Good afternoon.
Parliament is back and the government has work to do.
Labor will try to push through their digital duty of care legislation, as well as bills for a gas reservation policy and a 30% minimum tax on discretionary trusts.
But as parliament deals with the here and now, at the back of Anthony Albanese’s mind is his legacy.
Parents are being crushed by fees
Albanese wants universal childcare to define his prime ministership, his entry into Labor’s hall of fame alongside Medicare and the National Disability Insurance Scheme.
But affordability is a significant problem. Many parents report being crushed by fees.
With the cost of living continuing to bite, childcare could become a key election issue. It leaves Labor less than 18 months to make its case to Australian families about how it is going to make childcare accessible and affordable for all.
So far the government has defined universal care as “available, quality and affordable” – but unlike Medicare or public school, that doesn’t necessarily mean free, or at a low fixed daily cost.
What could universal childcare actually look like?
There are two key pieces of work happening behind the scenes to get to the answer in Australia: the bigger piece is by Deloitte, looking at the cost of running a childcare centre in any part of the country, be it metro, outer-metro, regional and rural. That’s due to reach government by the end of the year.
The second is a piece currently being mulled over by the cabinet from KPMG, outlining a business case for the government to own and lease services. It centres around the $1bn building early education fund that will give not-for-profit and state services money to set up where need is high and so are initial costs.
That gives us an indication of where Labor wants to go: it has said publicly it wants to see more non-profits in a sector where for-profits currently make up about 70% of the market.
Several Labor MPs have said privately that if they were building a childcare system from scratch, they would like it to consist only of not-for-profits and community or government-run centres. But the egg is already scrambled, and trying to strong-arm the private sector out is not a good look.
We’re already seeing the balance shift between public and private, though. In August, the for-profit provider Edge Early Learning went into administration, while competitor G8 has closed dozens of under-enrolled and underperforming centres. Last week, Goodstart Early Learning, a not-for-profit provider, signed an agreement to investigate the potential takeover of up to half of Edge Early Learning’s centres.
The system needs a fundamental change
A family with one child and a household income of up to $88,520 currently receives a government subsidy covering 90% of childcare fees. That subsidy tapers off at a rate of 1% per additional $5,000 of income, running down to nothing when the household income reaches $538,520.
Despite the government consistently increasing subsidy rates since 2022, childcare fees have been skyrocketing, going up more than twice the inflation rate in the year to August.
Advocates say that means the system needs a fundamental change beyond just increasing the subsidy – which generally leads to childcare centres reacting and increasing their fees.
The government has also been forced to tighten up standards across the sector following widespread allegations of child abuse and safety breaches which have damaged public trust. Advocates say increasing safety and quality standards will help to weed out some of the providers focused most on profits.
We know the Coalition are looking at their own policy offering, considering changes to the subsidy and paid parental leave. One Nation has policies that incentivise one parent staying home, while the Greens have modelled free childcare for five-days a week (which could cost $127bn over a decade).
Whichever way it’s sliced, childcare is expensive to run and public buy-in is essential.
Labor will have to act fast to get voters on board.
Photograph: Mick Tsikas/AAP
