Child Care Package Evaluation: Final report

Content type
Research report
Published

February 2022

Researchers

J. Rob Bray, Jennifer Baxter, Kelly Hand, Matthew Gray, Megan Carroll, Richard Webster, Ben Phillips, Mikayla Budinski, Diana Warren, Ilan Katz, Anna Jones

Executive summary

Child care plays an important economic and social role in Australia. For parents, it supports their participation in employment, education and training. For children, quality care can support child development, particularly for vulnerable and disadvantaged children and their families. In recognition of its importance, child care in Australia is substantially subsidised by the Australian Government via fee subsidies and some specific direct funding to some services. Child care services are regulated in relation to quality and other aspects of their operation.

In July 2018 the Australian Government introduced the 'Child Care Package' as a significant reform to child care provision and funding. It involved a major restructuring of subsidies and a range of other measures, and significant additional government expenditure. The core objectives of the Package are to support families to be able to access quality early learning, enable and encourage greater workforce participation and simplify child care payments, and targeting assistance to low and middle income families. Its goal was for child care to be 'simpler, more affordable, more accessible and more flexible'.

The new Child Care Package has 2 key elements:

  • Child Care Subsidy (CCS) - this is the main form of Australian Government financial support to parents as a subsidy for child care costs. Key elements of this are: a subsidy paid as a proportion of the cost of care up to an hourly fees cap with the rate tapering, from 85 per cent, with increasing income, and with the total value of subsidy capped for some households; along with limits on the number of hours of care for which the subsidy is paid, determined by the level of parents' participation. The subsidy is usually paid to the service as an offset to the fee that would otherwise be paid by the parent.
  • The Child Care Safety Net comprising:
    • Additional Child Care Subsidy (ACCS) - additional fee assistance directed at families and children who may face barriers in accessing affordable child care
    • Inclusion Support Program (ISP) - support for services to build their capacity and capability to include children with additional needs in mainstream services
    • Community Child Care Fund (CCCF) - grants to child care services to help them address barriers to participation and to support service sustainability, and for services in areas of high unmet demand.

It also involved regulatory change, a new IT system and the incorporation of some 'Budget Based Funding' (BBF) services into the main child care system.

Prior to the Child Care Package, there were 2 main forms of child care assistance for parents: Child Care Benefit (CCB) and Child Care Rebate (CCR); along with a range of complementary programs addressing children with additional needs, and families with barriers to access and services.

The Australian Institute of Family Studies, ANU Centre for Social Research and Methods, UNSW Social Policy Research Centre and the ANU Social Research Centre were commissioned by the Department of Education, Skills and Employment ('the Department') to undertake an evaluation of the new Child Care Package ('the Package'). The evaluation commenced in December 2017 prior to the introduction of the Package in July 2018.

The evaluation primarily considers the impact of the new child care subsidy system (comprising the Child Care Subsidy (CCS), Additional Child Care Subsidy (ACCS) and the Community Child Care Fund (CCCF). It also covers the Inclusion Support Program and the In Home Care Program, which are subject to separate reporting, with some findings synthesised into this overall evaluation.

The evaluation drew heavily upon the administrative data on the children's and families' use of child care along with surveys implemented by the Department and by the evaluation team, as well as extensive qualitative data from consultations and location-based case studies. It also drew upon contemporary literature and data published by the ABS and others.

The evaluation was impacted by external events, particularly COVID-19, which resulted in the suspension of the child care funding system for a period during 2020. As a result, the evaluation only draws on data to the end of 2019 and does not include data from 2020 as originally intended. We, however, consider that the elements of the Package were sufficiently implemented, and the evaluation had collected adequate information, to enable conclusions to be drawn on the program outcomes and impacts.

Use and provision of child care

  • In the December quarter 2019 over 1.3 million children from 933,648 families used a child care service in Australia provided by 13,118 child care services. Of these services 61.8 per cent were Centre Based Day Care services, 34.4 per cent were Outside School Hours Care services, 3.5 per cent were Family Day Care Services and 0.3 per cent were In Home Care services.
  • Overall, parents have a relatively high level of satisfaction with the quality of child care, with around half stating that they were 'satisfied' and a bit over a third saying they were 'very satisfied'. There was no change in parental satisfaction with the quality of child care with the introduction of the Package.

The evaluation assesses the Child Care Package against 4 key outcomes and 3 key impacts that reflect its policy objectives. In addressing these the evaluation has largely adopted a comparative focus; that is, whether the Package has had any positive or negative impacts relative to outcomes under the previous funding arrangements.

Outcome 1: Child care services are accessible and flexible relative to families' needs, including disadvantaged and vulnerable families

Accessibility

  • Access to child care has several dimensions including quality and cost. While access and flexibility for all families is considered, a particular focus is on outcomes for children from more vulnerable groups.
  • Analysis of data at the time of the implementation of the CCS and the following 18 months shows no marked changes in access to child care. There are though large differences in access geographically, and issues for children with additional needs.
  • Parents generally had a positive view about the accessibility of child care. There was an increase in the satisfaction of parents with a child aged 5-12 years using care with regard to ease in finding quality child care and with child care in a convenient location but not across other measures. For parents with a younger child in child care - that is, for the main group of parents - there was no improvement in satisfaction.
  • Some parents report having greater difficulties in accessing child care for children with additional needs. There is also evidence that exclusionary practices within the child care sector are impacting access.

Flexibility

  • As part of the Package, regulatory requirements related to the hours and days services must be open and some other regulatory requirements that limited flexibility were removed. Services were encouraged to look at more flexible offerings, including shorter sessions, in response to these changes, and the limits on subsidised hours of care provided under the CCS.
  • There are mixed levels of parental satisfaction with flexibility. Capacity to change hours received the second lowest parental satisfaction rating (only above affordability). Other aspects of flexibility were more neutrally rated by parents. These ratings have not changed following the introduction of the Package.
  • There was little change in the hours for which care was available since September 2018. Within the Centre Based Day Care sector there has been some shift to services offering shorter sessions and multiple sessions in a day. About one in 20 children are using shorter sessions following the changes, and only 2.2 per cent of children are using 6-hour sessions. Analysis, however, suggests that much of this change has been designed to work around the structure of the CCS to maintain revenue and limit parents' costs, rather than representing any real change in provision. Where shorter sessions have been introduced, they often have fixed and limited start and end times.
  • In Home Care does provide a form of flexible care to families, and there is a high degree of satisfaction with In Home Care among those who use it. But there have been challenges with the program, particularly related to the availability of suitably qualified educators. The Family Day Care sector also has the capacity to deliver flexible care.
  • The key barriers to providing more flexibility in child care are economic. The failure of services to respond to the demand for these types of flexible care largely reflects the costs involved.

In summary, the introduction of the Child Care Package has had little impact on the accessibility or flexibility of child care provision. There is though considerable variability in experiences of access to child care, and barriers to access for some children, particularly those with additional needs whose access may be affected by exclusionary practices by services. These exclusionary practices warrant further investigation to better understand the extent of them, as well as their cause and impact.

Outcome 2: Access to child care support is simple for families and services

  • A key feature of the Package was the replacement of the 2-part, CCB and CCR, subsidy arrangement with the single CCS. This was accompanied by regulatory changes for services to reduce some constraints and streamline processes, along with a new IT system. These were all seen as elements that would improve the simplicity of the provision of child care support. At the same time, more detailed activity testing and the use of Centrelink for all access to subsidies can make the system more difficult to navigate. The system has become simpler for some and more complex for others.
  • Parents were only weakly supportive of the system being easier to understand than the previous system, with the largest group neither agreeing nor disagreeing that the CCS system is simpler. Low to middle income earners were more likely to see the new system as being simpler than those on higher incomes.
  • For most people, the processes operate relatively smoothly. However, when issues arise, resolution of these are reported as being difficult. Two specific issues had prominence in responses to the evaluation data collections. The first was the 2-stage process associated with agreeing: the Complying Written Agreement and then confirming the enrolment. The second was the operation of both the DESE Helpdesk and Centrelink Helpdesk, with strong negative feedback on these including tardiness and issues not being resolved. There were also concerns raised about the functionality and ease of use of the Centrelink calculator relative to that produced by DESE prior to the transition.

Outcome 3: Child care is affordable to families especially those with limited means

  • Improving affordability of child care for low and middle income families was central to the Child Care Package, with the new CCS also including a taper reducing, and then ceasing, the payment of subsidies to high income earners, along with a cap on subsidies for some. The hourly fees cap, indexed by CPI, limited the level of subsidy and was seen as a means of putting downward pressure on fees. The shift to the CCS is estimated to have resulted in additional government expenditure of 6.3 per cent or $453 million in 2018-19 as compared to what would have been spent under the previous system.
  • There had been a long history of government interventions to reduce the cost of child care as measured by the CPI. These historically, while reducing the cost in the short term, did not impact the long-term trend, with the cost of child care trending well above the CPI but consistent with trends in earnings.
  • Fees charged by services have increased at a similar rate following the introduction of the Package to what they were before the changes, with the exception of In Home Care - where associated with the new program structure, the hourly fee is dramatically higher than under the former program- and in Family Day Care, with a continuing shift from sessional to hourly charging. Moreover, the subsidy fees cap is regularly exceeded by services. This suggests that the Package has not been effective, to date, in reducing increases in child care fees.
  • In 2018-19, 13.3 per cent of hours of child care paid for were unsubsidised and 52.6 per cent of families have some unsubsidised hours. While much of the volume of unsubsidised hours relates to people who have no receipt of CCS, the incidence of unsubsidised hours of care, although varying, persists across all points of the income distribution including those on low income, and across the bands of approved hours.
  • Extensive modelling was undertaken of the impact of the CCS relative to the CCB/CCR system. This used the 2018-19 population of child care users and estimated, using their actual current fees, income and usage, the value of assistance under the CCS and the old subsidies. This found that the CCS had:
    • Reduced the net cost of child care for 62.2 per cent of families using child care, had little impact on the cost for 8.6 per cent and increased the net cost for 29.2 per cent. The annual average income of those that gained was $95,848 compared to $177,240 for those whose cost increased although, overall, there is little difference in net child care costs for the income range $157,335-$240,818 per annum.
    • For those with a reduced cost under the CCS, the average proportion of gross income spent on child care fell from 6.7 per cent to 4.5 per cent, with annual net spending falling from $5,412 to $4,026, and the median cost fell from 4.4 per cent of gross family income to 3.2 per cent, and actual spending from $3,472 to $2,436.
    • Across all families the Package has reduced the median annual net cost of child care from $2,957 to $2,507 per annum. As a proportion of gross family income, it has fallen from 3.0 per cent to 2.7 per cent.
  • The gains were strongest for low income families, families with larger numbers of children using child care, families using longer periods of care and for those using for-profit Family Day Care. Once controlled for family characteristics there were no strong regional effects.
  • Parents' survey responses showed a marked and statistically significant increase in parents reporting that child care was affordable following the introduction of the CCS. However, in November 2019, parents with a youngest child aged under 5 were still more likely to disagree (54.7 per cent) than agree (28.4 per cent) that child care was affordable, although those with older children were more equally balanced.
  • The Consumer Price Index shows that the changes resulted in an 11.8 per cent decline in the costs of child care in September 2018. Prices have been adjusted at a faster rate than the overall CPI since June 2018. By March 2020 almost three-quarters of the reduction in the child care CPI had been lost.
  • The annual subsidy cap only impacts a small number of families (about 14,500 in 2018-19) mainly in the income band of $186,958-$251,248, and it is estimated that it only reduced government expenditure on CCS by $24 million in 2018-19.
  • More broadly, while the higher benefits from the Package have reduced the immediate cost of child care to families, there is little evidence in the data available to the evaluation of the hourly fee cap working as a constraint on fees being charged by services. Additionally, there is a significant group of parents being charged for hours beyond those subject to the CCS.

Outcome 4: Child care services are viable and the sector robust

  • It is noted that this evaluation is of the operation of the system to the end of 2019 and thus does not take account of the economic and social disruptions associated with COVID-19.
  • In 2018-19 child care subsidies accounted for some 60.7 per cent of services' revenue from care provision. The largest parts of the sector, Centre Based Day Care and Outside School Hours Care, are considered to be robust and viable. Other than a spike at the point of introduction, there was no change in the level of new services entering and exiting.
  • Since Q2 2017 there has been strong growth in the number of Centre Based Day Care services and a marked decline in Family Day Care, with 79.6 per cent of exits in this sector being associated with government compliance activity.
  • The roles of these sectors vary considerably across locations, with the not-for-profit sector providing an increasing proportion of services outside the capitals, especially in non-urban locations. There has been a trend towards consolidation across the sector. At the provider level, the Outside School Hours Care sector is the most concentrated and the only sector identified as consistently becoming more concentrated (i.e. the extent to which market share is concentrated among a small number of providers) over the past 3 years.
  • Analysis of self-reported service viability indicates that most services viewed themselves as viable, although there was a slight, but statistically significant, drop in this pre and post the introduction of the Package. Relative to Centre Based Day Care, the In Home Care sector was much more negative, and Family Day Care somewhat more negative about their viability, while Outside School Hours Care services were more positive.

In summary, the introduction of the Package appears to have had little impact on the viability of the sector as a whole. The for-profit Family Day Care sector has been the focus of compliance actions and, in larger states, its role has declined dramatically; at the same time, there has been a small but steady reduction in the for-profit sector. In the In Home Care sector, the new program and the increase in subsidy rates are still bedding down and longer-term viability is unclear. A number of services, in particular former BBF services, are effectively underpinned by the CCCF, with the program appearing to be acting, and potentially required, as an ongoing complementary funding stream for services that are unlikely to be viable under the CCS alone.

Impact 1: Parents of children can engage in work, education and the community

  • The Package was designed to increase parents' participation in employment. More affordable, flexible and accessible child care was designed to increase the financial returns from employment and to allow parents to increase their workforce participation.
  • ABS Labour Force Survey data, surveys of parents conducted for the evaluation and child care system administrative data show small increases in parental activity, including employment, since the Package was introduced. However, these increases are not inconsistent with increases over a period of years.
  • When asked about changes in employment in response to the Package, some parents reported increasing activity and others reducing, consistent with expected economic behaviour. On average, the proportion reporting an increase was higher than those reporting a fall; by some 1.5 percentage points for single parents and 1.9 percentage points for couples. These results though were not statistically significant. There is no data available on the actual magnitude of this increased activity.
  • The introduction of the Package has reduced the Effective Marginal Tax Rates (EMTRs) facing parents increasing their work activity, although they remain very high for some. A range of scenarios were modelled and across these there was an average reduction of 8.5 percentage points in the impact of EMTRs on the earnings parents would gain from working an additional day. After these reductions, the median EMTR was 67.5 per cent, and a quarter of the scenarios had an EMTR of over 78.3 per cent. Generally, single parents had higher EMTRs than a second earner in a couple, and the EMTR tended to be higher when people moved, for example, from 4 to 5 days work, than from zero to one day.

In summary, the evidence suggests that the Package has had diverse impacts on parents' participation in employment. While, on balance, positive, the extent of this is small, and the overall trends are not inconsistent with historical trends in the workforce participation of families with children.

Impact 2: Vulnerable and disadvantaged children are engaged and supported

  • The introduction of the Package has had little impact on the overall use of child care among low and lower middle income families. Analysis indicates a small increase (0.2 of a percentage point) in participation for children aged 0-4 years who live in families in receipt of FTB, and a slightly larger but still small fall (0.6 of a percentage point) for those 5-12 years. There is no clear pattern on access for population subgroups, including those at a higher risk of vulnerability. Relative to overall changes, children of parents on a humanitarian visa, some children whose parents were in receipt of full-rate income support and some lower income single parents had a decrease in access, while Aboriginal and Torres Strait Islander children had a more positive shift. However, these changes are mostly small and do not represent a substantive change in access.
  • While access levels are close to overall community rates for some groups, such as children with identified health conditions, there are substantially lower participation rates for a number of vulnerable groups. These include Aboriginal and Torres Strait Islander children, low income families, especially those reliant on income support, some groups of children with CALD backgrounds, including children of humanitarian visa holders. A central issue is the extent to which these groups do not just require 'equal access' and are not obtaining this but, rather, for many of these children early childhood education can play a critical role in addressing their disadvantage.
  • The reduction in the minimum hours of subsidised care from 24 hours a week to 24 hours per fortnight has disproportionately impacted children in more disadvantaged circumstances.
  • Overall, the ACCS appears to be effective, but with a significant administrative overhead and with a number of aspects of its operation, including continuity of support, initial access, treatment of kinship and other caring arrangements and the concepts of child wellbeing and 'at risk' having potential for refinement.

Impact 3: Child care funding is sustainable for government

  • There is little evidence of any changes to the economic fundamentals of child care provision. While the industry is robust, and there is evidence of continued investment, this appears to be more related to the maturing of the sector and competition for market share. The main driver of cost is wages and it is to be expected that these, consistent with wage growth, will increase at a rate above CPI.
  • The evaluation did not identify any significant changes that would impact the ongoing drivers of costs in the provision of child care. Historically, while a series of other subsidy and related interventions have been successful in reducing the real cost of child care to families in the short term, none to date has changed the longer-term trajectory.

The assessment of the sustainability of child care funding is essentially an issue for government in terms of a balance of revenue and expenditure priorities. The evaluation did not address this question. From the evaluation findings there is little evidence of the Package impacting the fundamental drivers of cost in the provision of care. While indexation of the fees cap to the CPI will curtail the extent of cost increases to the government, this is by transferring these to parents.

Recommendations

  • The evaluation has made a number of recommendations:
    • Specific recommendations are made about improving processes when children commence care, review of approved hours under the activity test and safety net, especially for those with 24 hours a fortnight, the removal of the annual benefit cap, refinement of aspects of the ACCS, and reviewing the helpdesks and the calculator.
    • More broadly, the evaluation notes there are significant challenges in the provision of early childhood education and care, including the balance between child care as an enabler of parental workforce participation and the role of early childhood education and care in child development and as an instrument to address disadvantage.
Glossary

Glossary

 
AbbreviationDescription
ABSAustralian Bureau of Statistics
ACCSAdditional Child Care Subsidy
ACECQAAustralian Children's Education and Care Quality Authority
AEDCAustralian Early Development Census
AIFSAustralian Institute of Family Studies
ANAOAustralian National Audit Office
ANUAustralian National University
ANZSCOAustralian and New Zealand Standard Classification of Occupations
ARIAAccessibility/Remoteness Index of Australia
ASCOAustralian Standard Classification of Occupations
ATOAustralian Taxation Office
BBFBudget Based Funded Program
CALDCulturally and Linguistically Diverse
CAPIComputer Assisted Personal Interview
CATIComputer Assisted Telephone Interview
CBDCCentre Based Day Care
CCBChild Care Benefit
CCB/CCR 
CCB/R
Former funding model comprised of CCB and CCR
CCCFCommunity Child Care Fund
CCSSChild Care Subsidy System (formerly the Child Care IT System (CCITS))
CCMSChild Care Management System
CCPFamSChild Care Package Families Survey
CCRChild Care Rebate
CCSChild Care Subsidy
CCTRChild Care Tax Rebate
CPIConsumer Price Index
CRNCustomer Reference Number
CSPCommunity Support Program
CplCouple
CWAComplying Written Arrangement
DESEDepartment of Education, Skills and Employment. 
Also refers to predecessors: Department of Education and Training to 29 May 2019, 
and Department of Education to 1 February 2020
DET(Former) Department of Education and Training - see DESE
DHSDepartment of Human Services (On 1 February 2020, DHS became Services Australia)
DSSDepartment of Social Services
ECEEarly Childhood Education
ECECEarly Childhood Education and Care
ECEIEarly Childhood Early Intervention
EMTREffective Marginal Tax Rate
FDCFamily Day Care
FTBFamily Tax Benefit
FTEFull-time equivalent
GCCBGrandparent Child Care Benefit
GSTGoods and Services Tax
HILDAHousehold, Income and Labour Dynamics in Australia Survey
IASIndigenous Advancement Strategy
IHCIn Home Care
IRSADIndex of Relative Socio-Economic Advantage and Disadvantage
ISPInclusion Support Program
ISIncome Support
ITInformation Technology
ITRGImplementation and Transition Reference Group
JETCCFAJobs, Education and Training, Child Care Fee Assistance
LDCLong Day Care
LinALife in Australia survey
LOTELanguage Other Than English
NDISNational Disability Insurance Scheme
NFF-OCCNon-Formula Funded Occasional Child Care
NHMRCNational Health and Medical Research Council
NQA ITSNational Quality Agenda Information Technology System
NQFNational Quality Framework
NQSNational Quality Standard
OECDOrganisation for Economic Co-operation and Development
OLSOrdinary Least Squares
ORIMAORIMA Research Pty Ltd
OSHCOutside School Hours Care
PAESPortfolio Additional Estimates Statements
PEPProvider Entry Point
PIRPost Implementation Review
PolicyModANU Centre for Social Research and Methods microsimulation model
PRODAProvider Digital Access
rhsright hand scale
SCCBSpecial Child Care Benefit
SEIFASocio-Economic Indexes for Area
SELCSSurvey of Early Learning and Care Services
SESSocio-Economic Status
SNAICCSNAICC (Secretariat of National Aboriginal and Islander Child Care) - National Voice for Children
SIHSurvey of Income and Housing
SPSingle Parent
SPRCSocial Policy Research Centre
SRCSocial Research Centre
UNSWUniversity of New South Wales
1. Introduction: The Child Care Package

1. Introduction: The Child Care Package

This is the final evaluation report on the Child Care Package that was introduced by the Australian Government, in large part, in July 2018.

Due to the impact of COVID-19, some aspects of the evaluation of this program were curtailed, and the timing of the final report brought forward from mid 2021 to early 2021. Specifically:

  • The evaluation focuses on the implementation and outcomes of the program to end December 2019, as after this date parents using child care and services were significantly affected by the pandemic and policy responses to it. In the case of child care, this included the introduction of an Early Childhood Education and Care Relief Package which operated from 6 April to 12 July 2020 and which included the suspension of Child Care Subsidy payments, a Transition Payment over the period 13 July to 27 September 2020 involving a reintroduction of the payments, and a Recovery Package commencing on 28 September 2020 and which was anticipated to continue to 31 January 2021.
  • A number of data collection activities envisaged as providing central inputs into the final evaluation were not able to be conducted. This included not being able to undertake the third wave of the services survey.

1.1 The Child Care Package

In July 2018 the Australian Government introduced the 'new Child Care Package' through the Family Assistance Legislation Amendment (Jobs for Families Child Care Package) Act 2017. The new Child Care Package has 4 key elements:

  • Child Care Subsidy (CCS) - the main form of Australian Government financial support to parents as a subsidy for child care costs
  • Additional Child Care Subsidy (ACCS) - additional fee assistance directed at families and children who may face barriers in accessing affordable child care
  • Inclusion Support Program (ISP) - support for services to build their capacity and capability to include children with additional needs in mainstream services
  • Community Child Care Fund (CCCF) -enables grants to child care services to help them address barriers to participation and to support service sustainability, and funding for services in areas of high unmet demand.

The Additional Child Care Subsidy, Inclusion Support Program and Community Child Care Fund are collectively referred to as the Child Care Safety Net that provides additional targeted assistance for disadvantaged communities and vulnerable children and their families to address barriers to participation in child care and employment. The structure of the program is illustrated in Figure 1.

Figure 1: Structure of the Child Care Package

fig001.png

1.1.1 Program objectives

The Package's core objectives include addressing issues of affordability and increasing costs, improving flexibility and increasing the targeting of financial assistance, in particular, to support those parents who are working or looking for work.

This was articulated in the second reading speech by the Minister for Social Services as:

Almost one million Australian families will benefit as a result of this child care assistance package. Low- and middle-income families will be the greatest beneficiaries …

Together, these reforms will ensure that, in a fiscally sustainable way, we can achieve three important goals:

  1. continue to assist families in raising their children and provide access to quality early learning opportunities over the long term
  2. enable and encourage greater workforce participation; and
  3. simplify our child care payments and social security systems …

Our objective is to help parents who want to work, or who want to work more, while still focusing on early childhood education.

Having two parents in paid employment has become the preferred choice for most families because of the changes in our society and economy over many years. More affordable access to quality child care puts the opportunity of work within far better reach of more families.

The Jobs for Families Child Care Package is designed to support more families, including jobless families, to increase their participation in work, training, study or volunteering. The government's significant investment is targeted to those who need it most - low and middle income families who are juggling work and parenting responsibilities. (Porter, 2016)

The policy was seen as a major initiative. Minister Porter referred to it as a 'once in a generation reform to child care' (Porter, 2017a), a sentiment reflected in the Departmental media release on the passing of the legislation:

This legislation gives effect to the most significant reform to the early education and care system in decades and will better target those who want work or work more. It will give around one million Australian families relief from out-of-pocket child care cost pressures and provide more children with the opportunity to benefit from early education.

Over the next 15 months, the Australian Government will implement a new child care system which is more affordable, accessible and flexible. (Department of Education, Skills and Employment (DESE), 2017)

1.1.2 Implementation

The Australian Government Department of Education, Skills and Employment (DESE)1 is responsible for the implementation of the Package, with the operationalisation of the CCS through the Centrelink element of Services Australia, an agency within the Social Services portfolio.

The Child Care Subsidy commenced operation on 2 July 2018. Its introduction was complemented by a new Information Technology system which was developed with the objective of providing a simpler interface for both parents and services, and to automate the payment system. This includes, as of January 2019, a requirement for services to report actual 'in' and 'out' times of children as part of sessional reporting.

Changes were also made to the child care services regulatory framework. These included a strengthened set of requirements that services need to comply with, including reporting on children's actual hours of attendance, as well as the removal of some requirements related to hours of operation.

Some elements of the Package were implemented prior to the introduction of the Child Care Subsidy, with the Child Care Safety Net being progressively rolled out from July 2016. At this time, the Inclusion Support Program was introduced, as was the Connected Beginnings program, which is part of the Community Child Care Fund. Another early element of the Child Care Package was the Nanny Pilot Programme, initially called the Interim Home Based Carer Subsidy Programme. A new In Home Care (IHC) program was introduced in July 2018, which replaced the previous In Home Care program and the previous Nanny Pilot Programme.

Since its initial implementation, a number of changes and other measures have been introduced. In addition to those associated with COVID-19, as detailed in the introduction, these include:

  • A set of mainly technical reforms in a series of legislative instruments. Of note these included: an extension of the 'eight week' rule (see Chapter 3); increases in the In Home Care hourly rate (see Chapter 4); and the removal of the 50 per cent ACCS (Child Wellbeing) rule (see Chapter 7).
  • Changes to the Inclusion Support Program, including revised guidelines issued in March 2020 and changes in the IT environment for this program.
  • Additional emergency measures, mainly through the Community Child Care Fund (CCCF) program to support services adversely affected by drought and bushfires, but also including support for families in bushfire declared areas by exempting them from the CCS activity test for the financial year.

In addition to these, enhanced compliance activities in the child care sector, initially introduced in 2014, and mainly directed at addressing fraud and related misconduct, have been maintained. The impacts of these - in particular, with regard to Family Day Care services - are discussed in Chapter 9.

1.1.3 The Child Care Subsidy

The Child Care Subsidy (CCS) is the main element of the Package and provides targeted assistance with the cost of child care. The parameters of the system include:

  • a cap on the hourly rate charged for child care to which the subsidy rate will apply
  • a subsidy rate that declines as family income increases
  • an annual cap on the total level of assistance paid to some higher income households
  • a limit on the number of hours of care for which the subsidy is payable for each child based on an activity test applied to the parent(s).

In addition, parents are required to meet residency requirements, and the child must meet immunisation requirements, be aged 13 years and under, and not be attending secondary school.2

The change to the CCS also introduced the concept of a family co-contribution, so that families pay a portion of their child care fees.3 There are, however, intersections between this and the Additional Child Care Subsidy (ACCS), which tops up the subsidy for families and children facing barriers to accessing affordable child care (see discussion of ACCS below).

Notionally, the CCS is calculated as a direct offset to the charges that would otherwise be paid by the parents. However, in most cases, the actual subsidy paid to a provider is 95 per cent of the amount of CCS the parent is eligible for, as 5 per cent of parents' actual entitlement is initially withheld by government.4 After annual reconciliation, this withheld amount is either then paid to the family or is used to offset any debt they may have to the Commonwealth; in particular, where an underestimation of annual income has resulted in the subsidy being paid at an incorrect and higher rate.

  • Key features of CCS are 3 parameters that determine the financial level of subsidy, and one on the quantum of child care that is subject to the subsidy.
  • The hourly rate caps are a limit on the rate charged by child care providers that is subject to the subsidy. Where a provider charges a rate less than the cap, families will receive their applicable percentage of the actual fee charged, while where the rate charged is above the cap, the percentage applies to the hourly rate cap.5 As of 1 July 2019, the rate cap was: $11.98 for children below school age and $10.48 an hour for school-aged children in Centre Based Day Care and Outside School Hours Care; $11.10 per hour for Family Day Care, and on a per family basis $32.58 for In Home Care. These caps are to be indexed annually based on the All Groups CPI.
  • The percentage of Child Care Subsidy rate is the proportion of the capped fee that is provided as a subsidy and is based on a sliding scale that reduces with family income. For 2019-20 the maximum rate is 85 per cent for families with an income of up to $68,163. The rate of assistance then tapers to 50 per cent at an income of $173,163, remaining at this rate up to a family income of $252,453, before again tapering to a rate of 20 per cent at $342,453, and holding at this rate until family income reaches $352,453.6 Families with an annual income at or above this amount have zero Child Care Subsidy entitlement. (See Figure 2).

Figure 2: Child Care Subsidy, rate of subsidy by family income, 2019-20

fig002.png

Source: Derived from program criteria

  • The annual cap is the maximum level of subsidy that will be paid to a family in any one year. For 2019-20 it was $10,373 per child per annum and applies to families with a joint income over $188,163 (and less than $352,453) per annum.7 For families with lower incomes there is no cap.
  • The activity test operates to restrict the number of hours of Child Care Subsidy a family is entitled to, on a per child per fortnight basis, with the number of hours being determined by the level of 'recognised activity' parents are engaged in. Reflecting the program's focus on participation, and employment in particular, 'recognised activity' includes: paid work; self-employment; unpaid work in a family business; looking for work; volunteering; and studying. When applied to couples, the test is based on the hours of activity of the member with the fewest hours. There are a number of exemptions to the activity requirement for some families. Table 1 illustrates the operation of the activity test and details the main exemptions.
Table 1: Maximum hours of subsidy per child under the activity test and exemptions - main parameters, 2019-20
StepHours of approved activity per fortnightMaximum number of fortnightly hours of subsidy per child
Persons subject to the activity test
18 hours to 16 hours36 hours
2More than 16 hours to 48 hours72 hours
3More than 48 hours100 hours
Activity test exemptions 8,9
Child Care Safety Net - families with an annual income of $68,163 or less who do not meet the activity test24 hours
Families who do not meet and are not exempt from the activity test and have a preschool aged child who attends preschool at a centre based day care service (for preschool child only) 1036 hours
Includes: Grandparent principal carers, Disability Support Pensioners and Carer Payment recipients 11100 hours

1.1.4 The Child Care Safety Net

The 3 elements of the Child Care Safety Net have been identified above. The specific objective of these is described by the Department as giving 'the most vulnerable and disadvantaged children, as well as those from regional and remote communities, a strong start through access to quality early childhood education and care' (DESE, 2020a).

Additional Child Care Subsidy

The Additional Child Care Subsidy (ACCS) is a top-up payment to the Child Care Subsidy. It provides additional fee assistance to families and children facing barriers in accessing affordable child care. As with the Child Care Subsidy, it is paid to services as an offset to the charge on parents. It has 4 components:

  • ACCS (Child Wellbeing) is for children who are at risk of serious abuse or neglect.
  • ACCS (Grandparent) supports grandparent primary carers, who receive an income support payment.
  • ACCS (Temporary Financial Hardship) is short-term increased child care fee assistance to families who, due to exceptional circumstances, are experiencing significant financial stress with the cost of child care.
  • ACCS (Transition to Work) is for parents who are transitioning from income support to work by engaging in work, study or training activities.

With the exception of the Transition to Work element, the subsidy is equal to the actual fee charged (up to 120 per cent of the hourly rate cap), and is provided for up to 100 hours per fortnight without an activity test. In the case of the Temporary Financial Hardship element, the activity exemption applies for a maximum of 13 weeks per financial hardship event. Under the Transition to Work element, the subsidy is equal to 95 per cent of the actual fee charged (up to a rate equal to 95 per cent of the hourly rate cap), with the number of hours of subsidised care being determined by the individual's activity test result, while the duration of assistance varies with the activity undertaken. In addition, the subsidy can continue for a further 12 weeks if parents gain employment and their income support payments cease. Assistance under the Child Wellbeing provision can be initially granted for 6 weeks on the basis of a certificate issued by the service provider, and for renewable periods of 13 weeks on the basis of a determination by Services Australia.

Inclusion Support Program

The Inclusion Support Program provides support to early childhood and child care services to build their capacity and capability to include children with additional needs in mainstream services. It commenced in July 2016 and replaced the previous Inclusion and Professional Support Program. It aims to increase the proportion of children with additional needs attending mainstream services, improve the capacity of the sector over time and ensure parents of children with additional needs have access to appropriate and inclusive child care services.

Under the program, support is provided to services to enable them to provide inclusive approaches to the provision of child care. This includes, but is not limited to, inclusive practices for children who may have additional needs as they:

  • have a disability or developmental delay
  • are presenting with challenging behaviours
  • have a serious medical or health condition, including mental health
  • are presenting with trauma-related behaviours.

And in meeting the needs and requirements of:

  • Aboriginal and Torres Strait Islander children
  • children from culturally and linguistically diverse backgrounds
  • children from refugee or humanitarian backgrounds.

The program operates through 7 state/territory-based Inclusion Agencies (essentially community-based organisations), along with a national Inclusion Development Fund Manager responsible for the management of the Inclusion Development Fund. Support under the Inclusion Support Program is implemented through Inclusion Professionals, employed at the Inclusion Agencies. These agencies undertake a range of roles in providing support to services to generally develop more inclusive approaches, support in the development of Strategic Inclusion Plans, and specific in providing support to assist services address barriers that individual children or groups of children may face. Inclusion Agencies operate equipment libraries for use by services.

There are 4 streams of funding available through the Inclusion Development Fund:

  • A subsidy for an additional educator in centre-based services to support ongoing high support needs, prioritised to assisting children with a diagnosed disability.
  • A subsidy for immediate/time-limited (up to 8 weeks12) support for centre-based services where there is an immediate barrier to enrolling a child with disability or other additional needs and while an alternative and more stable solution is being determined.
  • Top-up support for Family Day Care services where an educator is unable to enrol the maximum number of children they are permitted to because of the demands on the educator of including a child with a disability or high care needs.
  • Innovative Solutions Support that allows all service types to receive financial support for creative solutions to address barriers to inclusion.

Services wishing to access financial support through the Inclusion Development Fund must first develop a Strategic Inclusion Plan, except those applying for immediate support. The Strategic Inclusion Plan, developed through collaboration with the Inclusion Agency, outlines the current inclusion practices of the service, barriers to inclusion, and strategies to address those barriers. It may also involve inclusion-related training, development of policies and procedures, sourcing resources from the local community, changes to educators' planning and pedagogy, and modifications to the child care and early learning environment. While part of this evaluation, it is noted that some aspects of the evaluation of the Inclusion Support Program are continuing beyond the scope of this report.

Community Child Care Fund

The Community Child Care Fund (CCCF), the third element of the Child Care Safety Net, provides grants to child care services to help them address barriers to participation. The purpose of the fund, as described in 2017 by the then Minister for Education and Training, was to help 'new and existing services, particularly in rural, regional or vulnerable communities, to reduce the barriers for families to access those services and to increase the supply of places in areas of high, unmet demand' (Birmingham, 2017). More specifically the fund is designed to:

  • reduce barriers in accessing child care, in particular for disadvantaged or disadvantaged and vulnerable families and communities
  • provide sustainability support for child care services experiencing viability issues
  • provide capital support to increase the supply of child care places in areas of high unmet demand.

One specific objective of the program is to assist former Budget Based Funded services to transition to the new child care arrangements.

The program has 3 components:

  • CCCF Open Competitive Grants: These are available to eligible, approved child care services and are intended to supplement fee income. Eligibility targets services operating in selected disadvantaged communities, with funding awarded for up to 5 years.
  • CCCF Restricted Non-Competitive Grants: To help eligible former Budget Based Funded services (and a small number of other services, see Section 9.7) to build capacity and operate sustainably under the new child care system and support services to increase participation by Aboriginal and Torres Strait Islander children.
  • Connected Beginnings: To help Aboriginal and Torres Strait Islander children in areas of high need to be well prepared for school by supporting pregnant Aboriginal and Torres Strait Islander women and Aboriginal and Torres Strait Islander children from birth to school age. Connected Beginnings has operated since July 2016 and provides support to integrate early childhood, maternal and child health, and family support services with schools in a selected number of Aboriginal and Torres Strait Islander communities experiencing disadvantage. This program is jointly funded and implemented by the Federal Departments of Education, Skills and Employment, and of Health, with an annual budget of around $12 million. While Connected Beginnings was separately evaluated, the findings from this have been drawn upon in Chapter 7.

1.1.6 Former child care funding model

Prior to the Child Care Package, there were 2 main forms of child care assistance: the Child Care Benefit (CCB) and Child Care Rebate (CCR).

CCB was a means tested benefit covering up to 50 hours of approved child care use per child per week provided that parents satisfied an activity test of at least 15 hours per week. Families that did not meet the activity test were eligible for CCB for up to 24 hours of child care per child per week. The maximum rate of CCB was $4.30 per hour for a non-school child ($215 for a 50-hour week), and 85 per cent of this rate for a school-aged child. The maximum rate of Child Care Benefit was payable for families with an annual income under $45,114 or families on income support with the rate then reducing up to a limit of $156,914 for a family with one child in care, with this cap increasing with the number of children.

In addition, parents were eligible for CCR. This was a non-means tested payment that provided up to 50 per cent of a family's out-of-pocket child care expenses (after CCB was deducted) to a maximum of $7,613 per child per year. To be eligible for the rebate, parents were required to have had some work, training or study related commitments during the week, although there was no minimum number of hours of such activity required.

There were a range of different payment options available to parents, including whether assistance was paid directly to services as an offset to fees, or was paid to parents periodically or annually. CCB was subject to an annual reconciliation process as it was paid on the basis of estimated income.

These payments were complemented by a range of other assistance including Jobs, Education and Training Child Care Fee Assistance, and Special and Grandparent Child Care Benefit, and the Community Support Program, the In Home Care and Nanny Pilot Programs and the Inclusion and Professional Support Program. Additionally, some child care services, including non-mainstream services in rural, remote and Aboriginal and Torres Strait Islander communities, were directly funded under the Budget Based Funded Program.

1.1.7 Other changes

The introduction of the Child Care Package also involved some structural and related changes.

Service classification

There was a consolidation of types of child care service. Specifically:

  • Long Day Care services and Occasional Care Services were classified together as Centre Based Day Care Services.
  • Before-School, After-School and Vacation Care services were grouped together as Outside School Hours services (in many cases involving what had been previously treated as 3 separate services even where they were run by the same organisation now being seen as a single service).
  • Budget Based Funded (BBF) services were reclassified on the basis of their type of service - typically Centre Based Day Care services or Outside School Hours Care Services.
    • The funding changes, along with this classification, also resulted in those children attending these services being recorded in the Child Care IT environment.

For ease of analysis, reporting about services uses the new classification even when reporting on child care prior to July 2018, except where there is specific analysis relevant to one of the old sectors.

In particular, some dedicated analysis of the former BBF services is presented in the report, given the need to explore the transition experiences and outcomes for those services. These services were eligible for CCCF-restricted funding upon transition to the Child Care Subsidy. However, the former BBF services were identified in survey and interview data to allow a focus on them, separate to other services in the Child Care Package that are eligible for CCCF-restricted grant funding.

Program nomenclature and change

Additionally, it is noted that while there appear to be a number of analogues between the old and new program environments, there are frequently considerable differences in the actual nature of the programs. This applies in particular to:

  • In Home Care under the new arrangements and the former In Home Care Programme and Nanny Pilot Programme
  • Additional Child Care Subsidy (Child Wellbeing/ Grandparents/Temporary Financial Hardship/ Transition to Work) relative to the Jobs, Education and Training Child Care Fee Assistance, and Special and Grandparent Child Care Benefit programs
  • the Inclusion Support Program and the former Inclusion and Professional Support Program.
Priority placement

The introduction of the new program saw the removal of the 'Priority of Access Guidelines' that services were required to use to allocate available places. These identified 2 priority groups: Priority 1 - a child at risk of serious abuse or neglect; and Priority 2 - a child of a single parent who satisfies, or of parents who both satisfy, the work, training, study test, and a need to provide within these groups and in enrolling children outside of these groups, priority to: Aboriginal and Torres Strait Islander families; families that include a disabled person; low income families and those on income support; families from a non-English speaking background; socially isolated families; and single parent families.

1.2 The broader environment

The child care program operates in a wider context and there are interactions between it and other interventions. Three of particular note are:

  • quality monitoring and assessment
  • preschool education
  • preschool education

1.2.1 Quality monitoring and assessment

The day-to-day monitoring of the quality of child care provision is a state/territory government responsibility being undertaken by these governments, usually through education departments or agencies. The activity fits into a broader National Quality Framework (NQF) that includes the Australian Children's Education and Care Quality Authority (ACECQA), an independent national authority, that assists governments in administering the framework; National Quality Standards (NQS) that establish a national benchmark for the provision of quality services across 7 areas, which then feed into the national quality rating system under the aegis of ACECQA; and the Education and Care Services National Law (National Law) and related regulations that form a national system for the regulation and enforcement of the NQS. While nationally consistent, this law is legislated individually in each state or territory.

A total of 15,004 Early Childhood Education and Care (ECEC) services were rated under the NQF in Q4 2019. Of these 12,007 were child care services, with the others being preschools and kindergartens. The NQS quality ratings of child care services are considered in Chapter 2.

1.2.2 Preschool

The Australian Early Childhood Education and Care system encompasses both preschool and child care. The relationship between these functions, and the way in which they are delivered, varies significantly across the country. This is illustrated in Table 2. While in some states/territories including South Australia, Western Australia, Tasmania and the Northern Territory, preschool education mainly takes place in the education system, in New South Wales and Queensland it is overwhelmingly delivered in the child care sector, with this largely also being the case in Victoria, although that state also has a strong independent community based preschool sector.

Table 2: Composition of preschool provision, by state, 2019
 

NSW

Vic.

Qld

SA

WA

Tas.

NT

ACT

Aust.

Composition of preschool education delivery (%)

Government School

4.1

10.7

1.9

46.1

54.7

49.6

61.5

37.2

15.9

Private school

1.8

2.6

3.1

3.2

19.8

14.8

2.9

2.6

4.5

Community

22.0

31.2

23.1

0.7

0.0

0.0

0.0

0.0

19.9

Other

0.0

0.1

0.1

0.0

0.0

0.0

0.0

0.0

0.0

Mixed provider type

6.4

9.3

4.1

18.7

19.7

12.9

22.4

24.4

9.6

Within CBDC

65.7

46.1

67.8

31.4

5.7

22.7

13.1

35.9

50.1

Total

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

Source: Australian Bureau of Statistics: Preschool Education, Australia, 2019

The nature of preschool provision within child care services was one of the aspects of the pre-transition child care structure examined in the Baseline Survey of Early Learning and Care Services (SELCS)13 undertaken in April 2018. Across services as a whole, excluding Outside School Hours Care where most children were of an older age group, 88.4 per cent of those responding that had children in the preschool age group reported providing a preschool or kindergarten program for children in the year before full-time school. Among Long Day Care services14 this proportion was 93.7 per cent, with a further 3.0 per cent arranging access to a program run externally. Just 3.3 per cent said they made no provision. Across the Family Day Care sector, 35.5 per cent reported having a program, with 33.6 per cent arranging access to an external program, almost a third (30.9 per cent) said they made no provision.

Nationally there is a commitment to 'universal access' to preschool. This seeks to ensure that a quality preschool program is available to all children in the year before full-time school. While states and territories are responsible for the provision of preschool, the Commonwealth provides funding as a contribution to 'top up' arrangements and to ensure families have nationally consistent access to 15 hours per week, or 600 hours per year, in the year before school. This is complemented in those cases where the preschool program is provided in a Centre Based Day Care service by support via the Child Care Subsidy, which allows families who do not meet the activity test to obtain 36 hours of subsidised care per fortnight for a preschool-aged child who attends preschool at a centre-based day care service. Parents are still required to meet the income test to obtain this assistance.15

As noted above, the role of ACECQA extends across both the child care and preschool sectors.

1.2.3 NDIS

Inclusion is a key objective of the Australian child care system. Under the Package this is supported by access to the Additional Child Care Subsidy, the Inclusion Support Program and the In Home Care program. Children who have an impairment, serious illness or condition that is likely to be permanent are also potentially eligible for support through the National Disability Insurance Scheme (NDIS). A specific objective of the NDIS is investing in people with disability early to improve their outcomes later in life.

The NDIS has been rolled out across Australia, commencing in 2013, including from the rolling out of the specific Early Childhood Early Intervention (ECEI) approach that began in 2016. This measure supports children aged 0-6 years who have a developmental delay or disability and their families and/or carers, with a focus on providing supports to families to help children develop the skills they need to take part in daily activities and achieve the best possible outcomes throughout their life. The approach is currently under review and it is anticipated that an implementation reset process will be finished by mid-2021.

With respect to child care, the focus of the NDIS is on providing 'individualised supports to enable a child to attend an early learning service'. The program approach, however, limits this to those 'situations where a child has very significant and complex care needs that are beyond a reasonable expectation for child care services to provide. For example, a child requiring ventilation, which must be supervised by a trained carer or nurse' (NDIS, 2014). With the exception of these specific circumstances, the early childhood and child care services have responsibility for the education and care needs of children, including children with disability or developmental delay.

1.3 The evaluation

The Australian Institute of Family Studies in association with the Social Research Centre, the UNSW Social Policy Research Centre and the ANU Centre for Social Research and Methods were commissioned by the Australian Government Department of Education, Skills and Employment to undertake an independent evaluation of the new Child Care Package. The evaluation commenced in December 2017, prior to the introduction of the Package, and was expected to continue until June 2021. The In Home Care program and the Inclusion Support Program, in addition to being within the overall evaluation scope, are subject to separate reporting, with as noted some of the Inclusion Support Program evaluation continuing past the date of this report.

As noted in the introduction, the evaluation was disrupted by COVID-19 and associated restrictions, as well as changes to government assistance to families and the child care sector, and as a consequence this report only considers outcomes to the end of 2019. This focus, while bringing some constraints as to what was able to be done and limiting the capacity to identify longer-term consequences of the introduction of the Package, ensures that the outcomes and impacts reported on are those that relate to the Package itself, and not the consequences of these other interventions, nor the evolving circumstances in which services operate.

In particular, it is noted that because of disruptions to the sector, it was not possible to undertake the third wave of the Services Survey that was designed to better understand the impact of the Package on service operations, rather than the more transitional experiences that dominated the earlier waves.

The evaluation is guided by the Evaluation Framework that was agreed with the Department.16 The Evaluation Framework, as detailed in Figure 3, sets out 4 key outcomes and 3 key impacts against which the new Child Care Package is being evaluated. These reflect the policy objectives set by the government for the Package. In large part, they relate to medium to long term effects of the Package and its consequences for families, children and the child care sector.

Figure 3: Evaluation Framework

fig003.png

1.3.1 The evaluation approach

The primary focus of the evaluation, as detailed in the evaluation framework, is on the outcomes and impacts of the Child Care Package. This contrasts with other evaluative tasks, such as process or implementation evaluation, that are more concerned with the way in which programs are implemented and the extent to which implementation has occurred as intended and whether the program has been fully and properly implemented in accord with its guidelines and procedures. Notwithstanding this focus, Chapter 10 addresses questions of implementation in the context of the transition to the new program.

In undertaking the evaluation, it is noted that a number of balances have needed to be struck in the approach. These include the degree to which comparative or absolute outcomes and impacts are considered, the effective weighting of positive and negative outcomes, the extent to which outcomes and impacts can be attributed to the policy and program changes, and the degree to which the time scale of this report and the data available to the evaluation can fully identify the effects of the program. Additionally, there are questions concerning the nature and role of child care provision that are not necessarily wholly reflected in the evaluation framework. These are considered further below.

Comparative and absolute outcomes

In large part, the focus of the evaluation is comparative. That is, comparing the outcomes and impacts being achieved following the introduction of the Package, relative to those under the previous arrangements. In terms of affordability, for example, this is a focus on whether child care is more affordable to families under the CCS than it was under CCB/CCR. This approach reflects the fact that few of the concepts can be measured in purely absolute terms, or where the metrics of an absolute measure - for example, what constitutes 'affordable child care' - tend to be value laden.

At the same time, consideration of absolute outcomes in some cases is also important. For example, treating access in purely relative terms, when it comes to questions such as access for disadvantaged groups, ignores the important social imperative to ensure that children at risk have access to appropriate child care and related services.

Balancing of outcomes

Some aspects of the new child care policy have the potential to have differential impacts across the population, benefiting some, and disadvantaging others, in either absolute or relative terms. In the evaluation both of these are important, and care needs to be exercised in not just focusing on average effects but also the distribution of these. Such a focus, however, tends to limit the ability to draw concise, as opposed to more extended, nuanced findings that take account of these diversities. While, alternatively, some summative measures can be considered, these involve a range of potential value judgements about how to weigh gains and losses, including the extent to which these may be recorded by quite different population subgroups. In some cases, though, it is noted that program objectives, such as the refocusing of assistance from higher income families to those on lower and middle incomes, provides a normative weighting for such considerations.

Attribution

Attributing changes in outcomes to the effect of the Child Care Package can be problematic. For example, parents' perceptions of affordability may be affected by changes in their income and in other expenses - as well as, more widely, by perceptions of their financial circumstances and opportunities. Similarly, changes in employment can result from changes in the labour market and the demand for labour, as well as other policies such as the rates and conditions related to income support, and shifts in attitudes relating to parental workforce engagement. Disentangling the roles of each of these factors is difficult; in particular, as there is no counterfactual, control population that can be used as a reference point, as the policy applies to the entire parental population. While not all parents use the assistance, given that take-up is impacted by individual circumstances, attitudes and aspirations, these operate effectively as a selection effect that renders non-user parents unsuitable as a comparator. Additionally, as will be discussed in Chapter 8, the impact of the program needs to be considered across parents as a whole.

More widely, other policies, including universal access to preschool and its interaction with different state preschool systems, the introduction of the National Disability Insurance Scheme, and a wide range of other initiatives all, in turn, also have impacts on the outcomes of populations of children and families who use child care. The interaction of these confound any attempt to attribute changes to child care programs alone.

Time scale

The evaluation is considering the impact of the introduction of the Package over an 18-month period, with much analysis, due to potential seasonal effects, the more limited focus of the November 2019 DESE ORIMA parent survey and the curtailment of the evaluation specific services survey, being restricted to a 12-month period. Little information is available to assess whether this time scale is sufficient to fully identify the impact of the program. Two potentially sensitive dimensions relate to the impact on labour force engagement where people may either plan an engagement trajectory over time or where changes in their engagement are triggered by external factors, such as a job loss or a specific job offer.

The role of child care

As identified earlier, the rationale for the Package was described as having the objective 'to help parents who want to work, or who want to work more, while still focusing on early childhood education'. The 2 elements of this statement reflect 2 facets of child care. Given the evaluation framework, and the overall legislative intent as described by the Department 'that, in relation to early learning and child care, the primary role of the Australian Government is to provide families with financial assistance to help cover the cost of child care, while supporting workforce participation' (DESE, 2020b, p. 2) the focus of the evaluation is primarily on the first, and even to the extent to which questions such as access are considered, the orientation of the framework is on achieving access - not what access provides.

We address this further in our concluding chapter.

Terminology

In describing the sector, we have chosen to use the language of 'child care' rather than the alternative of 'early childhood education and care'. This decision was based on 3 grounds:

  • the terminology of the main program element, the 'Child Care Subsidy', and of the legislation Family Assistance Legislation Amendment (Jobs for Families Child Care Package) Act 2017
  • the extent to which the evaluation, as noted above, is directed at the child care role, rather than the content of early childhood education
  • the wider scope of the concept of 'early childhood education and care' that encompasses the preschool sector, and indeed some would also argue the early years of formal schooling.
Data and analysis

The evaluation draws very extensively upon administrative data provided by the Department; in particular, weekly records of child care use, surveys of parents, including one of the Department's surveys as well as those undertaken by the consortium, 2 major waves of surveys of services, a series of case studies, and extensive consultations. From these sources the evaluation has had a rich collection of quantitative and qualitative data that is reported on here. Data sources are described in detail in Appendix 1.

In addition to the direct reporting and interpretation of this data, the evaluation also undertook a major modelling exercise, reported on in Chapter 4, of the impact of the package on affordability.

1.3.2 Structure of report

This report is largely structured around the outcomes and impacts identified in the framework, specifically:

  • Chapter 2 'Child Care in Australia' provides an overview of the child care system and of the state of child care at the end of 2019.
  • Chapter 3 'Simplicity' addresses the second identified outcome - that of the simplicity of the system; in particular, for parents and services.
  • Chapter 4 'Child Care costs, subsidies and affordability' responds to the third identified outcome - the affordability of child care. This also has implications for the third impact - that of the sustainability of the child care funding, although we note that the substantive consideration of this is for government, which needs to weigh up decisions on priorities both in expenditures and revenues.
  • Chapter 5 'Flexibility' addresses the second half of the first outcome.
  • Chapter 6 'Access' encompasses the second half of the first outcome.
  • Chapter 7 'Vulnerable' focuses on the second impact, as well as aspects of these groups' experiences as identified in the first and third outcomes.
  • Chapter 8 'Employment participation impacts' addresses the first impact. It also covers some of the specific aspects of the safety net programs, including ACCS.
  • Chapter 9 'Viability and robustness of the industry sector' addresses the fourth outcome and informs on the third impact. The Chapter also discusses the operation of the CCCF and the impact of compliance activity.
  • Chapter 10 'The transition to the Child Care Package', in contrast to these other chapters that are concerned with program outcomes and impacts, focuses on the processes of the transition, the experiences of services and families and of the policy responses to these.
  • Chapter 11 'Conclusions and recommendations' presents the conclusions of the evaluation and recommendations for consideration drawn from these.

The evaluation framework also identified a series of cross-cutting issues, including the different sectors of child care provision, geographic outcomes, and the experiences of different families, as well as the effect of different program elements. In general, these are discussed across the chapters.

Appendix 1 'Evaluation process and data' reports more fully on the evaluation activities undertaken and the data sources drawn on, including those used in this report.

1 The Department of Education and Training became the Department of Education on 29 May 2019, then changed to the Department of Education, Skills and Employment (DESE) on 1 February 2020. In this report the Department, and its predecessors, is referred to as DESE or the Department.

2 In addition, where a child may be cared for by others, the person applying for the subsidy needs to meet a requirement with respect to the level of care that they provide to the child.

3 In the explanatory memorandum for the original Jobs for Families and Child Care Package legislation this was described as 'a provision that obliges approved providers to ensure that they recover, from individuals, the difference between a fee reduction (made available through CCS or ACCS) and the actual fee charged to the individuals, where there is a difference. The CCS payment is designed with a concept of co-contribution to the cost of child care. This provision intends to address an issue that has arisen with CCB where some child care services did not actually pursue the difference between fee reductions and actual fee charged to the individual' (Porter, 2017b, p. 87). In the accompanying Regulation Impact Statement (Department of Education and Training, 2015a), the Department indicated 'A minimum co-contribution from all child care users was seen by stakeholders as acceptable, fair and necessary. A co-contribution can encourage parents to be conscious of the fees charged and help keep downward pressure on child care fees' (p. 43).

4 Parents can apply to have this proportion increased.

5 Notwithstanding the introduction of the hourly rate cap, child care fee assistance continues to be calculated on the length of the session of care the parent is charged for, and not time actually attended. Where services charge by the session the hourly rate used to determine the relationship with the fee cap is derived by dividing the session charge by the session length.

6 In 2018-19 these values were $66,958, $171,958, $251,248, $341,248 and $351,248 respectively.

7 In 2018-19 the cap was $10,190 and applied to incomes above $186,958.

8 This is a summary of exemptions only. In some cases, exemptions apply to a specific child and, in other cases, to all children. It is further noted than in 2 parent families, where one person has an exemption, the hours of subsidised care for the family is based on the person with the lowest activity test result.

9 In exceptional circumstances families can make an application to Centrelink that it would be unreasonable for them in their circumstances to satisfy the activity test. This provision also allows for a subsidy for more than 100 hours per fortnight.

10 See Section 1.2.2 for further discussion of this provision.

11 The Department (Department of Education and Training, 2018a) indicates that people in the following circumstances are exempt from the activity test:

  • people with disability or impairment, including those who receive Disability Support Pension or an invalidity service pension or who have been diagnosed by a registered medical practitioner or clinical psychologist as impaired to a significant degree
  • people living or travelling outside Australia (the individual claiming Child Care Subsidy will usually be exempt for up to 6 weeks)
  • recipients of Newstart, Youth Allowance (jobseeker), Parenting Payment or Special Benefit, with an exemption from mutual obligation requirements (with some exceptions)
  • being in gaol or psychiatric confinement due to being charged with an offence
  • being a carer who receives Carer Payment
  • being a carer who provides constant care for an adult or child but they or the person they are caring for do not meet means or assets tests for Carer Payment
  • grandparents who are the principal carers of their grandchild or grandchildren but who do not receive income support payments and are therefore not eligible for Additional Child Care Subsidy (grandparent).

12 This was extended to 12 weeks in March 2020.

13 This is one of the surveys conducted as part of the evaluation. The survey is described in Appendix 1.

14 In this data Occasional Care Services were separately identified. 54.6 per cent of these had a pre-school program.

15 To receive CCS and the 36 allowed hours for the children in the year before school, families must be otherwise eligible for child care subsidy. This is also only an exemption from the activity test, the amount of subsidy is still defined by the income test. As such, while as part of the Universal Access National Partnership children may access preschool programs run in Centre Based Day Care services, these attendances may not necessarily receive CCS.

