Childcare subsidies may be pushing up fees: union

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Childcare subsidies may be pushing up fees: union

The childcare workers union believes subsidies paid to parents may be pushing up fees at childcare centres.

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The childcare workers union believes subsidies paid to parents may be pushing up fees at childcare centres.

The union, United Voice, said instead of paying the subsidies to parents they should be paid direct to the centres, which should have their fees regulated.
 
The United Voice submission to a federal government summit of childcare providers and unions said that last year, the Commonwealth spent $4.2 billion on childcare subsidies to parents — almost three times what it spent eight years earlier.
 
Annual rise of 11%
 
Yet, according to research by the union, childcare fees nationally increased by an average of more than 11% between April 2011 and April 2012.
 
The main subsidies are the means-tested childcare benefit, and the non-means-tested childcare rebate, which pays parents 50% of their out-of-pocket costs up to a yearly cap of $7500.

The union’s submission strongly criticises the rebate, arguing it may actually be fuelling fee increases despite being intended as a measure to make care more affordable.

‘As a subsidy based on the principle of subsidising market prices rather than actual costs, [the rebate] is a highly problematic form of public expenditure, which may itself be a significant contributing factor towards fee inflation,’ the submission said.

Can’t control fees
 
The union said the rebate gave the government little capacity to control prices, but committed the government to subsidise whatever price the operators opted to charge.

Currently, parents can choose whether to have the rebate paid to them or to their childcare centre.

The union argues this choice should be removed and the rebate paid directly to centres to put them in a stronger financial position by giving them more secure cashflows and reducing debts from parents.

United Voice called on the government to regulate fees through an independent price-setting authority.
 
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