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Chapter 5 - Impact of Child Care Funding Changes on Families and Children
5.1 The impacts on families, in particular on their ability to pay for
child care services, are discussed in this Chapter. For children, evidence
pointed to changes in the quality of care provided and changes in arrangements
made by parents as a result of affordability issues as the major impacts.
The particular problems of providing child care in remote and rural Australia
and for disadvantaged children and children with disabilities are also
discussed.
Impact on families
5.2 Anecdotal evidence, both from parents and from providers of services,
pointed to a range of impacts on families as a result of changes to child
care funding. These included:
- the changing of care arrangements and using combinations of care including
long day care, family day care and informal care in order to limit child
care costs;
- increased stress within families as a result of the conflict of needing
care but finding it unaffordable;
- increased stress within families due to the need to make complex child
care arrangements;
- changes to patterns of work, for example one parent working at night;
[1]
- withdrawal from formal study due to costs of child care;
- reducing household spending in areas like holidays;
- decisions to have fewer children or delay having children because
of costs of child care;
- reduced options for care because of closure of services; and
- limiting access by parents, particularly sole parents, to working
`after hours' or being unable to work sufficient hours to enable full
access to career opportunities, because of the 50 hour limit. [2]
5.3 The majority of these impacts relate to affordability issues. Many
witnesses stated that the most significant impact on families of the changes
to funding was on their ability to afford child care. It was generally
considered that child care was now more expensive for families because
of fee increases in the absence of increases in Government child care
support for families. As a result, fewer families were able to afford
child care and were removing children from formal care. The Queensland
Child Care Coalition (QCCC) survey, for example, indicated that the reason
for 21 per cent of the children removed from care in the survey group
between 1 July and 30 November 1997, was that care was cheaper
elsewhere. This was an increase from 13.5 per cent in the preceding
six months. [3]
5.4 It was also asserted that a decline in affordability had hit those
on low incomes the hardest, particularly those with more than one child.
[4] Mission Australia, for example, stated that
some low-income families are now paying a third of their income in child
care costs. [5] The SDA, which had supported
the removal of the operational subsidy from community-based centres, noted
that:
However, the final result of that decision [removal of the subsidy]
is that some low income families have been disadvantaged. They have
had reductions in their gross disposable income. Low income families
cannot afford to be put in that position. While on the one hand we support
the decision of the government, we say on the other hand that the plight
of low income families must be recognised. Alternative measures must
be put in place so that low income families are not disadvantaged as
a result of those changes. [6]
5.5 The affordability of child care for families depends on fees charged
for child care services and the capacity of families to pay. The fees
charged reflect the underlying cost structures of child care providers
(the impact of changes to child care funding on providers has been discussed
in Chapter 4). The capacity of families to pay for child care is
dependent on their income and assistance provided by government as well
as the number of children in care and the hours of care required.
5.6 Government assistance to families is provided through Childcare Assistance
and the Childcare Rebate. Childcare Assistance is provided at the maximum
rate of 83.04 per cent of a set `ceiling fee' for one child. Higher rates
apply when a family has more than one child in care. The ceiling is currently
$115 for 50 hours of care a week or $2.30 per hour. Families with
one child in full-time care who are eligible for maximum Childcare Assistance
pay a minimum of $19.50 [7] (the ceiling fee
less 83.04 per cent) plus the `gap fee' (the difference between the
ceiling fee and the amount charged by the service provider). Families
eligible for partial Childcare Assistance pay the minimum fee plus the
`gap fee' plus some portion of the difference between these two, depending
on their income level. As at 1 July 1998, a family with one child
and an annual income of up to $27,196 per annum will be eligible for maximum
Childcare Assistance. The threshold increases by $4,415 per annum for
every dependent child under 13 years of age if the family has been assessed
as eligible for more than the minimum rate of Family Allowance. [8]
There are currently 118,000 families on maximum Childcare Assistance.
From 1995 to 1997, the number of families on maximum Childcare Assistance
increased from 44 per cent to 47 per cent. [9]
5.7 The Childcare Rebate is paid at two rates, 30 per cent if family
income is $70,000 or less for one child in care and 20 per cent for incomes
greater than $70,000 for one child in care. Families must pay the first
$19.50 of child care costs with the rebate being available for the remainder
up to the maximum amount of $28.65 for those on the 30 per cent rate
and $19.10 for the 20 per cent rate.
5.8 The changes announced in 1996 were directed at restricting the growth
of Government outlays for these two forms of assistance by:
- freezing the Childcare Assistance fee ceilings;
- imposing a 50 hour limit on the hours for which Childcare Assistance
can be claimed; and
- `tightening' the income test through the abolition of the additional
income allowed for additional dependent children when assessing eligibility
for Childcare Assistance and a reduction in the income limit for Childcare
Assistance for families with two or more children in care.
These three measures were expected to result in savings of around $73 million
in 1997-98. [10]
5.9 Witnesses also noted that the reduction of the Childcare Rebate from
30 per cent to 20 per cent would impact on those families earning
over $70,000. The 20 hour limit for non-work related care also had
an impact on affordability for those parents not working.
5.10 Concern was raised that the Childcare Assistance ceiling has remained
at $115 per week for two years. This level was seen as increasingly unrealistically
low when fee increases have occurred over the last two years and will
continue to occur. It now means that the maximum possible combined amount
that a family could receive from these two forms of assistance is $124.15
per week for one child regardless of how high the fee is that is paid.
For families with one child in care based on the average centre based
fee of $155.00, the maximum amount received is $107.50, a gap of $42.50
(as at August 1997). [11]
5.11 Witnesses also noted that the impact of the freezing of the ceiling
was exacerbated by the abolition of the $30 disregard when assessing family
entitlement to Childcare Assistance. This has resulted in increased contributions
by many families, with low-income families more greatly affected, as their
dependency on Childcare Assistance is the greatest. [12]
An example provided to the Committee was the case of a father of five
children. Because of the abolition of the $30 disregard, the `fee assistance
percentage went from 32.48% down to 8.42%. In dollar terms over 5 days
of care per week, his fees increased from $112.70 pw to $140.30,
an increase of $27.60 pw or $1,435.20 per annum'. [13]
5.12 The Department commented that the removal of the disregard aligns
the Childcare Assistance income assessment process with Family Payment
and allows simpler income testing for Childcare Assistance. Further, since
it was originally introduced there have been significant improvements
in other forms of Government assistance to families. Most low-income families
receiving maximum Childcare Assistance (around 60 per cent of Childcare
Assistance families or 46 per cent of all families using Commonwealth
funded long day care) were not affected by the removal of the income disregard.
[14] The NSW Government, however, indicated
that 60 per cent of families were affected to some degree by this
change. [15]
5.13 In regard to the 50 hour limit, NACBCS suggested that for the
lowest income earners on maximum Childcare Assistance, there was an actual
fee increase of $25 per week:
Unless a centre was able to somehow absorb that or change the total
way of charging their fees, if a family on the lowest income receiving
the maximum amount of Childcare Assistance were to use full-time child-care
within a formal child care setting, their fee increase, just because
of the introduction of the 50-hour cap, would be $25 a week. [16]
5.14 Witnesses pointed out that the above elements, taken together, resulted
in an increasing gap between the cost of child care and the assistance
provided by the Government. It was this gap that was seen as `the single
most important factor in the withdrawal, total or partial, of children
from services' and the basis of the affordability or otherwise of child
care services. [17] An example of the combined
impact of changes given to the Committee:
In our centre, in January 1996, fees for low income families were $24.40
per week for one child and $43.10 for two children in care. Fees are
now $49.50 for one child and $82 for two children in care, yet our fees
have only increased by $5 per week per child in that period. [18]
5.15 In response to the evidence received on affordability, the Department
stated that total government assistance had kept up with inflationary
indicators such as the Consumer Price Index (CPI) and Average Weekly Earnings
(AWE). For example, in relation to AWE, Government assistance has remained
constant from 1991 to 1997 at 15 per cent. With regard to the CPI, Government
assistance has increased well above the CPI: between 1992-1997 the CPI
increased by 11 per cent while Government assistance increased by
23 per cent. [19]
5.16 A breakdown of these figures for 1996 and 1997 was provided by the
Department:
Table 5.1: Government Assistance, CPI and Government Assistance as
a proportion of AWE in 1996 and 1997
|
1996 |
1997 |
| Government assistance* |
2.4% |
1.1% |
| Consumer Price Index* |
2.1% |
-0.3% |
| Average Weekly Earnings* |
3.8% |
4.4% |
| Government Assistance as a proportion of AWE |
15.7% |
15.2% |
*Comparison shows increases over previous year
Government Assistance is combined Childcare Assistance & Rebate that
a low income family paying average fee would be entitled to for 1 child
in full time care.
