Early childhood experts including children’s advocates, parent bodies and providers agree that all children should be eligible for at least two days of subsidised early learning. Note this is subsidised access not free access; parents pay a co-contribution fee according to the means test on the subsidy (as they do currently). This does not mean that more families will access services but it will preserve the access families currently have.
As currently presented in the package, the proposed activity test will mean that families with one or more parents not working for more than 8 hours per fortnight will lose their eligibility for subsidy altogether. Low income families will still have access to 12 hours per week but this is a significant reduction from their current entitlement to 24 hours per week and it is insufficient to cover two days in a long day care centre. Advocates are unanimous in their concern about the impact this will potentially have on children’s participation, particularly vulnerable and disadvantaged children.
The rationale for the Government’s proposed activity test is to more closely align the subsidy to activity and encourage increased parental workforce participation. The early childhood education and care sector has been supporting families to participate in the workforce for more than 100 years and is absolutely committed to this goal. We understand the economic benefits for families and ultimately children, as well as the social and economic benefits for the country. At the same time we are committed to children’s long term educational outcomes – which actually deliver a higher economic return over the long term than increasing workforce participation. These are not competing priorities but rather complementary policy goals.
There are significant concerns amongst experts that the activity test may destabilise families and jeopardise workforce participation by reducing the participation of children whose parents are in irregular, insecure or variable work. These children are often those who stand to benefit the most from quality early learning programs.
Parents returning to work after parental leave need to have children settled into early learning before they start work, it is a pre-requisite rather than an incentive to work. Making the eligibility for subsidy dependent on securing work first is back-to-front.
Providers are broadly in agreement that providing children with two days per week does not require subsidy for 24 hrs per week under the new subsidy (as it is more generous than current subsidies) but must be more than 12 hours – consensus is strongest for 18 hrs per week. There are a number of potential savings measures that could be deployed to allow for increased investment in a universal level of provision, including changes to the taper rate and annual cap.
The new activity test is much stronger than the current test that applied to the Child Care Rebate so there will still be much closer alignment between activity and subsidy – for many families their eligibility may still reduce but two days per week provides some stability.
Specifically, we are calling on the government to amend the package, as follows:
- Provide all children with two days of access (apply the proposed activity test above two days):
- Significantly reduces the complexity of the proposed subsidy, reducing the activity test to two tiers (from three)
- Ensures a minimum level of participation that benefits children – there is strong research evidence and practice expertise that less than two days does not deliver the same benefits
- Reduces the variability of access that may result from changes in family circumstances such as unemployment or illness
- Ensures children have continuity of participation and are able to form stable attachments to educators and other children
- Provides a stable base for parents seeking to enter or re-enter the workforce after parental leave – particularly long-term unemployed, casual workers and unstable employment
- Safeguard higher levels of access for low income families (below $65,710k annual household income), Aboriginal and Torres Strait Islander families, and children with a disability,
- The majority of disadvantaged children start school behind their peers and rarely catch up
- The UK effective Preschool and Primary Education study suggested that disadvantaged children benefit up to 30 hours per week
- Aboriginal and Torres Strait Islander services transitioning to the mainstream subsidy model currently face a dramatic reduction in children’s participation because it is estimated that 46% of low income Aboriginal and Torres Strait Islander families will not meet the activity test (Deloitte)
- The economic benefits of the Package will be enhanced from providing access to vulnerable children to quality early learning - estimated by PWC to be up to $13.3 billion to 2050
- Increase transitional provision to six weeks
- Families will have to report changes to their activity and income as soon as practicable which may lead to a reduction or complete removal of Child Care Subsidy within two weeks of the change occurring. This has the potential to be extremely disruptive for children’s early learning, early childhood services, and parents who may lose their child care place.
- We suggest that providing six weeks to transition from one level of payment to another level is warranted. This will provide families with a platform to find more work or increase their activity level.
- This will provide better transitional arrangements for families so they don’t incur debts or sudden reductions in their entitlements – especially for those in casual or inconsistent work arrangements.
- Families should have up to six weeks to make alternative arrangements if their circumstances change beyond their control.
These amendments will secure Australia’s educational performance, future innovation and productivity though enhanced children’s development.
The Hearing can be streamed live at:
These priority amendments are proposed by:
Early Childhood Australia
Sam Page, CEO
Media contact: Carolin Wenzel 0475 55 999
Cassandra Goldie, CEO
Media contact: Fernando de Freitas 0419 626 155
Lin Hatfield Dodds, National Director
Media contact: Tanya von Ahlefeldt, 02 6249 6717
Early Learning Association Australia
Shane Lucas, CEO
Contact: 0417 308 751
Family Day care Australia
Andrew Patterson, CEO (Spokesperson)
Media Contact: Sasha Westwood, 0450 968 768
Australian Community Childcare Association
Prue Warrilow, National Convenor
Contact: 0408 020 904
Early Childhood Management Services (ECMS) (Victoria)
Bernie Nott, CEO
Media contact: Angie Farrugia 0422929450
KU Children’s Services
Christine Legg, CEO
Media Contact: Haydn Murray 0437 030 273
Secretariat of National Aboriginal and Islander Child Care
Gerry Moore, CEO
Media contact: Jessica Brennan 0421 334 918
C&K (Crèche and Kindergarten Association Ltd)
Michael Tizard, CEO
Media contact: Gabrielle Corser 0429 700 831
Catherine Yeomans, CEO
Media contact: Anne-Marie Baker 0475 959 494
Jo Briskey, Executive Director
Contact: 0423 262 449