Home truths of universal childcare

Labor’s push isn’t the social good it is promising, and parents shouldn’t be penalised for wanting other options.

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Anthony Albanese’s quest to make universal childcare essential to his legacy as prime minister has run into shocking revelations about institutional abuses – yet Albanese’s goal still seems immune from the policy, financial and social problems inherent in this vision.

There are few deeper progressive faiths in Australia than espousal of universal childcare in institutional settings, approved by regulators, subsidised by taxpayers and proof of a caring and egalitarian society, with a coalition of support encompassing Labor, the Greens, much of the female vote, the unions, academic community and that touchstone of morality, the professional and corporate class.

The debate since the revelations of abuse of children has driven Albanese and Education Minister Jason Clare into a justified response. “I think it’s pretty bloody obvious that the system has failed parents here and that we’ve all got a responsibility to step up,” Clare told the ABC’s 7.30 this week.

His legislation is a mix of incentives and disincentives to improve quality, target the 4 per cent of centres below minimum standards and negotiate improvements with the threat to cut off subsidies.

Education Minister Jason Clare tabled legislation to parliament to lift child safety in early education and care services. Picture: NewsWire / Martin Ollman

Clare conceded that some operations “have put profit ahead of the safety of children” – alluding to a coming debate sure to target profit-based childcare. Significantly, he said he didn’t have a “silver bullet” to “guarantee every child’s safety”.

Each day about 1.4 million children aged zero to 12 years attend early childhood education and care at about 19,000 services across the country. The proportion of mothers with children aged zero to four years who participate in the labour force is 72 per cent, pointing to a social revolution across the past 40 years. The number of ECEC places for children has increased by 50 per cent in the decade to 2023 and nearly one-half of one-year olds attend some form of ECEC.

In its September 2024 ECEC report the Productivity Commission, responding to the government’s brief, said the goal should be a “high-quality universal ECEC system that is accessible, within the means of all families, equitable and inclusive for all children” – an ambitious vision that would require years to achieve. Its immediate recommendations were estimated to increase childcare subsidy costs by 37 per cent to reach about $17.4bn a year. This is another version of the grand Labor governance model – a centralised program of taxpayer support distributed across the country guaranteed to win social approval, justified as an economic reform to promote workforce participation and anchored to a liberated view of women seeking fulfilment in careers.

In a recent jarring warning, UNSW Business School professor of economics Richard Holden wrote in the Financial Review that Labor’s vision “has been in the works for years” and is the product of “lobbyists with good hearts but not so good ideas”. He forecast the unfolding direction “will add billions in costs without improving care, while leaving big productivity gains on the table”. Holden warned the nation was heading into a “costly mess” and a vision that “if implemented, will end in tears”.

He is not alone. In his path-breaking 2024 book, The Care Dilemma, British journalist and social analyst David Goodhart describes the prime feature of modern life, an “undervaluing of the domestic realm” – a paradox when more people and employers are accepting the shift to work from home.

In Australia, some childcare subsidies are close to $40,000 a year.

With the idea of a successful life now revolving around professional and career achievement, there is under way a massive transfer of taxpayer funds, personal energy and social status into the public sphere and away from the domestic sphere. It touches nearly every family. This trend is tied to a false consciousness – the great delusion of modernity – the belief that we care even more about our children.

Indeed, we care so much we insist that in the first three years of life our children must be subjected to a benevolent state bequeathing financial subsidies to ensure young children are placed in childcare because this is the superior model for their growth and development, a contentious claim where the evidence is disputed.

Recall that much of this thinking springs from the same intellectual reservoir that in the dying days of the Gillard government produced the National Disability Insurance Scheme and Gonski school agenda, schemes of soaring cost that delivered major advances yet were plagued by unsustainable flaws.

Goodhart calls for a policy rethink – effectively a revolt – based on the principle that “policy should support both work-focused and family-focused mothers”. This principle is anathema to progressive orthodoxy in Britain and Australia where, as shown by the financial flows, institutional-based childcare is the enshrined model.

Parents need real choices for childcare, including the option to be subsidised to stay home, says Judith Sloan.

In her many articles on this subject in The Australian, economist Judith Sloan has called for a “move away from our obsession with centre-based care”, raising several options – from child tax credits to tax deductions for home-based care, the purpose being the radical leap to giving women more options.

