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Issue #1454      12 May 2010

Time to overhaul childcare funding

A new Australian Treasury Working Paper on childcare availability, quality and affordability strengthens arguments for a complete overhaul of childcare funding in Australia, according to the childcare workers’ union, Liquor, Hospitality and Miscellaneous Workers’ Union (LHMU).

Sue Lines, LHMU assistant national secretary said, “For many families the Australian childcare system fails the test on affordability, quality and availability.”

This Treasury Working Paper confirms childcare is a key determinant of whether women return to work after having children. It shows that every 1% lift in gross childcare price cut mothers’ employment rates by 0.3% and cut their hours worked by 0.7%.

“As the Working Paper says, this debunks the widely-held view in Australia’s literature that women’s labour supply is not responsive to the childcare environment, especially in respect to the cost of care.”

The research also points to a crisis in affordability for many Australian families. To resolve this crisis the union said that the funding system must be overhauled.

“The current system is a ‘dog’s breakfast’ which encourages profiteering by unscrupulous operators and effectively works against sustainable and quality childcare,” said Ms Lines. “There is strong evidence of the inflationary effect of the current funding model where increases in direct funding to parents act as a green light for operators to increase fees.

“The Council of Australian Governments reforms announced last year are an important first step on bringing quality up to scratch but the government’s job is only half done.

“To succeed these reforms must be accompanied by parallel changes to the overall childcare system. What’s needed is a deep, roots and branches, review of the funding system, not more tinkering around the edges.

“At stake is essential infrastructure, with a critical role in the economy and in the lives of working Australians.”

The LHMU has called on the federal government to take the inevitable next step in childcare reform by acting to fix the funding crisis. 

Next article – Telstra workers take action

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