Child Care

 

Response to Productivity Report

Impacts on Sole Parents from Final PC Report  (Bottom of the page is NCSMC`s submission)

 Key Points:

 •             On one hand, the PC notes that single parent families are much more likely to be living in poverty and that single parent families living below the poverty line make up a significant number of families. However, the PC also notes that their model would actually see 2,400 single parents exit the workforce as a result of losing access to subsidies (page 685).

•             The PC’s recommendations create new barriers to workforce participation for sole parents, decreases affordability for sole parents and actually results in sole mothers that are currently working, leaving the workforce. This model must be rejected and the key recommendations outlined below should be adopted in the final package.

 

 

 

National Council for Single Mothers and their Children

The National Council for Single Mothers and their Children is very concerned that the PC’s proposed reforms will make child care less accessible and affordable and will create new barriers to work for single mothers and will reduce the opportunities for their children to benefit from quality ECEC.

 

Single mothers and their children benefit from access to quality ECEC and the Government has a role to play in ensuring access to ECEC is affordable for sole income households. The ECEC system provides an important universal and tertiary services system for single mothers; they rely on it day in-day-day-out and rely on it even more when they are doing it tough. For example, for single mothers experiencing domestic violence and / or homelessness, access to their regular day care for their children helps maintain a stable and safe learning and care environment. Single mothers are also more likely to experience barriers to work and study as the sole carers of their children, there is no-one to share the pick-ups and drop-offs and they rely heavily on accessible affordable childcare in order to participate in the workforce.

 

The Council is very concerned that the proposed reforms will mean most single mothers and their children will be worse off by removing access to a universal entitlement to subsidised child care and early learning, by increasing out-of-pocket expenses and by removing the safety nets that are available to single mothers and their children.

Our concerns are discussed below followed by our recommendations for the Final Report.

1.     Single mothers in receipt of Parenting Payment Single will have a reduction in their subsidised child care under the PC’s proposed model.

  • At the moment PPS recipients can access a minimum of 24 hours of CCB. In addition they can also access a 50% discount through CCR if they are engaging in any work, study, training or 15 hours of volunteering that will help them find employment.
  • Under the proposed activity test these mothers will receive only 10 hours of subsidy per week and will have to pay the full childcare fee for any additional days.
  • One day of early learning and care per week is inadequate for children to form attachments with their educators and to achieve early learning and development outcomes.
  • The PC’s proposal will lead to worse outcomes for single parents and their children by reducing access to ECEC and creating new barriers to participation in work, study or training.

 

2.       Single mothers engaged in work for less than 24 hours a fortnight will lose access to the 50% child care rebate and will have to pay the full child care fee making work unaffordable for many under the PC’s proposed model.

  • At the moment, working single mothers can access CCR, providing a 50% rebate up to $7500 per child per year if they are engaged in any work study or training. There is no minimum number of hours.
  • There are many low, middle and high income women who work less than 12 hours per week in order to juggle their family responsibilities as the sole carer for their children. They may not be able to increase their hours due to family responsibilities or they may not be able to increase their hours because their employer does not have additional hours to offer them.  Under the proposed activity test these mothers will not receive any access to the ECLS child care subsidy.
  • This will have negative consequence for mothers and their children by removing access to early learning and socialisation opportunities for their children, creating new barriers to undertaking any work, forcing single mothers to rely on unregulated ‘informal’ care.

 

3.       Parenting Payment Single Recipients will no longer have access to the JET Program to assist with the cost of child care while they are undertaking study.

  • Many parents on PP do undertake some work, study or training, and if eligible for JET child care (plus CCB & CCR) they currently receive almost free child care.
  • Around 33,000 families receive JET assistance every year.[1] We understand that the majority are single mothers on Parenting Payment Single who are voluntarily taking up study or training.
  • We note the PC’s conclusion that these families will be able to access the ECLS subject to the work test. However, we expect there would be some JET families who are participating below the new work test who will no longer receive any assistance.
  • For example, a single mother who goes to TAFE one day a week would not be eligible for any child care assistance – which would make child care completely unaffordable.
  • For those parents that do meet the new work test – many will face higher out of pocket costs than under JET due to the Commission’s benchmark price model.
Example of impact on single mother currently receiving JET 

A single mother on PPS eligible for the new ECLS would get 85% of the ‘median benchmark price’. Whether she will have to pay more for child care will depend on what the fees are at her child care:

  • If she uses a service where the fees are at the ‘median fee’ – she will pay 75c / hour ($8.70 a day), which is about $2.90 more a day than what she pays now (based on current out of pocket of about 50c/hr).
  • If she uses a service that costs $100 a day (eg. Redfern, Sydney), she will pay at least $1.20 an hour ($13.40 a day) which is more than double her current out of pocket cost.

