We continue to throw money at parents for childcare year after year, despite the fact it only drives up prices. There’s a better way.
Debate is currently raging in Parliament over the government’s proposed changes to childcare subsidies. It wants to streamline several subsidies into one, and then increase this single subsidy – a measure popular with working mums.
But the government squeezed the proposal into its Omnibus Savings Bill along with unpopular cuts, such as reductions to family tax benefits, in an attempt to force through billions in budget savings.
Senator Nick Xenophon effectively killed off the package on Tuesday by pledging to vote against it. And that’s a good thing, because giving parents more subsidies is ill-considered and counter-productive.
Childcare subsidies help parents get their foot in the door in the short-term, but ultimately they only drive up costs. That’s why childcare prices are rising at 4-5 times the rate of inflation.
This is because subsidies only boost demand, not supply. Any parent will tell you that demand isn’t the issue here, supply is.
Childcare needs to be more affordable, but to do that we need to change the policy approach. There are three options.
Tax experts have long advised government to bite the bullet and make childcare tax deductible in its entirety. This will still drive demand to some extent but it will be much easier for parents to equate their income with the cost of childcare.
Secondly, the nature of childcare as it exists is that it is strictly regulated. That makes perfect sense; nobody would trust their kids with these centres if there wasn’t some accountability.
We are overdoing this and hindering choice.
As the Productivity Commission noted, childcare centres should have more accessible hours and a variety of choices. With most centres open from 8am until 6pm, parents are dropping their kids off and rushing to work. At the same time, not everyone needs full-day childcare.
Practical red-tape repeal will go a long way.
The third solution is the most controversial, but a humanitarian opportunity too.
Beyond calling for more places in existing centres, we should think about using the energy of migrant workers. The skilled migration program should be changed to seek out low-skilled childcare workers to help create pathways to childcare centres.
These workers aren’t likely to be qualified for childcare work in its entirety, but they could bridge the gap by helping us in our homes or in community centres run by local governments or non-profits. Obviously we would pay them a fair and decent wage, but by being lower-skilled it wouldn’t be as expensive as childcare services now.
Yet these aren’t the solutions we hear from politicians.
They go for the low-ball cash-splash that is driving up prices.
As the price increases continue, more parents will be forced to choose between work and childcare. That’s a failure of policy and has negative outcomes for children and the economy.
The status quo in childcare policy isn’t working. We need a different approach.
Conrad Liveris is a workforce diversity specialist.