Calculations of Government Assistance & AWE as at August each year.
CPI as at September
Source: Submission No.894, Additional Information, 28.7.98, p.2
(DHFS).
5.17 The Brotherhood of St Laurence in its report Is child care affordable?
examined whether expenditure support had been sufficiently indexed
to the costs of care. The Brotherhood concluded that inflation-indexation
alone may not be sufficient to keep up with costs, as child care is fairly
labour intensive and there is a limited capacity for improvements in productivity.
It stated that `in the long run, therefore, its costs will be largely
driven by wage costs, which tend to rise slightly faster than inflation
(unless child care workers' relative living standards drop)'. [20]
The Brotherhood also noted that the income test thresholds for Childcare
Assistance rose with inflation until 1997. However, it was then unilaterally
reduced `in a way which markedly affected larger families, as the removal
of the $30 per week per child “income disregard” was coupled
with the reduction in the maximum incomes for receipt of [Childcare Assistance]
for these families were also lowered, thereby increasing the withdrawal
rate'. The Brotherhood concluded that the impacts of the changes announced
in 1996 `will have been to worsen affordability more markedly, particularly
for larger families and most particularly for users of community-owned
centres'. [21] This last point was supported
by research by Families at Work which surveyed New South Wales families.
It found that only 27 per cent of families surveyed indicated that
they could afford the fee increases in community-based long day care centres.
[22]
5.18 The Department provided information on the extent to which funding
is assisting families. As shown in Table 5.2, for a single parent family
with one child in full-time care for 50 hours per week, the cost of child
care, based on the average fee of $159, would represent 33.1 per cent
of disposable income. With Government assistance the costs of child care
fall to 10.6 per cent of disposable income. For a two parent family, earning
$45,000 a year, with two children, before assistance child care costs
would represent 43 per cent of disposable income. With Government assistance,
this is reduced to 18 per cent of disposable income. Unfortunately,
the Department was unable to provide the Committee with a time series
showing assistance as a measure of disposable income as `it does not have
access to equivalent information for previous years to produce historical
tables'. [23]
Table 5.2: Impacts on Single Parent Families disposable Income
| Assumptions |
| Full-time Care/week |
50 hrs |
| Full-time Fee/week per child |
$159 |
| Family Profile |
Out of Pocket Child Care Costs |
Out of Pocket Child Care Costs
as a % of Disposable Income |
Child Care Subsidy |
| Number of Children |
Annual Gross Family Income |
Weekly Gross Family Income |
Weekly Disposable Income |
Weekly Child Care Subsidy |
Before Child Care Subsidies |
After Child Care Subsidies |
Before Child Care Subsidies |
After Child Care Subsidies |
As a % of Disposable Income |
As a % of fees |
| 1 |
$27,000 |
$519 |
$481 |
$108 |
$159 |
$51 |
33.1% |
10.6% |
22.5% |
68.1% |
| 1 |
$35,000 |
$673 |
$560 |
$95 |
$159 |
$64 |
28.4% |
11.5% |
16.9% |
59.6% |
| 1 |
$45,000 |
$865 |
$672 |
$78 |
$159 |
$81 |
23.7% |
12.1% |
11.6% |
48.8% |
| 1 |
$55,000 |
$1,058 |
$775 |
$55 |
$159 |
$104 |
20.5% |
13.4% |
7.1% |
34.8% |
| 1 |
$65,000 |
$1,250 |
$864 |
$31 |
$159 |
$128 |
18.4% |
14.8% |
3.6% |
19.4% |
| 2 |
$27,000 |
$519 |
$546 |
$235 |
$318 |
$83 |
58.3% |
15.3% |
43.0% |
73.8% |
| 2 |
$35,000 |
$673 |
$575 |
$212 |
$318 |
$106 |
55.3% |
18.4% |
36.9% |
66.7% |
| 2 |
$45,000 |
$865 |
$657 |
$183 |
$318 |
$135 |
48.4% |
20.5% |
27.9% |
57.6% |
| 2 |
$55,000 |
$1,058 |
$790 |
$154 |
$318 |
$164 |
40.2% |
20.7% |
19.5% |
48.4% |
| 2 |
$65,000 |
$1,250 |
$889 |
$114 |
$318 |
$204 |
35.8% |
22.9% |
12.8% |
35.8% |
NB - Child Care Subsidies include Childcare Assistance and Childcare
Rebate and are based on July 1998 parameters
- Weekly Disposable Income refers to the amount of income after income
tax and includes non child care Government benefits and rebates
- Assume that families are single parent families.
Source: Budget Estimates 1998-99, Answer to Senate Question on
Notice No 184 (DHFS)
Table 5.3: Impacts on Two Parent Families disposable Income
| Assumptions |
| Full-time Care/week |
50 hrs |
| Full-time Fee/week per child |
$159 |
| Family Profile |
Out of Pocket Child Care Costs |
Out of Pocket Child Care Costs as
a % of Disposable Income |
Child Care Subsidy |
| Number of Children |
Annual Gross Family Income |
Weekly Gross Family Income |
Weekly Disposable Income |
Weekly Child Care Subsidy |
Before Child Care Subsidies |
After Child Care Subsidies |
Before Child Care Subsidies |
After Child Care Subsidies |
As a % of Disposable Income |
As a % of fees |
| 1 |
$27,000 |
$519 |
$476 |
$108 |
$159 |
$51 |
33% |
11% |
23% |
68% |
| 1 |
$35,000 |
$673 |
$592 |
$95 |
$159 |
$64 |
27% |
11% |
16% |
60% |
| 1 |
$45,000 |
$865 |
$722 |
$78 |
$159 |
$81 |
22% |
11% |
11% |
49% |
| 1 |
$55,000 |
$1,058 |
$853 |
$55 |
$159 |
$104 |
19% |
12% |
6% |
35% |
| 1 |
$65,000 |
$1,250 |
$973 |
$31 |
$159 |
$128 |
16% |
13% |
3% |
19% |
| 2 |
$27,000 |
$519 |
$538 |
$235 |
$318 |
$83 |
59% |
15% |
44% |
74% |
| 2 |
$35,000 |
$673 |
$608 |
$212 |
$318 |
$106 |
52% |
17% |
35% |
67% |
| 2 |
$45,000 |
$865 |
$738 |
$183 |
$318 |
$135 |
43% |
18% |
25% |
58% |
| 2 |
$55,000 |
$1,058 |
$868 |
$154 |
$318 |
$164 |
37% |
19% |
18% |
48% |
| 2 |
$65,000 |
$1,250 |
$989 |
$114 |
$318 |
$204 |
32% |
21% |
12% |
36% |
NB - Child Care Subsidies include Childcare Assistance and Childcare
Rebate and are based on July 1998 parameters
- Weekly Disposable Income refers to the amount of income after income
tax and includes non child care Government benefits and rebates
- Assume that families are 2 parent families; second parent earns 40%
of the total family income.
Source: Budget Estimates 1998-99, Answer to Senate Question on
Notice No 184 (DHFS)5.19 The analysis by the Brotherhood of St Laurence
of average fees suggested that these fees had risen faster than inflation
and faster than Childcare Assistance. It noted that the maximum Childcare
Assistance previously covered three-quarters of fees, but by 1997 it covered
less than two-thirds: `the resultant “gap fee” has doubled as
a result, meaning the total out of pocket payments for lowest-income users
had risen by over $20pw, or 50 per cent in real terms'. [24]
5.20 In relation to the cost of child care, the Department provided information
on average fees payable for one child in full-time care. Average fees
have risen since 1991, with the greatest rise between 1991 and 1992, an
11 per cent increase in community-based centre fees and 12 per
cent in private centre fees. [25] Average gap
fees in community-based centres increased from $33 in 1996 to $48 in 1998.
