Childcare providers call for activity test review as free childcare nears an end

Childcare providers are calling on the government to review the test that determines how much subsidised child care a family can access warning it’s unlikely parents will be able to afford fees when free childcare ends next month.

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Parents receiving the emergency childcare package due to job loss during the coronavirus pandemic will unlikely be able to cover fees once they start again, childcare providers warn.

Education Minister Dan Tehan pointed to attendance rates rising to 74 per cent of pre-crisis levels as driving the need for the change.

“We had discussions with the sector, and it was seen that it was much more equitable to have a transition payment that went right across the sector,” he told ABC TV.

His comments come as the government ending its emergency free childcare package nears – finalising on July 13 – and JobKeeper gets pulled out of the sector.

It will be replaced with a $708 million transition package worth about a quarter of its pre-crisis revenue.

The wage subsidy was worth about a third of fees to those services that could access it but not all were eligible.

Australian Education Minister Dan Tehan says “we had discussions with the sector, and it was seen that it was much more equitable to have a transition payment that went right across the sector”. Picture: Lukas Coch

Goodstart, the nation’s largest childcare operator, said half of its nearly 60,000 families have had their income slashed since February.

Money coming into those households had dropped by a third on average, it said.

As a result, it, along with other operators, are calling for the government to address the activity test which determines how much subsidised child care a family can access as well as affordability for those who have had an income drop.

Goodstart and other operators have asked for the government to address the activity test that determines how much subsidised child care a family can access and affordability for those whose income had dropped.

It’s done the first – easing the activity test until October – but not the second.

“(The minister) heard our message that we needed a relaxation of the activity test families still need to pay out-of-pocket costs – child care will no longer be free – and they’ll still be means-tested on that,” Goodstart chief executive John Cherry told ABC Radio National today.

FREE CHILDCARE TO END IN JULY AS JOBKEEPER CUT

Millions of Australians will not get an extension on the Federal Government’s free childcare offering beyond June to help save them many hundreds of dollars a week.

Free child care will now come to an end on July 12.

Federal Education Minister Dan Tehan announced Monday the targeted scheme introduced in April would come to an end, with a return to child care subsidy program on July 13.

He said providers were “on the brink of collapse” when the initial announcement was made but that immediate threat how since passed.

“Australia’s success at flattening the curve … has seen demand continue to grow for the sector,” he said.

“Demand has hit 74 per cent.”

Transition measures will be put in place.

Education Minister Dan Tehan. Picture: Supplied

JobKeeper payments for the sector will also end in July.

The Federal Government childcare package was due to run out on June 28 and has saved many Australian families hundreds of dollars a week.

Since April parents have been able to lessen the financial pain of paying for childcare, which remains one of the biggest cost burdens on working Australians.

The temporary measure was designed to be rolled out short-term.

Since April parents have been able to lessen the financial pain of paying for childcare, which remains one of the biggest cost burdens on working Australians.

The temporary measure was only ever designed to be rolled out for the short-term, with childcare staff wages also supplemented by the government’s $1500 JobKeeper payment.

Mother-of-two Emilia Rossi, 37, who is on maternity leave from her part-time role as a market strategist, said the high costs of childcare affected her weekly budget.

Mother-of-two Emilia Rossi said having free childcare has been a help to boost her savings but she's realistic it won't last forever. Picture: Nicki Connolly

Her son Hercule, 2, goes to childcare three days a week, usually costing Ms Rossi $90 in out-of-pocket expenses a day.

“It’s a bonus to have free childcare, the savings we are making we’re putting into our mortgage offset account and we’re not spending it,” Ms Rossi said.

“I don’t feel like this will be a long-term situation but it will disrupt the childcare system because we can test to see if this is viable and sustainable for the childcare centres as well.”

The costs of child care vary depending on whether or not parents are eligible for the Child Care Subsidy, which reduces the costs outlaid.

Super fund HESTA has 860,000 members including 80 per cent women, and chief executive officer Debby Blakey said now was an important time to reassess childcare costs.

“We shouldn’t miss the opportunity to reform the childcare system, it’s so critically important to boosting women’s participation in the workforce and ultimately their retirement incomes,” she said.

“In Australia women still retire with about 40 per cent less than men.”

HESTA chief executive officer Debby Blakey said it was vital childcare costs were reassessed to make it more financially viable for consumers.

Latest data from the Association of Superannuation Funds of Australia showed many people will retire with little or no superannuation at all.

Australians aged between 60-64 are retiring with a median balance of $154,450 for males and $122,850 for females.

The analysis shows to obtain a comfortable retirement couples need $640,000 at retirement and singles need $545,000.

This presumes they own their home outright, have good health and are able to receive a part pension.

Financial comparison website’s RateCity’s spokeswoman, Sally Tindall, said parents should reassess their financial statuses to plan for when childcare costs return.

“Find out what assistance you’re eligible for and, if necessary, update your family income with Centrelink so you can get access to as much assistance as possible,” she said.

“It’s also worth talking to your childcare centre about any financial problems you’re facing.

“Some day cares can offer shorter days at a reduced cost.”

Originally published as Childcare providers call for activity test review as free childcare nears an end