The Productivity Commission has recommended substantial and expensive changes to Australia’s childcare system, aimed at making it more affordable and accessible. The changes would lower costs for almost all households and make it effectively free for those on lower incomes.
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00:00So the Productivity Commission went into this project with two key ideas in mind, I suppose
00:06access and affordability, working towards the idea of universal childcare.
00:12And the key recommendation to come out of it is that universal childcare, should it
00:15be pursued by the government, and the Productivity Commission says it should, would look like
00:19three days a week of access for all Australian children under five, or 30 hours.
00:25That is essentially the baseline and should be available to every Australian child under
00:29five, no matter their parent's circumstances or where they live.
00:33On the affordability question, things get a little bit more complicated.
00:37The Commission looked at some big ideas for really a complete overhaul of the system.
00:43One is this idea of a low flat fee for childcare, that all Australian children would be charged
00:49the same for the childcare they receive.
00:52Another was a 90% universal childcare subsidy.
00:56Now the Commission rejected both of those ideas, arguing essentially that they would
01:01primarily benefit wealthier Australian households, and that would come at a substantial cost
01:07to the government for not as much return as they might like.
01:10Instead, they're recommending a different proposal, which is essentially adjusting the
01:14existing childcare subsidy scheme that is already in place.
01:19Now the key headline here is that a 100% subsidy would be made available to households earning
01:24less than $80,000 a year.
01:26That is effectively free childcare for those Australian households on lower incomes.
01:32On top of that, subsidies would be increased for all households earning less than $580,000
01:36a year, so only excluding the wealthiest Australian households.
01:41That the Productivity Commission says is the best way to increase affordability for the
01:46greatest number of Australian households, with perhaps the lowest impact on the budget.
01:50This is significant and meaningful change that the Productivity Commission is suggesting
01:55here, but it's not quite the complete overhaul that perhaps some advocacy groups and others
02:00had been suggesting.
02:01And the government's been fairly clear in suggestions really over the past few months
02:04that it's looking at a substantial childcare policy, perhaps with the next election in
02:09mind.
02:10That is, after all, why it commissioned the Productivity Commission to do this work.
02:14It has been taken in the past by this idea of universal childcare, how to make childcare
02:20more accessible and more affordable to all Australians.
02:23Even floating the idea of that 90% universal subsidy that the Productivity Commission has
02:28decided in this instance to knock back as an idea.
02:32That being said, it does note the significant cost that would come with this.
02:36Childcare is already expensive in the budget, it's worth about $12 billion a year.
02:40This would jump up that figure to about $17.4 billion each year.
02:45So a significant increase, billions of dollars extra in funding every year.
02:48That being said, they say they're looking at all these recommendations very seriously.
02:52Let's have a listen to the Education Minister, Jason Clare, speaking on this new report earlier
02:57this morning.
02:58At the moment, the childcare subsidy means that we provide about $12 billion of support
03:04to parents and support to families every year.
03:07The recommendations about the childcare subsidy would see that increase from $12 billion to
03:12$17 billion.
03:13And then there's other recommendations there that would require additional investment as
03:17well around the activity test, around inclusion, around developing centres where they don't
03:22exist at the moment.
03:23But we're also very conscious of this, that early education and care helps parents, helps
03:30families to go back to work, in particular working mums.
03:34It helps our children because it provides them with the education that they need to
03:38be ready for school.
03:40But it also helps all of us.
03:42As you heard the Minister touch on, there is more to this report, particularly recommendations
03:46like dumping, the activity test that's in place, and ways to increase accessibility
03:50for childcare centres right around the country.
03:53So there is more to this report, and likely more to discuss in the months ahead.