Labor’s dodgy plan to spend billions it doesn’t have on childcare fantasy

It was only a matter of time before Labor announced its plans to spray around the extra tax revenue it expects to reel in as result of its multitude of additional tax imposts.

Mind you, this additional revenue is not in the bag, both because some of the measures may never pass the Senate and the inherent uncertainty of Labor’s revenue projections.

Who can forget Wayne Swan’s assumptions about the revenue that was going to be achieved from the mining tax, revenue that was spent several times over?

In the end the mining tax actually cost the government more than any revenue received.

It was always odds-on that Labor would commit more to childcare subsidies as well as ­directly fund higher wages for childcare workers.

Actually, there was an attempt by Labor’s former hapless childcare minister, Kate Ellis, in the dying days of the previous Labor government, to boost the wages of some childcare workers, but it was so badly executed it’s not clear what happened to the money.

There is no reason to think Labor’s extra $4 billion in childcare subsidies over four years will result in a different outcome, given the history of the commonwealth government’s involvement in childcare.

The end result will be higher fees, with the gains mainly snaffled by centre owners. Note that the unsubsidised daily fee for childcare is now close to $200 a day in inner Melbourne and Sydney.

All that stuff from Labor about the Australian Competition & Consumer Commission getting involved won’t really do anything.

Once upon a time, the commonwealth had almost nothing to do with childcare. Regulations were handled at the state level and there were some subsidies handed out at that level too, although directly funded community centres and family daycare were both common. Fast-forward and the commonwealth will outlay $8.3bn in childcare subsidies in 2019-20. According to the budget papers, the outlay for childcare subsidies will rise to $9.6bn in 2022-23. This is the figure before the turbocharging proposed by Labor.

The commonwealth also has control of regulation of the sector, with costly and difficult to justify impositions in relation to staff-to-child ratios, the qualifications of staff and the quality of the childcare centre premises. As for Labor’s proposal to increase the wages of childcare workers — these costs make up the majority of centre costs — by an average of $11,500 a year over an eight-year period, how are other workers delivering human services going to react?

There will be a lot of hands up for this same deal. This is surely another instance of Labor trying to usurp the role of the Fair Work Commission in setting minimum award wages and conditions of workers.

Notwithstanding the hiccup of ABC Learning, a company that ­really came unstuck because of its overseas expansion, childcare is a beautiful industry for centre owners, including the large corporate groups. With the government picking up most of the tab for parents, there is really nothing much that can go wrong. And over-regulation of the sector plays into the hands of bigger operators while forcing out the smaller operators.

The centre owners will no doubt demand even more — they don’t care much for the imposition of the activity test and the reduced hours for some parents who don’t meet the test. Labor will probably cave in on this issue, too.

Labor’s electoral pitch is based on offering more free stuff, using other people’s money, and ignoring the unintended consequences.

Expect further announcements of more free stuff.