; and minimal contact with parents by staff.

4.143 Under the Government's reforms, vacation care services delivered by the States which receive Commonwealth block grants will transfer to the new Childcare Assistance system. In its submission the Department stated that:

Consistent with its commitment to provide access to school age services to as many families as possible, the Commonwealth commenced negotiations with the States for the transfer over time of all funded vacation care places to the new Childcare Assistance system. However, it is expected that State and Territory governments will maintain their funding to the remaining state funded vacation care places. [150]

In evidence, it was noted that the Commonwealth had decided to continue operational subsidies to vacation care programs until 30 June 1998.

4.144 Support for the system of block grants was voiced during the inquiry, with the Network of Community Activities noting that `the block grant has meant quality programs with fee structures that are affordable and accessible to all families'. [151] The use of the Childcare Assistance for vacation care was seen as having a number of adverse impacts. It was noted that problems with cash flow may emerge as no monies would be paid before the holidays commence as was the case with block grants. This may also mean that parents are required to pay up-front because the money will be required to run the program. Parents would then claim Childcare Assistance. The Australian Manufacturing Workers Union noted:

That is all very well if you happen to have enough money in the bank. If you have three children, you have to find the money up-front to pay for this, so it is actually making it more difficult for people to pay for their care. It was simpler for them to pay where they could pay a lesser amount. [152]

4.145 Fee increases for parents were also expected with some services suggesting that fees would increase by 75 to 100 per cent. It was also noted that parents would have to register for the actual days they intend their child to attend the service which does not reflect usage patterns of vacation care. It was also anticipated that the pattern of usage would create considerable increases in costs in administering the Childcare Assistance system. Parents will also need to undertake a far greater degree of paperwork than has been the case in the past. [153]

4.146 Further, the 20 hour limit was also seen as having a negative impact on vacation services not only for the viability of services buy also for those that use them:

Traditionally these services have provided a safe playspace in the neighbourhood for children to play with their friends. For children at risk, these services provide a place for referral and respite for families in crisis. In rural areas they often provide the only community activity for children. The additional opportunity to learn life skills, participation in developmentally appropriate and life enhancing experiences will be denied to these children through no fault of their own but because of non-participation in the workforce of both of their custodial parents. [154]

4.147 Evidence was received that in order to continue to provide vacation care, services have considered cost cutting, for example, excursions. It was noted however that:

Excursions give children a different experience and provide the opportunity to do things that would be considered normal family outings if they were spending their vacations at home. It is important that centres provide these opportunities for children. Parents also want their children to be happy and not be deprived because their parents are at work. [155]

Other areas where cost cutting was being considered were the employment of extra staff to work with children who may have a behavioural difficulty or a mild disability; deferring the purchase of new equipment; and cutting back on the provision of morning and afternoon tea.

4.148 Services that were block granted under State grants indicated that they did not know whether or not they were eligible for Childcare Assistance. [156] It was also noted by the City of Casey that if these programs were not eligible for Childcare Assistance they would not have access to the Supplementary Support Program:

the Commonwealth funded workers who support the inclusion of children with disabilities into those programs have been told they will no longer be able to provide support to children with disabilities in those vacation care programs either.

In our vacation care programs, we have about nine or 10 special needs children with high support needs. The planning for the placement of those special needs children obviously takes a lot longer. We have to recruit, say, additional staff to work with them, or things like that, so we need a bit of lead-in time to the next school holidays so we can make sure those children with additional needs can be accommodated as well. [157]

4.149 The Hunter Children's Services Forum indicated that without funding from either State or Federal Governments, vacation care services have advised that fees will increase by up to 150 per cent and went on to note that `services which have recently increased their fees by far less than this percentage have reported significantly reduced utilization. An increase of this magnitude would result in the forced closure of many of these services'. [158]

Conclusion

4.150 The Committee considers that vacation care services face similar problems to OSHC services regarding administrative costs and fluctuating attendance. The Committee considers that additional funding for administrative costs should be extended to vacation care services.

