The government should consider abandoning the current childcare subsidy system in favour of alternatives including universal childcare or the government directly purchasing places, Kate Ellis has said.
Ellis, Labor’s early education spokeswoman, made the remarks in a speech at the National Press Club on Wednesday in which she also suggested aiming for universal access to preschool for three-year-olds.
Ellis said the problem with the current “fee and subsidy system” is the government has no “levers of control” over the costs and availability of places.
There is “no mechanism” to cap parents’ out-of-pocket costs nor to make sure that places are available in areas of undersupply, she said.
Despite the government contributing two-thirds of the cost of childcare, the system was run by corporate interests making decisions “based on the highest price that the market can bear, not on community need”.
Ellis questioned whether the $10bn the federal government contributed to childcare was well spent considering the industry made $1bn of profit.
Ellis said the government should consider a bigger overhaul rather than “blindly continuing to invest in a fee and subsidy system”.
“Government could see how many places are required in a particular area and tender for their delivery.
“Done correctly this could place downward pressure on costs by introducing competitive tendering for the service delivery and could cap the out-of-pocket costs of parents.”
This would incentivise new childcare places being created where they are required, she said.
“Ultimately we could work towards ensuring children could get a guaranteed place in a local centre.”
The shadow minister also proposed setting fixed payment rates to providers as occurred in New Zealand, the UK and Ireland in the same way as prices to private providers are limited by the medical benefits schedule.
Ellis noted models for childcare overseas including systems in which:
- Early education is free and part of the school system (France)
- Childcare has caps on out-of-pocket costs (Denmark, Norway and parts of Canada)
- Children are guaranteed a minimum number of hours of free early education (New Zealand, UK)
- Children have a legal right to childcare places (Germany, Finland and Sweden)
Ellis said there were “many possible models” for reform and Labor would undertake national consultation to develop a long-term plan.
She lauded Labor’s achievement of universal access to preschool for four-year-olds, noting 95% of children that age now attended preschool.
She said Australia was “looking backward and isolated” by not aiming for universal access to preschool from age three and called on the government to explain how it would reach that target.
Education and training minister Simon Birmingham Birmingham said he welcomed Labor to the discussion on three-year-old preschool that he had discussed nearly a year ago.
“The only concrete announcement Kate Ellis made at the National Press Club was to have a drawn out talk fest that would take the reform process back to square one,” he said.
Birmingham suggested that was because Ellis had “realised that Labor’s early education and care election policy would have meant higher fees for families and a $176m windfall for high income earners”.
The Coalition’s childcare package, announced in November but delayed until 2018 until budget savings were made, streamlines two childcare payments into one payment and places a work and study activity test.
Those on low fees with little work or study activity would lose while those on family incomes between $65,000 and $170,000 would save an average of $30 a week. Families on very high incomes would also lose benefits.
In an interview on Guardian Australia’s politics live podcast, Birmingham said the government was “hopeful” it could make progress delivering savings to pay for the package this year.
“We’ve seen some of the savings measures needed to pay for them passed through as a result of the omnibus savings [bill] ... but there’s still a gap to be bridged.”
“[Social services minister] Christian Porter and I have had discussions with a number of the crossbenchers about whether there is a way to bridge that gap, and/or whether there is a way to take some of the costs off the childcare model so we come up with an overall neutral approach.”
He said the package was a $3bn investment over four years and would boost early education and workforce participation. Birmingham warned it may be trimmed “a little” if savings weren’t sufficient.
