Australian families will resume paying for childcare from today as the JobKeeper subsidy for the sector is cut and free childcare ends.
Nearly a million families will be affected by the end of free childcare after the scheme was introduced in April to grant a three-month break from payments.
And on 20 July, childcare workers will become the first and only employee group to be cut from the JobKeeper subsidy program. The scheme is set to stay in place for other sectors until September.
Federal Education Minister Dan Tehan announced the end of support payments to the childcare sector in June, citing a change in demand.
"What we have seen is demand grow and grow over the last few weeks so that we needed to change the system," Tehan said.
"This system was designed for when demand was falling. Now, we are seeing demand increasing."
But Shadow Education Minister Amanda Rishworth said the decision to revoke JobKeeper support and remove free childcare would see households and the childcare sector experience “further pain”.
“The Morrison Government’s decision to snap-back to their old, pre-pandemic child care system... has left many Australian families wondering how they will get by,” Rishworth said.
“Families were already being crippled by high child care fees before the pandemic, with out-of-pocket costs soaring by 7.2 per cent in one year alone. Now in the middle of a recession, when parents are relying on mortgage and rent moratoriums, JobKeeper and JobSeeker to survive, child care fees will be out of reach for many.”
Early Childhood Australia (ECA) has also expressed disappointment at the end of support. In a statement, the ECA said childcare has been one of the worst-hit sectors and that it was imperative that the government ensures early learning and care services remain viable.
A Federal Government report found 86 per cent of childcare services believed the free childcare scheme helped them remain open. And 87 per cent said the scheme helped them look after vulnerable children and children of essential workers.
A flawed scheme
The free childcare scheme was devised as a way to stop the sector from failing due to crumbling demand as parents lost jobs and couldn’t keep kids in childcare. It also meant childcare employees were kept in a job.
But the scheme was marred by complaints after its execution meant some workers suffered major pay cuts as parental contributions changed.
CEO of women’s money publication Financy, Bianca Hartge-Hazelman, told Yahoo Finance that while withdrawing the entire scheme at this time could be a “dangerous move”, the scheme wasn’t without flaws.
“While the program is very good at boosting female workforce participation, there have been some real problems with it,” she said.
“There've been families not being able to get access to it and smaller childcare providers that have financially been really struggling because of this scheme which seems to benefit larger operators.”
Hartge-Hazelman said while the scheme wasn’t perfect, its removal could be premature.
“It comes at a time when many families are really struggling, and with the resurgence that we're seeing, perhaps this is not the best time for this to be happening,” she said.
“There's also been a lot of commentary around how the first measurement that was put in place to be axed has in fact been something that overwhelmingly affects women in the workforce.
“The timing couldn't be worse when we consider that... women have borne the brunt of the [job losses and hour losses caused by the] pandemic. We could see more women become unemployed, have hours cut back and we could see a greater burden placed on women as a result of this measure today.”
What happens next?
From today, parents will resume paying for child care again under the previous Child Care Subsidy. The Child Care Subsidy depends on household income and hours of work performed. However, the criteria for the subsidy has now been loosened, with families whose employment has taken a hit to receive up to 100 hours per fortnight of subsidised care until 4 October 2020.
If families can’t afford to pay any fees, they can apply for financial hardship under the Additional Child Care subsidy which will cover childcare costs up to 13 weeks.
Additionally, if a family is affected by the lockdowns in Victoria, they can also apply for fee waivers if they choose not to send their children to childcare. Childcare centres will still receive the government subsidies.
However the industry itself will have a slower transition – it will receive a three-month $708 million support package that will see the government cover 25 per cent of childcare services’ fee revenue. It will require centres guarantee staff numbers as those workers are shifted off the JobKeeper payments and that fees are capped at February levels.