There are few issues that are more likely to raise women’s passions than access to appropriate early childhood services. While it only affects some women at any one time, the issues tend to stay in the minds of parents for a long time after the need is no longer relevant. Being able to choose when and how you return to paid work is still a problem 40 odd years after I wrote a very early child care proposal for the Whitlam Government. Paid parental leave makes some difference for the first few months, and most parents stretch their time out for up to a year or maybe more. However, for too many women the timing is seriously affected by the lack of care for the under twos.
An article last week in Sydney Morning Herald Fairfax started with Almost one-third of Sydney childcare centres have no vacancies, forcing some parents to wait nearly two years for a place, with neither Labor nor the Coalition outlining a solution to the childcare crisis experts say is hampering women’s workforce participation: and later the above article identifies fee levels ranging from $55 per day to over $160!
Yet there has been limited interest from the major parties to recognise availability is a serious issue because of serious flaws in the national policy for funding children’s services. It is based on assumptions that a ‘market’ model for child care will somehow result in providing an appropriate spread of services at affordable prices. Despite the model now being in place for more than 15 years, it doesn’t provide for the needs of far too many users and potential users.
The Howard government abolished the contract with community based services and left supply decisions to the market. This has resulted in the considerable expansion of services but not necessarily providing services, where and what were needed. There are many places where they are not needed, too few places where they are and fees that vary substantially on the basis of what the market will bear, rather than the quality of care.
The present system has no contract – or even real contact – between centres and the government, so there is no way to require improved access, changed locations of services, or operating hours or setting maximum fees. The result is that there too many services that do not meet the needs of employers, parents or children.
The current child care system works on the false assumptions that parents have multiple choices of child care services and providers eagerly jostle to meet the children’s diverse demands! The funding is a de facto means tested voucher system that subsidises fees up to a set amount per child (Full time $199.50 pw). Another payment is available to cover the gap fees that most parents face but only up to about $150 per week. This fee relief is paid to parents or via parents, which leaves them responsible for influencing the supply and costs of services. Most parents want quality care but can’t shop around so take what is on offer, if anything is.
There are massive shortages of places for those under two. This gap is not surprising because there is no incentive to provide the more expensive baby places as the base subsidy is identical for babies and 4 year olds, despite the former needing more than double the staff. So what entrepreneur will choose to offer baby places in areas or build services with high land costs?
The Government needs to completely re-jig the funding system so it set up conditions and costs, as happens with nursing homes. They need to control and fund services that are in appropriate locations, places for different age groups and locally appropriate flexible hours of operating. This should also include some levels of fee control, to allow break even or profit levels but not excessive returns. The market model has shown it cannot meet diverse consumer needs under the current system so this industry should be deemed a market failure in need of more government intervention.
Yet there are no proposals to fix the current problems, apart from some initiatives on offer by the Greens. They are offering some capital and extra funding for the not for profit sector to fill some of the market gaps shown above, extra money for higher cost children, but no control over fees or location of services. The other election proposal is the referral of child care to the Productivity Commission, but I doubt they will suggest more control as their bias is market oriented.
The fuss about nanny care shows the many flaws in the system, but funding for nannies will undermine the assumption that government funding goes to services that are obliged to offer quality care. The Government should make it clear that the public subsidies are for quality childcare that meets clear standards as well as ensuring that parents can be economically or otherwise engaged.
Fixing the problems
I am therefore suggesting we move back to a model of funding care that ensures that the funding body and regulator has the control needed to ensure that the $4B annually spent on these services to children are designed with their needs in mind and not just commercial returns.
There needs to be some serious changes that achieve the following goals:
- Control the distribution of services to ensure that the patterns of available services reflect the age groups population of children living nearby or with parents working in the area, and likely to need services
- Ensure that there are adequate places available for primary parent who wish to return to work after the 12 month time frame of parental leave
- Ensure that the hours of services are sufficiently flexible to cover common patterns of shifts, starting and finishing times of user parents.
- Control costs so services can break even, including returns on investment but not excessive costs for younger children etc.
- Match quality requirements with funding so differential needs of ages and special needs can be met as well as majority needs
- Ensure that services are culturally diverse so all parents feel safe and welcome.
This can be achieved by the following policy changes
- A contractual relationship between the government and the service providers that is based on the services ability to meet local needs.
- One option is a basic operational subsidy which replaces the rebate and fund an agreed proportion of an agreed budget to set fees, staffing, opening hours and types of places available. The balance would come from parental fees and fee relief.
- Another option (both can operate) is to expand the current Budget Based model of funding children services which funds an agreed budget for those services that serve more diverse needs and fees need to be kept low. This model currently works well to allow most Indigenous services to meet local community requirements.
- Ensure that all early childhood services create diverse cultural acceptance by mandating Indigenous cultural awareness and cultural safety training
- Fund services to offer home based care connected to a centre based service so staff and children are part of the wider system, but services are able to be flexible for shifts and other needs.
We wait more detailed proposals from the major parties!