Labor announces substantial new commitment to improve ECEC affordability

The Australian Labor Party have announced a significant new policy initiative that will see the introduction of a 100% subsidy for low income families for the first time and provide additional fee support for families earning up to $174,000 per annum.

 

Families earning less than $69,527 per year will be eligible for a 100 per cent subsidy for their child care costs. Families earning between $69,000 and $100,000 will receive a subsidy rate of between 100 per cent and 85 per cent and families earning between $100,000 and $174,000 will receive a subsidy between 85 per cent and 60 per cent.

 

Combined family income	Current Subsidy	Proposed Subsidy
Up to $69,527	85% up to fee cap	100% up to fee cap
From $69,528 to $100,000	Tapered reduction from 85% to 50% up to fee cap	Tapered reduction from 100% to 85% up to cap
From $100,001 to $174,427		Tapered reduction from 85% to 60% up to cap

 

Subsidy receipts will however still be limited by the current hourly fee cap that is embedded in the Child Care Subsidy (CCS) System so families earning less than $170,000 attending a service where hourly fees are in excess of $11.77 will receive fee relief up to the $11.77 but would receive no relief for the portion of fees that exceed $11.77.

 

The proposed new subsidy structure will apply to all families that are currently participating in the CCS across the main settings of centre based services, family day care and outside school hours care including vacation care. The proposals are expected to cost $4 billion per year with up to 887,000 families expected to benefit. 

 

ACCC to become more involved in excessive fee investigations

 

The Labor announcement also saw a commitment to increase oversight of price increase behaviour at the provider level by tasking the Australian Competition and Consumer Commission (ACCC) with a new role to investigate fee increases deemed excessive and to publish any findings on the www.childcarefinder.gov.au website.

 

In addition, Labor promised to task the ACCC with investigating mechanisms to ensure greater controls on child care fee increases are available going forward.

 

This commitment comes in the wake of the most recent Australian Bureau of Statistics quarterly Consumer Price Index Child Care series release that showed quarterly increases in prices accelerating in some states after material falls recorded post the introduction of the CCS.

 

Disadvantaged and vulnerable family access concerns prompt review commitment

 

The sharp fall in the number of families classified as vulnerable and / or disadvantaged accessing the Additional Child Care Subsidy (ACCS) that was highlighted in the most recent Department of Education and Training Childcare in Australia information report will trigger a review of the new system.

 

As reported by The Sector, the total number of families accessing ACCS under the main categories of child well being, temporary financial hardship, grandparent support and transition to work fell 39 per cent year on year as stricter rules around evidence provision and a more involved Centrelink impacts enrolments.

 

It was not clear from the announcement if the controversial Activity Test embedded in the current CCS system would be included in the review.

 

Labor’s pre school commitment still stands

 

In addition, to the new affordability related proposals Labor also reiterated their ongoing commitment to their National Pre-School and Kindergarten program dubbed the “Biggest ever investment in early childhood education in Australia”  that will include:

 

• Committing to permanent ongoing funding to the national preschool and kindy program for all four year olds
• Extending the current program to cover all three year olds – commencing in 2021
• Establishing a $100 million facilitation fund to support the roll-out of the program, including workforce development and supporting expanded capacity where required
• Ensuring early learning centres are high-quality and safe by restoring the $20 million safety and quality funding

 

The program will ensure that four year olds and three year olds regardless of setting will receive at least 15 hours of subsidised early education per week.

Labor’s announcement comes in the wake of a significant policy initiative made by the Australian Green Party last week. To read more on the Greens announcement click here.