Scott Morrison will ask federal cabinet to give in-principle approval for additional spending on childcare on Monday as he begins consultations with the industry about his soon to be released families and childcare policy.
Morrison has previously said any increase in the $7.7bn a year now spent by the federal government on childcare would have to be offset by savings, and any funding increase depended on his ability to do a bipartisan deal with Labor over both the new childcare funding model and the savings that could pay for it.
He has scheduled a second meeting with Labor’s childcare spokeswoman Kate Ellis this week, but no concrete proposals have yet been discussed.
Now, as he moves to try to finalise the new package ahead of the May budget, Morrison is briefing cabinet on the structure of his proposed scheme and asking that it approve broader confidential consultations with the childcare sector. He clearly flags to his colleagues that the scheme will require significant additional government spending to ensure that families are not left worse off.
Morrison is developing his model against the difficult backdrop of warnings from the treasurer and treasury about the need to reign in recurrent expenditure and the politics of a government persistently behind in the polls and a prime minister battling for his political survival.
His submission will be made at Monday’s cabinet meeting after ministers discuss the government’s difficult political situation, and where they are also likely to be asked to sign off on a new troop deployment to Iraq.
Morrison’s policy is based on a model from the Productivity Commission which deliberately looked at how existing spending could be better used, and proposed some existing subsidies should be transferred from wealthy families to poorer families. The commission calculated that its plan would leave most families earning less than $130,000 better off, while those earning over $160,000 were likely to be worse off.
But the commission bases its plan on a “benchmark” cost of care – between $72 and $74 for a long day – and its calculations of winners and losers presumed families were paying this price, when in fact many families are paying vastly more.
Goodstart Early Learning – a large not for profit childcare provider – has calculated winners and losers based on “real world” figures where many families pay well over $74 a day and discovered that many would be worse off, including that;
- families with one child in care three days a week at centres charging $90 per day or above are worse off – even those on low incomes
- families with two children using care three days a week and paying $80 a day or more are worse off
Goodstart Early Learning’s chief executive, Julia Davison, said that without significant additional funding the proposed model would not achieve the government’s main objectives – improving the affordability of childcare and increasing workforce participation because too many families would be worse off.
“The biggest change is that families would no longer receive a subsidy based on the real fee they pay, but would receive a percentage of a national ‘median benchmark fee’ which could be a lot lower than the fees they actually pay,” Davison said.
“That means that families in childcare centres with fees above the benchmark will, in many cases, be paying more than they are now, while families in centres with fees below the benchmark would probably be paying less.”
Morrison and Ellis will meet again this week. Labor last week released a list of four “principles” for its participation in the talks with the government, including that it improve availability and affordability of childcare and address workforce shortages in the childcare sector.
