How can the federal government spend about $4 billion on child care a year and yet have little or no say in where the services are located or how much they charge? Could it be that a bad dose of neo-liberal market-based funding in the ’90s has undermined what should have been a community service and allowed ideology to override commonsense?

The Prime Minister Julia Gillard quickly convened a meeting with providers and unions yesterday but did not provide any immediate commitments as the PM stated that she was in no rush to make any changes to the child care system. Later on radio, she stated that she wanted new answers as presumably she recognised the difficulties of changing a system of funding that gave the government very limited power.

The funding is a serious mess. First a mea culpa, as I’ve been part of its history over the past 40 years since I first took on childcare policy, as part of the then newly formed Women’s Electoral Lobby. We raised the plight of mothers needing care so they could take on more paid work.  I later crafted the Hawke childcare policy approach and have also been in state bureaucracies running care.  So as user, advocate, policy maker and now watching  the difficulties of finding a place for my grandson, I can offer some informed advice. My “guilt” comes from raising economic justifications that later, over our objections, let government change the funding from contracting with the community sector to a subsidy to parents for a mainly commercial service.

Therefore, the current  problem starts with too little government engagement, despite the $4 billion involved. The federal government spends most of it on subsidising parental care fees, which removes any direct relationship with services. All these services have to do is register to meet quality standards so users can claim the subsidies. The official justification is that parents, as consumers, are in the best position to use their purchasing power to ensure that their services meet their needs and are affordable. This might work if supply exceeds demand, which it does not, and children are like dry cleaning  in search of the special offer.

So many providers of services do not meet parental needs. Too many of the services on offer are neither accessible nor affordable.  There is no government capacity to approve centres on the basis of the need for their services, locations, or fee levels. There is no direct contract between services and the government as the funder, so there is no current capacity for making funding conditional on higher wages, lower fees or better hours and locations.

Changes require contracts between the services and government about the location of services, the numbers and categories of places and the fees charged. Too many parents cannot find the type of care they need, particularly for children under the age of two. The costs of delivering such care are higher than for older children, as ratios of staff to children are higher, so commercially driven services often offer too many places for three and up and too few for those toddlers whose often desperate parents need to return from maternity leave.

The costs of care vary widely from $70 to $160 per day. Most services these days are commercial rather than community based so will charge what the market will bear. As, supply is less than demand, they can make a profit. They are anxious about proposed and current upgrades in quality being pursued by the Commonwealth, which will involve extra staffing and qualification. Even though they are not yet in force, many services have already raised fees in anticipation and presumably in the hopes of scaring off the changes.

There are increasing staffing problems emerging as relatively few well-qualified early-childhood teachers are prepared to work in underpaid community services. The other staff educators are also grossly underpaid and therefore turnover is often high. So the unions and United Voices for Education are asking the government to raise their pay.

This demand, along with parents needing some fee control, are both beyond the powers of the present funding model, so the current government has a serious problem in its hands-off funding mode if it wants to fix some major problems. Howard removed the last form of direct service funding later in the ’90s when he adopted the market model.

So here is a suggestion: why not offer direct funding to services, maybe offer to fund a proportion of staff salaries in return for some control over locations and fee approval? This would also allow funding flexibility, e.g. extra for toddler places and longer hours.  It would also allow wages to be raised without the need to increase the fees. Parents would still be able to claim fee relief for the balance of the centre’s charges but the fees could not arbitrarily rise?

Good idea, Julia? It was in Phillip Lynch’s child care act in 1972! The more things change, etc, but it is a model that has worked and would work again.

Peter Fray

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