The Education Minister says the temporary scheme has fulfilled its purpose, but the childcare sector is not going back to normal just yet.
Today, Education Minister Dan Tehan announced the Federal Government’s free childcare scheme was coming to an end.
After it was flagged to wind up on June 28, Mr Tehan said the scheme would end on July 12.
Let’s unpack what today’s announcement means.
What was the scheme supposed to achieve?
The whole point of the scheme was to stop the childcare sector from collapsing due to a lack of demand from parents whose jobs were impacted by the coronavirus outbreak and could not afford to keep their children in child care.
Free child care also meant essential workers could continue going to work especially while schools were closed during the pandemic.
Did it do what it was meant to?
Last month, the Federal Government handed down a report into the policy. At that time, childcare centres were at 63 per cent capacity.
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The Federal Government report found 86 per cent of childcare services said the scheme helped them stay open and 87 per cent said it allowed them to care for the children of essential workers and vulnerable children.
But some workers said they suffered pay cuts as a result of the scheme, with some reporting they were earning as little as $5 an hour when the parental contribution was changed.
Today, Mr Tehan said demand had reached 74 per cent across all parts of the sector, citing a recent survey.
“What we have seen is demand grow and grow over the last few weeks so that we needed to change the system,” Mr Tehan said.
“This system was designed for when demand was falling. Now, we are seeing demand increasing.”
But Mr Tehan couldn’t guarantee the demand for childcare places would fall once parents have to start paying for care again.
After today’s announcement, Labor’s spokeswoman for early childhood education and development, Amanda Rishworth, said “snapping back” to the previous system would hurt families.
Does everything go back to normal after July 12?
From July 3, the sector will be entering a transition period.
That will mean parents will go back to paying for child care under the Child Care Subsidy [CCS] which was in place before the scheme began in April.
But there will be a three-month support package worth $708 million, which will see the Government pay childcare services 25 per cent of their fee revenue.
This money will depend on centres capping their fees at their February rates and guaranteeing their staff numbers, with childcare workers being moved off the JobKeeper program.
These payments will continue until September 27.
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Ms Rishworth said going back to the old system would act as a “handbrake” on the economy, disadvantaging parents.
“The Government had a number of options on the table. And they chose none of them,” she said.
“They chose not to change the CCS percentage. Not to look at which groups might really need free child care. They chose just to snap back.
“What we know is that for many families, the cost of child care prior to this pandemic was just out of reach. It was too expensive and too difficult.
“What the Government said is ‘bad luck’ ‘bad luck, you are going to face the same fees that you did prior to this’ one of the most expensive in the world.”
Labor says plan to end free childcare would act as a “handbrake” on the economy.
What if I still can’t afford child care?
The Government is temporarily relaxing the activity test parents have to meet to qualify for fee subsidies.
“The changes to the activity test will help those families who have seen either their work hours reduced or who have lost their employment,” Mr Tehan said.
“When it comes to the activity test, they will have to pay minimal fees, the fees that they were paying previously.
“But if they have seen reduced income, what the activity test changes mean is that those payments that they make will be up to the gap and no more.”
Under the changes, parents who make the minimum requirements for working, studying or volunteering will receive up to 100 hours per fortnight of subsidised care.
The activity test will be eased until October 4.
If you’re on JobSeeker payments, Mr Tehan said you’ll still qualify for the automatic allotment of 72 hours of subsided care.
I’m a childcare worker, how will this affect me?
Mr Tehan said childcare workers would be moving off the JobKeeper program, which will be replaced by the transition payment.
“It will probably be a tiny bit less than what JobKeeper would be,” he said.
Will JobKeeper payments for other industries end early too?
We don’t know.
Mr Tehan said shifting of workers from the JobKeeper program was specific to the childcare package.
He said the Federal Government would be reviewing the scheme some time this month.
“The Government said that there will be a review in June so I am sure that the Prime Minister and the treasurer after that review will have more to say.”
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