In recent weeks, the media has been saturated with solutions to the childcare problems Australia faces. With the Abbott government's Productivity Commission Inquiry into the sector (set up due to persistent complaints about lack of availability and prohibitive costs) planning to release a draft report in July, such 'solutions' are likely to continue.
In the meantime, childcare operators and stakeholders have come out of the woodwork to suggest magic bullets for the problems faced in the sector. Making childcare costs fully tax-deductible is a popular argument, though its advocates have not presented strong reasons why the benefits outweigh significant costs to the budget in terms of foregone revenue. Another chestnut is extending the childcare rebate (the non-means tested benefit which covers fees per child up to $7,500 per annum) to nannies and other in-home carers.
What's more interesting in this discussion, however, is what is not being said. The national conversation has been about fundamental changes to taxation law and/or a higher burden on taxpayers, instead of what's driving the problem: regulation.
Approved childcare services (that attract the childcare rebate) are regulated through a federal and state compact – the National Quality Framework (NQF). The NQF mandates minimum conditions for long day care and family day care services; conditions include 'improved educator to child ratios' and 'educators with increased skills and qualifications.' The Regulatory Impact Statement for the NQF, the Henry Tax Review and the Productivity Commission have all conceded that these conditions have a negative impact on the cost and availability of childcare.
Other regulations exist in addition to those in the NQF. Individual councils, through which family day care programs are run and educators employed, have their own, varied regulations. Local councils also arbitrate where centres can be established – and have the power to prohibit employer-provided childcare located in densely populated urban areas or industrial areas. A 2006 Inquiry into Work and Family found that fringe benefits tax legislation means there is little incentive for small- or medium-sized employers to jointly provide on- or near-site childcare for their employees.
It is important to look at how we can create a functional and accessible childcare system to free parents up to engage in work. If we take childcare seriously, we mustn't commit the grave error of thinking that writing a blank cheque constitutes a workable solution.
Trisha Jha is a Policy Analyst at The Centre for Independent Studies.
Home > Commentary > Opinion > Childcare: a case study in regulatory capture
Childcare: a case study in regulatory capture
In the meantime, childcare operators and stakeholders have come out of the woodwork to suggest magic bullets for the problems faced in the sector. Making childcare costs fully tax-deductible is a popular argument, though its advocates have not presented strong reasons why the benefits outweigh significant costs to the budget in terms of foregone revenue. Another chestnut is extending the childcare rebate (the non-means tested benefit which covers fees per child up to $7,500 per annum) to nannies and other in-home carers.
What's more interesting in this discussion, however, is what is not being said. The national conversation has been about fundamental changes to taxation law and/or a higher burden on taxpayers, instead of what's driving the problem: regulation.
Approved childcare services (that attract the childcare rebate) are regulated through a federal and state compact – the National Quality Framework (NQF). The NQF mandates minimum conditions for long day care and family day care services; conditions include 'improved educator to child ratios' and 'educators with increased skills and qualifications.' The Regulatory Impact Statement for the NQF, the Henry Tax Review and the Productivity Commission have all conceded that these conditions have a negative impact on the cost and availability of childcare.
Other regulations exist in addition to those in the NQF. Individual councils, through which family day care programs are run and educators employed, have their own, varied regulations. Local councils also arbitrate where centres can be established – and have the power to prohibit employer-provided childcare located in densely populated urban areas or industrial areas. A 2006 Inquiry into Work and Family found that fringe benefits tax legislation means there is little incentive for small- or medium-sized employers to jointly provide on- or near-site childcare for their employees.
It is important to look at how we can create a functional and accessible childcare system to free parents up to engage in work. If we take childcare seriously, we mustn't commit the grave error of thinking that writing a blank cheque constitutes a workable solution.
Trisha Jha is a Policy Analyst at The Centre for Independent Studies.
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