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Huge problem with $1.7 billion childcare plan

·3-min read
Empty preschool table with painting on it, Kheang Ly and Francesca Pinzone smile.
Kheang Ly and Francesca Pinzone have flagged issues in current childcare supports. (Images: Getty, Supplied).

As many as one in three families struggle to afford childcare fees, despite recent Government intervention, and the long term ramifications may be devastating, childcare businesses have warned.

A recent report from Victoria University’s Mitchell Institute found 39 per cent of families are unable to afford the childcare services they use. And while the 2021 Budget included $1.7 billion in funding for childcare, this will likely only improve affordability for five per cent of affected families.

One in three families spend more on childcare than they do on groceries.

Advocates also warn that changes to the childcare subsidy due to come into effect in July 2022 also will not go far enough.

As of the new financial year, the annual $10,560 cap on how much high-income families can receive in childcare subsidies will be removed, while families with two or more children will be able to access subsidies of up to 95 per cent under plans laid out in the most recent budget.

“Childcare is currently unaffordable for many families across Australia. The changes that are due to come into effect in July 2022 will ensure that it remains unaffordable for many families, forcing many caregivers (predominantly women) to stay out of work rather than pay childcare fees,” co-founder of occupational and speech therapy social enterprise Umbo, Francesca Pinzone, told Yahoo Finance.

“Whilst this is an economic problem at the macro level, if we look at the micro level we can see that this can also have a detrimental impact on many children.”

She said a child’s first 1,000 days of life can have a significant impact on their development, and having access to childcare can play a vital role in this.

“Childcare has many well documented benefits for children. This includes social connectedness, peer relationships development as well as literacy and numeracy development,” Pinzone said.

“When children are unable to attend childcare due to prohibitive fees, they may miss out on these benefits developed outside the home. Childcare is also an important support network for many families and can provide a safety net for children at risk or those who are disadvantaged.”

The Federal Government last week announced that childcare centres in Greater Sydney will be allowed to waive families gap fees while they receive taxpayer subsidies.

The gap fee is the difference between the Child Care Subsidy paid to the childcare provider, and the remaining fee paid by the family.

“We are easing some of the pressure on families and encouraging them to keep their children enrolled, guaranteeing the continued flow of childcare subsidy to service providers,” Education Minister Alan Tudge said.

“Importantly, this means providers can keep their staff employed so business can continue as usual when the stay-at-home orders end.”

However, co-founder and CEO at childcare app OWNA Kheang Ly said that while the gap fee waiver will support families, more needs to be done to support businesses.

“If they opt-in, they lose money. If they opt-out, they risk losing families. The Government not paying the gap is making it hard for educators to navigate,” Ly said.

“As software providers, it's our duty to make waiving the Child Care Subsidy (CCS) gap fee as easy as possible for centres, and that's what we've tried to do. Providers have enough on their plates, between juggling COVID restrictions, catering to the different needs of parents during this time, and all on top of their own personal and family issues brought about by the lockdowns.

“It's a shame that once again, the educators and providers are taking the brunt of this whilst the Government takes the praise.”

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