Childcare activity test failing the poorest families, Impact Economics and Policy report finds

The childcare system is stacked against certain families, a new report has found, as advocates call for an overhaul.

Thousands of children from the poorest families are missing out on childcare because the system is unfair, a new report has found.

Simplifying the system could help encourage more parents back into the workforce and help fill much needed jobs, early childhood education advocates say.

The Impact Economics and Policy’s report by Dr Angela Jackson found there are 126,000 vulnerable children negatively affected by the activity test, which determines how much subsidised care a child receives, based on the partner working the least amount of hours.

“It’s unfair because access to quality early education is linked to the activities of a child’s parents,” Dr Jackson said.

“We should be investing in low income kids who we know will benefit the most from accessing childcare, instead they’re starting school behind their peers and are less likely to finish school and enter employment.”

Angela Jackson, lead economist at Impact Economics and Policy.

A change to the system in 2018 cut the minimum amount of care that low-income families are entitled to from two to one day a week, and resulted in a 42,000 fall in the number of families receiving the minimum entitlement.

The report found that a number of vulnerable family groups – compared to families earning more than $200,000 per year – are more likely to be subject to the activity test that limits access to care.

Single parents are more than three times more likely and Aboriginal and Torres Strait Islander families are more than five times more likely, to be limited to one day of subsidised child care per week.

Non-English speaking families and low income families earning between $50,000 and $100,000 are more than six times more likely to be limited to one day of subsidised child care per week.

Jay Weatherill, director of the Early Childhood Education advocacy group Thrive by Five, said the activity test is currently one of the major barriers families face when accessing early learning and childcare.

Jay Weatherill is calling for an overhaul of the childcare system to make it fairer. Picture: Sarah Reed

He said the Jobs and Skills Summit this week has the potential to change the early learning sector by removing the activity test.

“Abolishing or simplifying this test would ensure that children and their families have greater access to early learning and childcare that positively supports their development and continued learning,” Mr Weatherill said.

Labor’s election promise to reform the Child Care Subsidy is set to roll out next July.

Its $5.4 billion reform package will reduce the cost of care for 96 per cent of families, but the activity test will continue to undermine the broader reform objectives of lifting access for children and workforce participation of parents, critics argue.

Parenting advocate Georgie Dent says families are under stress.

“Government reform of the Child Care Subsidy will be a critical first step, but this can only happen if the activity test, as it currently stands, is removed,” Mr Weatherill said.

Georgie Dent from advocacy group Parenthood said for some people with changeable hours there is also the concern that they could get subsidies they were not entitled to and then are faced with unexpected debt notices from Centrelink.

“There is a lot of stress and uncertainty for families which is why we need to simplify the system,” Ms Dent said.

Originally published as Childcare activity test failing the poorest families, Impact Economics and Policy report finds