In private centres the average gap fee increased in the same time period
from $35 to $42. [26]
Table 5.4: Average Weekly Fees by Service Type for 1991 to 1998*
|
1991 |
1992 |
1993 |
1994 |
1995 |
1996 |
1997 |
1998 |
| Community centres |
$106 |
$118 |
$126 |
$133 |
$139 |
$148 |
$162 |
$163 |
| Private centres |
$104 |
$116 |
$124 |
$133 |
$142 |
$150 |
$152 |
$157 |
*Fee as at August each year, except 1998 where fees as at March.
Source: Submission No.894, Revised Appendix 9 (DHFS).
5.21 The Department also provided a breakdown of average fees by State
and Territory. Within each jurisdiction community-based centres charged
the highest fees with the exception of Queensland and the ACT.
Table 5.5: Average fees by State and Territory, May 1998*
| NSW |
VIC |
QLD |
SA |
WA |
TAS |
NT |
ACT |
AUST |
| Community-based |
$171 |
$161 |
$148 |
$167 |
$159 |
$170 |
$152 |
$174 |
$163 |
| Private |
$161 |
$156 |
$152 |
$161 |
$154 |
$169 |
$145 |
$173 |
$157 |
| All centres |
$164 |
$157 |
$151 |
$164 |
$155 |
$170 |
$149 |
$173 |
$155 |
*Preliminary data.
Source: Submission No.894, Additional Information, 28.7.98 (DHFS);
Committee Hansard, 25.6.98, p.627.
With the `ceiling fee' at $115 per week, average gap fees for full-time
care for one child ranged from $30 for private centres in the Northern
Territory to $59 in the ACT in community-based centres.
5.22 Three further matters were raised concerning fees and their impact
on affordability. Firstly, some witnesses noted that fees vary considerably
between States and Territories and within States and Territories. In some
areas the high costs of items such as land and council rates increased
fees charged for care, particularly long day care. As a result, families
in high cost areas faced higher child care fees. Further, fees in long
day centres are higher than in family day care services.
5.23 The Department's analysis of fees indicated that just over 90 per
cent of all centres, both community-based and private, charge a full-time
fee of $180 or less. Despite anecdotal evidence, the Department noted
that only a small number of families would be paying a gap fee of more
than $65. The Department indicated that the pattern of fees had remained
relatively constant over time, with some services consistently charging
fees above those that the majority of centres are charging.
Table 5.6: Average weekly fee for community-based and private long
day centres, May 1998
| Fee range |
Community based |
Private |
| $111-120 |
0% |
0% |
| $121-130 |
1% |
4% |
| $131-140 |
4% |
11% |
| $141-150 |
10% |
19% |
| $151-160 |
19% |
24%* |
| $161-170 |
27%* |
18% |
| $171-180 |
29% |
16% |
| $181-190 |
6% |
5% |
| $191-200 |
2% |
4% |
| $201-210 |
0% |
0% |
*Average fee
Source: Submission No.894, Additional Information, 25.6.98,
Handout 3 (DHFS)
5.24 Secondly, centres indicated that the cost of care between age groups
is not uniform. Costs for the care of babies and children under two are
higher than for older children because the staff/child ratio is higher
for babies than for older children. For example, in Victoria for under-threes,
the staff ratio is one to five and the ratio for the over three year olds
is one to 15, in NSW the ratio is one to five for under twos. [27]
Fees for babies reflected these costs with many centres charging a differential
rate based on age. Families with babies in care faced a greater gap fee
than families with older children. Some witnesses reported that the cost
of care for children 0-2 years of age is now prohibitive for many low
to middle-income families. [28] One operator
commented:
Most operators charge an excessive fee or a higher fee at the start
of child care, which is hugely ironical because, in the general sense
of progress of life, the time that young parents need most financial
assistance and help to establish their families is at the start of their
family life. So there is almost a paradox in the way that the industry
is forced, through regulations, to charge higher fees at the start and
reduce as the child gets older when its staff ratios are more flexible.
[29]
Witnesses called for the higher costs of caring for babies to be reflected
in child care assistance through a differential rate.
5.25 It was also noted that a differential rate would assist in overcoming
short falls in available places for babies. [30]
In its 1996 report on the management of children's services, the Australian
National Audit Office (ANAO) also commented on the single rate of assistance:
The single rate of Childcare Assistance has exacerbated the current
undersupply of places for under three year olds by discouraging private
services from providing baby care and failing to recompense community-based
services that provide it to meet community needs. [31]
The ANAO suggested that there be separate ceilings for babies and older
children more in line with actual costs.
5.26 Thirdly, it was noted that some centres now charged for services
such as meals, which had previously been absorbed in centre charges. This
is however, an additional cost now faced by families. [32]
5.27 The Brotherhood of St Laurence in its analysis of affordability
also looked at other pressures on family incomes, noting that inability
to afford child care may be as a result of declining disposable income
rather than because of price increases. Conversely, increases in income
in real terms mean that fee rises are more easily absorbed. The Brotherhood
looked at:
- underlying pressures on job opportunities;
- wages including the impact of women working part-time, lack of opportunities
for low wage adults to move to better paid or more secure employment;
- decisions by State government (Victoria); and
- vulnerable groups more likely to face affordability problems.
5.28 The Brotherhood concluded that average costs of formal child care
had increased over several years and that public expenditure support had
failed to keep up with this for low-income users. Recent price rises have
been felt most sharply by those on low-incomes and who have little prospect
of being able to improve them, those whose incomes are under pressure
because of a rise in other costs, and those who face very high marginal
tax rates on the incomes earned while their children are in care.
5.29 The LHMU also noted that many of its members are low income earners
on award wages and unable to absorb increases in child care costs:
I should say that many of the people who work in these sectors, and
who are members of our union, are low income people who have been particularly
affected, as parents, by the cuts in child-care funding. Most LHMWU
members in the service sector, at least, are totally reliant on award
rates of pay and there is very little incidence of overawards or increases
through enterprise bargaining. Award wages over the last decade have,
quite frankly, not kept pace in general with average weekly earnings
and it means that the purchasing power of real wages has declined so
that, in combination, low income people like those who belong to my
union are least able to absorb any increases in child care fees, if
they are parents, that have been occasioned by the child care cuts.
[33]
5.30 Many other witnesses also supported the view that child care was
now only affordable for upper-middle and high-income families. For many
low and middle-income families, affordable, good quality child care was
no longer accessible. [34] The Salvation Army
stated that `it disturbs us that poor children suffer because of a blanket
government policy that fails to adequately assess the effects on the poor
sector of society'. [35] Others pointed to
the emergence of an elitist system, with only the wealthy being able to
afford child care: `these families therefore have increased workforce
participation opportunities, resulting in greater economic resources for
their family. Families who begin with reduced economic resources are further
disadvantaged by lack of access to affordable child care service options.'
[36]
5.31 A number of suggestions were put to the Committee as to how adverse
impacts on low-income earners could be overcome. Many witnesses called
for assistance to be targeted at families through the reinstatement of
indexation of the fee ceiling. The Brotherhood of St Laurence noted that
it would be more beneficial to increase the ceiling for Childcare Assistance
as:
- it is likely that this has a more direct effect on decisions about
child care use and work force participation;
- it has a higher take-up rate; and
- it is more thoroughly income-tested and therefore more easily targeted.
5.32 The Brotherhood suggested that to restore affordability for low-income
households to 1992 levels, the maximum value of Childcare Assistance would
have to be increased to $105 per week. Even at this level, low income
earners would still face large out of pocket expenses. The Brotherhood
noted `there is a good case for [Childcare Assistance] to be further increased
to substantially eliminate `gap fees', which were not widely apparent
until the 1990s'. [37] ACOSS recommended that
the ceiling be lifted by $25-$30 per week to reduce gap fees, it suggested
that this represents about 50 per cent of the current gap fee. [38]
5.33 The Department responded to calls for increasing the ceiling and
improving Childcare Assistance by stating that:
The purpose of Childcare Assistance is to reduce the amount of money
families have to pay to access child care. The current system of Childcare
Assistance is targeted at low and middle income earners; the lower the
income the greater the benefit provided by the Government. It is not
Government policy for Childcare Assistance to keep pace with fee increases
which are set by services. [39]
5.34 The Department noted that previous experience suggested that when
Childcare Assistance was increased families did not always benefit: the
probable response to an increase in the level of Childcare Assistance
to families is a further increase in fees. As the Department stated the
Government can control the fee ceiling and the rate of Childcare Assistance
but it cannot control the fees charged by the services. [40]
Other witnesses concurred with this view and noted that following access
to Government assistance in the early 1990s fees in private centres increased.
