Wednesday, 16 February 2011

Childcare rebates slashed before parliament approves cuts

Thursday, 10 February 2011
By Sue Dunlevy
The Australian
CENTRELINK has slashed the 50 per cent childcare rebate paid to thousands of families by more than $279, even though parliament has yet to approve the cuts contained in last year”s federal budget.The Senate is now poised to vote down the cutbacks and the government welfare agency will have to repay parents the money.

The torpedoing of the bill means the Gillard government will have an $87 million hole gouged in its budget.

And it will be forced to start indexing the rebate again, a move that will deliver tens of thousands of families hundreds of extra dollars in childcare rebates this year.

Independent senator Nick Xenophon has confirmed he will join the opposition to vote down the reduction in childcare subsidies because “he doesn”t believe the government should be increasing the cost of childcare”.

His vote alone is enough to scuttle the bill but the Greens also say they do not support the bill in its current form, and they want the government to pay the rebate to parents fortnightly instead of quarterly.

“We will not be supporting this legislation until we see a guarantee that these fortnightly payments will be made to

parents, so they are not forced to pay for the government”s cut-backs,” Greens childcare spokeswoman senator Sarah Hanson-Young said.

In last year”s budget, the government announced plans to cut the 50 per cent childcare rebate from $7778 a child to $7500 a child from July 2010 and pause the indexation of the rebate for four years.

The measure is expected to hit about 19,000 families who have their children in

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full-time care or who pay high childcare fees.

But about 3000 families whose out-of-pocket childcare expenses have already exceeded this cap are already being hit by the cutback because the Department of Education, Employment and Workplace Relations implemented the cap before it became law.

The Australian has seen a letter sent to one parent that states “the rebate covers 50 per cent of your out-of-pocket expenses, up to a maximum of $7500 per year for each child in approved care”.

A spokeswoman for Childcare Minister Kate Ellis said the department had implemented an “administrative cap” ahead of the legislation passing to prevent families accruing a debt to the government.

“If the legislation does not go through the Senate, they will be reimbursed,” she said.

The defeat of the measure will be a boon for families who will now see their childcare subsidies increase as the payment will have to be indexed from July 2010, adding several hundred dollars to its value.

Debate on the bill began in the Senate yesterday.

Childcare Alliance spokeswoman Gwynn Bridge says parents are facing a double whammy as the government cuts back childcare subsidies at the same time as childcare fees rise.

Childcare fees are going up in NSW to cover the cost of higher staff ratios in childcare centres that have been imposed as part of the government”s attempt to improve the quality of care.

She says the attempt to freeze the indexation of the rebate would have meant up to 72,000 families would be getting smaller subsidies by 2014.


The childcare centre space race

Friday, 11 February 2011
By David Jean
The Advertiser

VACANCIES at childcare centres are shrinking and Government reforms are likely to make things tougher.

As soon as Jane Goldney found out she was pregnant with her third child she contacted her childcare centre of choice.

Experience told her it was the best way to successfully negotiate the ever-growing waiting lists before she was ready to return to work.

Because her other two children had already attended Unley Community Childcare Centre, she had an advantage.

But nothing is ever guaranteed in the stressful search for childcare, an issue that is worsening despite federal government attempts to alleviate the problems facing working families.

Less than two-thirds of South Australia”s 301 long day childcare centres had listed vacancies on the Australian Government”s online child-care directory MyChild yesterday.

According to experts, the real number is much lower, because the limited and sporadic times many centres have on offer are useless for most working families.

The problem is particularly evident in the zero-to-two-years category, where only 185 centres have vacancies.

In this category, some centre waiting lists extend beyond two years and many families are paying up to $60 to have their unborn children added to lists.

Community Child Centres SA chairwoman Melanie Gohl says there are no vacancies at most of the service”s 120-plus centres.

“There”s high demand, but not much supply,” she says.

“The waiting lists of some centres are in excess of two years and some actually close their waiting lists because they don”t have the positions.

“We have these extensive waiting lists and are just unable to help families return to work when they are wanting to.”

The latest available childcare vacancy report shows 82 per cent of reporting long day care services had a vacancy in the September quarter, down 1 per cent from the March quarter.

The national result for the September quarter was 84 per cent.

There were an average of 2970 long day care vacancies per day in SA in the September quarter of 2010.

University of SA child development senior lecturer Dr Victoria Whitington says centres listed as having vacancies are often inappropriate because they are in the wrong locations, or only have limited times available.

