KPMG analysis shows CCS optimisation could nudge the economy “back on track”

by Freya Lucas

September 07, 2020

New analysis from KPMG has yielded insights into the costs and benefits of making changes to the child care subsidy (CCS) system, noting that eliminating the per-child subsidy caps, increasing the maximum subsidy for the lowest income families, and provisioning for every child to attract some federal government subsidy could result in an annual boost of $5.4 billion to GDP. 


The measures outlined in the full report, The child care subsidy: Options for increasing support for caregivers who want to work, estimate that the GDP benefit could exceed the additional CCS expenditure by more than 110 per cent, with additional net expenditure of $2.5 billion, and the GDP benefit, arising from extra days worked in response, more than double at $5.4 billion. 


In addition to benefits to the GDP, changes in the CCS space would also create up to 210,000 additional working days per week, and improve both affordability and accessibility of early childhood education and care, with all its social and educational benefits for children. 


Commenting on the report, The Front Project CEO, Jane Hunt said that if the recommendations were followed, “every single Australian family will be better off, with more money in their pockets and more incentive to return to work”.


Citing financial insecurities pushed on to families as a result of COVID-19, Ms Hunt said access to affordable and high-quality early childhood education services “are vital for parents to be able to return to work to secure their family’s financial situation”.


Her thoughts were supported by Australian Childcare Alliance President, Paul Mondo, who noted the “once-in-a-generation recession” and resulting affordability issues as a key concern for many families.


“No child should fall through the cracks. We must do all we can to ensure every child in Australia has access to high quality, sustainable ECEC services and therefore the best start in life.”


The current system, Ms Hunt said, can penalise parents who work more, and who may find themselves in a situation where 30 per cent, or less, of what they earn on any given day, stays in their pocket.


“We have an opportunity to address this by building on the current CCS framework and removing some of the disincentives for parents to work.” 


“This is not free child care, this is a measured, evidenced-based approach, which recognises the huge demands on the Federal Budget. This new analysis has shone a spotlight on how crucial a strong, affordable and accessible ECEC sector will be to Australia’s recovery,” she added. 


The full report, The child care subsidy: Options for increasing support for caregivers who want to work, is available here