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Child care affordability: Not as easy as ABC

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, 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 (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 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.




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The system

Jay, I feel the same way as you. I am also happy to pay tax to subside child care and education, but let it improve the system and benefit the people who genuinely care about the well-being of the children. Why must my taxes benefit people who are already rich?

Tim, the system did allow for competition, but it also didn't have any restrictions on centres buying out other centres -- which is exactly what ABC did. Because of this, ABC got to set the high prices without providing a high level of quality. 

It will be interesting to see the outcome of the Inquiry, while it would be nice if the Swedish model was adopted. In reality, it isn't going to occur. If the regulations ensure that the children and parents benefit from the system then the price will be worth it. 


Hey Megan, I like your article a lot and found it very enlightening. I think this issue doesn't get anywhere near the coverage in the media that it should, because it impacts on so many people, like yourself, all around Australia.

I totally agree about the ridiculous ABC Learning. Over the years they undercut other child care centres in order to establish a monopoly of the market in many areas, which should never have happened. I think my biggest problem regarding ABC Learning is why the government didn't step in earlier, and why they didn't prevent ABC from undercutting those other centres, reducing the competition?

If governments had encouraged competition in the industry, do you think the problem wouldn't be as bad? You know more about this than I do so I'm interested to hear your thoughts...

 I hope for your sake that Australian moves closer to the Swedish model, but the pessimistic part of me really doubts it. If Rudd and Turnbull are the people making the decisions over the next 10 years then I think we're only gonna get lots of talking and not much else.

Subsidising corporatism

I'm quite happy to pay taxes to subsidise children, either through tax breaks or direct payments to parents. However, by using my taxes to subsidise childcare, the government is encouraging corporatism at the expense of more community and child friendly alternatives such as care by grandparents or others in the community.


Well, you really answer your own question.

"The Keating government allowed for the marketisation of the industry...".

The neoliberal project still had the virtue of deniable plausibility, from the Thatcher Reagan era. It was funded and driven by big business money and media resources and one of its promises was cornucopia on an unrelenting scale.

The historian Hobsbawm presciently talked of the "Death of (Historical) Memory" from this time in Age of Extremes and this ideologically induced, media imposed loss of memory led people to believe in a brave new world of unending prosperity, where everything would be just there for the taking.

But the current problems show what happens when the (real) elite finally comes to believe its own BS, with Iraq on the one hand and the global financial meltdown on the other.

You are quite right to cite the central issue, the decades-long clash between the Euro Keynesian / social democratic model and the harsher economic rationalist or neoliberal American model; this mediated by the breakout of capital from nation-state legislative controls, with the acceleration of globalisation.

This is why the G20 was important, as an opportunity for governments thru cooperative action to finally put predatory capital back into harness thru an internationally applicable regulatory framework. But they squibbed, and you can work out why.

So, Megan, your generation is caught out almost exactly as mine was as to the promises of the swinging 'sixties.

History repeats.

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