The reason childcare is unaffordable

A Centre for Independent Studies (CIS) report released today confirms the conclusions of the Senate Select Committee on Red Tape, that childcare is unaffordable for many parents because of red tape.

The CIS report notes that, “Even after claiming subsidies, parents’ out-of-pocket costs have continued to grow each year. From 2011 to 2017, average weekly out-of-pocket costs increased by 48.7% in real terms.”

The report points to the impact of the child to staff ratio, which has led to an increase in the childcare workforce by 72% since 2010, while the number of children in childcare has increased by just 46%.

It also notes that 85.2% of childcare contact staff now have a relevant qualification, compared to 68.9% in 2010, with the number of diploma-qualified staff increasing by 85% since 2010.

“Staff costs are by far the biggest overhead for a childcare operator. With such substantial increases in staff numbers, plus the higher remuneration expected of those with qualifications, it is not difficult to see why childcare has become so expensive,” said Senator Leyonhjelm.

“The Senate Red Tape came to the same conclusion in its interim report released on 15 August,” Senator Leyonhjelm said.

“The Senate report made a number of recommendations aimed at easing the burden on parents. If implemented, these would facilitate a reduction in childcare costs and, hopefully, a reduction in the cost to taxpayers.”

The recommendations of the Red Tape Committee are:

The committee recommends the Australian Government, through the Council of Australian Governments, expeditiously work toward reducing the regulatory burden in the Family Day Care sector, including by removing limits on the number of educators in each service.

The committee recommends that the Australian Government, through the Council of Australian Governments, promote and/or develop an evidencebase for staffing ratios and staffing qualifications in early childhood education and care, as a quality component of the National Quality Framework.

The committee recommends that, following establishment of the evidencebase for staffing ratios and staffing qualifications in early childhood education and care, the principles of the National Quality Framework be reviewed to ensure they appropriately reflect the evidence-base.

The committee recommends that, in reviewing the principles of the National Quality Framework, Australian, state and territory governments recognise that formal qualifications are not the only prerequisite for the provision of high quality child care, as this can also be provided by parents.

The committee recommends that the Department of Education and Training provide a detailed annual report to the Department of Jobs and Small Business, to provide greater transparency about red tape reductions in early childhood education and care.

The committee recommends that the Department of Education and Training and the Department of Jobs and Small Business report in greater detail on the regulatory effect of implementing the Child Care Subsidy, including in relation to Activity Test.

The committee recommends that the Australian Government review the objectives of fee assistance to ensure that it is actually targeting maternal workforce participation and children from disadvantaged backgrounds.

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