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| PC final report
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| recommends simplification and nannies
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The long awaited Productivity Commission's final report on Child Care and Early Childhood Learning has been released and recommends a range of sweeping changes including simplification of the child care payment system and subsidies for in-home care providers such as nannies.
Minister for Social Services, Scott Morrison, released the report and said it would be a key input to the Government's new families package, due to be released later this year.
"The Inquiry was the largest review of child care since the 1990s and the Commission has done an excellent job drawing together a wide range of input from families, service providers, early childhood education professionals, businesses and other experts to identify the challenges and potential ways forward," he said.
The Early Care and Learning Subsidy (ECLS)
The report recommends the axing of the current system in favour of a single payment, the Early Care and Learning Subsidy (ECLS), which would be means and activity tested and paid directly to a family's provider of choice.
The ECLS would apply to all approved early childhood providers including family day care, long day care, occasional care and outside school hours care. In an Australian first the ECLS would also apply to in-home care including accredited nannies who meet NQF requirements.
The ECLS would be available for up to 100 hours of service a fortnight for children 13 years and under who's parents meet a work/study/training test or who are exempt.
Benchmark Price
In place of the current CCR, CCB and JET payments a new 'benchmark' price would be introduced based on the service type and the age of the child.
The Commission's recommended rates are:
- $7.41 per hour for a 0 to 35 month old child in Long Day Care
- $7.20 for child aged 3 years or over in Long Day Care
- $6.94 per hour for all children in Family Day Care and who use approved nannies, and
- $6.00 per hour for kids in in OSHC.
The recommendations, which aim to improve work force participation among women, offer increased assistance to low and middle income families and a reduction in subsidy levels for families which can better afford to pay for care.
Under the recommendations families with an income of $60,000 or less would receive a child care subsidy up to about 85 per cent of the benchmark price. This subsidy would reduce to just 20 per cent for families earning $250,000 or more.
The Commission's modelling estimates that under the recommendations child care for families earning up to $130,000 is "likely to be more affordable under the new scheme." The average rate of assistance for a family earning $100,000-$130,000 would be 65 per cent of its costs under the changes, compared with 53 per cent under the current scheme.
However, once a family's income reaches more than $160,000, it would receive a lower subsidy than under the existing system.
In addition, the report makes it clear that families should not expect Government to pick up the tab for all child care costs and advises against making child care tax deductible.
Government Support
Mr Morrison is widely supportive of the PC's recommendations and says they will be used to inform the Government's new families package, which is being designed to maximise the productivity gains to be made from the $7 billion investment in early childhood.
"Families should not be faced with the choice of either leaving work when they have children or going back to work just to pay for child care.
We want to see more families get into work and stay in work when they have children, enabling them to create more economic opportunities both for their own families and the nation," said Mr Morrison.
Importantly, the PC Report supports the quality changes implemented as a result of the NQF but notes that these changes have driven up costs for providers and parents and says it is probably unnecessary for children to have a tertiary qualified early childhood carer from birth.
"This is certainly an option that some parents may wish for choose, but it should not be a minimum requirement imposed by governments, at considerable cost, on all families and taxpayers, until evidence substantiating the benefits for the additional cost is available," says the Commission in the final report.
Productivity Commission's Final Recommendations
- Introduction of a single child care payment, the Early Care and Learning Subsidy, to replace CCR, CCB and JET scheme.
- ECLS would be payable to all approved providers including accredited nannies.
- ECLS would cover up to 100 hours of care per fortnight for kids 13 and younger who's parents are at work, study or training for at least 24 hours per week or who are exempt.
- A means-tested subsidy rate between 85 per cent of the benchmark price for family incomes at or below $60,000 and 20 per cent of the benchmark price for family incomes at or above $250,000
- Simplified working holiday visas to make it easier for families to employ au pairs for a full 12 months rather than the current six months
- Extra financial support to child care centres in rural, regional and remote areas to stay open if child numbers temporarily fall
- Link payment of family tax benefit part A to attendance in preschool programs
- 100 per cent subsidy of the benchmark price for children deemed at risk
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