Why can’t we open more child care centres?

WHY is it so hard to open more child care centres in areas where parents are crying out for extra services? And will the new Budget measures help?

Family Day Care centres in Hobsons Bay celebrate with a picnic for families at Altona childcare Henry 2 Picture: Mark Wilson

CHILD care has been a huge topic of debate this week with the Abbott Government unveiling its plans to help parents get back to work.

But while its child care package promises to streamline payments for parents and will inject an extra $3.5 billion into the system over five years, will it actually see more child care centres open to meet demand?

One of the problems that the Productivity Commission identified in its inquiry was that parents were experiencing problems with the cost of, or access to, suitable child care.

Parents in inner city areas of Sydney and Melbourne in particular, find it difficult to secure child care at crowded centres.

Australia’s largest childcare provider Goodstart Early Learning advocacy manager John Cherry said that extremely high property prices were one of the main barriers to opening new centres in these areas. Securing an appropriate site that satisfies government regulations could be expensive.

“Property costs a lot of money and centres are required to have playgrounds, so trying to secure a site is a very substantial cost barrier,” he said.

A new complicating factor that will be introduced in 2017, will be a benchmark price that will cap fee subsidies in high cost areas. This will ensure prices remain more affordable for parents but will restrict a centre’s ability to recover costs through increasing fees.

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Mr Cherry said state and local government could help parents in high demand areas by freeing up public space for facilities as part of new developments. While some councils such as Sydney City had played a strong role in encouraging centres, more could be done.

“Child care has to be something that state and local governments plan for like roads and public transport,” he said. “It comes down to good planning.”

He said there was some evidence that more centres would open in areas of high demand, but these might not be cheap because operators needed to recover their costs.

“Child care generally operates on low profit margins but in high demand areas some operators are able to achieve higher profits,” he said.

He said the child care market in Australia definitely seemed to be split in two, with some inner city areas experiencing high demand, while others were competitive and vacancies were more numerous.

“We have a 20 to 25 per cent vacancy rate across our services but there are areas where supply is tighter, and those tend to be inner city areas,” he said.

But strong competition is one reason why Mr Cherry believes parents will see an improvement in child care affordability once the government’s package comes into effect in 2017.

Unfortunately Goodstart is concerned that affordability will actually get worse before it gets better.

“Despite this strong package, childcare affordability will actually decline over the next two years with the Childcare Rebate cap and the income thresholds for Childcare Benefit both frozen,” Goodstart chief executive officer Julia Davidson said this week.

Fees are also predicted to rise by another $10 a day from the beginning of next year, when centres will be required to take on more staff as a consequence of Labor’s National Quality Framework.

Goodstart CEO Julia Davison (back) is worried that child care affordability could get worse before it improves.

“Families need the government to improve childcare affordability now, not in two years’ time,” Ms Davidson said.

Childcare researchers and industry representatives have also expressed reservations about the government’s childcare package.

University of New South Wales childcare researcher Elizabeth Adamson told AAP the package did not, so far, seem to be about creating jobs for parents who might want to return to work.

Dr Adamson said the projections for increased workforce participation ignored complications such as mothers wishing to return to work but not being able to find suitable hours or available childcare places.

“The sector itself doesn’t necessarily have the capacity to have spaces for more children,” she said.

Director of the Australian National University’s Crawford School of Public Policy, Peter Whiteford, told The New Daily that the government would save about $1 billion over four years from cracking down on the paid parental leave scheme and around $60 million a year by abolishing the supplement paid to families with four or more children.

“So overall, the Budget proposals would take far more out of assistance for families than it puts in,” Professor Whiteford said.

WHAT’S IN THE PACKAGE?

Simplified child care subsidy

* The new Child Care Subsidy will be implemented from July 1, 2017. It will replace the Child Care Benefit, Child Care Rebate and Jobs, Education and Training Child Care Fee Assistance Programme.

* The government estimates families earning between $65,000 and $185,000 will be about $30 a week better off.

* The subsidy will be paid directly to child care providers.

More assistance for disadvantaged families

* Families with incomes of about $65,000 or less, will still be able to get up to 24 hours subsidised care each fortnight, even if they don’t work enough hours.

* A Community Child Care Fund worth $304 million will also be created to improve affordability for low income families in high cost areas.

* A new Inclusion Support Programme will assist parents who have children with disabilities or from culturally and linguistically diverse backgrounds.

* All children will have access to preschool for up to 15 hours a week for 600 hours a year.

Nannies trial

* About 4000 nannies will be subsidised to provide shift workers with child care from January 1, 2016. A hourly fee cap rate of $7 per child based on family income will be available to families earning less than $250,000 a year.

Vaccination requirement

* Children will have to be vaccinated for parents to access child care payments and Family Tax Benefit Part A.

Originally published as Why can’t we open more child care centres?