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‘Very risky’: Government warned return of childcare fees could trigger exodus of families

Early Childhood Australia chief executive Sam Page said the government should have either extended and improved the relief package, or reintroduced the childcare subsidy with significant changes.

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“Instead, it’s a switch back to the childcare subsidy with very minimal change to it and an even lower safety net than the JobKeeper payment, which seems very risky to me. Most risky to children and families but also to service providers,” she said.

Ms Page said the impact would become apparent by August after services start invoicing families and discovering who could afford to continue. She warned the changes to the activity test in particular would be complex to implement and confusing for families, and the government had missed an opportunity to address concerns about the subsidy model.

Georgie Dent, campaign manager for The Parenthood, warned families were “struggling financially and are no longer in a position to pay for the fees they could barely afford before the pandemic”.

Acknowledging concerns about fee affordability, Mr Tehan said fees would be “minimal” and capped at pre-pandemic levels. Eligible families who have lost work will be able to access 100 hours of subsidised care a fortnight, paying only the gap between the subsidy and the cost of care.

“This will assist families to return to the level of work, study or training they were undertaking before COVID-19,” he said.

While conceding “we can’t guarantee that demand won’t go backwards”, Mr Tehan said the government had consulted widely on the changes and had to allow services to keep up with surging demand, which was now at 74 per cent of normal capacity.

“The system was designed for when demand was falling, now we are seeing demand increase. And we think we have got the balance right,” he said.

The government was also accused of abandoning a commitment to maintain JobKeeper payments for six months. Prime Minister Scott Morrison last week said “people can count on that” duration. But on Monday, Mr Tehan said JobKeeper was not being distributed equitably across the childcare sector and it would end to ensure payments were “appropriately targeted”.

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Early Learning and Care Council of Australia chief executive Elizabeth Death welcomed the announcement, saying the capping of fees and eased activity test meant families “will be more able to access and afford early education”.

Labor early childhood education spokeswoman Amanda Rishworth criticised the government’s shift, calling it a “snap-back” to unsustainable high-fee childcare.

“This could well act as a handbrake on the economy. If women and families are not able to access affordable childcare, how are they going to get back to work? How are they going to actually participate in the economy? How are they going to actually be able to make ends meet?” she said.

The relief package was introduced at the start of April after enrolments plummeted, threatening the viability of thousands of childcare services. The package locked in half the centres’ usual level of government funding in combination with an expected $1 billion of JobKeeper wage subsidies. Centres have not been allowed to charge fees under the arrangements.

While the measures helped save thousands of centres, many services that had successfully maintained high enrolments in March and those that were receiving limited support from JobKeeper felt the package actually hurt them and some have been operating at a loss.

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