New child care investment welcome, but overall package is unbalanced and unfair

11 May 2015

Responding to the announcement of the Federal Government’s ‘Jobs for Families’ package, ACOSS has welcomed the effort to simplify and strengthen the early childhood and education system but challenged the overall fairness of the package.

“These changes to child care announced yesterday will deliver a simpler system and increased investment in early years education and care. This is welcome. However, the benefits of the package will not be fairly shared,” said ACOSS CEO Dr Cassandra Goldie.

“As a total package, the reforms to family and child care payments are unbalanced. Very low income families are being asked to foot the bill for generous subsidies to those who are already doing well financially. In addition, the package does not strike the right balance between workforce participation and child development, with some vulnerable children worse off.

“ACOSS broadly supported the Productivity Commission’s model for structural reform of the payments system and is disappointed that the Government has rejected key elements. Specifically, the Commission recommended that families on high incomes receive a base subsidy of 20% of the benchmark costs of care. The Government has instead announced it will adopt a 50% threshold for families on incomes of $170,000 and above. This has significantly increased the costs of the package, which the Government is now seeking to pay for through cuts to family payments.

“It is difficult to reconcile the generous assistance being extended to families in the top 25% of incomes with the severe cuts to payments for families struggling to make ends meet. The package includes the cuts to family payments announced in the last Budget, up to $60 a week for single parent households, while reducing child care subsidies for families locked out of paid work.

“We agree with the Government that child care subsidies are not welfare payments, but they should be targeted to those who struggle with child care costs. Above all, child care subsidies are an investment in the education of young children.

“Harsh activity tests will mean that children in disadvantaged families will have their access to early childhood education halved from 24 to 12 hours a week. This flies in the face of all the evidence about the importance of early childhood education on childhood development and lifelong learning. This is a short-sighted reform which will do nothing to support parents to get a job. If anything, it will place yet another barrier in the way for parents who are looking for paid work.

“Australia spends less on early childhood education and care than most OECD countries: 0.6% of GDP compared to the OECD average of 0.7%. Additional investment in the system is therefore a priority, but it must be targeted to those who most need and will benefit from it.

“We welcome the additional support for at risk and vulnerable children and for those with special needs through the additional Child Care Subsidy and Inclusion Support Program, but believe that the activity test should be reformed so that all children can access a minimum of 2 days early childhood education per week.

“We are also anxious to ensure that services for Aboriginal and Torres Strait Islander children and their families are strengthened in this reform process.

“The announcement of further changes to Paid Parental Leave is unexpected, and will leave many Australian families worse off than their overseas counterparts. The Government scheme was always intended to complement workplace schemes and together these programs brought Australia closer to 26 week minimum provided in many other OECD countries.

“ACOSS is very concerned that this package, the centrepiece of the 2015-6 Budget, does not meet the fairness test. We call on the Government to rethink and refocus this package to improve the lives of families locked out of paid work and the life chances of their children,” Dr Goldie said.

Media Contact: Fernando de Freitas 0419 626 155

ACOSS Briefing Note: Reform of child care and family payments.