16 https://aifs.gov.au/research/research-snapshots/child-care-package-activity-test

2. Child Care in Australia

2. Child Care in Australia

This chapter describes the Australian child care sector during the period covered by the evaluation, including key statistics on the sector and the families and children who used child care services at the end of 2019. It also reports on the families' level of satisfaction with the child care services they receive, and how this has changed during the period since the introduction of the Child Care Package. This can be seen as an important metric for considering the impact of the new policies. The Chapter draws heavily on administrative data held in the Child Care Subsidy System and the DESE/ORIMA parent survey.17

2.1 The child care system

2.1.1 The structure of the system

The Australian early childhood education and care system, and the role of child care services within this, is complex. The Commonwealth Government provides subsidies to most parents who use child care. It also provides direct funding to services for specific activities, such as the inclusion of children with additional needs, and support to services in particular circumstances, including in some disadvantaged areas and other areas of need. State and territory governments regulate the sector,18 with local government also having a role including with regard to planning approvals. Jointly the Commonwealth and the states and territories agreed, in 2008, to a National Partnership Arrangement with the introduction of a national framework, Belonging, Being, Becoming - Early Years Learning Framework, in 2009. Standards in the sector are monitored and reported on, and qualifications assessed, by the independent Australian Children's Education and Care Quality Authority (ACECQA). The actual assessment and rating of the services is undertaken by the relevant state or territory regulatory authority. In addition to the formal child care sector, there are a range of private arrangements, some non-commercial and voluntary, such as care by relatives, and more commercial arrangements, including families who employ nannies and au pairs to care for their children. These are outside of the funding arrangements considered in this evaluation.

In addition to the provision of child care services as considered in this evaluation, as noted in Chapter 1, the Australian Government provides financial support for preschool education.19 In some cases, these services are provided within the formal child care sector and, in other cases, within state education systems or through private or community based providers.

Formal child care services are provided through a range of providers in the private, community and government sectors. For the purposes of the operation of the child care subsidy, and of the analysis undertaken here, 4 types of care services are identified:

  • Centre Based Day Care: Services that typically offer long continuous sessions of care within services primarily focused on the early childhood education and care needs of children aged between 0 and 6 years. These services, as with those of other care types, operate both as individual services and as part of larger provider organisations. This also includes some services, classified as Occasional Care Services prior to the introduction of the Package, that provided shorter sessions of care. Many of these services continue to promote themselves as providers of occasional care including short sessions of care, and, or casual child care.
  • Family Day Care: This care is provided to a small number of children by individual educators, in most cases, in the educator's own home. These educators are usually contracted, or employed, by a Family Day Care provider (which constitutes the 'service' in subsequent analysis of this sector) that manages a number of individual educators, with some larger services having over a hundred educators.20 This structure means that, in contrast to Centre Based Day Care and Outside School Hours Care, the actual services are not usually directly engaged in the provision of care to children. Additionally, the geographic location of the service does not necessarily relate to the actual locations where care is provided by individual educators.
  • Outside School Hours Care: These services usually offer shorter sessions of care immediately before and/or after school hours, and/or longer sessions during school vacations. These services have programs focused on the developmental and supervisory needs of school-aged children.
  • In Home Care: This is a small sector that provides care to children for whom other forms of care are not suitable or accessible. This may be because of parental working arrangements outside of normal child care hours, due to geographic isolation including rural and remote locations, and where families have challenging or complex needs.

The structure of Commonwealth financial support for child care has been detailed in Chapter 1.

2.2 Child care in Australia - services and users

Over the course of Q4 2019, 1,327,238 children attended 13,118 child care services in Australia.21 Across the whole of the 2019 calendar year 1,579,459 individual children were recorded as using a child care service at some point.22

In presenting this overview it is noted that in addition to the complexity of the sector, at times the data and concepts reported on are complex or definitions are particularly nuanced. For example, a single child may attend multiple child care services, of different types, for different periods, even within a single week. For some children, the different care, or indeed even sometimes different sessions of care within a single service, may be funded by different parents who live in separate families. Similarly, while some providers only manage services providing one form of care, others manage several different types. Additionally, some services and providers operate across state and territory borders and in different locations in states and territories, or indeed provide services across a state or territory, rather than in a more limited geographic location. As noted in Appendix A, there are also some limitations imposed by the nature of much of the data used due to it being administrative by-product data rather than being specifically collected or curated to be used for the purposes of analysis or evaluation.

2.2.1 Structure of provision - services

The broad structure of the sector is shown in Table 3. The data is presented on the basis of the sectors as identified above, and whether or not the service is provided by for-profit or not-for-profit providers. (This differentiation is made as it may be considered that the motivations of these may differ, and this in turn may result in differential outcomes.) At the same time, however, such a classification conceals many differences within each of these sectors, with for-profit providers ranging from listed companies to small family businesses, and the not-for-profit sector ranging from very large social enterprises to local governments and small community-based organisations.

Table 3 illustrates how different measures can lead to different assessments/impressions of the relative contribution of different forms of care and different sectors. For example, the largest group of services identified in the table are for-profit Centre Based Day Care services. While these only represent 42.5 per cent of services, they are attended by a higher proportion, 47.7 per cent, of the children who attend child care services, and provide an even greater, 56.7 per cent, share of hours of care. Family Day Care services also disproportionately provide a much higher volume of services relative to the actual number of services. The contrary is the case for In Home Care and Outside School Hours Care sectors, where the proportion of children in care and the proportion of hours of care provided is low relative to the proportion of services.

Table 3: Child care services by type, for-profit status, number and relative magnitude of services provided, Q4 2019
 Service type:Total
CBDCFDCOSHCIHC
 For-profit
Services
Number5,5722632,388208,243
Proportion (%)42.52.018.20.262.8
Proportion of children a (%)47.73.912.60.064.2
Proportion of hours b (%)56.75.75.30.167.8
 Not-for-profit
Services
Number2,5321982,125204,875
Proportion (%)19.31.516.20.237.2
Proportion of children (%)19.63.113.10.135.8
Proportion of hours (%)22.73.45.90.132.2
 Total
Services
Number8,1044614,5134013,118
Proportion (%)61.83.534.40.3100.0
Proportion of children (%)67.26.925.70.1100.0
Proportion of hours (%)79.59.111.20.2100.0

Notes: a Proportion based on the number of unique child service records in the quarter. b Proportion based on the number of attended hours recorded in the quarter.

Source: DESE administrative data

Services and providers

While 37.5 per cent of services operate as independent entities, the remainder are parts of a larger provider structure,23 with the largest providers having over 600 services. As illustrated in Table 4, the role of large providers is particularly significant in the for-profit Outside School Hours Care sector, along with the not-for-profit Centre Based Day Care Sector. This latter reflects the role of Goodstart, a social enterprise established in the wake of the collapse of the private provider ABC Learning in 2008.

Table 4: Child care services, by provider size and sector, Q4 2019
Provider size (number of services providers have)ServicesTotalProviders
Service type:
CBDCFDCOSHCIHC
 Number of servicesNumber of providers
 For-profit 
Single2,76622540393,4033,403
2-41,33336307111,687690
5-93562130048878
10-243160142045830
25-993060387069313
100 +49501,01901,5145
Total5,5722632,388208,2434,219
 Not-for-profit 
Single7505870711,5161,516
2-4376582478689282
5-923728181344972
10-2426931344364742
25-9924623434570818
100 +654021208663
Total2,5321982,125204,8751,933
 Total 
Single3,5162831,110104,9194,919
2-41,70994554192,376972
5-9593303113937150
10-245853148631,10572
25-995522382151,40131
100+1,14901,23102,3808
Total8,1044614,5134013,1186,152

Source: DESE administrative data

Service size

The size of services varies. While services, on average, have around 80 individual children attending in most weeks, 25 per cent have fewer than 50 children, while 25 per cent have more than 120. These counts, however, do not provide the whole picture. The level of services provided is also impacted by the intensity of use, with some of these children only attending on some days, or for limited periods. Table 5 presents a conceptual description of effective service size based on a measure of the average number of 'effective places' (a measure that seeks to account for the number of children who only attend for some days of the week).24,25

As shown, just under a quarter of services have under 25 effective places, with these being particularly significant in the Outside School Hours Care and In Home Care sectors. Additionally, some 35 per cent of services have 25-49 places, a third between 50 and 99 places, with the remaining 8.7 per cent being larger. This though varies by type of service.

While, as noted, actual Family Day Care services are usually provided by single educators in their own home to a small number of children, these educators operate within the aegis of a larger Family Day Care service and, as such, the service size represents this organisational structure rather than the nature of actual child care service provision. In contrast, while In Home Care services operate a similarly dispersed network of educators who provide services to individual families in their own home, the specialist nature of these services tends towards smaller service sizes.

Table 5: Distribution of child care services, by effective service size and type, Q4 2019
Places aService type:Total
CBDCFDCOSHCIHC
 Distribution of services (%)
Under 2515.29.336.570.022.5
25-4938.115.833.515.035.7
50-9939.733.621.712.533.2
100-1496.318.96.12.56.7
150-1990.611.51.70.01.4
200-2490.16.30.30.00.4
250 and over0.04.60.20.00.2
Total100.0100.0100.0100.0100.0

Notes: a Places have been derived by estimating the number of children who could attend a service if they all attended each day of the week over which the service operates. This is a conceptual volume measure of the level of service provision and does not necessarily relate to the number of approved places that a service has, or the maximum number of children who attend the service at any one time.

Source: DESE administrative data

Service location

Most, 67.6 per cent, of child care services are located26 in the capital cities of states and territories, see Table 6. There is some variation in the geographic distribution of services by sector, with a higher proportion of Family Day Care and In Home Care services in smaller urban areas and inner regional areas. There are also significant differences between states and territories, reflecting their different patterns of settlement. In particular, in Western Australia and South Australia, some 80 per cent of services are in the capital city, as are 75 per cent of those in Victoria, and over 99 per cent in the ACT.27 In contrast in the Northern Territory 28.3 per cent of services are in non-urban locations, as are 23.7 per cent of services in Tasmania. The implications of these distributions are considered more in Chapter 6.

Table 6: Child care services, by urban and regional location and service type, Q4 2019
Urban and regional location aService type:Total
CBDCFDCOSHCIHC
 Number of services
Capital Cities5,4023023,139228,865
Urban 100k plus1,0493651321,600
Urban 50k-<100k320221932537
Urban 20k-<50k358311745568
Urban 10k-<20k17318842277
Inner Regional376242481649
Outer Regional287231303443
Remote51311166
Very Remote882212113
Total8,1044614,5134013,118

Notes: a The geography used in this, and subsequent, tables is a hybrid based on a combination of ABS Significant Urban Areas (with the added differentiation between the state and territory capitals and other major urban agglomerations) and the distribution of areas outside of these cities according to the ABS remoteness classification. In all cases the location is based on the geographical SA2 level.

Source: DESE administrative data

Most of the services operating in Q4 2019 have been established for some time. The measurement of the duration of operation is, however, difficult, as changes in ownership, with little impact on the service itself, can result in the services being identified as 'new', while an existing service may take on quite different characteristics with; for example, a new director. Based on data on child attendance since January 2017, 77.3 per cent of services that operated in Q4 2019 have been in operation since that date, 5.2 per cent had a commencement date later in that year, 9.3 per cent commenced in 2018, and 8.2 per cent in 2019. By type of care the highest proportion of long-standing services was in the Family Day Care sector where 90.6 per cent of services operating in Q4 2019 were operating in January 2017. This was followed by the Outside School Hours Care sector (77.6 per cent), Centre Based Day Care (76.3 per cent) and In Home Care (76.2 per cent).

Service quality

The quality of ECEC services are, as noted earlier, assessed by the states and reported on by ACECQA against the National Quality Standards. In their 2019 Annual Performance Report the Agency reported that: 'The proportion of children's education and care services rated "Meeting NQS" or above has increased every year since the NQF was introduced' (ACECQA, 2019, p. 6).

This pattern of improvement is reflected in data over the period from Q2 2018 to Q4 2019. While, as shown in Figure 4, there has been an apparent fall in the proportion with the highest quality ratings,28 this reflects a change in the classification system. The agency reports that this makes it 'more challenging for a service to achieve a rating of Exceeding NQS' (p. 7). Change over the period can hence be seen better in terms of the proportion of services rated as meeting or exceeding the standards. This has increased from 74.2 per cent in Q2 2018 to 76.6 per cent in Q4 2019. In both periods the number of services rated as 'significant improvement required' is very small, 0.2 per cent in Q2 2018, and 0.1 per cent in Q4 2019.

Figure 4: Rating of child care services against the National Quality Standards, Q2 2018 and Q4 2019

fig004-lines.png

Notes: a Not visible on chart, only 0.2 per cent of services in Q2 2018 and 0.1 per cent in Q4 2019. Includes Family Day Care, Centre Based Day Care and Outside School Hours Care services only as In Home Care Services are out of scope. Excludes services without an overall quality rating.

Source: ACECQA, Quarterly National Quality Standard Data (Q3 2013 - Q4 2019) Released on 6 February 2020 (ACECQA, 2020a).

Further analysis of the ratings indicate some systematic differences across the sector. Table 7 illustrates some of these. Of note are the very marked differences between the for-profit and not-for profit sector, and between service types. While 39.3 per cent of not-for-profit Centre Based Day Care services have a rating of Exceeding NQS or Excellent, this rate falls to just 4.8 per cent for for-profit Family Day Care services. In general, the differences between the for-profit and not-for-profit sectors are most marked in the Family Day Care and Centre Based Day Care sectors, while the Outside School Hours sector is more marked by its relatively low rating relative to the other 2 sectors, than the difference between for-profit and not-for-profit providers.

Table 7: Rating of child care services against the National Quality Standards, by care type and whether for-profit, Q4 2019
ACECQA rating:For-profitNot-for-profit
CBDCFDCOSHCTotalCBDCFDCOSHCTotal
 Proportion of services (%)
Exceeds/Excellent23.14.814.720.039.326.516.028.4
Meets53.828.660.254.949.644.956.552.4
Working towards23.065.725.025.011.128.127.519.1
Needs significant improvement0.10.80.10.10.00.50.10.0
Total100.0100.0100.0100.0100.0100.0100.0100.0
Services with rating (count)5,1002482,2167,5642,2611961,9684,425

Notes: Total is Family Day Care, Centre Based Day Care and Outside School Hours Care services only, as In Home Care Services are out of scope. Excludes services without an overall quality rating. Based on matched ACECQA and DESE data using DESE service details including whether for-profit. This does not necessarily match the ACECQA classification.

Source: ACECQA Q4 2019 and DESE administrative data

Further analysis indicates that there is a concentration of the highest quality services in the major urban areas relative to regional locations and, in particular, remote and very remote areas. While there is some variation in the pattern of fees by the quality rating of services, this varies by sector and by service type. It is most marked for not-for-profit Centre Based Day Care services where the average hourly fee charged by services rated as Excellent or Exceeding, of $10.48, is well above the $9.69 charged by the much smaller group of services rated as Working Towards.

These variations in the quality rating of services are, in turn, reflected in the quality of the service received by different children. Table 8 details the distribution of children, grouped on the basis of parental income, by the rating of the service they attend. It clearly shows a strong association between children from higher income families attending higher quality services. For example, well over 30 per cent of children of parents in the upper 2 income bands attend services rated as Exceeding the standard, and just 20 per cent attend services rated as Working Towards'. In contrast only some 20 per cent of those children whose parents earn under $50,000 attend these higher ranked services, and well over a quarter attend those falling below the standard.

Table 8: Children, by family income and service quality rating, Q4 2019
Family gross income range:ACECQA rating:
Exceeding NQS/ ExcellentMeeting NQSWorking towards NQSSignificant improvement requiredTotal
 Distribution of children (%) 
Zero19.150.730.10.1100.0
$1-<25k20.251.927.80.2100.0
$25-<50k20.451.827.70.1100.0
$50-<100k23.653.522.70.1100.0
$100-<150k26.453.719.90.1100.0
$150-<250k28.352.818.90.1100.0
$250-<500k31.650.617.70.1100.0
$500+k34.848.916.20.1100.0
Missing27.551.920.60.1100.0
Total25.952.821.20.1100.0

Notes: Family Day Care, Centre Based Day Care and Outside School Hours Care services only as In Home Care Services are out of scope. Excludes services without an overall quality rating. Based on first service attended by child in the quarter.

Source: ACECQA Q4 2019 and DESE administrative data

The extent of this relationship varies by type of care, with there being relatively little relationship between family income and the rating of the Outside School Hours Care the child attends, but a much steeper gradient for Centre Based Day Care services.

While providing some insight into the nature of child care provision, these quality ratings, however, are of limited value in assessing the impact of the Package on the quality of care because, in most cases, the rating of the service was undertaken prior to the introduction of the Package.29

2.2.2 Characteristics of users - children

As detailed earlier, 1,327,238 children attended child care services in Q4 2019. Over the quarter, 92.4 per cent of children attended a single service, 7.2 per cent 2 services, with the remainder attending more than 2. Such multiple use, as well as reflecting a specific pattern of use chosen by parents, includes children who may have changed the service that they attended at some point over the quarter or, for example, used one service during school vacations and another in school terms. In any one week only some 2.5 per cent are reported as attending multiple services, with virtually all of these only attending 2 services.

Child care attendance over time, as shown in Figure 5, displays a number of patterns, within and across sectors. In the case of Centre Based Day Care there is a pattern of increasing attendance over the year, as well as steep reductions in use over the Christmas/New Year period. The upward slope over the year reflects the way in which families may have a need for, or take a decision to use, child care over the year, but then for whole cohorts of children to be withdrawn in the new year, when they enter formal schooling. The sector also shows an increase in the number of children using care in each of the 3 years.30 The Outside School Hours Care sector's pattern of use reflects the impacts of school terms, and lesser levels of vacation care. The number of children attending Family Day Care services shows a marked decline over the period. In part, this is associated with enforcement action, which will be discussed further in Chapter 9. While only a very small number of children use In Home Care services, notable in this data was a sharp fall from some 3,000-3,500 children using this type of care up to July 2018, to around 1,800 after that date, reflecting the tightened eligibility criteria for the new program.

Figure 5: Children attending child care services, by week and service type, January 2017 to December 2019

fig005.png

Notes: This is the raw count of all children identified in the administrative dataset as of each week. Children who attend different service types in the same week are counted under each service type they attend.

Source: DESE administrative data

The pattern of children's participation by age is shown in Figure 6. This records the number of children in child care at a particular age as a proportion of the estimated Australian population of this age. This ratio reaches a peak for the 3-year-old age group where 62.2 per cent of all children of this age were estimated to have attended a child care service in Q4 2019. While participation remains high, at 59.6 per cent, for those aged 4 years, it then declines relatively rapidly.

By age group it is estimated that 45.6 per cent of children aged under 5 years attended child care in Q4 2019, along with 30.6 per cent of those aged 5-9 years and 9.2 per cent of those aged 10-13 years.

Also distinct in the chart are the differing roles of the care sectors. Most of the care in the youngest age group is provided by Centre Based Day Care services, along with some contribution by the Family Day Care sector, with the Outside School Hours Care sector, commencing for those children aged 5 years, then being the major provider. The In Home Care sector only makes a very minor contribution across the period sitting at some 0.07-0.08 per cent of the population of children between the ages of one and 5 years, and then declining to 0.01 per cent for those aged 13 years.

Figure 6: Estimated rate of child care use, by child age and service type, Q4 2019

fig006.png

Notes: As children may attend more than one form of care the components will add up to greater than the total. Population data are June 2019 estimates.

Source: DESE administrative data; ABS 3101.0 National, state and territory population, March 2020

In Q4 2019, 3.5 per cent of children attending child care services are identified as being a child of an Indigenous family31 and 3.6 per cent as coming from a family where one or both parents speak a language other than English. These children are considered further in Chapter 7.

Pattern of attendance - Days per week

Overall, children attend child care services on an average of 2.83 days a week (as estimated from the number of days for which a child is charged). There is a slight tendency for this proportion to increase with age. It rises from 2.63 days for those aged under one year to 2.84 days at age 4, and then to a peak of 2.97 for those aged 13 years.

As shown in Table 9 most commonly children attend a child care service for 2 days (28.4 per cent), or 3 days (25.6 per cent) per week. Only around one in 7 children, 14.5 per cent, attend for 5 days a week, and less than 1 per cent receive child care services on 6 or 7 days, although 11.3 per cent of children in Family Day Care services report sessions on 6 days a week.

Table 9: Distribution of days a week attended, by service type, Q4 2019
 Days charged
1234567Total
 Distribution of children attending (%)
CBDC14.030.628.513.813.00.00.0100.0
FDC18.923.217.111.517.811.30.2100.0
OSHC23.724.420.914.017.10.00.0100.0
IHC14.218.016.013.732.35.21.4100.0
Total16.928.425.613.714.50.90.0100.0

Notes: This is based on the number of days in the week in which sessions of care for the child were recorded.

Source: DESE administrative data

Pattern of attendance - Hours per session

There is also considerable variation in the length of time children attend services for when they do attend. This can be considered in 2 ways. Firstly, the length of the 'session'32 that children attend and for which parents are charged and, secondly, the actual time they spend at the service. The structure of sessions, and the extent to which these have changed with the introduction of the Child Care Package, is one of the matters considered in Chapter 5. In terms of the operation of the system, both these parameters are important, with the hourly fee and the fee cap, as well as approved hours of care, all operating on a session length basis but children's experience of child care being associated with the duration of actual attendance.

For children aged under 6 years, for those days on which they attended care, the derived average daily charged session length was 10.2 hours, which children attended for 7.1 hours. For those aged 6 years and over the session length was 4.3 hours, and children attended for 2.7 hours, see Table 10.

Table 10: Average charged session length and period of attendance, by service type and child age group, Q4 2019
 Service type:Total
CBDCFDCOSHCIHC
 Hours per day 
Children aged 0-5 years:
Average charged session length10.68.34.57.910.2
Average time attended7.37.02.87.67.1
Children aged 6 years and over:
Average charged session length4.96.04.16.34.3
Average time attended2.94.72.55.92.7

Notes: Data available for this part of the evaluation contained the number of hours charged per week, the number of hours they attended the service (based on their drop off/pick up times) and the number of days on which session were recorded. Session length and average period attended were derived from this. More detailed analysis of session length is in Chapter 5.

Source: DESE administrative data.

The distribution of time spent as detailed in Table 11 shows the distribution of the average time children spent in care on those days they received care over Q4 2019. Children who attended Centre Based Day Care most frequently attended for between 6 and 8 hours (35.6 per cent) or between 8 and 10 hours (38.9 per cent). In contrast, those attending an Outside School Hours Care service most frequently spent less than 2 hours at the service, although a proportion of periods of attendance of 8 to 10 hours were also recorded. This latter reflects the role of this sector in providing whole day care over school vacations.

Table 11: Distribution of average daily hours attended, by service type, Q4 2019
Hours attendedService type:Total
CBDCFDCOSHCIHC
 Distribution of average duration of attendance (%)
Under 2 hrs2.75.752.23.716.4
2-<4 hrs6.913.635.813.815.3
4-<6 hrs12.621.12.218.510.4
6-<8 hrs35.634.03.619.826.7
8-<10 hrs38.922.35.725.328.6
10+ hrs3.43.30.518.92.7
Total100.0100.0100.0100.0100.0

Notes: Distribution of weekly average period attended on days attended.

Source: DESE administrative data

Cost of services

Across all services the cost of an average hour of care (excluding In Home Care where the cost is per family) and based on the formal session period was $9.78. This varied between services, service types, and locations. The detailed distribution of fees, and the implication of these for affordability, is addressed in Chapter 4. The distribution by service type and location is shown in Table 12. Across all non-In Home Care services, and locations, the average cost of care in services provided by not-for-profit providers was $9.30 per hour, and by for-profit providers $10.05. This though also reflects the mix of services by state, location, and service type. In the Centre Based Day Care sector, for example, there was little difference between the average not-for-profit fees of $10.24 compared with $10.37 in the for-profit sector. This was also the case in the Family Day Care sector where the average hourly rate charged by a not-for-profit provider of $10.69 was the same as that charged on average by for-profit providers.

As illustrated, there were some marked differences between states, with particularly high costs in the Australian Capital Territory, followed by Western Australia and Victoria.

Table 12: Hourly fees, by whether for-profit, service type, and state, Q4 2019
StateFor-profit servicesNot-for-profit services
CBDCFDCOSHCIHCTotal aCBDCFDCOSHCIHCTotal a
 $ per hour per child$ per hour per family$ per hour per child$ per hour per child$ per hour per family$ per hour per child
NSW10.5410.957.9834.3010.0710.4710.897.5933.639.32
Vic.10.6710.679.6139.1410.4010.7610.687.73 10.26
Qld9.6310.356.8237.829.309.3410.407.0425.898.32
SA10.31-7.6937.229.919.999.986.95 8.56
WA10.6810.5610.4335.2610.6010.4311.009.9031.6610.38
Tas.9.7910.319.10-9.689.3510.738.9431.199.47
NT9.8110.428.18-9.129.0710.387.67 8.81
ACT11.8311.459.62-11.2711.6111.6610.1928.3710.93
Total10.3710.698.7137.4110.0510.2410.697.5829.649.30

Notes: a Excludes In Home Care.

Source: DESE administrative data

The more detailed analysis in Chapter 4 indicates that not only do 14.3 per cent of services have an average above the cap, but just the minority, 44.1 per cent, do not record having charged care for a child at a rate above the cap, at some point in Q4 2019.

2.2.3 Structure of users - families

In Q4 2019, 933,648 families33 had children who attended child care services. Of these families, 63.1 per cent had a single child who attended a service in the quarter, 31.8 per cent had 2 children attending child care, 4.5 per cent 3 children and the remaining 0.6 per cent more than this.

The administrative data for Q4 2019 indicates that 78.9 per cent of the families with children attending child care were couple families, and 21.1 per cent single parents. The number of children attending child care per family in single parent families was typically smaller than in couple families, with 68.3 per cent of single parents having just one child in child care, compared with 61.7 per cent of couple families.

While there are some differences in the number of children attending child care services for families in different circumstances, in most cases the differences are slight, although, overall, families with higher incomes tend to have more children attending relative to those on middle and lower incomes. There was little variation by region.

Engagement with the child care system by parents tends to be persistent. Of those parents who commenced using child care before or during 2017, 69.1 per cent were still using child care in 2019, and of those who commenced in 2018, 82.8 per cent were using it in 2019.

Families by activity

Table 13 shows the distribution of families by state and classified by their level of participation in employment and other activities, based on their reported activity in the context of the CCS activity test.34 As illustrated, most families using child care engage in significant levels of activity. In Q4 2019, of the single parent families, 40.1 per cent report being engaged on a part-time basis (activity of between 10 and 34 hours per week), and 41.4 per cent on a full-time basis (35 hours or more of reported activity per week). Among couple families, the most frequently reported forms of engagement are: 46.7 per cent of couples report one person with part-time activities and one with full-time; and 35.9 per cent where both parents report activity of more than 35 hours per week.

This data also highlights some marked differences between states. While on average, across states, the proportion of single parents reporting part-time and full-time activity are similar, in the Northern Territory a much higher proportion of this group report being engaged at the full-time level. Similarly, there is considerable difference between states in the level of activity reported by couples. For example, while across Australia there are some 77 couples where both undertake full-time activity for every 100 who have one member with part-time activity and one with full-time activity, this proportion varies from just 46:100 in Tasmania to 101:100 in the ACT and 172:100 in the Northern Territory.

Table 13: Distribution of families with children in child care, by reported approved activity in last week of care used, Q4 2019
Activity aStateTotal
NSWVic.QldSAWATas.NTACT
 Distribution of families (%)
Single parent         
Missing activity b2.12.02.42.42.12.81.70.82.1
Low1.61.62.21.81.82.41.20.61.8
Part-time7.98.09.79.78.711.45.85.58.5
Full-time7.97.311.68.68.67.814.28.68.8
Total Single parent19.518.826.022.521.324.422.915.621.1
Couple         
Missing Activity4.84.33.64.03.53.64.13.24.2
Low Activity0.20.20.20.10.10.20.20.00.2
Some Part-time6.26.85.46.75.37.94.57.16.2
1 Low, 1 Full-time3.33.33.02.94.13.21.71.63.2
1 Part-time 
1 Full-time
35.739.233.640.640.541.624.536.036.8
2 Full-time30.327.428.223.125.219.242.136.528.3
Total Couple80.581.274.077.578.775.677.184.478.9
Total100.0100.0100.0100.0100.0100.0100.0100.0100.0
Families307,771230,734209,35460,99878,57516,2747,72822,292933,726

Notes: Data relates to a range of approved activities, one of which is employment, and also includes journey to work and related travel time. Data is reported on a fortnightly basis and has been converted to a weekly basis assuming equal time was spent in each week. a Low includes zero and less than 10 hours per week; Part-time is 10 to under 34 hours per week, Full-time is 35 hours or more a week. b There are a number of reasons why activity may be missing. One, discussed in Section 2.3, is that there are some families who do not apply for subsidies. Second, there may be non-reporting by families' who have an exemption from the activity test. It should also be noted that this group may be over-reported as being single parents, as without full reporting, associated with activity, a partner may not be identified.

Source: DESE administrative data

Family income

The distribution of families using child care, and children in care in Q4 2019, by whether they are a single parent family, or a couple, by gross household income, is shown in Table 14. Dominant in the table is the concentration of single parents at the lower end of the income distribution, with both 56.3 per cent of these families and children in these families attending child care reporting incomes under $50,000 per annum35 compared to just 5.0 per cent of couple families. In contrast, 46.5 per cent of couple families, and 48.4 per cent of the children of such families who attend child care, report incomes of $150,000 or more.

Table 14: Distribution of families with children in child care, by family type and gross income, Q4 2019
Family gross income aSingle parentCoupleTotalSingle parents as share of total
FamiliesChildrenFamiliesChildrenFamiliesChildrenFamiliesChildren
 Distribution (%)Proportion (%)
Zero1.51.40.10.10.40.387.387.4
$1-<25k24.524.40.70.75.75.590.590.5
$25-<50k31.831.94.34.310.110.066.565.7
$50-<100k32.632.818.317.421.420.632.332.6
$100-<150k5.95.928.327.623.623.15.35.3
$150-<250k2.02.035.937.128.729.91.41.3
$250-<500k0.30.39.910.67.98.50.90.8
$500+k0.00.00.60.70.50.51.21.0
Missing1.41.21.91.61.81.516.616.0
Total100.0100.0100.0100.0100.0100.021.120.5
Families196,731-736,917-933,648---

Notes: a Estimated gross income as reported.

Source: DESE administrative data

Further analysis of family income of families using child care, including the distribution of income with regard to the steps of the CCS subsidy rate, is presented in Chapter 4.

Data from the DESE/ORIMA parent survey suggests that, on balance, among families with children those who used child care were less sanguine about their financial situation than those who did not. The distribution of responses to the question 'Given your current needs and financial responsibilities, would you say that you and your family are …?' are shown in Figure 7. While there is clearly a skew towards more negative responses by those using child care, only the differences in the categories 'Very comfortable', and 'Just getting by', were statistically significant.

Figure 7: Families with children aged under 13, perception of financial circumstances, by use of child care, DESE/ORIMA parent survey, June 2019

fig007.png

Notes: Child care user defined as a parent who has a reference child in an identified formal child care reference care. (See Section 2.4.2). Error bars on the chart show the 95 per cent confidence interval on the estimate.

Source: DESE/ORIMA Parent survey, June 2019

2.3 Costs and subsidies

The cost of child care is considered in detail in Chapter 4. This section considers the notional distribution of costs over time and the aggregate budget impact.

2.3.1 Fees and subsidies over time

The level of weekly fees charged and notional subsidies paid shows a number of patterns over time (Figure 8).36 These are driven by the patterns of use of child care services, the level of fees, and the structure of assistance to parents. Overall, the pattern of total fees reflects the number of children receiving care, as seen in Figure 5. The pattern of subsidies, however, also shows 2 distinct features relating to the old and new subsidy systems:

  • In the period up to July 2018, there is a distinct pattern of the level of subsidies declining over the financial year. This reflects, in large part, the impact of the CCR cap. This progressively cut in across the financial year as more people reached their cap and lost eligibility for further assistance.
  • In the post July 2018 period, the subsidy shows a distinct sawtooth pattern. This is largely a product of the caps on the number of hours of care a family is entitled to in a fortnight, with a small number of families reaching this cap in the second week of each of the assessable fortnights and hence receiving a lesser amount than they did the previous week. The operation of the activity test is considered in Chapter 6.

Figure 8: Total weekly fees and notional fee relief subsidies, January 2017 to December 2019

fig008.png

Source: DESE administrative data

More detailed analysis of the impact of subsidies on the affordability of child care is undertaken in Chapter 4.

Non-receipt of subsidies

While most children in child care do receive subsidy support, a small proportion, estimated at 5.6 per cent of children, do not. There are a number of reasons for this. In some cases, a parent will not meet the residency criteria for eligibility for subsidy or provide less than the 14 per cent minimum level of care, they may fail to meet immunisation requirements, or the family may have an income above the cut-off for CCS eligibility, or consider that the amount of subsidy due to them is not worth the effort of applying for the subsidy, or parents may simply be reluctant to register with Centrelink. In the case of administrative data, such as that used here for analysis, it is also possible that a single snapshot of data may record some incomplete administrative processes.

The incidence of non-receipt is highest in Outside School Hours Care where 10.7 per cent of children who attended such services, and had fees paid for, did not record having received a subsidy. In contrast, the proportion was just 0.6 per cent for children in In Home Care,37 2.2 per cent for those in Family Day Care, and 3.2 per cent for those in Centre Based Day Care. Across the population of children, the incidence of non-receipt is concentrated in higher income families, or those with missing information on income.

Figure 9: Proportion of children not receiving subsidy, Q4 2019

fig009.png

Note: Children for whom no subsidy is recorded in the quarter although they have recorded fees charged.

Source: DESE administrative data

2.3.2 Government expenditure

Budget expenditure by the Department of Education, Skills and Employment on child care programs is shown in Table 15. More generally, the Productivity Commission reports an increase in real spending by the Australian Government on ECEC of 74.8 per cent, from $4.498 billion in 2009-10 to $7.861 billion in 2018-19. The Productivity Commission also reports, in addition, spending of $1.964 billion in 2018-19 by state and territory governments.

As shown in Table 15, the overwhelming proportion of expenditure by the portfolio is on the subsidy programs. The support programs primarily involve spending on the Inclusion Support Program and the Community Child Care Fund, which are discussed in Chapters 7 and 9, but prior to 2018-19 also included expenditure on the Budget Based Funded Services.

Drawing strong conclusions from this budget information is, however, limited by some outstanding issues with the accrual accounting estimates for 2018-19. Over the financial year 2018-19, the Departmental administrative data reports the total value of the (unreconciled) Child Care Subsidy at $7.69 billion. While data for the 2019-20 financial year is included in the table, it is noted that this estimate also includes the impact of policies implemented as a response to COVID and hence is not a reflection of the impact of the Package on program expenditure.

Table 15: Education, Skills and Employment Portfolio spending on Child Care program elements, 2015-16 to 2019-20
Program elementsaActual ExpensesRevised Estimate
2015-162016-172017-182018-19 b2019-20
 $ millions
Child care support111.7238.3252.5267.8342.7
JETCCFA17.426.449.9-0.6-
CCB2,578.43,649.03,246.6--
CCR2,450.93,627.43,766.6--
CCS---7,440.38,317.2
JETCCFA/CCB/CCR/CCS5,046.77,302.87,063.17,439.88,317.2
Total5,158.47,541.17,315.67,707.58,659.9

Notes: a Selected program elements, excludes items such as communications campaigns and contributions to the Early Years Quality Fund. b DESE reports that in addition to this estimate of their actual expenses on an accrual accounting basis, the Department has also contingent assets and liabilities which relate to reconciliation and related debt issues.

Source: 2015-16: Education and Training Portfolio, Portfolio Additional Estimates Statements (PAES) 2016-17, 30-31; 2016-17: Education and Training Portfolio, PAES 2017-18, 25-26; 2017-18: Education and Training Portfolio, PAES 2018-19, 29; 2018-19 & 2019-20: Education, Skills and Employment Portfolio, PAES 2019-20, 37

2.4 Satisfaction with child care

Parental attitudes to the role and use of child care are important both in determining levels of use of these services and with respect to their satisfaction with access, quality and cost. The specific aspects of parental experiences and satisfaction with affordability will be considered in Chapter 4, those relating to flexibility in Chapter 5, and access in Chapter 6. This section considers, firstly, the attitudes of parents who both use and do not use child care services towards the role of this sector, and, secondly, what parents who use these services consider to be important, and their levels of satisfaction with aspects of provision.

The data used here has been drawn from a series of parent surveys undertaken by ORIMA Research for the Department of Education, Skills and Employment and made available to the evaluation as the key data source on parental experiences and attitudes. The survey is detailed further in Appendix A and will be drawn on in other chapters where it offers particular insight into the questions being considered. The June 2018, November 2018 and June 2019 surveys included a sample of parents using and not using child care. The November 2019 survey only sampled parents using care.

Most of the data on satisfaction and attitudes was collected on a 5-point scale, with parents rating their agreement or otherwise with a series of statements, with responses ranging from 'Strongly disagree' to 'Strongly agree'. In the following analysis, some results are presented as the original distribution, in other cases, a single summated score has been derived, with the mean, average, score being shown. This score ranges from -2 if everybody strongly disagreed with a statement to +2 if everyone strongly agreed.

2.4.1 Parental attitudes to child care

Parents were surveyed with regard to their attitudes to work and child care, including the benefits they saw children could obtain from participation. The questions sought parents' level of agreement with statements that child care benefits children in terms of their social skills, and benefits their learning and development. The results, as average scores, are presented in Figure 10. The data is presented for 2 different parental classifications, one by family type and labour force participation, the second by family type, age of youngest child and whether or not the respondent used child care.

Figure 10: Parental views on the benefits of child care for children, mean agreement, June 2019

fig010.png

Notes: These questions asked a respondent parent to state their level of agreement with a series of statements. The charts show the mean score on a 5-point scale centred on those who neither agree nor disagree. The weights attached were 'Strongly disagree': -2; 'Disagree': -1; 'Neither agree nor disagree': 0; 'Agree': +1; and 'Strongly agree': +2. Error bars on the chart show the 95 per cent confidence interval on the estimate. a The labour force status of families has been derived from the reported employment activity of respondents and their partners and data on hours of work. SP F/T: Single Parent full-time employed; SP P/T: Single Parent part-time employed; SP Nil: Single Parent not employed; Cpl 2 F/T: Couple, both full-time employed; Cpl F/T & P/T: Couple, 1 full-time and 1 part-time employed; Cpl 1 F/T: Couple, 1 full-time employed and other not employed; Cpl P/T only: Couple, no full-time but one or both part-time employed; Cpl Nil: Couple, neither employed; b SP use 0-4: Single parent uses child care, youngest child aged 0-4 years; SP use 5-13: Single parent uses child care, youngest child aged 5-13; SP non 0-4: Single parent does not use child care, youngest child aged 0-4; SP non 5-13: Single parent does not use child care, youngest child aged 5-13; Cpl use 0-4: Couple uses child care, youngest child aged 0-4; Cpl use 5-13: Couple uses child care, youngest child aged 5-13; Cpl non 0-4: Couple does not use child care, youngest child aged 0-4; Cpl non 5-13: Couple does not use child care, youngest child aged 5-13.

Source: DESE/ORIMA Parent Survey June 2019

The data using this second classification, in particular, highlights some very large differences in the attitudes of parents. Although all groups reported on balance a positive level of agreement with the statements concerning child care having benefits for children, the force of this agreement was markedly, and statistically significantly, higher for each of the groups of parents who used child care, relative to the equivalent group of parents who did not use care.

Although the differences on the basis of labour force participation were not as marked, a key difference was seen among couples where both parents were working, especially working full-time, relative to those couples where there was a single full-time breadwinner. This latter group of respondents reported much, and statistically significantly, lower levels of agreement.

This result has a bearing on considerations in Chapter 8 on employment participation.

2.4.2 Parental satisfaction with child care

Parents were also asked questions about their overall level of satisfaction with the quality of paid child care. The first question asked about all paid child care that they had used over a defined reference period. The second was focused on a specific child care service received by a specific child in their family - the 'reference care' accessed by a 'reference child'.38 This latter is the focus of consideration here.39  Figure 11 presents the distribution of responses to this question across the 4 waves of the survey.

Satisfaction with the quality of care

Overall, parents expressed satisfaction with the child care their child was attending, with around half stating they were 'satisfied' and a bit over a third saying they were 'very satisfied', around 8 per cent said they were 'neither satisfied nor dissatisfied', some 4 per cent said they were 'dissatisfied', and around 1 per cent that they were 'very dissatisfied'. In general, there was little change in these responses over the 4 surveys, other than in November 2019. The proportion of parents reporting that they were very satisfied with the quality of care in this survey, of 32.3 per cent was statistically significantly lower than the 37.9 per cent recorded in June 2019 and 36.7 per cent in June 2018. Conversely, there was a statistically significant increase in the proportion reporting that they were satisfied between June 2019 and November 2019, but not relative to June 2018.40

Figure 11: Distribution of parental satisfaction with quality care, June 2018 to November 2019

fig011-lines.png

Notes: Reference care of reference child. Error bars on the chart show the 95 per cent confidence interval.

Source: DESE/ORIMA Parent Survey, June 2018, November 2018, June 2019 and November 2019

The pattern of stability seen in this distribution is also seen when the responses are combined into a single scale. This identified a small fall from June 2018 to November 2018 and then an increase to June 2019, and a decline to November 2019. However, none of the movements, either between individual surveys, or overall, were statistically significant at the 95 per cent confidence level, although the June to November 2019 fall was significant at the 90 per cent level. Figure 12 shows this single scale measure disaggregated by the type of care which was identified as the reference care.

While the results for the In Home Care sector are shown in the diagram, these will not be discussed, as the small sample size for this sector makes the estimates unreliable. Looking firstly at the relative ranking of the other sectors across the surveys, Family Day Care had a significantly higher level of satisfaction with the quality of care relative to both Outside School Hours Care and Centre Based Day Care in all surveys. In turn, Centre Based Day Care recorded statistically significant higher satisfaction with the quality of care than Outside School Hours Care in all but the November 2019 survey.

With respect to changes over time, there were no significant changes in satisfaction in any of the sectors, at the 95 per cent level of confidence and, indeed, across the sectors a range of diverse movements are recorded. Using the less stringent 90 per cent confidence measure, the decline in satisfaction with quality in Centre Based Day Care seen in November 2019 is a significant decline from that in June 2019 but not relative to June or November 2018.

Figure 12: Trends in mean satisfaction with quality of care, by sector, June 2018 to November 2019

fig012.png

Notes: Reference care of reference child. Error bars on the chart show the 95 per cent confidence interval.

Source: DESE/ORIMA Parent Survey, June 2018, November 2018, June 2019 and November 2019

Two snapshots of satisfaction by state and territory in June 2018 and November 2019 are shown in Figure 13. In June 2018 respondents in Western Australia reported a significantly higher level of satisfaction with the quality of care received by the reference child compared to Victoria and Queensland but with no other significant differences with other states and territories. In November 2019 the only significant difference was a higher level of satisfaction in Tasmania relative to Victoria.

Turning to change over time, between June 2018 and November 2019 all states other than NSW showed a decline in satisfaction, although none of these, nor the very slight increase in NSW, were statistically significant at the 95 per cent confidence level, although the decline in Western Australia was significant at the 90 per cent confidence level.

Figure 13: Mean satisfaction with quality of care, by state, June 2018 and November 2019

fig013.png

Notes: Reference care of reference child. Error bars on the chart show the 95 per cent confidence interval.

Source: DESE/ORIMA Parent Survey, June 2018 and November 2019

Importance of, and satisfaction with, aspects of care

The surveys asked parents about their level of satisfaction with a number of different aspects of child care. Specifically, parents were asked about their level of agreement with the following statements:

  • Your child care service offers good learning and development opportunities for your child.
  • Your child care service provides a place for your child to socialise with other children.
  • Your child care service offers a healthy and safe environment for your child.
  • The workers at your child care service are trained and experienced educators.
  • Your child care service provides culturally appropriate care to your child.
  • I am able to change my child care hours or days if I need to.

Additionally, in the baseline June 2018 survey, parents were also asked about the importance of these dimensions of child care provision, using a similar 5-point scale. Figure 14 illustrates the responses in that survey to both the question on importance and that on the level of satisfaction. The data is provided separately with respect to where the reference child is aged under 5 years, and for those aged 5-13 years.

The first 3 aspects seen as being most important were the same for both groups of children: firstly, health and safety, followed by having trained and experienced educators and, thirdly, providing opportunities for socialisation. Learning was fourth ranked with regard to care of younger children, followed by parental capacity to change hours and days, and for the older age group these 2 were reversed. While in rank terms, this reversal of position of learning is relatively minor, the mean scores show a marked difference; a mean rating of 1.2 for the younger age group and just 0.6 from parents with a reference child in the older age range. For both groups, cultural appropriateness is last ranked, with other analysis suggesting this is a very amorphous concept.

Figure 14: Parental views of importance of, and satisfaction with, aspects of child care provision, by age group of youngest child, June 2018

fig014.png

Notes: Satisfaction relates to reference care of reference child. Error bars on the chart show the 95 per cent confidence interval.

Source: DESE/ORIMA Parent Survey, June 2018

The trends in satisfaction against each of these dimensions, across the 4 surveys from June 2018 to November 2019, are shown in Figure 15.41 The time series for satisfaction with the first 4 aspects of satisfaction: good learning and development opportunities; socialising with other children; providing a healthy and safe environment for children; and having trained and experienced educators all show the same pattern. This is an increase in satisfaction to a peak in June 2019 to reach a level statistically significantly higher than that in June 2018, and then a decline to November 2019 leaving the measure at a level somewhat above, but not statistically significantly higher, than it was in June 2018.

Satisfaction with care being culturally appropriate shows a similar pattern but with the level in November 2019 being statistically significantly above that recorded in June 2018.

In contrast, satisfaction with their ability to change hours and days, as well as having a much lower level of satisfaction in each of the surveys when compared with any of the other dimensions of provision, shows a pattern of declining satisfaction, with the level of satisfaction in November 2019 being statistically significantly lower than it was in June 2018. This is an aspect that will be considered in Chapter 5.

Figure 15: Parental satisfaction with elements of child care provision, June 2018 to November 2019

fig015.png

Notes: Reference care of reference child. Error bars on the chart show the 95 per cent confidence interval.

Source: DESE/ORIMA Parent Survey, June 2018, November 2018, June 2019 and November 2019

Taken together, this would suggest that, while on balance there have been some increased satisfaction by parents with some aspects of child care provision, these have been relatively modest and not statistically significant, due in some cases to a decline at the end of the period, as well as one measure showing a decline over the period. More generally, the responses to the aggregate question on satisfaction with quality showed no significant change. While clearly pointing to there not having been any systematic decline in these aspects of care associated with the introduction of the new Child Care Package, neither does this data suggest that there has been any significant improvement.

2.4.3 Service perspective on system

There is less systematic material available on services' perspectives of the state of the sector, although the Early Learning: Everyone Benefits report summarised it as:

At a national scale, the picture presented in this report is largely positive; however, focusing on the detail reveals challenges. While the headline figures indicate strong national progress in ECEC provision and quality, closer examination highlights significant pockets of unmet need, and problems of affordability and workforce planning. The picture also differs between states and territories, where differences in the ECEC landscape combine with varying policy settings to produce inconsistent results for children and families. (Early Learning: Everyone Benefits, 2019, p. 1)

2.5 Summary

The data in this Chapter has sought to describe the structure and magnitude of the child care sector in Australia and some of the main characteristics of the services that provide care and the families and children who use them. It has identified a number of specific aspects of the system, which will be addressed in later chapters.

While there has been a trend to improving quality in child care services as measured by ratings under the National Quality Standards, this data does not provide a basis for examining changes related to the impact of the Child Care Package.

The Chapter also reports on parental satisfaction with the child care system. This indicates:

  • Overall, parents have a relatively high level of satisfaction with the quality of the child care that their children receive, with a distribution of views on what is important in the services provided by the sector.
  • While satisfaction with some particular aspects of care have shown some improvements between some of the surveys, these have not necessarily been consistent over time, or with each other. More generally, there has been no significant change in parental satisfaction with the overall quality of care provided by child care services since June 2018. This suggests, at a minimum, that there have been no adverse impacts in these areas associated with the changes introduced with the Child Care Package in July 2018 but, equally, no evidence of any positive effects.

16 aifs.gov.au/sites/default/files/cc_package_ef_0.pdf

17 This survey was commissioned by DESE to be the main source of data on parents for the evaluation. The survey was managed and designed by the Department and was conducted on the Department's behalf by ORIMA Research.

18 The regulatory framework is complex. Centre Based Day Care services, Outside School Hours Care services and Family Day Care services must hold approval under the National Law. In Home Care services are not regulated under the National Law but in some states are subject to state and territory legislation. All In Home Care services need to meet quality standards as detailed in the Commonwealth Minister's Rules. Services also need to gain approval under Commonwealth Family Assistance Law to be eligible for receipt of Child Care Subsidy.

19 The legislation specifically excludes from eligibility to receive CCS a 'service that primarily provides an early educational program to children in the year that is 2 years before grade one of school (such as a preschool or kindergarten)', the rationale for this is that 'Preschool and kindergarten education is a financial responsibility of state and territory governments, including the distribution of Commonwealth contributions provided to states and territories through the National Partnership on Universal Access to Early Childhood Education' (DESE, 2020b, p. 2).

20 In some cases, a single educator or small group of educators may constitute a service.

21 In this analysis a child attending child care is defined as a child who has at least one record of hours of care in the DESE administrative dataset. This approach has been adopted to allow for some of the analyses that take into account actual attendance data. The figure of 1,327,238 children derived from this methodology compares with a raw count of 1,331,903 children in the dataset, and 1,330,205 if records that have no recorded child care fees are excluded. The restricted dataset used here identifies 13,118 services, compared with 13,135 in the raw dataset. These differences are considered to be immaterial for the purposes of the analysis undertaken, although it is noted that as different restrictions are used across particular parts of the evaluation analysis, similar small variations in counts will occur and hence numbers reported may vary.

22 This is based on the number of unique child identifiers. In some cases, a child may have more than one identifier as a result of a change in parenting arrangements, or other factors.

23 Analysis of provider structure is based upon the (confidentialised) provider CRN within the DESE administrative dataset. These identifiers do not, however, necessarily relate to legal or corporate structures. Analysis indicates that in some cases some organisations may have multiple CRNs; for example, when operating in different states, and hence be identified as being separate providers.

24 Hence while in November 2019 services had an average of 94 children attending, the estimated number of effective places was 53. This reflects the pattern of attendance of children discussed later in Table 9.

25 The state/territory approval process for services usually involves the specification of a number of 'approved places' that represent the maximum number of children who can attend the service. This data was not available comprehensively for this evaluation, nor does the approved size of a service necessarily reflect the actual current operating scale of the service.

26 It is noted that for both the Family Day Care and In Home Care sectors, location refers to the location of the service and may not reflect the actual location of service provision, as the latter is determined by the actual location of the educators operating within the service.

27 The ACT includes Jervis Bay.

28 The rating system also contains a classification of Excellent. This is the highest rating and is available, by application, for services which are rated as Exceeding the National Quality Standard in all 7 quality areas. Specifically it recognises services using innovative practice to achieve higher outcomes for the children and families using the service, their communities and the wider education and care sector. In Q4 2019 27 child care services had this rating. In the material presented here this category is combined with those rated as Exceeding.

29 Once services are rated, state authorities tend to monitor standards on a risk based approach with a focus on those services with lesser outcomes. Services can also apply for a re-rating. Data indicates that only 25.6 per cent of ratings, as at December 2019, were issued after the introduction of the Child Care Package (taking into account the 10-week period associated with conducting and issuing a rating). Additionally, some of the overall improvement in service ratings appears to be related to the exit of lower rated services. Data indicates that around one third of those services that had a last child record between Q3 2018 and Q3 2019 had a rating of working towards, or needing significant improvement, compared with some 23 per cent of those continuing.

30 Some caution needs to be exercised in comparing the pre-July 2018 data with the subsequent period. This reflects the extent to which the new data collection associated with the CCS may be more comprehensive in its coverage of children for whom subsidies are not being claimed, as well as changes in the underlying database as part of the IT changes associated with the package. In addition, children who attended what were then Budget Based Funded Services in this earlier period were not included in the data.

31 As discussed in Chapters 6 and 7, monitoring the levels of participation of Indigenous children in child care services is complicated by a change in the way these children are recorded in the data from July 2018 onwards, and the shift of the group of former Budget Based Funded services, which predominantly provided services to Indigenous children, into the fee and subsidy based sector as at the same date. These services are discussed in more detail in Chapter 10.

32 Essentially this is a measure of charged hours. While this may represent a formal session length in some cases; for example; when an hourly fee is charged, it may represent the number of hours which are charged.

33 The actual administrative data records for each child record a unique identifier for the 'customer', and where there is one, for a 'customer partner'. These are usually the parents of the child and are defined here as a family. In some cases, a child may have multiple families identified in the data; for example, if their parents are separated and have joint custody and each is responsible for arranging and paying for child care for those periods in which they care for the child. Except for the subgroup of children for whom additional information is available from the matched FTB file, no information is available in the administrative data on any other children in the family who do not use child care.

34 Parental activity and the approach to classification of activity is considered in more detail in Chapter 9, see also table notes to Table 13.

35 Excluding those with a reported zero income.

36 The level of subsidies shown in the chart are 'notional' in that while they relate to the actual subsidies paid to services in a particular week (plus the proportion withheld), as calculated based on the reported current income and activity of parents, these payments are subject to annual reconciliation and hence do not necessarily equate to the actual subsidy families receive. This is considered more in Chapter 5.

37 This result may be an artefact of the data, as the guidelines for In Home Care specify that: 'to access In Home Care, families must be eligible for CCS' (DESE, 2020c, p. 10).

38 Where families had more than one child, the reference child was the youngest child in the family attending paid child care. If the child attended more than one form of child care, the form of care used as the reference care was randomly selected.

39 This focus has been adopted as the first question potentially included the use of a range of paid child care services including nannies, etc., outside the scope of consideration here. In addition, the focus on a particular form of care where a child used multiple forms allowed the responses to be analysed by type of care.

41 There is a possibility that the difference between the June and November surveys may also reflect somewhat of a seasonal pattern. There is, however, insufficient data to allow this to be wholly explored.

3. Simplicity

3. Simplicity

The second program outcome identified for the evaluation was that 'Access to child care support is simple for families and services'. This is addressed in this chapter. The role of the Package in delivering a simpler system was emphasised in the second reading speeches on the legislation: 'A new, simpler Child Care Subsidy, which will improve affordability' (Birmingham, 2017) and 'a simpler, more affordable, more accessible and more flexible early education and childcare system' (Porter, 2016).

3.1 Program changes and simplicity

3.1.1 Program changes

A number of elements of the Package can be seen as making the child care system simpler. These included:

  • The replacement of the dual subsidy approach of Child Care Benefit and Child Care Rebate with the single Child Care Subsidy.
  • Improved processes for services in relation to regulations around approvals and opening hours. This included improving the consistency of language and streamlining required processes.
  • A new IT system. The Department indicated this would 'support the major changes to the Child Care Package and will positively impact child care services, families and all levels of government with streamlined processes, reduced administrative and regulatory burden and increased information sharing' (Department of Education and Training, 2017a, p. 2).

At the same time, the new program arrangements introduced new, and modified other, elements of the program including: the new Income and Activity Tests, along with new processes for accessing child care assistance and enrolment processes, new reporting requirements and the hourly rate cap. These all have implications for the operation of child care for both parents and services. The Department considered that the new IT system would 'reduce regulatory burden on service providers by allowing parents to electronically record the times their child attends a child care service … [and] would remove the need for services to undertake administrative tasks, such as preparing and storing attendance sheets, … [and] would also streamline the reporting processes for services' (Department of Education and Training, 2015a, p. 101). While aspects of the enrolment and reporting process were seen as improving compliance and were 'required to support the integrity of the child care system, … [a]ll providers will be required to invoice families fortnightly, rather than quarterly, to provide families with information about their usage and entitlements' (p. 103).

In late 2019 the government revised one aspect of the new policy, changing what was known as the '8-week rule'. Under this, enrolments were deemed to lapse after 8 weeks of absence and required a new application for any further assistance. The change extended this period to 14 weeks. This addressed a concern by services that the 8-week period was too short, especially for the Outside School Hours Care sector, and had created a more complex and less efficient framework for the program. Because of the timing of data collections for the evaluation, most of the information used here predated this change and hence its impact cannot be reported on, and responses reported on may reflect this earlier issue.

3.1.2 Evaluating simplicity

Evaluating simplicity has a number of challenges, some of which have been exacerbated by the curtailment of some planned evaluation activities as a consequence of the pandemic, and the changed timing of this final report. These challenges include:

  • The nature of the evaluation, which is focused on outputs and impacts, rather than being a formative evaluation. As such, it has not incorporated the type of systems analysis that would more directly inform on the complexity of processes. In the absence of this type of analysis and, as previewed in the evaluation strategy, a strong reliance on perceptions of simplicity, rather than direct measurement of this.
  • The extent to which simplicity can be intermediated by the actions of the parties. For example, parental assessment of simplicity may be influenced by the extent to which services provide support to parents in their interactions with the child care system. Similarly for services, the quality of the software they use (as provided by a third party), significantly shapes their experience of the complexity of their interactions.
  • The degree to which perceptions of simplicity are impacted on by 'difference' rather than 'complexity'. That is, people learn systems, and the introduction of a new system involves a new learning process, which means that, even if the new arrangement is simpler, they are less familiar. In this context, responses collected by the evaluation on 'simplicity' may be impacted by the experience of doing something different.
    • Similarly, over time, as people become habituated to a system and learn how to navigate its complexities, they can confuse their increasing facility in working with it as simplicity.
  • The introduction of the Package involved very substantial change and, in many cases, a very high workload, in particular for services, in making preparations and adjustments to their operations for the new system. Differentiating these transition effects relative to ongoing simplicity is difficult, especially where there is a high reliance upon subjective reporting.

The relationship between simplicity, and knowledge, and understanding, is also important. Some simple processes can appear, or become, complex if people cannot obtain, or understand, information about them, and even quite complex processes can be relatively simple to complete if people are readily able to access and understand clear information and guidance. For this reason, questions about access to, and understanding of, information about the system and its processes are also considered here.

In evaluating simplicity, 2 other key issues are:

  • Whether or not the focus is on an absolute or a relative concept of simplicity. The evaluation largely considers this in relative terms - are the arrangements introduced with the Package simpler than what existed before, and how does the complexity of the operation of the Package compare with other administrative arrangements?
  • How to treat problems experienced with processes; for example, slow administrative processes, systems issues, and other factors that impinge on the efficiency of the system, in the context of simplicity. In this chapter, we have included some dimensions of this. Underlying this approach is that a system that is conceptually simple but operationally inefficient, does not meet common concepts of simplicity in public administration.

The experiences of simplicity for families and services are also relevant to other outcomes and impacts in this report. For families who find access to child care assistance complex, or do not understand application processes, this may impact on both access to, and affordability of, child care. For more vulnerable families, this may be especially relevant, and is discussed in Chapter 7. For services, concerns about more complex or administratively burdensome processes may contribute to concerns about viability.

This Chapter initially considers parents' perceptions of whether the new subsidy arrangements are easier to understand, along with their level of understanding of the system, how easy they find information on child care to understand, as well as the sources they use to access this. A similar approach is then taken with services.