5.35 The Department also indicated that to change maximum total assistance
would not target low income groups:
Suppose the subsidy was increased from $107.50 to $120—$12.50.
The $12.50 per week increase would not only go to the person on $27,000,
the same $12.50 increase would be available to the person on $50,000,
because everything will go up. It will still be income tested but everything
will go up a notch. You cannot just give the extra money to the bottom
end unless you actually change the income test and make it tighter.
[41]
5.36 The Brotherhood acknowledged that fee increases may not be passed
onto users. It noted `during the early 1990s, fees in private centres
seem to have increased markedly upon their obtaining access to CA. However,
holding down CA since that time does not appear to have done a great deal
to contain fees. It is probably more accurate to see fees growth as reflecting
real wage and other cost increases, at least within the community-owned
centres'. The Brotherhood suggested that to ensure the increase in assistance
was received by families:
It might be necessary for any increase to be coupled not only with
planning mechanisms to constrain growth in private centre places, as
is currently under way, but also to constrain growth in fees. Since
the Commonwealth is directly providing a large share of the cash flow
of these centres, such action would be reasonable (as it is in health
spending, for example).
The current degree of competitive pressure coupled with the administrative
power of the Commonwealth should be sufficient, even amongst private
centres, to minimise the problem of additional subsidies not being passed
on. [42]
5.37 In commenting on the issue of a measure of affordability, the Department
stated:
What we are concerned to see is: are we able to keep steady the sort
of participation and utilisation of different levels of income families.
But to actually have a very specific definition of affordability could
set up expectations in terms of total costs beyond what the government
would be able to pay. [43]
The Department indicated that it was not doing any work at the present
time on developing criteria for judging affordability but that `over the
next 12 months it is something that we will have to look at'. [44]
5.38 The Department also commented on the view expressed by many witnesses
that the underspending in the Children's Services Program reflected a
decline in families ability to afford child care. The Department responded
that the $117 million underspend was due to a number of factors:
- lower than expected growth in places: at the time of the 1997-98 Budget,
it was estimated that 358,200 child care places would be operational
by June 1998; this figure was revised to 344,450 at the time of the
1998-99 Budget;
- lower than expected utilisation: places grew more rapidly than the
number of hours of Childcare Assistance claimed, therefore average Childcare
Assistance cost per place was lower;
- change in payment arrangements to better manage the payment of advances
to services. [45]
The Department stated that the growth rate of places was slowing but
the number of children using those places was slowing even more. Its data
was aggregated but the Department believed that there were also children
were using care for less hours than they had previously. [46]
Conclusion
5.39 Government assistance provided through child care funding assists
parents to more easily meet the costs of child care and is directed to
a greater degree to those on the lowest incomes. However, the question
arises as to whether this assistance is provided at a level which is effective
in ensuring that those seeking care can access it, particularly low-income
earners. And if not, what level of affordability should Government support
and what mechanisms should be used to deliver increased affordability.
5.40 The Committee received extensive anecdotal evidence that affordability
of child care has declined. Witnesses pointed to decreased utilisation
of child care services as the result of the compound effect of increased
gap fees, freezing of the Childcare Assistance ceiling, and other changes
such as the abolition of the $30 deductibility for other children.
This evidence was supported by analysis by the Brotherhood of St Laurence
which looked at such indicators as trends in average fees, gap fees and
government support in relation to inflation. The Brotherhood suggested
that to restore affordability to 1992 levels for low income families Childcare
Assistance would have to be increased to $105 per week.
5.41 The Department provided the Committee with evidence of the level
of assistance provided by the current arrangements and its impact on disposable
income (see Tables 5.2, 5.3). However, the Department was unable to provide
similar information over an extended time period. Thus, while the Committee
could identify the level of benefit accruing under the current arrangements
it could not identify trends in the degree of assistance over time in
relation to disposable income: whether it had decreased, remained the
same or improved. To have had this information would have been of great
assistance to the Committee's deliberations.
5.42 The Committee considers that while Government assistance has not
increased at the same rate as increases in child care costs for families,
the impact on affordability has varied across income ranges. The Committee
considers that there has been minimal impact on affordability of child
care for high income earners. In relation to changes to affordability
for middle-income earners, the Committee received much contradictory anecdotal
evidence. The Committee therefore was unable gain a clear impression of
the impact on affordability of child care for middle-income families but
it would appear, for the moment at least, middle-income earners are able
to access child care without too much economic difficulty. However, the
Committee considers that there has been a much more significant decline
in affordability for low income families, which is having an adverse impact
on their ability to access formal child care. The impact has been felt
most by families with more than one child.
5.43 The Committee has considered the suggestions for an increase in
the fee ceiling and concludes that an increase in the child care ceiling
may lead to price increases across the sector, thereby further diminishing
affordability for low-income families. However, the Committee considers
that there is need to further assist low income families to access child
care by increasing the level of assistance provided through the introduction
of a `top up' or `supplement' to Childcare Assistance for these families.
In particular, the Committee considers that low-income families with more
than one child should receive additional assistance.
Recommendation: The Committee recommends that urgent action be taken
to better target child care assistance to low income families, particularly
those with more than one child, by the introduction of a `top up' or `supplement'
to the current rate of Childcare Assistance.
Recommendation: The Committee also recommends that the Department
Family and Community Services conduct research to establish criteria to
judge affordability levels for families accessing child care as a matter
of priority.
Impact on children
5.44 The Committee received a large amount of anecdotal evidence which
suggested that children had been adversely affected as a result of the
changes in child care funding. Changes both within centres because of
cost control and in the choices which families are making about the hours
of formal child care they were able to access were cited as evidence that
children were not benefiting from the changes to child care funding.
5.45 It was noted by many witnesses that key elements of quality in child
care are the staff/child ratio, the qualifications and experience of staff
and the degree of stability and consistency, both in terms of carers and
in terms of the other children with whom pre-school children engage while
in care. [47] Pressures to keep costs down
were now mitigating against these three elements of quality, particularly
in the area of staffing which may account for up to 80 per cent of
the costs of running a child care centre. [48]
Changes impacting on the quality of care for children in a centre include:
- staff in excess of the prescribed staff/child ratios no longer employed;
- casualisation of staff;
- not employing teachers with degrees in early childhood education or
employing less experienced staff;
- reduction of ancillary positions such as cooks, cleaners and maintenance
staff;
- amalgamations of rooms so that there is a greater spread in the age
of children within groups;
- increase in the size of centres;
- mixing of child care arrangements to make care more affordable for
families; and
- centres no longer able to afford to replace damaged equipment or to
provide new equipment and consumables.
5.46 Extensive evidence was received concerning the impact on children
of the changes listed above. For example, in relation to the casualisation
of staff it was stated:
Some of the effects on child care are now having ramifications, such
as reduced staff hours. One effect of this practice is that children
are therefore being placed in the care of many short-term providers
in one day…constant staff changes produce low quality care and
insecurity for children. I have heard of instances of up to three or
four staff changes in one day for a child, where you would have staff
coming in for two- or three-hour sessions. There is lots of research
on the negative effects of that. Research on infant and toddler care
suggests that very young children differentiate between stable and non-stable
caregivers. In both types of higher staff-child ratios, trained caregivers
were associated with better care giving and child development. [49]
5.47 The reduction in ancillary staff is commented upon in Chapter 6.
However, the loss of cooks from centres could have a particular impact
for children. It was argued that the loss of trained cooks would lead
to a reduction in quality food services available to children in care.
