Flat-fee childcare won’t help families who are struggling

Ensuring the most disadvantaged children can actually access care will be the real test.

Back view of mother walking down the street with a little son with a backpack on sunny summer day

Anthony Albanese’s plan to axe the work test for the childcare subsidy prioritises families and children who actually need more childcare.

He is recognising a huge body of evidence that shows disadvantaged children have the most to gain from structured learning and formal care settings – the exact cohort that isn’t accessing it in Australia.

In some ways, though, the changes aren’t as big as they are being made out to be. Families earning under $80,000 were already eligible for 24 hours of subsidised childcare a fortnight, regardless of whether they met the work test. Aboriginal and Torres Strait Islander children are eligible for 36 hours of childcare a fortnight regardless of their parents’ activity levels. Removing the work test will roughly double the existing entitlements for these groups while also cutting out a pile of paperwork.

The removal of the work test also may be a lifeline for stay-at-home parents who don’t have a “village” or parents nearby for support. Caring for children inside the home can be isolating, stressful and just plain hard yakka. Mothers contributing unpaid labour are worthy of support, despite what we have been told about women being of value only in the paid workplace.

Short of somehow conjuring up the organic and incidental help that was more freely available a few generations ago, the least we can do is ensure that paid help is affordable and accessible. If the activity test were axed, parents in the home would be able to access subsidised occasional care hours.

In the scheme of things this policy won’t change much for most Australians, with benefits flowing to an estimated 66,000 families out of 6.7 million.

You’ve got to hand it to the Prime Minister’s communications team – it has drummed up quite the fanfare for a policy with a very narrow target group. With headlines such as “three days of childcare guaranteed” and “first step to universal childcare”, you’d be forgiven for thinking he was promising free childcare for everyone.

For once, the policy isn’t about getting more mothers back to paid work. Past data and future modelling clearly show the removal of the work test will have a negligible impact on workforce participation.

For once, the policy isn’t about getting more mothers back to paid work. Picture: AAP

Parents looking for work already can access 36 hours of subsidised childcare a fortnight – jobseeking is already a recognised activity that goes towards meeting the work test. Under current policy settings most parents who want a job already have one. Nevertheless, childcare advocates are still claiming it’s a boon for workforce participation because new mothers now will have no excuse to continue in a caregiving role.

Georgie Dent from The Parenthood advocacy group was quick to try to rationalise the removal of the work test by claiming it would lead to increased workforce participation. “The activity test was designed as an incentive for parents to work, but in reality it has blocked a whole lot of families, particularly single-parent families, from being able to work at all,” she told Instagram followers.

“Why? Because if you don’t have childcare lined up for your children, you cannot accept a shift … So this trap has meant a whole lot of families have not been able to have their kids participating in ECEC (early childhood education and care) and that has then limited their ability to work.”

Apart from completely missing the fact that people looking for jobs can already access subsidised childcare, she refuses to accept the possibility that people caring for babies or toddlers in the home are doing so by choice and are already making a valuable contribution to society. She is hellbent on flushing those who perform vital unpaid labour into the workforce.

Albanese himself was not even making these claims. The real test of his commitment to vulnerable families will be how he ensures the most disadvantaged children can actually access childcare in a system where demand already outstrips supply. He has made clear his support for $10 a day childcare, a flat-fee funding model pushed hard by childcare advocacy groups such as Thrive by Five.

This is despite the Productivity Commission recently showing the flat-fee funding model would result in most benefits flowing to the top 25 per cent of wealthiest families in Australia. The 1000-page universal childcare report shows the flat-fee model would crowd out the most disadvantaged children, those who stand to benefit the most from childcare, and actually reduce their ability to access centre-based care.

This is because wealthier families take up additional childcare days ahead of the introduction of fee relief and they beat the rush to pick up more days when the actual fee relief comes into effect.

This is why the Productivity Commission found means-tested childcare is still essential in an Australian childcare context – we don’t have enough spots, centres and workers to allow open-slather childcare. Price barriers for wealthier families are essential to allow the most disadvantaged families the opportunity to get a spot.

Thrive By Five and The Parenthood are being plainly ignorant and misleading of significant drawbacks for the most vulnerable families if a $10 a day fee is implemented.

It’s not just about access. The Productivity Commission demonstrated that expanding childcare use through a flat-fee model would neither provide net benefit to children nor increase labour supply by any significant measure. If it doesn’t lead to more workers, if it doesn’t further improve outcomes for children, the only rationale for cheaper childcare at this stage is as a cost-of-living measure.

There are many more effective ways to help struggling families while ensuring wealthy families who can afford childcare still contribute a fair amount. You don’t get to own several houses or earn $400,000 a year and still have the taxpayer pay for your childcare costs. That’s just not how it works – especially not in a system where childcare is delivered by for-profit providers. Our progressive tax and welfare system is the most effective way to deliver cost-of-living support to where it’s needed most.

Childcare use in Australia is already widespread and extensive among all socio-economic groups except the most disadvantaged – the bottom 10 per cent of earners. If there are benefits to be gained from childcare, most children are already getting a fair amount.

Removing the work test for childcare subsidies does prioritise the needs of our most disadvantaged – but only if we save these children a spot. It’s time for advocacy groups and our leadership to focus on the families and children who are really doing it tough.