The government’s release of the Mid-Year Economic and Fiscal Outlook (MYEFO) revealed significant upwards revision in expenditure on Family Tax Benefits and childcare fee subsidies, together totalling $5.6 billion.
These blowouts highlight the urgent need for crucial policy reform to reign in the increases, says policy analyst Trisha Jha.
“Spending on Family Tax Benefits is expected to increase $3.2 billion over the next four years. Expected growth in unemployment, combined with slow wage growth, means more reliance on Family Tax Benefits for many families.
“But in order to both cope with that and put the budget back on a track to surplus, there needs to be a change in the policy — including stronger means-testing for FTB,” Jha says.
“MYEFO also shows a $2.4 billion blowout in childcare subsidies over four years that exceeds what was expected in the May budget, highlighting that the government needs to urgently fix its policy.
“Childcare subsidies are already one of the fastest-growing areas of government spending, averaging 10.3% real growth over the past decade. When you consider the May budget forecast of 9.9% growth from the previous financial year, revising those figures even further upwards is extraordinary and is an indicator of broken policy.
“The government should consider revising the tranche of tougher mandatory minimum standards for staff ratios and staff qualification that are being phased in over the next couple of years. My research has shown that there’s very little evidence to suggest these things have a significant impact on children’s outcomes.”
Trisha Jha is a Policy Analyst at the Centre for Independent Studies. Her most recent research is Regulating for Quality in Childcare: The Evidence Base.