3.2 Parental perceptions and experience of the Child Care Subsidy

In addressing the question of simplicity from the perspective of parents a focus is their ease of understanding and ability to successfully operate within the system.

3.2.1 Overall assessment of the child care subsidy

The November 2018 and June 2019 DESE/ORIMA parent surveys asked parents a broad overview question about their level of agreement with a statement: 'The new child care subsidy is easier to understand than the old Child Care Benefit and Child Care Rebate.'

This question elicited a consistent pattern of responses in both the November 2018 and June 2019 surveys. That is, the perception of the relative ease of understanding the Child Support Subsidy system compared to the old was viewed consistently shortly after its introduction and a year after. This pattern suggests that the responses reflect a measured assessment, rather than being unduly influenced by familiarity or difference. As shown in Figure 16, the most common response was that people neither agreed nor disagreed with the statement, with just over 43 per cent of respondents giving this answer in both surveys. Some 33-34 per cent reported a degree of agreement with the statement, and 22-24 per cent disagreement. In both these cases - and more so in the case of agreement - these were heavily weighted towards the more moderate response of 'agreement', rather than 'strong agreement'.

Figure 16: Parental agreement 'The new child care subsidy is easier to understand than the old Child Care Benefit and Child Care Rebate', DESE/ORIMA parent survey, November 2018 and June 2019

fig016.png

Notes: Parents with a 'reference child' in an identifiable 'reference care'. Error bars on the chart show the 95 per cent confidence interval on the estimate.

Source: DESE/ORIMA Parent Survey November 2018 and June 2019

More detailed analysis of these responses found some variation in responses for different population subgroups. Most marked, as seen in Figure 17, were variations between families on the basis of family income. While lower and middle income families tended towards being neutral or weakly positive, higher income families were negative in their assessment of the ease of understanding of the new policies. However, the 2 groups with strong negative responses represent very small population groups - 3.3 per cent and 1.4 per cent, respectively.

The largest population group - those families with children in child care with gross family incomes between $65,000 and $125,000 per annum, who accounted for around 30 per cent of the estimated population of parents in November 2018, was the only group that recorded a statistically significant average positive rating in both November 2018 and June 2019 in response to this question on the CCS being easier to understand, although those families with an income of between $30,000 and $65,000 also did so in the June 2019 survey but not in the preceding November survey. While the 2 lower income groups both reported an increase in their assessment of the relative ease of understanding the program between these 2 waves of the survey, the reverse was the case for all other groups, although none of these changes were statistically significant.

The pattern of responses, in particular the more adverse responses by higher income groups, would appear to reflect several factors. One is the extent to which families with higher incomes were more likely to have a decrease in their level of subsidy rather than any increase, and the structure of the new administrative arrangements that required them to engage with Centrelink, that many of those with lower incomes had already had some experience with.

While there were some other statistically significant variations, these were not consistent across the surveys and were small in magnitude.42

Figure 17: Mean parental agreement 'The new child care subsidy is easier to understand than the old Child Care Benefit and Child Care Rebate', by family income group DESE/ORIMA parent survey, November 2018 and June 2019

fig017.png

Notes: Parents with a 'reference child' in an identifiable 'reference care'. The chart shows the mean score on a 5-point scale centred on those who neither agree nor disagree. The weights attached were 'Strongly disagree': -2; 'Disagree': -1; 'Neither agree nor disagree': 0; 'Agree': +1; and 'Strongly agree': +2. Error bars on the chart show the 95 per cent confidence interval on the estimate.

Source: DESE/ORIMA Parent Survey, November 2018 and June 2019

Overall, this would suggest that while the Package measures were, on balance, seen more positively than negatively in terms of parents' ease of understanding, the magnitude of this was small. The average rating in November 2018 was 0.08, just one twelfth of a response category above neutral and, in June 2019, 0.11 of a category.43 While both of these were statistically significantly different to being neutral, the strength of agreement was very weak. While responses to this question varied across population subgroups; in general, these were small, other than the more negative response by those on higher incomes. Overall, these results suggest a very small marginal effect, rather than any significant shift in perceptions around the simplicity of child care support.

3.2.2 Parents and the Child Care Subsidy

Parents' assessment of their understanding

Parents were asked (in CCPFamS) how well they understand how eligibility for CCS works. In November 2018, 31.8 per cent said they understood this 'very well' or 'well'. Another 42.2 per cent reported they understood it 'somewhat', while 25.9 per cent said they understood this 'not very much' or 'not at all'. When this same question was asked in September 2019, responses were similar, although with a little more understanding reported: 35.2 per cent said they understood how eligibility to CCS works 'very well' or 'well'.

Figure 18 presents, for this question, and a number of more specific questions about the operation of the subsidy, the mean score reported by parents in these 2 survey waves. A positive score represents a balance of responses above that of 'somewhat understanding' and a negative score a balance below this - that is somewhere between 'somewhat' and 'not very much'.

The chart indicates that there was some variation in parents' understanding of different aspects of the program, and some shift in the level of understanding over time:

  • Overall, the average scores reported by parents were just slightly above 'somewhat of an understanding'.
    • The most well-understood component was what parents needed to do if their circumstances changed, and the least well-understood was the 5 per cent withholding.
  • Over time, between November 2018 and September 2019, there was some improvement in understanding by parents, as reported in this survey.
    • This was relatively slight in the case of understanding how eligibility for the Child Care Subsidy works, and how income and activity affects entitlement. In each of these, the gain was just one tenth of a step between response categories.
    • In contrast, understanding of what to do if circumstances change, and of the 5 per cent withholding, increased by around 0.4-0.5 of a step.

Figure 18: Parents' self-reported understanding of aspects of the Child Care Subsidy, CCPFamS, November 2018 and September 2019

fig018.png

Notes: The chart shows the mean score on a 5-point scale centred on those who report they 'somewhat understand'. The weights attached were 'Not at all': -2; 'Not very much': -1; 'Somewhat': 0; 'Well': +1; and 'Very Well': +2.

Source: Child Care Package Family Survey, Wave 1 (November 2018) and Wave 2 (September 2019)

Multivariate analysis of these responses did not identify any strong patterns of association other than those who reported they or their partner worked variable hours, reporting a lower degree of understanding to most of the questions. This was a marked half a category difference with respect to eligibility, and a third of a category on the role income plays in determining entitlement.

Parents' experience of the CCS

A series of more experiential questions relating to the ease of interaction with the Child Care Subsidy were asked in the DESE/ORIMA parent survey. While some of these questions were asked in each wave of the survey, and provide some basis for identifying the extent to which the Package was relatively simpler than previous funding arrangements, others were only asked of the new arrangements. The results are shown as summary mean ratings in Figure 19. Again, these are rated with agreement being positive on a 2-step scale and disagreement negatively, with neutrality being neither agreement nor disagreement.

As shown, the largest negative response was with regard to it being 'easy to understand government information about child care fee assistance'. This series, though, does show a statistically significant improvement between June 2018, when the question related to the old funding arrangements, and the subsequent surveys, which relate to the Child Care Subsidy. The pattern of these responses is considered further in Figure 20, which shows the proportion of parents 'strongly disagreeing' with the statement falling from 20.9 per cent to 15.8 per cent between June 2018 and November 2019, and the proportion 'agreeing' increasing from 21.5 per cent to 26.2 per cent, with both these movements being statistically significant. In addition, there was a fall in those 'disagreeing' and a slight increase in those 'strongly agreeing', but neither of these was statistically significant.

While suggesting that information on the Child Care Subsidy was more easily understood (or presented), the actual magnitude of change needs to be given some attention. This change equates to a fall of 7.3 percentage points in the proportion of parents who disagreed with the statement, and an increase of 5.2 percentage points in the proportion agreeing. More so, even after this improvement, some 49.8 per cent of parents disagreed with the statement and just 28.7 per cent agree.

Additionally, while there has been a small improvement in understanding, it has not been accompanied by any consistent increase in parents' perception of the ease with which they can obtain this information.

Figure 19: Mean parental agreement with statements on aspects of the operation of the Child Care Subsidy, DESE/ORIMA parent survey, June 2018 to November 2019

fig019-lines.png

Notes: Parents with a 'reference child' in an identifiable 'reference care'. The chart shows the mean score on a 5-point scale centred on those who neither agree nor disagree. The weights attached were 'Strongly disagree': -2; 'Disagree': -1; 'Neither agree nor disagree': 0; 'Agree': +1; and 'Strongly agree': +2. Error bars on the chart show the 95 per cent confidence interval on the estimate.

Source: DESE/ORIMA Parent Survey, November 2018 and June 2019

Figure 20: Parental agreement that 'It is easy to understand Government information about child care assistance', DESE/ORIMA parent survey, June 2018 and November 2019

fig020.png

Notes: Parents with a 'reference child' in an identifiable 'reference care'. Error bars on the chart show the 95 per cent confidence interval on the estimate.

Source: DESE/ORIMA Parent Survey, November 2018 and June 2019

The only other question that recorded a consistent significant change over time was that concerning information on service quality: 'It is easy to access information on the quality of child care.' There does not seem to be any activity associated with the Package that could impact on this change, which was seen across the country.

Turning to the other questions, it is noted that:

  • The balance of responses to questions about the ease of being able to 'provide (or update) my details for child care assistance via the myGov website or Centrelink'44 and it being 'easy for me to report fortnightly hours of activity for the Child Care Subsidy Activity Test', were positive, although this was only weakly so. On average, the responses to these questions were just a little above one third of the way to 'agreement', relative to 'neither agreeing or disagreeing', with fewer than one in 10 respondents strongly agreeing.
    • There was no time trend in these responses, which suggests that lack of familiarity with the system in the early stages of introduction was not a factor in the relatively low scores.
    • Parents reported (CCPFamS (Wave 2)), in September 2019, a considerable degree of confidence that they had reported their activity details correctly (85.4 per cent agreed or strongly agreed). However, about half (50.6 per cent) the parents reported being worried that they would end up with a child care debt at reconciliation if they did not get their activity details right. The majority indicated they did not overestimate or underestimate their activity hours, in contrast to the minority reporting to overestimate (6.6 per cent), or underestimate (11.5 per cent), the hours of activity they report to Centrelink. Overall, these responses indicate that while the majority of parents make an effort to record their activity details correctly and in a timely manner, many are still concerned about having a child care debt associated with incorrect reporting of activities (referred to as 'activity debt' by the Department).45
    • There was a weakly significant negative association between parents who had variable hours of employment and their reporting of ease of completing these various administrative tasks. There was also a tendency for higher income families to be more negative.
  • Statements [Statements of Entitlement]46 provided by services were seen most positively of any of the aspects covered by these questions.

3.2.3 How parents gain information

To access information about child care assistance, families may go online for general information, with information provided on Services Australia and Department of Education, Skills and Employment websites, as well as being available from different child care providers and stakeholders. They may also contact Centrelink by phone or in person. Where parents go to for information about government child care fee assistance, as reported in the November 2019 ORIMA/DESE survey, indicates that by far the most common information source among those using paid child care, see Table 16, was Centrelink/myGov, with three-quarters of respondents citing this as one of the sources they used.

Table 16: Sources of information used by parents about Government child care fee assistance, DESE/ORIMA parent survey, November 2019
Source: 
(Multiple sources could be given)
Proportion of parents accessing (%)
Centrelink/myGov75.4
Child care service24.1
Word of mouth, e.g. family, friends, work colleagues, etc.15.3
General web search14.0
MyChild/Child Care Finder5.1
Advertising1.4
Other1.1

Notes: Parents with children attending paid child care.

Source: DESE/ORIMA Parent survey, November 2019

Centrelink/myGov as an information source was reported by a similar percentage in June 2019 (77.0 per cent) but before this, in May 2018 and November 2018, was reported by much lower proportion (50.8 per cent and 43.4 per cent respectively). In contrast, the percentage of families reporting that they sourced information from their child care service was lower in June 2019 (27.6 per cent) and November 2019 (24.1 per cent) compared to a much higher 49.9 per cent previously in November 2018. ('Child care service' was not a response category in the May 2018 survey.) The changing information sources appear to indicate a pattern of strong reliance upon services during the transition and then a shift toward Centrelink/myGov.

3.2.4 Parental reports of issues arising

This section draws on some of the qualitative data collected in the evaluation through surveys, consultations and case studies to identify some of the more recurrent themes in parental and provider responses concerning issues that have arisen in parents' interaction with the child care system.

The activity test

The activity test was frequently raised. This test is both simple in some aspects and complex in others,47 and while at times appearing to be applied as 'indicative' rather than prescriptive, parents' statements of activity are subject to random spot checks, with a requirement for documentation of evidence, and the potential for the creation of a significant level of debt. For example, the documentation provided to parents indicates 'If your work hours change each fortnight, you need to give us an estimate of your hours. Estimates should be the highest number of hours you expect to work in a fortnight over the next 3 months' (Services Australia, 2019). However, parents are also warned that they may be subject to spot checks and be required to provide evidence of their level of activity. But there appears to be no guidance on what happens if the 'expected hours' do not eventuate, or any warning to parents of the potential debt they may incur. These concerns about activity related debt are consistent with the data from the Child Care Package Family Survey reported in Chapter 4.

As detailed above, parents' views on the ease of reporting on the activity test were on balance positive, with just over half (51.4 per cent) agreeing (although only 6.1 per cent strongly agreeing), 29.4 per cent neither agreeing nor disagreeing, and 19.2 per cent disagreeing, although around half indicated they were worried that they would end up with a reconciliation debt if they did not get their details right.

Against this background, services and stakeholders expressed some concern about parent understanding of the activity test, particularly where the parent/carer is engaged in casual or intermittent work, or undertaking non-paid work activity, that would be eligible towards meeting the activity test. Services, who, as reported in Section 3.3.2, saw the activity test as having a negative impact on their operation, reported that they had experienced a number of cases where families did not recognise that these were eligible activities, referring to a range of circumstances including farming activities and volunteering. One stakeholder referred to their experiences working with parents who often had unstable working arrangements:

… for many families and particularly for women at the bottom end of the labour market … circumstances would be constantly changing … women who are on casual rosters and on short term contracts and highly variable work arrangements, and for them to navigate the complexity of the activity test … It was much more likely that women would think, 'Oh no, I'm not going to be able to access that subsidy because I don't have stable work. And I can't be sure that I'm always going to meet the activity test and I don't want to take the risk that one fortnight I'm going to lose it.' And so that they would rule themselves out 
[Child care stakeholder, November 2018]

This lack of understanding of the operation of the activity test, and of reporting, was also evident in responses from parents:

My husband lost his job, and after a few months, we changed his income and were entitled to a higher rebate. However, as I didn't adjust his hours for 'looking for work' and, on paper, he was technically doing 0 hours work, we got less than one day subsidised care. Our weekly child care cost jumped to $1000 without notice for the 3 days our children attended. We could not pay this until my husband resumed work, and we couldn't withdraw them from care because we would not have been able to get them back in. We had to take out a loan. 
[Family using CBDC, October 2019]

Some of the questions on the forms around CCS need to be clarified. As I know I incorrectly put down my weekly instead of fortnightly hours and had to submit a correction. In particular, more definitions or examples would be helpful. It can be confusing for parents. 
[Family using CBDC and OSHC, October 2019]

The Income Test and costs of care

Different experiences of understanding child care costs have been evident in the comments by parents in the qualitative interviews and surveys. Overall, parents considered they did know how much child care was costing them, although there is little evidence of this understanding having improved with the introduction of the Child Care Package.48 In November 2018, 74.8 per cent of families in CCPFamS strongly agreed or agreed that they knew how much child care was costing them, and this compares to 73.5 per cent of the same respondents having indicated in May 2018 (in the DESE/ORIMA survey) that they knew how much child care was costing them.49

Notwithstanding this general response, there were extensive comments made by parents in the data collections that highlighted some specific problems parents encountered, or where they felt that the system could be improved. These included:

CCS is very hard to predict. Once I started working more I didn't know how much I'd need to budget until my first direct debit from day care came in. It seems arbitrary and all the calculations, for a working parent are ridiculous. Create a calculator that a parent can access online, that would help greatly. 
[Family using CBDC, October 2019]

I think because I went back to work more hours, it increased the percentage I had to pay. It wasn't a huge debt … Annoying though … It was far easier when it was the 50 per cent. Life is busy enough, without constantly thinking about changing my income and work details. I do not have the time for that. 
[Family using CBDC, October 2019]

Related to this, parents also reported difficulties in understanding how their child care costs would be impacted by changes in circumstances. According to findings in one of the case study sites, this was exacerbated in situations that involved possible transition from income support payments to employment, in which parents were unclear how their income support and rent assistance payments would be affected, along with not understanding how much child care would cost them.

The issue of having a calculator to assist parents work out their child care costs was, as identified above, raised on a number of occasions. Prior to the transition to the Child Care Package, online estimators were available to help parents determine their eligibility for child care assistance under the new arrangements, and help them estimate their future costs of child care. Initially, an estimator was made available through the DESE website. From April 2018, the Services Australia Payment and Service Finder was enabled, and the DESE estimator was disabled.50 The Services Australia Payment and Service Finder continues to be available. Comments from families in the November 2018 CCPFamS indicated greater satisfaction with the initial DESE calculator provided during transition, when compared to the Services Australia one.

I used to use the child care calculator to work how the costs would change if I worked more or less. The website seems to have changed (sometime before the transition) and now it is far less helpful. Having to answer questions to see what payments I might be eligible for before being able to move to the calculator I was hoping to quickly pop some figures in. 
[Family using CBDC, October 2019]

The existing Services Australia estimator first steps parents through whether they are entitled to other subsidies and payments administered by Centrelink/Services Australia, so is a more complex process than some parents are seeking, particularly those that are not seeking any information about government assistance other than for child care. Further, this estimator does not provide a straightforward means for parents to experiment with different work hours or child care characteristics to determine their child care costs under different scenarios. The initial DESE estimator allowed parents to do this. Some of the large providers have developed their own estimators that are available through their websites to fill this demand.

Interactions with Centrelink

Many comments in the evaluation data collections about families' experiences of CCS refer not to the subsidy itself, but to experiences of needing to rely on Centrelink for information or assistance, or what parents saw as the complexity of Centrelink processes and inadequacy of information. This was apparent from parent reports in the CCPFamS. In 2019, comments specifically about Services Australia/Centrelink centred on a number of key themes about poor customer service and long waiting times for assistance from Centrelink, information being difficult to understand, difficulties navigating myGov and long waiting times for end of financial year balancing.51

An example of the adequacy/clarity of information and the time taken in dealing with Centrelink is illustrated in one parent's report:

When applying for child care subsidy or updating my family income estimate, the website doesn't explain very well that if you're on maternity leave you leave your hours at 80 per fortnight for up to 12 months post baby being born. It doesn't give you the option to tick 'on maternity leave' so I had to call Centrelink and wait for 55 minutes to get through to a customer service representative to find that out. 
[Family using CBDC, November 2018]

3.2.5 Services' perspectives on parents and simplicity

Services who participated in the case studies largely agreed that the move from 2 separate subsidies to a single subsidy was more streamlined for families and that, aside from initial issues during the transition, most families had become competent at navigating myGov, updating their income and hours of activity, and managing enrolments. However, consistent with findings of the Evaluation Stakeholder Survey from 2019, service directors spoke of the CCS application process remaining confusing for some families who were new to the process and voiced their concerns that these processes posed particular challenges for disadvantaged or vulnerable families. In this regard, they reported that in their experience the process was also less straightforward when family circumstances required supplementary applications or when families needed to make complex calculations, for example calculating hours of activity when a parent is engaged in casual or intermittent work.

A consequence of this was that many services reported needing to assist families to understand or navigate through some of the less obvious elements of the new package.

I've got my teams now and they regularly search out information that's not promoted. It's an 'in the back' 'in the fine print' process that directly affects our frontline staff and it affects our families. The intricacies of the administration that is probably not visible or understandable to the families. 
[CBDC and OSHC stakeholder, April 2020]

Issues cited included understanding the reconciliation process at the end of the financial year and how accrued debt would be recouped, the 8-week rule (in data collected before the changed policy), the need for a child to be physically present on their last day of enrolment at a service, and how the billing cycle works when the hours of care used by a family are greater than the number of subsidised hours they receive.

3.2.6 Simplicity and parents - summary

The above analysis suggests that while the child care arrangements introduced with the Package are somewhat simpler, from the perspective of parents, the extent of change is quite small. At best, parental views on aspects of the system are weakly positive, including with regard to accessing information, understanding it and applying it to their operational interface with the payment system. While, on one hand, many families were able to 'set and forget' their child care payments once they had navigated the initial processes - which could be challenging for some - for others it was more difficult.

In particular, the analysis suggests that the system is seen as less simple by those with unstable or varying employment, and also by higher income earners. This latter, though, is a relatively small group and their attitude is likely to also reflect the extent to which they are now having to interact with a means tested payment and with Centrelink, rather than the more universal Child Care Rebate. For those who are already dealing with uncertainty in employment this, in turn, can be amplified by their concerns with how this impacts their child care assistance.

Underpinning parents' attitudes are a wide range of more specific issues. One element of this concerns the lack of responsiveness of the system to queries and problems, with Centrelink being seen as central to this, and, more generally, that when problems do arise they can take a very long time to be resolved. One specific aspect of timing, identified here but also discussed in Chapter 6, relates to the initial approval process and the Departmental view that services should charge full fees over this period.

While some of the analysis suggests that parents' experiences have improved as they have become more familiar with aspects of the system, this would appear to relate more to their level of understanding, rather than seeing the actual system as being simpler. Ease of access to information about the CCS is viewed less favourably than a number of other aspects of the program.

3.3 Services and simplicity

As discussed in the introduction, in the evaluation a key challenge in assessing the service perspective and experience of simplicity in the new arrangements was the significant complexity and high workload that services experienced in the transition process (see Chapter 10) and the way this permeated their responses. This was exacerbated as the final phase of research for this question, which was to involve an additional survey wave of services at a time more removed from the introduction, was curtailed by the COVID-19 pandemic.

3.3.1 Service understanding of the Child Care Package

As is the case for families, service understanding of the Child Care Package is both a reflection of the simplicity of arrangements and of their having the prerequisite knowledge to function within the arrangements. Just prior to the introduction of the Child Care Package, about half the services rated their understanding of the Package as poor or fair. By the second wave of the services survey in July 2019, there had been a marked improvement in understanding, with fewer than 15 per cent reporting their understanding was only fair or poor. A similar percentage rated their understanding as excellent, see Figure 21.

Figure 21: Services' assessment of their understanding of the Child Care Package, SELCS, June 2018 and July 2019

fig021.png

Source: Survey of Early Learning and Care Services, May/June 2018 and July 2019

This pattern of increase is seen across all sectors, see Figure 22, and is particularly marked in the Centre Based Day Care sector, where there was an average full category improvement in self-reported understanding. The lowest level of understanding, in both waves, was reported by Outside School Hours Care services.

Figure 22: Services' mean assessment of their understanding of the Child Care Package, by service type, SELCS, June 2018 and July 2019

fig022.png

Notes: The chart shows the mean score on a 5-point scale centred on those who report a fair understanding. The weights attached were: 'Poor' -1; 'Fair' 0; 'Good' 1; 'Very Good' 2; 'Excellent' 3.

Source: Survey of Early Learning and Care Services, May/June 2018 and July 2019

Those reporting a poor understanding in July 2019 were asked which aspect or aspects of the Package they found difficult to understand. While only a limited number of observations were recorded, one recurrent theme concerned a lack of understanding about back-payments of subsidy and whether these would go to services or families. The Department provided more advice to services about this in 2019 but, given the curtailment of the data collections, it is not possible to determine whether this has been wholly addressed.

3.3.2 Services' perspectives on simplicity

In the SELCS, in addition to asking about their assessment of parents' understanding of the policy and of simplicity from a parent's perspective, services were asked if they thought the changes introduced in July 2018 had led to a simpler process for child care payments for services. Responses from services in July 2019, as illustrated in Figure 23, were disparate across services and within sectors. Across services, as a whole, 5.6 per cent strongly agreed that it had, with a further 31.2 per cent agreeing. The largest group, 32.6 per cent, neither agreed nor disagreed, while 19.3 per cent disagreed and 11.2 per cent disagreed strongly.

While Centre Based Day Care services showed the same pattern as the aggregate, as shown in the chart:

  • Family Day Care Services, which had a similar proportion in the 2 categories of agreement to Centre Based Day Care, had a much higher proportion disagreeing, and disagreeing strongly, and fewer providing the neutral response.
  • A similar, although less extreme, pattern was seen among Outside School Hours Care services.
  • Responses in the In Home Care sector were more polarised. While this sector had the highest proportion of services strongly agreeing (8.3 per cent), it also had the highest proportion disagreeing (24.4 per cent) and strongly disagreeing (35.6 per cent).

Figure 23: Agreement with statement 'Changes to the child care system has led to simpler process for child care payments to services', SELCS, July 2019

fig023-lines.png

Source: Survey of Early Learning and Care Services, Wave 2 July 2019

Multivariate analysis, however, suggests the In Home Care service response reflects a range of other factors. While, overall, the model only had a limited fit (r2 = 0.074) and many of the parameters were non-significant, there was no statistically significant findings by type of service, and the magnitude of the coefficients for service type were generally small. There were limited state effects, with both Tasmanian and Australian Capital Territory services being more positive. Services with larger numbers of staff tended to be less positive, while those who simply relied on the Provider Entry Point52 were more positive. The strongest association was with services' perceptions of their financial viability, with those services who reported positive financial viability reporting more positively on the new arrangements as being simpler. However, it is not possible to determine the direction of causality in this relationship - or even if the 2 are directly related - or may be the result of another factor; for example, management capacity.53

The polarity of views about this was also apparent when discussing simplicity with services in interviews in mid-2019 and in the CALD case study in late 2019. There were diverse issues raised in these interviews, with many services focusing on the problems they had encountered, including in the transition, or were currently dealing with, rather than addressing the broader question of whether the Child Care Package was simpler and easier for services to understand and administer than the previous arrangements. A commonly raised and reported persistent issue was the workload associated with resolving issues and problems with the CCS. There was similarly a diverse set of perspectives recorded in the Evaluation Stakeholder Survey (August 2019), with comments again referring to the challenges in needing to put resources into helping families with their CCS applications and, in particular, in providing these supports to disadvantaged or vulnerable families.

Services were asked, in the SELCS in July 2019, to report on the impacts on their service of different aspects of the Child Care Package, see Figure 24. The most adverse responses were recorded with respect to the 8-week rule, which as noted in the introduction, has since been revised. This was followed by the application and confirmation process, and the activity test, with lesser, but still a balance of negative, impact being identified for enrolments, the hourly rate caps and income test. The only aspect of the Package that had on balance a positive response was the marginally above neutral response to the question on the impact of reporting attendance.

Figure 24: Aspects of the Package that have an impact on services, mean score, SELCS, July 2019

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Notes: The chart shows the mean score on a 5-point scale centred on those who neither agree nor disagree. The weights attached were: 'Large, positive impact' +2; 'Small, positive impact' +1; 'No impact' 0; 'Small, negative impact' -1; 'Large, negative impact' -2.

Source: Survey of Early Learning and Care Services, Wave 2 July 2019

As noted, the question on 'families completing the CCS application and enrolment confirmation' had the second most negative response, with 24.6 per cent of services reporting this process had a large negative impact and 41.0 per cent reporting it had a small negative impact. Another 18.1 per cent reported it had no impact, 11.0 per cent a small positive impact and 5.2 per cent a large positive impact. The negative reports by services were related to their needing to support families through the application and enrolment process, and to support them in communicating with Centrelink. While not directly indicating whether or not these elements of the Package represent a move towards simplicity, they provide insight into which aspects involve additional work and more complex operations.

Operation of safety net programs

Services were also asked questions about the ease of undertaking a number of tasks related to the 2 safety net programs, Additional Child Care Subsidy (ACCS), and the Inclusion Support Program. Mean scores, with a positive score indicating the degree to which the task was seen as easy, are shown in Figure 25. In broad terms, while there were differences between the specifically identified elements, the table suggests that while ACCS was the easier for services to operationalise (although 2 out of 3 specific aspects were on average rated towards difficult, from a base of neither easy nor difficult), a much higher burden arose in the case of the Inclusion Support Program, particularly in the preparation of a Strategic Inclusion Plan.

Figure 25: Ease of process, aspects of safety net programs, mean score, SELCS, July 2019

fig025.png

Notes: The chart shows the mean score on a 5-point scale centred on those who neither agree nor disagree. The weights attached were: 'Very easy' +2; 'Mostly easy' +1; 'Neither easy nor difficult' 0; 'Somewhat difficult' -1; 'Very difficult' -2.

Source: Survey of Early Learning and Care Services, Wave 2 July 2019

3.3.3 Issues arising out of the experiences of services

In the 2019 data collections, most services reported that the majority of families were managing to successfully navigate the CCS application process independently, and that families' understanding of the CCS had improved since the transition period. However, services echoed the previously raised concern that when a problem arose with a CCS application, or subsidy payments, it was often difficult to resolve, and that this frequently placed a burden on services. This kind of comment was typical:

If you really think, out of the 1,000 children that we have, we probably have issues with less than 50. … but the ones that we do have problems with can cause us weeks of problems. 
[FDC provider, October 2019]

While it is not possible from the qualitative data to determine the magnitude of incidence of this type of problem, nor the extent to which it always reflects a lack of simplicity in the system, this section reports some of the issues that were reported to the evaluation.

Applications and Centrelink

Problems with Centrelink were a recurrent theme of many responses. Services reported long delays in Centrelink processing applications for CCS for a minority of their families. While services were not always sure of the cause of the delay, they cited examples such as processing errors by Centrelink, immunisation records not being up-to-date or supplied, and some issues with CRNs. Former BBF services reported a range of issues associated with families not having documentation such as birth certificates.54

A number of services argued that the requirement for families to apply for CCS through Centrelink had increased the complexity of child care assistance for families. They noted that it was difficult for families to contact Centrelink, particularly for families for whom English was not their first language, with services commenting on Centrelink using confusing terminology. Additionally, there were multiple reports of Centrelink providing incorrect or incomplete information for example not telling families about other payment types that they could be eligible for, such as ACCS temporary financial hardship, as well as some services reporting that they found advice and support from Centrelink was variable across different Centrelink staff. Again, while the specific issues raised by services in these discussions were not able to be followed through by the evaluation to ascertain the validity of criticisms of Centrelink, the extent of reporting of this type of issue suggests it does have substance.

According to interviewed services, some families were spending a long time waiting on the phone for support from Centrelink. Many services reported that families made a number of visits to Centrelink to resolve issues and that they needed to prepare families to visit Centrelink by providing them with screenshots and print-outs of Child Care Package policy.

A further issue raised by some services related to ACCS (Child Wellbeing). Whereas under the previous arrangements, child care services could contact the department responsible for Special Child Care Benefit claims, with the Child Care Package ACCS (Child Wellbeing) claims are processed by Centrelink and services reported that they had been advised that Centrelink cannot discuss these claims with them.

Enrolments

Another recurrent issue raised was that of the enrolment process. For parents, there are 2 main steps to their enrolment in child care following registration for CCS through myGov. The first is agreeing to a Complying Written Agreement (CWA) with the service. The second is confirming the enrolment. This step involves logging into myGov, reviewing and confirming the child's details, and accepting the declaration. Many services reported a lack of understanding by families of the need to do this second step, and the workload in having to follow up with families:

You've got to constantly chase those CWAs. All the time. 
[CBDC provider, March 2019]

And the other big issue with all this too, is they'll say, the parent hasn't confirmed … A lot of these people do speak English quite well, but they don't understand these systems. And go on the computer, forget it. They've got to find the daughter, or a son or like, you know, [name] here can help them. They don't know how to manipulate that, go on myGov and confirm it. They can't do that. They can't even understand what I'm saying to them. 
[CBDC provider, June 2019]

A number of services reported it was difficult to support families to use myGov because they did not receive any information about myGov and did not know what families needed to do. A further issue, which is more fully addressed in later chapters, concerned the fact that services are advised to charge full fees until CCS eligibility is determined.

Other issues

Services reported that when problems arose in families' enrolment or CCS payment, they could not always locate the source of errors or the problem (although some cited what they saw as IT system 'glitches' and Centrelink errors) and found it difficult to resolve issues. A pattern of cyclical help-seeking by families and services was reported in a little over half of the interviews with services in 2019. These services reported spending substantial amounts of time contacting third party software providers, the CCS helpdesk55 and sending families to Centrelink, but then having families referred back to the service, without issues being resolved.

Service directors who participated in the case studies noted that this frustration is exacerbated by services being prevented from directly liaising with Centrelink on specific queries about the subsidy arrangements of families, and this has contributed to delays in resolving issues:

We thought it would be a little bit more streamlined. We would be able to ring up and have a lot more access to parent's data […] Hopefully that might change down the track. We are approved providers. We've done our police checks to get access to query data. So, I do not know why we can't just find out that bit of extra information. 
[CBDC provider, April 2020]

The other issues raised were predominantly payment-related, with services citing issues such as an incorrect overpayment of CCS, session reports that would not submit, or backdated readjustments to CCS payments that required a service to manually find the period which had been adjusted. The following quote provides an illustration of how one Family Day Care provider described the impact of the Child Care Package on their work. This experience was typical of comments provided by a number of services about the impact of the Child Care Package in relation to their services' administration and workload.

So, each of these issues is taking really complex problem solving and a huge amount of investment in terms of time to work through each of these issues to get outcomes for families. And our resourcing is the same now as it was when the changes came in on July 1. And we're struggling to keep up with the demands, and every time the team feel that they are getting on top of some of these issues or they're getting a better understanding of how this is working, another issue comes out left field. And to be honest with you, there's a word that we use in here, at our team meetings that I'm going to share with you, and that is that it's `relentless'. 
[FDC provider, April 2019]

Service information sources and help-seeking

For services' access to support on their own issues, there were mixed reports from interviewees about the utility of the CCS helpdesk. Some interviewees reported avoiding the helpdesk, finding it too slow. Others found that issues were resolved, but that it took a long time and many exchanges. These perspectives can be seen in interview responses:

I very rarely ring them because it's too long and too drawn out. I just go through my software provider. And try and get the answers from there. 
[OSHC provider, March 2019]

Software providers, as cited in this quote, were frequently mentioned by services as a source of information and support. This included for basic information about the Child Care Package as well as resolving issues such as changes to enrolments or payments. For some services interviewed in 2019, the software provider was reported as their first point of contact to resolve issues or queries.

3.3.4 Summary simplicity and services

As with parents, there were mixed views by services as to the impact of the Package on simplicity with no strong consensus. Indeed, it was split into 3 almost equal groups - with just over a third saying it had made things simpler, a third that it had made no difference and just under a third disagreeing. Services on average reported a negative impact from a range of specific aspects of the policy. This included the 8-week rule, which has now been addressed, and the enrolment process - especially around confirmation. While the operation of the ACCS generally does not appear to be overly burdensome, a more negative assessment was given to aspects of the Inclusion Support Program.

A core theme was that while problems tended to be the exception, rather than the rule, when they did occur, they were difficult and slow to resolve, and support for resolution from both the Child Care Subsidy Helpdesk and Centrelink was often slow or lacking.

3.4 Summary

On balance, the data suggests that the Child Care Package can be seen as being a little simpler than the former arrangements. However, the perspectives of both services and parents, while on balance pointing to this, show a diverse experience, with the system becoming simpler for some, but more complex for others. This would appear to be a persistent finding over time, notwithstanding the extent to which both parents and services have become more confident and knowledgeable about the system, especially the operation of the Child Care Subsidy.

Some of the factors that appear to be particular blockages to system simplicity include:

  • the initial enrolment process, and specifically:
    • the 2-stage application process; in particular, the confirmation step
    • initial assessment of the amount of subsidy families are entitled to and the subsequent issues with the policy that services should charge full fees over this period
  • problems for people who have irregular or unstable employment and/or earnings with regard to both the activity and income test
  • Parents, while reporting some improvement in being able to understand subsidy information, still report negatively on this, and do not report any increased ease of access to this information.
    • One specific issue is that of the Centrelink calculator and the ease with which parents can explore how their activities impact the support available to them through the subsidy.
  • poor problem resolution; in particular, the time taken to resolve issues. Specifically, across the range of service reporting there was a view that while most interactions were unproblematic, when problems did arise, these were frequently very difficult to resolve. Issues identified by them related to:
    • the Helpdesk - which was generally reported to be slow
    • Centrelink, with problems relating to attempting to make contact, inconsistent advice (often with a lack of understanding of child care related programs). Centrelink was also poorly reported on by parents.

While the replacement of the 8-week rule addressed one of the major concerns, these other issues persist.

42 In general most of the differences between the subgroups were just some one tenth or one fifth of a response category.

43 A response category is the equivalent from moving from one response to another - for example, from strong disagreement to disagreement, or from neither agreeing or disagreeing to agreeing. Obviously, a movement of a whole response category can be considered to be a marked shift, whereas fractional movements might be considered as a more gentle movement.

44 While there was an analogous question in the June 2018 survey relating to the operation of the former subsidies, the language of this question was considered to be significantly different to preclude any comparison. The mean score for this item in June 2018 was -0.28.

45 An 'activity debt' may occur when parents back-date their activity details, and the altered activity details mean they have been overpaid CCS for a period of time. The 'activity debt' is not apparent to parents immediately, but will be detected as part of the end of year reconciliation process.

46 Services are required as part of the new arrangements to provide parents with a fortnightly 'Statement of Entitlement' that includes information of the child, the service, sessions of care provided and attended including actual in and out times, fees, including the hourly session fee, and details of subsidy amounts and the number of hours for which fees are reduced.

47 The activity test, for example, is explained in 3,700 words in the Family Assistance Guide. (Australian Government, 2020a).

48 Although, at a time when costs for child care and other services are often paid through direct debit, being unaware of child care costs may also reflect such an arrangement, which parents 'set and forget'.

49 The CCPFamS November 2018 sample is a subset of those responding to the May 2018 DESE/ORIMA survey. These calculations are based on the 456 parents who answered this question in the DESE/ORIMA survey as well as the CCPFamS.

50 At the time of transition and for most of the data collections, Services Australia was the Department of Human Services. DESE was the Department of Education and Training.

51 In Wave 2, 114 out of 563 respondents provided a comment in response to this question.

52 Services can interface with the CCS system either through third party software (which usually incorporates a wider range of child care service management tools), or where they choose not to use such a package directly through the Provider Entry Point, see also discussion in Section 10.4.1.

53 It should also be noted that the largest coefficient difference was 0.56, that is just over half a step between these categories, indicating that this factor alone is not responsible for the large differences between service responses.

54 The issue of delays in Centrelink processing applications for CCS could result in families incurring debts to services. This issue is considered in Section 9.5.3.

55 The Child Care Subsidy Helpdesk is operated by the Department as a support centre for services and providers, in particular with regard to the operation of the CCS. A separate support team operates to provide support with regard to ACCS.

4. Child care costs, subsidies and affordability

4. Child care costs, subsidies and affordability

A key objective of the Child Care Package was to improve affordability, especially for 'low- and middle-income families' and address increasing costs. This Chapter reports on the extent to which these outcomes and impacts have been achieved. This addresses the evaluation outcome that 'Child care is affordable to families especially those with limited means'.

This Chapter considers:

  • some of the conceptual issues related to defining affordability and the approaches adopted by the evaluation
  • an overview of the elements of the Child Care Subsidy (CCS) system, as well as the previous funding arrangements, that directly impact affordability and the extent to which different segments of the child care user population are impacted by each of the key changes
  • the number of families affected by the replacement of the special child care payments (Grandparent and Special Child Care Benefit and JETCCFA) with the Additional Child Care Subsidy (ACCS)
  • analysis of trends in child care fees over time, and more specifically following the introduction of the Package
  • parental perceptions of affordability and changes in affordability
  • microsimulation modelling of the first round direct effects of the impact of the Package on affordability overall, and for different groups of users. This is the key focus of the evaluation of the impact of the Child Care Package on affordability.
  • analysis of the extent to which child care users are incurring debts to the government as a result of the annual income reconciliation process.

In addressing these questions in the evaluation, it is noted that the time frame of the evaluation is limited to the first 18 months of operation of the Child Care Package which means that the longer run impact of the Package on child care fees and affordability is not considered in this evaluation.

As noted above, the primary focus of the analysis of the impact of the Child Care Package on affordability is a static microsimulation of the comparative affordability outcomes of the Child Care Package relative to the former funding arrangements. As a consequence, affordability is largely considered from the relative perspective of whether child care under the new CCS is more affordable than it was under the former Child Care Benefit/Child Care Rebate System. Static in this context means that the analysis focuses on the outcomes of these 2 systems on the same structure of child care usage and same child care fees. It does not take any account of the extent to which patterns of use of child care may have changed as a result of the introduction of the Package, nor the impact of fee changes (which may or may not be attributable to the introduction of the Package).

4.1 Defining and measuring affordability

The concept of affordability of child care is open to many different interpretations. Economic theory assumes that a family purchases a bundle of goods and services and takes decisions on the trade-off they make between work and 'leisure' in ways that maximise wellbeing (utility) subject to the financial resources available and preferences. Differences in preferences result in different expenditure choices and thus what is an affordable price is a normative question that will vary between families with the same financial resources. Stated differently, affordability depends in part upon the trade-offs that families are prepared to make between different consumption bundles. For discussions of the definition of affordability see Maclennan and Williams (1990) and Niëns et al. (2012).

These sorts of issues can be seen in the decisions people make. Some will consider affordability in terms of the net gain they will obtain from working and purchasing child care to enable this. Others will place this in a longer-term perspective and see the cost of care as an investment. This could be an investment in their own future earnings through minimising time out of the paid workforce while caring for young children to maintain or further develop their human capital, through education or maintaining career progression. In these cases, they will view the cost relative to these future returns. Others may see it more through a lens of investment in their children's development - and will weigh up the cost relative to other investments they can make, including the trade-offs of their own time. Linked with this type of consideration are questions about the quality of care. That is, it is not just the actual cost that is important, but rather the value of the service that is being purchased. This consideration is not just one that is taken in deciding between different types of formal child care, or between what is being offered by specific child care services,56 but also whether to use formal care, or unpaid or other informal care arrangements.

4.1.1 Evaluation approaches

In this evaluation we are taking 2 approaches to measuring affordability and change in affordability. The first approach is on the conventional measure of the net child care costs incurred by families (out-of-pocket costs) relative to income. The conceptual basis is that the lower the child care costs incurred by families relative to their income, the more affordable child care is. This approach uses the results of modelling of entitlement to child care subsidies under the previous CCB/CCR system and the new CCS system. The second approach draws on parents' assessments and perceptions of: (i) whether they consider child care to be affordable; and (ii) the extent to which they consider child care costs have been impacted by the amount of child care they are using. These self-report measures, while lacking the apparent 'objectivity' of costs relative to income measure, can be seen as better capturing the full range of factors that go into determining whether families consider child care is affordable. In all of the analysis the focus is on the extent to which the affordability of child care has changed since the introduction of the CCS Package in July 2018.

4.1.2 Modelling - Child care costs relative to income affordability

Two ways of modelling the impact of the CCS Package on affordability have been undertaken. These differ in the data sources used and how child care cost relative to income is calculated. The main modelling has been undertaken using administrative data from the CCS system. This is a rich dataset from a child care operational perspective which permits a very detailed review of the impact of the subsidy arrangements on families, but is limited in that the only measure of income is that of the parent, and, if they have one, their partner's, taxable income (i.e. gross or before-tax income). From an affordability perspective this is a limitation because affordability needs to be considered in terms of the actual resources available and the measure of gross income that is available from the administrative data ignores the amount of income tax they have to pay, and also does not account for the number of people in the household who this income needs to support. A consequence of this is that comparisons between households who may be spending similar proportions of gross income on child care may be misleading.

This modelling using the administrative data from the CCS system has therefore been supplemented by modelling based on the Australian Bureau of Statistics (ABS) Survey of Income and Housing. While the modelling based on the Survey of Income and Housing does not permit the same degree of precision in estimating the actual costs and subsidies for child care as the modelling based on the administrative data, it does permit the change in costs to be considered on the basis of the household's after-tax (disposable) incomes, and on the basis of equivalised income that takes into account the different needs of households with different compositions.

As has been noted above, this modelling is primarily focused on relative affordability - addressing the question of how the affordability of child care for families changed with the introduction of the new Package.

4.1.3 Self-reported affordability of child care

Data on parents' assessments of the affordability of child care is drawn from the 4 waves of DESE/ORIMA family surveys, the first of which was collected in June 2018 just prior to the introduction of the Child Care Package. Data on self-reported affordability of child care considers both the perspectives of those parents who are currently using child care and parents not using child care. For parents using child care, the data covers parents' assessment of affordability per se, collected before and after the changes to the child care system, assessment of the financial impact of the Child Care Package and whether child care is value for money. For parents not using child care, the data covers their assessment of the extent to which affordability is a barrier.

4.2 The structure of the Child Care Package and affordability

This section describes the structure of the child care subsidy arrangements under the Child Care Package and the former funding arrangements that directly impact affordability, and examines the extent to which the key structural elements of the CCS impact families using child care.

4.2.1 Elements of the CCS

Key elements

The key aspects of the Child Care Package introduced in July 2018 are described in Chapter 1. Under the Child Care Package and the new CCS there are 4 components which determine the rate of CCS and, hence, the amount of child care payment to which families are entitled. These are:

  • hourly rate caps, which limit the hourly fee charged by child care providers that will be subject to the subsidy57
  • the percentage rate of CCS families are eligible for, which applies to the capped hourly fee. The subsidy rate commences at a rate of 85 per cent of the fees paid, up to the hourly rate cap, and then is tapered, in stages, as family income increases, becoming zero for families with income at or above an annual income of $351,248 (2018-19 level).58 One feature of this rate structure was that of ensuring that parents made a co-payment towards the cost of child care59
  • the annual cap, which is the maximum amount of CCS that will be paid to a family in any one financial year. In 2018-19 it was $10,190 per child per annum. The annual cap only applies to families with an annual income over $186,958 (2018-19 level)
  • approved hours as determined under the activity test. Families are subject to an activity test that limits the maximum number of hours of CCS a family is entitled to on a per child per fortnight basis, with the number of hours determined by the level of activity parents are undertaking. For couples, the activity test is based on the hours of activity of the member of the couple with the fewest activity hours. There are exemptions to the activity requirements in certain circumstances. Details of the maximum hours of subsidy per child under the activity test and exemptions are provided in Chapter 1, Table 1.

The type of care being used also has an impact on the amount of CCS that can be received because there are some differences in the hourly rate caps between children below school age and school-aged children, and between Centre Based Day Care and Outside School Hours Care and Family Day Care. For In Home Care the hourly rate cap operates on a per family basis.

Safety net support

While the CCS is the main form of government financial support for the costs of child care to families, families and children who may face barriers in accessing affordable child care may be eligible for the Additional Child Care Subsidy (ACCS). The ACCS is paid to services as an offset to the charge to parents. To be eligible to receive ACCS, a carer must be eligible for CCS and meet one of the following criteria: an eligible grandparent getting an income support payment (ACCS (Grandparent)); transitioning from certain income support payments to work (ACCS (Transition to Work)); experiencing temporary financial hardship (ACCS (Temporary Financial Hardship)); or caring for a child who is vulnerable or at risk of harm, abuse or neglect (ACCS (Child Wellbeing)). The amount of ACCS received depends on the type the family is eligible for. Irrespective of the type of ACCS being received, subject to the specific conditions of the support, there is no annual cap on the amount of ACCS received. ACCS payments are not subject to a withholding amount and the ACCS payments are not balanced at the end of the financial year. The amounts of ACCS that can be received are:

  • Under the Grandparent, Temporary Financial Hardship and Child Wellbeing elements the amount is the lower of: 100 per cent of the fee charged where it is equal to or below the hourly rate cap; or up to 120 per cent of the hourly rate cap where the fee charged is above the hourly rate cap.
    • While there is no time limit on how long a person can receive ACCS (Grandparent), ACCS (Temporary Financial Hardship) is paid for up to 13 weeks, and ACCS (Child Wellbeing) is initially available for 6 weeks on the basis of a service's certification and, after this, for a renewable 13-week period on the basis of determination by the Department of Human Services.
  • The ACCS rate for the Transition to Work component is the lower of: 95 per cent of the fee charged where it is equal to or below the hourly rate cap; up to 95 per cent of the hourly rate cap, where the fee charged is above the hourly rate cap. The length of time that this subsidy can be received is complicated and depends on whether the person is studying, looking for a job, working or training.
Differences between the old and new subsidy system

The primary focus of the analysis of affordability, as noted above, is on the impact of the Child Care Package relative to the previous funding arrangements. The main differences that will impact the amount of child care payment and hence affordability between the CCS and the previous Child Care Benefit (CCB) and Child Care Rebate (CCR) payments which it replaced are:

  • Under the previous system, CCB was a means tested benefit that provided a subsidy for up to 50-hours of child care per child per week. This was complemented by the CCR, which was non-means tested and provided up to 50 per cent of a family's out-of-pocket child care expenses (after CCB was deducted) to a maximum of $7,613 per child per year. The means testing of the full child care payment under the new system make the CCS more targeted than CCB and CCR.
  • Under the old CCB and CCR system there was an activity test that had 2 levels. First, a universal 24 hours of care per week (48 hours per fortnight) per child. Second, up to 50 hours per week (100 hours per fortnight) per child for those with more than 24 hours of activity per week.60 There was only limited review and testing of claimed activity. The more graduated activity test and number of hours to which the subsidy applies under the CCS means that under the new system there is greater potential for families to need more hours of child care than they are subsidised for and hence to have a proportion of the hours they pay for unsubsidised.
  • While there is an hourly rate cap under the new CCS system, there was also an implicit hourly rate cap that operated via the maximum subsidy rate of CCB and the fact that CCR only applied to 50 per cent of the net (post CCB) fee.

The relative size of the subsidies under the CCB/CCR system compared to the CCS system depends on a range of factors including income, number of children using care, level of activity, number of hours of care used and the hourly fee paid for services.

Under the old child care system, additional support for some families was available through Jobs, Education and Training Child Care Fee Assistance (JETCCFA), Grandparent Child Care Benefit (GCCB) and Special Child Care Benefit (SCCB). The JETCCFA provided financial assistance to eligible parents who qualified for the maximum rate of CCB and it paid for most of the gap in out-of-pocket costs while a parent was working, studying or training. SCCB was available for families experiencing financial hardship or for children at risk. Grandparents who were primary carers of a child may have been eligible for GCCB. SCCB and GCCB could be up to the full costs of child care and were not subject to an activity test.

4.2.2 Hourly fee rate cap

As outlined in Chapter 1 and in Section 4.2.1, the Child Care Package introduced an hourly rate cap, which is a limit on the hourly fee charged by child care providers that will be subject to subsidy. This will have an effect on affordability as one of the consequences of this cap is that parents need to fully pay for any cost of child care above the hourly fee rate cap.

The hourly fee rate cap is seen as having an important role to play in seeking to contain increases in the cost of child care. As discussed in Section 4.3 and further explored in Chapter 5, the concept of hourly fees in child care services is not straightforward. This is because most children are provided care on a sessional basis, rather than on an hourly basis. In turn, sessions are variously structured to meet several disparate objectives. First, they provide a structure for the operation of a child care service, allowing services to plan to offer a certain number of child care places for specific sessions and to organise staffing schedules around these. Second, they provide flexibility for parents around start and finishing times, with longer sessions allowing for this. Third, there are interactions, considered further below, between session structure and lengths and the operation of allowed hours under the activity test.

While most services do adopt a sessional structure, some instead charge by the hours of actual use (see Chapter 5). Additionally, when services offer multiple sessions, the hourly fee they charge parents can vary significantly across sessions, especially where shorter sessions have been introduced as a means of avoiding the strictures of the activity test.

In this context, while the child care hourly rate plays a very important role in the determination of the actual rate of subsidy paid to parents, it is also very much a notional concept, being based on dividing the sessional fee charged to parents by the nominal length of the session. Because of the nature of the administrative data provided by the Department, in this report, estimates of the hourly fee are based on total weekly fees paid and total weekly sessions (hours charged for). While this may slightly underestimate the proportion of fees that are in excess of the hourly cap, the impact of this is considered to be relatively small.61

The focus in this section is on the impact of the hourly fee rate cap on the subsidy paid to parents. First, the extent to which children have any care charged at a rate higher than the cap, and the proportion of hours paid for that are being charged at a rate higher than the cap, is considered. Second, the extent to which services are charging any families above the cap is documented. Average service level fees in comparison to the hourly rate cap are presented in Section 4.3.1.62

The hourly fee rate cap varies according to the age of the child and the type of care. As of 1 July 2019, the hourly fee rate cap was $11.98 per hour for children below school age and $10.48 per hour for school-aged children in Centre Based Day Care and for Outside School Hours Care, and $11.10 per hour for children below school age in Family Day Care and $10.29 for those of school age. For In Home Care the cap is on a per family basis and is $32.58 per hour. The former CCB had an implied hourly fee rate cap with a maximum rate payable of $4.30 per hour for a non-school-aged child and the rate for school-aged children was 85 per cent of the non-school child rate. The cap rates over the financial year 2018-19 are detailed in Table 17.

Table 17: Hourly fee rate cap, by service type, 2018-2019
Service type:July 2018-December 2018January 2019-June 2019July 2019-June 2020
 Below school ageSchool-aged aBelow school ageSchool-agedBelow school ageSchool-aged
 ($ per hour)
Centre Based Day Care11.7710.2911.7710.2911.9810.48
Family Day Care10.9010.9011.10
Outside School Hours Care11.7710.2911.7710.2911.9810.48
In Home Care (per family)25.4832.0032.58

Notes: a A child is considered to be 'school-aged' if they are in school, including being home schooled, or 6 years or older. Hourly rate caps for all services were increased in July 2019, in line with indexation.

Source: Department of Education, Skills and Employment

Figure 26 shows the proportion of child hours per week being charged over the hourly fee rate cap by service type since July 2018. This data shows a number of distinct patterns by service type:

  • While In Home Care only accounts for a small proportion of child hours of care, because a much higher proportion of In Home Care hours are charged over the hourly rate cap, it dominates the chart.64 Over time, 2 key features can be seen in relation to In Home Care. The first is the very high proportion of hours charged above the fee cap prior to the 25.6 per cent increase in the cap in January 2019. The second is the trend to an increasing proportion of hourly rates being above the cap since this initial fall in January 2019.
  • Centre Based Day Care services showed an increasing proportion of child hours being charged above the cap across 2018-19, before a fall with the indexation of the cap in January 2019 and a slight increase since then. Nevertheless, in the second half of 2019, 15 per cent or more of child hours of care were charged above the cap, compared with some 11 to 13 per cent in the same period in 2018.
  • Family Day Care services were more likely to charge above the cap than were the Centre Based Day Care sector, with some 19 to 25 per cent of hours being charged above the cap over the period (excluding the late December and early January period). Again, this sector shows a fall in the proportion of hours of care being charged above the cap with the indexation of the cap. While this initially brought the rate of charging above the cap down in July 2019 below that of a year earlier, there has since been an upwards drift in the proportion.
  • The pattern of charging above the cap in Outside School Hours Care is dominated by the differences between this care being provided over the school term and during vacation times. This sector has the lowest rate of charging above the cap.

Figure 26: Proportion of child hours per week charged over the hourly rate cap, by service type, July 2018 to December 2019

fig026.png

Notes: Data shown from 8 July 2018 onward as data for 1 July 2018 was affected by transition issues. For In Home Care the hourly rate is reported at the family level and all children within the family using the In Home Care are assigned the same hourly fee. Where rates vary for school-aged children, as per next footnote all children aged 6 years and over are treated as being of school age.64 Weighted by number of hours each child uses the service for.

Source: DESE administrative data

From an affordability perspective the most important issue is the amount by which fees exceed the hourly rate cap. Table 18 presents information, for Q4 2019, on how much above the hourly fee rate cap, the hourly fee is for child hours that are charged at a rate above the cap. The 'excess' charge is presented as a proportion of the hourly fee rate cap. For Centre Based Day Care, Family Day Care and Outside School Hours Care one-quarter of the above cap child hours of care (i.e. the 25th percentile) are charged only marginally higher than the cap (2.6 per cent to 4.0 per cent). For In Home Care, a quarter of the above cap child hours of care (i.e. the 25th percentile) are charged at 10.5 per cent above the hourly fee rate cap. However, at the upper end of the distribution (90th percentile), 10 per cent of child hours are charged at rates ranging from 23.3 per cent above the cap in Centre Based Day Care to 31.2 per cent in In Home Care.

Table 18: Child hours charged above the hourly fee rate cap, amount charged above the cap as a proportion of the cap at selected distributional points, Q4 2019
Service type:At:Average
 25th percentile50th percentile75th percentile90th percentile 
 'Excess' as proportion of cap (%)
Centre Based Day Care2.66.814.123.310.3
Family Day Care3.08.116.226.411.3
Outside School Hours Care4.09.418.129.813.3
In Home Care10.516.621.331.217.4

Notes: For In Home Care the hourly rate is reported at the family level and all children within the family using the In Home Care are assigned the same hourly fee. Where rates vary for school-aged children, all children aged 6 years and over are treated as being of school age.

Source: DESE administrative data

Figure 27 shows the proportion of services that charged at least one child an hourly fee that is greater than the hourly fee rate cap for each week. Over three-quarters of Family Day Care services are charging at least one child above the hourly fee, and the proportion of Centre Based Day Care services charging at least one child over the hourly rate cap increases from around 40 per cent in early July 2018 to nearly 60 per cent by December 2019.

Figure 27: Proportion of services charging any child over the hourly fee rate cap, by week, July 2018 to December 2019

fig027.png

Notes: Data shown from 8 July 2018 on, as data for 1 July 2018 was affected by transition issues. For In Home Care the hourly rate is reported at the family level and all children within the family using the In Home Care are assigned the same hourly fee. Where rates vary for school-aged children, all children aged 6 years and over are treated as being of school age.

Source: DESE administrative data

In order to better understand the extent to which this charging above the cap is an occasional occurrence Figure 28 shows the proportion of hours in the quarter being charged over the cap (at the child level) by the cumulative proportion of children being charged below this proportion of hours above the cap. The data is for Q4 2019. This figure shows that, when any time is charged over the hourly cap, in the majority of cases a substantial proportion of hours used by the child are charged above the hourly fee rate cap. For example, of those being charged at least one hour above the cap, just 0.2 per cent of all children have 5 per cent or less of their hours charged above the cap, 4.3 per cent have 10 per cent or less of their hours charged above the cap and 76.2 per cent have three-quarters or more of their hours charged above the cap.

Figure 28: Proportion of hours of care used per child charged over the hourly fee rate cap, by cumulative proportion of children, Q4 2019

fig028.png

Source: DESE administrative data

Table 19 provides information on the proportion of hours of care charged by services that have an hourly fee that is above the hourly fee rate cap for the service, and how this varies according to whether the service is a for-profit/not-for-profit type of service and the geographic remoteness of the service. The geographic remoteness measured, first described in Chapter 2,65 is a population/remoteness measure that categorises areas according to whether they are a capital city, if not a capital city the population size, and then for small population areas whether the area is categorised as being an inner regional, outer regional, remote or very remote area.

