Childcare changes to push up prices, prompt parents to dump care: Productivity Commission

The Productivity Commission says parents could be forced to reduce the amount of time they put children in childcare as costs from the government’s childcare reforms filter through the industry.

The Early Childhood Development Workforce draft research report, released yesterday, looks at the likely impact of government changes to early childhood education and care. The changes include increasing qualification requirements, lowering child-to-carer ratios and ensuring all children can attend preschool.

From next year, centres will be required to have one employee per four babies; from 2016, they will be required to have one employee for every five children between 25 and 35 months, and one worker for every 11 older children.

It says the reforms will have “far-reaching implications” for the early childhood education and care workforce, which covers long day care centres and family day care. The broader sector looks after more than 1.5 million children, and employs about 140,000 workers, mostly women.

The report says the reforms will require more workers, and that those workers be paid more to reflect higher education and training levels.

“Staffing costs for early childhood education and care services will increase, and this increase will need to be paid for by the service through lower surpluses or profits, by staff accepting less than market wages, by parents in the form of higher fees, or by governments, or a combination of these,” the report says.

Presiding commissioner Angela MacRae said the increased costs would mainly be shared by governments and parents.

The government provides a 50% rebate for childcare costs and says workforce participation is a key focus, so the prospect of parents cutting back their participation or exiting the workforce because of high costs is not likely to sit well.

“Parents of disadvantaged children are often low-income earners, or are already bearing the costs of raising a child with additional needs,” the report says.

“As a result, without further assistance these parents are more likely to reduce their children’s participation in early childhood education and care services in response to any cost increases.”

It also casts doubt on the government’s timelines, saying they “appeared optimistic”.

“The supply of suitably qualified workers is likely to take some time to respond, and exemptions from the new standards will be required,” it adds.

“The sector already suffers from difficulties in attracting and retaining employees and existing workforce strategies that focus on the availability and affordability of training will not be adequate to stimulate supply sufficiently to meet demand — particularly in the short term, and particularly for hard-to-staff positions.”