“I”m also the chair of the board at Lady Gowrie centre in Thebarton and we have odd spots – half days here and there and that sort of thing – but you wouldn”t say we”ve got much space at all,” Dr Whitington says.

“Many families these days want one or two days of care, so you end up with a vast number of families in one centre, which is difficult.

“The part-time care parents want makes it difficult for centres, so it”s very hard to find the care you want.”

Childcare South Australia president Barbara Langford agrees.

Ms Langford, whose four centres charge a $60 administration fee to those wanting to go on a waiting list, says the problem is getting worse.

“For example, we might have 100 people on the waiting list and we only have a Monday to offer them,” Ms Langford says.

“If none of those 100 want Monday we”re still going to have it available, so it is not always a true reflection of what is available at any time.

“It very much depends on parent needs.

“Some centres can offer some days, but they may not necessarily correspond to what parents want.

“There”s a very high demand for the babies and that”s often very limited within the centre because it”s the most expensive service to provide.

“That will continue to be the most expensive as the ratios change for the care of those children.”

The Federal Government”s tough new early childhood reforms will begin rolling out in January 2012.

Increased staff-to-child ratios and higher qualification standards for staff are among the biggest changes.

Current standards allow one staff member for every five children up to age two.

When new national ratios are introduced next January, the number will be cut to four.

While few in the industry are against improving childcare, many fear waiting lists will balloon when the reforms come in.

“It will impact on those centres that will need to adjust their ratios, which will have a long-term impact online casino on waiting lists,” Ms Gohl says.

Federal Employment Participation and Childcare Minister Kate Ellis is the driver of the reforms and her efforts to improve the industry have not escaped the notice of the industry.

The Australian Government has recently invested to establish a new Early Learning and Care Centre in Adelaide and a further four Children and Family Centres throughout South Australia.

Ms Ellis says she recognises the difficulties some families face in finding childcare that suits them. .

“I know that there are some circumstances in which South Australian families face challenges finding child care that meet their particular needs,” she says.

“That is why the Australian Government now funds an unlimited number of childcare places in long day care, family day care and outside school hours care,

to help providers expand existing services or create new services where demand exists.

“We also provide around $97 million per year in establishment and sustainability assistance payments that help secure the viability of around 1500 services nationwide.”

Ms Goldney says she was one of the lucky ones.

“It is hard to get places, particularly with young kids, because of the staff ratios.”

The less lucky ones are still waiting.


Cost of childcare has halved in six years

Saturday, 12 February 2011
By Patricia Karvelas
The Australian

THE portion of household income required to pay for childcare has nearly halved in the past six years, leading to a sharp jump in the number of children and babies attending centres.

Childcare Minister Kate Ellis today will release data showing families are spending on average 7 per cent of their disposable income on childcare compared with the 13 per cent they were spending in 2004.

The figures show also that use of childcare in Australia has surged.

In the June quarter last year 869,770 Australian children — almost

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one in four aged 12 and under — were in approved childcare, up 8.7 per cent on the June quarter 2009.

The government figures suggest reforms over the past six years have made childcare much more affordable.

The new evidence also blunts any attempts by the Gillard government to further means-test and control childcare payments as a way of cutting spending in this year”s May budget.

In last year”s budget the government announced plans to cut the 50 per cent childcare rebate from $7778 a child to $7500 from July 2010 and pause the indexation of the rebate for four years.

In the June quarter last year a family earning $75,000 a year would have used 23 per cent of its disposable income on childcare without the subsidies, compared with 7 per cent with them.

Since 2004, out-of-pocket costs for families earning $75,000 have fallen from 13 per cent of their disposable income.

For families with a gross annual income of $115,000, the proportion of their disposable income spent on childcare fell from just over 11 per cent in 2004 to 7 per cent in 2010.

Ms Ellis said she was proud to see that the government”s investment in childcare affordability was making a real difference for families.

“This easing of the family budget is a direct result of the government”s decision in 2008 to increase the Child Care Rebate from 30 to 50 per cent, up to a cap of $7500,” she said.

The new data also reveals that 869,770 Australian children attended centres approved for the Child Care Benefit in the June quarter last year, an increase of 8.7 per cent on the June quarter of 2009.

Children spent an average of 21.6 hours a week in childcare and nearly one in four — 23.7 per cent of babies and children aged up to 12 — attended centres.