For Centre Based Day Care, 41.0 per cent of services charge no hours at all above the cap, 27.5 per cent charge 1-10 per cent of hours above the cap, 12.5 per cent of services charge 11-25 per cent of hours above the cap, 5.2 per cent charge 26-50 per cent of hours above the cap, 2.1 per cent charge 51-75 per cent of hours above the cap, 7.6 per cent charge 76-99 per cent of hours above the cap and just 4.3 per cent charge 100 per cent of hours above the cap. A smaller proportion of Family Day Care services charge no hours above the cap (21.0 per cent), with 20.1 percent, 19.1 per cent and 19.3 percent charged 1-10 per cent, 11-25 per cent and 26-50 per cent of hours, respectively, above the cap. For Outside School Hours Care, 52.2 per cent of services charge no hours above the fee cap, and 15.5 per cent charge 1-10 per cent of hours above the cap.

Not-for-profit services are more likely to charge no hours above the hourly fee rate cap than are for-profit services (54.1 per cent compared to 38.2 per cent). There are some differences by geographic remoteness with very remote services substantially more likely to not charge any hours above the fee cap (62.5 per cent) than services in other areas. Services in major cities are the most likely to charge at least some hours above the hourly fee rate cap.

Table 19: Proportion of hours at service charged over the hourly fee rate cap, by service characteristics, Q4 2019
 Proportion of hours charged above cap
0%1-10%11-25%26-50%51-75%76-99%100%
 Distribution of proportion of above cap charging (%)
Whether for-profit or not-for-profit
For-profit38.224.012.36.54.310.54.3
Not-for-profit54.121.68.94.62.85.12.9
Type of service
CBDC41.027.512.55.22.17.64.2
FDC21.020.119.119.310.86.33.5
OSHC52.215.57.65.55.910.23.1
IHC18.616.32.39.311.627.914.0
Urban and regional location
Capital Cities40.921.411.06.44.411.04.9
Urban 100k plus51.230.310.03.61.52.31.3
Urban 50k-<100k42.027.115.24.13.26.02.4
Urban 20k-<50k46.926.013.47.22.13.50.9
Urban 10k-<20k45.722.716.65.43.65.01.1
Inner Regional54.824.78.73.72.13.82.1
Outer Regional59.022.18.84.53.41.60.7
Remote47.823.97.57.53.09.01.5
Very Remote62.519.67.11.82.75.40.9
All services44.123.111.05.83.78.53.8

Notes: Excludes a small number of services whose for-profit/not-for-profit status is 'other'.

Source: DESE administrative data

Characteristics of families being charged over the hourly fee rate cap

This section considers how the characteristics of families vary according to the extent to which the number of hours of care they pay for are charged in excess of the hourly fee rate cap. The analysis is based on child care used during Q4 2019. Hours are categorised according to whether they had no hours charged in excess of the hourly cap for the quarter, greater than 0 per cent and less than 50 per cent of hours charged in excess of the cap, 50 per cent to less than 90 per cent of hours charged in excess of the cap and 90 per cent or more of hours charged in excess of the cap.

Overall, in Q4 2019, 76.8 per cent of families were charged no hours in excess of the hourly fee rate cap, 6.2 per cent were charged some hours in excess of the cap but less than 50 per cent of hours in excess of the cap, 4.5 per cent were charged 50 per cent to less than 90 per cent of hours in excess of the cap, and 12.5 per cent were charged 90 per cent or more of hours in excess of the cap.

Table 20 shows the proportion of hours that families at different points in the distribution of hours were being charged in excess of the hourly fee rate cap for Q4 2019. For families who were being charged some hours in excess of the hourly fee rate cap but less than 50 per cent, the median percentage hours being charged in excess of the cap is 15.6. For families being charged 50 per cent to less than 90 per cent of hours in excess of the hourly fee rate cap, the median percentage is 73.4 per cent and for those being charged 90 per cent or more of hours in excess of the cap it is 100 per cent from the 25th percentile and above.

Table 20: Proportion of hours families charged above the hourly fee rate cap, at selected distributional points, Q4 2019
Percentage of hours family charged in excess of hourly fee rate capAt:
5th percentile25th percentile50th percentile75th percentile95th percentile
 Average proportion of hours charged in excess of cap (%)
0%0.00.00.00.00.0
>0%-<50%1.46.815.630.846.2
50%-<90%50.161.873.482.888.2
90%+92.3100.0100.0100.0100.0

Source: DESE administrative data

Table 21 shows how the proportion of hours that are charged in excess of the hourly fee rate cap varies according to CCS subsidy income thresholds for Q4 2019. The proportion of hours that families are charged in excess of the hourly rate cap gradually increases with income. Eight in 10 (80.5 per cent) families with an annual income below $66,958 were charged no hours in excess of the hourly fee rate cap, compared to 62.2 per cent of families with an income over $351,247. Correspondingly, 10.3 per cent of families with an income less than $66,958 had 90 per cent or more of hours charged in excess of the hourly fee rate cap as compared to 21.9 per cent of families with an income of over $351,247.

Figure 29 shows how the proportion of hours that are charged in excess of the hourly fee rate cap varies according to income vigintile. The proportion of hours charged in excess of the cap increases gradually with income from around income vigintile 13. Income vigintiles 19 and 20 have a substantially smaller proportion of hours charged at or below the cap (65.2 and 59.1 per cent respectively) and correspondingly an increase in the proportion of families with 90 per cent or more of hours being charged in excess of the hourly fee rate cap.

Table 21: Extent to which families are charged over the hourly fee rate cap, by CCS combined family income cap threshold, Q4 2019
Gross annual family income category:Proportion of hours in quarter charged over the cap:Number of families
0%>0% to <50%50% to <90%90%+
 Distribution of families (%)(count)
Up to $66,95880.55.73.510.3208,418
$66,958-$171,95779.65.93.710.8422,097
$171,958-$186,95775.66.74.912.851,426
$186,958-$251.24772.47.15.814.7131,007
$251,248-$341,24666.87.47.218.665,932
$341,247-$351,24764.17.48.620.03,927
Over $351,24762.27.48.521.936,305
Total76.86.24.512.5935,472

Notes: Excludes families with missing income data.

Source: DESE administrative data

Figure 29: Extent to which families are charged over the hourly fee rate cap, by gross family income vigintile, Q4 2019

fig029-lines.png

Notes: See Table 40 for the income ranges that apply to each income vigintile.

Source: DESE administrative data

There are differences in the extent to which families are being charged over the hourly fee rate cap between states and territories and for areas of different population sizes and geographic remoteness (Table 22). Families are much more likely to be charged fees in excess of the hourly fee rate cap in the Australian Capital Territory, followed by Western Australia, Victoria and New South Wales. The states/territories with the lowest proportion of families being charged fees over the hourly fee rate cap are Queensland, Northern Territory, South Australia and Tasmania. This is consistent with the differences in fees between states and territories.

There are also differences in the extent to which families are being charged in excess of the hourly fee rate cap according to population/geographic remoteness, with the highest proportion in capital cities, remote and very remote areas and lower rates in other areas (Table 22).66

In terms of child related factors, there are small differences according to the age of the youngest child in the family using child care, with a slightly higher proportion of hours being charged in excess of the hourly fee rate cap for children with a youngest child using care under the age of 3 years than for those with a youngest child aged 3-5 years or 6-13 years (Table 23).

Families being charged for a relatively low number of hours of care per week (up to 10 hours per week for whole family) are substantially more likely to be charged hours in excess of the hourly rate cap and are substantially more likely to be charged in excess of the hourly fee rate cap for 90 per cent or more of the hours of care they are charged for.

Table 22: Extent to which families are charged over the hourly fee rate cap, by geographic location, Q4 2019
 Proportion of hours in quarter charged over the capNumber of families
0%>0% to <50%50% to <90%90%+
 Distribution of families (%)(count)
State/territory
New South Wales77.54.54.413.6308,412
Victoria68.38.05.618.1231,214
Queensland89.73.92.24.2209,674
South Australia86.85.22.55.561,128
Western Australia63.012.97.516.678,673
Tasmania84.07.03.15.916,295
Northern Territory89.75.81.82.77,756
Australian Capital Territory45.110.512.232.222,320
Urban and regional location
Capital Cities73.26.35.315.2649,702
Urban 100k plus87.44.92.25.5124,706
Urban 50k-<100k81.67.33.67.639,709
Urban 20k-<50k82.46.82.97.941,971
Urban 10k-<20k82.76.53.27.519,654
Inner Regional85.15.82.46.733,986
Outer Regional86.55.72.25.720,852
Remote75.36.73.714.22,271
Very Remote79.39.93.27.62,621
Total76.86.24.512.5935,472

Source: DESE administrative data

Table 23: Extent to which families are charged over the hourly fee rate cap, age of youngest child using care and average hours of care charged for per week, Q4 2019
 Proportion of hours in quarter charged over the capNumber of families
0>0% to <50%50% to <90%90%+
 Distribution of families (%)(count)
Age youngest child using child care
0-274.26.24.714.9324,848
3-577.86.44.311.5385,897
6-378.85.74.511.0224,478
Average hours charged per week (for whole family)
Up to 10 hours69.35.34.221.2111,958
Over 10-20 hours76.85.64.513.2192,802
Over 20-30 hours79.44.83.712.1202,451
Over 30-40 hours78.25.84.211.8160,110
Over 40-50 hours78.36.54.710.6126,643
Over 50-60 hours73.810.16.010.155,647
Over 60 hours77.99.45.96.885,861
Total76.86.24.512.5935,472

Source: DESE administrative data

There are interactions between the various characteristics of families, their use of child care and geographic location. To better understand the characteristics of families and location that are charged over the hourly fee cap, a regression model is used. The model estimated is a logit model of the probability of being charged at least one hour in Q4 2019 over the hourly fee rate cap as compared to having all hours charged at or below the hourly fee rate cap. The results of the model are presented in Table 24 using marginal effects. The large sample size means that virtually all of the underlying coefficients are statistically significant and, thus, the focus in this discussion is on the marginal effects that are larger in size. The relationship between income and being charged hours in excess of the hourly fee rate cap is apparent in the regression model, with the probability of those in the 20th vigintile being charged in excess of the hourly fee cap being 17.8 percentage points higher than the 10th income vigintile. This appears to reflect the fact that very high income families generally choose more expensive child care services even after control for location, age of youngest child and hours of child care charged per week.

Table 24: Factors associated with being charged hours in excess of the hourly fee rate cap, Logit model, Q4 2019
 Average marginal effect (%) Average marginal effect (%)
Gross family income vigintileUrban and regional location  
10.9***Capital Citiesbase
20.7***Urban 100k plus-7.9***
41.9**Urban 50k-<100k-5.5***
52.1***Urban 20k-<50k-7.5***
62.1***Urban 10k-<20k-8.5***
71.2***Inner Regional-10.2***
80.2Outer Regional-7.9***
90.2Remote2.9***
10baseVery Remote-1.3
11-0.01Age of youngest child using child care
120.8***0-2 yearsbase
131.3***3-5 years-4.6***
142.2***6-13 years-10.9***
153.2***Average hours charged per week (for whole family)
164.1***up to 10 hoursbase
175.7***over 10-20 hours-8.8***
188.3***over 20-30 hours-14.1***
1912.3***over 30-40 hours-13.5***
2017.8***over 40-50 hours-13.9***
State/territoryover 50-60 hours-10.4***
New South Walesbaseover 60-70 hours-13.8***
Victoria8.2***over 70 hours-8.8***
Queensland-11.2***   
South Australia-9.8***   
Western Australia12.2***   
Tasmania-6.1***   
Northern Territory-12.8***   
Australian Capital Territory27.1***   

Notes: *, **, *** indicate that the underlying coefficient is significant at the 90 per cent, 95 per cent and 99 per cent confidence levels respectively. The marginal effect represents the change in the proportion of families being charged hours in excess of the cap relative to the base case. See Table 40 for the income ranges that apply to each income vigintile.

Source: DESE administrative data

Large differences between state and territories and population size/geographic remoteness are apparent in the regression model and are similar to those in the bivariate analysis (Table 22). Families with a youngest child using child care aged 6-13 years were 10.9 percentage points less likely to be charged hours in excess of the cap than families with a youngest child of under 2 years. The relationship with hours of care remains with families using less than 10 hours of care per week being more likely to be charged hours in excess of the hourly fee rate cap.

4.2.3 Subsidy taper rate

The second aspect of the structure of child care subsidies that impacts affordability is the rate of subsidy and the extent to which this reduces with increasing family income. As noted in Section 4.2.1 and described in Chapter 1, CCS is a maximum rate of 85 per cent of the capped child care fee for families up to an income threshold (which was $66,958 in 2018-19) and then tapers to 50 per cent on income of $171,958, remaining at this rate up to a family income of $251,248, before again tapering to a rate of 20 per cent at $341,248 and holding at this rate until family income reaches $351,249, beyond which CCS is reduced to zero.

This section considers the number of families that are in the different income ranges and hence subject to a different rate of CCS, and the actual rates of subsidy they obtain. About one-quarter of families have a reconciled annual income below $66,958, and hence the maximum subsidy percentage of 85 per cent of fees (up to the hourly fee rate cap) applies (Table 25). Almost half of families are in the income range between $66,958 and $171,958 per annum and hence receive a subsidy rate of between 85 per cent and 50 per cent depending on where their income is in this range.

Table 25 also shows the mean and median effective subsidy rates received by families in each income threshold group. This is calculated by dividing modelled CCS/ACCS by fees based on reconciled family income. The details of how CCS/ACCS are modelled and the reconciled family income measure are described in Section 4.5.1.67 For all income groups up to an income of $251,248 (except for the income group $66,958 to $171,958 for whom the subsidy rate tapers from 85 per cent to 50 per cent), while the median effective subsidy is generally relatively close to the program structure, the mean effective subsidy rate is substantially less than the rate of CCS subsidy. For example, the mean effective subsidy rate for families with an income below $66,958 is 75.3 per cent which is substantially lower than the formal 85 per cent subsidy rate (up to the hourly fee rate cap).

Table 25: Families using child care, by income in range of each combined family income cap threshold, 2018-19
Gross family income category:Subsidy rate (%)Families
FormalAverage modelled effectiveMedian modelled effectiveDistribution (%)Number
Up to $66,9588575.384.027.7313,180
Over $66,958-$171,95885 to 5061.064.247.6538,583
Over $171,958-$186,9585044.349.64.551,167
Over $186,958-$251,2485043.048.811.5129,531
Over $251,248-$341,24750 to 2031.834.74.854,125
Over $341,247-$351,2472014.417.80.22,725
Over $351,247No subsidy0.50.03.741,866
Total   100.01,131,177

Notes: Based on the income measure that includes reconciled income for the 75 per cent of families for whom reconciled income data was available. For the remaining families, the income reported to Centrelink during the course of the year is used. This means that some families with an income over $251,257 received some benefits during the course of the year. Because the reconciled income measure is used in this table, the average effective subsidy received is modelled based on reconciled income. The table includes families with zero or negative income in the income category up to $66,958. These families are excluded from the modelling and hence the average modelled actual excludes these families.

Source: DESE administrative data

This lower effective subsidy rate for many families, as reflected in the mean effective subsidy rate, is due to the combined effect of the hourly fee rate cap, with 20.7 per cent of hours charged above the hourly fee rate cap in Q4 2018, the impact of the activity test (see Section 4.2.5) and the use of hours in excess of allowable fortnightly hours (see Section 4.2.5). A small number of families in the income range over $186,958 to $351,247 were also impacted by the annual subsidy cap.

Differences in income levels between families with different characteristics, levels of activity and income support/FTB receipt status result in a different distribution of families across the income thresholds that are used to determine the applicable CCS subsidy rate (Table 26). About 4 in 5 (81.9 per cent) of single parents have an income below $66,958 and hence are in the range for the 85 per cent subsidy rate and 15.0 per cent are in the income bracket $66,958 to $171,958 and hence have a subsidy rate that tapers in the range 85 per cent to 50 per cent. Only 14.6 per cent of couple parent families have an income under $66,958 and hence a subsidy rate of 85 per cent. Just over half (55.5 per cent) have an income in the range $66,958 to $171,958 and the remainder have higher incomes with 14.2 per cent in the range $186,958 to $251,248 and hence have a subsidy rate of 50 per cent.

The table can also be viewed on page 72 of the PDF.

Table 26: Proportion of families using child care with income in range of each combined family income cap threshold, by family characteristics, 2018-19
 Gross family income threshold: Population
Up to $66,958$66,958 to $171,958$171,958 to $186,958$186,958 to $251,248$251,248 to $341,247$341,247 to $351,247Over $351,247
 Distribution of families (%)Families
Family type       
Couple parent14.655.55.614.25.90.34.0910,271
Single parent81.915.00.10.20.10.02.7227,842
Family income support/family payment status a    
Single parent       
Full-rate IS94.14.30.10.10.00.01.494,994
Part-rate IS90.68.50.10.10.00.00.744,687
FTB only64.334.50.30.40.10.00.477,259
No FTB34.852.32.24.92.00.13.838,631
Couple parent       
Both full-rate IS95.04.70.00.10.00.00.210,639
Some IS80.918.60.10.20.10.00.126,822
FTB only40.259.40.10.20.00.00.1175,125
No FTB3.156.47.519.28.10.45.3654,361
Family activity status b      
Single parent       
Missing74.44.00.20.60.30.020.526,680
Low97.02.20.00.10.00.00.623,435
Part-time88.511.00.10.10.00.00.395,194
Full-time72.326.80.20.30.10.00.482,533
Couple parent       
Missing34.736.82.77.23.40.215.294,694
Low76.817.70.92.41.10.11.12,559
Some part-time32.048.03.89.54.10.22.376,116
Low and full-time30.154.72.96.73.00.22.537,254
Part-time and full-time9.962.25.914.05.40.32.4396,407
Both full-time7.654.97.018.88.30.43.1303,241
Total28.047.44.511.44.80.23.71,138,113

Notes: a Family income support/family payment status is derived from the income support and Family Tax Benefit dataset. Full-rate income support means that the families' income is below the threshold beyond which the amount of income support payment is reduced. b Variable defined in Chapter 2. Based on the reconciled income measure.

Source: DESE administrative data

As expected, for both single parent and couple parent families that are in receipt of full-rate income support, the vast majority have an income of less than $66,958 and hence are in the 85 per cent subsidy rate. For couple parents that do not receive FTB, 56.4 per cent are in the income range $66,958 to $171,958, 7.5 per cent in the range $171,958 to $186,958 and 19.2 per cent in the income range $186,958 to $251,248.

Table 27 shows how the distribution of families across the income thresholds that are used to determine the applicable CCS subsidy rate varies according to geographic location. There are some differences in the extent to which families are subject to the subsidy taper rate. In capital cities 25.3 per cent of families have an income below $66,958 and hence are in the range for the 85 per cent subsidy rate and 46.1 per cent are in the income range $66,958 to $171,958 and hence have a subsidy rate that tapers in the range 85 per cent to 50 per cent. As population size decreases and remoteness increases, the proportion of families with an income below $66,958 increases. In remote and very remote areas 28.8 and 29.7 per cent, respectively, have an income below $66,958 and a higher proportion have an income of $186,958 to $251,248. The impact of the subsidy taper rate is quite similar in capital cities and remote and very remote areas, with a smaller impact in other areas due to the lower income levels.

There are some differences in the distribution of families across the CCS subsidy rate income thresholds. Families in the Australian Capital Territory and, to a lesser extent, the Northern Territory are much more likely to be in the income range of $186,985 to $254,248 and therefore subject to the 50 per cent subsidy rate than families in the states, and those in Tasmania, South Australia and Queensland are the least likely to be in this income range.

The table can also be viewed on page 73 of the PDF.

Table 27: Proportion of families using child care with income in range of each combined family income cap threshold, by geographic characteristics, 2018-19
 Gross family income threshold:Population
Up to $66,958$66,958 to $171,958$171,958 to $186,958$186,958 to $251,248$251,248 to $341,247$341,247 to $351,247Over $351,247
 Distribution of families (%)Families
Urban and regional location
Capital Cities25.34.94.913.15.90.34.4790,021
Urban 100k plus31.64.24.28.62.50.12.2148,332
Urban 50k-<100k35.73.43.46.91.70.11.948,264
Urban 20k-<50k36.53.43.46.51.70.11.751,808
Urban 10k-<20k35.23.73.78.42.40.11.824,409
Inner Regional36.72.92.95.91.50.12.041,797
Outer Regional37.93.03.06.01.60.12.226,591
Remote28.84.64.612.13.40.23.13,086
Very Remote29.74.54.513.13.40.15.43,638
State/territory        
New South Wales27.444.84.612.36.00.34.6374,786
Victoria27.548.34.411.04.80.23.8281,495
Queensland32.447.74.29.73.20.22.7253,863
South Australia28.753.23.98.62.70.12.974,897
Western Australia24.848.95.112.94.80.23.396,794
Tasmania31.854.13.26.71.90.12.220,008
Northern Territory20.447.55.916.35.90.23.89,643
Australian Capital Territory12.244.27.122.19.40.54.626,460
Total28.047.44.511.44.80.23.71,138,113

Notes: Based upon the reconciled income measure.

Source: DESE administrative data

4.2.4 Annual benefit cap

As outlined above, there is an annual cap on the maximum amount of CCS per child that families with an income in excess of $186,958 (in 2018-19) can receive. This section provides data on how many families were impacted by the benefit cap in 2018-19.

Only 14,667 or 1.3 per cent of families are estimated to have been affected by the annual benefit cap (Table 28). Among couple parent families, as expected, the vast majority of those impacted by the annual benefit cap have both parents working full-time, along with a smaller number which have one parent working full-time and the other part-time. Virtually all of those impacted by the cap are in couple parent families (14,447 out of 14,667) and the vast majority lived in a capital city (12,876 out of 14,667). Among families with an income above the fee cap threshold ($186,958) and below the income at which entitlement to any CCS is lost ($351,247), 8.7 per cent are impacted by the annual fee cap (Table 29).

Table 28: Proportion and number of families impacted by the annual benefit cap, by family type, family activity status and geographic remoteness, 2018-19
 Impacted by the annual benefit cap
(%)Number
Family type  
Single parent0.1220
Couple parent1.714,447
Family activity status  
Single parent  
Missing0.00
Low0.01
Part-time0.145
Full-time0.2174
Couple parent  
Missing0.08
Low0.01
Some part-time0.3252
Low and full-time0.136
Part-time and full-time0.93,670
Both full-time3.510,480
Urban and regional location 
Capital Cities1.712,876
Urban 100k plus0.6950
Urban 50k-<100k0.5228
Urban 20k-<50k0.5251
Urban 10k-<20k0.7159
Inner Regional0.3115
Outer Regional0.258
Remote0.310
Very Remote0.620
Total1.314,667

Notes: Based on the most commonly reported income during the year income measure.

Source: DESE administrative data

Table 29: Proportion and number of families impacted by the annual benefit cap, by income threshold category, 2018-19
 Income threshold:Total income
 $186,958-$251,248$251,248-$341,247$341,247-$351,247$186,958-$351,247
 Number of families
Fees exceed $10,190 per child12,6751,990<2014,667
Number in income range120,97845,5752,421168,974
 (%)
Proportion impacted by the annual benefit cap10.44.4<1.08.7

Notes: <20: estimate is too small for publication, sum of row may not equal total. Based on the most commonly reported income during the year income measure.

Source: DESE administrative data

Because the annual benefit cap applies only to families with an income in excess of $186,958, it is of interest to compare the circumstances of the families just above the threshold income who are impacted by the cap and those just below the threshold income who have per child care costs in excess of $10,190 and who therefore would have been impacted by the cap if their income had been higher than the cap threshold. There are 5,290 families with an income in the threshold below the annual benefit cap who received more CCS than the cap and would have had their CCS capped if their income was above the cap (Table 30). Within this income range there is a very similar proportion of families (9.9 per cent) as the proportion of families in the next income threshold range which places them above the cap threshold income and who had their CCS capped (10.5 per cent).

The proportion of single and couple parent families just below the income threshold who received an amount of CCS in excess of the cap is very similar to that in the next income threshold up who had their CCS capped. This is also the case for family activity status and geographic location.

Table 30: Characteristics of families' fees in excess of annual fee cap, income category just below cap threshold and income category just above cap, 2018-19
 Over $171,958-$186,958Over $186,958-$251,248
 Would be impacted by cap if income higherImpacted by cap
 (%)Number(%)Number
Family type
Couple family13.012211.5188
Single parent family9.85,16810.512,487
Family activity status
Single parent    
Missing10.020.00
Low0.000.00
Part-time4.721.41
Full-time13.611812.3187
Couple parent    
Missing2.4213.161
Low0.000.00
Some part-time1.512.24
Low and full-time1.742.112
Part-time and full-time0.8430.786
Both full-time11.15,09911.812,324
Urban and regional location    
Capital Cities10.94,36111.511,003
Urban 100k plus7.44877.4878
Urban 50k-<100k6.41086.9212
Urban 20k-<50k7.61457.3236
Urban 10k-<20k6.4647.0138
Inner Regional5.7825.0123
Outer Regional3.4293.658
Remote3.251.76
Very Remote4.794.821
Total9.95,29010.512,675

Notes: Based on the most commonly reported income during the year income measure.

Source: DESE administrative data

4.2.5 Approved hours of care and the activity test

The Child Care Package involved significant changes to the number of hours of child care that were eligible for subsidy with the introduction of a more structured, multi-level rigorously applied activity test. This has implications for both access to child care, see Chapter 6, and affordability. In particular, relative to previous activity testing, many families, in particular those on the safety net provision, are eligible for fewer hours of subsidised care. One consequence is that some of these now use hours in excess of their allowed hours. This latter group is the focus of this section.

The new activity test, as described in Chapter 1, introduced a tiered approach with universal access of 24 hours per fortnight (12 hours per week) for low income households who did not meet the activity test, and then tiers of 36, 72 and 100 hours per fortnight above this depending on the number of hours of activity undertaken per fortnight. There are a range of exemptions to the application of the activity test. In addition to the 24 hours per fortnight noted above, these include, for those families who do not meet the activity test sufficiently, 36 hours per fortnight for children to attend preschool where this is delivered through a Centre Based Day Care service, and up to 100 hours per fortnight for those who receive Additional Child Care subsidy.68

In some cases, parents may not be eligible for any hours of subsidised care. This includes some families with high incomes that preclude eligibility, some cases where fees are met by a third party, and others where a family fails to meet other CCS eligibility criteria such as residency or immunisation requirements.

In 2018-19, 13.3 per cent of hours of child care paid for were unsubsidised. However, if families that have zero approved hours (largely because of the exclusions noted above) are excluded, the proportion is 9.0 per cent and if families that received no CCS (based on the reconciled income) are excluded, then 5.4 per cent of total hours are unsubsidised.

Overall, 47.4 per cent of families received subsidy for every hour paid for and 52.6 per cent paid for at least one hour of unsubsidised child care during 2018-19 (Figure 30). About one-quarter (24.8 per cent) of families had some but 5 per cent or less of their hours unsubsidised, and 8.4 per cent had none of their hours subsidised. When the analysis excludes families with zero approved hours of care, the distribution is very similar, although the proportion with all hours subsidised increases to 49.8 per cent, and those who have some, but 5 per cent or fewer of their hours unsubsidised, increases to 26.0 per cent.

Figure 30: Distribution of families by the proportion of hours paid for that are unsubsidised, 2018-19

fig030.png

Source: DESE administrative data

Figure 31 shows the mean and median percentage of hours paid for by families that are unsubsidised by the CCS income threshold of the family. The income measure used is reconciled family income. There is relatively little difference in the proportion of hours paid for which are unsubsidised across the taper reduction income ranges69 until the $341,248-$351,248 bracket is reached (Figure 31). Families in this group have 21.3 per cent of their hours unsubsidised and for those with an income of over $351,248, 73.0 per cent of hours of child care that are paid for are unsubsidised. While families with an income of over $351,248 will not be eligible for any CCS and hence all hours will be unsubsidised, the measure of unsubsidised hours reported in this section is constructed by aggregating across 12 months hours that were paid for and hours for which CCS was paid and there are fortnights in which the income reported to Centrelink is below the income threshold. Families that have a reconciled income in excess of $351,248 will incur a child care debt to the government that will have to be repaid.

Figure 31: Proportion of hours paid that are unsubsidised, by CCS income thresholds, 2018-19

fig031.png

Notes: Excludes families with zero approved hours. Reconciled family income. Weighted by number of hours paid for.

Source: DESE administrative data

Figure 32 shows the proportion of hours that are unsubsidised by the ranges of approved hours of care. While the proportion of hours that is unsubsidised decreases as the number of allowed hours increases, there are unpaid hours across all of the categories of approved hours including an average of 8 per cent or more of the hours for those who were approved for 72 or 100 hours, although the median value of zero indicates that at least half of the hours are subsidised. For families with 36 approved hours per fortnight, the proportion of hours that are unsubsidised increases to 19.8 per cent. It is 22.8 per cent for those with 24 hours per fortnight of approved activity, and for families with zero hours of approved activity virtually all hours of care are unsubsidised (mean of 97.5 per cent and median of 100.0 per cent).

Figure 32: Proportion of hours paid for that are unsubsidised, by allowed hours, 2018-19

fig032.png

Notes: Weighted by number of hours paid for.

Source: DESE administrative data

The highest proportion of hours paid for that are unsubsidised is in very remote areas (11.0 per cent), followed by remote areas (6.8 per cent) and capital cities (6.5 per cent) (Figure 33). This is consistent with the higher income levels among the child care population in remote and very remote areas and in capital cities, compared to the other areas.

Figure 33: Proportion of hours paid for that are unsubsidised, by urban and regional location, 2018-19

fig033.png

Notes: Excludes families with zero approved hours. Weighted by number of hours paid for. See note on Table 6 for a description of the urban and regional location variable.

Source: DESE administrative data

Table 31 shows the percentage of hours paid for that are unsubsidised by income vigintile. The percentage of hours paid for that are unsubsidised is slightly higher for the lowest income vigintile than for the second income vigintile. The proportion of unsubsidised hours among families with at least one unsubsidised hour, initially decreases as income increases, is then relatively stable for income vigintiles 3-19, and then increases sharply for the highest income group. That is, 56-59 per cent of families that use child care and who are in the lowest 2 income vigintiles have at least one hour of unsubsidised care and, among this group who have at least one unsubsidised hour, about 1 in 5 hours are unsubsidised. Families in the lowest income vigintile have a reported income of under $21,000, which is less than the minimum social security entitlement for full-income support for a family with one child. Families in the second income vigintile have reported income between $21,000 and less than $31,399 per annum, which is less than the minimum full-rate social security entitlement for most families with child care aged children.70

If the reported income is an accurate reflection of the family's access to economic resources, then it is difficult to understand how they can afford a significant number of unsubsidised hours. While we are not able to definitely determine the explanation for this, with the data we have available, we think that it is probably in part due to the reported incomes for many of these families not an accurate reflection of their access to economic resources for a range of reasons. These include significant support being provided by family or friends or that the family has significant assets but their income is low in the particular year due to capital losses, business losses or tax minimisation strategies. It may also be the case that child care services are not in fact receiving payment for unsubsidised hours from some of the families in this situation and are 'writing off' their debts.

Table 31: Proportion of hours paid for that are unsubsidised, by gross family income vigintile, 2018-19
Gross family income vigintileChild care users with at least one hour of unsubsidised careProportion of hours unsubsidised if have at least one unsubsidised hourNumber of unsubsidised hours (over year) if have at least one unsubsidised hour
 (%)(%)Annual hours
159.520.1144.5
256.017.6133.2
353.916.0119.7
453.015.5114.0
552.415.3113.1
651.215.4110.2
748.816.1111.4
846.915.6103.1
945.315.3100.4
1044.214.897.8
1144.414.295.6
1244.614.394.4
1344.913.993.1
1444.714.095.7
1546.314.593.5
1647.314.1100.2
1749.314.3106.8
1851.314.3115.1
1954.816.2140.3
2078.465.2710.9
Total50.418.0142.1

Notes: Excludes families with zero approved hours. Reconciled family income. See Table 40 for the income ranges that apply to each income vigintile.

Source: DESE administrative data

4.2.6 Trends in the effective child care subsidy rate

This section reports on the trends in the child care subsidy rate received by families, as measured by the child care subsidy as a proportion of child care fees, from the beginning of 2017 to the end of 2019. The proportion of families receiving a child care subsidy rate of zero, greater than zero and less than 50 per cent, 50 to less than 75 per cent, 75 to less than 95 per cent and 95 per cent and over is shown in Figure 34 on a weekly basis. Prior to the introduction of the Child Care Package in July 2018, a large majority of families received a subsidy rate of 50 to less than 75 per cent (mid-60 per cent to just below 80 per cent), and between about 13 and 25 per cent received a subsidy rate of 75 to less than 95 per cent. A smaller proportion received a zero subsidy rate, a subsidy rate of under 50 per cent or a subsidy rate of 95 per cent or more. The effect of families hitting caps towards the end of the financial year can be seen in the figure, with the proportion receiving no subsidy or a subsidy less than 50 per cent increasing towards July 2017, before dropping and then increasing again towards July 2018.

Following the introduction of the Child Care Package there has been a substantial fall in the proportion of families receiving a subsidy rate of 50 or more but under 75 per cent and substantial increases in the proportions receiving 75 or more but under 95 per cent and the proportion receiving some subsidy but less than 50 per cent, reflecting a combination of the shift to income testing the full amount of child care subsidy, the effect of the more graduated activity test and approved hours and some of the other changes. There was also a substantial increase in the proportion of families receiving no subsidy due in substantial part to having an income high enough that they are no longer eligible to receive CCS.

Figure 34: Actual weekly child care subsidy rate received by families, 2017-19

fig034.png

Notes: Uses unreconciled estimate of weekly subsidy.

Source: DESE administrative data

4.2.7 Additional Child Care Subsidy

As discussed earlier, the Additional Child Care Subsidy, as part of the Child Care Safety Net, replaced a diverse range of programs under the previous funding arrangements that provided additional assistance with the costs of child care for families with specific additional needs, including Grandparent Child Care Benefit, Special Child Care Benefit, and Jobs, Education and Training Child Care Fee Assistance.

The focus in this Chapter is the impact of the replacement of the additional forms of assistance with the costs of child care in place under the previous system with the Additional Child Care Subsidy. This section briefly describes the numbers of families that received the various forms of additional child care assistance under the old and new systems; further analysis of the transition from the old to the new system is provided in Chapter 7.

In 2017-18 there were 23,447 families that received SCCB, 5,559 families that received GCCB and 11,356 families that received transition to work (JETCCFA) during at least one week during 2017-18. In total, 40,362 families received one of the additional payments in 2017-18, which is 3.7 per cent of all families (1,091,549) that received a child care subsidy during the year. In 2018-19 there were 32,419 families that received Additional Child Care Subsidy during at least one week during 2018-19, which is 3.1 per cent of all families (1,041,692) that received a child care subsidy during the year. This means that there were 7,943 fewer families that received additional child care payments after the introduction of the Package.71

There were 5,159 families who received SCCB in the last week of June 2018 and, of these, 38 per cent were receiving ACCS in the first week of August 2018, 49 per cent were receiving CCS and 13 per cent were not in the child care system. There were 3,120 families who received GCCB in the last week of June 2018 and, of these, 78 per cent were receiving ACCS in the first week of August 2018, 8 per cent were receiving CCS and 15 per cent were not in the child care system. There were 4,005 families who received JETCCFA in the last week of June 2018 and, of these, 42 per cent were receiving ACCS in the first week of August 2018, 53 per cent were receiving CCS and 5 per cent were not in the child care system.

Our estimates from the 2017-18 administrative data are that the additional amount of support (on top of what would have been received under the standard CCB/CCR payment) provided under the GCCB program was $203.6 million, under the SCCB it was $108.6 million and under JETCCFA it was $30.4 million. This compares to the amount of additional support (on top of what would have been received under the standard CCS payment) for 2018-19 of $294.3 million.

4.2.8 Impact of program settings on affordability - summary

There are 4 components of the CCS that determine the amount of subsidy to which families are entitled: hourly rate caps; percentage rate of Child Care Subsidy; the annual cap; and approved hours as determined under the activity test. There is also additional government financial support for families and children who may face barriers in accessing affordable child care via the ACCS.

The relative size of the subsidies under the Child Care Benefit/Child Care Rebate systems and CCS depends on a range of factors including income, number of children using care, level of activity, number of hours of care used, hourly fee paid for services and type of care used.

A substantial minority of hours of care paid for are charged above the hourly rate cap. During the second half of 2019, across the period, in most weeks, the proportion of hours charged above the cap was between about 13 and 18 per cent,72 for Centre Based Day Care around 15-16 per cent of hours were charged above the cap, for Family Day Care around 20-23 per cent of hours were charged above the cap73 and Outside School Hours Care had the lowest proportion of hours charged above the cap and much lower proportions being charged above the cap during school holiday weeks. While In Home Care comprises only a small proportion of total hours of child care used, a high proportion of hours are charged over the hourly rate cap (ranging from just under 40 per cent of hours to around 75 per cent of hours over the period since 1 July 2018).

Where the hourly fee is being charged above the cap, the average amount above the cap varies from 10.3 per cent for Centre Based Day Care and 11.3 per cent for Family Day Care to 17.4 per cent for In Home Care. At the 90th percentile, the amount being charged in excess of the cap is substantial, being 23.3 per cent for Centre Based Day Care and up to 31.2 per cent for In Home Care.

While the majority of hours of care are not charged above the hourly rate cap, the cap does impact particularly families using In Home Care and families with higher incomes, with a youngest child using child care of under 3 years, using very short hours of care and those using child care services in capital cities or remote or very remote areas. For the majority of hours charged above the cap, the amount in excess of the cap is relatively small but there are a small proportion of hours that are charged well in excess of the hourly fee rate cap.

The subsidy taper rate, which reduces the amount of subsidies paid as income increases, has a substantial impact. Overall, 4.8 per cent of families have an income in the range over which the CCS rate reduces from 50-20 per cent and 3.7 per cent do not receive any subsidy due to their income being above the threshold at which the subsidy rate goes to zero. Very important to note is that there is a difference between the formal subsidy rate and the effective subsidy rate received by families. For example, for families with an income of up to $66,958, the formal subsidy rate is 85 per cent but the rate received is in fact only 75.3 per cent. This is for a range of reasons including the impact of the activity test, which means that some hours paid for are unsubsidised, and the annual cap among other factors.

The annual benefit cap impacts a small number of families with an income above $186,958 (14,667 families or 1.3 per cent of all families using child care). Amongst families with an income in excess of $186,958 and up to $351,247, 8.7 per cent were impacted by the annual benefit cap.

The changes to the approved hours of care and the associated activity test have had a significant impact on families. Overall, 13.3 per cent of hours paid for by families were unsubsidised, with just over half of families paying for at least one hour of unsubsidised care during the year. While most families that pay for at least one subsidised hour have only a small proportion of hours unsubsidised, there are some families that are charged for substantial numbers of unsubsidised hours. The highest proportion of hours that are unsubsidised are for high income families (in excess of $341,248 per annum). For families on an income of less than this, there are only small differences in the proportion of hours that are unsubsidised, being a bit under 10 per cent of hours.

4.3 Child care fees

The fees charged by child care services are an important determinant of the affordability of child care. Historically, child care costs have increased at a faster rate than CPI and, hence, have increased in real terms (Section 4.3.3). The July 2018 changes to the child care system were designed to put downward pressure on child care fees via the introduction of the hourly fee rate cap and the concept of a family co-contribution, so that families pay a portion of their child care fees.74

4.3.1 The distribution of hourly child care fees

This section provides a summary of the distribution of hourly fees charged by services in Q4 2019 and how this varies according to type of care. Fees are reported at various points in the distribution of fees (p5, p10, p25, p50 (median), p75, p90, p95) and the average fee. The average fees for child care type combined (excluding In Home Care) is $9.78 per hour and is slightly higher in for-profit services ($10.05) than not-for-profit services ($9.30) (Table 32). The median hourly fee is similar to the average hourly fee, which is because the distribution of fees is not skewed. There is a little more variation between fees at the bottom end of the distribution and the top end of the distribution in not-for-profit services than in for-profit services. The average fees are highest in Family Day Care services ($10.69), slightly lower in Centre Based Day Care services ($10.34) and substantially lower in Outside School Hours Care services ($8.14). The range of hourly fees charged (5th-95th percentile) is smallest in Family Day Care services, followed by Centre Based Day Care services and largest in Outside School Hours Care services.

The table can also be viewed on page 83 of the PDF.

Table 32: Hourly fee charged at selected distributional points, by service type, Q4 2019
   At:Mean
5th 
percentile
10th 
percentile
25th 
percentile
50th 
percentile
75th 
percentile
90th 
percentile
95th 
percentile
 ($ per hour)
Centre Based Day Care       
For-profit7.678.259.1710.2111.4812.6513.6210.37
Not-for-profit7.438.099.0710.1811.3312.2913.1510.24
Total7.608.189.1410.2011.4312.5513.4810.34
Family Day Care      
For-profit8.609.0310.0010.6011.1012.3313.4210.69
Not-for-profit8.518.959.5710.5011.4512.7513.7810.69
Total8.579.009.8010.5511.2112.5113.5310.69
Outside School Hours Care      
For-profit5.355.956.898.3310.3011.9912.958.71
Not-for-profit4.895.406.357.338.5010.0010.867.58
Total5.055.646.627.699.4711.1812.188.14
In Home Care        
For-profit24.8329.0035.0038.4040.7043.2046.4137.41
Not-for-profit17.2020.8525.0030.7035.2237.7038.6029.64
Total19.1322.9527.8534.5038.4041.0043.0032.94
Total excluding In Home Care      
For-profit6.537.438.8010.0011.3012.5013.4810.05
Not-for-profit5.526.317.679.3610.8311.9612.789.30
Total6.006.908.379.8511.1112.3313.289.78

Notes: For In Home Care the hourly rate is reported at the family level. Records with zero fees or zero hours are excluded.

Source: DESE administrative data

As discussed in Section 4.2.2, while the majority of child hours are charged at rates below the hourly rate cap, a significant proportion of services are charging at least some children at rates that exceed the hourly rate cap. Table 33 shows the proportion of services with an average hourly fee above the hourly rate cap, by service type, along with the proportion of services where at least one child is charged an average fee across the quarter above the hourly rate cap. These approaches produce very different results, which is due to there being variation in the fees charged to families within a service. Using average hourly fees to compare to the hourly rate cap does not fully capture this possible variation, so underestimates the extent to which services are charging above this rate.

Table 33: Proportion of services charging above the hourly rate cap, by service type, Q4 2019
 Proportion with mean fee above rate capProportion with at least one child charged average fee above rate cap
 (%)
Centre Based Day Care 
For-profit12.660.8
Not-for-profit9.055.0
Total11.659.0
Family Day Care 
For-profit18.165.4
Not-for-profit21.697.5
Total19.479.0
Outside School Hours Care 
For-profit11.963.4
Not-for-profit2.430.2
Total6.947.8
In Home Care  
For-profit94.495.5
Not-for-profit45.466.7
Total62.781.4
Total excluding In Home Care 
For-profit12.961.7
Not-for-profit8.745.8
Total11.555.8

Notes: For In Home Care the hourly rate is calculated at the family level. Records with zero fees or zero hours are excluded.

Source: DESE administrative data

4.3.2 Trends in average hourly child care fees

This section provides an overview of the hourly fees charged by services over the period Q1 2017 to Q4 2019, and of the extent to which there is any evidence of a change in the trend in the hourly child care fee following the introduction of the Child Care Package in July 2018.

As discussed in Section 4.2.2, in the context of the hourly fee rate cap, the concept of an hourly fee is in most cases a post facto construction based on nominal session length and the session fee.75 This means it is possible for hourly fees to increase in response to a nominal reduction in session length without the actual cost to parents increasing.

Across all services (excluding In Home Care where the cost is per family), and based on the formal session length, the cost of an average hour of care increased from $8.71 in Q1 2017 to $9.96 in Q4 2019 (Figure 35), an increase of 14.4 per cent. Inspection of Figure 35 shows that the average hourly fee being charged by Centre Based Day Care (CBDC) and Outside School Hours Care (OSHC) was increasing prior to the introduction of the Child Care Package in July 2018 and this has continued after the introduction of the Package. For Family Day Care there was a sharp increase in the hourly fee between Q2 and Q3 2018 following the introduction of the Child Care Package.

Figure 35: Quarterly average hourly fees, Centre Based Day Care, Family Day Care and Outside School Hours Care, Q1 2017 to Q4 2019

fig035.png

Source: DESE administrative data

The average hourly fee charged by In Home Care services over this period is shown in Figure 36. The average fee charged by In Home Care was increasing prior to the introduction of the Child Care Package and increased very substantially immediately following the changes from $18.93 per hour (on a family basis) in Q2 2018 to $29.08 per hour in the Q3 2018. This, in part, reflects the significant changes associated with the new In Home Care program and its alignment to the Child Care Package. These changes were expected to result in changes to the charging practices of the In Home Care services (see also Section 5.6).

Figure 36: Quarterly average hourly fees per family, In Home Care services, Q1 2017 to Q4 2019

fig036.png

Notes: In order to take into account the shift in In Home Care from charging on a per child to a per family level (see footnote 63), In Home Care fees prior to July 2018 are calculated by summing fees charged to individual children.

Source: DESE administrative data

Figure 37 shows the changes in the average hourly fee for the 12 months prior to the changes to the child care system (Q2 2017 to Q2 2018) and the 12 months following the changes to the child care system (Q2 2018 to Q2 2019). The increase in hourly fees for Family Day Care is apparent with a 0.6 per cent increase in the 12 months prior to the changes and a 19.9 per cent increase in the 12 months post the changes. For In Home Care there was a big increase in the family hourly fee in the 12 months prior to the changes (11.3 per cent) and a massive increase of 62.7 per cent following the changes. Across all services (excluding In Home Care) the average increase in fees in the 12 months prior to the changes was 3.7 per cent and in the 12 months following the changes the increase was 7.3 per cent.

The change in the average hourly fee charged by Centre Based Day Care and Outside School Hours Care is similar in the 12 months prior to the changes to the system and in the 12 months after the changes to the system, with a slightly higher percentage increase for Centre Based Day Care post the changes than before and a slightly lower percentage increase for Outside School Hours Care following the introduction of the Package relative to that prior.

Figure 37: Change in hourly fees 2017 to 2018 and 2018 to 2019, by service type

fig037.png

Notes: In order to take into account the shift in In Home Care from charging on a per child to a per family level (see footnote 63), In Home Care fees prior to July 2018 are calculated by summing fees charged to individual children.

Source: DESE administrative data

Figure 38 shows the increases over 2 periods, June 2017 to June 2018, and June 2018 to June 2019 by type of service provider. In both periods the overall increase in fees was higher for for-profit services relative to not-for-profit, although this did not hold for all service types. In particular, for-profit services in the Family Day Care sector had smaller increases in the 2017-18 period and much larger in the 2018-19 period than not-for-profit services. In the Outside School Hours Care sector, the increase in fees for not-for-profit providers was above that of for-profit providers in both time periods.

Figure 38: Annual percentage change in average hourly fee, by type of service and whether for-profit or not-for-profit, 2017 to 2018 and 2018 to 2019

fig038.png

Notes: Change in fees is June quarter to June quarter.

Source: DESE administrative data

The big increase in the average hourly fee being charged by for-profit Family Day Care providers led to a convergence of the hourly fee being charged by for-profit providers to that being charged by not-for-profit providers (Figure 39). Before July 2018, for-profit Family Day Care providers were charging a substantially lower per hour fee than were not-for-profit Family Day Care providers. After the changes, the hourly fee charged by for-profit Family Day Care providers increased to be the same as that being charged by not-for-profit providers. Post the shift to the new system, the hourly fee charged by for-profit and not-for-profit Family Day Care providers has increased at about the same rate.

Figure 39: Average hourly fee, Family Day Care, by whether provider is for-profit or not-for-profit, Q1 2017 to Q4 2019

fig039.png

Source: DESE administrative data

As documented in Chapter 9, a significant number of for-profit Family Day Care services have ceased operating since the beginning of 2017. Also as outlined in Chapter 9, this is in substantial part due to fraud and a range of non-compliance issues. Figure 40 shows the hourly fee charged by for-profit Family Day Care providers over the period Q1 2017 to Q4 2019 according to whether the service continued operation in 2018-19. There is very little difference in the hourly fee charged between services that ceased operating and those that continued to operate post June 2018. This demonstrates that the increase in the hourly fee being charged by for-profit Family Day Care services is not due to compositional change among Family Day Care services.

Figure 40: Hourly fee, by whether services continued into 2018-19, for-profit Family Day Care services, Q1 2017 to Q4 2019

fig040.png

Source: DESE administrative data

Table 33 provides further insights into the reason for the apparent big increase in the hourly rate being charged by for-profit Family Day Care providers. Between 2017-18 and 2018-19, while the per hour cost of care charged by for-profit Family Day Care providers increased by 22.2 per cent, the annual number of hours of care per child paid for by families using for-profit Family Day Care decreased by 23.3 per cent (from 1,104 to 847 hours per year). Among not-for-profit Family Day Care providers there was a much smaller increase in the per hour cost of care being charged for (increase of 5.9 per cent) and hours per child charged for decreased by 3.5 per cent.

The increase in the hourly rate being charged by for-profit Family Day Care providers appears to be due to a change to the basis on which many for-profit Family Day Care providers are charging families. This is consistent with the data from the SELCS Wave 2 (June-July 2019) (Chapter 5) that shows that 56.0 per cent of Family Day Care services charge on an hourly basis.

There are some differences across states/territories in the change in hourly fee charge and per child hours of care paid in the Family Day Care sector. There were increases in the hourly fee in all states/territories except for the Northern Territory, where there was a small fall in the hourly fee (1.2 per cent). There were smaller increases in the hourly fee charged in the Australian Capital Territory (5.2 per cent increase) and Tasmania (5.8 per cent increase). The largest increase in the hourly fee was in New South Wales (20.7 per cent) followed by Victoria (17.2 per cent increase). The states in which the hourly fee increased by the largest amount also were the states with the largest decrease in the number of hours of care used.

Table 34: Hourly fees and hours paid for per child, Family Day Care, 2017-18 and 2018-19
 Fee/hourHours/childChange
2017-182018-192017-182018-19$/hrHrs/child
 ($ per hour)(Annual hours)(%)
State/territory      
New South Wales8.5010.2695278920.7-17.2
Victoria8.7310.231,05677717.2-26.4
Queensland8.449.9483876417.7-8.8
South Australia8.339.1766160510.1-8.5
Western Australia8.9810.0484072811.8-13.4
Tasmania9.419.964974675.8-5.9
Northern Territory10.059.93909868-1.2-4.6
Australian Capital Territory10.5711.118597995.2-7.0
Australia8.6410.1593476117.5-18.5
For-profit / not-for-profit      
For-profit8.3310.171,10484722.2-23.3
Not-for-profit9.5410.106446225.9-3.5

Source: DESE administrative data

4.3.3 Distribution of changes in fees

The above analysis has focused on changes in average fees across services. This section considers the question of whether there have been differences in the rate of change in the hourly child care fee across services. Of particular interest is the potential impact of the new hourly fee cap, both among services charging well below the cap, and the possibility that the introduction of the cap was interpreted by these services as a signal that they should be charging more, and the intended effect of this measure of reducing increases in hourly fees above the cap.

The analysis is restricted to Centre Based Day Care services, given the substantial changes in how Family Day Care services and In Home Care services were charging associated with the introduction of the Child Care Package. As the data is longitudinal, it relates only to those services operating across the period of the comparison, and hence does not take into account changes in the composition of services over the period as a result of entries and exits.

A challenge in considering this question is the time period over which change should be considered, and the extent to which focus is on the pattern of fee change since the introduction of the package or this pattern relative to that prior to the change. In this section, 4 measures are used:

  • The first is the change in the average quarterly hourly fee between Q2 2017 and Q2 2018, and Q2 2018 and Q2 2019. This gives a measure of the immediate impact of the changes.
  • The second measure is the change in the annual increase in hourly fees between 2017 and 2018, and 2018 and 2019. This measure is focused more on the trend in the change in hourly fees than the immediate impact of the introduction of the Child Care Package.
  • The third measure is the change in fees between the December quarter at the end of one year and the following June quarter - that is, the change from December 2017 to June 2018 and the change from December 2018 to June 2019. This measure focuses of trends in fees unaffected by the actual changes that occurred with the introduction of the package.
  • This is complemented by the fourth comparison, which considers the change between Q1 2017 to Q4 2017 and Q1 2019 to Q4 2019. This again excludes the short term impact associated with the introduction of the package.

In addition, a regression modelling approach is used to estimate whether there are distinctive changes in the pattern of fee increases for services at different points of the fee distribution following the introduction of the Child Care Package, in absolute terms and relative to what they were prior to the changes.

As has been detailed in Table 32 there is considerable variation in the fees charged by services, with, for example, in Q4 2019, the average hourly fee charged by a Centre Based Day Care service at the 95th percentile point of the fees distribution of $13.48 compared to $7.60 for a service at the 5th percentile. For this analysis, services have been grouped into 10 deciles based on their hourly fee.76

Figure 41 shows the change in hourly fees between the June quarter (Q2) 2017 and Q2 2018 and between Q2 2018 and Q2 2019 for Centre Based Day Care services ranked by their decile of hourly fee in Q2 2017. This second change effectively picks up the impact of fee increases associated with the introduction of the package. Specifically, it shows that while in the period prior to the introduction of the package the dollar value of the increase in fees was relatively flat across services by their decile of fee, this changed with the introduction of the package. In this latter period, there was a very distinct pattern of higher increases for those services that had the lowest fees, and much smaller increases among higher fee services. This is emphasised in the chart, with the line showing the ratio of fee increases in the second period relative to those in the first.

Figure 41: Centre Based Day Care Services, ranked by decile of fee in Q2 2017, change in hourly fees between Q2 2017 and Q2 2018 and Q2 2018 and Q2 2019

fig041.png

Source: DESE administrative data

The additional analyses are focused more on the longer-term changes in the pattern of fee increases, rather than the immediate impact of the package - and suggest that this experience differs from the shorter term.77

Figure 42 shows the change in annual average hourly fees between 2017 and 2018 and between 2018 and 2019 for Centre Based Day Care services, this time ranked by their decile of annual average hourly fee in 2017. The figure also shows the ratio of the change in the hourly fee in the second period relative to the first. A ratio of more than 100 indicates that the fee increase was higher between 2018 and 2019 than it was between 2017 and 2018. This data shows a pattern of decreasing increases for the higher fee deciles in the second period but, in this case, shows this as being consistent with the earlier period. As a consequence, the ratio of increases across the 2 periods is almost flat (with the exception of the highest fee decile where the increase is higher in the second period) - suggesting no change in the pattern of fee change for most of the distribution. This data is, however, still impacted by the changes at the time of the introduction of the package.

Figure 42: Centre Based Day Care Services, ranked by decile of fee in 2017, change in annual average hourly fee, 2017 to 2018 and 2018 to 2019

fig042.png

Source: DESE administrative data

To address this, Figure 43 and Figure 44 look at changes over 3 quarter periods that exclude the impact of the changes. Figure 43 shows the change in hourly fees between the December quarter (Q4) 2017 and the June quarter (Q2) 2018 and the December quarter (Q4) 2018 and the June quarter (Q2) 2019 for Centre Based Day Care services ranked by their decile of hourly fee in Q4 2017. The conclusion from this analysis is also that the pattern of changes in hourly fees by fee decile is similar post the Child Care Package to what it was prior to the changes to the child care system, and the growth in the second period was higher than in the first.

Figure 43: Centre Based Day Care services, ranked by decile of fee in Q4 2017, change in quarterly average hourly fee, Q4 2017 and Q2 2018 and Q2 2019

fig043.png

Source: DESE administrative data

Figure 44 presents changes in the average quarterly hourly fee between Q1 2017 and Q4 2017, and between Q1 2019 and Q4 2019. This shows a similar picture to Figure 43 but with an indication of a relatively higher ratio of growth for the upper deciles.

Figure 44: Centre Based Day Care services, ranked by decile of fee in Q1 2017, change in quarterly average hourly fee Q1 2017 to Q4 2017 and Q1 2019 to Q4 2019

fig044.png

Source: DESE administrative data

Given that there were some changes in the pattern of use of child care following the introduction of the Child Care Package, including session length, which affects the calculation of the hourly fee, as well as the potential for a range of other service characteristics to have an impact on price changes, a regression model of the extent to which the quarterly change in the hourly child care fees differs before and after the introduction of the package has been estimated. In this model, the dependent variable is the quarterly change in the hourly fees in dollar per hour terms and the explanatory variables include the time (measured quarterly), and the decile of service fee in Q1 2018 interacted with whether the quarter was before or after the introduction of the Child Care Package from July 2018. In addition, the average hours of care per child is controlled for, as is the size of the service in terms of child weeks of care in the quarter and the size of the provider, the service location and whether the service was for-profit. The model is estimated for the period Q2 2017 to Q4 2019, with change between Q2 2018 and Q3 2018 excluded.

In terms of the key question as to the pattern of fee increase across services ranked by their fee level in the post package period, the model suggests a differential pattern of an increase of some 4 cents per hour per quarter for services in deciles 1-6 and of 3 cents an hour for those in deciles 7-9, with decile 10 excluded due to the model structure. While these are statistically significant, their magnitude is very small. This suggests that the fee decile of the service makes relatively little contribution to the relative change in fees in the period following the introduction of the package.

This analysis suggests that, while there was a tendency for lower fee Centre Based Day Care services to increase their fees more rapidly at the point of transition to the CCS, possibly indicative in the short term of there being a 'benchmark effect', in the longer term the pattern of increase is relatively consistent across the fees distribution.

Table 35: Multivariate analysis of quarterly change in hourly fees, Centre Based Day Care services, 2017-19
VariableCoefficientVariableCoefficient
Quartera Whether for-profit 
Q2 2017 0.000***For-profitbase
Q3 2017 0.155***Not-for-profit-0.020***
Q4 2017 -0.050***Urban and regional location
Q1 2018 0.080***Capital Citiesbase
Q2 2018 0.010***Urban 100k plus-0.003
Q4 2018 -0.046***Urban 50k-<100k-0.001
Q1 2019 0.071***Urban 20k-<50k0.001
Q2 2019 -0.001Urban 10k-<20k-0.008
Q3 2019 0.176***Inner Regional0.000
Q4 2019 -0.084***Outer Regional-0.003
   Remote-0.010
Average child hours-0.027***Very Remote-0.028
Child weeks0.000State 
Child weeks squared0.000New South Walesbase
Interaction Victoria0.009***
Pre/PostFee decileQueensland0.017***
Pre1-0.042***South Australia0.001
Pre2-0.018***Western Australia0.004
Pre3-0.013***Tasmania-0.006
Pre4-0.007Northern Territory-0.002
Pre5baseAustralian Capital Territory0.019**
Pre6-0.001Whether former BBF 
Pre70.005Notbase
Pre80.004Former BBF-0.013
Pre90.013**Provider size 
Pre100.015**1 servicebase
Post10.043***2 services-0.002
Post20.042***3-5 services0.001
Post30.041***6-99 services0.006
Post40.038***100+ services0.012***
Post50.040***  
Post60.038***Constant0.036***
Post70.031***  
Post80.031***  
Post90.028***  
Post10omitted  
     
N = 70,715  
r2 = 0.304  

Notes: a change to quarter, excludes change from Q2 2018 to Q3 2018. OLS regression with robust standard errors. 
*, **, *** indicate that the underlying coefficient is significant at the 90 per cent, 95 per cent and 99 per cent confidence levels respectively.

