07 Jul 2020

It's Time to Review Australia's Child Care System

Elizabeth Foley
It's Time to Review Australia's Child Care System

With the Government's free child care scheme coming to an end, a spotlight has been shone on the system as a whole.

The temporary Early Childhood Education and Care Relief Package was introduced on 6 April 2020 and for many families has meant hundreds of dollars more in their pocket each month. However the funding from the Government has fallen short for child care centres across the board, resulting in less revenue than before the crisis.
This has seen many centres struggle to provide long day care. So while parents have not been paying child care fees, they have been frequently unable to receive the long hours they need to have a full time role.
The free child care is set to end 12 July 2020 and will revert back to the Child Care Subsidy (CCS). While the Government has introduced new transition measures, which includes easing the activity test until 4 October (providing affected families with up to 100 hours per fortnight of subsidised care), more needs to be done for the long term to ensure affordable child care is available and families have access to the hours of child care they need, to work the hours they want.


The AIPM has been discussing the issue of childcare and its impact on women returning to work for some time. In our report 8 Imperatives for Gender Equity in the Workplace which was released in February 2020, we outlined how “affordable, available, quality childcare is fundamental to women with children returning to the workforce.”
While we understand that the current model of free child care, and its transition measures which are set to follow, are short term fixes to get Australia and its child care industry through the COVID-19 period, further review of the Child Care Subsidy is needed to ensure long term outcomes and benefits for university educated women. While the changes introduced on 2 July 2018, were a vast improvement on the Child Care Rebate and the Child Care Benefit schemes, they did not go far enough.
For many working women, the Child Care Subsidy does not provide the economic return to work full time, as the subsidies cut out when your household reaches a certain pay level. For instance, once the transition measures come to an end, under the Child Care Subsidy if the family income is over $186,958, the CCS is capped at $10,190 per child per year.
According to KPMG reducing these workforce disincentives facing professional, university educated women could add up to an estimated 12 million working hours to the economy annually. This is the equivalent of an additional 6,500 highly talented women in the Australian workforce.
The last thing we want to see once these measures come to an end later in the year, is women with children financially disincentivised to work the hours they want to due to the current caps.
As outlined in our report “there is a need to consider the interaction of the personal tax, family payments and childcare support systems and its impact on Australian women with young children from participating more fully in the workforce.”


We need to look at measures that will improve our child care system for the long term and ensure affordable and quality childcare is available to women. After all many experts, such as AMP’s Capital Chief Economist Shane Oliver are predicting a full recovery is unlikely before the end of 2021.
With a mindset of an 18-month recovery period, the child care measures implemented by the Government need to be more long term. As we look at ways to boost the economy, we can all agree that keeping as many people in the work force is the aim and ensuring affordable child care is an extremely important part of increasing the hours worked by women. 
Reverting back to the Child Care Subsidy as it was prior to COVID-19 does not allow women who are often the primary carers, to participate more fully in the workforce. Over 2020, AIPM will continue to advocate for permanent measures to be introduced to the child care system, which ensure fair and affordable child care is available for working mothers.


For further reading about gender equity in the workforce, read our blogs on Closing the Gender Gap on Superannuation and 6 tips from 6 women in leadership