The NSW Child Care Nutrition Network emphasised that good nutrition and
the development of appropriate eating habits are essential for the future
health of our children. Trained cooks are vital to provide varied, well
planned meals and snacks as well as appropriate food awareness activities
for children. The Network argued that `centres are compromising the nutritional
and educational quality of child care meals by reducing the employment
of trained cooks'. [50]
5.48 Anecdotal evidence indicated that families were changing their patterns
of child care to make it more affordable. This was occurring in a variety
of ways:
- decreasing the hours of centre-based care used with parent/s changing
working hours;
- decreasing the hours of centre-based care and using a mix of care
arrangements including informal care and family day care in order to
keep costs down; and
- withdrawing children completely from formal care and using cheaper
informal care. [51]
5.49 Witnesses were concerned with the outcomes for children in relation
to the second and third of these options, with `children being forced
into a care situation purely on economic basis are not necessarily guaranteed
the best and most secure care and education'. [52]
The mixing of care arrangements was seen as providing poor continuity
and consistency for children, particularly very young children. It was
stated that research had indicated that `continuity of care-giving is
a critical determining-factor of good quality outcomes for children'.
It was also stated that the development of `more complex and unstable
arrangements' added to stress within families. [53]
The additional benefits of formal care for children from disadvantaged
families are discussed below.
5.50 Many witnesses expressed concern about where the children leaving
formal care were going. The NACBCS survey indicated that parents were
more likely to move children to informal care when centre-based care was
considered unaffordable, with 67 per cent of families surveyed leaving
centres using informal care. While most states reported increases in the
use of informal care, the Childcare Industry Association of Queensland
stated that the informal sector had increased some 91.68 per cent
in Queensland. Evidence presented to the Committee also indicated that
although family day care was an option and fees in family day care were
less than in long day care centres, there was no national indication that
children were leaving centres were entering family day care. [54]
In South Australia for example there is underutilisation of family day
care. [55] The Department also noted that between
1995 and 1997 the number of children using family day care had decreased.
[56]
5.51 Views were put to the Committee expressing concerns for the wellbeing
of children being placed in informal care arrangements. Witnesses pointed
to a range of matters including the overcrowding of homes, safety issues,
lack of police checks on carers, children's educational and developmental
issues and the unregulated nature of the sector. Those working in the
OSHC sector particularly noted the increased incidence of children being
left uncared for. [57] The QCCC survey reported
that parents were now considering allowing older primary children to make
their own way home after school and to stay there alone until the parent/s
arrived home from work. [58] NOSHA used the
expression `telecare' to describe the emergence of children returning
to empty homes and being `cared for' by the television with access to
the telephone to contact parents to advise that they had arrived safely
and if there are any problems. [59]
5.52 Other witnesses pointed to the pressures now being placed on grandparents
to mind young children. While some grandparents welcomed the opportunity
to look after their grandchildren others felt that they are unable to
provide appropriate care. One operator commented:
…because the gap in using child care fees in a serviced or licensed
centre or in family day care has risen so substantially, people are
using other alternatives. There are two alternatives that I see happening
most commonly. The first alternative is the use of grandparents, and
it is creating a lot of family stress. At least 10 per cent of my fees
are actually being paid by grandparents, in preference to providing
the care themselves, because they do not feel that they can provide
equivalent care. [60]
5.53 There were calls for the legislative regulation of the informal
sector, particularly in view of the level of regulation in the formal
care sector. Representatives of the Queensland Government informed the
Committee that it had prepared draft legislation to regulate informal
care and to set standards for informal home-based care. [61]
5.54 Some witnesses called for payments of the Childcare Rebate to families
using informal care to cease. The Childcare Industry Association of Queensland
stated that it preferred the cessation of payments of the Childcare Rebate
to parents who used unregulated care, or that it be limited to `grandma'
care. It noted that the Childcare Rebate was paid to carers as long as
they were more than 18 years of age and that no checks were conducted
as to the good character of the person providing the care or the safety
of the premises. At the same time, long day care providers had to submit
themselves to strict licensing, federal regulations and accreditation.
[62]
5.55 The Department however, noted that data on claimants of the Rebate
who use formal and informal care indicated that the proportion of families
claiming for informal care, as a proportion of all families claiming the
Rebate, has remained relatively constant at around 3 per cent since the
introduction of the Rebate in 1994. [63]
5.56 The SDA noted that only 20 per cent of families use formal
care. In 1996, the union conducted a survey of its members. Some 84 per
cent utilised informal care and `virtually all members surveyed in the
SDA survey (95 per cent) said they were happy with their child care
arrangements'. The main reason given by families was that they were comfortable
having their children cared for by a family member or friend. The SDA
concluded that `it is clear from this survey that informal care is widely
used for a range of reasons, most of which are unrelated to costs'. [64]
5.57 The Department also indicated that the Government recognised that
many families choose to have their children cared for outside the regulated
care environment and that many children were cared for by a relative,
particularly for children under two years of age. However once a child
turned two many parents preferred a more formal child care arrangement.
[65]
5.58 The Department stated that it was difficult to obtain recent detailed
information about the extent of informal care, however, Australian Bureau
of Statistics (ABS) data showed that the number of children using informal
care provided by a relative increased from 866,000 in 1993 to 891,000
in 1996. [66] The next ABS survey to be conducted
in 1999 will include a category to establish the number of children being
cared for by grandparents. The Department indicated that it will be monitoring
changes to care arrangements, and that a research priority for 1998-99
will be to better understand the issues affecting child care users. [67]
Conclusion
5.59 The Committee considers that the impact on children of changes to
child care funding has not been adequately assessed, in particular any
changes to quality of care. The Committee notes that quality of care is
maintained through the Quality Improvement and Accreditation System (QIAS)
and State and Territory licensing requirements. The Committee strongly
supports QIAS. The system has been a major factor contributing to improved
quality of child care. At present the Child Care Advisory Council is undertaking
a review of QIAS (see para 4.104). The Committee considers that the quality
aspects of child care and their impact on children in care are important
issues during this time of rapid change in the sector and that the review
should be completed as a matter of priority.
5.60 In relation to informal care, the Committee recognises that informal
care will always be the most favoured option for many parents. For example,
families with very young children often prefer their children to be cared
for by a person they know, a relative or friend, in an informal setting.
However, the Committee also notes that informal care, by its nature, is
largely unregulated and that in some instances it may not provide the
same benefits and protection as formal care for children and their families.
The Committee notes that legislation has been drafted in Queensland to
regulate informal care and set standards for informal home-based care.
5.61 While informal care will be the preferred option for many families,
there are other families for whom informal care is not the preferred option
but who appear to have been forced to choose informal care because of
affordability and access issues. The Committee also considers that formal
child care should be available and affordable for those who wish to place
their children in this type of care.
Recommendation: The Committee recommends that the review of the Quality
Improvement and Accreditation System being undertaken by the Child Care
Advisory Council be completed as a matter of priority.
Families in rural and remote areas and disadvantaged families
5.62 Evidence was presented concerning the special needs of families
in rural and remote Australia and disadvantaged families.
Rural and remote families
5.63 The problems of distance were highlighted in evidence concerning
the needs of rural and remote families. It was noted that often women
are on farms, long distances from towns and while there are family day
care (FDC) services in the towns, those living out of town may not be
able to access them because of the travel required. It was noted that
often FDC is the only suitable option for non-town families because of
the need for flexibility in arrangements. However, there is competition
for FDC places from those living in towns even though there might be a
private child care centre which could cater for the needs of town-based
families. [68]
5.64 While FDC provides a flexible service, problems were raised concerning
variations in quality of services provided. This was a particular problem
where inadequate resources within FDC coordination units do not allow
for the level of monitoring of outlying carers deemed necessary to maintain
quality. Another problem was that short-term or respite care is rarely
available in rural and remote areas. Problems were also reported because
of fluctuating demand resulting from seasonal employment and transient
populations in rural areas. Australian Women in Agriculture indicated
that there was a need for more options for child care than those offered
by FDC schemes and noted that some alternative models were being trialed.