Source: DESE administrative data

4.3.4 Trends in the costs of child care: Consumer Price Index (CPI) data

The history of the cost of child care as measured by the Australian Bureau of Statistics' Consumer Price Index is one of rapidly increasing prices (especially since the early 1990s) punctuated by strong price falls as Commonwealth governments have increased the generosity of payments or introduced new programs (Figure 45).

Interpreting these changes in the child care CPI requires an understanding of the methodology that the ABS uses to calculate price change for child care. The ABS methodology involves collecting gross child care prices and then subtracting government child care payments. Government child care payments are calculated through the use of customer profiles for a sample of households. The methodology takes into account payments that are made to families that reduce child care costs to families, but not when this assistance was provided through the tax system.

Specifically highlighted in Figure 45 are some of the major changes. The ABS report these changes as:

  • a fall of 14.7 per cent in child care fees in the March quarter 1991. This was as a consequence of the introduction of Childcare Assistance in January of that year (effectively the extension of the 'Fee relief' that has been available in the community sector).
  • a 5.1 per cent decrease in the September quarter 1994. This was 'largely due to the introduction of the Commonwealth Government Childcare Cash Rebate Scheme that came into effect on 1 July 1994' (ABS 6401.0, September 1994, p. 2).

Figure 45: ABS Child Care and All Groups CPI, March 1982 to March 2020

fig045.png

Source: ABS (various years). 'Consumer Price Index, Australia', ABS Catalogue No. 6401.0, ABS, Canberra.

  • a fall of 15.1 per cent in the September quarter 2000. No detailed explanation of this is given by the ABS, in part as this release also encompassed the effect of the introduction of the GST. The change appears to reflect the impact of the introduction of the Child Care Benefit and the higher rates of assistance this provided.
  • a fall in September 2001. ABS reported 'a fall in the cost of child care (-6.4 per cent) due to an increase in Commonwealth child care benefits' (ABS 6401.0, September 2001, p. 4).
  • a fall of 33.4 per cent in September quarter 2007. The ABS reports this as resulting 'from a change in the eligibility criteria for the Child Care Tax Rebate (CCTR) that has brought it in-scope of the CPI this quarter and from the additional 10 per cent indexation of the Child Care Benefit (CCB) rates on top of the usual annual CPI indexation' (ABS 6401.0, September 2007, p. 1).78
  • a further fall of 22.9 per cent in the September quarter 2008. This is ascribed by the ABS to 'the increase in the Child Care Tax Rebate (CCTR) from 30 per cent to 50 per cent that was implemented as of 1 July 2008' (ABS 6401.0, September 2008, p. 5).

The ABS reported the introduction of the Child Care Package and the CCS as resulting in an 11.8 per cent decline in the cost of child care in September 2018: 'The fall in child care is due to the introduction of the CCS from 2 July 2018, which replaced the Child Care Rebate and Child Care Benefit' (ABS 6401.0, September 2018, p. 3).

The ABS CPI data suggests that child care prices have been adjusted continuously since June 2018, rather than there being a large jump at the beginning of the new calendar year. Over the period September 2018 to September 2019 the ABS Child Care CPI has increased by 7.0 per cent and the overall CPI increasing by 1.7 per cent. By March 2020 almost three-quarters (72.6 per cent) of the reduction in the child care CPI due to the Package had been lost.

Figure 46 shows the child care CPI (real child care costs) and child care CPI relative to male and female full-time adult ordinary time average earnings. This measure is clearly linked to affordability because the large majority of those using child care and paying child care fees have at least one parent in paid employment.

Figure 46: ABS Child Care CPI relative to male and female full-time adult ordinary time average earnings, March 1982 to December 2019

fig046.png

Notes: MFTAOTE - Male Full-time Adult Ordinary Time Earnings. FFTAOTE - Female Full-time Adult Ordinary Time Earnings.

Source: ABS (various years). 'Consumer Price Index, Australia', ABS Catalogue No. 6401.0, ABS, Canberra. ABS (various years). 'Average Weekly Earnings Australia', ABS Catalogue No. 6302.0. ABS, Canberra.

The real price index for child care was 152.3 in March 2020 compared with 162.4 in June 2018, just prior to the introduction of the Package and 142.6 in September 2018, just after it was introduced. While real net child care costs have increased substantially since 1982, relative to earnings they are no higher in March 2020 than they were in March 1982.

This is open to several interpretations. One is that the very large increases in government child care assistance over the period have had no impact on the actual proportion of earnings that parents need to pay for child care. Alternatively, it may be argued that the government assistance has largely been absorbed by quality improvements, including, for example, improved staff to child ratios and more qualified staff.

In addition, wages of child care workers have for many years been increasing at a faster rate than CPI. The ABS Survey of Employee Earnings and Hours conducted every 2 years provides data on earnings and hours for detailed occupational classifications. There are some challenges resulting from changes in occupational classifications with the shift from the Australian Standard Classification of Occupations (ASCO) to the Australian and New Zealand Standard Classification of Occupations (ANZSCO) in 2006. Over the period from 2006-18 the average week total cash earnings of full-time non-managerial adult employee child care workers increased by 45.3 per cent and average hourly total cash earnings increased by 47.4 per cent.79 The increase in the wages of child care workers is substantially more than the 31.5 per cent increase in CPI over this period.80 Because wages are a substantial proportion of the costs of providing child care (wages in 2018-19 were around 60 per cent of child care revenue and about two-thirds of costs) (Richardson, 2019) and because the ability to find costs savings in other areas is limited, it means that it is almost inevitable that child care costs will increase at a faster rate than CPI.

4.3.5 Child care costs - summary

The average hourly fees being charged by child care centres increased in the 12 months following the introduction of the Child Care Package, and for Centre Based Day Care and Outside School Hours Care, the change in the 12 months following the changes to the child care system were very similar to the increases in the 12 months prior to the changes to the child care system. While there was an apparent very large increase in the hourly fees charged by for-profit Family Day Care providers, this reflects a change in the charging practices of these services from charging per session to charging per hour of care used, with an increase in the hourly fee charged and a reduction in the number of hours paid for. When this is taken into account, there appears to be little change in the fees being paid by families using for-profit Family Day Care services. For In Home Care where the program was substantially changed there has been a very large increase of 62.7 per cent in the hourly fee being charged in the 12 months following the child care changes.

The Australian Bureau of Statistics CPI data shows child care prices have been adjusted continuously since June 2018, child care CPI has increased by 7.0 per cent and the overall CPI by 1.7 per cent. By March 2020 almost three-quarters of the reduction in the child care CPI due to the Package had been lost. Child care costs as a proportion of average earnings are no higher now than they were in 1982.

4.4 Parental perceptions of affordability

This section reports data on parental perceptions of the affordability of child care using the DESE/ORIMA cross-sectional surveys of parents.81 As detailed earlier, there have been 4 waves of the DESE/ORIMA parents' survey: the first in June 2018 just before the changes to the child care system, which provides a baseline, and the other 3 in November 2018, June 2019 and November 2019, after the introduction of the Package.

This section draws on a number of questions in these surveys that provide an insight into perceptions of affordability. The initial focus is on parents' level of agreement or disagreement with the statement 'The cost of child care is affordable' - which was asked in all waves of the survey.

4.4.1 Parental perceptions of affordability

Parental perspectives on the affordability of child care are diverse, although on balance negative. In November 2019, 22.5 per cent of parents with a reference child aged under 5 years 'strongly disagreed' with the statement that the cost of child care was affordable, with a further 32.2 per cent 'disagreeing'. In contrast, only 24.6 per cent of these parents 'agreed' with the statement, and just 3.8 per cent 'strongly agreed' (Figure 47). Noticeable in the distribution is the degree of polarisation with just 16.8 per cent expressing a neutral position - that of 'neither agreeing nor disagreeing'. This pattern is also seen for parents with an identified reference child aged 5-13 years, although they were more likely to agree or strongly agree that child care was affordable than those with a younger reference child. Of parents with a reference child aged 5-13 years, 15.3 per cent 'strongly disagreed' and 25.6 per cent 'disagreed' with the statement that child care was affordable, 20.2 per cent stated that they 'neither agree nor disagree', 32.4 per cent 'agreed', and 6.5 per cent 'agreed strongly'.

On balance:

  • Parents with a younger child (aged 0-4 years) were more likely to disagree that child care was affordable - with 54.7 per cent disagreeing compared with 28.4 per cent agreeing.
  • Perspectives of parents with a youngest child using care aged 5 years and over were almost equally balanced, with 38.9 per cent agreeing it was affordable, and 40.9 per cent disagreeing. However, those expressing disagreement were twice as likely to report their disagreement as 'strong disagreement' compared to those agreeing who reported this as 'strong agreement'.

Figure 47: Parents' agreement that child care is affordable, distribution, November 2019

fig047-lines.png

Notes: Parents with a reference child who is in identifiable formal child care. Error bars on the chart show the 95 per cent confidence interval.

Source: DESE/ORIMA Parent Survey, November 2019

There was some increase in the balance of parents who agreed that child care is affordable between the June 2018 survey, conducted just before the changes took effect, and November 2019. Figure 48 shows the mean score of disagreement/agreement with the statement that child care is affordable with a value of -2 for strongly disagree, -1 for disagree, 0 for neither agree nor disagree, 1 for agree and 2 for strongly agree.

For parents with a reference child aged under 5 years there is a clear and statistically significant increase in the mean score of agreement between June 2018 and the subsequent surveys, although the average remains below zero (the neutral score of neither agreeing nor disagreeing) and there is a slight downward trend from November 2018 to November 2019, although this is not statistically significant. A similar pattern is shown by the data in responses by parents with an older reference child, and while the mean rating is below the neutral zero in all time periods, the extent is much less than that for those parents with a younger child.

Figure 48: Parents' agreement that child care is affordable, by child age group, mean rating, June 2018 to November 2019

fig048.png

Notes: Parents with a reference child who is in identifiable formal child care. Error bars on the chart show the 95 per cent confidence interval. Responses scored: 'Strongly agree': +2; 'Agree': +1; 'Neither agree nor disagree': 0; 'Disagree': -1; 'Strongly disagree': -2.

Source: DESE/ORIMA Parent Survey, June 2018 to November 2019.

The November 2019 survey data suggests that the balance of parents' agreement on the affordability of child care statement is most negative for those with a reference child under 2 years of age (-0.51), followed by a reference child aged 2-4 years.

By type of care it is clear, see Figure 49, that parents who have a child in Centre Based Day Care have the lowest level of agreement that child care is affordable, with a statistically significant lower agreement than those in either Family Day Care and Outside of School Hours Care, and a statistically significant mean rating below zero indicating a tendency to disagreement. There are no statistically significant differences among other types of care on affordability, and no statistically significant difference from zero, meaning neither agree nor disagree.

Figure 49: Parents' agreement that child care is affordable, by type of care, mean rating, June and November 2019 pooled sample

fig049.png

Notes: The June and November 2019 surveys have been pooled in order to reduce the sampling error. Parents with a reference child who is in identifiable formal child care. Error bars on the chart show the 95 per cent confidence interval. Responses scored: 'Strongly agree': +2; 'Agree': +1; 'Neither agree nor disagree': 0; 'Disagree': -1; 'Strongly disagree': -2.

Source: DESE/ORIMA Parent Survey, June 2018 to November 2019

Figure 50 presents the mean scores of agreement on the affordability of child care by family labour force type for June 2018 and November 2019. Considering, first, the November 2019 data, the highest negative average rating, -0.58, was recorded for couple families with both members employed full-time, with this being significantly different to all couple families, other than those with nil employment and all groups of single parents. None of the other differences, either between the different groups of single parents, or within couples, were significant at the 95 per cent confidence level.

With respect to changes over time, all groups, except for couples with no recorded employment, had higher levels of agreement with the statement that child care was affordable in November 2019 than in June 2018. For 4 of these groups the changes were statistically significant. These were single parents with part-time employment, single parents with no employment and couples with one employed full-time and one part-time employed, and those with just one member employed full-time.

Figure 50: Parents' agreement that child care is affordable, by parents' employment status, mean score, June 2018 and November 2019

fig050.png

Notes: Parents with a reference child who is in identifiable formal child care. Responses scored: 'Strongly agree': +2; 'Agree': +1; 'Neither agree nor disagree': 0; 'Disagree': -1; 'Strongly disagree': -2. Refer to Figure 10 for family labour force classification. Error bars on the chart show the 95 per cent confidence interval.

Source: DESE/ORIMA Survey June 2018 and November 2019

As noted in the introduction, and considered later in this chapter, the introduction of the Child Care Package was expected to have a range of diverse impacts on the affordability of child care, dependent on family income. The changes to the system were expected to reduce the level of subsidy provided to higher income parents and, all else being equal, thus to reduce affordability. For middle income parents the changes were expected to increase the level of subsidy, and for lower income parents, to increase the level of subsidy for those who met the new activity test.

Figure 51 shows the mean score of the affordability question by gross family income using the June 2018 and November 2019 data. Between June 2019 and November 2019 there was, on average, a perception of an improvement in the affordability of child care for those income groups below an income of $170,000 per annum. Specifically, for all categories of families the overall rating given to affordability was negative:

  • The 6.6 per cent of families82 with a reported income of less than $30,000 per annum reported an improvement of 0.13 of a response category. This was not statistically significant.
  • A large and statistically significant 0.40 of a response category gain was reported by the 22.5 per cent of families with reported gross incomes of $30,000 to $65,000.
  • A lesser, but still marked and statistically significant, gain of 0.24 of a response category was reported by those with incomes of $65,000 to $125,000 who accounted for 54.9 per cent of families.
  • A small and statistically insignificant increase of one tenth of a response category was reported by the 11.2 per cent of families with incomes of $125,000 to $170,000 per annum.
  • In contrast, the other 3 income groups which account for just 5 per cent of the population of parents in the survey, reported a worsening of their perception of the affordability of child care, with this being around 0.35 of a response category for the 2 higher income ranges. None of these changes were statistically significant.

Figure 51: Parents' agreement that child care is affordable, by gross family income, mean score, June 2018 and November 2019

fig051.png

Notes: Parents with a reference child who is in identifiable formal child care. Responses scored: 'Strongly agree': +2; 'Agree': +1; 'Neither agree nor disagree': 0; 'Disagree': -1; 'Strongly disagree': -2. Error bars on the chart show the 95 per cent confidence interval.

Source: DESE/ORIMA Parent Survey, June 2018 and November 2019

While this suggests that, on average, families in the income classifications up to $170,000 were more likely to report that child care was affordable (or in fact be less likely to report it was not affordable) in November 2019 than they did in June 2018, it is emphasised that this is, however, an average for these groups and not the experience of all families within the income classification.83 The distribution of outcomes is considered further below.

4.4.2 Parents' assessment of financial impact of the Package and value for money

When asked in the June 2019 Parent Survey specifically about whether they were financially better off under the CCS compared to the old system,84 almost half (46.1 per cent) of those parents with a child identified as being in care neither agreed nor disagreed, and slightly more agreed that they were better off (5.5 per cent strongly agreed and 25.0 per cent agreed) than disagreed (14.0 per cent disagreed and 9.5 per cent strongly disagreed). Consistent with the pattern of changes in self-assessed affordability by income group discussed above, those in lower income households, as shown in Figure 52, were more likely to agree that they were better off under the CCS compared to those from higher income households.

Views on the impact of the new subsidy are dispersed within each of the income bands, although the balance varies considerably. In the lowest income range, up to $30,000, the number of positive responses, 34.3 per cent, significantly outweighs the 12.5 per cent negative answers. This balance, although diminishing, continues up to the $65,000 to $125,000 bracket, where while 33.3 per cent still express agreement that they are better off, the proportion expressing disagreement increased to 19.2 per cent. These proportions are almost reversed in the $125,000-$170,000 grouping, with just 20.5 per cent expressing agreement, and 34.1 per cent disagreement. This pattern continues until, in the very high income group, that is families with an income of over $340,000 per year, 86.7 per cent report disagreement and just 2.0 per cent agreement.

Figure 52: Parents' agreement 'I am better off under the new CCS than under the old CCB/CCR', by gross family income, November 2019

fig052-lines.png

Notes: Parents with a reference child who is in identifiable formal child care. Population restricted to those who has used paid child care prior to 2 July 2018.

Source: DESE/ORIMA Parent Survey, June 2018 and November 2019

Overall, single parents were more positive about being better off under the new arrangements, with 36.3 per cent agreeing that they were, as opposed to 17.2 per cent disagreeing. Couples were more evenly divided, with 29.3 per cent agreeing, and 25.0 per cent disagreeing.

A further question that provides some insight into the wider question of affordability was asked in the last 3 waves of the survey. This was whether parents considered the child care that they were using provided good value for money. As this question was not asked prior to the introduction of the Package, it is not possible to investigate whether the new arrangements have impacted this aspect. While, as shown in Figure 53, there was a slight decline in the mean score given by parents who were using child care to this question over the 3 surveys for which information is available, none of the differences between the survey waves were statistically significant. The level of the mean score indicates a level of agreement with the statement well above neutral, and tending towards agreement.

Figure 53: Parents' satisfaction with child care, providing good value for money, November 2018 to November 2019

fig053.png

Notes: Parents with a reference child who is in identifiable formal child care, refers to satisfaction of the reference care of the reference child. Responses scored: 'Strongly agree': +2; 'Agree': +1; 'Neither agree nor disagree': 0; 'Disagree': -1; 'Strongly disagree': -2. Error bars on the chart show the 95 per cent confidence interval.

Source: DESE/ORIMA Parent Survey November 2018 to November 2019

Child care costs as a barrier

In June 2019, those parents who did not use child care were asked to rate their agreement with statements relating to possible reasons for their not using child care. One of these was 'I did not use paid child care since July 2018 because it was difficult to meet the cost of child care'. Overall, 62.2 per cent of those not using child care who gave a response to this question agreed that one of the reasons they were not using child care was that it was difficult to meet the cost of care. Another 15.2 per cent disagreed with the statement, and 22.5 per cent said they neither agreed nor disagreed.85 Some caution is required in interpreting these results, as many of the respondents gave multiple reasons, and it is not possible to identify from the survey the extent to which this can be seen as a barrier or just one of a number of factors that may limit their use of child care. More detailed analysis of the role of child care as a barrier to employment is undertaken in Chapter 8.

4.4.3 Parental perceptions of affordability - summary

On balance, parents have viewed affordability negatively, with this being more marked among those with younger children. While it is clear that many consider that they have benefited from the Package, others perceive a negative impact. Overall, the data collected from parents points again, on balance, to a positive outcome, with this being seen in terms of trends in the proportion of parents who consider child care is affordable; and in parents' perception of whether the introduction of the Child Care Package has resulted in them being better off. The data points to more positive outcomes for single parents, relative to couples, and for lower and middle income households, relative to those on higher incomes. For this latter group, the evidence points to declining affordability.

4.5 Modelled impact of changes to the child care system on affordability for families

The following sections report on the results of the microsimulation modelling of how the Child Care Package (CCS and ACCS) has impacted the amount of child care benefits received by families, relative to what would have been received under the former funding arrangements (CCB including Grandparent and Special, Child Care Rebate and JETCCFA) and the impact this had on net child care costs, and net child costs as a proportion of income, which are the key measures of affordability.

The modelling of affordability was undertaken on a financial year basis, given that income is required to be reconciled at the end of the financial year86 and that some of the key parameters of the CCB/CCR and CCS/ACCS systems are based on use of child care and/or amount of subsidy received over the full financial year. Additionally, the use of whole year data provides a better estimate of actual child care usage by a family.

4.5.1 Overview of microsimulation methodology

Microsimulation models allow the amount of government benefits received by individual families and households and the amount of tax paid to be modelled and for the impacts of changes to the rules of the government benefit and taxation system on the amounts of benefits received or paid by individual households to be calculated. Microsimulation models are based on administrative or survey data that represents the underlying population of interest (termed 'the base file') and allow population level results to be produced, as well as results for different population subgroups, by income or other characteristics.

Choice of base file

As described in Chapter 1 and Section 4.1.2, this evaluation uses microsimulation models that are based on 2 sources of population base files. The first source is the Department of Education, Skills and Employment administrative data from the child care system. The second base file is the Australian Bureau of Statistics Survey of Income and Housing. For the analysis of the child care system administrative database file a purpose built microsimulation model of the CCB/CCR system and the CCS/ACCS has been built. This model incorporates all of the key components of the child care payment system. The analysis of the Survey of Income and Housing population base file was undertaken using the ANU Centre for Social Research and Methods microsimulation model PolicyMod.

  • There are 2 options of base file for the administrative data: the 2017-18 (old world base file); and 2018-19 (new world base file). The analysis of affordability presented here has been undertaken using the 2018-19 base file. The reasons for this choice are:
    • The 2017-18 administrative database file does not include the detailed activity data required in order to model the amount of CCS that families would have been eligible for
    • Analysis of the files suggests there are significant limitations in the reporting of family income, with many of the estimates relating to previous year information.87
  • The 2018-19 administrative data allows, in principle, estimates of the impact of the changes on all families who were in the child care system in 2018-19. It does not include families who left the child care system between 2017-18 and 2018-19 due to the changes to the activity test88 and high income families who left the child care system due to the greater level of means testing of the CCS.89
  • In order to test the robustness of the results to the choice of the 2018-19 base file, the impact of the Child Care Package has also been modelled using the 2017-18 base file, notwithstanding these known limitations. While there are differences in the modelled impact of the Child Care Package on affordability as modelled on the 2017-18 population base file relative to the 2018-19 population base file, the overall impact and the impacts according to income level are similar and the evaluation findings are robust to the choice of year population base file.
Use of reconciled income

The amount of child care payments made to families each fortnight is based on their estimated adjusted taxable income for the current financial year that they have provided to Centrelink. At the end of the financial year, once their taxable income is known and any adjustments made to arrive at their adjusted taxable income, then their actual child care payment entitlement for the year is assessed and any adjustment made, which can include an additional payment being made if they have received less than they are entitled to or a debt that must be repaid. In order to reduce the risk of families incurring debts and to limit the size of any child care payment debts that are incurred, under the CCS policy 5 per cent of their benefit is withheld and paid after the annual reconciliation process.

Because the process of submitting and assessing tax returns can take some time, reconciled income is available for about three-quarters of families. We used reconciled income when available and if not available the best available unreconciled income variable is used in the modelling.

The modelling task

As indicated in the introduction, the modelling task is that of a first round static comparison of the impact of the different subsidy arrangements that existed under the former CCB/CCR structure and that which applies under the Package. As such the modelling:

  • does not take account of any changes in labour force participation and child care use as a result of the Package
  • does not take account of any changes in child care costs.

The rationale for this approach is that the focus of the analysis is on the impact of the funding arrangements and that attempting to capture any of the dynamics associated with the above 2 effects is problematic. As explored in Chapter 8, not only are net changes in labour very small, but there are quite diverse changes, with some families increasing their reported level of participation and others decreasing. Attempting to ascribe these experiences to the base file brings with it a large risk of the results being as much a reflection of the adjustment process as the actual changes in the subsidy arrangements. Similarly, as seen in Chapter 6, not only does the immediate transition analysis not point to any major shift in participation but also there is a strong child age gradient to child care usage that makes the measurement of changes in usage in a longitudinal sense difficult to ascertain. Similarly, any attempt to take account of changing child care fees requires the construction of a counterfactual of how fees would have changed in the absence of the introduction of the Package. As discussed in Section 4.3, there is no clear pattern of change in fees associated with the Package, rather a diverse set of changes have been recorded across sectors, locations and types of providers.

Benchmarking expenditure

An important test of the performance of the modelling of the child care payments is to compare the total modelled expenditure with the actual expenditure reported on the child care administrative data file and with total expenditure as reported in the Portfolio Budget Statements.

The total modelled expenditure using reconciled income data is $7,682 million, which is 99.4 per cent of estimated actual expenditure of $7,725 million reported in the Departmental Portfolio Budget Statement. The expenditure on CCS/ACCS on the administrative data file, which reflects the actual pre-reconciliation entitlement, is $7,731 million (Table 36).

Table 36: Estimated actual and modelled expenditure on the CCS, 2018-19
Expenditure estimate source2018-19 expenditure estimate
2018-19 Actual expenditure from administrative data file a$7,731 million
2018-19 Modelled expenditure (CCS/ACCS) from administrative data file, reconciled income a$7,682 million
2018-19 Estimated actual expenditure b$7,725 million

Sources: a DESE/Services Australia child care and payment system administrative data; bPortfolio Budget Statements 2019-20 Education and Training Portfolio. Commonwealth of Australia, Canberra.

Figure 54 reports the actual and modelled total amount of CCS received by each income vigintile. There are no systematic differences between actual and modelled amounts of benefits received by income vigintile suggesting that at an aggregate level the modelled amounts of CCS are not substantially upward or downward biased for any of the income groups.

Figure 54: Actual and modelled expenditure on the CCS, by income vigintile, 2018-19

fig054.png

Notes: Modelled expenditure is based on the unreconciled income as reported to Centrelink. See Table 39 for the income ranges that apply to each income vigintile.

Source: Evaluation modelling using 2018-19 administrative database file

Figure 55: Families, distribution of absolute difference between modelled and actual annual CCS, 2018-19

fig055.png

Notes: Modelled CSS is based on the unreconciled income as reported to Centrelink.

Source: Evaluation modelling using 2018-19 administrative database file

The absolute difference between modelled and actual annual CCS is shown in Figure 55. It is apparent that for the majority of families, the difference in dollar terms is very small with 66.9 per cent within $10 and 73.7 per cent within $20. Examination of the distribution of the absolute percentage difference between modelled and actual CCS shows that for 70.7 per cent of families the difference is zero or very close to zero, 90.2 per cent of modelled CCS is within 2 per cent of actual CCS and 95.3 per cent is within 5 per cent (Figure 56).

Figure 56: Families, distribution of percentage difference between modelled and actual annual CCS, 2018-19

fig056.png

Notes: Modelled CCS is based on the unreconciled income as reported to Centrelink.

Source: Evaluation modelling using 2018-19 administrative database file

4.5.2 How the changes impact families

Before considering the detailed modelling results, it is useful to examine how the patterns of differences between the subsidy outcomes under the old CCB/CCR and the new CCS/ACCS systems relate to changes in family circumstances. This is considered below through a number of cameos that have been selected to demonstrate some of the different relative outcomes that can be experienced.

Cameo examples

This section uses some cameo family examples to illustrate the impact of the Child Care Package on the amount of child care benefits received as the number of hours of care used varies, the family income increases and the hourly fee paid increases. All cameos are for Centre Based Day Care and assume hours per week are indicative of annual day care use.

Cameo families for hours of care used

Cameo 1

A single parent Sue who has 2 children aged under 5 years using Centre Based Day Care. Sue is not working and has no recognised activity. She receives Parenting Payment Single and has an income of $35,600 per annum.

Cameo 2

Priya and Deepak have one child under 5 years using Centre Based Day Care. Their family income is $140,000 per annum. Both Priya and Deepak are working full-time (activity hours 80 per fortnight).

Cameo 3

Marianne and Nandoor have 2 children under 5 years using Centre Based Day Care. Marianne works full-time and Nandoor works part-time (activity hours of 40 hours per fortnight). They have a family income of $110,000 per annum.

Cameo 4

Mohammed and Sofia are a couple with 2 children using Centre Based Day Care. Mohammed is working full-time and Sofia works part-time (activity hours 40 hours per fortnight). Their family income is $380,000 per annum.

For each scenario the difference in benefits is modelled for hours of care over the range of 1 to 45 hours per week (per child). For reasons of simplicity, it is assumed that in families with multiple children in child care, the pattern and numbers of hours of care used by each child is the same. The child care fee paid is $10 per hour.

Figure 57 shows the impact of the Child Care Package on the amount of benefit received by each cameo family as the hours of care paid for increases. It is clear that the relationship between the number of hours of care paid for and the impact of the child care changes on the amount of benefits received is complex and depends on family income and hours of approved activity.

Specifically, the cameos show:

  • For the single parent with a low income from income support (Cameo 1), they obtain a gain under CCS that increases in a linear fashion as hours of care increase. At 20 hours of care per week they are $52.40 per week better off.
  • For the couple with both working full-time and a little above average income (for child care using population) (Cameo 2), they obtain a gain under CCS that increases as number of hours of care increases and the gains increase at a faster rate from about 33 hours of care per week.
  • For the couple with one working full-time and one part-time and an average income (Cameo 3), they gain under CCS for all hours of care up to 42 hours per week. The gain reaches a maximum at 36 hours of care per week and then starts to decline and they are worse off under CCS for 42 hours or more of care per week.
  • For the very high income family with one parent working full-time and the other part-time, they are worse off under CCS compared to the previous CCB/CCR system and the amount they are worse off increases to reach a maximum of $298.38 per week at 30 hours of care per week and then they continue to be worse off by this amount up to 45 hours of care per week.

Figure 57: Modelled impact of Child Care Package on child care payments received, by hours of care paid for per week, cameo families 1 to 4, 2018-19

fig057.png

Notes: SP - Single parent; CPL - couple parent family; 'act hrs/wk' - activity hours per week; 1 under 5 - one child using care under 5 years of age; 2 under 5 - 2 children using care under 5 years of age.

Source: Derived using ANU developed microsimulation model of the child care system

Cameo families for family income

Cameo 5

A single parent Cecilia has 2 children aged under 5 years using Centre Based Day Care. Cecilia is a full-time student and has 100 hours of approved care per fortnight. She is using 15 hours of care per week and the child care fee is $10 per hour. This scenario represents income increasing as Cecilia moves into employment.

Cameo 6

Nathan and Amélie have one child under 5 years using Centre Based Day Care. They are both working full-time (activity hours 80 per fortnight). They use 40 hours of care per week and the child care fee is $10 per hour.

  • For the single parent whose income increases as she transitions from full-time education into work (Cameo 5), she receives more under CCS, and the additional amount increases to reach a maximum at an income of around $70,000 (Figure 58). As her income increases beyond this the amount of additional child care subsidy received under CCS declines, and for incomes from around $180,000 to around $250,000 she receives the same amount under the new and old system. As her income increases beyond $250,000, she is worse off under CCS.
  • For the couple both working full-time and using long hours of paid care (Cameo 6), they are better off under CCS for incomes up to about $280,000. The amount they are better off is similar for incomes up to about $250,000 and then it starts to fall very gradually. For incomes in excess of about $280,000 they are worse off under CCS, and the amount they are worse off increases until an income of about $360,000 is reached.

Figure 58: Modelled impact of Child Care Package on child care payments received, by family income, cameo families 5 and 6, 2018-19

fig058.png

Notes: SP -Single parent; CPL- couple parent family; 'act hrs/wk' - activity hours per week. 1 under 5 - one child using care under 5 years of age; 2 under 5 - 2 children using care under 5 years of age.

Source: Derived using ANU developed microsimulation model of the child care system

Cameo family for hourly fee

Cameo 7

Akamu and Ātaahua have one child under 5 using Centre Based Day Care. They both work full-time (activity hours 75 per fortnight) and have a family income of $110,000 per annum. They use 25 hours of care per week.

Cameo 7 illustrates how the net gain varies as the hourly fee varies. For the slightly above average income couple earning $110,000 per annum, their gain under CCS increases as the hourly fee increases to reach its maximum at the relevant hourly fee rate cap ($11.77) (Figure 59). The gain then decreases as the hourly fee increases, and for increases in the hourly fee in excess of $14 per hour, the gain under CCS remains constant.

Figure 59: Modelled impact of Child Care Package on child care payments received, by hourly fee paid, cameo family 7, 2018-19

fig059.png

Source: Derived using ANU developed microsimulation model of the child care system

4.5.3 Overall impact of the Child Care Package on affordability

This section presents the results of the microsimulation modelling of the impact of the child care changes on affordability using the 2018-19 administrative data population base file.

4.5.4 Comparison of impacts on affordability using the 2017-18 and 2018-19 administrative data

For the reasons outlined above there are likely to be differences in the estimates of the impacts of the changes on affordability between the modelling based on the 2017-18 and 2018-19 administrative data. This section reports on the overall estimates of the impact of the changes on affordability and how the impacts differ by income level using the 2 administrative database files.

Table 37 shows the actual fees charged, adjusted taxable income, modelled benefits, net cost of child care and net cost of child care as a percentage of income under the CCB/CCR (2017-18) and CCS (2018-19) policies. Across all families using the child care system, the modelling estimates that average child care subsidies would have been $6,305 under the CCB/CCR policy and $6,786 per annum under the CCS policy, which is an increase of $481 or 7.6 per cent higher under CCS than under the CCB/CCR policy. This results in the net cost of child care falling from $4,875 to $4,394 per annum and the net child care costs as a percentage of gross family income falling from 5.2 per cent to 4.1 per cent.

The mean increase in benefits and reduction in child costs is greater than the median change. Given that the amount of child care subsidies were increased very substantially, the median arguably provides a better indication of the impact of the Child Care Package on the typical family. Median benefits under the CCB/CCR system would have been $4,892 per annum and under the CCS system were slightly lower at $4,807. While median benefits fell slightly, the median net cost is lower under the CCS system than it would have been under the CCB/CCR system (as the median total cost of child care is lower than the mean), falling from $2,957 per annum to $2,507 per annum and as a percentage of gross family income from 3.0 per cent to 2.7 per cent. The fall in net costs of child care is greater at the 75th percentile (reduction of $741 per annum) than at the 25th percentile (reduction of $103 per annum). This distribution is considered in more detail below.

Table 37: Modelled per annum child care benefit, net cost and affordability for CCB/CCR and CCS policies, 2018-19
 Fees 
($pa)
Total child care benefits 
($ pa)
Net cost 
($ pa)
Net cost 
(% income)
Adjusted Taxable Income 
($ pa)
CCB/CCR policyCCS policyCCB/CCR policyCCS policyCCB/CCR policyCCS policy
Mean11,1806,3056,7864,8754,3945.24.1131,267
Median8,1554,8924,8072,9572,5073.02.7113,926
25th percentile2,7941,6141,3689738701.01.060,986
75th percentile16,6279,10410,1246,5885,8476.45.4170,939

Source: Evaluation modelling using 2018-19 administrative database file assuming constant 2018-19 child care costs and usage

It is estimated that total government expenditure on child care payments would have been $7,229 million under the old CCB/CCR system, thus the modelled increase in expenditure due to the CCS changes is $453 million per annum, which is an increase of 6.3 per cent.

Table 38: Estimated modelled expenditure on the CCS, 2018-19
ModelEstimated expenditure
2018-19 modelled expenditure (CCS/ACCS) from administrative data file, reconciled income$7,682 million
Estimate of what expenditure would have been had old system (CCB/CCR) applied in 2018-19$7,229 million
Estimated increase in expenditure due to CCS changes$453 million

Source: Evaluation modelling using 2018-19 administrative database file assuming constant 2018-19 child care costs and usage

Net impact across the population

In terms of the distribution of outcomes, the modelling suggests that 29.2 per cent of, or about 323,000, families receive a lower subsidy under the CCS than they would have received than under CCB/CCR, 8.6 per cent of, or about 95,000 families would have had the same net cost of child care under both policies,90 and 62.2 per cent of families, that is about 686,000 families, received more child care subsidy (Table 39).

For this majority of families who receive a higher subsidy under the Child Care Package, the mean net cost of child care falls from 6.7 to 4.5 per cent and the median net costs falls from 4.4 to 3.2 per cent. Those who received less subsidy have much higher incomes than those who receive more subsidy (mean income of $177,240 compared with $95,848 per annum). Those who were unaffected had a mean adjusted taxable income of $170,406 per annum.

For those who received less from CCS than they would have under CCB/CCR, the mean net cost of child care increases from 2.9 to 4.0 per cent of income and the median costs increase from 1.5 to 2.1 per cent (Table 39).

Table 39: Modelled per annum child care benefit, net cost and affordability for CCB/CCR and CCS policies, by whether changes had a negative impact, positive impact or the family was unaffected, 2018-19
 Annual Fees 
($ pa)
Total child care benefits 
($ pa)
Net cost 
($ pa)
Net cost 
(% income)
Adjusted Taxable Income 
($ pa)
CCB/CCR policyCCS 
policy
CCB/CCR policyCCS 
policy
CCB/CCR policyCCS 
policy
 Negative impact (322,672 families)
Mean8,7904,7473,4864,0435,3042.94.0177,240
Median5,1602,9741,7141,9412,7271.52.1161,844
 Unaffected (94,712 families)
Mean9,6075,2605,2564,3484,3512.82.8170,406
Median7,5004,1034,1003,1613,1612.02.0186,439
 Positive impact (686,305 families)
Mean12,8487,4368,8225,4124,0266.74.595,848
Median10,1766,3827,2293,472,2,4364.43.294,000

Source: Evaluation modelling using 2018-19 administrative database file assuming constant 2018-19 child care costs and usage

4.5.5 Impacts of child care policy change by income level

This section provides a more detailed analysis of the impact of the child care policy changes on the amount of child payment received and the costs of child care to families by income level. The analysis is presented for each 5 per cent of the gross family income distribution (income vigintiles).

Figure 60 shows the median modelled amounts of child care subsidies received under CCB/CCR (old policy settings) and under CCS (new policy settings) by income level. The figures also show the modelled subsidy as a percentage of fees paid (subsidy rate). The higher the subsidy rate the lower the proportion of fees that families pay.

The median benefits are higher under CCS than CCB/CCR up to and including the 14th income vigintile (a gross family income of up to $157,335 per annum). For the 15th income vigintile there is very little difference in the amount received under CCS as compared to CCB/CCR, and for the 16th income vigintile upwards the amount received under CCS is lower than that received under CCB/CCR, and the difference increases with income. For the 20th income vigintile (an income of $308,189 or more), the median amount of CCS received is zero compared to the $1,365 that would have been received under CCB/CCR. The median subsidy expressed as a percentage of fees is higher under CCS than under CCB/CCR for incomes up to income vigintile 14. The subsidy percentage under CCS is fairly stable for income vigintiles 1-4 (around 83 per cent) and then starts to fall as income increases. For the highest income vigintile the median subsidy percentage under CCB/CCR is 50 per cent compared to zero under CCS.

Figure 61 shows the mean child care subsidies and subsidy percentages modelled under CCS and CCB/CCR. The mean benefits under CCS are higher further up the income distribution than median benefits, with the mean CCS being higher up to and including income vigintile 15. There is virtually no difference between the amount of subsidy received under CCS and CCB/CCR for income vigintiles 16, 17 and 18. The mean amount of CCS received is lower than CCB/CCR for income vigintile 19 and is substantially lower for income vigintile 20 ($790 compared to $3,698).

The conclusions that are drawn from consideration of the mean child care subsidies are similar to those drawn from consideration of the median child care subsidies, although the median subsidy percentages under CCS are substantially higher than the median subsidy percentages under CCB/CCR up to the 14th income vigintile.

Figure 60: Median child care subsidies and subsidy rate under CCB/CCR policy and CCS policy, by family gross income vigintile, 2018-19

fig060.png

Notes: See Table 40 for the income ranges that apply to each income vigintile.

Source: Evaluation modelling using 2018-19 administrative database file assuming constant 2018-19 child care costs and usage

Figure 61: Mean child care subsidies and subsidy rate under CCB/CCR policy and CCS policy, by family gross income vigintile, 2018-19

fig061.png

Notes: See Table 40 for the income ranges that apply to each income vigintile.

Source: Evaluation modelling using 2018-19 administrative database file assuming constant 2018-19 child care costs and usage

Figure 62 shows the difference in median child care subsidies and difference in subsidy percentage under CCS compared to under CCB/CCR by income vigintile and Figure 63 shows the mean values in order to highlight the impact of the Child Care Package. The difference in both the median and mean values shows that there are gains in the amount of child care subsidies received under CCS well up the income distribution and it is only for the highest 2 income vigintiles that the amount of CCS received is lower than what would have been received under CCB/CCR. This is reflected in the subsidy rate with higher subsidies well up the income distribution. The mean subsidy rate is affected by outliers and so on balance our judgement is that the median provides the best indication.

Figure 62: Difference in median child care subsidies and child care subsidy percentage under CCS and CCB/CCR policies, by family gross income vigintile, 2018-19

fig062.png

Notes: See Table 40 for the income ranges that apply to each income vigintile.

Source: Evaluation modelling using 2018-19 administrative database file assuming constant 2018-19 child care costs and usage

Figure 63: Difference in mean child care subsidies and child care subsidy percentage under CCS and CCB/CCR policies, by family gross income vigintile, 2018-19

fig063.png

Notes: See Table 40 for the income ranges that apply to each income vigintile.

Source: Evaluation modelling using 2018-19 administrative database file assuming constant 2018-19 child care costs and usage

Figure 64 shows the ratio of mean and median modelled CCS compared to CCB/CCR by income vigintile. For the lowest income vigintile mean, benefits under CCS are 109.1 per cent of the benefit that would have been received under CCB/CCR. It reaches a maximum of 116.3 per cent for income vigintile 6 and then remains above 110 per cent up to and including income vigintile 14. The fall in benefits is very substantial for the highest income vigintile, with mean benefits under CCS being 21.4 per cent of the benefit that would have been received under the CCB/CCR policy settings.

Figure 64: Child care subsidies under CCS relative to child care subsidies under CCB/CCR, mean and median, by family gross income vigintile, 2018-19

fig064.png

Notes: See Table 40 for the income ranges that apply to each income vigintile.

Source: Evaluation modelling using 2018-19 administrative database file assuming constant 2018-19 child care costs and usage

Child care costs as a proportion of gross family income

Reflecting the analysis presented in Figure 60, median net child care costs as a proportion of family gross income are lower under the new CCS policy relative to CCB/CCR policy for all income vigintiles up to and including income vigintile 14 ($145,226-<$157,335), with effectively no difference for vigintile 15. They are then higher under the new policy settings than they would have been under the old policy settings from vigintile 16 ($170,948-<$187,648) (Figure 65). The difference in median costs is largest for the lowest income vigintile (1.8 percentage points lower), is 1.4 percentage points lower for vigintile 2, and declined to be 0.1 percentage points lower for vigintile 14. The highest income vigintile ($308,189 plus) median cost increased from 0.6 per cent of income to 1.0 per cent of income under the new policy settings.

Figure 65: Median net child care costs as a proportion of gross family income under CCB/CCR and CCS and change in net costs as a percentage of gross family income, by family gross income vigintile, 2018-19

fig065.png

Notes: See Table 40 for the income ranges that apply to each income vigintile.

Source: Evaluation modelling using 2018-19 administrative database file assuming constant 2018-19 child care costs and usage

This focus on the median impact does, however, not fully reflect the range of outcomes across families using child care. The distribution of outcomes is presented in Figure 66, with some of the key moments shown in Table 37. Figure 66 plots the distribution of net child care costs as a percentage of gross family income by income vigintile. In the figure, the bars show the p25 to p75 interquartile range, along with the median, while the whiskers represent p5 and p95. Several points can be taken from the figure. First, consistent with the biggest fall in child care costs, is for families that experience higher net child care costs under the CCB/CCR policy. For example, for the fourth income vigintile the median net cost falls from 3.8 per cent to 2.8 per cent under CCS and for families at the 75th percentile the net cost falls from 8.6 per cent to 6.0 per cent and for the 95th percentile it falls from 22.7 per cent to 14.5 per cent.

Figure 66: Distribution of net child care costs as a proportion of gross family income, CCB/CCR and CCS policies, by family gross income vigintile, 2018-19

fig066.png

Notes: Whiskers show the net child care costs at the 5th and 95th percentiles. See Table 40 for the income ranges that apply to each income vigintile.

Source: Evaluation modelling using 2018-19 administrative database file assuming constant 2018-19 child care costs and usage

The table can also be viewed on pages 116 of the PDF.

Table 40: Net child care costs as a percentage of gross family income by family gross income vigintile, CCB/CCR and CCS policies (median, 25th and 75th percentiles), 2018-19
Income vigintileCCB/CCR policiesCCS policyChange (CCS-CCB/CCR)
p(25)p(50)p(75)Meanp(25)p(50)p(75)Meanp(25)p(50)p(75)Mean
 Proportion of family income (%)Percentage point change
1 (<$21,000)2.68.118.214.02.36.314.010.9-0.3-1.8-4.2-3.1
2 ($21,000-<$31,399)1.75.913.410.41.54.59.77.4-0.2-1.4-3.7-3.0
3 ($31,399-<$41,218)1.44.710.78.41.33.57.55.7-0.1-1.2-3.2-2.7
4 ($41,218-<$50,809)1.23.88.66.61.02.86.04.6-0.2-1.0-2.6-2.0
5 ($50,809-<$61,000)1.23.57.65.81.02.55.13.9-0.2-1.0-2.5-1.9
6 ($61,000-<$72,000)1.13.26.85.10.82.24.43.3-0.3-1.0-2.4-1.8
7 ($72,000-<$83,000)1.03.06.34.60.92.24.43.2-0.1-0.8-1.9-1.4
8 ($83,000-<$93,681)1.03.05.94.30.92.34.43.2-0.1-0.7-1.5-1.1
9 ($93,681-<$103,683)1.13.05.84.20.92.44.53.2-0.2-0.6-1.3-1.0
10 ($103,686-$113,942)1.13.05.74.11.02.64.83.3-0.1-0.4-0.9-0.8
11($113,942-<$124,000)1.13.05.74.11.02.64.93.4-0.1-0.4-0.8-0.7
12 ($124,000-<$134,513)1.13.05.74.11.12.75.03.50.0-0.3-0.7-0.6
13 ($134,513-<$145,226)1.13.15.74.11.12.85.23.60.0-0.3-0.5-0.5
14 ($145,226-<$157,335)1.13.05.84.11.12.95.33.60.0-0.1-0.5-0.5
15 ($157,355-<$170,948)1.13.05.94.11.13.05.63.80.00.0-0.3-0.3
16 ($170,948-<$187,648)1.02.85.63.81.02.95.53.70.00.1-0.1-0.1
17 ($187,648-<$209,368)0.92.55.23.50.92.65.13.50.00.1-0.10.0
18 ($209,368-<$240,818)0.82.34.83.30.92.54.83.30.10.20.00.0
19 ($240,818-<$308,189)0.72.04.33.00.82.44.73.20.10.40.40.2
20 ($308,189 plus)0.10.62.01.50.21.03.32.20.10.41.30.7

Source: Evaluation modelling using 2018-19 administrative database file assuming constant 2018-19 child care costs and usage

The differences in the impact of the policy at different points in the net cost distribution (conditional on income) are explored further in Figure 67, which shows the cumulative density function of change in net child care costs (measured as a percentage of income) by income quintile. The cumulative density function shows the proportion of families in the income quintile whose net child care costs are reduced by at least the particular reduction in net costs. For example, for income quintile one (lowest income quintile) 12.8 per cent had a reduction in net costs of 8 percentage points or greater and 43.7 per cent had a reduction of 2 percentage points or greater.

Almost one-quarter (73.3 per cent) of the lowest income quintile had lower net child care costs as a result of the Child Care Package, and 8 in 10 of the second and third income quintiles had lower net costs (80.7 and 81.3 per cent respectively). For the fourth income quintile 62.3 per cent had lower costs and for the fifth quintile only a minority had lower net costs (12.8 per cent). The number of families with lower net child care costs is highest for the second and third income quintiles.

Figure 67: Cumulative density function of change in net child care costs as a proportion of income, by family gross income quintile, 2018-19

fig067.png

Source: Evaluation modelling using 2018-19 administrative database file assuming constant 2018-19 child care costs and usage

4.5.6 Impact of the Child Care Package by family characteristics

This section describes the impact of the change to the child care system on net costs by a range of family characteristics. The family characteristics considered are:

  • family type (single parent, couple parent)
  • total number of children using child care during 2018-19
  • age of youngest child using child care during 2018-19
  • family level approved activity level that is the activity used to assess eligibility for number of hours of subsidised care
  • income support and family payment status of the family (whether received full rate income support payment, part rate income support payment, FTB but not income support, or received neither FTB nor income support).91

Regression modelling, reported in Section 4.5.10, is used to further explore the relationship between a range of these characteristics and the impact of the Child Care Package on affordability. The regression modelling allows an assessment of the independent contribution of these and other family characteristics and the nature of child care used to changes in affordability.

Table 41 shows the median and mean net costs of child care as a percentage of gross family income and the median and median change in child care subsidies according to family type. For single parents, the median costs of child care as a percentage of income falls from 4.1 per cent under the old system to 3.1 per cent under the new system due to an increase in annual child care benefit received of $297 (Table 40). For couple parents the median costs also fell but by a smaller amount from 2.8 to 2.6 per cent of income due to an increase in benefit of $133 per annum. The mean reduction in child care costs is greater for single parents, falling from 8.1 to 5.7 per cent.

While there is a decrease in the median and mean net cost of child care under the new system for all groups of families, when grouped by the number of children in care, there is a distinct pattern of the fall in costs increasing as the number of children increases. For families with one child using child care over the year, the median net cost of child care as a percentage of gross family income falls from 2.2 per cent under the old system to 2.0 per cent under the new system. For families with 5 or more children, the net median costs fall from 12.3 to 9.2 per cent of gross family income, and for these families the median increase in child care benefits is $1,464 and the average increase is $3,291 per annum. While there are only 4,261 families with 5 or more children using child care in the year 2018-19, for these families the increase in subsidies and reduction in child care cost is substantial.

The biggest increase in subsidies and reduction in net child care costs are for families with a youngest child aged under 2 years using child care (median cost falls from 4.9 to 4.2 per cent of gross family income), followed by a youngest child aged 2 to under 5 years using child care. There is little change in net costs for families with a youngest child using child care aged 5 to less than 6 years and a very slight increase for families with a youngest child using care aged 6 years or older. The net costs for families with a youngest child using child care aged 6 years or older is quite low (0.7 per cent of gross family income under CCS).

In terms of family activity, for single parent families the biggest increase in subsidies is for those with full-time activity (median increase of $438 per annum and a mean increase of $1,161 per annum), followed by those with part-time activity (median increase $370 and mean increase of $876 per annum). Single parents with low levels of activity, while still showing a gain, have much lower increases in subsidies (median increase of $100 and a mean increase of $268 per annum). The reduction in median net costs as a percentage of gross income for these single parents is largest for those with part-time activity, where it falls from 4.5 to 3.3 per cent of income followed by full-time activity which falls from 4.2 to 3.2 per cent.

For couple parent families, there is less difference in the impact of the child care changes on the net costs of child care as a percentage of income, with small improvements for all activity groups. While median and average costs fall as a percentage of income for all activity groups, mean benefits fall only slightly by $11 per annum for couple families with one parent having low activity and the other full-time activity. The biggest increase in benefits is for couple families in which both parents have full-time activity.

For both single parent and couple parent families, the biggest reduction in child care costs as a percentage of income is for those receiving full-rate income support. For single parents receiving no FTB (high income), the median cost of child care increases very slightly, and for couple families not in receipt of FTB, there is a very slight fall in the net costs of child care from 2.7 to 2.6 per cent of income under the new child care system.

Table 41: Net child care costs as a percentage of gross family income and change in child care subsidies, CCB/CCR and CCS policies, by family characteristics, 2018-19
 Median subsidyMean subsidySubsidy changePopulation
CCB/CCR policyCCS policyCCB/CCR policyCCS policyMedianMean 
 Net costs as proportion of gross income (%)($)('000)
Family type       
Single parent4.13.18.15.7297841224.0
Couple parent2.82.64.43.7133392907.4
Number of children       
12.22.03.93.2154437619.8
23.53.25.74.6159454368.7
35.24.88.16.3286569117.4
46.86.112.58.83941,17621.2
5+12.39.222.313.71,4643,2914.3
Age of youngest child using child care    
Under 2 years4.94.27.05.5518814491.7
2 to less than 53.83.45.74.7300390298.2
5 to less than 61.41.32.92.31515380.4
6+0.60.71.71.4-59260.9
Family activity a       
Single parent       
Missing activity2.11.86.14.9-21825.9
Low activity4.43.78.06.910026822.9
Part-time activity4.53.38.35.737087693.8
Full-time activity4.23.28.35.54381,16181.3
Couple parent family       
Missing activity1.11.23.43.3--10393.9
Low activity2.42.25.95.412642.5
Some part-time2.82.55.14.11737575.7
1 low, 1 full-time1.91.83.63.224.2-1137.1
1 part-time, 1 full-time3.02.74.23.5224.5401395.7
2 full-time3.33.15.04.1185.5604302.6
Income support / family payment status    
Single parent       
Full-rate income support5.94.410.47.431878092.7
Part-rate Income Support4.93.57.95.24901,05944.3
FTB only2.62.05.74.026889776.5
no FTB1.81.94.44.1-11438.3
Couple family       
Both full-rate Income Support5.43.911.67.04841,57210.4
Part-rate Income Support4.33.48.66.137394826.4
FTB only3.62.75.94.25731,034174.0
no FTB2.72.63.93.548213653.5
Total3.02.75.24.11674811,131.4

Notes: a Low includes zero and less than 10 hours per week; part-time is 10 to under 34 hours per week, full-time is 35 hours or more a week.

Source: Evaluation modelling using 2018-19 administrative database file assuming constant 2018-19 child care costs and usage

Table 42 shows the proportion of families that are worse off, unaffected or better off under CCS than CCB/CCR by family characteristics. Single parents are substantially more likely to be better off under CCS than CCB/CCR (72.6 per cent) than are couple parent families (59.6 per cent). There is relatively little difference in the proportion of families that are worse off or better off according to the number of children using child care, with the exception of the small proportion of families with 5 or more children using child care, who are somewhat more likely to be better off than families with one to 4 children using child care.

In terms of the age of the youngest child using child care, those with a child under 2 years of age have the highest proportion better off (69.9 per cent) and the lowest proportion worse off (23.0 per cent) under CCS. This compares to those with a youngest child using child care who is 6 years or older of whom 47.2 per cent are better off under CCS and 41.5 per cent are worse off. Considering the pattern of better off and worse off by family activity status, single parents with full-time activity are the most likely to be better off under CCS (76.5 per cent) and couple parent families with missing activity information are the least likely to be better off under CCS (41.5 per cent). The higher the level of family activity, the higher the proportion of families that are better off and the lower the proportion of families that are worse off following the Child Care Package.

Table 42: Whether Child Care Package had a negative impact, positive impact or family unaffected, by family characteristics, 2018-19
 Worse offUnaffectedBetter off
 Distribution (%)
Family type   
Single parent22.94.572.6
Couple parent30.89.659.6
Number of children   
128.37.464.4
230.49.859.8
330.510.958.6
430.99.859.3
5+24.85.669.6
Age of youngest child using child care 
Under 2 years23.07.169.9
2 to less than 527.78.164.1
5 to less than 636.210.952.9
6+41.511.347.2
Family activity a   
Single parent   
Missing activity45.44.849.8
Low activity32.75.661.8
Part-time activity18.54.377.2
Full-time activity19.14.476.5
Couple parent family  
Missing activity55.23.241.5
Low activity45.24.450.4
Some part-time30.97.062.1
1 low, 1 full-time42.95.052.1
1 part-time, 1 full-time26.110.363.5
2 full-time29.611.459.0
Income support / family payment status
Single parent   
Full-rate Income Support24.34.970.8
Part-rate Income Support16.34.179.6
FTB only22.04.173.9
No FTB47.74.447.9
Couple family   
Both full-rate Income Support21.15.173.8
Part-rate Income Support23.84.072.3
FTB only17.32.180.6
No FTB33.012.454.6
Total29.28.662.2

Notes: a Low includes zero and less than 10 hours per week; part-time is 10 to under 34 hours per week, full-time is 35 hours or more a week.

Source: Evaluation modelling using 2018-19 administrative database file assuming constant 2018-19 child care costs and usage

4.5.7 Impact of the Child Care Package by type and amount of care used

An important dimension in which the impacts of the changes to the child care system on affordability may have varied is type of care used and whether the care is being provided by a for-profit or not-for-profit service.

Service type and sector

Figure 68 and Table 43 detail the impact of the child care changes on median affordability by the most common child care type used during the year.92 Again, it is noted here that, notwithstanding the earlier discussion on changes in the hourly fees charged by services, this modelling is based on the fees and patterns of child care use as recorded in 2018-19, and relate only to the relative subsidies under the CCS and the CCB/CCR.

For families for whom the most common type of child care used during the year is Centre Based Day Care, there were relatively small improvements in affordability for both for-profit and not-for-profit services. The median net cost for families whose main type of care was for-profit Centre Based Day Care fell from 4.5 to 4.0 per cent of gross family income as a result of the changes to the system, and for families using not-for-profit Centre Based Day Care the net costs are reduced from 4.1 to 3.6 per cent of income by the changes.

The changes to the child care system as modelled resulted in a substantial improvement in affordability for families whose main type of care was for-profit Family Day Care (5.7-4.3 per cent of gross family income), and a smaller improvement in affordability for families whose main type of care was not-for-profit Family Day Care (3.0-2.5 per cent of income).

There was a substantial fall in affordability for families whose main type of care was for-profit In Home Care (increased from 2.8 to 5.5 per cent of gross family income as a result of the changes).

Figure 68: Median net child care costs as a proportion of gross family income, CCB/CCR and CCS policies, by type of care used and whether for-profit or not-for-profit, 2018-19

fig068.png

Source: Evaluation modelling using 2018-19 administrative database file assuming constant 2018-19 child care costs and usage

Table 43: Median net child care costs as a percentage of gross family income, CCB/CCR and CCS policies, by type of care used and whether for-profit or not-for-profit, 2018-19
Type of care and whether for profit/not for profitCCB/CCR policyCCS policy
 Proportion of gross family income (%)
Centre Based Day Care  
For-profit4.54.0
Not-for-profit4.13.6
Family Day Care  
For-profit5.74.3
Not-for-profit3.02.5
Outside School Hours Care  
For-profit0.60.7
Not-for-profit0.60.7
In Home Care  
For-profit2.85.5
Not-for-profit6.36.3

Source: Evaluation modelling using 2018-19 administrative database file assuming constant 2018-19 child care costs and usage

Hours of care used

Figure 69 shows the median net costs of child care and subsidy rate under the CCB/CCR and CCS policies by per child number of hours of care paid (expressed in weekly terms). As expected, the net cost of child care as a percentage of income increases as the number of hours of care increases. The net costs of child care are lower under CCS than CCB/CCR for per child hours of care 6-10 hours per week or higher, and the percentage point reduction in the net costs of child care increases as the number of hours of care paid for increases. For families paying for 46-50 hours of care per week, the median net cost falls from 10.9 per cent under CCB/CCR to 7.6 per cent under CCS. Correspondingly, the subsidy rate is lower for all hours from 6-10 hours up under CCS and the difference increases for care paid for of 41-45 hours per week and higher.

