Child care affordability: Not as easy as ABC
by Megan van der Hoeven

This year I am paying $248, just under a third of my net weekly salary, on my son’s child care. He’s in full-time care because, as a single mother, I need to pay the rent. I also don’t have my family around to help with his care. It’s no wonder many other Australians are arguing – like me – that child care isn’t affordable. Instead what subsequent governments have given us is a business model that’s propped up private enterprise – at the expense of parents and taxpayers.

According to child care resource site CareForKids [1], the daily rates range from $55 to $115 across the country. For eligible parents these rates are subsidised by the Federal Government’s Child Care Benefit [2] (CCB), which is paid directly to the provider. This was introduced in 2000 by the Howard government, and was certainly an improvement to the existing system built under Keating.

The Keating government allowed for the marketisation of the industry by subsidising private centres as well as not-for-profits. Ironically, the Federation of Child Care Associations supported this reform, arguing that over-qualified union members were the reason for the high costs.

The corporatisation of the industry took place in the early 2000s, supported by the CCB (which was now available to all providers) and the Liberal government’s support for individual shareholding.

Instead of improving quality and reducing costs from the subsidies, this free market model led to private centres reaping huge profits.

James Kirby in the November 2003 issue of Business Review Weekly said: “The child care business is the best business I’ve ever seen in my life. The government pays subsidies, the parents pay you two weeks in advance and property prices keep going up”.

ABC Learning Centres (ABC) reported profits of $52.3 million in June 2005 – 46 per cent of this came from government subsidies. In 2006 it controlled one in five centres nationwide.

Like Australia, Sweden’s child care is funded partly by the government, taxpayers and parents. In 2001, child care costs were regulated as part of the government’s reform of the sector. This led to the introduction of the maximum fee policy – the cost of child care doesn’t exceed three per cent of the parent’s income.

Sweden has been able to achieve affordable child care with high quality. In 2005, 54 per cent of staff in child care centres had formal qualifications.

The collapse of ABC has seen government funds being spent on bailing out ABC, rather than being spent on establishing new centres, or improving the quality of existing ones. One man’s greed has impacted on hundreds of thousands of families across the country.

A Senate Inquiry [3] into the provision of child care started this year. One reoccurring theme in the submissions to date, funnily enough are costs – making it affordable for all families. Hopefully the Senate will look to the Swedish for ideas that will benefit all.