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News: The draft recommendations of the productivity child care report are out....

The report gives more flexibility for child care options.

After a long wait and an endless amount of media speculation, the Productivity Commission has released its draft inquiry report on Childcare and Early Childhood Learning.

One of the key features of the proposals is what many were counting on – the ability to claim back the costs of nannies.

The average out-of-pocket cost of childcare in Australia is 27 per cent of the average wage — which is less than in Britain, the US, New Zealand or Canada. However the number of women who work has increased in the past two decades – from 57 to 66 per cent – and the bill for childcare costs has also grown, with some families finding its financially just too difficult to send their kids to childcare.

With more than 40 per cent of children aged 12 years or under using some type of informal care on a regular basis, and nearly one in four parents working part time being unable to work more hours due to unmet demand for childcare, there is a desperate need for an overhaul of the system.

Some of the submission details concern over stay-at-home mums taking much needed child care spots: “But the reality of childcare is that it should be more directed at working families. Spots can be filled by stay at home mums … just looking for time off from the baby for a cheap ‘babysitting’ rate,” wrote one contributor. While others were concerned with the lack of after school care: “My eldest daughter attends Leichhardt Public which in 2014 will have 650 students but only 180 spots for after school care. I have friends whose second child cannot access this service as they are full – and they are on the priority list. Next year will be even worse.”

The key recommendations of the report are:

Nanny subsidy

Means testing of a single childcare rebate

One of the key recommendations is that grandparents, nannies or babysitters could be eligible for a government payment if they had at least a Certificate III in early childhood education. (Which is not exactly an easy task, being a one year full-time or two year part-time course..)

The current costs of a nanny varies from $20 an hour to around $27 an hour. This does not cover au pairs – however it does recommend that the current restriction on au pair’s visas be amended, allowing au pairs to remain with a family for the full twelve months of their visa rather than the current limit of six months.

The report says that, “This reduces the transition costs for families changing to a new au pair every six months and the continuity and stability that this would enable would also be of benefit for children.”

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Single means tested payment

The complicated system of childcare subsidies currently on offer would be replaced with one means-tested payment that would go directly to the parents’ choice of provider. “Some of our key recommendations include replacing the current multiple childcare subsidies with a single subsidy that would be paid directly to the parents’ choice of provider, and be means and activity tested. The subsidy would be based on a set reasonable cost of care,” Presiding Commissioner Dr Wendy Craik said.

The means testing of a single childcare rebate would still see eligible families receiving a minimum of 30% of their reasonable childcare fees reimbursed by taxpayers. The payment would be paid directly to the family’s choice of approved services, for up to 100 hours per fortnight.

Those on a family income of $60,000 or less would get 90 per cent of the cost of childcare covered. Families on $300,000 or more would get 30 per cent. There would be additional funding for children with extra needs.

After school care and occasional care

After school care provisions would also be extended so that all school principals have the ability to provide after school care – and interestingly, this recommendation says that this would include care for preschoolers. For those despairing the lack of occasional care it calls for a removal of the restrictions on the number of child care places for occasional care and the hours that centres have to be open in order to receive Government subsidies.

Pre school funding

The commission found the Federal Government should also maintain the current funding arrangement for pre-school for four-year-olds that provides 15 hours a week. It also found that governments should continue to contribute funds to preschool programs in long day care (LDC) centres. The federal government is waiting on a review before deciding the future of the current state-federal funding model to give each child 15 hours.

Additional jobs

The report says that these recommendations would see a a GDP impact of an additional $5.5 billion and would encourage up to 47,000 more mothers back to work. The new system would cost the government about $8 billion a year – this is  roughly $1 billion more than child care assistance costs now. The draft submission will be finalized by the end of October – and it remains to be seen which, if any, of its recommendations will become reality.

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