Figure 69: Median net child care costs as a proportion of gross family income and median subsidy rate, CCB/CCR and CCS policies, by per child hours of care paid for, 2018-19

fig069.png

Source: Evaluation modelling using 2018-19 administrative database file assuming constant 2018-19 child care costs and usage

The proportion of families that the Child Care Package had a positive impact on increases as the per child hours of care paid for increases from 46.5 per cent for those paying for 1-5 hours per child per week to 92.1 per cent of families paying for 51 or more hours care per child per week (Table 44). There is little difference in the proportion of families positively impacted by the Child Care Package according to whether the most common type of care used by the family is for-profit or not-for-profit Centre Based Day Care. Families using Family Day Care as their most common form of care are somewhat more likely to be positively affected than families using other types of care, and the proportion of families positively affected is higher for those using for-profit Family Day Care (77.5 per cent) than those using not-for-profit Family Day Care (71.3 per cent) as their most common type of care. There is a big difference between for-profit and not-for-profit In Home care with over half of families using not-for-profit In Home Care experiencing a positive impact as compared to just 27.6 per cent of families using a for-profit service.

Table 44: Whether Child Care Package had a negative impact, positive impact or family unaffected, by characteristics of care used, 2018-19
 Negative impactUnaffectedPositive impact
 Distribution (%)
Average per child hours of care paid for (per week)
1-545.38.146.5
6-1029.710.160.2
11-1526.810.662.6
16-2025.110.264.7
21-2524.19.866.1
26-3020.08.171.9
31-3515.34.580.2
36-4010.52.586.9
41-459.51.589.0
46-508.11.390.5
51+7.60.492.1
Type of care and whether for-profit/not-for-profit
Centre Based Day Care   
For-profit24.87.467.8
Not-for-profit25.08.566.6
Family Day Care   
For-profit18.93.777.5
Not-for-profit22.36.471.3
Outside School Hours Care   
For-profit45.910.943.2
Not-for-profit41.713.345.0
In Home Care   
For-profit69.52.927.6
Not-for-profit40.03.756.3
Total29.28.662.2

Source: Evaluation modelling using 2018-19 administrative database file assuming constant 2018-19 child care costs and usage

4.5.8 Impact of the Child Care Package by geography

The impact of the Child Care Package differs between areas with different geographic characteristics. While there are differences in the median net costs of child care across states and territories, the impact of the child care changes on the median costs of child care are similar, ranging from a reduction of 0.3 per cent of income in Victoria and a reduction of 0.4 per cent in Queensland and Tasmania to no change in the Northern Territory (Table 45).

The reductions in median net child care costs are largest in geographic areas with the lowest socio-economic status (a reduction in median costs from 3.7 to 3.0 per cent of income) and then decrease as the level of socio-economic disadvantage of the areas decreases to be no change for the 9th decile and a fall of 0.3 per cent for the 10th decile (least socio-economically disadvantaged areas).

There are also relatively small differences in the impact of the child care changes between areas with different levels of the composite geographic remoteness/ population size measure, although it does appear affordability was slightly worsened in very remote areas, where it is estimated that the child care changes increased net child care costs by 0.3 per cent of gross family income.

Table 45: Net child care costs as a percentage of gross family income and change in child care subsidies, CCB/CCR and CCS policies, by geography, 2018-19
 MedianMeanSubsidy changeFamilies
CCB/CCR policyCCS policyCCB/CCR policyCCS policyMedianMean 
 Net costs as proportion of gross income (%)($)('000)
Urban and regional location     
Capital Cities3.02.85.34.3120427785.5
Urban 100k plus3.22.75.13.9283636147.7
Urban 50k-<100k3.22.65.03.831968848.1
Urban 20k-<50k3.22.75.13.932067351.5
Urban 10k-<20k2.92.54.73.724955124.3
Inner Regional2.62.24.53.522353941.5
Outer Regional2.42.14.13.317441126.3
Remote1.91.93.63.1452353.0
Very Remote2.12.43.73.5-193.3
State/territory       
New South Wales3.33.05.64.5155399372.8
Victoria3.12.85.54.3188584279.5
Queensland3.12.75.14.0215565252.2
South Australia2.01.83.83.012745074.6
Western Australia2.52.24.33.511035496.3
Tasmania2.42.03.82.925746220.0
Northern Territory2.82.84.54.0382619.5
Australian Capital Territory3.23.04.94.22739626.4
SEIFA       
13.73.07.25.138492092.9
23.22.65.84.330172477.1
33.22.75.44.130970294.7
43.12.65.13.928865395.7
53.12.75.24.0274677108.0
63.02.65.03.9237642120.6
73.02.74.93.9195569136.0
83.02.84.94.0119461124.2
92.62.64.53.92198145.0
102.52.84.54.2-0-326133.4
Total3.02.75.24.11674811,131.4

Source: Evaluation modelling using 2018-19 administrative database file assuming constant 2018-19 child care costs and usage

Table 46 shows the percentage of families whose net child care costs are higher under CCS (negative impact), unaffected by the shift to CCS or better off under CCS (positive impact).

The areas in which the highest proportion of families are better off under CCS are outer regional, inner regional and towns ranging from populations of 10,000 to less than 20,000 up to 100,000 (ranging from 66.6 per cent positive to 71.5 per cent positive). The areas with the lowest proportion of the population who experience a positive impact are very remote (46.2 per cent), remote (55.2 per cent) and capital cities (59.2 per cent). There are some differences across states/territories with the highest proportion of families positively affected in Tasmania (72.4 per cent) and the lowest in the Australian Capital Territory (52.3 per cent) and the Northern Territory (52.8 per cent). There is a clear area level socio-economic gradient, with the proportion of families positively impacted by the changes decreasing from 73.8 per cent for the most socio-economically disadvantaged areas to 40.2 per cent for the most socio-economically advantaged areas (Table 46).

Table 46: Distribution of whether Child Care Package had a negative impact, positive impact or family unaffected, by geography, 2018-19
 Negative impactUnaffectedPositive impact
 Distribution (%)
Urban and regional location 
Capital Cities32.18.859.2
Urban 100k plus22.88.868.4
Urban 50k-<100k20.68.071.5
Urban 20k-<50k21.37.471.4
Urban 10k-<20k23.28.268.6
Inner Regional23.07.469.6
Outer Regional25.97.566.6
Remote35.79.155.2
Very Remote45.68.246.2
State/territory   
New South Wales31.28.860.0
Victoria29.77.263.1
Queensland25.09.765.3
South Australia26.79.364.1
Western Australia32.18.159.8
Tasmania20.57.272.4
Northern Territory36.610.652.8
Australian Capital Territory38.19.652.3
SEIFA   
120.45.873.8
222.06.871.2
322.07.170.9
422.17.969.9
523.28.168.7
624.58.866.7
727.09.563.6
831.010.158.9
938.710.550.8
1050.89.140.2
Total29.28.662.2

Source: Evaluation modelling using 2018-19 administrative database file assuming constant 2018-19 child care costs and usage

4.5.9 Impact of the shift to ACCS

This section presents the modelled impacts of the Child Care Package on child care benefit received and net child care cost for families that received ACCS in 2018-19 under the new system (Table 47). The impact of the Child Care Package was to reduce the mean and median net child care cost for families that received ACCS for at least part of 2018-19. The reduction in the net costs of child care (as a percentage of income) is similar for those who received an ACCS payment compared to families that did not receive an ACCS payment in 2018-19.

Table 47 also shows the modelled impact of the Child Care Package for families that received SCCB, GCCB or JETCCFA in 2017-18 and were in the child care system in 2018-19. The reduction in child care costs was larger for these groups than for the entire group of families that received ACCS in 2018-19 and families that did not receive ACCS in 2018-19.

Table 47: Modelled per annum child care subsidies, net cost and affordability for CCB/CCR and CCS policies, by whether received ACCS in 2018-19 and whether received SCCB, GCCB or JETCCFA in 2017-18
 Fees ($)Total child care benefits ($)Net cost ($)Net cost (% income)Adjusted taxable income ($)
CCB/CCRCCSCCB/ CCRCCSCCB/ CCRCCS
 Does not receive ACCS (1,099,486 families)
Mean11,0676,1366,6124,9314,4545.14.1133,706
Median8,0534,7864,6983,0132,5583.02.7116,282
 Received ACCS in 2018-19 (31,869 families)
Mean15,10212,14912,7832,9532,3198.36.447,122
Median11,6129,6459,6371,3791,2153.73.332,624
 Received Special CCB in 2017-18 and in child care system in 2018-19 (18,202 families)
Mean16,68611,38712,6615,3004,02511.48.362,925
Median13,8319,45310,1793,5012,6107.25.643,846
 Received Grandparent CCB in 2017-18 and in child care system in 2018-19 (3,162 families)
Mean14,19212,58413,1261,6091,0665.63.934,397
Median10,5459,7239,4381151980.40.629,783
 Received JETCCFA in 2017-18 and in child care system in 2018-19 (8,037 families)
Mean15,80311,71013,0994,0932,70411.67.741,162
Median13,78310,42211,2512,8661,9867.85.535,418

Source: Evaluation modelling using 2018-19 administrative database file assuming constant 2018-19 child care costs and usage

4.5.10 Regression modelling of impacts of child care changes on affordability

In order to understand the extent to which the changes had an impact on different groups while holding constant income, hours of care used, type of care used and other family and geographic variables, a regression model is estimated. The dependent variable for the model is the change in net child care costs as a percentage of income due to the changes in the child care system. An OLS model is estimated and the explanatory variables included are gross family income (income vigintile), total hours of care paid for, number of children using child care, age of youngest child using child care, family activity status, care type used and whether it is for-profit or not-for-profit, socio-economic status of region in which family lives, state/territory of residence and urban and regional location.

The results are presented in Table 48. Given that the sample used to estimate the model includes the population of child care using families for 2018-19, the sample size is large and most variables are statistically significant, generally at the 99.9 per cent confidence level. The focus is therefore on whether there are economically significant differences in the impact of the various explanatory variables on the net child care costs as a percentage of gross family income.

The relationship between income vigintile and child care costs is clear and shows the biggest reductions in net child care costs at the bottom end of the income distribution and increases in child care costs at the top end of the income distribution. The predicted values using the regression model are entirely consistent with the unconditional impacts reported above. The conclusions about the relationship between income and net child care costs from the regression modelling are the same as the conclusions drawn from the unconditional analysis. There are only very small differences in change in net costs as a percentage of gross family income according to family activity status.

The finding that the gains under CCS increase with the number of children using care is confirmed by the regression modelling. The regression modelling shows relatively small differences in the change in net child care costs according to the age of youngest child using child care. The regression results for type of care used and whether the service is for-profit or not-for-profit are similar to the unconditional results (Figure 68), with substantial differences in the regression modelling only for for-profit Family Day Care and for-profit In Home Care where net costs to families are estimated to have increased by 2.5 and 4.3 per cent respectively.

Table 48: Factors associated with change in net costs of child care as a percentage of gross family income, OLS model
Coefficient aCoefficient aCoefficient a
Vigintiles of gross family income15 X single parent-0.59***FDC NFP-0.23***
1-2.34***16 X single parent-0.71***IHC FP4.30***
2-2.24***17 X single parent-0.98***IHC NFP-0.53
3-1.95***18 X single parent-0.95***OSHC FP0.36***
4-1.22***19 X single parent-1.11***OSHC NFP0.46***
5-1.15***20 X single parent-2.59***SEIFA 
6-1.08***Hours of care paid for (hrs/week)1-0.19***
7-0.76***1-52.49***2-0.09***
8-0.45***6-102.22***30.01
9-0.21***11-151.78***40.03*
10base16-201.31***5base
110.12***21-250.69***6-0.04***
120.25***26-30base7-0.05***
130.36***31-35-0.72***8-0.05***
140.47***36-40-1.45***9-0.04***
150.64***41-45-2.25***100.05***
160.83***46-50-2.70***State/territory 
170.97***51+-8.26***New South Walesomitted
181.03***Number of children using child careVictoria-0.13***
191.29***1omittedQueensland0.23***
201.23***2-1.01***South Australia-0.01
Single parent family0.51***3-1.88***Western Australia-0.11***
Vigintile of gross family income interacted with single parent indicator4-3.49***Tasmania0.07***
1 X single parent-1.19***5-7.47***Northern Territory0.44***
2 X single parent-0.76***Age of youngest child using child careAustralian Capital Territory-0.18***
3 X single parent-0.35***Under 2 yearsPopulation/remoteness
4 X single parent-0.66***2 to less than 50.25***Capital Citiesbase
5 X single parent-0.47***5 to less than 6-0.66***Urban 100k plus-0.06***
6 X single parent-0.32***6+-0.96***Urban 50k-<100k-0.05***
7 X single parent-0.12**Family activity statusUrban 20k-<50k0.05***
8 X single parent-0.061 Urban 10k-<20k0.00
9 X single parent-0.032-0.64***Inner Regional0.11***
10 X single parentbase3-0.67***Outer Regional0.22***
11 X single parent-0.24***Care type by whether for-profitRemote-0.02
12 X single parent-0.11CBDC FPbaseVery Remote0.37***
13 X single parent-0.30***CBDC NFP0.00Constant-0.70***
14 X single parent-0.45***FDC FP-2.52***   
Number of observations1,127,089      
r20.2321      

Notes: a The coefficient represents the percentage point difference associated with each category relative to the base case. 
*, **, *** indicate that the underlying coefficient is significant at the 90 per cent, 95 per cent and 99 per cent confidence levels respectively. See Table 40 for the income ranges that apply to each income vigintile.

Source: Evaluation modelling using 2018-19 administrative database file assuming constant 2018-19 child care costs and usage

There are only small differences in the net costs of care for the geographic variables once income (and other characteristics) are controlled for. This differs from the unconditional results and is because the geographic variation largely reflects differences in income (and other family level, type of care used characteristics) between geographic areas.

4.5.11 PolicyMod microsimulation model - Survey of Income and Housing base file

This section reports the results of the modelled impacts of the new Child Care Package on affordability using the ANU PolicyMod microsimulation model that uses as the population base file the 2017-18 Survey of Income and Housing.

As discussed in Section 4.1.2, the use of the ABS Survey of Income and Housing as a base file allows the impact of the changes to the child care system from July 2018 on household incomes to be estimated, and for household income to be adjusted to take into account differences in the costs of living between households of different sizes and demographic compositions. However, at the same time, it introduces some limitations. In particular, there is insufficient information on the survey to allow the activity test to be accurately modelled. This limitation arises as, while the survey provides data on hours of paid work, it does not include a measure of the various other forms of activity that count towards the CCS activity test.

The approach taken has been to use the administrative data on the application of the activity test to benchmark the modelling based on the Survey of Income and Housing (SIH). The benchmarking involves reweighting the survey data so that the 'correct' number of families have each level of approved hours. This benchmarking is necessary to avoid the modelling using the Survey of Income and Housing overestimating the positive impacts of the changes to the child care system on affordability and underestimating the negative impacts of the changes.

The modelling using the SIH is that, on average, child care subsidy payments are $261 per annum per family higher under the CCS policy than they would have been under the former CCB/CCR policy. This translates into an additional expenditure of just under $300 million in CCS subsidies as compared to what would have been received under the CCB/CCR policy settings. This compares to an estimate of an additional $455 million from the modelling using the administrative database file.

Figure 70 shows the mean change in the per annum amount of subsidy received under CCS as compared to CCB/CCR by income deciles. The income deciles in this figure are calculated using the distribution of equivalised disposable household income for families using child care. As discussed in Section 4.1.2, the use of equivalised income adjusts for differences in the cost of living for households of different sizes and demographic composition and this assists in making welfare comparisons. Figure 71 shows the mean change in the amount of subsidy received by income deciles calculated using the distribution of income of all households. A positive difference means that the families receive more under CCS than under CCB/CCR. Focusing on the pattern of impacts by income decile, calculated using the incomes of households using child care, the amount of subsidy received is higher under CCS than CCB/CCR up to and including income decile 9. Families in the highest income decile are modelled to experience a substantial reduction in the amount of benefits received due to the impact of the income test (Figure 70).

While there are some differences in the relative size of the difference in subsidy amount received between income deciles, when the deciles are calculated using income for all households the pattern of impacts remains essentially unchanged (Figure 71).

As discussed above, the main benefit of the microsimulation modelling using the SIH is that it is possible to model the impact of the Child Care Package on affordability as measured using the percentage change in disposable household income, rather than the cruder measure of the percentage of gross family income, which is the measure used for the microsimulation modelling based on the administrative data.

Figure 72 shows the median and mean change in effective disposable income under CCS compared to under CCB/CCR by equivalised disposable household income deciles (calculated using the income distribution for families using child care). The median change in income under CCS is 1.1 per cent for the lowest income decile and then is in the range 0.4-0.6 per cent higher under CCS for income deciles 2-6. For income deciles 7 and 8 there is a very small (0.1 per cent) median increase in income, no difference for decile 9 and a fall of 0.9 per cent for the highest income decile. The mean increase in income is generally larger than the median increase. For the lowest income decile, the mean change in household disposable income is 2.8 per cent and for income deciles 2 and 3 it is 0.7 and 0.6 per cent respectively. The increase in income (in percentage terms) then reduces to be 0.2 per cent for decile 9, and for decile 10 the fall in income is 1.1 per cent under CCS as compared to under CCB/CCR.

Figure 70: Mean difference in per annum child care subsidy received under CCS compared to CCB/CCR, by equivalised household disposable income (deciles based on income distribution of families using child care), 2018-19

fig070.png

Source: Evaluation modelling using Survey of Income and Housing, ANU PolicyMod

Figure 71: Mean difference in per annum amount of child care subsidy received under CCS compared to CCB/CCR, by equivalised household disposable income (deciles based on income distribution of all households), 2018-19

fig071.png

Source: Evaluation modelling using Survey of Income and Housing, ANU PolicyMod

Figure 72: Median and mean proportional effective change in disposable household income as a result of introduction of CSS, by equivalised household disposable income deciles (deciles based on income distribution of families using child care), 2018-19

fig072.png

Source: Evaluation modelling using Survey of Income and Housing, ANU PolicyMod

Figure 73 shows net costs as a percentage of gross household income by income quintiles, with the quintiles constructed only using data for families that use child care. This shows that costs as a proportion of gross income are highest for the lowest income quintile, lowest for the second income quintile and similar for quintiles 3-5. The reduction in the net cost of child care is greatest in percentage terms for the lowest income quintile and there are smaller reductions for income quintiles 2, 3 and 4. Income quintile 5 experiences an increase in child care cost as a result of the Package. These patterns are broadly consistent with the modelling of net child care costs as a percentage of gross family income using the DESE administrative data.

The final part of this section considers the impact of the Child Care Package on the net costs (out-of-pocket costs) of child care relative to disposable household income. This income measure includes private income and government benefits including child care and deducts personal income tax including deductions. Furthermore, because of the progressive nature of the personal income taxation system, the difference between disposable and gross household income increases with income level. For these reasons, disposable household income provides a more accurate measure of the economic resources available to the household than the gross parental income available from the DESE administrative data.

Across child care families, the net costs of child care as a percentage of disposable household income is estimated to be 4.6 per cent under CCB/CCR and slightly lower at 4.4 per cent under CCS (Figure 74). For the lowest income quintile, net child care costs are estimated to be 5.7 per cent of disposable household income under CCB/CCR, which falls to 4.3 per cent under CCS. There are reductions in the net costs of child care costs as a percentage of disposable household income for income quintiles 2, 3 and 4 but these are smaller than the percentage reduction for the lowest income quintile. For the highest income quintile, net costs of child care increase from 4.2 per cent of disposable household income under CCB/CCR to 4.9 per cent under CCS.

Figure 73: Net costs of child care as a percentage of gross household income, by income quintiles (child care families only), 2018-19

fig073.png

Notes: Income quintiles are based on child care using families only and use equivalised household income.

Source: Evaluation modelling using Survey of Income and Housing, ANU PolicyMod

Figure 74: Net costs of child care as a percentage of disposable household income, by income quintiles (child care families only), 2018-19

fig074.png

Notes: Income quintiles are based on child care using families only and use equivalised household income.

Source: Evaluation modelling using Survey of Income and Housing, ANU PolicyMod

4.5.12 Summary affordability

The modelling undertaken for the evaluation using the administrative data as the base file finds that the Child Care Package and the shift to the CCS has resulted in the net cost of child care being reduced from $4,875 under CCB/CCR to $4,364 per annum under CCS, and as a percentage of gross family income the Child Care Package is estimated to have reduced costs from 5.2 to 4.1 per cent. The median cost was reduced by the Child Care Package from $2,957 to $2,507 per annum, which translates into a reduction in cost from 3.0 to 2.7 per cent of gross family income. The fall in net costs of child care is greater for families that were facing higher costs under CCB/CCR than for families at the middle and lower end of the child care cost distribution.

Overall, almost two-thirds of families (62.2 per cent or about 686,000 families) had lower net costs under CCS, almost 1 in 10 families (8.6 per cent or about 95,000 families) had more or less the same net costs and 3-in-10 (29.2 per cent or about 323,000 families) had higher net costs under CCS than under CCB/CCR.

There has been a redistribution of subsidy from the top end of the income distribution (top 10 per cent of child care families). Families up to and including the 14th income vigintile (a gross family income of up to $157,335 per annum) have experienced a reduction in the median net costs of child care (measured as a percentage of gross family income). The reduction in median costs as a percentage of gross family income is largest for families in the lowest income vigintile, and then gradually becomes smaller up to the 15th income vigintile. Families in the 17th and 18th income vigintiles have a median change in net child care costs of zero, and families in the 19th and 20th income vigintiles (incomes in excess of $240,817 per annum) experienced substantial reductions in child care subsidies received and an increase in net costs.

Families with the following characteristics have relatively large reductions in net child care costs as a result of the Child Care Package:

  • single parent families
  • families with larger numbers of children, with the reduction in cost relatively increasing for families with 3 or more children using care
  • families with the youngest child using child care being under 5 years of age
  • families that use larger amounts of care
  • single parent families in which the parent receives a part or full-rate income support payment and couple parent families in which both parents receive a full-rate income support payment or at least one parent receives a part-rate income support payment.

There are similar reductions in median net child care costs as a percentage of gross family income for families whose most common type of care used was for-profit and not-for-profit Centre Based Day Care. There is a very substantial reduction in net costs for families using for-profit Family Day Care and a smaller reduction for families using not-for-profit Family Day Care. There is little change in net costs for families whose main type of care is Outside School Hours Care and a very substantial increase for families whose most common type of care used is for-profit In Home Care.

The median net child care costs, as a percentage of gross family income, is lower for all hours of care used except for families paying for one to 5 hours of care per child per week, who experienced a slight increase in median costs. The reduction in median child care costs as a percentage of income is much larger for families paying for long hours of care than for families paying for shorter hours of care.

There are reductions in the median cost of care for families that receive ACCS, and the reduction is similar to the reduction (in terms of the percentage of gross family income) for families that did not receive ACCS during 2018-19.

The regression modelling shows that the changes in net costs by income level are not explained by other factors. It also shows that much of the differences in the impact of the Child Care Package on net costs between families with different characteristics is due to differences in income, hours of care used and other factors, rather than the characteristics itself. The main exceptions are some substantial differences that remain for hours of care paid for, and type of care, with increases in for-profit In Home Care and a reduction for families using for-profit Family Day Care.

The conclusion about the impact of the Child Care Package on affordability drawn from the modelling using the Survey of Income and Housing data is in broad terms consistent with the conclusions drawn from the more detailed modelling undertaken using the administrative data.

4.6 Debt

This section considers 3 forms of debt. First, debt related to income reconciliation, which is a debt owed to the government. Second, debt related to overstating activity levels, which is a debt owed to the government. Third, debts incurred by families to services.

4.6.1 Reconciliation debts to the government: over- and under-stating income

To determine the amount of CCS paid during the year, families are required to provide an estimate of their annual income to Services Australia and to update this if their income changes during the course of the year. If income is under-reported during the course of the year, then the family is potentially paid more CCS than they are actually entitled to and incurs a debt at the end, when their income as reported to the ATO is used in reconciliation. Small over-payments of CCS do not result in an actual debt payable to the Commonwealth because, in most cases, the actual subsidy paid to providers is 95 per cent of the CCS and 5 per cent of parents' actual entitlement is withheld.93 After annual reconciliation, the amount withheld is either paid to families or used to offset any debt they may have to the Commonwealth (e.g. because an underestimation of annual income has resulted in the subsidy being paid at an incorrect rate). Conversely, if income is over-reported during the course of the year and the family is paid less CCS over the course of the year than they are entitled to, they receive a higher reconciliation payment at the end of the year.

The CCS administrative data contains data on reported income over the course of the year and reconciled income data. Table 49 shows the ratio of reconciled annual adjusted taxable income to average reported income over the course of the year by income group. This provides a measure of the extent to which there is any significant systematic over or under-reporting of income. For the child care population, as a whole, the ratio of the median reconciled income to reported income is 100.3 per cent and the mean is 101.8 per cent, which suggests that there is no systemic under- or over-reporting of income. There is, however, a significant proportion of families that substantially under or overestimate their income. At the 5th percentile reconciled income is 62.7 per cent of reported income and for the 95th percentile it is 145.4 per cent.

For most income groups, the median ratio of reconciled to reported income is close to 100 per cent. For income categories less than $240,839 (up to and including decile 9) the ratio varies from 97.5 per cent to 105.6 per cent. The implication of this is that if CCS was overpaid by more than 5 per cent then the family would be expected to have incurred a debt to the government. For the highest income decile (income in excess of $240,839), the median ratio of reconciled income to reported income is 110.9 per cent and hence the families at the median would have incurred child care debts to the government. For all income groups, the ratio of reconciled to reported income for the 95th percentile is substantial, ranging from 130.0 per cent to 170.0 per cent and thus would have incurred significant child care debts to the government.

Table 49: Ratio of reconciled income to reported income over the year, by income group, 2018-19
Gross Income decilesAt percentile point a:At meanNumber of families
p5p25p50p75p95
 Ratio of reconciled to reported income (%) (count)
<$31,43235.470.6100.0106.7150.892.475,586
$31434-$50,83849.180.097.4115.1170.0100.379,627
$50,839-$72,00056.784.598.5112.7154.3100.381,932
$72,001-$93,70362.886.497.5108.7145.099.282,528
$93,704-$113,96368.588.598.2107.6134.099.283,983
$113,964-$134,53474.290.699.0107.8131.1100.384,085
$134,534-$157,34978.893.1100.5108.7130.9102.181,905
$157,350-$187,65882.395.5102.4110.5132.6104.282,375
$187,659-$240,83985.098.1105.6115.0137.6107.880,976
$248,840+88.2101.1110.9125.4160.0115.458,844
Total62.790.4100.3111.5145.4101.8791,841

Notes: a Percentile points of the distribution of families by the ratio of reconciled to reported income within each income decile. Table population is restricted to the 75.2 per cent of families for whom reconciled income is available to the evaluation. Families for whom the ratio of reconciled to reported income is less than 0.2 or greater than 2 are excluded in order to reduce their undue influence on the mean. Income deciles based on reconciled gross family income.

Source: Evaluation modelling using 2018-19 administrative database

The microsimulation modelling of the 2018-19 administrative data can be used to estimate the extent to which families received more benefits than they were entitled to, due to underestimating the income reported to Services Australia. The approach is to compare the amount of CCS modelled over the year using the income reported to Services Australia to what they are entitled to when modelled using reconciled income. If they received more CCS over the course of the year than they were entitled to following the balancing of payments using the reconciled income, then their entitlement is adjusted. Because 5 per cent of CCS is withheld and paid at the end of the year, if the amount of over-calculation of CCS is less than 5 per cent of the amount of CCS that the family is assessed as being eligible to receive, then the family will not need to pay any money back to the government and the amount of withheld CCS that they receive will be reduced by this amount.

Of families for whom reconciled income was available, the process of reconciliation of income led to two-thirds (67.5 per cent) either having received the correct amount of benefit or less benefit than they were entitled to. A further 16.4 per cent received more benefits than they were entitled to, but this amount was less than 5 per cent of the benefit received over the year and hence they received a partial reconciliation payment and 16.1 per cent received more than 5 per cent additional subsidy and hence would have had to pay a refund.

Table 50 shows the amounts of child care debt due to under-reporting of income.94 Two measures of debt are provided. The first includes amounts that are less than 5 per cent of the amount of benefit received during the year, and the second includes only amounts that are greater than 5 per cent and hence the family would have been required to repay some of the CCS they received to the government.

Across all families in the child care system (for whom reconciled income data was available) and including debts that are less than 5 per cent of the amount of benefit received, the average debt is $208 per annum, which is 3.2 per cent of benefits or just 0.1 per cent of gross family income (Table 50). Restricting the analysis to the 32.5 per cent of families with a debt, the average debt is $638 per annum and the median $225. This is 9.8 per cent of benefits or 0.4 per cent of income.

Considering only debts greater than 5 per cent and the portion of the debt above 5 per cent of benefits received over the year, the average debt across all families is $171 and for families with a debt it is $1,059 per annum and the median is $580 per annum. For the 16.1 per cent of families with this type of debt the average amount in excess of 5 per cent of benefits and hence money that needs to be repaid is 16.7 per cent of benefits and the median amount is 10.1 per cent of benefits. While this is a substantial percentage, it is only a small percentage of income; the mean debt is 0.6 per cent of income and the median debt is 0.4 per cent of income.

Table 50: Child care debt due to under-reporting of income, families with reconciled income, families with a debt and all families, 2018-19
 All debtDebts greater than 5% of CCS - portion in excess of 5% of CCS
Value of debt ($)As proportion of subsidy (%)As proportion of income (%)Value of debt ($)As proportion of subsidy (%)As proportion of income (%)
 All families
mean2083.20.11712.70.1
p25-0.0--0.00.0
p50-0.00.0-0.00.0
p75531.80.04-0.00.0
 Families with a debt
mean6389.80.41,05916.70.6
p25602.00.052056.90.1
p502254.90.258010.10.4
p7567110.50.51,26116.70.8

Notes: Table population is restricted to the 75.2 per cent of families for whom reconciled income is available to the evaluation

Source: Evaluation modelling using 2018-19 administrative database file

In order to understand the impact of child care debt to government on families, it is important to understand how the prevalence and amount of debt varies with income. Figure 75 shows how the estimated child care debt varies by income level and as a percentage of income, using the amount of debt in excess of 5 per cent of CCS measure and restricting to families that have a child care debt. There are virtually no child care debts (due to under-reporting of income) for families up to and including the 6th income vigintile. The average value of the debt then gradually increases with income to be $944 for income vigintile 19 and jumps to $2,706 for the highest income vigintile.

While the value of the debt is quite large for the higher income groups, particularly income vigintile 20, as a proportion of gross family income, it is very small for all income groups and even for income vigintile 20 it is less than one per cent of income (0.7 per cent) (Figure 75).

Figure 75: Estimated child care debt due to under-reporting of income, and debt as a percentage of gross family reconciled income, families with a child care debt, by family gross income vigintile, 2018-19

fig075.png

Notes: Table population is restricted to the 75.2 per cent of families for whom reconciled income is available to the evaluation. Debt in this figure refers to debts in excess of 5 per cent of CCS received during the year and are thus amounts in excess of the 5 per cent of CCS received. See Table 40 for the income ranges that apply to each income vigintile.

Source: Evaluation modelling using 2018-19 administrative database file

Parent perspectives on the end of year balancing

The Child Care Package Family Survey asked child care using parents about the extent to which they were concerned about ending up with a child care debt as the result of the end of year reconciliation of their income and having a debt due to not getting their activity details correct. They were also asked about how confident they were that if they report their income accurately, they would not have a debt at the end of the year, and if they end up with a debt that they will be treated fairly by Centrelink.

In September 2019, 44.0 per cent of respondents indicated they were concerned about the possibility of having a debt after balancing by Centrelink at the end of the year (Figure 76). There was further concern about how this would be dealt with by Centrelink, with 31.8 per cent not being confident that they would be treated fairly by Centrelink if they have a debt.

Most parents reported that they were confident that they would not have a debt if they reported their income accurately (73.4 per cent agreed or agreed strongly with this). Further, parents did seem to link their worries about getting their activity test details right to worries about debt, with half the parents saying they were worried they would have a debt if they did not get these details right. We note that previously we have reported that where parents have commented on lack of understanding of aspects of the CCS, such comments are often related to concerns they will be faced with a debt at the end of the year.

While the analysis of the administrative data shows that for the majority of families that under-reported their income to Centrelink, the 5 per cent withholding of CCS by Centrelink means that they do not have to repay any CCS. As reported in Chapter 3, survey data of families using child care reveals that the 5 per cent withholding was the least well understood aspect of the CCS.

Figure 76: Parent perspectives on end of year balancing and debts, September 2019

fig076-lines.png

Source: Child Care Package Family Survey, Wave 2 (September 2019)

The September 2019 Child Care Package Family Survey also asked parents if they had taken any actions aimed at avoiding debt. A majority (out of 512 parents) indicated that they had taken some actions:

  • 52 per cent reported that they overestimated family income.
  • 43 per cent reported that they updated their details regularly to be accurate.
  • 6 per cent reported that they underestimated their activity hours.
  • 5 per cent reported that they increased their withholding percentage
  • 24 per cent reported doing none of these.

The analysis of difference between reconciled and reported income using the administrative data reported above in Table 49 is broadly consistent with the survey data, with the median ratio of reconciled to reported income being very close to 100 per cent. Where families overestimate their income, the median ratio of reconciled to reported income is 0.894, and where they underestimate their income the median ratio is 1.122. Parents in higher income households (incomes >$173,000) were the most likely to report taking no actions to avoid debt. One possible reason for some discrepancy is that while they may tend to overestimate their recurrent income from employment, they may neglect other forms of income such as interest and capital gains that form part of reconciled income.

In interviews with low income parents, there was generally a low level of concern about the reconciliation process. Some parents in this sample explained that they were familiar with the annual reconciliation, likely because they had experienced similar processes as part of other Centrelink benefits, such as the Family Tax Benefit. However, generally low concern was apparent across this sample, irrespective of whether participants were familiar or unfamiliar with the reconciliation process.

4.6.2 Debts to services

The other type of child care debt that families may incur is to services. This was an issue that emerged in in-depth interviews with service providers and a range of stakeholders undertaken shortly after the transition to the new system in late 2018 and 2019. Most interviewees discussed debt or related issues with payments that they considered had had significant flow-on effects for services.

One recurrent theme was the creation of debt when services estimate the subsidy rate prior to this being established and charge the families what the service expects to be the net cost to them. While services are not supposed to estimate the child care benefit prior to the claim being approved, the reality is that many families do not have sufficient money to pay the unsubsidised fee prior to their claim for CCS being assessed by Centrelink. Lengthy processing times, reportedly due to third party software system errors and Centrelink processing backlogs, meant that individual debts accrued and, in some cases, became quite significant.

Other reasons services reported for families having debts to services are:

  • third party software and Centrelink generating incorrect or inconsistent information
  • families not understanding that enrolment happened in 2 stages and so failing to confirm their enrolment
  • when backpay was made directly to families instead of services and families spent the back payment not understanding that it was CCS or ACCS backpay that should be passed on to services. It was reported that payments appeared in families' bank accounts as an unspecified Centrelink payment, without families being advised of the reason for the payment. In some of these cases, services were then unable to recoup these debts from families.

Debt issues were also reported as arising with ACCS when families had set their hours of care under one ACCS certificate and applied for and expected another determination, and so maintained those hours. If the second determination was not granted, the family owed full fees for the additional hours of care they had used and owed a debt to the service. Some services outlined specific cases where a family had accrued debt in relation to ACCS (Child Wellbeing) and noted that the 28-day backdating limit was particularly challenging for families who were in crisis. This backdating limit determines that CCS will only be paid for up to 28 days prior to an application being approved, so if there are significant delays in CCS or ACCS approval processes, parents will be liable for payment of full fees to their child care service for the period of time not within these 28 days. This has contributed to real affordability issues and debt for some families when the approval process has been protracted.

The other problem is, too, when a family joins up, and if you've got 28 days minimum, so it could be six to eight weeks before that CCS comes through and that person's got three children and they've just started a job because they need money, all of their money goes out in child care for the first six to eight weeks. How can they sustain that? 
[CBDC provider, March 2019]

Some interviewees were specifically concerned that recalculations of CCS and retrospective corrections to payments that resulted in families owing fees to a service were making child care services into 'debt collectors for the government'. These services discussed balancing their need to be a viable business with wanting to support children and families. It was reported that this was especially difficult for services needing to recover unpaid fees from families for previously balanced accounts and retrospective corrections. This was compounded where families were vulnerable or disadvantaged and the service was concerned that pursuing debt or limiting services would impact the wellbeing and safety of the child. More detail about parent experiences of debt, and the reasons for that debt, are discussed below.

The July 2019 SELCS asked services about the extent to which parental debt at their service had changed since the July 2018 changes to the child care system. Specifically, services were asked whether the amount of debt (in dollar terms) incurred by families at their service had increased or decreased, the overall number of families at the service carrying a debt, the amount of debt (in dollar terms) the service carries because of unpaid fees, and the length of time it takes for families to pay off incurred debts.

About half the services who responded to the July 2019 SELCS reported that the experience of debt at their service was unchanged from prior to the introduction of the Child Care Package. Around 30 per cent reported some increase in debt-related experiences at the service and only about 10 per cent reported fewer debt related problems as compared to prior to the changes to the child care system.

This includes:

  • 32.6 per cent with a moderate to large increase in the amount of debt (in dollar terms) incurred by the families at their service.
  • 28.1 per cent with a moderate to large increase in the overall number of families carrying debts at the service.
  • 31.1 per cent with a moderate to large increase in the amount of debt (in dollar terms) the service is carrying because of unpaid fees.
  • 31.1 per cent with a moderate to large increase in the length of time it takes families to pay off incurred debts.

Figure 77: Service reports about changes in debt experiences at their service, July 2019

fig077-lines.png

Source: SELCS Wave 2

By service type, those most likely to have reported moderate to large increases in any of these were the In Home Care services (Table 51). Services were markedly less likely to report that there had been a moderate to large reduction in the amount of debt, number of families carrying debt, the amount of debt carried by services and the length of time it takes for families to pay off incurred debts.

Table 51: Proportion of services reporting a moderate to large increase in families' debt experiences at their service and the proportion reporting a moderate to large reduction, by service type, July 2019
 Service type:
CBDCFDCOSHCIHC
 Proportion reporting (%)
 Moderate to large increase
Amount of debt incurred by the families at this service36.136.127.067.3
Overall number of families carrying debts at this service30.632.721.252.7
Amount of debt this service carries because of unpaid fees34.531.925.758.3
Length of time it takes for families to pay off incurred debts34.633.824.949.1
 Moderate to large reduction
Amount of debt incurred by the families at this service10.76.312.52.1
Overall number of families carrying debts at this service12.69.911.97.6
Amount of debt this service carries because of unpaid fees10.59.113.70.0
Length of time it takes for families to pay off incurred debts8.07.911.40.0

Note: 'Don't know' and 'Not applicable (Service not operational prior to July 2018)' excluded from analysis.

Source: SELCS Wave 2

4.6.3 Summary - debt

While there are a substantial number of families who under-report their income during the course of the year to Centrelink and hence many receive more benefits than they are entitled to, for most income groups the median ratio of reported to reconciled income is close to 100 per cent and it is only the highest income groups that have a substantial under-reporting of income. The withholding of 5 per cent of CCS means that about half the families that under-report their income end up with a debt to the government because they received more than 5 per cent CCS than they end up being entitled to. In total 16.1 per cent of families received more than 5 per cent additional subsidy.

The average value of the excess debt across all families is $171 per annum or 0.1 per cent of gross family income. Among families with a debt, the average value of the debt is $1,059 per annum. While this is substantial, it is largely owed by higher income families and the value of the debt is 0.6 per cent of gross family income on average. While, overall, it appears that debt to the government is not a major issue, the debts can be quite substantial. There are a minority of families that end up with substantial debts, although these are largely high or very high income families in this situation.

It appears that debts owed by families to services is a more problematic issue. These debts arise because of the fact that the delays in claims for CCS being processed by Centrelink combined with the reality that many families do not have the money to pay the full unsubsidised fees means that services end up estimating the subsidy rate and sometimes they overestimate the amount of CCS that the family will be eligible for and hence the family incurs a debt to the service. Speeding up the processing of claims for CCS and potentially improving the ability of families and services to accurately estimate CCS eligibility would reduce the extent of this problem.

4.7 Decomposing sources of change in affordability

This section provides a high-level summary of the contribution that the different elements of the Child Care Package make to the value of the subsidy paid to parents and the cost of this to government. The approach is to run the modelling of the amount of CCS received a number of times but in each case to 'switch off' one of the key affordability related components of the new system and replace it with an approximation of what it would have been under the former Child Care Benefit / Child Care Rebate system. The impact of each these scenarios on the total amount of child care expenditure is calculated and this is used as an indicator of the significance of the particular component of the system.

The alternative scenarios modelled:

  • The 'no hourly rates cap' scenario estimates CCS paid using the actual hourly dollar rate for the weekly sessions (fees divided by hours).
  • The 'CCB activity test' scenario estimates CCS paid using the simpler CCB activity test (for under 15 hours of activity per week, then maximum hours subsidised is 24. The maximum number of subsidised hours for activity over 15 hours per week is 48). The test has no reference to income, in contrast to the CCS activity test.
  • The 'CCR subsidy percentage' scenario estimates CCS paid as if the subsidy percentage was a flat rate of 50 per cent (as was the case for CCR under the previous system) rather than the income tested tapered system operating under CCS. This isn't strictly comparable to CCR, however, as CCR was based on the difference between total fees and the child care benefit (CCB), rather than total fees as is the case under CCS.
  • The 'no annual subsidy payments cap' estimates CCS paid with no reference to the annual cap in subsidy received ($10,190 in 2018-19).

The results are presented in Table 52. The key points are that the hourly fee rate cap and the more graduated activity test have a small but non-trivial impact on the amount of subsidy received. If there was no hourly rate cap, it is estimated that expenditure on CCS would have been $127 million (1.7 per cent) higher in 2018-19, and if the former activity test had applied then expenditure would have been $90 million (1.2 per cent higher). The tapering of the CCS rate reduces expenditure by $1,820 million if the CCB/CCR subsidy percentage had applied.

Given that net expenditure is estimated to be $455 million higher under the CCS system and the combined effect of the hourly rate cap, graduated activity test, annual subsidy payment cap and the tapering of the CCS percentage is to reduce expenditure by $1,647 million, then the effect of a higher subsidy payment rate is to increase expenditure by $2,102 million.

Table 52: Hypothetical modelling of impact of components of the CCS system on total expenditure compared to the counterfactual Child Care Benefit / Child Care Rebate Policy, 2018-19
Modelling scenarioTotal expenditure (% million)Impact on expenditure (% million)
2018-19 modelled CCS/ACCS, reconciled income$7,682-
2018-19 modelled expenditure (CCS/ACCS) from administrative data file, reconciled income, no hourly rates cap$7,809$127
2018-19 modelled expenditure (CCS/ACCS) from administrative data file, reconciled income, applying CCB activity test to weekly hours cap$7,772$90
2018-19 modelled expenditure (CCS/ACCS) from administrative data file, reconciled income, applying CCR subsidy percentage (50 per cent) in place of CCS tapered percentage$5,862-$1,820
2018-19 modelled expenditure (CCS/ACCS) from administrative data file, reconciled income, no annual subsidy payments cap for higher income ($10,190)$7,705$24

Source: Evaluation modelling using 2018-19 administrative database file assuming constant 2018-19 child care costs and usage

4.8 Summary - affordability

A key objective of the Child Care Package was to improve affordability, especially for low and middle income families, and to reduce the extent of future increases in the costs of child care. This Chapter reports the analysis of the impact of the changes to the child care system on the costs of child care to families and its affordability.

The main approach used to estimating the impact of the Child Care Package on affordability is static microsimulation, which models what individual families would have received under the former CCB/CCR policy and compares to a modelling of what would be received under the current CCS policy. The results of modelling at the individual family level are then aggregated to produce a picture of the impact of the changes for the population as a whole or for different population subgroups. The modelling is static in the sense that any potential behaviour change as a result of the policy change is not taken into account. The microsimulation modelling has been undertaken using the population of families using child care prior to the changes (prior to July 2018) and the population of families using child care post the changes (post June 2018). The conclusions about the impact of the changes on affordability are the same based on the pre-policy change and post-policy change population. In the evaluation, the post-policy change population (families using formal child care in 2018-19) is used for the microsimulation, which also means that the 2018-19 levels and patterns of child care fees and usage are used for the modelling.

The changes were designed to increase affordability, increasing the overall generosity of the child care subsidy system by increasing the level of income testing of CCS as compared to the previous CCB/CCR system and paying a greater proportion of the child care subsidy to low income, middle and upper income families. It is estimated that the shift to the CCS has resulted in an additional expenditure of $453 million in 2018-19 as compared to what would have been spent under the previous CCB/CCR system. This is an increase in expenditure of 6.3 per cent.

Based on the microsimulation modelling using the administrative data, it is estimated that the Child Care Package has reduced the median annual net cost of child care from $2,957 to $2,507. Expressed as a percentage of gross family income, the median net cost of child care is modelled to fall from 3.0 per cent under CCB/CCR to 2.7 per cent under the replacement CCS. While this is a substantial decrease in the net cost of child care in percentage terms, it is relatively small in relation to gross family income. Overall, almost two-thirds of families had lower net costs under CCS, almost 1 in 10 families had more or less the same net costs and 3-in-10 had higher net costs under CCS than under CCB/CCR.

While there has been a reduction in the net cost of child care, the impacts across the income distribution are not uniform. The net costs of child care have been reduced as a result of the Child Care Package for families up to around the 14th income vigintile (gross family income of $145,226-$157,335 per annum), with the reduction in costs being largest for the lowest income families. For families in the 15th to the 18th income vigintile ($157,335-$240,818 per annum) there is little difference in net child care costs. For the highest income families (incomes in excess of $240,818) the net costs increase quite substantially, particularly for families with an income in excess of $308,189 per annum.

There have been larger gains for some groups, particularly: single parent families; with 3 or more children using care; with the youngest child using child care being under 5 years of age; using a large number of hours of care; and single and couple parent families receiving income support payments. However, once income and other factors are taken into account, substantial differences remain for: number of children using care; and very long hours of care.

There have also been differences between types of services families use95 and whether these are for-profit or not. The modelling results indicate that, keeping fees as a constant, the impact of the Package is most beneficial to families using for-profit Family Day Care Centres, and that those using for-profit In Home Care have the most substantial increases.

The reductions in median net child care costs are largest in geographic areas with the lowest socio-economic status, with increases in costs in the most advantaged areas. There were also increases in costs in very remote areas. However, the geographic differences appear to be explained by other factors such as differences in income and hours of care used.

Microsimulation modelling was also undertaken using the ABS Survey of Income and Housing as the population base file. While this survey has limitations for the purpose of modelling child care, including relatively small sample sizes and not having the necessary activity data, it does have the big advantage of providing a measure of disposable (after personal income tax) household income and it allows income to be adjusted for differences in household size and composition (i.e. equivalised), and this provides a better basis for comparing affordability for different families. As expected, the net child care costs to families are a higher proportion of disposable household income than gross family income. In addition, there are smaller differences in the net costs of child care as a percentage of income according to income level when disposable household income is used than when gross family income is used. The Child Care Package has reduced the income gradient in the net costs of child care as a percentage of disposable household income.

The Australian Bureau of Statistics CPI data shows that the introduction of the Child Care Package resulted in an 11.8 per cent decline in the costs of child care in September 2018 and that child care prices have been adjusted continuously since June 2018 at a faster rate than the overall CPI, which meant that by March 2020 almost three-quarters of the reduction in the child care CPI due to the Package had been lost. Child care costs as a proportion of average earnings are no higher now than they were in 1982. While the fall in the child care CPI following the introduction of the Child Care Package is smaller than the fall following other child care policy changes over the last 3 decades, the pattern of child care costs continuing their faster than CPI growth, following the initial policy change, has been associated with other changes to the child care subsidy.

Consistent with the CPI data, analysis of the fees charged by services shows that the change in the 12 months following the changes to the child care system were very similar to the increases in the 12 months prior to the changes to the child care system, with the exception of In Home Care, for which the hourly fee has increased dramatically. The elements of the Package that are designed to reduce the growth of child care fees - the hourly fee cap and the requirement for parents to make a co-payment to the cost of child care - do not appear to have been effective.

Data from surveys of parents shows, on balance, an increase in the proportion of parents who consider child care is affordable and in their perception of whether the introduction of the Child Care Package has resulted in them being better off. Consistent with the results of the modelling, the survey data points to more positive outcomes for single parents, relative to couples, and for lower and middle income households, relative to those on higher incomes. For high income families the survey data points to declining affordability.

The effects of the Child Care Package on affordability are related to the following components of the CCS:

  • hourly fee rate caps
  • percentage rate of CCS
  • the annual cap
  • approved hours as determined under the activity test.

Clearly the shift to income testing of the full amount of subsidy has had a substantial impact in reducing the amount of subsidy received by high income families. The hourly fee caps are having an impact in reducing the amount of subsidy received, with about 15-17 per cent of hours in the second half of 2019 charged above the hourly fee cap, with the modelling suggesting that if there was no hourly rate cap, an additional $127 million in subsidy would be paid to families. The effect of the hourly fee cap will almost certainly increase with the fact that the costs of providing child care rise faster than CPI due to wages increasing at a substantially faster rate than CPI.

The activity test and allowed hours also has a significant effect in reducing the amount of subsidy paid, with the modelling suggesting that if the old CCB activity test had applied, an additional $90 million in subsidy would be paid to families. It appears the activity test is not precluding many families from using child care, with 13.3 per cent of hours paid for in 2018-19 unsubsidised. While the proportion of hours that are unsubsidised increases with income, even among very low income families there are substantial numbers of unsubsidised hours of child care being used. The annual fee cap is having only a very small effect, with the modelling suggesting that if it did not apply, the amount of additional subsidy paid to families would be $24 million.

In summary, this analysis indicates that the introduction of the Child Care Subsidy and related changes has:

  • increased Commonwealth expenditure on child care from what would have been about $7,229-$7,682 million for 2018-19
  • reduced the net cost of child care for 62.1 per cent of Australian families using child care, had little if any impact on the costs of 8.6 per cent, and increased the net cost for 29.2 per cent.
  • on average the largest gains were recorded by:
    • low and middle income families
    • families using long hours of child care
    • families with a larger number of children using child care
    • single parents
    • families in which the parents received income support payments
    • families using for-profit Family Day Care as their most common type of care.
  • The groups adversely affected were:
    • those with high incomes
    • families using for-profit In Home Care as their most common type of care.

56 As has been noted in Chapter 2 ACECQA's assessment of the quality of ECEC services against the National Quality Standards reveals considerable variation in service quality ratings.

57 The objectives of the hourly fee rate cap are to limit the amount of subsidy paid to individuals and thus control expenditure, and restrain the level of fees charged by services.

58 In this Chapter all income amounts refer to annual amounts unless otherwise specified.

59 This requirement is not applied to some users who are eligible for some forms of safety net support through the Additional Child Care Subsidy.

60 To receive CCR, parents were required to have some work, training or study related commitments, although there was no minimum number of hours of such activity required.

61 The data used in this analysis is based on total fees charged to parents. This may include an amount for a late fee or some other additional charge. DESE advice is that this has little impact on the overall estimates, and this data is the same source used for their published information on fees.

62 It is noted that the Department does not publish data on the actual incidence of the cap in relation to individual child care users, but rather just publishes a high level indicator of the 'Number of services under/above the fee cap', which is based on the total fees charged by a service divided by the total hours charged for, in a quarter. They report, in December 2019, that 12.7 per cent of Centre Based Day Care services, 23.2 per cent of Family Day Care services and 15.7 per cent of Outside School Hours Care services charge above the cap (DESE, 2019a, Table 3.4). This data does not, however, actually provide a measure of the number of families for whom the cap restricts the amount of CCS they receive.

63 Prior to the changes to the child care system in July 2018, fees for In Home Care were calculated at the child level. Following the introduction of the Child Care Package fees for In Home Care shifted from being charged at the child to the family level. In order to present comparable data before and after the shift to family level fees, In Home Care fees before July 2018 have been converted to the family level.

64 It is noted that this treatment may tend to underestimate the proportion of children who are actually attending school and who are subject to a lower cap than that used in the calculation and hence underestimate the proportion in excess of the cap. It is not considered that this significantly impacts results.

65 See footnotes to Table 6.

66 Geographic location of families is derived from the location of the service that the family uses. For families that use services in more than one geographic location during the course of the year the location of the service to which they pay the largest amount of child care fees is used.

67 The results are very similar when actual CCS/ACCS received during year is used (and thus based on unreconciled reported income rather than reconciled income) and when the modelled amounts of CCS/ACCS based on reconciled income are used for all lower to middle income thresholds. They only differ for higher income thresholds due to the average underestimation of reported income compared to reconciled income for higher income groups (see Section 4.6.1).

68 In exceptional circumstances, ACCS individuals can apply to receive more than 100 hours of subsidised care per fortnight. There are a range of exceptional circumstances including domestic violence, serious illness or a medical condition or hospitalisation preventing an individual from working or caring for their child, participation in a treatment or rehabilitation program to address substance abuse issues and complying with a compulsory obligation imposed by a court.

69 That is the income bands where the rate of taper changes from the previous band.

70 In September 2019 the social security benefit entitlement of a single parent with one child aged 8 years receiving full-rate Newstart and not receiving Rent Assistance was $25,007. The entitlement for a single parent with one child aged 3 years, receiving full-rate Parenting Payment and not receiving Rent Assistance was $34,390 and a single parent with one child aged 3 years, receiving full-rate Parenting Payment Single and receiving Rent Assistance was $38,617.

71 In the Second Reading Speech for the Family Assistance Legislation Amendment (Jobs for Families Child Care Package) Bill 2016, the responsible Minister the Hon. Christian Porter noted that there were concerns '… that existing programs that support disadvantaged and vulnerable families are complex, inefficient, poorly targeted and open to abuse. This is particularly the case in relation to the Community Support Program, special childcare benefit and the jobs, education and training childcare fee assistance payment'. The Minister said that the child care safety net aspects of the package would '…. Comprise a more integrated and targeted set of funding programs that leverage the increased Commonwealth investment in child care to provide the best early learning outcomes, particularly for those who need it most' (Porter, 2016).

72 If school holiday weeks are excluded the range is 15.2-17.8 per cent.

73 Figures for Centre Based Day Care and Family Day care excluded school holiday weeks.

74 In the explanatory memorandum for the original Jobs for Families and Child Care Package this was described as 'a provision that obliges approved providers to ensure that they recover, from individuals, the difference between a fee reduction (made available through CCS or ACCS) and the actual fee charged to the individuals, where there is a difference. The CCS payment is designed with a concept of cocontribution to the cost of child care. This provision intends to address an issue that has arisen with CCB where some child care services did not actually pursue the difference between fee reductions and actual fee charged to the individual' (Porter, 2017b, p. 87). In the accompanying Regulation Impact Statement (Department of Education and Training, 2015a), the Department indicated 'A minimum cocontribution from all child care users was seen by stakeholders as acceptable, fair and necessary. A cocontribution can encourage parents to be conscious of the fees charged and help keep downward pressure on child care fees' (p. 43).

75 Overwhelmingly, Centre Based Day Care services and Outside School Hours Care services charge on a sessional basis, as do a third of Family Day Care Services. Most Family Day Care services and In Home Care services charge on an hourly basis. See Section 5.4.2 for more details.

76 Weighted by the number of children attending the service.

77 In undertaking this analysis, it is emphasised that only 3 years of administrative data was available to the evaluation and that data beyond Q4 2019 was impacted by the COVID-19 response.

78 This fall was as a result of a May 2007 change in the way in which the Child Care Tax Rebate (CCTR) was paid. Instead of being paid through the tax system the payment was to be made through the Family Assistance Office. This change was triggered by a change in the treatment of the CCTR in assessment of the cost of child care in the CPI. The ABS estimates that without the change in treatment the Child Care Expenditure Class Index would have fallen, due to the changes in indexation by just 4.9 per cent. From the perspective of families this change in treatment of the CCTR did not have an impact on household budgets per se. Rather it can be considered that the previous operation of CCTR should be seen as decreasing their effective costs in the preceding periods, rather than occurring at this point.

79 Figures are for the occupation category Child Carers (ANZSCO 3 digit code 421) and from ABS (various years). 'Employee Earnings and Hours, Australia', ABS Catalogue No. 6306.0, ABS, Canberra.

80 The increase in CPI is calculated as the change from June 2006 to June 2018.

81 See details of these surveys in Chapter 2.

82 As at November 2019.

83 As the parent surveys were cross-sectional and not longitudinal, it is not possible to track individuals over time.

84 One possible bias in this data is the exclusion of those who may have ceased to use formal child care as a consequence of the impact of the package. This may lead to an overstatement of the extent to which families have benefited from the new policy.

85 In contrast to most of the other questions that used a 5-point scale, this question was asked on a 3-point scale of: agreement; neither agreement nor disagreement; and disagreement.

86 Reconciliation of income refers to the use of annual income as reported to the Australian Taxation Office, relative to the cumulative estimated income that families report to Services Australia over the year.

87 Under the CCB/CCR policy, only CCB was income tested and for families who were income tested off CCB income was not required in order to determine eligibility for CCR. There are several indicators that strongly suggest that the 2018-19 income data is more accurate than the 2017-18 income data, including implausibly large increases in the reported incomes between 2017-18 and 2018-19.

88 It is not possible to determine the actual income levels of this group as it is not possible to differentiate these families from other families who moved out of child care as part of the usual volatility of use. It is possible that they were more likely to be low income families.

89 However, as is shown in Chapter 6 it is estimated that well fewer than 1 per cent of children left the system as a result of the Child Care Package and so this limitation of the 2018-19 base file is not significant.

90 Unaffected is defined as CCS being within plus or minus 1 per cent of CCB/CCR.

91 Ideally, we would have also considered how the impact of the Child Care Package on affordability differs according to family employment. This information is, however, not available from the child care system administrative data and, therefore, family activity is used as a proxy.

92 The most common care type is the care type with the highest child care fees paid during 2018-19.

93 Parents can apply to have this proportion increased.

94 The term 'under-reporting' is used here to denote a difference between the sum of reported income and reconciled income. It is noted that this does not imply any deliberate understating of income, but can arise from a range of factors including under-estimation of capital income and lumpy income.