Holden provocatively asked why, instead of getting a childcare subsidy, every family should not get instead a tax-free child voucher for use at a centre, or for a nanny at home, or to pocket while caring for their children.

In 2019, in conjunction with Rosalind Dixon and Melissa Vogt, Holden outlined a reform model allowing parents to choose between getting the childcare subsidy or a tax deduction for childcare.

No household would be worse off. People could stick with the existing subsidy if they wanted or opt for the tax-deductibility option. The idea was to promote accessibility, affordability and competi­tion in childcare. Holden warns that while current abuses must be addressed, “a government takeover of childcare isn’t the answer”.

There are three policy issues here – an alternative model promotes competition by expanding supply; it promotes individual choice leading to more family satisfaction; and it promotes better social cohesion since all surveys show many women, if given a financial option, would work fewer hours or choose the home-care option. Indeed, the current Labor model works against competition and choice and is justified on a disputed foundation – that centre-based care is best for kids when it is best for some kids, often disadvantaged, but not for other kids.

In the recent US economic policy book Abundance, much loved by Jim Chalmers, the warning is stark about subsidising demand with limits on supply, the guaranteed consequence being higher prices – and higher subsidies. This is Australia’s recent past and its coming future. Childcare for an infant costs on average $36,000 in Massachusetts and $28,420 in California. In Australia some subsidies are close to $40,000 a year.

A recently launched grassroots campaign calls on the Albanese government to broaden the use of its childcare subsidy to include care at home by grandparents, nannies, au pairs and co-working spouses. Picture: Bianca De Marchi/AAP

The Australian data shows the Albanese government’s previous increase in childcare subsidies have been massively eroded by fee increases, a reality that must cast grave doubt on the workability of a model based on increasing subsidies – the heart of the Productivity Commission recommendation.

But to be fair to the PC, it was worried about costs. Indeed, its report raises serious questions about the value for money of the proposed expansion of childcare. Its cost estimate of $17.4bn a year underestimates the actual cost. It says more investment would be needed to rectify availability and inclusion gaps. Does anyone recall the massive initial underestimation of the NDIS cost?

In its report the PC assessed different ECEC models. Consider for a moment their economic value. Its preferred model – raising the maximum rate of subsidy to 100 per cent of the hourly cap rate on incomes up to $80,000 with half of all families eligible for a subsidy rate of 90 per cent or more – would mean an increase in costs of $4.7bn. What would be the benefit in more female participation in the workforce? The answer: “negligible”. Female participation is already high, no more meaningful gains there.

But the model initially preferred by the Albanese government – replacing the subsidy with a flat fee of $10 per child a day – was far more expensive and estimated to cost an increased $8.3bn. How many jobs would that create? An extra 7300. Think about that – an extra $8bn to deliver a touch more than 7000 jobs. How irrational is that?

What is the justification for such extra fiscal burdens to fund childcare expansion when the federal government is in deficit for the next decade, with Treasury saying tax rises and spending cuts will be required?

The PC report raises serious questions about the value for money of the proposed expansion of childcare.

Former treasurer Peter Costello has warned the burdens that social agendas are putting on government budgets are unsustainable – witness childcare, the NDIS and aged care – a story tied to the decisive shift in responsibility from the family to the state, a story loaded with adverse unintended consequences.

In relation to expanded childcare, there is no economic justification arising from more female participation in the workforce. The PC said all options meant higher demand for ECEC but “minimal changes” to labour force participation. Here’s the set-up: more fiscal cost, less economic gain.

Perhaps the justification lies in equity. Unfortunately not – there’s an ever bigger problem here. Consider the PC analysis of the Labor-attracted $10 flat-fee model – it says a “disproportionate share of the increased government support would go to families whose incomes are in the top 25 per cent of the income distribution (those with a disposable income over $160,000)”. Of course, Labor may not mind, given well-off professional women with political clout now constitute a growing pro-Labor constituency or, at least, an anti-Coalition lobby.

In fact, there’s a double problem. As the PC says, the kids who most benefit from childcare come from low-income and disadvantaged backgrounds while those who gain the least come from high-income families. What is the justification for a model that expands ECEC usage with a strong bias in favour of children belonging to the seriously better-off?

What, then, is the justification for such an expanded spending agenda? The obvious point resides in its political popularity. Indeed, it is fair to say expanded childcare now assumes the status of a social contract bordering on morality. The expectation is irresistible. Yet it is exaggerated.

