The Prime Minister's speech at the National Press Club this week was meant to set the tone for government policy in 2015. The speech contained some discussion of the government's so-called 'families package', including the fact that the policy focus, and funding as well, will shift from paid parental leave to childcare.
This is a mixed blessing. My colleague Matthew Taylor this week explained why Abbott's pet PPL scheme is best buried, but the danger lies in the instinct to direct the additional taxpayer's money into a childcare system which is broken.
A promising sign is that Social Services Minister Scott Morrison has rightly compared childcare rebates to the First Home Owner's Grant. Childcare subsidies simply push up prices (since providers will continue to charge what the market will bear) and do nothing to improve issues of affordability and access. Morrison is also right to point out that the workforce participation effect of this extra spending has been minimal.
The only way to increase supply and exert downward pressure on costs is to promote competition in the childcare sector. One way to do this is to remove barriers to entry that restrict new entrants into the market.
Unfortunately, government policy continues to head in the opposite direction. The latest attempt to crack down on so-called 'dodgy' family day care providers will only exacerbate the chronic national shortage of child care places. Unsurprisingly, established players like this idea.
An alternative approach is for the government to take a step back from the Gillard-era national standards which require ever-more highly trained staff and lower staff-to-child ratios. My research has shown that the evidence simply does not back up the 'quality' arguments used to justify the new regulations.
The Productivity Commission has also pointed to areas such as council zoning restrictions and onerous reporting requirements that inhibit growth in the number of childcare places and can compromise service quality.
Childcare is a complex policy area that involves all three levels of government, and it is clear that the whole system needs fixing. Simply fiddling around the edges with a boosted subsidy scheme is not an option. If more funding is devote to childcare without structural reform, this will be like pouring water into a leaky bucket.
Trisha Jha is a Policy Analyst at The Centre for Independent Studies.
Home > Commentary > Opinion > Don’t pour funding into the leaky child care bucket
Don’t pour funding into the leaky child care bucket
This is a mixed blessing. My colleague Matthew Taylor this week explained why Abbott's pet PPL scheme is best buried, but the danger lies in the instinct to direct the additional taxpayer's money into a childcare system which is broken.
A promising sign is that Social Services Minister Scott Morrison has rightly compared childcare rebates to the First Home Owner's Grant. Childcare subsidies simply push up prices (since providers will continue to charge what the market will bear) and do nothing to improve issues of affordability and access. Morrison is also right to point out that the workforce participation effect of this extra spending has been minimal.
The only way to increase supply and exert downward pressure on costs is to promote competition in the childcare sector. One way to do this is to remove barriers to entry that restrict new entrants into the market.
Unfortunately, government policy continues to head in the opposite direction. The latest attempt to crack down on so-called 'dodgy' family day care providers will only exacerbate the chronic national shortage of child care places. Unsurprisingly, established players like this idea.
An alternative approach is for the government to take a step back from the Gillard-era national standards which require ever-more highly trained staff and lower staff-to-child ratios. My research has shown that the evidence simply does not back up the 'quality' arguments used to justify the new regulations.
The Productivity Commission has also pointed to areas such as council zoning restrictions and onerous reporting requirements that inhibit growth in the number of childcare places and can compromise service quality.
Childcare is a complex policy area that involves all three levels of government, and it is clear that the whole system needs fixing. Simply fiddling around the edges with a boosted subsidy scheme is not an option. If more funding is devote to childcare without structural reform, this will be like pouring water into a leaky bucket.
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