Thousands of Australian families struggle to make ends meet as the costs of childcare continue to rise. In the aftermath of the Australian Federal election, we investigate what the two major political parties intend for the future of Australian childcare.
What was the Liberal budget for childcare in 2015-2018?
Over the past year, the Coalition government has increased payments to low and middle- income families through the new ‘childcare subsidy’ which combines several payments into one. In order to receive a subsidy, the government has instated an ‘activity test’ whereby the number of subsidised childcare hours that families have access to per fortnight is calculated.
Currently, a family who receives up to $67,000 of income is entitled to 85% of childcare fees paid. This reduces to 20% for those who earn an income of $341,250 while families who earn $251,250 and above do not receive subsidies.
According to the Liberal Party, a “typical” family saved approximately $1,300 per annum under the 2015-2018 budget, which helped about 1 million families. As part of these changes, the Coalition put an extra $2.5 billion into the childcare system.
The Coalition has not suggested further changes to their existing childcare system, however, Treasurer Josh Frydenberg has said a review will take place.
What is Labor’s campaign promising?
Labor made the robust promise to dedicate an extra $4 billion over four years towards reducing childcare fees. This money would allow for families earning below $69,530 to receive free childcare (provided the fees are under $11.77 per hour).
Labor says that approximately 887,000 families would be in a financially stronger position as the average annual savings would be around $1,200 per child, depending on a family’s income level.
Labor has publicly committed to permanently funding the preschool program. Labor says this will cost about $1.8 billion for the first four years and about $8.6 billion over the next decade.
However, the Grattan Institute, a public policy think tank, has warned that Labor’s policies could have childcare centres tempted to increase their fees.
Furthermore, Chiang Lim, the NSW CEO of the Australian Childcare Alliance (ACA) says, “voters are looking for governments that can make sensible decisions to solve their everyday problems. Young parents and childcare service providers just want common-sense solutions especially when market-forces fail”.
We’ve seen the implementation of Liberal’s childcare policies, but what impact would Labor’s proposed policies have?
The substantial amount of money promised to childcare facilities comes with significant risk. Education Minister Dan Tehan says, “It is up to the market to make sure that wages increase because any other method will cause a distortion”.
Furthermore, Professor Robert Breunig, the director of Tax and Transfer Policy Institute at ANU believes that “it’s going to be very difficult to track what companies do with the money… in this case, I think the money would just be a handout going into the pocket of the firms”.
By cutting through campaign slogans and advertising, we are able to decipher what the two major political parties are proposing for a more stable and affordable future for Australian childcare.