95 Service type is based on the most common service type a family used in the year.

5. Flexibility

5. Flexibility

This Chapter addresses the second outcome, that 'Child care services are accessible and flexible relative to families' needs, including disadvantage', with a focus on the flexibility of services with regard to the structure of hours and sessions. Accessibility is addressed in Chapter 6.

In the evaluation framework, the role of flexibility was identified as being important to improve access to child care for families by better aligning care provision with their needs. In some cases, this was seen in terms of aligning hours of child care charged for with those used, in others, to meet the needs of irregular working patterns or working non-standard hours. For these families, flexible care is viewed as important to support parents' paid employment. Also noted in the evaluation framework were questions such as being able to change or add a session of care at short notice.

In addressing issues of flexibility, this Chapter is focused on:

  • the extent to which rigidity in the structure of provision of child care impacts on parental satisfaction, and poses a barrier to their workforce and other participation
  • the factors that may constrain the provision of flexible child care
  • the degree to which the Child Care Package has resulted in increased flexibility in service provision, including the role of the In Home Care program.

5.1 Background

Improving flexibility in child care provision was central to the Package and in the policy debates leading to it. It is a dimension of service provision that has been seen as having increased importance, with trends towards more flexible employment arrangements for many Australian families.

5.1.1 The nature of child care provision

In discussing the concept of flexibility of provision, the 2 central parameters considered here are hours of operation and sessions of care. In addition, there is the capacity of parents to flexibly use child care, changing when they use it and for what periods.

Hours of operation concern the question of when services provide care: on what days of the week; and the starting and finishing times.

A significant proportion of child care is purchased on a sessional basis. In the case of Centre Based Day Care, this was traditionally a day of care with the length of the session defined by the opening and closing times, or in the case of Outside School Hours Care, a before school session - from the opening of the service until the commencement of school, or after school care, from the end of school to closing. Variations to this existed. These included Occasional Care Services that offered shorter sessions or charged by the hour, and some services that offered half-day sessions. While Family Day Care frequently also used a sessional approach, there has been a strong trend towards charging on an hourly basis. Notwithstanding this, the nature and structure of sessions remains a core element of provision and is a focus here; in particular, how the length of 'sessions' has been impacted by caps on hours of care eligible for subsidy linked to the operation of the activity test.

5.1.2 Flexibility and the Child Care Package

While the language of the Package refers to 'reform for a simpler, more affordable, more accessible and more flexible early education and child care system' (Porter, 2016), the only explicit policy change addressing this were changes to regulatory requirements. These were described in the Government's response to the Senate report on the proposed legislation as: 'The Bill removes regulatory requirements that currently apply to child care services, including the hours per day and days per week a service must open. This will allow providers and services to be able to consider flexible options that may better suit their children and families, as well as their business' (Australian Government, 2017, p. 11).

Other elements of the Package also potentially impacting flexibility included:

  • the abolition of the priority of access (see Section 1.1.7). While this can be seen as providing greater flexibility to services in relation to who they provide care for, it also has potential impacts on access, including access for vulnerable families and children. This is addressed in Chapter 7.
  • the absorption of occasional care services within the Centre Based Day Care sector
  • the redevelopment of the In Home Care program, one element of which is to enable the provision of child care to 'parents or carers of the child who are unable to access other mainstream child care options such as those who work non-standard hours, are geographically isolated or have families with challenging and complex needs' (DESE, 2020c, p. 8). This is addressed in Section 5.7.
  • the requirement, for most enrolments, for a Complying Written Arrangement (CWA), a formal agreement between a child care provider and an individual to provide child care in return for fees.96 As well as details of the child or children for which care is to be provided, and fee information, the CWA includes information on whether casual or flexible care is needed or if the care will be provided on a routine basis, and if so, when and for how long (typically, usual start and end times of sessions) (See Figure 80.)
  • a more complex set of allowed hours, including the reduction in the base number of hours for groups not meeting the activity test from 24 hours per week to 24 hours a fortnight. Along with Departmental material on 6-hour sessions, this resulted in a strong perception within the sector that services were expected to change their business operations to ensure there were short sessions that permitted children with 24 allowed hours per fortnight to attend for 2 days a week, by introducing a 6-hour session. (This also applies in respect of children with 36 allowed hours per fortnight.)

It was anticipated that as a consequence of the Package, there would be growth in the number of services offering shorter sessions of care and in changed operating hours and days. The abolition of minimum operating hours was also seen to allow all services to offer sessions of care to meet demand for casual or short sessions, such as that which had been the primary focus of occasional care services.97

More broadly, the Productivity Commission saw flexibility as being associated with a move to charging child care on an actual hourly use basis, rather than per session.

The removal of caps on occasional care, and the removal of requirements around the hours of operation that differentiate occasional care from other care - as recommended by the Commission - will make it harder for providers to sustain charging models based on hours booked. As such, the Commission expects that short-term enrolment where parents are charged on the actual hours their children are in care will become increasingly common (Productivity Commission, 2014a, p. 434)

This sentiment was further elaborated on by the then Minister for Education Birmingham, who declared 'it is unacceptable that families who routinely need and use only four, 6 or 8 hours of care are charged for 10 or 12 hours' (Bita, 2015). This, in conjunction with the requirement that services report on children's actual attendance, resulted in concerns in the sector that the Package was a first step towards subsidies being paid on the basis of per hour of use instead of sessions.

In the period of transition to the Child Care Package, a Child Care Services Business Support Resource was made available to services and providers. This was intended to help services to review their business and operation ahead of the introduction of the Package. This proposed 'some options and ideas child care services may want to consider to take advantage of the greater flexibility that will be supported from 2 July 2018' (Department of Education and Training, 2018b, p. 6). It included, as examples, variations in operating hours, offering different sessions to cater for groups such as shift-working families, examining the service's fee structure, and staff rostering. Services are also encouraged to consider these issues in the Child Care Provider Handbook:

Child care providers should consider changes that deliver flexible, cost-effective care and learning services for families. For example, providers could choose to offer parents receiving 36 hours of subsidy under the preschool category six sessions of six hours or four sessions of nine hours per fortnight. (DESE, 2019b, p. 90)

The Package and tensions in the length of session

The structure of the Package has 2 elements that impose constraints on how sessions of care are structured by services:

  • Allowed hours places a limit on session lengths. Effectively to maximise the opportunity for parents to claim Child Care Subsidy, session lengths need to be structured in a way that is compatible with allowed hours. So, for example, for parents with an allowable 100 hours and using care for 10 days a fortnight, any session length over 10 hours leaves a portion ineligible for subsidy. Similarly, the allowable 24 hours per fortnight only enables regular attendance for more than one day a week if session lengths are 6 hours or less.
  • The fee cap works in the opposite direction. As most services operate on a sessional basis, the calculated hourly fee is the session cost divided by its length. A longer session length reduces the calculated hourly fee, and hence permits a higher sessional cost without parents having their Child Care Subsidy impacted by the cap. Conversely a notional reduction in the length of a session increases the calculated hourly fee, and the probability that the fee cap is breached.

These tensions and other constraints on provision are considered further in Section 5.3.

5.2 Parents, flexibility and child care

The impact of demand for flexible working arrangements is frequently cited as one of the drivers of a requirement for more flexible child care, including in the provisions of the In Home Care program. There is, however, a complex relationship between these working arrangements and child care use.

While for some parents, having flexible working arrangements, such as working non-standard hours, imposes a high demand for child care that can accommodate these working arrangements, for others, this form of non-standard hours is used as a device for sharing child care with a partner, family or others. For example, it may involve one of the members of a couple working during the day, often with an early start, while the other works in the evening, or one working in a regular job on normal work days, and the other taking shifts on the weekend. The evaluation of the Australian Government's Child Care Flexibility Trials identified that this was frequently the case, showing that even when flexible care options are available, parents often prefer family-based solutions to their care needs, especially when care is needed on weekends, early mornings, evening or overnight. (Baxter & Hand, 2016)

Flexibility has both micro and macro aspects to it, as even minor child care inflexibility can cause problems for families. For example, a 10-minute difference between opening hours and when a parent needs to be able to leave their child in order to get to their job can in some circumstances act as a total barrier. This example equally identifies also a complementary role of flexibility in employment to enable parents to effectively manage their use of child care and other family responsibilities.

For those with less regular hours of employment, as well as obviously the questions of cost, and whether they have sufficient approved hours, decisions on using child care in a flexible fashion can also be affected by questions such as whether the child has an entrenched peer group of friends within child care, and how the educational role of child care is conducted, and the perceptions of parents around the importance of this.

Consideration of these questions also needs to take account of the nature of the child care sector, and the extent, or otherwise, that parents have a choice of services that they can use. Where there is a competitive market with multiple services that can be accessed by a parent, there is clear room for product differentiation and the capacity of various of these services to adopt quite different structures and offerings, rather than each service having to do so.

Parents' experience and perspectives on flexibility are considered below, initially focusing on the more qualitative and descriptive experiences and then analysing the more detailed survey questions.

5.2.1 Parental experiences and preferences

In both waves of the CCPFamS, in addition to more specific questions about their use of, and satisfaction with, child care, parents were invited to provide free responses on how they thought their child care options could be improved. Of those who responded to this, some 20-30 per cent identified issues related to service flexibility.

  • The most commonly cited issues related to flexibility were those around the desire for flexible session lengths, including only paying for hours of care actually used, and charging per hour or half days.
  • The second most common was the desire for their service to provide care beyond their current operating hours, with the needs of working parents to be able to drop off and pick up their children earlier and later than currently available, being most frequently cited.
  • The third most common issue was a desire by some parents to be able to casually book days when needed or swap days. This was particularly common among those working rotating rosters or casually.

Additionally, highlighting the relationship between flexibility, access and choice, it was also common for parents to answer this question in terms of improvements to access (e.g. vacancies, lack of child care centres in area) or affordability (costs, impact of activity test).

These findings were also reflected in the reports by parents who participated in the case studies. The sample of parents from 4 of the case studies included families who worked varying or non-standard work hours and/or shift work, particularly Case Study 6 (shift work) and Case Study 7 (shift work and fly in/fly out work). Families with these work arrangements spoke about being dependent either on one parent taking the responsibility for managing child care (by working standard hours and managing all drop-offs/pickups, or by not engaging in paid employment) or by making complex child care and work arrangements that included juggling shifts between both parents (which often included evening, night or weekend work) alongside having informal care arrangements (primarily grandparents or other parents).

For example, one family member who was interviewed spoke of working two 8-hour shifts a week. She had previously worked 12-hour shifts, but once her eldest child started school, she could no longer work 12-hour shifts as the Outside School Hours Care did not open until 7 am. Her workplace was supportive and flexible, allowing her to change the length of her shifts to accommodate the needs of her family, whereas her husband's workplace did not have this flexibility (he was also a shift worker). This family member felt that the current child care system was geared towards parents working standard hours.

There are lots of people that do 12-hour shifts […] mostly for them, their [partners] work Monday to Friday, and they drop the kids off before work and pick them up on the way home. So, their children spend the whole day at child care. Or, alternatively, they work night shifts during the week and then just work weekends when their [partners] are home. Centre Based Day Care is really targeted for Monday to Friday workers 
[Family using CBDC, August 2019]

For single parents working non-standard hours and/or shift work, the juggle between work and child care was often reported as more challenging. Family Day Care educators who provided evening and weekend care were identified as one option for such families needing care outside of standard hours. However, the availability of Family Day Care, and Family Day Care educators offering extended hours, within the case study sites varied substantially.

A demand by some parents for greater flexibility was also reported by services. In the baseline May/June 2018 SELCS, just before the introduction of the Child Care Package, services were asked if there was a demand for more flexible care options than currently provided. Across all service types, 26.9 per cent of services reported a demand by parents for more flexible care options.

5.2.2 Barriers and satisfaction

Lack of flexible child care as a barrier to increasing employment

The DESE/ORIMA parent survey asked parents whether they wanted to work more hours and, if so, what would assist them to do so. In this, they were asked to identify how many hours they wanted to work and questions about workplace and child care barriers.

Overall, as discussed in Chapter 8, only a small proportion of parents indicated that they wanted more, rather than fewer hours. For those who wanted to work more hours, many cited multiple barriers. This and the specific role of flexibility in child care provision are considered in Table 53. As shown in the table, while these respondents represent an estimated 116,000 parents saying they wanted to work more hours, with 74,493 citing the flexibility of child care as one reason, only 8,052 cited only child care reasons as a barrier, with flexibility being one of these, and just 2,015 that flexibility was the only barrier. These parents wanted to work an average of an additional 12.8 hours per week.

This highlights the extent to which, while the flexibility of child care is an issue for some working parents, caution needs to be exercised in seeing it as the major, or even the most significant barrier that parents face in seeking to increase their workforce participation. It also suggests that the net labour force contribution from increasing flexibility alone may be modest.

Table 53: Parents wanting to work more hours, child care barriers, DESE/ORIMA Parent Survey, November 2019
Wanting to work more hours a, bPersonsAdditional hours wanted
 At 25th percentileAt 50th percentileAt 75th percentileAverage
 (count)(hours)
Total respondents116,4498.013.021.016.5
Child care flexibility is an issue74,4938.012.524.017.0
Only child care barriers, of which flexibility is one8,0525.012.020.014.8
Only flexibility cited as a barrier2,0159.812.012.012.8

Notes: a In this wave of the survey this question was only asked of the respondent and not about their partner. This may lead to an underestimate of the overall potential labour market impact of a lack of child care flexibility, although the relativities of the categories are less likely to be impacted. b Only includes persons who indicated they wanted to work more hours and for whom the difference between their current hours of work as either an employee or self-employed and their desired hours of work was positive.

Source: DESE/ORIMA Parent Survey, November 2019

Satisfaction with flexibility of child care

The CCPFamS also asked families about their level of satisfaction with the flexibility of child care. This was part of a series of questions about satisfaction with aspects of child care. As illustrated in Figure 78, on balance, families rated their satisfaction with flexibility negatively, but markedly less so than they rated either affordability or having sufficient options to choose from, although slightly less negatively than it being easy to get the care that they consider they need.98

Figure 78: Parent satisfaction with aspects of child care, CCPFamS, September 2019

fig078.png

Notes: Questions were asked on a 5-point scale of strong agreement to strong disagreement. These have been coded to a single scale from +2 to -2, with positive values indicating agreement.

Source: CCPFamS Wave 2, September 2019

Multivariate analysis of the responses to the question on flexibility was undertaken to identify the family characteristics, including working arrangements that were associated with their experience. This is reported on in Table 54 and Table 55.

Table 54: Multivariate analysis of satisfaction with child care flexibility, couple families, CCPFamS, September 2019
Dependent variable: Satisfaction with child care flexibility 
(reverse coded - higher value is agreement)
CoefficientP<|t|
Highest level of education
Secondarybase 
TAFE-0.090.801
University0.080.813
Have youngest child under 4-0.130.505
Family income
<$68,163base 
$68,163-$173,163-0.690.220
$173,163-$252,453-0.910.118
$252,435-$342,453-0.620.294
$342,453-$352,453-2.36***0.000
$352,453 or more-1.19*0.077
Prefer not to say-1.080.379
Hours worked by respondent (weekly)
Under 15base 
15-340.66*0.069
35-400.72**0.045
Over 401.20**0.011
Hours worked by partner (weekly)
Under 15base 
15-340.050.931
35-400.240.691
Over 400.150.790
Respondent self-employed0.290.481
Partner self-employed0.280.240
Work hours vary week to week
Neitherbase 
Partner only-0.310.280
Respondent only-0.130.776
Both-1.01*0.071
Works outside standard hours
Neitherbase 
Partner only0.070.770
Respondent only0.410.200
Both0.040.898
Works changing shifts
Neitherbase 
Partner only-0.58**0.016
Respondent only-0.490.266
Both-0.370.253
Satisfaction with child care affordability0.30***0.000
Use CBDC0.230.334
Use OSHC0.060.715
Use FDC0.090.776
Constant0.060.950
n =239 
r2 =0.222 

Notes: OLS regression with robust standard errors. *, **, *** indicate that the underlying coefficient is significant at the 90 per cent, 95 per cent and 99 per cent confidence levels respectively. Questions were asked on a 5-point scale of strong agreement to strong disagreement. These have been coded to a single scale from +2 to -2, with positive values indicating agreement.

Source: CCPFamS, September 2019

Table 55: Multivariate analysis of satisfaction with child care flexibility, single parent families, CCPFamS, September 2019
Dependent variable: Satisfaction with child care flexibility 
(reverse coded - higher value is agreement)
CoefficientP<|t|
Highest level of education 
Secondarybase 
TAFE-0.200.682
University-0.78*0.081
Have youngest child under 4-0.220.583
Family income  
<$68,163base 
$68,163-$173,1630.020.944
$173,163-$252,453-0.86*0.067
$252,435-$342,453--
$342,453-$352,453--
$352,453 or more--
Prefer not to say--
Hours worked by respondent (weekly) 
under 15base 
15-34-0.600.375
35-40-0.740.341
Over 400.320.739
Respondent self-employed2.39***0.000
Work hours vary week to week-0.090.841
Works outside standard hours0.120.733
Works changing shifts-1.37***0.004
Satisfaction with child care affordability0.29*0.069
Use CBDC-0.210.643
Use OSHC-0.390.316
Use FDC0.370.620
Constant1.62**0.010
n =64 
r2 =0.490 

Notes: OLS regression with robust standard errors. *, **, *** indicate that the underlying coefficient is significant at the 90 per cent, 95 per cent and 99 per cent confidence levels respectively. Questions were asked on a 5-point scale of strong agreement to strong disagreement. These have been coded to a single scale from +2 to -2, with positive values indicating agreement.

Source: CCPFamS, September 2019

While these models are not strong, particularly for couples in terms of wholly explaining the variation in satisfaction, they still provide some insight into the factors associated with satisfaction with child care flexibility. When interpreting the values of the coefficient, it is noted that a value of 1 equates to a step on the scale of agreement - that is, for example, the difference between 'satisfied' or 'very satisfied'. Key results were:

  • A positive association with satisfaction with the affordability of child care and satisfaction with flexibility of child care. This may suggest that respondents have a generalised sentiment around child care, or that those who experience problems with flexibility have already been having to pay a premium for finding a workable arrangement, with this, in turn, being reflected in their affordability outcome.
  • For both single parents, and more so for couples, those families with higher incomes are less satisfied with the flexibility of child care, with this being particularly marked, and statistically significant, for high income couples on incomes from $342,453 to $352,453.
  • Self-employment is positively associated with satisfaction with flexibility, being more marked for single parents, where it is equal to 2 steps in the response categories. This may reflect the capacity of those who are self-employed to structure their employment around existing child care provision.
  • There appears to no strong association between satisfaction with flexibility and the type of child care used.
  • Turning to working arrangements:
    • For couples there is a marked, and weakly significant, negative association where both the respondent and their partner work varying hours - equal to a step on the scale; a somewhat positive relationship, although not statistically significant, where the respondent works outside standard working hours but their partner does not; and a consistent negative association where one or both of them work changing shifts.
    • For single parents, the only strong negative response is associated with working varying shifts, with this being equal to one and a third response categories.

This suggests, overall, that the key labour market groups who find child care not flexible to their needs are some higher income earners and those parents required to work changing shifts.

Satisfaction - capacity to change hours

One specific dimension of flexibility is the ability of parents to change their hours of care. Chapter 2 has presented this as part of the analysis of parental satisfaction with child care based on data collected in the DESE/ORIMA Parent Survey. Specifically, this found, using the aggregate score of responses:

  • For parents with a reference child aged under 5 years, this aspect of child care provision was the second lowest in terms of importance to parents of the 6 aspects they were asked about, with all of the differences between this and the higher ranked dimensions being statistically significant. The only aspect ranked more highly was the cultural appropriateness of the service. For those parents with an older child, it was seen as being more important, but was still statistically significantly ranked below safety, and having trained educators, but above learning, and cultural appropriateness. Although children's socialising was also ranked more highly, the difference was not statistically significant.
  • This dimension of child care provision had, however, the lowest level of satisfaction of the 7 aspects of provision considered, although, consistent with Table 53, the level of satisfaction was well above that related to affordability (see Chapter 4).
  • Parents in November 2019 were statistically significantly less satisfied with this aspect than they were in June 2018.
  • The level of satisfaction varied by type of care. In November 2019, the highest level of satisfaction with this aspect of flexibility was recorded in the Outside School Hours Care sector, with the level of satisfaction in this sector being statistically significantly higher than either of the other 2 sectors. While the difference between Family Day Care and Centre Based Day Care was not significant, the mean level of satisfaction with being able to change hours in Centre Based Day Care was much lower.

5.2.3 Summary - the parent perspective

There is clearly a demand from some parents for more flexible child care provision. One major driver of this is workplace demands, in particular shift work. Additionally, for those using Centre Based Day Care in particular, a significant group of parents wanted a capacity to use these services on a more casual basis, rather than being locked into rigid approaches.

Taking the responses to various questions together points to a mixed set of parental satisfaction with flexibility. While in the DESE/ORIMA survey, satisfaction with being able to change hours was the lowest aspect of the quality of service aspects they were asked about, and has declined over time; at the same time, parents rated the importance of this below other attributes of the care services provided. In the CCPFamS, the average parental stance was neutral - that of neither satisfaction nor dissatisfaction - and in both these surveys, satisfaction with flexibility rated much higher than satisfaction with affordability. While for some, lack of flexibility in child care was an issue for workforce participation; in particular, where parents work changing shifts, in itself, lack of flexibility does not appear to be a dominant barrier to this.

5.3 Child care services and flexibility

While it could be expected that, in a market, the suppliers of child care would respond to the demand identified above, such a response can be constrained, both by the economics of such provision, and by other institutional and related barriers. These are considered here, firstly in terms of how services see their capacity to respond to flexibility impacted by these, and then more specific discussion on the potential constraints.

5.3.1 Service perspectives on delivering more flexible service

As cited above, in the SELCS some services identified a demand that they could not meet for more flexible services. These services were asked to indicate what constraints they faced in responding to this demand. These responses were free text and covered diverse issues. Analysis indicates that the 2 most common themes were staffing and regulations.

In relation to staffing the main constraints identified were the costs and recruitment of qualified staff willing to work non-standard hours; in particular, in the In Home Care and Family Day Care sectors. With regard to staffing costs, services reported that the staffing costs of providing flexible arrangements were frequently prohibitive, citing the need to pay penalty rates or having to pay higher rates to attract staff.

Regulations and service licensing issues were more commonly reported by Centre Based Day Care and Outside School Hours Care services and covered issues such as external restrictions on the service hours of operations.

Some services that had changed their session times, or who were considering changing session times, raised concerns about the operational aspects of this, including the impact on their occupancy, and the challenges of managing staff ratios and resourcing. Services, particularly Centre Based Day Care services, identified the challenges of budgeting and administrating different session times.

These responses were corroborated and expanded on in wider qualitative data collections, with services and stakeholders reporting that the Child Care Package had not alleviated the concerns of services about providing flexible care. Rather, the experiences of services of modifying their session offerings had reinforced, for many, the extent to which there were very significant constraints on their ability to offer flexible care.

These issues emerged most strongly in discussions about financial viability. Most of the stakeholders interviewed reported that to keep disadvantaged and vulnerable children engaged in Centre Based Day Care, some providers had begun offering 6-hour sessions, so children could access 2 days of care a week. These stakeholders said that these sessions were costly to the services, particularly for those services with a high proportion of families accessing the lowest level of subsidised care, and services were concerned that they were not sustainable into the future. Others commented that providing flexible hours that met parents' demands was too difficult, given the unpredictability of the demand for that care.

Some services noted the challenge of changing their business model to offer a range of sessions that could meet the needs of families and ensure the service remained viable, while managing the administration of a more complex range of service offerings. These interviewees also expressed concern about staffing shorter session times and argued that increases in shorter session times would compromise the ongoing viability of the sector.

A number also mentioned the tension they saw between providing flexibility in terms of multiple and shorter sessions, but needing to have greater rigidity in enforcing these. This is considered further below.

5.3.2 Constraints on providing flexible child care

Regulatory and workforce constraints faced by services mean that providing flexibility is not always possible or comes at a significant cost. Flexibility is therefore a matter for a service's business operations, profitability and viability. Solutions need to fit with staff rostering and are constrained by regulations.

Workforce constraints

Workforce constraints, in addition to those addressed above in terms of recruitment, also arise from educator to child ratios and staffing qualification requirements. These constraints remain under the Child Care Package. With a service operating on one long session of care, this session tends to operate as an 'envelope', such that most children spend somewhat shorter times at the service and staffing is configured to meet demand, with lower tails at either end of the day. The provision of flexible care, including offering additional short sessions (e.g. at the start or end of the day, or to meet casual demand) requires modification to this, to ensure there is appropriate staffing across the service's operating hours.

Flexibility may come, as noted above, with additional costs to services, which are required to pay penalty rates to educators who are working extended or non-standard hours. For example, under the Children's Services Award 2010:

  • Full-time employees are employed for 38 hours a week and can be rostered to work up to a maximum of 10 hours in any one day. Changes in roster arrangements need 7 days' warning.
  • Ordinary hours of work are from 6.00 am to 6.30 pm, Monday to Friday. Any shift which extends beyond these involves a loading from 10 to 30 per cent depending on its nature.
  • Overtime is to be paid at 150 per cent of the hourly rate for the first 2 hours and 200 per cent beyond this. This includes weekend work. (Children's Service Award 2010, Fair Work Ombudsman).

While, as noted in Chapter 9, the labour market is currently seen as being in balance overall, the above suggests that services experience some problems in recruiting qualified staff to work non-standard hours.

Regulatory constraints

While changes in the Child Care Package addressed some regulatory constraints, including minimum operating hours, other constraints exist under Family Assistance Law (that sets out the conditions of providing child care services), by licensing regulations imposed by state and local governments, and other requirements linked to measures of quality.

Central to these are staffing ratios. These for Centre Based Day Care services are shown in Table 56. Economic efficiency in terms of labour costs to fees is optimised when staffing levels match these ratios. To the extent flexibility varies the number of children who are attending the service at any one time, the number of children either hits the upper bound imposed by these staffing requirements, or drops below, impinging on efficiency. Additionally, the regulations require at least half of the educators to be diploma or higher qualified if there are preschool-aged children, and the balance with a Certificate III level qualification in an appropriate field.

These requirements, as is noted in some subsequent discussion, requires significant levels of workforce planning to ensure adequate coverage at all times of the day, particularly when the number of children vary over time, with this planning needing to be locked in some time ahead to meet workplace relations obligations as noted above.

Table 56: Centre Based Day Care staffing ratios, 2020
Age of childrenEducator to child ratioApplies
Birth to 24 months1:4All states and territories
Over 24 months and less than 36 months1:5All states and territories excluding Vic.
 1:4Vic.
36 months up to and including preschool age1:11ACT, NT, Qld, SA, Vic.
 1:10NSW, WA, Tas. (except preschool)
 2:25 for children attending a preschool programTas.
Over preschool age1:15NT, Qld, SA, Tas., Vic., NSW
 1:11ACT
 1:13 
(or 1:10 if kindergarten children are in attendance)
WA

Source: ACECQA 2020a

The issue of local government land use planning instruments is discussed extensively in UTS:CLG (2013), which notes, for example, constraints such as:

Some councils' land use planning instruments may include locational criteria to ensure that centres are not situated in areas that could present health or safety risks to children and, at the same time, do not 'unreasonably affect residents with respect to noise, loss of privacy, traffic generation and on street parking'. (p. A14)

While issues such as noise complaints subsequent to approval generally do not cause a direct regulatory constraint, unless approval has only been given for limited operating hours because of this, good neighbour relationships also need to be managed.

Quality standards

The national quality standards, in addition to the question of staffing requirements, place another potential constraint on a service's capacity to move to highly flexible staffing arrangements. This concerns the impact of such staffing on their ability to achieve suitable standards ratings. Element 4.1.2 of the National Quality Framework 'Continuity of staff' seeks to ensure that in care 'Every effort is made for children to experience continuity of educators at the service.' The rationale for this is given as:

Continuity of staff on a day-to-day basis and over time assists educators to build secure relationships with children and plays a significant role in promoting their learning and development. Educators who work closely with children each time they attend the service, understand each child's interests, strengths and areas where support may be needed. They are able to provide continuity of experiences to extend children's learning. (ACECQA, 2019, p. 211)

Achieving this requires a stable workforce, most of whom are at the service for an extended period each day. It cannot be met by a service that uses a very flexible and highly casualised workforce with educators who come and go over the course of a day as demand fluctuates.

Service minimum operating periods

Minimum operating periods apply to each type of child care service in terms of weeks per year they are required to be open. For Centre Based Day Care, Family Day Care and In Home Care, the minimum operating time is 48 weeks per year. For Outside School Hours Care, the minimum is 7 weeks per year. Some services (e.g. the former BBF services and a small number of other specified services that were not previously approved for CCB) are not required to meet these minimum operating periods. A special circumstances provision allows exemptions to the minimum operating periods 'where it would be unfair or unreasonable for a service to provide care for the minimum period' (DESE, 2020d, p. 2).

Only a very small number of services have been granted the special circumstances provision since the introduction of the Child Care Package - a total of 17 Centre Based Day Care services between July 2018 and December 2019. There have not been applications for the special circumstances provision from other service types.

Service capacity

These factors come together in terms of service capacity, in particular with regard to some of the flexible care that parents often seek, such as allowing casual or more flexible bookings. A significant constraint of services' capacity to offer this is whether they are operating at full capacity across the day or across the week/fortnight, and whether or not they have unfilled places. Where services are full, they are less likely to have capacity to offer days or sessions for casual booking. While lifting restrictions around minimum operating hours was intended to free up service offerings around casual/short term bookings, this is likely to only make a difference where services have times in the day or days in the week that are under-utilised. According to the SELCS Wave 1, just before the introduction of the Child Care Package, 49.9 per cent of services had vacancies in all sessions, 38.1 per cent had vacancies on specific days and 10.0 per cent had no vacancies. (Others reported vacancies for specific educator or specific ages or groups of children.) Outside school hours care services were the most likely of the service types to have vacancies in all sessions (61.5 per cent of services). Also, former BBF services often had vacancies in all sessions (46.5 per cent).

5.3.3 Interaction with aspects of the Child Care Subsidy

Underlying a number of the constraints discussed above and, in particular, the staffing constraint, is the question of the profitability - or economic viability - of offering greater flexibility. Given the market driven supply of child care services, this has to be seen as potentially the greatest of the constraints. While it can be argued that there are some sectors of the industry that may be limited in their capacity or vision to alter their product mix to meet consumer demand, there are others that are keenly innovative and market driven that seek to identify demands to which they can respond.

In this regard, considering the central role of government subsidies in the funding of child care, there is the question of how well the funding system responds to more flexible, but potentially more costly, service provision.

The activity test

While changes in session offerings are commonly viewed as being primarily concerned with providing greater flexibility, as discussed below, it would appear that they have been predominantly concerned with aligning sessions of care to families' approved hours. This has had 2 motivations: one is so that families have fewer unsubsidised hours of child care to pay for, and the second is around the number of days of attendance that can be achieved.

While the implications of particular approved hours levels are presented elsewhere, analysis of session length, with a particular focus on 6 and 10-hour sessions, is discussed below.

The hourly rate cap

Two issues emerge with regard to the hourly rate cap and service flexibility. As discussed in Section 5.1.2, firstly is the relationship between the nominal session length and the cap. That is, if session lengths are reduced to enable a match with allowable hours without a corresponding reduction in the session charge, this produces a higher hourly fee that is then potentially subject to the hourly rate cap. This relationship between session length and hourly fee can be seen in Figure 79, which contains extracts from the material provided by some services to parents. To take one example, the service offering a 6-hour session for $95, a 9-hour session for $96, a 10-hour session for $97 and a 12-hour session for $97 generates hourly fees of $15.83, $10.67, $9.70 and $8.08 respectively. As can be seen in the third example in the figure, and common to much of the other material from services, is reference to the hours cap as the rationale for the session structure.

More detailed analysis of session lengths and fees using data from the operational administrative data, covering a much wider number of services, is undertaken in Section 5.6.2.

Figure 79: Examples of post-package service fee schedules

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The second is the extent to which the hourly rate cap does not take account of variations in the hourly cost of services. This is an issue with respect to flexible care in that families needing child care outside of typical business hours may be charged at a higher rate to reflect educators' penalty rates for working these hours. The cap makes no provision for this. This has emerged as an issue in the evaluation of In Home Care, although a high proportion of families using In Home Care are receiving Additional Child Care Subsidy. It was addressed by the 'Sector Viability Brief' produced by Family Day Care Australia (2019), which argues that in that sector 'a loading of 20 per cent for non-standard hours care be adopted' (p. 6).

5.3.4 Rigidity in session offerings

While reducing the length of sessions is seen as a means of increasing flexibility for families, in some cases shorter sessions have significant rigidity. This is because sessions effectively operate as a window of time during which a child can receive child care services, with parents having flexibility within this window. A consequence of shorter sessions is to diminish the window within which they can drop off and pick up children. This was identified as a concern by both parents and stakeholders:

What that has done, is an added complexity around managing staffing at the beginning and end of the day. So parents are now required to book in for specific times, so my … nine hour day is only going to go from nine till five. If you arrive before nine or leave after five, even if the centre's open from seven till six, you're going to be charged the late fee. 
[Child care stakeholder, January 2019]

This is a concern not just with short hours of care but also, for example, those working full-time and being entitled to a 10 hours session where minor additional work demands may delay a return, and be compounded by long commute times.

This type of rigidity also comes through in the set of options services offer. This can be seen in Figure 80, which contains 2 extracts from services' Complying Written Agreements. In the first case, the service offers 4 session lengths 12, 10, 9 and 6 hours. In each case, these have specific start and end times, and in the case of the 6-hour sessions, they run from 6.30 am to 12.30 pm, or 12.30 pm to 6.30 pm. In the second, there is more flexibility in the range of options for the 10 and 9 hours sessions, but the 6-hour session is only offered on a 9 am to 3 pm basis.

Figure 80: Examples of post-package booking options in a Complying Written Agreement

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While, in some cases, a parent's employment activity may coincide with the rigid hours offered for some of these sessions, in many cases, it will not. Given that in many cases, as seen above, sessions of different lengths are charged at the same rate, or with relatively minor discounts for shorter periods, choosing a shorter session with rigid start and end times does not appear to represent enhanced flexibility.

A second aspect seen in these agreements is the use of a weekly schedule, which is seeking a regular pattern of service use over a week, rather than the fortnight used for the purposes of the CCS.

5.3.5 Summary constraints on flexibility

Providing flexibility in services in large part involves additional costs, or revenue uncertainty and risk. In a market driven system, providing flexibility has staffing and hence labour costs implications and this constrains how services can respond. Additionally, a range of external constraints may impact the capacity of services to provide more flexible offerings. Delivering more flexible session lengths has both potential cost impacts for child care users, and reduced flexibility of utilisation.

In contrast to the Centre Based Day Care sector, the Family Day Care sector can be considered to be less affected by a number of these constraints and be able to provide more flexible options.

5.4 Changes in service provision

In the context of these issues and the changes involved with the introduction of the Child Care Package, this section considers the extent to which there have been changes in service provision, in terms of service operating hours and session lengths, since the introduction of the Package. In the SELCS, in June-July 2019, services were asked whether the sessions they offered had changed since the introduction of the Child Care Package. Almost three-quarters, 74.9 per cent, reported they had made no changes to session offerings since July 2018. However, 20.0 per cent said that their session offerings had changed due to the changes to government child care fee assistance. Another 4.4 per cent said their session offerings had changed but not due to changes to child care fee assistance. Those most likely to have reported changing their session offerings were Centre Based Day Care services (32.0 per cent), In Home Care services (23.9 per cent) and former BBF services (40.4 per cent). Those least likely to report having changed their session offerings were Family Day Care services (13.1 per cent) and Outside School Hours Care services (14.1 per cent). Of those services reporting having increased flexibility, 44.7 per cent reported they had changed their session offerings.

In explaining the changes to sessions, the main factor cited related to the introduction of the activity test, and services described taking a range of actions to align session lengths with the eligible hours of subsidy from the test. This included introducing 6-hour sessions for low-income families with 24 allowed hours per fortnight, along with 10-hour sessions to align to the 100 hours allowed hours category99 and, in other cases, 9-hour sessions for families with 36 or 72 allowed hours. A smaller number reported introducing hourly sessions to allow parents to keep within their range of subsidised hours.

In the second wave of the SELCS, 27.8 per cent of services agreed or strongly agreed that the changes to the child care system introduced in July 2018 had led to increased flexibility in how their service offered care. This was highest for former BBF services (36.0 per cent) and Centre Based Day Care services (35.7 per cent), followed by Family Day Care services (29.0 per cent) and In Home Care services (26.3 per cent), but low amongst Outside School Hours Care services (14.1 per cent). Reports of increases in flexibility were related to services also reporting they had changed how fees were charged at their service, with 52.5 per cent of those saying there had been increased flexibility also saying there had been changes to how fees were charged. A smaller percentage of those who said there had been increasing flexibility also said there had been changes to the hours of operation of the service (23.2 per cent).

5.4.1 Service operating hours

Service opening hours

Centre Based Day Care and Outside School Hours Care services typically have fixed opening and closing times, while operating hours of Family Day Care tend to vary more, depending on individual educators' preferred work hours. In Home Care services deliver care by educators at non-standard and variable hours, as it is the nature of In Home Care to meet the demand that cannot be met by other services.

The focus here is on the extent to which services have adjusted their operating hours since the introduction of the Child Care Package. While data is not available on the actual opening or closing times of services or the times of day that Family Day Care and In Home Care services are offered by services, or particular educators, the child care administrative data can be used to ascertain the times of day that are covered by the submitted sessions of care reports within a service. This is treated as a proxy for the times the service is open. This data was only available since the introduction of the Child Care Package, so the focus is on changes from Q3 2018 to Q4 2019. While this data cannot inform fully on potential changes associated with the Package, it provides a useful insight, particularly as it is consistent with more qualitative information.

For this analysis detailed session reports were accessed for one specified fortnight at about the mid-point of each quarter, at which time there are no public holidays or school holidays in any jurisdiction. This data referred to the middle fortnight of August 2018, November 2018, February 2019, April 2019, August 2019 and November 2019.

Figure 81 shows the percentage of services 'open' at each time of day, calculated as a percentage of those providing care at some time that fortnight100 by care type, for August 2018 and November 2019. For Centre Based Day Care, Family Day Care and Outside School Hours Care the distributions are virtually identical, indicating very little change in the times of day that services are operating. While data is not available prior to the introduction of the Child Care Package, there is little evidence in the responses from services to suggest that they made any dramatic changes at the time of transition. The charts also show the variation between the 2 series on an amplified scale to see the changes more clearly.

There is more change apparent for In Home Care services. This, however, is based on a much smaller number of services (50 in August 2018 and 42 in November 2019).

The lack of change in Centre Based Day Care service opening times is apparent in comparing the proportion of services open at specific times:

  • At 6.00 am, 7.5 per cent were open in August 2018 and 7.2 per cent were open in November 2019.
  • At 6.30 am, 37.6 per cent were open in August 2018 and 37.9 per cent in November 2019.
  • At 7.00 am, 67.8 per cent were open in August 2018 and 68.8 per cent in November 2019.
  • At 7.30 am, 87.4 per cent were open in August 2018 and 87.98 per cent were open in November 2019.

At the end of the day, among Centre Based Day Care services:

  • At 5.30 pm, 93.9 per cent were open in August 2018 and 93.6 per cent in November 2019.
  • At 6.00 pm, 84.2 per cent were open in August 2018 and 83.8 per cent in November 2019.
  • At 6.30 pm, 28.8 per cent were open in August 2018 and 28.8 per cent were open in November 2019.
  • At 7.00 pm, 1.7 per cent were open in August 2018 and 1.1 per cent were open in November 2019.

For the Outside School Hours Care services, 83.9 per cent provided some child care in the before school period in August 2018, and 85.1 per cent in November 2019. In the after-school period 99.6 per cent provided some care in August 2018, and 99.7 per cent in November 2019.

Figure 81: Child care services, proportion of services open by time of day, by care type, August 2018 and November 2019

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Notes: This is the percentage of services delivering child care at a particular time (the day divided into 15-minute intervals) at least once this fortnight, among those who delivered child care in this fortnight, by service care type. Data is taken from a specific fortnight in August 2018 and November 2019, to align with a 2-week period that does not include school holidays or public holidays.

Source: Child care administrative data analytical dataset (sessions of care data), Q3 2018 and Q4 2019

The patterns evident above are averages and may hide change at the individual service level; for example, if some services are shifting their opening or closing hours to a little earlier, and others are shifting them to a little later. Analysis of Centre Based Day Care services indicates that 90.8 per cent of services have the same earliest session start time in each of the quarters from Q3 2018 to Q4 2019. Just 5.3 per cent had their earliest session start time vary by under 45 minutes and 3.9 per cent by 45 minutes or more.101 Looking at session end times, 93.4 per cent of these Centre Based Day Care services reported the same latest session end time each quarter, 4.1 per cent had a latest session end time that varied by under 45 minutes and 2.5 per cent had a latest session end time that varied by 45 minutes or more. That is, the majority of services appear to have not changed their services' operating hours but some small changes are apparent across the sector.

The lack of significant change in operating times is consistent with services' reports of their expectations for, and experiences of, changes to their services' hours of operation. Just before the introduction of the Package, 18.0 per cent of services reported that they expected the change to the Child Care Package would mean changes to the hours of operation at their service. At July 2019, only 10.6 per cent reported that changes to the hours had occurred. Those most commonly reporting a change in their hours of operation were the former BBF services (43.5 per cent), the In Home Care services (31.4 per cent) and Family Day Care services (22.8 per cent), compared to 12.4 per cent for Centre Based Day Care and 5.3 per cent of Outside School Hours Care services.

5.4.2 Number of sessions reported by services

One restriction on services is that of a maximum service length of 12 hours, although in this regard the advice to services states:

While 12 hours is the maximum length for a session of care, this should in no way be interpreted as a standard session length. Rather, providers should determine session lengths that are appropriate to the needs and circumstances of families, their operating environment and business model. 
(Australian Government, 2018)

Given the maximum session length of 12 hours, some services that have long opening hours must have at least 2 sessions, either with these overlapping, or possibly short sessions at the beginning or end of the day, to allow coverage of the whole day.

In the SELCS in June-July 2019, the specific session charging arrangements reported to be offered by services were:

  • 39.1 per cent of services reported that they charge by the day or they only have one session length
  • 42.8 per cent reported that families can choose from one of a number of sessions
  • 11.0 per cent reported they have multiple sessions, with some only offered to particular families
  • 3.8 per cent reported charging on an hourly basis
  • 3.4 per cent reported having other charging arrangements.102

There are, however, marked differences by service type in the distribution of these arrangements, see Figure 82. Of particular note is the majority use of hourly rates in the Family Day Care and In Home Care sectors, with 56.0 per cent of Family Day Care and 79.1 per cent of In Home Care services reporting that they used this approach.

Figure 82: Session offerings by service type, July 2019

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Notes: Cross-sectional weight. Excludes those who responded 'Don't know'.

Source: SELCS Wave 2 (June-July 2019)

5.4.3 Sessions and lengths in practice

More detailed data in the session reports to the Department enables these reported arrangements to be examined more closely. This has been done for the middle fortnight of August 2018, November 2018, February 2019, April 2019, August 2019 and November 2019. The primary focus of this analysis is the Centre Based Day Care sector. Again, while this data cannot provide a full tracking of changes associated with the introduction of the Package, it does inform about adaptations made by services in operating under the new arrangements.

Centre Based Day Care sessions

Figure 83 shows that for Centre Based Day Care there was a gradual shift from August 2018 to November 2019 in services only offering one session of care, with increases most apparent for offering 3 sessions of care. No changes were apparent comparing August and November 2019. One in 4 Centre Based Day Care services had only one session length reported in November 2019.103

  • Among Centre Based Day Care services with one session of care, the most common length is 10 hours (49.3 per cent of those with one session length) followed by 11 hours (34.1 per cent).
  • Among those with 2 sessions, this is most commonly 10 and 11 hours (32.2 per cent of those with 2 session lengths), 10 and 12 hours (20.2 per cent of those with 2 sessions) and 9 and 10 hours (9.3 per cent of those with 2 sessions).
  • Those with 3 session lengths included those with a 9, 10 and 12-hour session (35.6 per cent of those with 3 session lengths) and those with 9, 10 and 11-hour sessions (28.2 per cent of those with 3 session lengths).

Figure 83: Number of session lengths reported in Centre Based Day Care services, August 2018 to November 2019

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Notes: 'Sessions' were rounded down to the nearest hour. Analysis indicates that this does not significantly impact the results. The data presents sessions used at some time in the fortnight rather than sessions offered.

Source: Child care administrative data analytical dataset (daily sessions data for selected fortnights per quarter)

Analysis of the Centre Based Day Care focusing on those services offering only one session length of care shows:

  • Since August 2018 there has been a decline in the number of services offering only one session length.
  • Services in the higher socio-economic areas were considerably more likely to only have one session length, along with services located in capital cities.
  • Services that are single service providers were more likely to have only one session length, relative to those that are part of a provider network, with services belonging to large providers significantly more likely to have more than one session length, compared to small or medium provider sizes.
  • Services with fewer children are more likely to have only one session length.
  • Services in which more than 5 per cent of the children are on the Additional Child Care Subsidy (ACCS) are less likely to have only one session length, while there were no significant differences according to whether the percentage of children with 24 allowed hours is greater than 10 per cent.

Figure 84 shows the most common session lengths that are reported by Centre Based Day Care services over time. Across the period there was little change in the percentage that reported sessions of less than 6 hours, 6 hours, 11 hours or 12 hours, but there was growth in the percentage that reported sessions of between 7 and 9 hours, and sessions of 10 hours.

Figure 84: Incidence of session lengths reported by Centre Based Day Care services, August 2018 to November 2019

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Notes: 'Sessions' were rounded down to the nearest hour. Analysis indicates that this does not significantly impact the results. The data presents sessions used at some time in the fortnight rather than sessions offered.

Source: Child care administrative data analytical dataset (daily sessions data for selected fortnights per quarter)

The session length of 10 hours remained the most prevalent session length across the period reported for about 3 in 4 Centre Based Day Care services at November 2019, and its prevalence has increased over time.

With regard to 6-hour sessions, the multivariate analysis of Centre Based Day Care service characteristics indicates:

  • Over the period, there was not much change in the proportion with a 6-hour session until August 2019, when the proportion was somewhat higher than in August 2018.
  • Services located in the lowest socio-economic quintile were significantly more likely to have a 6-hour session, compared to other services.
  • Findings across locations as defined by population size and remoteness. Services were most likely to have a 6-hour session if located in large urban centres of 50,000-100,000 people or in inner regional areas.
  • Services belonging to the largest providers were more likely to have a 6-hour session, with those part of medium-sized providers being the least likely, with single service and small providers in-between.
  • Using child counts as a measure of size identified few differences in the likelihood of a service providing these sessions.
  • Services were more likely to have a 6-hour session if more than 10 per cent of children at the service had 24 allowed hours of subsidy under the activity test, as were services with more than 5 per cent of their children on Additional Child Care Subsidy.

Looking at shorter sessions:

  • About 6 per cent of Centre Based Day Care services reported a 1-hour session at least once in the fortnight. Over the selected periods, this varied between 5.5 per cent and 6.4 per cent but with no apparent trend.
  • 16 per cent of Centre Based Day Care services reported a 2-hour session, varying from a low of 15.4 per cent to a high of 16.3 per cent over the period, but with no apparent trend.
  • 18 per cent of Centre Based Day Care services reported a 3-hour session. There was a very slight gradual decline in the incidence of this session length from 18.0 per cent in August 2018 to 17.2 per cent in November 2019.
Sessions in other care types

While sessions data for other care types was not examined in the same detail as above, analysis indicates that for Outside School Hours Care services, some 69.2 per cent of services had 2 session lengths in November 2019, typically reporting a morning, before school, and afternoon, after school, session. Another 21.0 per cent of services had one session length. These percentages varied a little across the fortnight snapshots with no apparent trend.

The 2 most commonly recorded session lengths in the Outside School Hours Care sector were 2-hour (73.2 per cent of services) and 3-hour (76.5 per cent) sessions, followed by 1-hour sessions, which may reflect casual charging practices (30.8 per cent of services).104 There was little variation over time in the distribution of these session lengths.105

Almost all Family Day Care and In Home Care services recorded 5 or more different session lengths at each period, reflecting the more flexible delivery of child care for these services. Looking at the session lengths in detail, a majority of Family Day Care and In Home Care services reported very variable session lengths, with many including sessions recorded of one up to 10 hours within the fortnight. Fewer, though, had sessions of 11 or 12 hours.

Commonly used session lengths

The above findings are based on whether any children in the service were reported to use any of the session lengths. Analysed by a count of children using each session length the 10-hour session is the most commonly used session length at Centre Based Day Care services, and over time has become more common, with a diminution in the role of 11 and 12-hour sessions, although with some flattening of the rate of increase in November 2019. This distribution is shown in Figure 85.

Figure 85: Most commonly used session length at each Centre Based Day Care service, based on child numbers in each, August 2018 to November 2019

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Notes: 'Sessions' were rounded down to the nearest hour. Analysis indicates that this does not significantly impact the results. The data presents sessions used at some time in the fortnight rather than sessions offered.

Source: Child care administrative data analytical dataset (daily sessions data for selected fortnights per quarter)

Session lengths vary for other care types. Table 57 shows the most commonly used session lengths as at November 2019 for each care type. For Outside School Hours Care services, the most commonly used session length was 3 hours (71.7 per cent of services), while for Family Day Care and In Home Care the most commonly used session length was one hour (71.8 per cent and 76.2 per cent respectively), reflecting the use of hourly charging regimes.

Table 57: Distribution of most commonly used session lengths, by care type, November 2019
Session lengthService type:
CBDCOSHCFDCIHC
 Distribution of session lengths (%)
1 hour0.12.070.276.2
2 hours0.324.91.111.9
3 hours1.271.70.07.1
4 hours0.31.30.20.0
5 hours0.80.00.02.4
6 hours1.40.00.00.0
7 hours0.60.01.30.0
8 hours3.00.019.80.0
9 hours5.30.03.90.0
10 hours35.90.03.50.0
11 hours32.30.00.02.4
12 hours18.90.00.00.0
Total100.0100.0100.0100.0
Number of services8,0354,29445942

Notes: 'Sessions' were rounded down to the nearest hour for this analysis, rounding up to one hour for sessions less than one hour. This is sessions used at some time this fortnight rather than sessions offered. The most commonly used session length for each service was calculated as the one with the most children using it. This shows the mostly commonly used session length per service.

Source: Child care administrative data analytical dataset (daily sessions data for selected fortnights per quarter)

Six-hour sessions

Earlier analysis shows that 22.7 per cent of Centre Based Day Care services reported a 6-hour session at some time in the fortnight of sessions data in November 2019. This is based on at least one child at the service having been charged for a session length of (or about) 6 hours. Among all children using Centre Based Day Care that fortnight, only 2.3 per cent were recorded as being in a session of (or about) 6 hours at some time with another 5.5 per cent of children in a session shorter than this.

As has been noted, this data considers sessions 'used' rather than 'offered', with regard to access and flexibility this latter is important. It is also a question of demand, and while there are a range of reasons why parents may wish to use shorter, 6-hour sessions, as discussed, another important role for these sessions related to the limits of hours that are eligible for subsidy under the activity test. The proportion of children with these low hours is, however, small. For example, in the final week of Q2 2019, 31.8 per cent of Centre Based Day Care services had no children with 24 allowed hours enrolled, and only 31.3 per cent had 2 or more. This though, of course, records children with these hours who use care, not those who do not.

Further analysis of 6-hour sessions is reported in examining issues for vulnerable families in Chapter 7.

5.4.4 Summary changes in hours and sessions

Other than in the In Home Care sector where services are operating over a greater time span, there has been little change in the hours for which other forms of child care are open between Q3 2018 and Q4 2019. There is considerable variation across service types in how care is charged, with hourly fees most common in Family Day Care and In Home Care, and session-based structures in the other sectors.

Within the Centre Based Day Care sector there has been some shift towards offering multiple sessions. In terms of the range of sessions being offered, the main feature has been an increasing proportion of services offering session lengths between 7 and 9 hours and 10 hours. In terms of frequency of use, there has been a shift from sessions of 11 and 12 hours in favour of those of 10 hours.

There has only been a relatively minor increase in the number of services in this sector offering 6-hour sessions, and these are only used by 2.2 per cent of children, with 5.5 per cent using shorter sessions.

5.5 Sessions, attendance and charging

This section considers 2 additional dimensions of sessions of care. The first is the actual time children spend in care, relative to the duration of the session they are attending and is paid for. The second concerns how services charge for sessions of different lengths. Of interest here is the extent to which there was greater alignment between the session lengths that were charged and the time children spent in care, and whether or not the introduction of a greater range of sessions has reduced costs for those using these sessions.

5.5.1 Hours attended and hours charged for

From mid-January 2019, child care services were required to record actual attendance of children. However, there was some 'settling in' of this, such that early attendance data in the administrative records may not be reliable, instead reflecting the start and end time of a session. To be more confident of the data quality, the analysis here draws on attendance data from Q2 2019 (April-June 2019) to Q4 2019 (October-December 2019). While data on hours attended is provided through the administrative data, no information is available on whether these attendance patterns are normal, or if the child has an unexpected or unplanned absence. That is, the difference between hours charged and hours attended will be any usual gap between these measures plus any additional gaps because of absences from child care that fortnight that are nevertheless subject to charging. To avoid exaggeration of the gap between hours used and hours charged when children are away from child care all week, those with weekly attendance hours of zero are excluded, as are those with hours charged or fees charged of zero. Figure 86 shows the mean hours charged for and hours attended per fortnight by care type by quarter, along with the ratio of hours attended to hours charged.

Figure 86: Average hours attended and average hours charged per fortnight, by quarter and care type, Q2 2019 to Q4 2019

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Source: DESE administrative data

For each of the sectors, the hours charged is markedly higher than the hours attended. In Q4 2019, the ratio of hours attended to hours charged was lowest in Outside School Hours Care (57.6 per cent of hours charged were attended) and Centre Based Day Care (64.7 per cent), compared to those sectors that more often have hourly charging practices - in Family Day Care and In Home Care hours attended represented 79.0 per cent and 85.7 per cent, respectively, of hours charged.

While there are some variations in this ratio over time, interpretation of this requires caution given the short time period for which the data is available, and the possibility that there may be seasonal factors that cannot yet be observed. Of note, however, is that to the extent there seems to be some increase in the ratio in the Outside School Hours Care and In Home Care sectors, this appears to have come from increased actual use, rather than any decrease in the average session lengths.

Data for just the Centre Based Day Care sector, with children grouped according to ranges of fortnightly hours charged for within each quarter is shown in Figure 87. Across the 5 hours groupings, while there is some variation in the proportion of charged hours for which children attend, there is no consistent pattern to these, and no obvious trend. This suggests that, on the evidence to date, having shorter periods of charged child care is not associated with using these more efficiently, as well as there being an absence of any change over time. This data does not provide any substantial evidence to suggest that the increased flexibility in session charging is leading Centre Based Day Care services to better align hours charged to hours attended, except perhaps at the margins.106

Figure 87: Centre Based Day Care average fortnightly hours charged and attended, by ranges of fortnightly hours attended and quarter, Q2 2019 to Q4 2019

fig087.png

Source: DESE administrative data

5.6 Changes to service charging practices

The analysis above shows some adjustments have been made to how services are 'packaging' child care for families. This section considers the charging practices of services in relation to these sessions. It initially considers survey responses on this question and then analyses administrative data on actual practice in Centre Based Day Care services.

5.6.1 Services reported changes

In the SELCS Wave 2, in June-July 2019, services were asked if the changes introduced in July 2018 had led to changes in the way fees are charged at this service. Overall, 30.4 per cent of services agreed (strongly agreed or agreed) that changes had been made. Changes were least likely for Outside School Hours Care services (17.3 per cent agreed) and most likely for the former BBF services (80.5 per cent agreed) and In Home Care services (60.5 per cent agreed). Of the Centre Based Day Care services, 36.4 per cent reported the way fees were charged had changed, and of Family Day Care services 41.6 per cent agreed that the way fees were charged had changed. Changed charging practices were more likely to be reported among those who reported their session offerings had changed.

More specifically, services were asked how their charging worked where they provided more than one session length. Just over half (54.6 per cent) of services offering more than one session length reported that they charge the same rate per hour for all session lengths. This was notably higher for former BBF services (90.1 per cent), In Home Care services (69.8 per cent) and Family Day Care services (62.8 per cent). In contrast, a much lower 55.3 per cent of Centre Based Day Care services with multiple sessions reported they charged the same hourly rate, as did 51.2 per cent for Outside School Hours Care services.

Services that charged varying rates for different sessions were asked to describe how these charges vary. The more common themes emerging from responses included the following that relate to session lengths:

  • Many Outside School Hours Care responses relate to varying fees for before school care, after school care and vacation care.
  • Some services reported charging the same fee regardless of session length, although some noted there was a different fee for the 6-hour session.
  • Some reported having a sliding scale they charged depending on session length.
  • Some reported that shorter sessions are charged at a higher rate to cover casual staff costs and overheads, and similarly longer sessions have a discounted/reduced hourly rate.

Some explanations for the charging practices include:

We looked at our clientele and what their affordability would be, in the hopes that they can access our longer sessions. So we made our longer sessions cheaper per hour. 
[CBDC provider, July 2019]

10 and 9 hour sessions have the same full fee - and due to the CCS calculation method - pay the same gap fee. Our service is not rigid on start/finish times so families are able to meet their work/study commitments. 6 hour sessions are charged at a higher rate and aim to provide a balance of affordability to families and viability for the service, given that some of these families also utilise our courtesy bus and therefore end up accessing extra hours of care. 
[CBDC provider, July 2019]

The reference to charging practices for 10 and 9 hours sessions seen in the second of these responses is considered in more detail in Section 5.6.2.

Additional comments referred to varying fees for reasons such as: the age of the child; for some sessions that include meals or amenities that affect session costs; some sessions being offered at a reduced rate because of outside funding (for example, preschool funding); and in the case of Family Day Care and In Home Care, because fees are set by individual educators, with rates varying with educational qualifications and experience.

5.6.2 Session length and charging in Centre Based Day Care services

To analyse the charging practices for different session lengths across services, this section draws from the main dataset of service session data a series of subsets of services with similar session structures (based on the number and duration of sessions).107 Key results of the analysis are presented in Table 58.

In November 2019, 1,632 (35 per cent) of Centre Based Day Care services were recorded as having 2 session lengths. Restricted to those that had one session length of 10 hours and one of 11 hours (525 services):108

  • The average fee charged for the 10-hour session was $114 and for the 11-hour session was $117.
  • The derived hourly rate (the session fee charged divided by the number of hours charged) of $11.41 for the 10 hour session was markedly higher than the $10.50 per hour for the 11-hour session.
  • The average 10-hour session fee was the same109 as the average 11-hour session fee in 19.0 per cent of the services.

