Free childcare for families earning less than $80k key recommendation from inquiry

Aussie families who can’t catch a break and would love access to an essential service will be buoyed by this recommendation.

The federal government should abolish its childcare subsidy activity test and make childcare free for families earning less than $80,000, the Productivity Commission has found.

The commission has made 56 recommendations for the government to reform early education and after-school care, making it more accessible, inclusive and affordable for all Australian families, including those on low incomes and living in regional and remote areas.

It was tasked with finding out how to make early childhood education and care (ECEC) universal in Australia by the federal government.

The commission found to achieve a long-term goal of a universal ECEC system, the government should firstly abolish the activity test and increase the rate of the childcare subsidy to 100 per cent for low-income families.

It would mean families on incomes up to $80,000 or families with children aged under 5 with an income of $140,000 would receive free childcare.

The subsidy would then filter down to zero for families with an income of more than $500,000.

If the changes are adopted, the commission found every child aged from 0 to 5 would have access to ECEC for at least 30 hours or three days a week for 48 weeks of the year.

It would increase demand by 10 per cent and also increase the childcare subsidy cost from about $12bn a year to $17.4bn a year.

Prime Minister Anthony Albanese, king of the kids. Picture: NewsWire / John Appleyard

Early Childhood Australia (ECA) chief executive Sam Page said he supported the process of the commission’s inquiry and the introduction of a child entitlement to high quality ECEC regardless of parental workforce activity in principle.

“ECA has consistently advocated for the childcare subsidy activity test to be scrapped, as it is preventing many children at risk of educational disadvantage from accessing early childhood services,” she said.

Ms Page said addressing affordability was urgent and the Productivity Commission echoed the ECA’s calls for the abolition of the activity test and childcare subsidy reform.

“If implemented to their full extent, these recommendations have the potential to make early childhood education and care more affordable for many children and families,” she said.

“The sad fact of the current system is that the children who are most likely to benefit from it are also those that are most unlikely to access it, whether it be because of regionality, family circumstances or poverty.”

The reforms wouldn’t come cheap, Education Minister Jason Clare said. Picture: NewsWire / Martin Ollman

Education Minister Jason Clare said these recommendations would require a substantial investment.

“These recommendations aren’t just about the million families that benefit from early education and care at the moment,” he said.

“This report reminds us that there are children who are missing out, about one in 10 children aged four, about one in four children aged three.

“Particularly children from poor families, from the regions or children with additional needs.

“One of the things it recommends is changes to the childcare subsidy.

“It also recommends other changes as well, in particular to the activity test, but also making early education and care more available where it doesn’t exist at the moment.

Early Childhood Education and Youth Minister Anne Aly said the government had made childcare cheaper and increased the wages of childcare workers. Picture: NewsWire / John Appleyard

Youth Minister Anne Aly said the government asked the commission to provide guidance on how it could achieve universal ECEC, which they would now go over and devise a shared vision.

She said the government had already made childcare cheaper by 11 per cent for families across Australia and had increased early childhood education and care workers’ wages by 15 per cent.

“If we want to chart that pathway to a universal early childhood education and care system, the first thing we need to do is make sure that we have a strong, sustainable and supported workforce,” she said.

“We also introduced $72m worth of professional development and paid practicums for early childhood educators, as well as free TAFE, which has now seen an increase in the number of early childhood educators since we were last in government.”

Shadow Minister for Early Childhood Education and Youth, Angie Bell said Labor continued to talk big on childcare but the reality was there were families who continued to miss out or pay higher costs.

“In the last 12 months, out of pocket costs have increased by 8.4 per cent, and Labor’s $4.7 billion cheaper child care package hasn’t delivered a single place for families without access to early learning,” she said.

“The Coalition is currently making our way through the Productivity Commission final report which includes more than 56 recommendations and almost 1,000 pages of information, data and findings, and a response will be provided in due course.”

Greens senator Steph Hodgins-May supported the reforms and said the only question was when would Labor implement the recommendations. Picture: NewsWire / Martin Ollman

Greens ECEC spokeswoman Steph Hodgins-May said a draft copy of the reforms had been with Labor since June 28 and wanted to know when they would deliver on them.

“With rents nearly doubling the rate of wages, food prices rising nearly 20 per cent in the last four years, families need as much support as they can get right now,” Senator Hodgins-May said.

“Every day that Labor delays implementing these critical early childhood education reforms, kids miss out on early education and parents miss out on important paid work.

“The Australian Greens welcome the report’s calls for all children aged 0-5 years to have at least 30 hours of care per week, increased access for the most disadvantaged and remote communities, removal of the punitive childcare subsidy activity test, and greater inclusivity.

“These are essential steps towards universal, early years education, which the government could implement today.

“But let’s be clear – early years education is a fundamental right and should be completely free, just like primary and secondary school.”

Originally published as Free childcare for families earning less than $80k key recommendation from inquiry