Why the Childcare Subsidy is bad for the economy

By Andrea Christie-David

2 July 2018

As of 2 July 2018 the way families access and pay for childcare is changing. Whilst the new system is colloquially referred to as the new Child Care Subsidy, a closer look quickly reveals that the new system revolves more around the activities of parents, rather than the care of children.

The focus of the new subsidy is on the adults and how they are contributing to the economy by re-engaging in study, work or entrepreneurship. This importance of a thriving economy involving contributions from all sectors of society cannot be underestimated. However, what the new policy fails to do is to take a long-term view of who really needs assistance accessing early childhood education, the economic benefits of both early childhood education, and the continued engagement of women in the workforce.

1. Early childhood education benefits the economy

It is well established, through numerous longitudinal studies, that ‘children’s engagement in quality early childhood services is linked to positive outcomes for children…with educational and economic benefits’ (Leyland & Smith, 2015). But with so many families worse off under the new subsidy, many of them are likely to seek alternative care options for their children. This could involve removing their children from formal early childhood education to revert to nannies, au pairs, grandparents, or irregular attendance at activities like playgroup, story time or music groups. The end results is that these alternative care options often don’t offer the ongoing measurement against developmental milestones and learning outcomes available in formal early education settings. Inevitably, there is a risk that children with increased vulnerabilities may slip through the cracks, potentially missing out on the additional support that could ensure their development remains commensurate with that of their peers.

This means that it is the children who suffer under the new subsidy, without access to regular, ongoing early childhood education, from qualified and experienced early childhood educators. As we know from studies that underpin the Early Years Learning Framework, the long-term benefits to a child’s social, emotional and cognitive development as a result of early childhood education, will be lost if children no longer have regular and sustained access to structured early learning. This means that children who no longer have access to regular, ongoing early childhood education, from qualified and experienced early childhood educators under the new subsidy risk falling behind, particularly if their parents and/or alternative carers are not equipped to recognise or respond to increased learning needs of children in a timely manner.

2. Working Mums benefit the economy

A glaring oxymoron in the new policy is the fact that high income earning families are also being penalised for achieving success in their careers at a time when they have young children. We can all say that both parents’ incomes should be considered when talking about who might actually be impacted by the loss of the childcare rebate, but the reality is that our society is still predominantly patriarchal and the primary care of children is still largely delivered by women. This means that when heterosexual couples need to come to a decision about who should not return to work after a period of parental leave, for the most part it will be the woman who takes the self-sacrificing position and puts their career on hold, because the current system does not support them. This is on top of the career break many women take following the birth of their child, further delaying the progression of their careers as they take further time outside of the workforce.

The 2015 ‘working mom study’, as it became known, found that children who were raised by mothers who worked, performed better in adult life, whether it was women achieving more successful jobs, or men making positive contributions to domestic life. It is therefore pretty easy to see, from this study alone, that taking women out of the workforce will have a negative impact on the economy in the long term.

3. Vulnerable children are left behind

As captured by Lisa Bryant in her recent article, vulnerable and at risk children will no longer receive priority in the allocation of funding, yet the Government has ‘made no apologies’ about prioritising contributions to the economy over early childhood education for children.

The entire early learning framework in Australia was overhauled only a matter of years ago to change the focus of childcare so it achieved measurable positive outcomes for children. But yet, in the blink of an eye, the funding system that underpins access to childcare shifts its focus to parental re-engagement in the workforce. If the policy rewarded women who had achieved success in their careers, then we wouldn’t need to shift the focus so strongly towards parents returning to the workforce.

It is disappointing to see that the focus of the new Child Care Subsidy is on short term re-engagement in the workforce and economy, rather than the long term economic benefits of both early childhood education and the retention of women in the workforce. We can only hope that children’s access to education can still be met in other ways to deliver the long-term benefits to the economy that we know is achieved through access to early childhood education.

Andrea Christie-David is a human rights lawyer, company director, mother of three, and founder and Managing Director of Leor In Home Early Learning.

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