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‘Crippling’: Missing detail in PM’s childcare scheme destroys centres

Anastasia Santoreneos
·4-min read
Missing detail in PM's childcare scheme 'cripples' centres. Source: Getty
Missing detail in PM's childcare scheme 'cripples' centres. Source: Getty

All essential workers with children will be given free childcare during the coronavirus pandemic, the Prime Minister revealed last week – but the nuts and bolts of the announcement could send childcare workers broke.

According to the scheme, around one million families will be given access to childcare for free.

After one month, the scheme will be reviewed, with an extension to be considered after three months.

The Prime Minister said the plan would support families and also ensure 13,000 childcare centres can keep their doors open. However, centre owners say they’ll lose out.

Here’s why.

How the childcare system works

Some Australian parents are eligible for a childcare subsidy from the government, which is then passed on directly to child care providers, who then subsidise the cost of the day for the parent.

Families then make a co-contribution to their childcare fees, and pay to the provider the difference between the fee charged and the subsidy amount – a gap.

The subsidy parents receive is means tested, meaning it is dependent on the combined annual family income.

If a centre typically charges $100 per day, the government may pay $45, with the parents paying $55 if they earn a low income. If they earn a higher income, the government may only pay $25, while the parents pay $75.

How the ‘free childcare’ system works

Under the plan, the government will pay 50 per cent of the sector’s fee revenue up to the existing hourly rate cap, so long as services remain open and do not charge families for care, the government said.

The funding will apply from April 6 and is based on the number of children who were in care during the fortnight leading into March 2, whether or not they are attending services.

What this means is that if a childcare centre charges $100 for the day, the government will pay $50 to the centre – but the centre is not allowed to charge parents the remaining $50 gap, meaning these centres lose income.

‘Devastating’ losses

Louise White owns a childcare centre in Sydney’s north shore, and says the ‘free childcare’ system means she will earn half of what she normally earns, despite working the same hours with the same children.

“What the government has failed to mention is that child care is free for the parents at my expense and at the expense of every Family Day Care Educator who has had her income halved over a matter of days,” White said.

“I am taking a 50 per cent pay cut so that families who are still working and earning their full pay can have free child care.”

The effect is devastating for her family, she said.

“My family is not a high income family. This will cripple us. This will destroy Family Day Care,” White said.

“Regardless of an Educator’s family income – as of Monday, we will all be working for half price.”

On top of that, White is constantly faced with the health risks of her job – but now is expected to do so for a fraction of her regular income.

“I am not able to social distance from the children – they are all under 5 and still need lots of love and cuddles – and I am exposing my home and family every day,” she said.

“All Family Day Care Educators are in the same position and are now expected to do it for half the income.”

Digging into superannuation to cover costs

While White said some childcare operators will be eligible for the JobKeeper program, not all will – and the delay to get the payments is a huge burden.

“The timing is ill-considered since JobKeeper hasn’t been passed and won’t be available until May,” she said.

“My super has already taken a hit thanks to this crisis and now I’m going to have to try and withdraw some of it as well.

“That is outrageous, as a low income earner, I hardly have enough as it is.”

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