Reintroduce activity test, support in home-care amongst recommendations in latest Menzies Research report

A new discussion paper published by the Menzies Research Centre has called for a rethink of current early childhood education and care (ECEC) policy with a view to addressing concerns around program cost, parent choice and birth rates. 

The report, authored by former Liberal Education Minister Alan Tudge, comes at a point in time when the debate around what direction policy is likely to take in the years ahead is starting to pick up in anticipation of the more robust discussions associated with the run up to Federal Elections where ECEC policy is often a central issue. 

Titled “Childcare and family policy: Challenges and opportunities” Mr Tudge and his team have sought to test “current policy against three goals: supporting parents, lifting workforce participation and helping children develop” whilst also considering “the policy’s bearing on the birth rate.” 

The range of policy recommendations is quite broad with some moving with the current tide of what is considered by researchers, regulators and providers in the best interests of selected cohorts of families and their children and others moving in the opposite direction. 

Recommendation 1 (cost focused): Maintain the existing CCS but remove activity test   

The first conclusion is to maintain, but not lift, the existing Child Care Subsidies for long day care and family day care with the report noting that there is no evidence that increasing the subsidies would support greater child social development, and there is mixed evidence that it would significantly increase workforce participation.

In addition, as cost saving measures the report suggests that the activity test should also be restored to the first 72 hours of care a fortnight, so that the subsidy is only supporting families who are working or studying and potentially that the upper income threshold should be lowered, so that subsidies cut out at less than the current $538,520.

Recommendation 2 (choice focused): That FDC should be deregulated

The second recommendation focuses on the FDC sector and calls for a rethink of regulations that currently govern the setting, in particular around formal qualifications with the case being made that most parents do not have such a qualification to look after their own children so why should FDC educators. 

By deregulating the environment the report suggests that parents would be more free to make their own choices highlighting that “Some parents might seek a person with a formal qualification, while others would be content knowing that the carer is a good parent themselves and is known and trusted.”

Recommendation 3 (choice focused): Develop in-home care platforms

Citing examples from overseas the report highlights that the current In Home Care program may provide a sound basis for expanding targeted funding to parents to then be free to spend proceeds on an educator of their choice to come to their home. 

“This is currently the program most similar to the Scandinavian and French systems of in-home care, but in those countries, support is available to all families with young children,” rather than in Australia where it is limited to families with specific needs. 

Recommendation 4 (birth rate focused): Lower income tax for young families 

This recommendation focuses on the demographic challenge of lower birth rates and is designed to address affordability concerns about having children expressed by many young people considering having children. 

The recommended approach in this instance is to provide lower taxes to families with children below the age of six by potentially increasing the tax-free threshold to $45,000 for one parent nominated by the family, or for a single parent where that applies. 

Recommendation 5 (support focused): Extend paid parental leave

The report calls out that the current paid parental leave policy of six months works well in enabling a parent to stay at home and look after their newborn, secure in knowing that a base income is still present however additional benefits may accrue to families should it be extended. 

That being said, it is also acknowledged that there is a cost consideration to implementing this recommendation as well as a likely impact on small business that would need to manage any extended leave over and above current levels.

Recommendation 6 (support focused): Introduce a grandparents allowance

The report advocates for a new allowance, similar to the carer allowance, targeted at grandparents to encourage greater hours of care to be undertaken by this cohort. 

An example of $162.60 per fortnight (the current rate of Carer Allowance) is suggested as a suitable stipend if a grandparent provided more than 20 hours per week of care before adding that about 29 per cent of families with children not yet at school used grandparent care, for an average of 11.8 hours a week for each child.

Recommendation 7 (development focused): Continue to support preschools

The report acknowledges that the strongest evidence from a child social development perspective is that 15 hours a week of preschool in the year before school starts makes a difference. 

It notes that preschools are largely funded and regulated by state governments (but with federal support) and that they should continue to be supported, and expanded where required, so that every child has the ability to attend.

Recommendation 8 (development focussed): Introduce national child development standards

The report recommends that Governments should consider introducing a clear set of national development standards that parents can use to monitor their own child’s development. 

This would empower parents to determine how well the care they are choosing is working for their child. In an institutional setting, the provider could be asked by parents to do the assessment and provide this feedback. Providing this option to parents should be a regulatory requirement.

To review the Menzies report please visit their website here