By Rachel Clun
Families should be able to send their children to daycare at least three days a week at a cost of no more than $10 a day, a think tank recommends, in an overhaul of the way early childhood education and care is funded.
While separate research estimated that such a shake-up would cost an extra $7 billion a year, the Centre for Policy Development found the government would recoup more than that amount with more parents returning to work and better outcomes for children.
A think tank has recommended a flat $10-a-day fee for childcare.Credit: Ryan Stuart
The centre’s chief executive, Andrew Hudson, said many families struggled to afford care and more than 100,000 of the most disadvantaged children missed out altogether, so it was recommending a simpler and more affordable system.
“Why is it that a six-year-old is entitled to universal education, but a five-year-old isn’t? That doesn’t make any sense,” he said.
“We’ve got plenty of universal systems and services in this country – public schooling, Medicare, superannuation. We want early learning to be right there with them.”
The centre recommends providing at least three days a week of free or low-fee childcare, with extra days available for a slightly higher set fee depending on a child’s needs. It suggests three days of free care for children from disadvantaged backgrounds, and up to five days free for the most vulnerable.
The reforms, which would be introduced over 10 years, would abolish the current system of subsidies paid to parents, remove the activity test and move to a model where childcare providers are funded directly by the government.
The centre recommends putting conditions on providers – including minimum quality standards; specified, “fair” wages for workers; and enrolment systems that prioritise children in need – if they wish to receive government funding.
The Productivity Commission’s draft report on the sector, released last year, estimated that introducing a $10-a-day flat-fee model would increase federal government spending on childcare, which is currently about $13 billion a year, by $7.3 billion a year.
Hudson said that cost would be “more than offset” by other benefits. He also noted the full increase would not hit the budget bottom line until the reforms were totally implemented a decade from now.
A previous report by the centre found the federal government would gain between $2.9 billion and $3.2 billion in additional tax revenue and an annual GDP boost of up to $6.9 billion as parents worked more hours or returned to work thanks to universal and low-cost childcare.
Hudson said the knock-on effects and long-term savings from reduced health issues, lower crime rates and lower welfare costs would also be immense.
“It’s clear that this new system would have a net positive economic benefit to the nation,” he said.
Georgie Dent, chief executive of parenting advocacy group The Parenthood, said the flat-fee proposal warranted genuine attention as the current system was complex and out-of-pocket costs were prohibitively high for many families.
She noted that Prime Minister Anthony Albanese had maintained he wanted the government’s legacy to be a universal early childhood education and care system.
“I do think that we have got an appetite for this reform that we haven’t previously had,” she said.
When asked last week about the prospect of moving to a flat-fee model for early childhood education and care, Treasurer Jim Chalmers said the government had been focused on extending access to subsidised care and had set aside funding for pay rises, but noted it had to think about the cost.
“I am personally, and the government is, enthusiastically supportive of the early childhood education and care sector,” he said.
“We’ve said that we’ve got an open mind to further changes in the future but recognising the fairly substantial fiscal constraints and fiscal pressures that we’ve got at the same time.”
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