ABC Radio Perth – child care fee increases

Tuesday, 19 January 2021

NADIA MITSOPOULOS, PRESENTER: Amanda Rishworth is the Federal Shadow Minister for Early Childhood Education and Development, she’s been looking at these figures this morning. Thanks for your company.

AMANDA RISHWORTH, SHADOW MINISTER FOR EARLY CHILDHOOD EDUCATION AND DEVELOPMENT: Great to be with you.

MITSOPOULOS: Can you just talk us through those figures? Because I mean, we’re looking at these figures that were pre COVID, and we know that people were enjoying some free child care last year and prices didn’t increase. So to be clear, we’re looking at the year before that?

RISHWORTH: We are, this is most recent data being released by the department, so it shows the trend of where prices were heading before COVID hit. We’ve also had some other information come out from the department that says they are still expecting costs of child care to go up by about 4 per cent each year across the nation. So the trend that we’ve seen before COVID will continue going into the future. It does show that the cost of child care are going to continue to increase, and this is well above the increase that happens to the subsidy, the support that parents get. So what that means is out of pocket costs have grown significantly, and in Western Australia, but will continue to do so into the future.

MITSOPOULOS: What is that in dollar terms, on average, that increase?

RISHWORTH: Well in dollar terms it really depends on what your place is charging, but it is around $10 to $20 a day usually, and that is quite significant. Now, obviously people get a different level of subsidy, but what we know is that the subsidy is only indexed by CPI, which is 1 or 2 per cent. So what we’ve got really is those out of pocket costs growing substantially.

MITSOPOULOS: And why? Because one argument could be if we do see the increases that you talk about this year, between sort of 6 to 8 per cent, couldn’t that be child care centres just absorbing extra costs that they incurred last year? Because of COVID?

RISHWORTH: Absolutely it could be a range of things. I mean one of the reports that have come out recently by PwC has seen that there is a lack of transparency when it comes to child care costs. A lot of child care providers will say they had to burn a whole lot of the cost when it came to free child care during the COVID period, that the government had not properly funded it. So that’s part of it. There’s of course, profit, many of the centres are for profit, and many aren’t –

MITSOPOULOS: And they have had to do things differently, because of COVID, so to be fair [inaudible].

RISHWORTH: Absolutely, and wages are a point as well. My criticism is not of the child care providers, although we want to see reasonable increases, not exorbitant increases. But of course, the system that the government designed means that the subsidy that families get does not keep up with this cost increase for child care. So you see every year greater and greater out of pocket costs for families, and that puts a huge burden on them. So we’ve got to see I think firstly some proper reform when it comes to the child care subsidy, and also have a proper look at what is driving prices. There’s a range of things driving prices, and we need to make sure that they’re reasonable, just like with health insurance and other things, we have a careful look at what drives those prices. We need to do the same in child care.

MITSOPOULOS: And the government is looking at this, and they did do some investigations into trying to reform the system last year. How does the subsidy system need to change then, how do you reform that? It’s not as simple as just giving people more of a subsidy because the government says that’s not sustainable.

RISHWORTH: Well firstly I disagree with the government when it comes to the subsidy. They had a “once in a generation reform” and it hasn’t led to the changes they promised two years ago. And so what we need to do is firstly I think look at price regulation, seriously look at those cost drivers. But importantly, ensure that families do get an increase in subsidy. I mean, one of the things that the research has shown is that there is no better economic investment than in child care, it delivers about a return for every dollar you put in, you get a $2 return. So it is a good economic investment. And the government since their reforms in 2018 has basically said “there’s nothing to see here”, they’ve gone back to the system that’s proved it hasn’t been working. So Labor’s put forward a couple of suggestions, including looking seriously at price regulation and the ACCC having a close look at that. Secondly, we’ve said we want to increase the subsidy and take away some of the barriers that exist within the current system that stop families from being able to go back to work, including the annual subsidy cap. We’ve announced a number of changes that if elected we would bring in relatively quickly. But we’d also like to go to a 90 per cent subsidy system for every family, because schooling after five is seen as an essential service, something that children benefit from and help families. We don’t have the same approach to early education and care, and Labor has said we want to see that change.

MITSOPOULOS: Thank you for your time. Amanda Rishworth, Federal Shadow Minister for Early Childhood Education Development, good to talk to you.

RISHWORTH: Thank you.

ENDS

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