“The government will continue to keep Australian families and the broader community informed about activity in the childcare system,” Ms Ellis said.


Profit motive sits uneasily with aims of childcare

Monday, 14 February 2011
By Patrick McClure
Sydney Morning Herald

The importance of childcare and early childhood development cannot be overstated. Most of our development as individuals takes place in early childhood.

Research shows that it is from birth to age five that children rapidly develop the foundations on which subsequent development builds.

The increase in working parents in Australia has highlighted the importance of affordable, accessible and quality child-care services. It also raises an ethical dilemma.

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Is child care about quality of services that includes higher staff-child ratios and better qualified staff?

Or is child care a corporate business making large profits and returns for investors? Or is it a mix of quality services and profitable business?

A report last year from the Office of Early Childhood Education and Child Care showed that 64 per cent of child-care centres are now privately run commercial companies.

When ABC Learning rapidly expanded its child-care business, non-profit child-care centres could not understand how the large, publicly listed company was making the profits it reported.

In submissions to a Senate inquiry, non-profit organisations stated that their services operated with staff costs typically at 80-90 per cent of operating revenues. In addition they did not pay rent, had similar fee structures to ABC and their education services were cost-neutral. Yet ABC Learning was reporting profits 30-40 per cent higher than them.

The subsequent demise of ABC Learning and other listed child-care companies appeared to show that profit and quality child care do not necessarily mix despite annual government subsidies of $4 billion.

The non-profit sector argues that it offers higher-quality care for children at an inevitable cost.

KU Children”s Services stated in a Senate submission that the non-profit model is more expensive than the ABC Learning model due to higher quality of care including higher staff-to-child ratios and better qualified and experienced staff, as well as the inclusion of children with special needs. In NSW the staff-child ratio for children under two increased this year from 1 to 5 to 1 to 4.

GoodStart Childcare, the consortium of non-profit organisations that bought many of the failed ABC Learning centres, is a hybrid of the profit-making and non-profit models.

GoodStart”s chairman, Robin Crawford, said recently that the organisation was on track to generate possibly $10 million this year. It also relies on a charity exemption from payroll tax reportedly worth $20 million per year.

With a high fixed-cost base, occupancy levels are the make or break indicator for child-care centres. An industry report from IBISWorld estimates that long daycare centres require occupancy rates of at least 70 per cent to be profitable.

It is a reflection of the problems facing ABC Learning that its founder, Eddy Groves, reportedly told institutional investors that 90 per cent occupancy of child-care centres was the desired metric for the company. Anything less than this and the company would struggle.

The ASX-listed G8 Education, a merger between publicly listed Early Learning Services and

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a private company Payce, has acquired child-care centres in Australia and Singapore. Its website states it now operates/manages 108 of them.

Even with industry regulation, the failure of a large, publicly listed company such as ABC Learning has not been in the interests of Australians.

The successful organisations providing quality care appear to be non-profit or small to medium-sized commercial companies. Given this history, it will be very interesting to watch GoodStart Childcare”s performance.

It is a consortium of non-profit organisations with funding from the federal government, non-profit partners, high-net-worth individuals, foundations and a bank loan. One hopes that it will be successful in providing the affordable, accessible and quality care that Australian children deserve.

Patrick McClure, Ethics Fellow at the Centre for Social Impact, University of NSW.


Historical Independent Consultant Articles

Article Title Article Provider Date

Australian Industry Newsletter – 10 February 2012
Australian Industry Newsletter – 16 January 2012
Australian Industry Newsletter – 4 November 2011
Australian Industry Newsletter – 31 August 2011
Australian Industry Newsletter – 24 August 2011
Australian Industry Newsletter – 04 August 2011
Australian Industry Newsletter – 29 June 2011
Australian Industry Newsletter – Tuesday, 15 June 2011
Australian Industry Newsletter – 08 June 2011
Australian Industry Newsletter – 01 June 2011
Australian Industry Newsletter – 30 March 2011
Australian Industry Newsletter – 23 March 2011
Australian Industry Newsletter – 16 March 2011
Australian Industry Newsletter – 23 February 2011
Australian Industry Newsletter – 16 February 2011
Australian Industry Newsletter – 09 February 2011
Australian Industry Newsletter – 26 January 2011
Australian Industry Newsletter – 10 November 2010
Australian Industry Newsletter – 03 November 2010
Australian Industry Newsletter – 27 October 2010

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