A quarter of all childcare centres say free scheme won’t help them remain viable | Australia news


One quarter of childcare centres reported the federal government’s support package scrapping fees has not helped them remain financially viable, according to an education department report.

The education minister, Dan Tehan, released the summary report on Tuesday, one month into the free childcare scheme, revealing concern that cost pressures will only grow as the economy reopens and more children return to care.

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The report confirms dissatisfaction with the package among centres that are ineligible for wage subsidies or have not reduced the number of children in care, with some even calling for an early end to the six-month free childcare program.

Under the relief package announced on 2 April, the government suspended its usual childcare subsidies and instead offered to pay 50% of childcare centres’ usual fees based on February enrolments.

Childcare centres that opted into the new system were prohibited from charging families an out-of-pocket fee, with the expectation they would recoup the rest of their costs through the jobkeeper wage subsidy or limit costs by restricting the number of children in care, while prioritising children of essential workers.

The government has claimed success on the basis that 99% of about 13,400 services remained operational as of 8 May, but many complained of an impending financial disaster as the $1.6bn of funding in three months would be insufficient to meet costs.

The education department report cited an ORIMA Research survey of more than 7,000 childcare operators which found that the new payment had “at least to some extent” helped 86% of them to stay open and retain staff and 76% “remain financially viable”.

The report said it was both “contemplated and permissible” that childcare centres had chosen to adjust their operations – limiting children’s attendance – in order to fit the funding model and implement social distancing.

But the report said there were “pockets of dissatisfaction with the relief package among services that have maintained high attendance regardless of the impacts of Covid-19, and among services that are ineligible for jobkeeper”.

Services with “a significant proportion of their staff being ineligible (such as recently engaged casuals, or temporary visa holders)” had the same complaint, it said.

Some 87% of surveyed providers were claiming the $1,500 fortnightly jobkeeper payment. But the report found that “some services” were operating at a loss because jobkeeper had not commenced when they were surveyed and “cost structures were different”, due to higher than average rent, debt and salaries.

It said the survey was conducted before 1 May, when the government announced a boost for not-for-profit organisations and educators from family daycare and in home care services which are not eligible for jobkeeper.

The report rejected any proposal to end the free service by allowing childcare providers to charge additional fees, which it said could lead to providers preferring families who paid the fee at the expense of others, “putting vulnerable children particularly at risk”.

“A widespread concern of stakeholders is that as demand for care increases, as schools return to face-to-face learning and economic activity picks up, the relief package funding may face challenges meeting more normal levels of demand.

“Stakeholders reported that demand for childcare is expected to increase significantly through May and June as the economy opens up and schools return, yet services cannot apply for supplementary payments until attendance exceeds reference period levels.

“This led to some to call for an early return to the childcare subsidy system and/or increases to the relief payments.

“However, there is no consensus and others wish the package to continue.”

Tehan said the changes were designed “to ensure as many childcare businesses as possible survived the Covid-19 pandemic while continuing to provide care to our children” and concluded “the system worked”.

“The four-week review into the package makes clear that we need to begin planning for increased demand for places as businesses reopen and more people return to work,” he said.

“The government is looking closely at the interplay between increased attendance and the relief package.”

On Tuesday the Senate committee examining the government’s response to Covid-19 will hear from the education department, including officials responsible for the childcare package.



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