5.65 The Queensland Churches Child Care also noted that its centres in
rural areas are small and may not be able to sustain operations if forced
to cut budgets. The services provided by the centres enabled women to
work on farms. In many cases in Queensland, both parents are required
to work as the impact of the drought precluded the employment of outside
labour. [69]
5.66 A further matter raised by Australian Women in Agriculture was the
income test for eligibility for assistance. It was stated that because
of the nature of farm business many farm families are ineligible for assistance
despite being on low or negative incomes. This is common for young farm
families building up their farm enterprises who are more likely to have
young children. There are also difficulties for families due to the fluctuating
nature of farm incomes. [70]
5.67 The Department indicated that there are hardship provisions in the
assets test for Childcare Assistance. Where a family is not eligible for
Childcare Assistance because the family's assets exceed the limit ($407,250
as at April 1998), but the family has low-income and low levels of liquid
assets, the family can be deemed to have passed the assets test for Childcare
Assistance. The provisions apply where liquid assets do not exceed $10,000
(couple) or $6,000 (single) and income is below $15,710 for a one child
family, increased by $642 per annum for each extra dependent child, and
the value of the family's assets does not exceed $604,250. [71]
5.68 The Northern Territory Health Services submitted evidence on the
difficulties of providing child care services to remote Australia. It
noted that:
- capital construction costs in remote areas are significantly higher,
however, the Commonwealth child care capital funding formulae, unlike
that for nursing homes and hostel accommodation, does not take this
into account;
- it is difficult to gain and retain new professional skills and knowledge
now required in the child care industry while living and working in
remote areas;
- existing models do not ensure delivery of child care services in remote
areas and these services are substantially below that in urban areas
(520 places for 3,049 rural and remote area children, ie access for
17 per cent, while there are 2,310 places available for 6,246,
ie access for 37 per cent); and
- the demand for respite care and occasional care are generally not
met in remote areas. [72]
5.69 The benefits of providing child care for those in rural and remote
Australia were emphasised. These included opportunities for children,
who would ordinarily have little contact with other children, to socialise
with larger groups of children; to remove children from farm environments
which are also dangerous work environments; to allow women to take on
work during busy times of the year such as harvest time and to assist
parents to gain better parenting skills. [73]
5.70 The Department's Annual Report for 1996-97 indicated that the level
of demand met has increased from 57 to 76 per cent in rural areas
and from 41 to 59 per cent in remote areas between 1996 and 1997.
[74]
Disadvantaged families
5.71 Many submissions and witnesses raised general concerns about the
impact of changes to child care funding on the children of low income
and disadvantaged families, both rural and urban. It was noted that child
care could make substantial long-term improvements in the lives of children
and families in crisis or experiencing chronic disadvantage arising from
poverty or cultural or linguistic or geographical isolation. Child care
can also make a significant difference to abuse and neglect of children
and can decrease rates of entry to `institutional care'. Good quality
child care can have a significant impact on the future life of children
born in poverty. Further, child care is of importance to `socially deprived'
children and their families in moving out of poverty by allowing women,
many of whom are single parents, to work. [75]
5.72 Professor Alan Hayes, Institute of Early Childhood Studies, noted:
The higher rates of birth among those in the most disadvantaged groups
will result in an increase in the proportion of children at risk, given
the relationship between disadvantage and risk. The rates of children
born with developmental problems, children born with perinatal problems,
are differentially much higher among those in low social classes. At
the moment, the birth rates in lower social groups in Australia double
those in the upper groups…The emphasis in early services has to
be on high quality and consistency, and regard for the developmental
needs of Australian children.
In work overseas, such services, along with supports for secondary
school completion, have been found by the Rand Corporation to be the
most cost-effective crime prevention measures, for example, in the long
term. In the light of the well-established links between poverty and
educational disadvantage, it is timely to reassert also the importance
of education in debates about public policy. [76]
And:
[A United States study] produces longitudinal data that shows for each
US dollar that you spend on quality child care for disadvantaged families,
you get a $7 multiplier in terms of reductions of children who go towards
the juvenile justice system…If you look at it, the differential
between what we spend in this country on prisons as opposed to what
we spend on child care makes another compelling argument: maybe there
is a preventive benefit in this. The recent report [indicated]…one
of the most cost-effective interventions early in life is quality community
services like child care, particularly to disadvantaged communities.
[77]
5.73 Other submissions also pointed to the benefits of early intervention
through child care programs which can reduce risk factors which lead to
criminality and can, in association with other measures, `increase young
people's attachment to school, family and community which in turn makes
them less likely to engage in criminal and other “problem” behaviours
such as drug misuse'. [78]
5.74 Barnardos Australia and the Salvation Army raised a number of specific
problems in relation to disadvantaged families. The Salvation Army pointed
to its OSHC and Vacation Care programs conducted at Macquarie Fields which
helped to protect many children from violence and abuse, both within the
family and in the community:
It is sometimes very dangerous for these kids to be on the streets,
even to go to football. We have actually had one of our workers take
a boy to football because it was too dangerous for him. [79]
Children came to the centre to escape danger and are taken in even
if parents have neglected to give notice of their attendance. By protecting
children, savings are made to other programs such as policing.
5.75 The Barnardos' submission raised concerns for children which it
defined as `socially deprived', that is children who are the concern of
State Welfare Departments or other social work services. Barnardos estimated
the number of children in this category to be approximately 15,000 based
on its definition.
5.76 While acknowledging that there had been some discussion in relation
to `socially deprived' children, for example exemption from the 20 hour
limit, Barnardos raised the following issues:
- child care is not affordable to `socially deprived' children as a
result of substantial increases in gap fees;
- `socially deprived' children remain a low priority for access to available
places, as well closures of centres in low-income areas further restrict
supply;
- procedures for getting classification as a `socially deprived' child
are unclear, and this may lead to children not being referred to child
care; and
- administrative uncertainty is affecting the provision of service.
Services in low-income areas are most adversely affected by continual
changes in administrative arrangements as they had little financial
`cushioning' from adverse circumstances. [80]
5.77 The Salvation Army gave evidence on the general impact of the changes
on the services that they provide to disadvantaged groups:
One of our concerns as the Salvation Army is that we feel that our
particular role in society, particularly with social services, is to
care for those who are disadvantaged, not just disabled. The problem
with the current child care policy, like employment programs, is that
it is actually forcing us to take a different group of people so that
we might be able in some way to cross-subsidise them and look after
less of those people we have been looking after. That is our real concern,
that government policy is actually changing the way we deal with people.
Our submission is that at a number of our child-care centres this has
been a real problem, mainly because of the people we deal with. They
are not necessarily physically disadvantaged, because some of those
people who have those other disadvantages do receive other benefits
along the way. However, some of the people we deal with are from families
who are of low income. If the government really wants these people to
work then somehow there needs to be some way in which their children
might be cared for. [81]
The Army noted that increased assistance for families using OSHC services
which may be an improvement for middle-income families, but it stated
`it has no bearing on services like ours [at Macquarie Fields] where our
service users cannot afford any fees in the first place – our after
school care service is free'. [82]
5.78 Both Barnardos and the Salvation Army voiced concern about the closure
of centres in low-income and disadvantaged areas. The Salvation Army noted
that its centres had suffered as a result of the loss of the operational
subsidy and that it could no longer carry bad debts as it had done in
the past for very poor and disadvantaged parents. They also suggested
that their organisations might have difficulties in the future to sponsor
new centres in disadvantaged areas because of the loss of the operational
subsidy. Queensland Churches Child Care voiced the same concern in relation
to rural and remote ares, noting that the Churches would be reluctant,
without substantial capital funding, to support centres in remote areas.
[83] The Salvation Army noted that the Government
would have to pay additional costs to help other service providers to
set up new centres if centres sponsored by organisations like the Salvation
Army were to close. [84] It concluded that
`it disturbs us that poor children suffer because of a blanket government
policy that fails to adequately assess the effects on the poor sector
of society'. [85]
5.79 Another matter raised was the proposal to direct payments to parents,
not services. It was contended that such a move might undermine viability
of services in low income areas. Barnardos noted that their clients included
groups affected by a cluster of problems often including mental illness,
high debts and extreme domestic dysfunction. Parents in these circumstances
find it very difficult to plan for their children's needs by ensuring
that their children's child care fees are passed onto the service provider.
If child care assistance were to be paid directly to families, such monies
will be easily seen as needed for other goods and services. [86]
In evidence during Estimates hearings, the Department indicated that the
Government would not change the current system and that payments would
continue to be made to services. [87]
5.80 The Salvation Army told the Committee that the Commonwealth Government
had decided to give its Macquarie Fields centre a recurrent grant matching
the operational subsidy that it had lost for its OSHC service in recognition
of the unique nature of the service provided by this centre. The Army
expressed the view that such grants should be made to other long day care
centres which target the poor and called on the Commonwealth to reinstate
operational subsidies to all child care centres in socioeconomically disadvantaged
areas which clearly target this population group.
