The Parliamentary Budget Office reported in its medium-term spending projections that the decade 2002–03 to 2012–13 saw average annual spending growth on childcare subsidies reach 10.3 per cent, forecast to slow to 4.9 per cent over the decade to 2022–23.
This year’s budget forecast 9.9 per cent real growth from 2013–14 to 2014–15, and a massive 18.5 per cent real growth to the end of the projections period in 2017–18.
Combine these startling figures with the fact that MYEFO has revealed a 2014–15 budget deficit of $40.4 billion. It becomes very difficult to see how the government’s revamped "families" package (which reportedly includes scaling back Tony Abbott’s signature paid parental leave scheme) can reasonably include "new" money for childcare.
"Unfortunately, the explosion in spending has consisted of subsidies for a hybrid of childcare and preschool where mandatory minimum standards have been increasing — and the beneficiaries have mostly been comfortable families."
MYEFO has shown a significant upwards revision on childcare spending estimates, partially as a result of ‘higher than expected’ fees. Consequently, the families package, when it is announced, will most likely merely involve reallocating the money earmarked in the budget’s contingency reserve for paid parental leave to cover the shortfall in childcare.
This might seem a workable solution, until one considers that the expansion of paid parental leave was meant to be paid for with a 1.5% levy on business (currently unlegislated). It is safe to say that PPL is an unfunded policy. As a result, the rapid growth in spending on childcare is unfunded as well.
It is both understandable and noble to want to see more money go towards helping vulnerable children access good-quality care in a way that could improve their life prospects. But the situation with the budget means the only way it can be funded is to change the overall shape of the system.
There are three distinct reasons why programs designed for children before they start school exist. One is simple: it’s childcare, so that children can be safe and happy while their parents are at work. Another is preschool: a properly-designed program to help children transition into school.
The third is the most complex: a tightly-targeted early childhood intervention, intended to provide specialised early education, often with an in-home or parental component designed to boost effective parenting, so that the compounding negative effects of disadvantage are reduced over the life course.
It’s this third type of early childhood program that could use more funding. Unfortunately, the explosion in spending has consisted of subsidies for a hybrid of childcare and preschool where mandatory minimum standards have been increasing — and the beneficiaries have mostly been comfortable families.
From the 1st of January 2012, a new national system of regulation for childcare was introduced. The National Quality Framework is aimed at increasing the quality of childcare services through stricter minimum standards and a more rigorous quality assessment process.
I have conducted research which draws on studies of childcare from both Australia and overseas to suggest that the two main areas where the government has mandated increased minimum standards — staff-to-child ratios and staff qualifications — have no significant or consistent bearing on children’s outcomes. These requirements also indisputably impact the bottom line of both households and the government.
The role of childcare subsidies in supporting female labour force participation should not be discounted, but deregulation — not more spending — is the way to ease the problems of affordability and availability for working families.
Rather than spreading the expenditure to achieve marginal increases in quality for all children, money spent on early childhood education should be targeted to ensure access to quality care for children from disadvantaged backgrounds. The evidence of impact for these children is very strong relative to the evidence for other groups of children.
There is no more money for childcare, but there is a lot of room to fix our policies and re-focus our scant resources so that the most vulnerable children can have a better chance.
Trisha Jha is a policy analyst at the Centre for Independent Studies.
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