Family day care

4.151 In family day care (FDC), the Commonwealth subsidises fees through the Childcare Assistance and the Childcare Rebate. In addition, operational subsidies are provided to sponsors of FDC schemes which are used to support FDC coordination units. In its report, Future Child Care Provision in Australia, EPAC noted that the subsidies helped FDC coordination units to deliver services by:

• supporting and resourcing Family Day Carers;
• recruiting carers;
• providing peer group support;
• matching and placing children with carers;
• arranging access to playgroups, toy libraries, book libraries and the like;
• making back up arrangements for carers; and
• administering Childcare Assistance payments. [159]

4.152 In support of the present arrangements, witnesses pointed to the role of the coordination units as being an integral feature of ensuring the quality of care available to children. [160] Further, it was stated that the removal of the subsidy would be `at odds with moves to introduce a quality assurance system into this sector and would decrease choice for parents looking for quality home-based care'. [161]

4.153 Witnesses expressed the view that FDC would not be viable in its present form if the operational subsidy was removed. FDC centres already operate on fine margins and the loss of the operational subsidy would make it difficult for some services to operate. [162] The Australian Local Government Association indicated that if the operational subsidy was abolished, it would be extremely unlikely that the majority of NSW Councils would cover the grant from their revenue. ALGA added that it would also be unlikely levies could be introduced which would not either make the care unaffordable for many families or affect the viability of the carer's business. [163]

4.154 The Hunter Children's Services Forum also stated that FDC services which have been set up without the assistance of the operational subsidy `have had to charge a significantly higher fee, and in each instance the service has closed or dramatically reduced its services, due to lack of utilisation, and resultant economic un-viability'. [164]

4.155 The importance of FDC services in rural and remote areas was highlighted. FDC is often the only form of regulated child care in rural areas and provides opportunities for the social development for children in rural areas, for whom socialising with children of their own age is limited. It was stated that the removal of the subsidy would jeopardise these essential services as they would not be able to sustain their operations due to a smaller pool of users. Australian Women in Agriculture also noted that the supervision, accountability and support provided by Coordination Units was particularly important for those living out of town where children are cared for on farms which are also dangerous workplaces. [165]

4.156 Witnesses also indicated that FDC was (with very few exceptions) the only service catering for the needs of shift workers and other employees working irregular hours and for those requiring overnight and respite care. [166] The 1995 Census of Child Care Services found that in FDC, around 5,000 children (6 per cent of all children in FDC) received overnight care ie between 8pm and 6am. [167]

4.157 Not all witnesses supported the continuation of the operational subsidy for FDC. The Association of Child Care Centres of NSW indicated that it would welcome the removal of the operational subsidy for FDC, as it would be `fairer for everybody if funding did not prefer one service delivery model over another'. [168]

4.158 In response to concerns about the future of FDC, the Department stated:

The Government recognises that Family Day Care plays an important role in the delivery of flexible, affordable and quality care options for families. The Government has no plans for the removal of operational subsidy from Family Day Care. [169]

Conclusion

4.159 The Committee concludes that FDC offers an important additional choice for families seeking care for their children. It offers flexible, affordable and quality care for those with special needs such as shift workers and for those requiring overnight and respite care. FDC is particularly important in rural and remote Australia. The Committee considers that the operational subsidy is a fundamental element of the FDC system and that no changes should be made to this arrangement.

Recommendation: The Committee recommends that given the important role played by Family Day Care (FDC) in providing alternative care options for families, the current arrangements for the provision of an operational subsidy for FDC should continue.

Navigation: Previous Page | Index | Next Page

 

Footnotes

[99] Submission No.422, p.8 (NSW Children's Services Forum); Submission No.446, p.2 (Free Kindergarten Association of Victoria).

[100] Submission No.440, p.5 (QCCC).

[101] Committee Hansard, 16.6.98, p.539.

[102] Committee Hansard, 16.6.98, pp.583-4.

[103] The survey of community-based centres was conducted by the LHMU (Vic Branch) and NACBCS.

[104] Submission No.591, Annexure C (LHMU-NSW Branch).

[105] Committee Hansard, 21.4.98, p.67.

[106] Committee Hansard, 23.4.98, p.245.

[107] Submission No.542, p.10 (Childcare Industry Association of Queensland).

[108] Committee Hansard, 25.4.98, p.631.

[109] Submission, No.894, Additional Information, 5.6.98, Revised Attachment 1 (DHFS).

[110] Submission No.422, p.8 (NSW Children's Services Forum).

[111] Committee Hansard, 25.6.98, p.635.

[112] Committee Hansard, 22.4.98, p.176.

[113] See for example, Submission No.882, p.3 (Uniting Children's Services), Submission No.891, pp.8-9 (ACOSS); Submission No.440, p.4 (QCCC).

[114] Submission No.912, p.3 (Queensland Government).

[115] Submission No.463, Additional Information, 5.6.98 (ALGA).

[116] Submission No.881, p.16 (Northern Territory Government).

