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Taking the lottery out of child care

By Lin Hatfield Dodds - posted Wednesday, 22 March 2006

In recent months, there has been a clamour of proposals and complaints over child care - from parents, child care workers, the industry and from corporate and other lobby groups. It reflects the fact that child care has become like a lottery with some areas facing long waiting lists for services, a lack of affordable child care and inconsistent quality of services.

The Australian Council of Social Service (ACOSS) examined how the child care system could be improved rather than reinvented to boost the quality, affordability and fairness of Australia’s child care and preschools system today. Of course, this examination exposed many other issues - such as tax debates and federal-state divisions - but our intent was primarily to propose a system that gives children a fair start to care and early childhood education.

Child care costs rose by 49 per cent from 2000 to 2004. Some parents cannot find services in areas where they need them. Other parents struggle to pay the bills. ACOSS’s plan looks at each of these issues and addresses them by building on the strengths of the Federal Government’s child care benefit, which is progressive - delivering most support to lower income families and least to higher income families.


ACOSS proposes expanding the Child Care Benefit (CCB) and linking its value to the cost of providing good quality services. This would occur through the government negotiating with the child care industry to develop a schedule of government-recommended fees. While not obligatory for service providers to enforce, it would provide information about reasonable prices for services so parents could compare costs and quality of different service providers.

Second, the ACOSS 10-point plan for child care creates a 30 per cent child care benefit guarantee so all families would be paid at least 30 per cent of the government recommended fee for services. The amount paid to families would depend on their income, a sliding scale of support being developed so that many families would be entitled to much higher levels of support to meet child care costs (with up to 85 per cent being paid to lowest income parents).

These two proposals would be balanced by axing the wasteful child care tax rebate. Because the amount given back to parents is calculated on the basis of the gap between what they are given in child care benefit and the child care costs, the child care tax rebate benefits high income earners. It means out-of-pocket costs for a high income earner using an expensive long-day care centre will be much higher in dollar amounts than an average or lower income earner and that high income earner is entitled to 30 per cent of the costs back as part of the rebate (to a maximum of $4,000 per year).

Of course, affordability is just one of the key issues facing parents needing child care. Another is finding places in the area in which they live or work. Part of this problem is due to the fact that not all types of child care, such as long day care, are in the current planning system. There needs to be a national demand model and a national planning system to identify demand and match the mix of services to local area needs.

The estimated cost of the ACOSS plan is $700 million and includes savings from abolishing the child care tax rebate. These are modest proposals considering currently the government spends about $1.7 billion on child care and families spend $2 billion. Making child care simpler and fairer should be key elements in any new commitments by the government on child care in this year’s Budget.

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More statistics, analysis and ten recommendations of the plan are found in a new ACOSS report, Fair Start: 10-point plan for early childhood education & care released on

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About the Author

Lin Hatfield Dodds is the National Director of UnitingCare Australia.

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Creative Commons LicenseThis work is licensed under a Creative Commons License.

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