NB: all calculations based on 11.5 hr day. Out of pocket costs would be higher if centre offered a shorter day because subsidies provided on hourly basis.

 

 

4.       Single parents accessing ECEC in markets above the median price will have higher out of pocket expenses than they do currently, making child care relatively less affordable and exacerbating the barriers to work, study and training.

  • There are many single parents living in inner city and metropolitan areas so they are close to work. ECEC in these areas tends to be higher cost, reflecting the higher cost of living. A recent NATSEM report showed that child care can cost more than $140 per day in some capital cities which is more than a full time wage for many low income women. The report also notes that the vast majority of Sydney  and Melbourne has middle or high price to income ratios. Many of these inner city areas have big populations of sole parents living in apartments and public housing.
  • The ‘media benchmark price’ model applied as proposed by the PC would see ECEC become relatively less affordable for working single parents. A single parent earning $50,000 accessing child care for $113 per day would be around $10 per day worse off, over a fortnight if they were in full time care that could be an additional $100 per child they would have to find.
  • The ‘benchmark price’ must be set so that it ensures affordability is improved for working sole parents, the current model makes it worse for many single parent families.

 

5.       Single parents with more than one child will have higher out of pocket expenses because the income thresholds do not move upwards with additional children.

  • The current CCB income thresholds include a ‘child add-on’ which reduce the impacts of effective marginal tax rates and help ensure it is affordable for women from low and middle income families to return to work when they have more than one child.
  • The PC’s proposed model does not include this important policy design feature and the consequence is the ECEC will be less affordable, especially for sole income households with multiple children under school age. To expand on the example above, a single parent earning $50,000 accessing child care in a capital city area for $113 a day for two children would have to pay more than an additional $200 per fortnight compared to the current system.
  • The income thresholds must include an appropriate per child add-on to ensure affordability is improved for low and middle income sole parents.

 

6.       Single mothers and their children experiencing trauma and financial hardship will no longer be able to access short term fee relief because the PC is proposing to abolish the Financial Hardship Special CCB program.

  • The current program which provides 13 weeks of 100% subsidy for families experiencing financial hardship is vital to supporting single mothers experiencing trauma that impacts on their ability to pay their child care fees. Some examples include: women escaping from domestic violence, those experiencing homelessness (often as a result of domestic violence), those who have experienced a major injury or illness, those who have another child that has experienced a major injury or illness.
  • In all of these circumstances access to financial hardship assistance ensures that a stable child care environment is maintained which is beneficial for the children and for their mother. This allows the child to feel safe and secure in their regular care environment and also provides much needed respite for their mother, for example to attend appointments with lawyers and doctors, look for housing or look for work. Without access to financial hardship assistance this simply wouldn’t be possible and would have negative consequences for children and their mothers.

Key Recommendations

  1. Single parents should maintain existing access to subsidies given the challenges they have in accessing in informal care and maintaining their connection to the work force.

 

  1. Parenting Payment Single recipients and sole parents should have access to a base entitlement that provides subsidised access for parents who do not meet the activity test but are engaging in some work, study or training or who are engaged in seasonal or casual work and may not meet the activity test in all fortnights.

 

    1. The proposed subsidy system creates new barriers to work by making childcare unaffordable for women working one or two shifts a week in casual employment. This is unacceptable and must be addressed in the Government’s response.

 

  1. Parenting Payment Single recipients should receive at least 2 days subsidised care that is exempt from the proposed activity test to ensure access to ECEC and preschool is affordable in recognition of the benefits for children

 

  1. Short term financial hardship assistance must be retained for mothers and their children where they receive full fee relief for 13 weeks, consistent with the current program.

 

  1. A program similar to JET should be retained to support single mothers to access training so they can improve their chances of securing employment.

 

  1. Parenting Payment Single recipients and sole parents should have the income thresholds adjusted upwards to reflect that the family income is based on a sole income earner. This will help ensure the relative affordability of child care for sole parents and will remove disincentives to work.

 

  1. The income thresholds should be adjusted upwards by a reasonable child-add on for each additional child in ECEC or OSHC in recognition of the additional costs for single parents with multiple children.

 

  1. The ‘benchmark price’ must be set higher than the median and act as a daily cap to ensure single mothers in markets above the median price are not worse off than under the current system.

 

Productivity Commission Submission -    Productivity Commission Final 


[1]Department of Education Portfolio Budget Statement 2014-15.

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