Australia (Commonwealth)_Two years ago, Jessica faced the challenge of high childcare costs in Melbourne, with a daily expense of $176 for her daughter. Unfortunately, starting from July, the fees are set to rise even further to $204.40, resulting in a $26.40 increase. This situation has made Jessica reconsider the possibility of having a second child, as she anticipates spending over $1,000 per week on childcare fees for the first five years of her daughter’s life. Jessica describes the situation as being akin to sending her child to a private school.
According to Jessica, the introduction of the government’s childcare subsidy, scheduled to take effect from July 10th, has led daycare centers to raise their rates. However, due to limited availability, parents like Jessica have no choice but to accept these increases, as there is a two-year waiting list to get into nearby centers. She expresses frustration at the situation, feeling that the new subsidies have been overshadowed by the rising fees imposed by childcare centers.
The government’s $5.4 billion scheme aims to increase the maximum subsidy rate from 85% to 90% and provide a more generous income test, benefiting around 1.2 million families across Australia. Under this legislation, the family income limit is being raised from $356,756 to $530,000 per year. Nevertheless, experts have cautioned that early learning centers may take advantage of these changes by raising their fees, potentially resulting in higher costs for parents.
Labor estimates suggest that families with a combined income of $120,000 and one child in care could see annual fees reduced by around $1,700. Furthermore, families with a combined income of $80,000 or less will see the subsidy rate increase to 90%. Additionally, the federal government has increased the baseline number of hours of care eligible for Indigenous children to 36 per fortnight.
Lisa Bryant, an education and care consultant, views the subsidy as a partial solution and believes it does not go far enough. She explains that providers may increase fees to cover the additional costs resulting from wage increases, while others may simply view it as an opportunity for greater profit. Bryant highlights the need for government funding of these services and suggests that various entities, including private equity providers, real estate agents, and property developers, are viewing childcare as a lucrative avenue.
To address these concerns, the consumer watchdog is conducting an inquiry into childcare services and is expected to deliver an interim report to Treasurer Jim Chalmers, with a final report due in December. Jay Weatherill, director of early childhood group Thrive By Five, emphasizes the urgency of action to prevent private providers from exploiting the subsidy and engaging in excessive fee increases beyond rising costs.
In response to these concerns, Treasurer Jim Chalmers acknowledges the existence of price caps in the system but states that he is working closely with the Australian Competition and Consumer Commission to determine whether further changes are necessary. He emphasizes that substantial assistance will still be provided for early childhood education, as opposed to providing no help at all.
Prime Minister Scott Morrison acknowledges that while costs will drop for many parents, some may experience an increase in July due to inflation. He highlights that the subsidies, even without the increase, would not have prevented the rise in fees. Education Minister Jason Clare echoes the sentiment that the subsidy is only a starting point and mentions an ongoing productivity commission focused on improving affordability and access in the long term. The government is also exploring the possibility of a universal early education system, similar to Medicare, to ensure that all children receive a strong start in life.
Overall, the government is taking steps to address the rising costs of childcare and provide assistance to families. However, there are ongoing challenges, and further action is necessary to ensure transparency, accountability, and affordability in the sector.