5.81 ACOSS raised concerns about disadvantaged children whose parents
are outside the labour force and who are therefore subject to the 20 hour
limit. ACOSS noted that formal care for these children provides them with
opportunities for socialisation and education, and as well, gives respite
to parents. ACOSS concluded that non-work related care should be provided
on a planned basis, ensuring equitable access to all families who need
it. [88]
5.82 This issue was also raised by a long day centre which serviced a
remote community. Little Diggers Child Care, a private centre, noted that
the parents of many of the children who attended the centre were considered
to be `not working'. These parents lived on the opal fields and undertook
mining activities. It stated that many lived in very rough conditions:
without electricity and running water; with pit toilets and dirt floors.
Parents also have literacy problems, are often non-English speaking and
other support services such as a SUPS worker are not available. The one
pre-school is full and the nearest is 70 kilometres away. The nearest
child care centre is over 200 kilometres away. 90 per cent of the
parents using the centre are on the highest rate of Childcare Assistance.
The centre argued that the children from these families would benefit
from increased opportunities provided by child care and the parents from
respite care. It recommended that the 20 hour limit be removed where
the centre is the only one in the area. [89]
The Department advised the Committee secretariat that this centre and
other private centres in rural and remote Australia had been exempted
from the 20 hour limit.
5.83 Many witnesses raised concerns about the limit of the Disadvantaged
Areas Subsidy (DAS) to rural and remote areas. For a centre to receive
the DAS, it must meet eligibility criteria including that it must be located
in a town or township in a rural or remote statistical area, or in a township
on the fringe of an urban area where no other centre based care is available;
or is the sole provider of centre based baby places or is the sole provider
of overnight centre based care in a rural/remote town. More than 10 per
cent of children must be from low or middle-income families, that is families
eligible for Childcare Assistance. All centres must obtain financial and
management advice which demonstrates a need for on-going funding to maintain
viability. DAS is also approved for community centres catering primarily
for Aboriginal and Torres Strait Islander children, regardless of location.
The Department indicated that 110 centres, including one centre in Adelaide
providing the only 24 hour care in the city, had received DAS to
March 1998 and 13 ATSI services had received DAS. [90]
5.84 Witnesses pointed out that many urban areas were `disadvantaged'.
An example of a disadvantaged area in Melbourne was used:
I would like to ask the Senate to recognise that Broadmeadows is a
disadvantaged area, even though we are not a rural area, and that we
do need to receive extra funding or assistance to meet the needs of
these families. It is a very low socioeconomic area. These parents no
longer have a choice of child care centres. It is a fact that they just
cannot afford to send their children to child care. [91]
And:
The irony here is that many of the centres in need are indeed from
rural areas. However, many of them are also from metropolitan areas.
Mrs Watson's centre in Broadmeadows literally backs onto a high school
which, because of its geographical area, is in receipt of extra funding
as it is deemed to be disadvantaged. There are primary schools located
very near the centre which are deemed to be disadvantaged and, therefore,
gain extra funding.
Because Mrs Watson's centre is not located in a town or rural or remote
statistical local area, she cannot receive disadvantaged area funding,
even though she caters for children from low socioeconomic and refugee
backgrounds who often do not speak English as their first language…
It is absurd that a child between the ages of zero and five is deemed
not to require disadvantaged subsidies and yet goes to primary school
at the age of five and is immediately classed as having access to disadvantaged
funding. We believe this ought to be addressed as well. [92]
5.85 Witnesses called for the extension of the Disadvantaged Area Subsidy
criteria to ensure that centres servicing disadvantaged urban areas could
continue to provide the service to those in need. The LHMU recommended:
that eligibility for the disadvantaged area subsidy be extended to
centres in metropolitan areas that are socioeconomically disadvantaged.
The definition of socioeconomically disadvantaged should include areas
where there is a high rate of unemployment, a high rate of welfare dependency
and a high incidence of low income earners, where there are clusters
of public housing; and, of course, should take into account areas where
there is a high proportion of people of Aboriginal and Torres Strait
Islander backgrounds. [93]
5.86 NCOSS also suggested that assistance should be targeted to services
in disadvantaged localities. NCOSS proposed that funding should be made
available to long day care centres on their capacity to provide a quality
service to low income families, similar to the Disadvantaged Schools Program.
Funding would need to be at a level that enabled services to provide quality
programs through experienced and qualified staff and staffing above regulations.
A minimum rate of $500 per place per year was suggested.
5.87 NCOSS indicated that it had some `initial thoughts' about the kinds
of criteria which might be used to identify services to receive additional
funding. It suggested that criteria for special assistance include a combination
of socioeconomic indicators for the locality (for example income levels
and levels of public housing) and indicators for users of the service
such as numbers of parents eligible for full fee relief, numbers of non-English
speaking background or ATSI children; numbers of children with special
needs; numbers of sole parent families; places allocated to children deemed
by the service to be at risk or in need of full-time, non-work related
care. [94]
5.88 The Salvation Army supported the need for special provisions for
centres in disadvantaged areas and suggested that further assistance should
be provided to the centres where more than 70 per cent of families
are on maximum Childcare Assistance. [95]
5.89 Concerns were raised by witnesses about the ability of families
with children with disabilities to continue to access high quality programs.
[96] It was noted that access may be lost because
of:
- loss of quality of care which may impact on vulnerable disabled children;
and
- `the potential for changing attendance patterns amongst children in
the centre to result in more complex social environments' and more complex
environments `can only negatively impact upon the benefits normally
arising from inclusion of young children with disabilities'. [97]
5.90 The Department noted that from July 1997, funding of $4.1 million
is being provided annually to community-based services in disadvantaged
areas, particularly in rural and remote areas, to ensure that families
in these areas are not further disadvantaged through loss of access to
child care. DAS so far provided to centres has been equivalent to 100 per
cent of former Commonwealth operational subsidies. Funding is for a three-year
period.
5.91 An additional $10 million annually is also provided for the Special
Need Subsidy Scheme (SNSS) to support children with high levels of additional
needs, particularly children with a disability, who would otherwise not
be able to be placed in Commonwealth child care services. [98]
5.92 The Department also noted that 30 centres had received recurrent
grants in place of operational subsidies for OSHC services because of
the unique nature of the services provided including those to disadvantaged
families.
Conclusion
5.93 The Committee notes that the Commonwealth has provided additional
funding assistance for community-based services in rural and remote areas
and those services with a large Aboriginal and Torres Strait Islander
population through the Disadvantaged Area Subsidy. Recurrent grants have
been made to OSHC services, for example the Salvation Army centre at Macquarie
Fields, which provide a unique service such as care for disadvantaged
groups. Exemptions to the 20 hour limit are also available and these have
been provided to a number of centres in rural and remote Australia.
5.94 However, the Committee considers that in addition to increased support
for low-income families already recommended by the Committee, see paragraph
5.43, there is a need for further assistance for disadvantaged families
living in urban areas. The Committee believes that the range of services
to which the Disadvantaged Area Subsidy applies is too restrictive. While
some centres in urban areas have received DAS funding, for example, a
centre providing the only 24 hour care service in Adelaide, the scheme
is aimed primarily at centres in rural and remote areas. Many urban centres
provide important services and benefits for particularly high-needs families.
These services are in addition to those normally provided by child care
centres and may include a strong protective element such as that provided
by the Salvation Army Centre at Macquarie Fields. The Committee considers
that this should be recognised and supported through additional funding
as are schools in disadvantaged areas.
5.95 The Committee considers that additional assistance be directed to
areas of identified social or economic disadvantage, for example areas
of high unemployment or areas where there are high levels of public housing.
These features have ramifications for community standards of living, access
to human services and costs of community infrastructure. Within these
areas, assistance should be targeted at centres where parents are particularly
socially or economically disadvantaged. These would include centres with
a high proportion of users eligible for maximum Childcare Assistance;
a high proportion of sole parents; places allocated to children deemed
to be `at risk' and children from non-English speaking backgrounds.
Recommendation: The Committee recommends that additional funding be
provided to centres which cater for very high needs families in socially
or economically disadvantaged urban areas.
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Footnotes
[1] Work force participation for women is discussed
in Chapter 6.
