Federal election 2019 opinion: Taxing impact of childcare scheme

Labor is proposing to use $550 million of taxpayers’ money to pay for its childcare package. But it will cost much more than that, writes Renee Viellaris.

WE TRUST childcare workers to look after our children, and we need quality educators in the system, but the question is, should taxpayers give them a pay rise?

At the moment, childcare workers are paid by their boss, the owners of childcare centres, and some of those bosses who are very rich.

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Labor is proposing to use taxpayer money – $547 million over three years — to give them a pay rise. But it will cost taxpayers more than that because Labor wants to continue to give them a pay rise for eight years.

Depending on the award, it will increase the earnings of an average childcare worker by $11,300, or 20 per cent over eight years. The extent of the cost will not be revealed until Labor unveils its costings later in the election campaign. It has not revealed the mechanics of how it will be done.

Labor will work “with the early education sector in the first 100 days of government to increase the wages of early childhood educators in the private and not-for-profit sectors”.

Childcare bosses love it. They get to give their staff a pay rise without having to chip in.

The significant intervention means Australian taxpayers will now not only help families pay for their childcare costs (which should happen because it helps women, increases tax receipts and lowers the welfare bill) but also means if Labor wins, we will have a Government using the public purse to give people employed in the private sector a pay rise. At a commonwealth level, where else does this happen in the private sector?

Opposition Leader Bill Shorten with wife Chloe yesterday. Picture: Kym Smith

Mostly women work in childcare and Labor and the sector believe that is it unfair for childcare workers who can have the same qualifications as a teacher, to be paid much less.

However, one of the reasons why childcare is so expensive is because of the education levels of childcare workers. Public policy must always come down to common sense and it would be hard to argue there needs to be someone with a Bachelor’s degree in teaching to look after a baby or a toddler.

Perhaps there is an argument for better qualified educators before kids start prep but other than that, it is a waste of money.

Before their child is three years old, parents just want their kids to have their nose wiped, nappy changed and a nice finger painting to hang on the wall.

The more educated the worker generally pushes up the cost of a service and this is one of the reasons why childcare has started to cost a bomb.

Labor’s Julia Gillard introduced the National Quality Framework, which started increasing costs for parents.

Currently, childcare is subsidised depending on a family’s earnings and whether they are working or studying. Labor has also announced it will make it cheaper for middle-and-lower income families to send their kids to childcare — and that should be welcomed.

Childcare is ridiculously expensive, although the Coalition did introduce significant changes this year that has made it more affordable for more families.

The problem is that Labor and the Coalition have squibbed it when it comes to childcare policy.

Parents pay for child care if their kids are sick, on family holidays, on public holidays and even pay for a full day if their child is there for only four hours.

And some childcare workers are not on the books permanently, meaning if there are fewer kids they get sent home — a double win for centres that don’t have to pay wages but get Government money.

Without a rebate, parents are paying up to $150 a day.

The current system is perverse and does not encourage parents to take on more hours.

For example, if a cafe or a retailer rings a mother and asks if she can cover a four-hour shift, in the majority of daycare centres, she has to pay for a full day’s care.

It can often mean it will cost her to go to work, so she won’t.

Labor has to ensure its policy does not have unintended consequences.

From July next year, every single family in Australia earning up to $174,000 will get cheaper child care with Labor.

“If you’re one of the 367,000 Australian families with a household income of under $68,000, for you and your children, childcare will be as good as free,’’ Opposition Leader Bill Shorten said yesterday.

It will be welcome relief but with these policies there must not be a disincentive to work because that will only hurt a woman’s superannuation while pushing up the cost of the nation’s welfare bill, because reduced incomes can tip families into family tax benefit brackets.