British journalist and social analyst David Goodhart describes the prime feature of modern life, an ‘undervaluing of the domestic realm’ – a paradox when more people and employers are accepting the shift to work from home. Picture: Pier Marco Tacca/Getty Images)

Goodhart quotes a British analyst, Maria Lyons, saying: “The push to culturally normalise non-maternal childcare rests on the beliefs that childcare can be shifted from the home to the market with no adverse consequences for children, mothers or society; and that paid employment is both empowering and personally rewarding for women whereas homemaking and childrearing are not. While these beliefs are influential in academic and political circles, evidence suggests that they are not representative of the values and beliefs of the general population.”

He also quotes London-based researcher and writer Ellen Pasternack saying: “Because domestic labour is undervalued, there is a failure to recognise childcare as proper work unless it takes place in a designated workplace, by unrelated individuals who are employed to be there.”

A grassroots campaign launched two weeks ago by four Queensland mothers, under the title For Parents, calls on the Albanese government to broaden the use of its childcare subsidy beyond the existing centres to include care at home by grandparents, nannies, au pairs and co-working spouses, thereby allowing parents to keep their children close.

Co-founder Cecilia Cobb said: “For too long, government funding has favoured one model: traditional, centre-based care. But that model doesn’t work for everyone and it certainly doesn’t reflect the diversity of Australian families. Families shouldn’t be penalised for choosing care which works best for them.”

The petition, which now has more than 10,000 signatures, seeks a change in subsidy eligibility and a basic shift in policy direction given that childcare expansion over the past decade has been overwhelmingly through growth of private, for-profit, centres. The more the public is aware of this entrenched policy, the more public reservations will skyrocket.

The advocacy group is dismissive of the current In Home Care program, saying it is irrelevant to their demands with fewer than 1 per cent of families using the highly restrictive model under the program.

Cecilia Cobb, with baby George, watches as nanny Mary Pole reads to 3yo daughter Summer at their rural district home outside Brisbane. Picture: Lyndon Mechielsen

The defects in the current Australian progressive system may lie far deeper. New York-based American social worker, psychoanalyst and parent guide expert Erica Komisar argued in a February 2025 paper: “The inconvenient truth is that although the mental health crisis is multivariable and outside forces – which do play a part – are stressful, we as parents are primarily responsible. We are raising children who are self-centred, self-focused and without the inclination or ability to take on responsibility and commitment.

“A Pew Research Centre poll found that 18 per cent of 18 to 34-year-olds do not want to have children and only 45 per cent of young women in the poll want to have kids. They feel that having children is a burden which would require them to sacrifice the time, money and personal freedom. When they do have children, many do not want to raise them themselves. Women never before questioned the importance of mothering until these social changes shattered all prior evolutionary preconceptions and standards.

“Men and women were taught that children were an afterthought to their education, career and personal goals: the myth was born that they were self-sufficient beings who could raise themselves and be just fine. Women who wanted to stay at home with their children faced self-doubt and societal judgment. The rise of two-working parent families meant no one was home raising and nurturing children when they needed it most.

“There is nothing wrong with ambition. However, if we place our ambition above those we love, there is a price to pay.”

US academic Erica Komisar.

Her analysis led Komisar to offer unqualified advice to the Australian government: “Families should not be forced to place their children in institutional care due to financial pressure. The federal government should offer tax credits and family stipends that allow parents to choose home-based care or care by trusted relatives for children under three.”

The essence of progressive ideology, by contrast, is that childcare is either the desirable or, in the contemporary world, the best model for the infant’s growth and development. As other justifications for the state’s commitment to childcare erode, this has been elevated as the primary purpose for the project and the vast financial commitment being imposed on taxpayers.

Effective childcare and preschool can be an advantage for a child proceeding to primary school. This was reflected in the comment by Clare when interviewed by David Lipson on the ABC on July 2: “This is a service that helps our children get ready for school. Ask any principal at the local primary school and they will tell you they can tell the children that have been in childcare and preschool and the ones that haven’t.”

Much of this, obviously, is true. The larger truth is that each child is unique. Each child will respond in different ways, depending on background, family and age. Some children do better in formal care; other children do better in home care. Is this truth too hard to accept? Is it too hard to act on and offer genuine choice to Australian families without disadvantaging those who prefer the current system? Why does the Labor Party preach diversity yet deny diversity in its childcare policy? Can we not assess the current childcare experiment – because it is an experiment – with an open mind?