[117] Committee Hansard, 22.4.98, p.176.

[118] Committee Hansard, 22.4.98, p.165.

[119] Committee Hansard, 22.4.98, pp.197-8.

[120] Committee Hansard, 22.4.98, p.146.

[121] Submission No.894, p.19 (DHFS).

[122] Submission No 894, p.19 (DHFS) Budget Estimates 1998-99, Community Affairs Legislation Committee, Committee Estimates Hansard, 3.6.98, p.CA128; Answer to Senate Question on Notice, No. 5 (DHFS).

[123] Budget Estimates 1998-99, Community Affairs Legislation Committee, Committee Estimates Hansard, 3.6.98, p.CA143.

[124] Submission No.921, p.1 (NOSHSA).

[125] Submission No.422, p.5 (NSW Children's Services Forum); Submission No.862, p.9 (NSW Government).

[126] Submission No.894, p.15 (DHFS).

[127] Submission No.862, p.10 (NSW Government).

[128] Submission No.418, Additional Information, 29.5.98, p.3 (NCOSS).

[129] Submission No.422, p.3 (NSW Children's Services Forum).

[130] Submission No.891, p.4 (ACOSS).

[131] See Submission 572, p.1 (Hunter Children's Services Forum); Submission No.862, p.10 (NSW Government); Submission No.882, p.4 (Uniting Community Services Australia); Submission No.906, p.4 (Campbelltown City Council).

[132] See for example, Submission No.211, p.2 (Central Coast OOSH Forum).

[133] Submission No.921, p.4 (NOSHSA).

[134] Committee Hansard, 25.6.98, p.645; Budget Estimates 1998-99, Community Affairs Legislation Committee, Answer to Senate Question on Notice No.202 (DHFS).

[135] Submission No.921, p.5 (NOSHSA).

[136] Submission No.912, p.3 (Queensland Government).

[137] Submission No.454, p.5 (Albury City Council).

[138] Submission No.760, p.2 (Country Children's Services Association of NSW).

[139] Submission No.866, p.3 (City of Casey).

[140] Submission No.921, p.4 (NOSHSA).

[141] Submission No.921, p.2 (NOSHSA).

[142] Submission No.921, p.3 (NOSHSA).

[143] Submission No.536, p.9 (City of Yarra).

[144] Committee Hansard, 23.4.98, p.264.

[145] Submission No.894, p.10, Additional Information, 28.7.98, p.B8 (DHFS).

[146] Submission No.894, p.14, Additional Information, 28.7.98, p.B12 (DHFS).

[147] Submission No.894, Additional Information, 28.7.98, p.B10 (DHFS).

[148] Submission No.894, Additional Information, 28.7.98, p.B8 (DHFS).

[149] Submission No.894, Additional Information, 28.7.98, pp.B8,9 (DHFS).

[150] Submission No.894, p.15 (DHFS).

[151] Committee Hansard, 23.4.98, p.256.

[152] Committee Hansard, 29.4.98, pp.310-11.

[153] Submission No.530, p.6 (Network of Community Activities); Submission No.742, p.1 (Eden Vacation Care Program).

[154] Submission No.530, p.10 (Network of Community Activities).

[155] Submission No.530, p.7 (Network of Community Activities).

[156] Committee Hansard, 21.4.98, p.83.

[157] Committee Hansard, 21.4.98, p.91.

[158] Submission No.572, p.2 (Hunter Children's Services Forum).

[159] Economic Planning Advisory Commission, Future Child Care Provision in Australia, Final Report, November 1996, AGPS, Canberra, pp.63-4.

[160] See for example, Submission No.440, p.1 (QCCC); Submission No 891, p.5 (ACOSS).

[161] Submission No.862, p.11 (NSW Government).

[162] See Submission No.882, p.4 (Uniting Community Services Australia); Submission No,793, p.1 (Family Day Care Association, Qld).

[163] Submission No.463, p.7 (ALGA).

[164] Submission No.572, p.2 (Hunter Children's Services Forum).

[165] Submission No.440, p.1 (QCCC); Submission No.454, p.6 (Albury City Council); Submission No.534, p.1 (Australian Women in Agriculture).

[166] Submission No.440, p.1 (QCCC).

[167] DHFS, Children's Services Statistical Report, June 1997.

[168] Submission No 456, p.8 (Association of Child Care Centres of NSW) see also Submission No.542, p.2 (Childcare Industry Association of Queensland).

[169] Submission No.894, p.15 (DHFS).