[2] Submission No.411, pp.5,7 (St George Advocates
for Children Inc); Submission No.417, p.5 (Monash University); Submission
419, p.8 (National Family Day Care Council of Australia); Submission No.572,
p.1 (Hunter Children's Services Forum); Submission No.657, p.14 (Tufnell
Child Care Centre); Submission No.862, pp.9, 15 (NSW Government).
[3] Submission No.440, Attachment 4, p.9 (QCCC).
[4] Submission No.891, p.6 (ACOSS).
[5] Mission Australia, Children's Poverty:
Lost Expectations, cited in Submission No.862, p.4 (NSW Government).
[6] Committee Hansard, 21.4.98, p.70.
[7] From 1 July 1998, the minimum payment rose
to $20.00 as a result of indexing.
[8] AIHW, Australia's Welfare 1997, p.124;
Submission No.894, Additional Information, 28.7.98, p.2 (DHFS).
[9] Submission No.894, p.21 (DHFS).
[10] Department of the Parliamentary Library,
Background Paper No.9 1997-98, Childcare in Australia: current provision
and recent developments, pp.5-6. In reviewing savings, it was also
noted that these levels of savings appear to have been calculated from
forward estimates 1995-96, p.19.
[11] Submission No.894, Additional Information,
28.7.98, p.1 (DHFS).
[12] Submission No.794, p.3 (Quality Child
Care Association of Victoria).
[13] Submission No.273, p.3 (Culburra Beach
Children's Centre).
[14] Submission No.894, Additional Information,
28.7.98, p.B3 (DHFS).
[15] Submission No.862, p.29 (NSW Government).
[16] Committee Hansard, p.330.
[17] Submission No.418, Additional Information,
29.5.98 (NCOSS).
[18] Committee Hansard, 16.6.98, p.547.
[19] Submission No.894, p.21 (DHFS).
[20] Tasker, G & Siemon, D, Is child
care affordable?, Brotherhood of St Laurence, 1998, p.21.
[21] Is child care affordable?, p.22.
[22] Submission No.863, p.2 (Families at Work).
[23] Submission No.894, Additional Information,
28.7.98, p.A4 (DHFS).
[24] Is child care affordable?, p.24.
[25] Submission No.894, Revised Appendix 9,
(DHFS); Committee Hansard, 25.6.98, p.627.
[26] The gap fee is the difference between
the `ceiling fee' and the amount charged by the service provider. In both
1996 and 1998 the `ceiling fee' was $115.
[27] Committee Hansard, 21.4.98, pp.92,
131.
[28] Submission No.292, p.5 (Uniting Church
Children's Services Forum); Committee Hansard, 22.4.98, p.177.
[29] Committee Hansard, 16.6.98, p.562.
[30] Submission No.273, p. 2 (Culburra Beach
Children's Centre).
[31] Australian National Audit Office, Efficiency
Audit, Mind the Children, p.xxi.
[32] Committee Hansard, 22.4.98, p.197;
23.4.98, p.243.
[33] Committee Hansard, 25.5.98 p.515.
[34] Submission No.882, p.11 (Uniting Community
Services Australia).
[35] Committee Hansard, 23.4.98, p.265.
[36] Submission No.572, p.3 (Hunter Children's
Services Forum Inc).
[37] Is child care affordable?, p.37.
[38] Submission No.891, p.11 (ACOSS), see also
Submission No.418, Additional Information, 29.5.98, (NCOSS).
[39] Submission No.894, Additional Information,
28.7.98, p.B2 (DHFS).
[40] Committee Hansard, 25.6.98, p.627.
[41] Budget Estimates 1998-99, Community Affairs
Legislation Committee, Committee Estimates Hansard, 3.6.98, p.CA135.
[42] Is child care affordable?, p.37.
[43] Budget Estimates 1998-99, Community Affairs
Legislation Committee, Committee Estimates Hansard, 3.6.98, p.CA130.
[44] Budget Estimates 1998-99, Community Affairs
Legislation Committee, Committee Estimates Hansard, 3.6.98, p.CA133.
[45] Submission No.894, Additional Information,
28.7.98, p.B5 (DHFS).
[46] Committee Hansard, 25.6.98, p.646.
[47] Submission No.731, p.13 (Australian Early
Childhood Association); Submission No.762, p.3 (Institute of Early Childhood
– Macquarie University).
[48] Committee Hansard, 23.4.98, p.238.
[49] Committee Hansard, 16.6.98, p.599.
[50] Submission No.462, p.2 (NSW Child Care
Nutrition Network).
[51] Committee Hansard, 21.4.98, 23.4.98,
pp.97, 254; Submission No.887, Appendix 2 (Community Child Care Co-operative
Ltd (NSW)).
[52] Submission No.331, p.2 (Association of
Child Care Centres of SA Inc).
[53] Submission No.905, p. 6 (South Australian
Government)
[54] Committee Hansard, 23.4.98, p.259;
see also Submission No.131, p.2 (City of Monash); Submission No.375, p.10
(Maroondah City Council).
[55] Submission No.331, p.4 (Association of
Child Care Centres of SA Inc).
[56] Committee Hansard, 25.6.98, p.631.
[57] See for example, Submission No.572, p.1
(Hunter Children's Services Forum).
[58] Submission No.440, Attachment 4, p.9 (QCCC).
[59] Submission No.921, p.5 (NOSHA).
[60] Committee Hansard, 16.6.98, p.524.
[61] Committee Hansard, 16.6.98, p.608.
[62] Submission No.542, p.11 (Childcare Industry
Association of Queensland); see also Submission No.331, p.2 (Association
of Child Care Centres of SA Inc).
[63] Submission No.894, Additional Information,
28.7.98, p.A5 (DHFS).
[64] Submission No.465, p.21 (SDA).
[65] Committee Hansard, 25.6.98, p.634.
[66] Submission No.894, p.23 (DHFS).
[67] Committee Hansard, 25.6.98, p.634,
Budget Estimates 1998-99, Community Affairs Legislation Committee, Answer
to Senate Question on Notice, No.198 (DHFS).
[68] Submission No.534, p.4 (Australian Women
in Agriculture); see also Submission No.125, p.2 (Mrs H Severin).
[69] Submission No.415, p.7 (Queensland Churches
Child Care).
[70] Submission No.534, p.5 Australian Women
in Agriculture).
[71] Submission No.894, Additional Information,
14.8.98, (DHFS).
[72] Submission No.881, pp.15-17 (Northern
Territory Health Services).
[73] See also Submission No.760, p.2 (Country
Children's Services Association of NSW).
[74] DHFS, Annual Report 1996-97, p.142.
[75] See for example, Submission No.905, p.9
(South Australian Government).
[76] Committee Hansard, 22.4.98, p.198.
[77] Committee Hansard, 22.4.98, p.204.
[78] Submission No.416, p.11 (Uniya Jesuit
Social Justice Centre).
[79] Committee Hansard, 23.4.98, p.265.
[80] Submission No.532, pp.2-3 (Barnardos Australia).
[81] Committee Hansard, 23.4.98, 263.
[82] Committee Hansard, 23.4.98, p.264.
[83] Submission No.425, p.3 (Queensland Churches
Child Care).
[84] Submission No.370, p.2 (Salvation Army).
[85] Committee Hansard, 23.4.98, p.265.
[86] See also Submission No.792 (Little Diggers
Child Care Centre).
[87] Budget Estimates 1998-99, Community Affairs
Legislation Committee, Committee Hansard, 3.6.98, p.CA157.
[88] Submission No.891, p.7 (ACOSS).
[89] Submission No.792 (Little Diggers Child
Care Centre).
[90] Budget Estimates 1998-99, Community Affairs
Legislation Committee, Answer to Sentate Question on Notice, Nos 187-191(DHFS).
[91] Committee Hansard, 21.4.98, p.55.
[92] Committee Hansard, 21.4.98, p.68.
[93] Committee Hansard, 23.4.98, p.234.
[94] Submission No.418, Additional Information,
29.5.98, p.2 (NCOSS).
[95] Committee Hansard, 23.4.98, p.278.
[96] Committee Hansard, 22.4.98, p.177.
[97] Submission No.762, p.6 (Institute of Early
Childhood).
[98] Submission No.894, p.9 (DHFS).