Free welfare services are not free

Albanese government plans to make childcare a free essential service like Medicare requires careful assessment. While no doubt it would be popular with overstretched parents, the measure extends the social welfare state and would add to the heavy demands already placed on the public purse. Included on this list is the out-of-control National Disability Insurance Scheme, which continues to grow at a rate that is already beyond sustainable proportions. Careless comments this week by NDIS Minister Bill Shorten, that it would not be the end of the world if the scheme’s growth rates were not cut to the 8 per cent-a-year budget target from the current 14.4 per cent, are illustrative of the tensions within government over financial management. Jim Chalmers was able to bring his colleague quickly back into line, forcing him to commit to spending reductions. To not have done so would have demolished all budget credibility given the NDIS clawback is supposed to deliver $75bn to the bottom line across the next 10 years.

But just as Mr Shorten was ceding to economic reality, Education Minister Jason Clare let slip the government’s long-term plans were for free childcare as a universal right. Mr Clare said the Prime Minister wanted to build a universal early education system parallel to the “free” health system offered under Medicare. “You don’t have to rely on your credit card to get good access to healthcare,” Mr Clare said. “It’s that green (Medicare) card in your purse or in your wallet.” He also described superannuation as a universal retirement system. Such comments underscore the extent to which politicians can be detached from the real world and where the money they spend actually comes from. Medicare is part-funded by a levy on earnings and the rest comes from consolidated revenue. The NDIS is not a free system simply because those who use it don’t have to pay. The universal retirement system of superannuation is based on the forced savings of people who might reasonably have other, better, uses for their money.

The government’s selling point for childcare is that it frees up parents to work harder and therefore will boost productivity. This may sound better in theory than it works in practice. The cost of child-raising is already recognised and compensated in other parts of the tax and transfer system. Those who choose not to have children are entitled to question if more should be spent supporting those who make another lifestyle choice.

Flush with funds from its super taxes on coal, Queensland already has announced that families would save an average of $4600 a year through 15 hours a week of free education in daycare centres or preschools for every child in the year before starting school, starting next year, regardless of parental income or work status. Meanwhile, the cost of services will get progressively higher as government-sponsored higher wages in aged care inevitably flow through into other sectors including disability care and childcare. The social welfare net is being widely cast again and must be checked before it runs out of control.