Early Childhood Development is a claimed priority for the Rudd Government, albeit to enhance future human capital in current preschoolers. These economistic outcomes are presumed to depend on upgrading qualifications and ratios of staff.
As a long term advocate in the area, I welcome the possibilities of more adults per child and the upgrade of skills, but I am concerned that more formal qualifications may not include needed skills. As one example, there is a gross deficit of skills in two ways teaching that recognises Indigenous cultures and builds literacy and numeracy on these. Yet closing the gap is a key aim of this program.
COAG has endorsed papers for the current brief national consultation on possible desirable changes to staffing ratios and qualifications. The modelling was done by Boston Consulting and the “products ie child care services” are assumed to be inter-changeable and the demand inelastic. This adds up to the proposition that rises in costs will be affordable as parents will want to compete for better staffed services and any good services will do the trick.
These assumptions are already the flawed basis of the current market driven policies which have not been shaken by the collapse of market leader ABC Child Care. Despite the Government already spending over $56M to fund the bankruptcy and save centres, it refuses to look at how the current funding model made such collapses inevitable. The basic building block is parent fees “purchasing” services, based on competition and adequate market knowledge. Public funding, apart from some accreditation and odd bits of support, is primarily directed to subsidising parent fees.
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Low income users get child care benefit ($180 pw) if the family earns less than $40,000 per annum, and then pro rata and all users of approved care get a 50% rebate (max $7,778 pa) So the maximum a very low income parent would get for full time care would be $330 pw out of bills ranging from $400 to $540 or even more. This leaves a gap they have to meet.
The differences in gaps is usually because of extra staffing, more qualified and more experienced staff. Therefore those who pay higher gaps get better services. The proposals are to move to more qualified staff, eg four year degrees, but these qualifications are in short supply so they can, and do, choose schools as these pay more and have better working hours. So keeping high quality staff may require that the service offers higher pay.
The discussion paper underplays the importance of gap fees and deny these are a factor in decision making, particularly at low income levels. Other issues such as the location of the services, cultural factors and trust affect choices but are left out as “externalities” in the economic modelling.
The COAG proposals do not deal with funding issues at all. This is the elephant that is not being dealt with. The old market model that allowed ABC to fail is deeply flawed because it has no contractual relationship between funder and supplier. The government is the only player who has the power to ensure both that services are run responsibly and that they can meet the needs of the children they serve.
They abrogate their potential power to the parents and assumes they, as purchasers, will drive quality and price. This allows cowboys to flourish. There are still some 700 plus ABC centres in receiver hands and the 200 plus already auctioned off have mainly gone to commercial operators, who may not be finding them the cash cow they hoped for.
So the proposed changes won’t work unless the funding system changes from one-size-fits-all payments to parents to a system which funds services and set conditions. This would allow COAG to recognise the varying needs of children and fund centres according to the ages and capabilities of their users. This model would allow for some form of fee control, as there is with nursing homes, as well as subsidies to meet the needs of children in need of extra care skills or the very young.
So, if the government and COAG are serious about reform in this area, there needs to be a total review of the funding model and then we can take the proposed quality care upgrades seriously.