Buried in an innocuous-looking table in Statement 6 of Budget Paper 1 lies this hard fiscal fact: childcare fee subsidies are one of the fastest-growing direct cash payments for which the government is responsible.
In the midst of substantial economising on family benefits and baby payments, there's been a 9.9% real growth in childcare fee assistance since the 2013 budget. By the end of the forward estimates period to 2017-18, childcare fee assistance will have almost doubled.
The rapid growth of childcare costs did not escape the attention of the Commission of Audit (CoA). Yet instead of identifying policy changes that could bring down the costs for taxpayers, the CoA squibbed the issue by proposing to dedicate the money saved through its downsized paid parental leave scheme towards childcare subsidies.
The government last year instructed the Productivity Commission to make recommendations for childcare policy within the current funding parameters. Presumably, this means that the government would like to keep spending on childcare assistance relatively constant after accounting for population growth.
Based on current policy settings, this is laughably optimistic.
If the costs of childcare subsidies are ever going to be brought under control, there needs to be significant changes to the underlying policies. Everything from first principles, to the purpose of government subsidies, to subsidy design needs to be up for debate.
In particular, the regulations for quality in the childcare sector need to be evaluated. Some of the basis for the COAG Early Childhood Development Strategy (including the National Quality Standard which regulates childcare services) includes evidence which doesn't stack up.
In part, the COAG ECD strategy is based on decades-old American initiatives like the Perry Preschool Project and the Abecedarian Project. These initiatives yielded significant benefits, but they were also targeted to highly disadvantaged children and their families.
Contemporary equivalents like Head Start (also American) suggest that even the benefits of expensive, high-quality care to disadvantaged children fade out over time. Therefore, the case for these initiatives being used as the basis of a costly and virtually universal early childhood education and care system is incredibly shaky.
Questions about the evidence base are only a small part of what needs to be answered by government about childcare. With the Productivity Commission report due in October, it's doubtful that the government can avoid making some tough choices in the 2015-16 budget.
Trisha Jha is a Policy Analyst at The Centre for Independent Studies.
Home > Commentary > Opinion > The looming task of childcare
The looming task of childcare
In the midst of substantial economising on family benefits and baby payments, there's been a 9.9% real growth in childcare fee assistance since the 2013 budget. By the end of the forward estimates period to 2017-18, childcare fee assistance will have almost doubled.
The rapid growth of childcare costs did not escape the attention of the Commission of Audit (CoA). Yet instead of identifying policy changes that could bring down the costs for taxpayers, the CoA squibbed the issue by proposing to dedicate the money saved through its downsized paid parental leave scheme towards childcare subsidies.
The government last year instructed the Productivity Commission to make recommendations for childcare policy within the current funding parameters. Presumably, this means that the government would like to keep spending on childcare assistance relatively constant after accounting for population growth.
Based on current policy settings, this is laughably optimistic.
If the costs of childcare subsidies are ever going to be brought under control, there needs to be significant changes to the underlying policies. Everything from first principles, to the purpose of government subsidies, to subsidy design needs to be up for debate.
In particular, the regulations for quality in the childcare sector need to be evaluated. Some of the basis for the COAG Early Childhood Development Strategy (including the National Quality Standard which regulates childcare services) includes evidence which doesn't stack up.
In part, the COAG ECD strategy is based on decades-old American initiatives like the Perry Preschool Project and the Abecedarian Project. These initiatives yielded significant benefits, but they were also targeted to highly disadvantaged children and their families.
Contemporary equivalents like Head Start (also American) suggest that even the benefits of expensive, high-quality care to disadvantaged children fade out over time. Therefore, the case for these initiatives being used as the basis of a costly and virtually universal early childhood education and care system is incredibly shaky.
Questions about the evidence base are only a small part of what needs to be answered by government about childcare. With the Productivity Commission report due in October, it's doubtful that the government can avoid making some tough choices in the 2015-16 budget.
Trisha Jha is a Policy Analyst at The Centre for Independent Studies.
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