Taking a second subset of those with 2 sessions, one of 10 hours and one of 12 hours (329 services):

  • The average fee charged for the 10-hour session was $114 and for the 12-hour session was $111.
  • The derived hourly fee for the 10-hour session of $11.43 is very much higher than the $9.23 for the 12-hour session.
  • The same fee was effectively charged for both session lengths by 16.0 per cent of the services.

Of the 1,860 services with 3 identified session lengths, the most common combination was having session lengths of 9, 10 and 12 hours (662 services). These are considered here:

  • On average, the fee charged for the 9-hour session was $110, for the 10-hour session $108 and for the 12-hour session $112. This pattern of fees is considered further below.
  • The derived hourly fees were $12.24 for 9-hour sessions, $10.84 for the 10-hour sessions, and $9.36 for the 12-hour sessions, reflecting the same pattern of higher hourly fees for shorter sessions.
  • The session fee was the same for the 9-hour session and the 12-hour session in 14.8 per cent of services.
Table 58: Centre Based Day Care Services, selected analysis of session lengths and charges, November 2019
Session structureSession costHourly rateProportion charging same fee
 ($)(%)
2 sessions (525 services)19.0
10 hour114.0011.41 
11 hour117.0010.50 
2 sessions (329 services)16.0
10 hour114.0011.43 
12 hour111.009.23 
3 sessions (662 services)14.8
9 hour110.0012.24 
10 hour108.0010.84 
12 hour112.009.36 

Source: DESE administrative data

One distinctive feature of this analysis, as noted above and shown in the table, is the pattern of charging in the services that have 3 sessions where the actual fee for a 9-hour session is higher than that of a 10-hour session. This was examined in detail and it was found that this pattern, as shown in the table, of a 9-hour session being more costly than a 10-hour session holds true across service locations, business models and other service related variables. In some 62 per cent of the services with these 3 session offerings (9, 10 and 12 hours) the total cost of 9-hour sessions is higher than for 10-hour sessions.

The analysis of the administrative data indicates that in these services, overwhelmingly, these 9-hour sessions are being used by people with either 36 or 72 allowed hours of CCS subsidy. In contrast, 10-hour sessions are mostly used by children with 100 allowed hours attending 5 days per week. As outlined in the service survey response cited in Section 5.6.1, the apparent basis of this pattern relates to the interaction of allowed hours and session lengths. That is, for people with 36 allowed hours using 2 days of care per week, while the total fee charged for 9-hour sessions may be higher than that for 10 hours, it works out as a lower out-of-pocket cost for these families (as long as the hourly cap is not breached) as they do not have any unsubsidised hours. That is, if they attended a 10-hour session, they would only receive the subsidy for 9 of these hours with the subsidy based on the hourly rate calculated across the whole 10 hours, and have to pay the full cost for the 10th hour. By having a 9-hour session at a higher rate - which enables services to obtain the same revenue that they would if the session length was 10 hours, the parents effectively receive the same (or even potentially a higher) value of subsidy but without the obligation of paying the full cost of the 10th hour. A similar set of circumstances occurs for those with 72 allowed hours using 4 days of care.

While as noted above, these figures are estimates, based on averages, they nevertheless indicate that some services, while ostensibly offering flexibility through diverse session lengths, effectively have a fixed 'day' rate for Centre Based Day Care, with the session length varying between families (or children) depending on the number of subsidised hours families can access, and being charged at substantially the same rate.

5.6.3 Former Occasional Care services

One of the changes associated with the Package was the removal of some of the regulatory constraints on former Occasional Care services, and their integration within Centre Based Day Care. Of the 8,035 Centre Based Day Care services for which there were session reports in November 2019, 83 were formerly Occasional Care services, 6,761 were formerly Long Day Care services, and another 1,191 were not matched in the 2017-18 data. Those Centre Based Day Care services that were previously Occasional Care services were, as detailed in Table 59, considerably more likely than other services in this sector to be reporting short and varied sessions of care and much less likely to be reporting session lengths of 10, 11 or 12 hours.

Table 59: Session lengths in Centre Based Day Care services in November 2019, by care type of service prior to July 2018
Previous care typeSession lengths reported:
 
hour

hours

hours

hours

hours

hours
7-9 
hours
10 
hours
11 
hours
12 
hours
 Proportion reporting (%)
Long Day Care5.415.317.04.06.722.249.376.040.129.7
Occasional Care22.936.148.251.859.039.856.612.03.61.2
Unmatched to 2017-18 data7.115.116.58.611.123.947.368.335.633.9
Total5.815.517.25.27.922.749.174.239.030.0

Notes: Row totals do not add to 100 per cent as services can have multiple sessions.

Source: DESE administrative data

Analysis of fee data indicates that in Q4 2019 former Occasional Care services were charging an average hourly rate of $11.14 compared to $10.33 for those Centre Based Day Care services that were either new or had been Long Day Care services. This is indicative of a premium for the shorter session lengths.

5.6.4 Insights from case studies

The findings from the case studies offer some additional insights into the provision of shorter session lengths by services and how different service providers chose to charge for and staff these sessions.

Whether or not a Centre Based Day Care service offered a reduced daily rate for the shorter session appeared to have some bearing on how services managed staffing arrangements and viewed the long-term financial viability of offering different session lengths. Most Centre Based Day Care services in the case study offering different session lengths charged families either the same daily rate for the session options, or a marginally lower rate for the shorter session (e.g. up to $5 per day difference). This tended to be the approach of Centre Based Day Care services who offered a long day session (11 or 12 hours) as well as a 10 and, or, 9-hours sessions. This meant, as discussed above, that while families accessing shorter sessions were paying a higher hourly rate for care, this approach benefited families financially if the family used more hours than their fortnightly allowable hours, as this was more affordable than paying for unsubsidised care.

Taking this approach also meant that these Centre Based Day Care services did not have to be rigid about specific start and finish times for the shorter sessions as income, and subsequently their staffing arrangements, remained largely unchanged. It was Centre Based Day Care services offering substantially lower daily rates for the shorter session options and, in particular, when services offered a 6-hour session, that spoke of services needing to carefully consider their staffing arrangements to ensure the long-term financial viability of this session offering. One aspect of this was needing to be more rigid as to what hours the shorter sessions were available. As one service director noted, families wanting a 6-hour session were most likely to want the 6 hours of care between the hours of 9 am and 3 pm, rather than from 6 am to 12 midday or 12 midday to 6 pm. This meant that Centre Based Day Care services offering a 6-hour session did so at the expense of maximising their occupancy levels, as the hours before 9 am and after 3 pm would not generally be able to be filled by another child.

Consistent with the administrative data analysis outlined in Section 5.4.3, Centre Based Day Care services in the case study were slightly more likely to offer a 6-hour session when the service had a higher percentage of children enrolled who were only entitled to 24 hours per fortnight of subsidised care. In Case Study 2, which was an area selected to enable a focus on child care use in a relatively high income central business district (CBD) environment, few of the participating Centre Based Day Care services offered any session options and none offered a 6-hour session (one service had initially offered a 6-hour session and then stopped due to viability concerns). Whereas, in Case Study 1, which was an area selected to enable a focus on child care use in a low-income area in an outer metropolitan location, most participating Centre Based Day Care services were offering session options to families. However, even here very few Centre Based Day Care services offered a 6-hour session despite service directors expressing concern that the most vulnerable children were not receiving sufficient early education in the years before school.

The services offering 6-hour sessions charged lower fees for this session option. One Centre Based Day Care service that was offering a 6-hour session noted that it was challenging to make this offering financially viable. Service directors spoke about needing to tightly manage their staff rostering, and associated staffing costs, within staff/child ratio requirements, and some services capped the number of families accessing this session offering.

There's a bit of complexity around managing [six hour sessions] in terms of service viability. We've had to cap it at a certain number of families who can access it at any given time, because it does require us to, I guess, as an organisation to make a bit of a financial commitment to those families. But it actually does cost us money to be able to provide those sessions for families. 
[CBDC provider, August 2019]

Several Family Day Care educators within Case Study 1 had a minimum session length of 6 hours. For some, this had been longstanding and predated the introduction of the Package, and for others, they had subsequently adopted this business model. Offering a 6-hour session between 9 am and 3 pm for children of preschool age or under enabled Family Day Care educators to also provide outside of school hours care to school-aged children, thus ensuring that offering a 6-hour session could be financially viable. This was put by one director as:

So, we are lucky in a sense that our educators could see the purpose in that in retaining their families but also we went, well that gives you an option to take before and after school care as well. So we had to try and sell it in the sense of how that's going to work for them and their business, and how they'll still be able to maintain their income, even though they're doing something to help the family so the children could actually retain and maintain care. 
[FDC provider, February 2020]

5.6.5 Impact on hours charged and charging

While, as noted in the previous section, there have been some changes in the structure of sessions offered by some services, this appears to have had little impact, over the time period for which data is available, on the extent to which hours attended tend to be significantly below the hours charged for. Where services have adopted a range of session choices, the cost of these sessions is usually close to the cost of longer sessions. It would appear that this has largely been done as a device for allowing parents to receive funding for all of their hours of care by bringing the charged hours into alignment with their allowable hours and so avoiding having unsubsidised hours of care.

5.7 In Home Care

As identified in Chapter 1, In Home Care is a program focused on providing flexible child care in the home for families in particular circumstances whose child care needs cannot be met by mainstream options. An evaluation of the In Home Care program has been conducted separately. The program commenced in July 2018 following a complex transition from the 2 previous programs, an earlier In Home Care program and Nanny Pilot Programme.110

In addition to having to meet Child Care Subsidy eligibility, the program eligibility requires that families do not have other child care options available or that are appropriate, and they meet one or more of 3 criteria, which can be seen as constituting streams of the program. These are:

  • The parents or carers are working non-standard or variable hours, outside normal child care service hours.
  • The family is geographically isolated from other types of approved child care, particularly in rural or remote locations.
  • The family has challenging or complex needs, including where families are experiencing challenging situations, and other approved child care services are not able to meet the needs of the children or the family.

Each of these can be seen as having elements of flexibility in them. This is most apparent for the 'nonstandard or variable hours' eligibility criteria, in which parents require In Home Care where mainstream care options do not operate during the hours needed by parents. But flexibility is also relevant to those with challenging or complex family needs who need child care solutions that are sensitive to child and family needs. For those requiring In Home Care because they are geographically isolated, this is less about meeting a need for flexible child care, but more about meeting a need for accessible child care.

The program has a specific structure including a networked brokerage model for the delivery of In Home Care and distinct roles for the Australian Government, newly introduced In Home Care Support Agencies, In Home Care providers and services, and educators. The program has a cap on the level of provision, currently up to 3,200 places, providing up to 100 hours of subsidised care per child per fortnight. In Home Care Support Agencies data in December 2019 reports that there were 518 families (1,088 children) on an In Home Care waiting list.

Figure 88 presents the number of families accessing In Home Care according to families' main eligibility criteria. This data shows a diverse set of trends for these different subgroups over time, reflecting both some residual transition issues, as well as the implementation processes of the new program structure.

Figure 88: Number of families accessing In Home Care by eligibility criteria, Q3 2018 to Q4 2019

fig088-lines.png

Notes: These program reports classify families according to the one most relevant eligibility criterion, even if more than one applies to them.

Source: In Home Care program data

Data collected for the In Home Care evaluation includes family reports of satisfaction with In Home Care. According to this survey data, families are mostly quite satisfied with the In Home Care received and with the quality of care provided by the educator. Most families are satisfied or very satisfied with the number of hours of In Home Care that can be accessed, the times of day the family has been able to access In Home Care and the flexibility of In Home Care. (Figure 89 shows the mean rating with the average in most cases being around a rating of 'satisfied'.)

The survey data, however, only shows that a minority of families have difficulties with these aspects of In Home Care, but with somewhat more dissatisfaction among those families using In Home Care for their complex and challenging needs. For example, 17.6 per cent of these families were dissatisfied with the flexibility of In Home Care if the hours of care needed to be changed. For those using In Home Care for their non-standard or variable hours, or because they were geographically isolated, about 12 per cent were dissatisfied. Interviews with the In Home Care Support Agencies also suggested that flexibility of In Home Care hours continued to be a problem for some families. In Home Care Support Agencies and In Home Care services attributed problems with flexibility to the challenges of recruiting educators for short periods of time. Other challenges were identified for families working shift work, with varying rosters, whereby the service was often unable to line up an educator to meet child care needs that varied from week to week, or roster to roster. For some families, this has meant being unable to access In Home Care altogether.

These challenges with flexibility experienced by some families amplify the wider challenge for the In Home Care program to recruit suitably qualified educators who are available to provide child care at variable or non-standard hours, or in geographically isolated locations. This is reflected in 2 in 3 families on the waiting list being there due to a suitable educator not being available. More detailed analysis has been presented in the In Home Care evaluation report.

Figure 89: Mean family satisfaction with aspects of In Home Care, by family category and suitability criteria, 2020

fig089.png

Notes: Questions were asked on a 5-point scale of strong agreement to strong disagreement. These have been coded to a single scale from +2 to -2, with positive values indicating agreement.

Source: In Home Care Family Survey Wave 2 (November 2019-February 2020)

5.8 Summary

Flexibility is a concern for parents, although it has several dimensions. These include, firstly, the actual times at which care is available, secondly, the extent to which parents can change their pattern of use of it, and thirdly, the relationship between actual use and charges. While a substantial group of parents expressed dissatisfaction with their ability to easily change their usage of child care, such as increasing or decreasing hours on short notice, on the whole, satisfaction with flexibility ranks well above that of satisfaction with affordability. There is no evidence of any increase in satisfaction with flexibility with the introduction of the Child Care Package. With regard to employment, there appears to be a specific issue for those parents who work changing shifts, although, more generally, a lack of flexibility does not appear to be a significant inhibitor of labour supply.

In large part, providing flexible child care comes at a cost. Extending operating hours incurs costs, in particular staff costs due to the payment of penalty rates, and in potentially providing incentives for staff to work at non-standard times. The nature of the CCS is that any additional costs in such circumstances need to be fully met by parents. Similarly, moving away from rigid patterns of attendance around which staffing rosters can be constructed to meet statutory staff to children ratios, continuity of staffing brings with it the potential for a gap between revenue and expenditures, or a breach of the ratios if there is a mismatch between the number of children attending and the rostered structure. As such, the failure of services, in particular Centre Based Day Care services, to respond to some demands for more flexible care is not a market failure, but rather a demand for services which are uneconomic to supply. It is noted that in contrast to this sector, the characteristics of Family Day Care make this sector more capable of providing flexible care. As has been discussed in Chapter 4, a substantial part of the Family Day Care provision has largely moved to an hourly fee basis.

For most services, other than In Home Care, there has been no substantive change in the operating hours since September 2018. In Centre Based Day Care there is evidence of changes in the structure of sessions of care, with more services offering sessions of more than one different length, including shorter sessions. In some cases, these are available for parents to choose, and in some cases, they are only offered to selected parents. While shorter sessions are often perceived as being a 'flexible' option, in many cases, they involve significant rigidity, because shorter sessions are typically only offered for predetermined periods of the day that may not meet the parents' needs.

It does appear that the development of shorter sessions has been largely driven by the operation of the activity test and the allowable hours of subsidy to which parents are entitled. In terms of charging, the available data does not provide evidence that sessions of care have been modified to better align use and charging. More so, the data clearly shows the emergence of a pattern of charging that is designed to minimise parental costs while maintaining service revenue, by structuring sessions and charges around the structure of allowable hours.

In Home Care does provide a form of flexible care to families, and there is a high degree of satisfaction with In Home Care among those who use it. But there have been challenges with the program, particularly related to the availability of suitably qualified educators.

96 There are other ways that children may be enrolled. In particular, 'relevant arrangements' may be used by services if children do not meet the full requirements for a CWA - no CCS can be paid in these cases. This is usually used when a provider is sure that the family does not wish to claim CCS, and services receiving CCCF Restricted grants have been encouraged to use 'relevant arrangements' to ensure vulnerable families engage with their service. There may also be a provider eligible arrangement for children receiving Additional Child Care Subsidy (Child Wellbeing) or an arrangement with a third-party organisation. The SELCS Wave 3 was to collect information on these different enrolment arrangements but, as discussed in Chapter 3, this survey was not undertaken.

97 The number of occasional care places available to parents was capped by state/territory governments and casual booking of child care was not offered at all services. In Q2 2018, the number of children using occasional care in a week peaked at 3,650 children (week ending 3 June 2018). In that week, 59.7 per cent had used up to 12 hours of care in the week, 29.7 per cent had used 13-24 hours and 10.6 per cent had used more than this.

98 The actual survey questions were 'Thinking about all the care your family uses, do you agree or disagree with the following: The cost of child care is affordable; There were enough child care options for me to choose from when selecting a child care provider; Child care is flexible to meet my family's needs; and It is easy for me to get the child care I need.'

99 While a 50 hours a week cap applied under the former CCB, no cap was applied to CCR, and to the extent excess fees arose due to exceeding the CCB cap, these were eligible expenditure for CCR claims.

100 For Family Day Care and In Home Care it shows the percentage of services that have educators providing child care by time of day, as a percentage of services providing some Family Day Care or In Home Care that fortnight.

101 Based on 8,485 Centre Based Day Care services which had session reports submitted for at least one of the fortnights covered by these quarters. Excludes a small number with session times that did not appear valid for Centre Based Day Care.

102 These 'other' arrangements typically covered services' reporting to have variation in fees for particular families (e.g. some reporting it is free for some families, multiple sibling discounts, different fees for not-working families), rates varying for permanent versus casual, and sometimes including an administrative or educator levy.

103 Data is derived from session reports. Start and end times of sessions were used to calculate a session length. For simplicity, these were rounded down to the nearest hour (with the exception of sessions calculated as under one hour, which were rounded up to one hour). Any session report submitted for a service was used, and this may include session lengths not typically offered, for example, if parents are charged for an additional hour or 2 before or after their usual session of care. This may explain why the administrative data results in more session lengths when compared to the survey data. In the SELCS Wave 2, 40.9 per cent of Centre Based Day Care services reported offering one session, 13.2 per cent reported offering 2 sessions and 45.9 per cent offering 3 or more sessions. This is different to the administrative data for around the same time (August 2019), which finds fewer had one session (29.5 per cent), more with 2 sessions (20.3 per cent), with about the same percentage 3 or more sessions (50.2 per cent). There is also a difference in the survey data with respect to reporting about session lengths, with survey data indicating a smaller percentage of Centre Based Day Care services offering a 6-hour session, for example.

104 These analyses are based on rounding sessions to the nearest full hour and so there will be more variation than this across the sector; for example, with some services having sessions that include part of an hour.

105 The sessions data was intentionally extracted to avoid school holiday periods, so data on the session lengths of Outside School Hours Care during school holidays (that is, vacation care) is not available.

106 Even to the extent there may be any change at the margins, this must be placed in the context of the earlier discussion, which is examined further in the next section, of services introducing shorter sessions but charging rates similar to that of longer sessions. While such shorter sessions would be expected to increase the alignment of hours and attendance, it has no material impact on the actual cost of care charged, but rather is designed to work around the activity test constraints and maximise subsidy flows, and hence the balance of the cost between families and government.

107 This analysis focuses on sessions data for 8,035 Centre Based Day Care services for November 2019. There is some variation in fees charged at services by factors other than session length, so these findings are not precise.

108 Session lengths are derived by rounding the difference between the end and start times of the session. The hours charged are more variable, as they allow fractions within those rounded session lengths. The exception is a 12-hour session, as 12 hours is the maximum session length.

109 The fees were rounded to the closest dollar value for the purposes of comparing fees for different session lengths.

110 The Nanny Pilot Programme was an early component of the Child Care Package that explored the use of nannies to support parents who needed flexible child care arrangements. The Nanny Pilot Programme (initially named the Interim Home-Based Carer Subsidy) was a pilot program of in home care that operated between 1 January 2016 and 1 July 2018. The Nanny Pilot Programme was implemented alongside the previous In Home Care program and was designed to increase the workforce participation of families working non-standard hours, or with other barriers to participation such as living in remote or rural areas or the unavailability of existing child care. The Nanny Pilot Programme subsidised services that used this subsidy to reduce the cost of using a nanny for families in the program. The cost for the subsidy was calculated per child per hour and nannies were required to have a Working with Children Check and First Aid training, (Department of Education and Training, 2016) but were not required to hold a formal qualification, such as the Certificate III that was required for other Commonwealth approved services for subsidies. A review of the Nanny Pilot Programme found that while it was successful in providing flexible care for many families, some families were unable to access the program due to costs or nanny availability. Recommendations from that review included the need to assist families in recruiting nannies and the requirement that nannies have a minimum Certificate III child care qualification as well as ongoing training and support. The review also recommended considerations to the cost of providing care in the home and suggested targeting the subsidy to those most in need, as well as revised subsidy arrangements for families with multiple children. The Nanny Pilot Programme was replaced by the new In Home Care program in July 2018.

6. Access

6. Access

6.1 Child care and access

Access is part of the first of the outcomes identified in the evaluation framework: 'Child care services are accessible and flexible relative to families' needs, including disadvantaged.' The element of flexibility in this outcome has been addressed in the previous chapter, and the needs of the disadvantaged in the next, which addresses communities with vulnerabilities.

One element of the framework governing access is the legal requirements under the Racial Discrimination Act and the Disability Discrimination Act, although this latter does have an exemption where providing a service to the person would 'impose an unjustifiable hardship' to the provider. While the Disability Standards for Education (DESE, 2020e) place a higher responsibility on educational service providers, child care services are explicitly excluded.

In addition, as noted in Chapter 1, prior to the introduction of the Child Care Package, services were expected to operate in the framework of the priority placement guidelines that stipulated that services had to give priority in access to particular groups of children including those at risk and single parents who were engaged in employment and other activities, along with children from low income families, families with people with disability and other criteria relating to potential vulnerability.

Under the Package, the Child Care Handbook indicates:

There are no requirements for filling vacancies. Providers can set their own rules for deciding who receives a place.

Providers are asked to (but are not legally obliged to) prioritise children who are: at risk of serious abuse or neglect, a child of a sole parent who satisfies, or parents who both satisfy, the activity test through paid employment. (DESE, 2019b, p. 51)

6.1.1 Child care access and ECEC goals

The concept of access to child care has many dimensions. From one perspective, it can be seen in terms of whether parents can obtain child care when they require it to enable them to participate in the workforce. It can also be seen in terms of whether those children for whom early childhood education and care services are important for their development can obtain it. Baxter and Hand (2013) suggest 3 components to this: 'creating opportunities for children to participate in ECE [early childhood education] programs; providing enough time within the programs for children to learn; and allowing children to experience the program (and its potential benefits) fully' (p. xiv).

While the primary focus of the Australian Government Child Care Package is on workforce participation, as reflected in the 'jobs for families' language of the Child Care Package legislation and the priorities identified in the evaluation framework, the second is also important, and is indeed the primary focus of policy in many countries. The OECD, for example, report that:

Early childhood education and care has experienced a surge of policy attention in OECD countries in recent decades, at the national as well as international level. However, this increasing attention is not the only change; the nature of the public debate has also significantly evolved over this period. Policy makers have recognised that equitable access to quality ECEC can strengthen the foundations of lifelong learning for all children and support the broad educational and social needs of families, and they have therefore increased the resources allocated to this sector over the last decade. With this trend, governments have taken recent initiatives that aim to enhance the quality of ECEC services and improve the equity of access to ECEC settings. This is in contrast to the public debates of the past, which were limited to quantitative issues, and public spending was mainly concentrated on measures to expand access to affordable ECEC. (OECD, 2017, p. 16)

The European Agency for Special Needs and Inclusive Education, a cross national organisation that works with the education departments of some 31 European countries, reports on an evolution in the European focus as:

The focus of European education policies has, however, shifted. Initially, they focused on increasing the quantity of childcare and pre-primary places to enable more parents to join the labour market. Now, they focus on the educative and formative effects of ECEC for young children in their development. (Bellour et al., 2017, p. 20)

Importantly, also, access to child care is usually expressed in terms of 'access to affordable, high quality child care' (Hockey, Abbott & Ley, 2013). This emphasises that access should not be viewed, or measured, in terms simply of physical access and capacity, but also whether the care is affordable, and whether it is of high quality. Affordability has been discussed in detail in Chapter 4 and parental satisfaction with their ability to access quality care is considered here in Section 6.6.

The adequacy of access also needs to be addressed. This is whether or not the volume of child care that can be accessed, and the times at which it is available, is sufficient to meet the needs of the child or the family. That is access is more than just a question of whether a child has attended or not attended. Critical also are issues of choice. Do parents have a choice of services, of different types, available to them? Do they have choice, for example, as to whether they can access child care close to their home, or their work location, and whether they have choice over accessing child care that reflects their values and aspirations for the care of their child?

6.1.2 Conceptual approaches to measurement

The ways in which child care is used, as seen in Chapter 2, varies considerably. Some children use it for extensive periods on a daily basis, others regularly use short periods; for example, in after-school care, while the use by others is intermittent. This, along with the question of adequacy of volume, poses a number of challenges to the measurement of access. Questions include:

  • Should the focus be on individual children, or on families? While child level counts provide information on the access of children to the development and other opportunities of care, a family or parent approach provides responses in the context of capacity to participate in the workforce and other activities.
  • Whether a focus should be placed on the volume of care used, or a headcount of access. For example, in Q4 2019, due to varying patterns of attendance and use, and the different roles played by types of care, the 24.5 per cent of children using the most hours of care accounted for half the volume of care, as measured by charged hours. Conversely the 50 per cent of children using the least amount of care only accounted for 19.4 per cent of the volume of care.
  • What is the time period over which access is considered. As there are marked differences in the count of children using child care between the use of annual, quarterly and weekly data.

These types of differences, as discussed in Chapter 2 with regard to service counts and the relative size of the different sectors, can significantly influence results. Here, however, the primary focus will be on the headcount, usually over a quarter, but varying with the nature of the data and the question being responded to, with this being complemented by separate analysis regarding the quantum of care accessed. While it is recognised that this approach has limitations, it is far less complex than attempting to use a hybrid approach.

6.2 Levels of access

In Q4 2019 there were 1,331,903 children who used child care at least once in the quarter. On average, in each month of the quarter, there were 1,239,565 who accessed child care, and on average in each week, 1,069,938 - some 80.3 per cent of the number at some time in the quarter. While some of this can be explained by inflows and outflows, much more is explained by intermittent usage, including the role of Outside School Hours Care, where children may attend before and/or after school sessions during term time, and they, or other children, may attend vacation care at other times.

On average in Q4 2019 those children identified in the child care administrative system attended child care for 170.6 hours (out of a total paid session length of 259.6 hours), on an average of 34.4 days, spread over 10.4 weeks, attending care on an average of 3.2 days a week and spending 4.8 hours in care (out of a paid session length of 7.4 hours) on these days. These averages, however, belie, as shown in Table 60, a wide diversity of experiences across the population. The data presented shows the levels of participation at the 5th, 25th, 50th, 75th and 95th percentile points. (In each case these are calculated independently; that is, a child may be in the lowest vigintile (that is, below the 5th percentile point) of attendance on the number of days attended in the quarter, but not in the calculation of average hours on the day.) As shown, while 5 per cent of children identified in the system had less than 9 hours actual attendance across the quarter, another 5 per cent had 441 hours or more.

Table 60: Children attending child care in Q4 2019, distribution of usage
Point in distribution Days in quarter attendedHours in quarterWeeks in quarterDays in weeks attendedHours on days attended
ChargedAttendedChargedAttended
 (days)(hours)(weeks)(days)(hours)
5th percentile4189212.01.0
25th percentile2295531023.82.2
50th percentile362351431238.35.2
75th percentile5039626213410.56.9
95th percentile6562444113512.08.5
Mean34.4259.6170.610.43.27.44.8

Notes: All children with an identified record in the quarter.

Source: DESE administrative data

6.2.1 Trends in the use of child care

Trends in the number of children using child care by type of care, and whether it is provided by a for-profit or not-for-profit provider, are shown in Figure 90, along with year-on-year growth rates (based on the last 6 months of the year) in Table 61.

The table reports, on the basis of the matched 6 monthly periods,111 an overall growth in provision, by 0.8 per cent in 2017-18, and a stronger 1.7 per cent in 2018-19. While this growth mainly represents additional provision, it also includes, from July 2019, over 4,300 children who had previously attended a service that had received Budget Based Funding or related support and who had been outside of the scope of the CCB/CCR funding regime and hence the administrative data.112 Across sectors, however, quite different trajectories have occurred, with this being particularly marked with declines in both periods in the Family Day Care and In Home Care sectors. The circumstances of these 2 sectors are considered in Chapter 9.

Figure 90: Children in child care by service type and sector, January 2017 to December 2019

fig090.png

Notes: Count of all children with a child record in the month.

Source: DESE administrative data

Excluding these 2 sectors to focus on Centre Based Day Care and Outside School Hours Care - the 2 sectors that account for some 90 per cent of child care provision - sees higher growth rates. The rate of growth in 2017-18 is 4.7 per cent, and in 2018-19, 3.4 per cent. This, though, suggests growth was higher in the first period, a reverse of the pattern seen if all services are included. These growth rates also need to be compared with longer term trends. Between 2004 and 2017 the number of children in child care increased at an annualised rate of 4.2 per cent, and between 2010 and 2017 by 5.4 per cent.113

Table 61: Child care, average numbers attending by service type and sector, July to December, 2017, 2018, 2019
 Average July to DecemberAnnual growth
2017201820192017-182018-19
 (children)(%)
CBDC For-profit482,142502,723527,1534.34.9
CBDC Not-for-profit213,082219,893223,3793.21.6
FDC For-profit100,39066,82452,756-33.4-21.1
FDC Not-for-profit53,37848,20245,264-9.7-6.1
OSHC For-profit184,963197,160202,9646.62.9
OSHC Not-for-profit187,873198,840203,3285.82.3
IHC For-profit1,654864826-47.8-4.4
IHC Not-for-profit2,3951,4701,276-38.6-13.2
Total1,225,8771,235,9751,256,9460.81.7

Notes: Based on monthly data as per Figure 90.

Source: DESE administrative data

While across all forms of care the not-for-profit sector grew more quickly in the 2017-18 period at 2.6 per cent, relative to a decline of -0.2 per cent in the for-profit sector, the reverse occurred in 2018-19, with the not-for-profit sector growing by 1.0 per cent, and the for-profit sector by 2.1 per cent. Again, critical to this were the experiences of the Family Day Care sector where for-profit provision has fallen by 33.4 per cent and 21.1 per cent over the 2 years, with a milder fall of 9.7 per cent and 6.1 per cent in the not-for-profit sector, and the In Home Care sector where the level of provision in the private sector fell by 47.8 per cent between July to December 2017 and the corresponding period in 2018, and a further 4.4 per cent to 2019. In this sector, while the not-for-profit sector has a smaller fall between 2017 and 2018 of 38.6 per cent, the fall of 13.2 per cent in the 2018 to 2019 period was larger than that for these services in the for-profit sector.

6.2.2 Time spent in child care

Data on actual time spent in child care by children is only available since the introduction of the Package, and has been discussed in Section 2.2.2, Figure 91 shows the trends in average weekly hours charged by service type since Q1 2017. The data shows diverse trends across the sectors. In the Centre Based Day Care sector there has been a slight ongoing increase, it is not possible to determine whether this has been driven by increases in the number of days of care used, or longer charged sessions. There does not appear, however, to be any marked change in the trend with the introduction of the Package. The Family Day Care sector shows a quite strong decline in the average hours charged, which is associated with the shift, discussed in Section 4.3.2, towards charging on an hourly basis. The decline in average hours in the In Home Sector is relatively small but does appear to be related to the introduction of the Package, as does the marked increase in average hours recorded in the Outside School Hours Care sector.

Figure 91: Average hours of child care charged per child per week, by service type, Q1 2017 to Q4 2019

fig091.png

Source: DESE administrative data

6.2.3 Identification of children using child care

With the introduction of the Child Care Package, there have been changes that impact on recording the number of children in child care. In particular, all children regardless of their CCS entitlement are included in the administrative data from July 2018, while before this, children who received no subsidies were not necessarily in the administrative data. In exploring potential changes in access to child care, it is important to understand to what extent these changes might impact on the numbers of children recorded as using child care, and this is explored in this section.

One potential group that may have been impacted by this are children who attend care but without a subsidy claim. While previously there were some children within the child care database for whom no subsidy was payable, measurement of this group is difficult as, as illustrated in Figure 92, the actual count in the earlier period reflects 2 groups. The first are those continually in this situation. This was very small, potentially around one per cent. Secondly, over each financial year the number of children recorded as not being in receipt of assistance increased as more families reached their CCR cap and hence became identified in the data as having no subsidy payment. In contrast, since the Package has been introduced, the rate has been around 5-6 per cent, although potentially lower in 2019-20 than in 2018-19.

Figure 92: Proportion of children identified in child care data with fees but no subsidy, January 2017 to December 2019

fig092.png

Source: DESE administrative data

There are a number of reasons why this group of 'non-subsidy' children occur, some of these include:

  • those families that exceed the eligibility cap for CCS because their incomes exceed $351,247
  • families who do not meet residency and other requirements for eligibility, or where the person making the claim does not have sufficient care of the child
  • families who do not wish to engage with the subsidy system or are unwilling to make an application and interact with Centrelink
  • where parents have not immunised a child, or where a child is older than 13, or in high school, without having been approved to attend child care.

As noted, it is not possible to apportion the rise shown in the figure between the above factors but, nevertheless, it is probable that some of the apparent increase in provision does not reflect additional access.

6.3 Snapshot of access

The existence of an age profile of child care use has been seen in Chapter 2. Figure 93 presents this in terms of the proportion of the population of a specific age who use child care, by state. This chart points to very marked state differences in levels, and to a lesser degree patterns, of participation.

Figure 93: Child care, rate of use, by single year of age and state, Q4 2019

fig093.png

Source: DESE administrative data (Q4 2019) and ABS National, State and Territory Population Cat No 3101.0 (June 2019)

For all ages, except for children aged 0 and aged 13 years, the ACT has the highest rate of child care use, with rates up to 10 percentage points higher than the national average in the preschool group, and over 15 percentage points higher at ages 7 and 8. In contrast, the rate of access to child care in the Northern Territory and Western Australia sits well below the national average. In the Northern Territory the deficit is particularly marked from age 2, where the gap is 12.4 percentage points, and age 3, where the gap is 19.1 percentage points. While there are also large gaps for those aged 4 and 5 years, some caution needs to be exercised around these ages, given the complex interactions between child care and preschool education in different states.

A further insight into relative access is provided in Table 62, which decomposes participation rates by geographic locations within states. Here even more stark disparities can be seen. Access rates to child care for children aged under 5 years in remote and very remote locations are well under half of the rates in capitals and in major towns and cities, and are just under a third of that which exists in towns of 20,000-50,000 people.114 Indeed, for children of this age group, the highest levels of provision appear to be in the larger non-capital city urban locations. In contrast, the level of provision in regional areas without any larger urban settlement tends to be low. Notwithstanding these features, the overall picture is one of much inconsistency. For example, while towns of 10,000-20,000 people in Victoria have higher rates of access by these young children relative to larger urban areas in the state, this is reversed in Queensland, and in Tasmania.

A similar set of disparities exists for children in the 5-9 years age group, although here there appears to be a more consistent pattern of higher provision in the capitals, with the rate of access then declining as these urban locations have smaller populations, and then again for non-urban locations by remoteness.

While it is not possible to determine whether these results reflect supply or demand side factors, they do, however, point to inconsistent levels of access to child care across the country. For the younger age group, this has particular implications with respect to the role of this sector in early learning and child development.

Table 62: Proportion of children age 0-4 years and 5-9 years attending child care, by state and urban and regional location, Q4 2019
Urban and regional locationStateAustralia
NSWVic.QldSAWATas.NTACT 
Children aged 0-4 years in child care as proportion of children aged 0-4 years a (%)
Capital Cities48.347.956.846.342.060.352.763.049.0
Urban 100k plus55.258.959.2-----57.5
Urban 50k-<100k64.250.657.4-36.957.1--54.3
Urban 20k-<50k63.152.754.258.271.869.838.2-60.4
Urban 10k-<20k49.161.740.545.934.245.0--47.8
Inner Regional35.036.328.630.522.021.3-b33.0
Outer Regional32.127.133.129.928.423.817.4-30.6
Remote35.3-16.831.419.96.822.9-23.2
Very Remote13.8-23.628.720.055.113.8-19.7
Total49.147.953.144.540.950.937.363.148.5
Children aged 5-9 years in child care as proportion of children aged 5-9 years a (%)
Capital Cities39.436.445.940.826.439.342.257.938.5
Urban 100k plus38.735.540.8-----39.4
Urban 50k-<100k37.427.235.6-20.331.5--31.3
Urban 20k-<50k33.323.329.326.728.939.017.0-29.9
Urban 10k-<20k25.927.426.717.816.728.6--24.2
Inner Regional19.019.817.723.510.510.9-50.018.6
Outer Regional13.88.817.017.47.311.322.9-14.1
Remote12.4-5.115.34.42.916.4-8.9
Very Remote9.4-11.210.74.829.84.7-7.3
Total35.733.238.636.223.929.926.157.934.6

Notes: a Based on children attending services in Q4 2019, and 2016 census population at the SA2 level. The estimated proportion of children in child care using this older population base of 48.5 per cent for the 0-4 year old age group, and 34.6 per cent for the 5-9 age group, compares with estimates based on the current population in June 2019 of 44.6 per cent and 31.5 per cent. b Jervis Bay not shown.

Source: DESE administrative data and ABS Census 2016, Census TableBuilder

6.4 Changes in access (changes in utilisation)

Changes in access, expressed in terms of the proportion of children who attend child care, by single age of child are shown in Figure 94. This shows the proportion of children in each age group who were in child care in the 4th quarter of 2017, 2018 and 2019.115 The chart shows a number of different shifts in participation. In particular:

  • In 2019 relative utilisation by children at each single age between one and 5 years, and those aged 7, was above that in either of the previous 2 years.
  • In contrast, it was lower than both prior years for those aged zero, 6, and 9-13 years, while for those aged 8, it was higher than in 2018 but lower than in 2017.

While generalising from this is difficult, it suggests that there may have been some slight gains in access at the younger ages of the distribution and some reductions for older children.

Figure 94: Proportion of children who attended child care, single years of age, Q4 2017, 2018, 2019

fig094.png

Notes: Based on children attending services in Q4 of each calendar year.

Source: DESE administrative data, and ABS National, State and Territory Population Cat No 3101.0 (June 2017, June 2018, June 2019)

6.4.1 Regional changes in child care provision

This analysis is undertaken on change over a 2-year period from Q4 2017 to Q4 2019. The choice of this period was a compromise. The level of change over the one-year period from the introduction of the Package was not sufficient to provide any effective overview at this level of detail, while to extend this to an 18-month period confuses actual change with the annual pattern that comprises increases over the calendar year followed by falls with the commencement of school. The extended period is also not necessarily inappropriate. Given that the introduction of the policy was well publicised over an extended period prior to its commencement, to the extent the policy was perceived of as improving (or potentially adversely affecting) demand for child care, it can be argued that some services would have sought to make pre-emptive changes - some of which might be picked up in this wider time span.

Table 63 presents this data, firstly on the basis of all services, and then for Centre Based Day Care and Outside School Hours Care only so as to minimise the more specific circumstances of Family Day Care and In Home Care sectors. While this approach removes the more volatile movements in the data, caution needs to be exercised as to whether some of the growth in the other sectors is as a result of displaced demand, rather than reflecting a real increase in access to child care.

While both NSW and Victoria show relatively systematic growth across all locations in the data excluding In Home Care and Family Day Care Services, this is not the case for other states and territories. These, with the exception of Tasmania and the ACT, have disparate patterns of increases in some locations and decreases in others. In Tasmania, while no locations show a decline, a number show an absence of growth (and the ACT only has services identified as being in the capital in this table). Across states, while some locations such as the capital cities consistently show growth, the magnitude of this varies considerably. Further, once the data for child care as a whole is considered, any systematic pattern of change dissipates.

Table 63: Change in number of children in child care, by state and urban and regional location, Q4 2017 to Q4 2019
Urban and regional locationStateAustralia
NSWVic.QldSAWATas.NTACT a
 Change in number of children attending Q4 2017 to Q4 2019 (%)
All child care services
Capital Cities-1.7-1.03.43.77.11.59.69.61.2
Urban 100k plus6.917.83.3-----5.9
Urban 50k-<100k3.35.95.8-7.43.1--5.2
Urban 20k-<50k-0.611.9-4.41.57.1-0.116.2-2.2
Urban 10k-<20k2.811.518.6-15.911.812.4--6.3
Inner Regional3.77.3-2.62.72.0-9.8--3.5
Outer Regional-4.313.80.05.99.21.3-0.2-0.7
Remote-1.9--26.2-5.9-18.30.01.5--11.3
Very Remote-9.5--6.813.54.10.0-10.1--1.6
Total0.11.33.12.96.91.58.19.72.1
CBDC and OSHC only
Capital Cities6.310.66.36.111.45.110.011.48.1
Urban 100k plus8.014.95.1-----7.1
Urban 50k-<100k4.814.05.1-4.75.5--8.0
Urban 20k-<50k4.414.10.97.613.20.121.6-6.7
Urban 10k-<20k4.917.622.0-9.016.412.4--11.1
Inner Regional6.412.8-5.52.7-1.723.7--5.7
Outer Regional3.622.9-0.711.118.71.6-12.8-4.3
Remote5.3--35.24.6-6.90.01.5--8.0
Very Remote75.7-29.9-26.33.20.037.1-16.3
Total6.311.55.35.711.14.810.811.37.7

Notes: a Excludes non-capital locations.

Source: DESE administrative data

Given this, it does not appear possible to draw any substantive conclusion as to the extent to which access has changed at this level of geography, other than noting that there is no systematic evidence of a comprehensive shift in provision.

6.4.2 Families in receipt of FTB

Another perspective on the relative rate of usage of child care, albeit for a more limited population, can be obtained by looking at the participation of children whose parents were in receipt of FTB payments, either in combination with receiving income support or not. This is considered here firstly as a snapshot of current usage and then trends over time.

Child care use by parental transfer payment receipt and child age

Data in Figure 95 presents the age profiles of child care use for 7 groups of families classified by the level of transfer payment they receive (full-rate of pension or benefit, part-rate (including in couples where only one receives a full-rate payment, and FTB only), single parent or couple status, and a residual category of those who do not receive any transfers) in June 2019.

The chart plots some very marked differences in the propensity to use child care by child age and parental income support usage. Overall, it shows that single parents in receipt of transfer payments use child care at much higher rates than couples in similar circumstances. Highlighting the critical role child care provides in enabling these parents to participate in employment, a dominating feature of the chart is the exceptionally high rates of use by single parents with a part-rate of benefit and young children. In contrast, couples in receipt of transfers have quite low rates, with this being particularly marked for children of school age.

Overall, the chart also suggests that those single parents either in receipt of FTB only, or on a part-rate of benefit, show a pattern of child care usage more aligned with that of parents not in receipt of any transfers.

Figure 95: Utilisation of child care, by child age and FTB/Income support receipt by parents, Q2 2019

fig095.png

Notes: Non FTB cannot be split by family type as population data is not available on this basis by single year of age.

Source: DESE and DSS administrative data, ABS National, State and Territory Population Cat No 3101.0 (June 2019)

Changes since the introduction of the Child Care Package

Table 64 considers trends in child care participation of children of these parents, by broad child age group on a quarterly basis since 2017. In considering this data, care needs to be taken in accounting for seasonality as a number of series; for example, single parents on part-rate payments, show a marked pattern. For example, in the 3 calendar years for this group of parents with children aged under 6 years, the Q4 rate of participation is 2.8, 3.4 and 3.4 percentage points respectively higher than it was in Q2 of each of these years.

Overall, the data shows diverse patterns.

  • Single parents on full-rate income support payments generally show a decline for children of both age groups with this being more marked in the earlier period. For those on a part-rate benefit there has been a general increase in the rate of use by younger children and a decline for older children in their use of child care. This pattern is repeated for those children of a single parent who is in receipt of FTB only.
  • There was generally declining use - or access by couples where they received either full or partial income support, with this being particularly marked by those on full-rates of support and more apparent in the earlier period. However, as will be considered in Chapter 8, these groups have declined as a share of parents, leaving this change open to being a reflection of compositional change.
  • For couples in receipt of FTB only there is no consistent trend in the participation of children under 6 years in child care, although there is a decline in participation by older children.

Hence, again, while some of these groups of parents appear to be showing increased levels of access to child care, this is not a uniform trend - either for different age groups of children or parents in different circumstances. More so, the patterns seen since the introduction of the Package do not appear to be inconsistent with those seen prior to this, suggesting the main factors are longer standing trends.

Table 64: Children of parents in receipt of transfer payments, proportion in child care, by family type, Q3 2017 to Q4 2019
 Single ParentCouple
Full-ratePart-rateFTB onlyFull-ratePart-rateFTB only
 Proportion of children using child care (%)
Children aged under 6 years
Q1 201736.672.058.627.334.338.1
Q2 201735.570.758.226.732.937.9
Q3 201737.072.859.027.233.637.6
Q4 201736.673.559.825.732.837.1
Q1 201835.772.458.625.732.537.6
Q2 201834.271.158.624.030.937.1
Q3 201834.773.058.222.730.336.5
Q4 201834.474.560.121.730.236.6
Q1 201934.473.257.822.330.037.5
Q2 201933.371.456.720.628.636.9
Q3 201935.173.858.021.229.437.2
Q4 201935.174.860.620.529.737.2
Children aged 6-12 years
Q1 201714.530.226.319.317.214.0
Q2 201713.729.426.217.716.214.0
Q3 201714.430.527.317.816.714.2
Q4 201713.730.427.516.216.013.8
Q1 201813.029.325.815.915.013.2
Q2 201811.928.425.714.113.712.8
Q3 201811.529.026.011.511.912.3
Q4 201811.129.226.711.011.712.4
Q1 201910.528.024.810.811.111.9
Q2 201910.027.324.79.510.011.7
Q3 201910.528.625.98.710.012.1
Q4 201910.028.526.48.29.811.9

Notes: Proportion of non-FTB children using child care cannot be calculated, as population of non-FTB children cannot be derived on a parental relationship basis or accurately on a quarterly basis.

Source: DESE and DSS administrative data

6.4.3 Days per week attendance

The diversity of daily attendance has been seen in Table 60. One issue which was raised in qualitative research, as discussed further below, and by services in the SELCS, was the extent to which the new funding arrangements, including the operation of the activity test, may have led to a reduction in the number of days a week of attendance, with a particular focus on young children in Centre Based Day Care services. Low income families who do not meet the activity test requirements are either entitled to 24 hours of subsidised care per fortnight for each child, or 36 hours if the child is preschool-aged and attends a preschool program at a Centre Based Day Care service, as part of the Child Care Safety Net. However, these hours can be quickly absorbed by long session times and weekly booking routines,116 with the 24 or 36 hours typically translating to one day a week in a service that has 10, 11 or 12 hour daily sessions. There was a strong view that attendance of only one day a week was insufficient for children's early learning opportunities, including for the preparation of school-readiness. There were also views that one day a week was not sufficient for effective attachment bonds to be formed between a carer and a child, and as children aged, effective building of friendship networks.

The length of time spent in quality early childhood programs is considered critical for child outcomes. There is strong evidence that more time spent in centre based early learning, or in instruction in specific content areas, predicts larger gains among preschoolers (Burchinal et al., 2016). Across all the case studies, numerous service directors and key stakeholders argued that the fortnightly entitlements of children in low income families who did not meet the activity test were insufficient to meet the learning needs of children. This was of particular concern as participants felt these children were often the ones who needed this experience the most.

We have to get around to asking 'Why are we providing funding? What is being effective? And what is the purpose of it?' I think also when you've got that wraparound of where it's accessibility for our most vulnerable and targeted, to simply support, and this isn't about education, it's about, you know, when you look at children in poverty and when you look at children who are vulnerable, targeted and subjected to harm, that's where we also used to function highly, in that long day care space […] Countless numbers of evidence-based research and papers say they need to be in early childhood and having that education and care experience prior to [school] and this was a source, and I think that that's just been lost. 
[CBDC and OSHC stakeholder, April 2020]

Prior to the introduction of the Package, children whose parents were entitled117 to the base level of approved hours of care of 24 hours per fortnight had been able to access more than one day of subsidised child care each week.118 In some of the case study sites, particularly Case Study 1, which was an area selected to enable a focus on child care use in a low income area in an outer metropolitan location, there was evidence that a small number of Centre Based Day Care and Family Day Care services were responding by offering a 6-hour daily session, meaning that children could attend 2 or 3 days per week. However, this session offering remained uncommon despite the significant concern raised about meeting the education and care needs of children from economically disadvantaged families. This is discussed further in Chapter 7.

The incidence of such limited attendance was analysed through identifying the number of children who only attended Centre Based Day Care Services, and only attended this on a one day a week basis in all weeks of a quarter in which they attended care. This analysis could only be conducted from Q3 2018 onwards as earlier data on days or sessions attended was not available.119 As shown in Figure 96, by single year of age, and over time, some 8-16 per cent of children show this pattern of attendance, with the highest rate being recorded by children aged under one year, with other ages sitting in a narrower band. While only a relatively short time series is possible, this points to a decline in the use of this type of care arrangement between the last 2 quarters of 2018 and the last 2 of 2019. On average over the 2 quarters for which year-on-year estimates are possible:

  • The rate had dropped by 1.2 percentage points for children aged under 2 years.
  • It has fallen by 1.0 percentage point for those aged 2 and 3 years.
  • It has fallen by 0.4 of a percentage point for children aged 4 years.

The occurrence of this type of child care use is, however, concentrated in some groups. For example, while children of parents who have an entitlement to a subsidy for 24 or 36 hours care per fortnight only account for some 6.6 per cent of children aged 4 years and under who only attend a Centre Based Day Care service, these children account for 24.7 per cent of this single day a week pattern of attendance.

Figure 96: Proportion of children attending Centre Based Day Care for a single day only per week, by age, Children aged 4 years and under, Q3 2018 to Q4 2019

fig096.png

Notes: Children who only attended Centre Based Day Care and only attend child care on one day a week in all weeks they attended child care in the quarter.

Source: DESE administrative data

6.4.4 Recent changes in provision and access

The relatively short time since the adoption of the Package limits the extent to which changes in access can be observed. As noted, however, given that the main parameters were well known beforehand, this did provide scope for services to anticipate the pattern of future demand and build capacity to meet this. On the basis of the data considered here, the evidence suggests a small increase in access, although this was far from consistent across states and across locations within states, and appears to have been largely for younger children in certain family circumstances.

There has been a concern that some aspects of the new arrangements (in particular, for families with access to 24 allowed hours) might lead to families increasingly using only one day a week of child care. The trend, however, appears to generally show a decline in single day a week usage since the introduction of the Package.

6.5 Impact of the introduction of the Package

This section is concerned with the immediate impact of the introduction of the Package; in particular, the extent to which the new funding arrangements may have acted to exclude some children and families, or encouraged the entry of others who were previously outside the sector.

Initial consideration, Table 65 to Table 70, addresses the transition experience overall and by sector. Specifically, these tables focus on the population of children who were in child care in either Q2 2018; that is, immediately prior to the introduction of the CCS and associated measures, and in Q3 2018, the initial 3 months of operation of the new arrangements. It divides the population into those continuing; that is, who appear in the data at some point in the 3 months either before or after 2 July 2018, those who exited prior to this date, and those who entered after. In turn, these are broken down into 3 groups, the first based on being in one of these states in the 2 fortnights on either side of the introduction, the second, while not in this group, being in one of these states in the balance of the month on either side, and the third, any other time in the quarter. The same calculations have been undertaken using data from 2017 and 2019 and classified in the same manner to provide a reference as to what the usual pattern of change is.

Table 65 presents data for all child care sectors. This suggests that the rate of exits in 2018 of 13.0 per cent of children was above that of either 2017, 12.1 per cent, and that of 2019, 11.2 per cent - indicating potentially that some 1 per cent of children attending child care before the introduction of the new arrangements may have been withdrawn from care coincident with this - somewhere in the order of 13,000 children. Of particular note in this data are the 1.5 per cent of the children who were in child care in the 3 months prior to the introduction of the policy who, despite being in child care in the fortnight before, were not seen again in the following 3 months. This is higher than the 0.9 per cent in 2017 and 0.8 per cent in 2019.

Table 65: All services, entries and exits from child care between second and third quarters, calendar years 2017, 2018, 2019
Transition status a As share of Q2 populationAs share of Q3 population
201720182019201720182019
 Composition (%)
Continuing - fortnight65.666.971.265.466.370.7
Continuing - month12.89.58.612.89.48.5
Continuing - quarter9.510.69.19.410.59.0
Subtotal continuing87.987.088.887.686.288.2
Before - last fortnight0.91.50.8---
Before - last month0.70.70.5---
Before - in quarter10.510.79.8---
Subtotal exit12.113.011.2---
After - first fortnight---2.22.91.9
After - first month---1.41.81.4
After - in quarter---8.89.18.4
Subtotal entering---12.413.811.8
Total100.0100.0100.0100.0100.0100.0

Notes: a Persons are firstly classified as continuing, exits or entries, based on whether they are present in the quarter before and after the commencement of the first full fortnight in July. They are then classified on the basis of whether, in the case of continuing, they were present in the fortnight before and after, or in the case of exits, the fortnight before, or entries, the fortnight after the data. This process is then repeated for the balance of the month, and then the balance of the quarter to form the other groups.

Source: DESE administrative data

New entrants, as a proportion of all children in child care in the third quarter, were higher in 2018 at 13.8 per cent, than the 12.4 per cent recorded in 2017, and 11.8 per cent in 2019, with this again being most marked in the fortnight following the introduction of the new arrangements.

As has been noted in Section 6.2, this may be partially affected by the inclusion in the reporting of attendance of all children, including those whose parents may not have been eligible for receipt of assistance, as well as inflows from former BBF services.

6.5.1 Impact by service type

As observed in Table 61, however, the patterns of change in children attending child care has varied considerably by sector. This is considered here. In the data used in these sector based tables, the entry and exit status has been derived as the child's experience in child care as a whole, and their sector of child care is based on their final record over the 2 quarters.

Centre Based Day Care

The transition pattern for Centre Based Day Care, Table 66, in large part reflects the changes seen for the sector overall, although suggesting a much lower rate of additional exits - some 0.3-0.6 percentage points. The existence of possible additional exits, however, remains particularly marked, although quite small, for the population of those attending the fortnight before, and suggests additional exits in the range of 0.2-0.3 percentage points. There is also a higher level of entries, with these in 2018 being some 1.4-1.9 percentage points higher than the preceding or succeeding years.

Table 66: Centre Based Day Care services, entries and exits from child care between second and third quarters, calendar years 2017, 2018, 2019
Transition status a As share of Q2 populationAs share of Q3 population
201720182019201720182019
 Composition (%)
Continuing - fortnight84.984.486.380.879.482.4
Continuing - month3.02.52.22.92.42.1
Continuing - quarter3.74.43.53.54.13.3
Subtotal continuing91.691.391.987.385.987.8
Before - last fortnight0.60.80.5---
Before - last month0.40.40.3---
Before - in quarter7.47.57.3---
Subtotal exit8.48.78.1---
After - first fortnight---2.12.81.8
After - first month---1.31.51.3
After - in quarter---9.39.89.1
Subtotal entering---12.714.112.2
Total100.0100.0100.0100.0100.0100.0

Note: a See notes Table 65.

Source: DESE administrative data

Family Day Care

In the Family Day Care sector over a quarter, 26.9 per cent, of children who were in child care in the 3 months prior to 2 July 2018 exited child care by the beginning of the next quarter, see Table 67. This is over double the proportion for child care as a whole of 13.0 per cent. One contribution to this very high rate, however, is the impact of compliance measures against some fraudulent providers. To exclude the effects of this, Table 68 presents data on transitions in the Family Day Care Sector excluding all services that have had compliance action taken against them.

Table 67: Family Day Care services, entries and exits from child care between second and third quarters, calendar years 2017, 2018, 2019
Transition status a As share of Q2 populationAs share of Q3 population
201720182019201720182019
 Composition (%)
Continuing - fortnight65.055.268.373.165.472.9
Continuing - month5.96.04.56.67.14.8
Continuing - quarter7.212.09.08.014.29.6
Subtotal continuing78.173.181.787.886.687.3
Before - last fortnight1.45.11.0---
Before - last month0.91.60.8---
Before - in quarter19.620.216.5---
Subtotal exit21.926.918.3---
After - first fortnight---1.92.41.9
After - first month---1.41.41.4
After - in quarter---9.09.59.5
Subtotal entering---12.213.412.7
Total100.0100.0100.0100.0100.0100.0

Note: a See notes Table 65.

Source: DESE administrative data

Even after the exclusion of these services, while the rate of exits in this sector declines, it remains high at 19.1 per cent in 2018, compared with 15.6 per cent in 2017 and 17.9 per cent in 2019. This again indicates a likelihood of the introduction of the new arrangements having an impact on some families, which resulted in them removing children from care. The magnitude is though only in the region of some 1.2-3.5 percentage points if the other 2 years are taken as bounds on the estimate. This data does though very clearly highlight the apparent existence of a group who remained in care up to the point of the introduction of the new policy but then exited. This was comprised of 4.5 per cent of all children in the sector in Q2 2018 who, while attending child care in the last fortnight of the quarter, failed to attend at any time in the following 3 months - a rate that contrasts with the more usual 1.0 per cent seen in the other years.

Consideration of the role of new entrants associated with the transition is less clear, in part because of the contrast between 2019 and the more consistent pattern seen in 2017 and 2018.

Taken as a whole, while there is some data which supports there having been an impact, it can be suggested that the direct effect of the introduction of the new funding model was small compared to the broader changes faced by the sector.

Table 68: Family Day Care services without sanction activity, entries and exits from child care between second and third quarters, calendar years 2017, 2018, 2019
Transition status a As share of Q2 populationAs share of Q3 population
201720182019201720182019
 Composition (%)
Continuing - fortnight69.161.568.670.865.772.9
Continuing - month7.26.54.57.46.94.8
Continuing - quarter8.113.09.08.313.99.6
Subtotal continuing84.480.982.186.586.487.3
Before - last fortnight1.04.51.0---
Before - last month0.71.20.8---
Before - in quarter13.913.516.1---
Subtotal exit15.619.117.9---
After - first fortnight---2.12.51.9
After - first month---1.51.41.4
After - in quarter---9.99.69.5
Subtotal entering---13.513.612.7
Total100.0100.0100.0100.0100.0100.0

Note: a See notes Table 65.

Source: DESE administrative data

Outside School Hours Care

This sector is one that has somewhat higher levels of entries and exits. This reflects the nature of the provision that includes both before and after school care during terms and vacation care, which, while in some cases are provided to the same children are, in other cases, not. The 6 month window shown in the table encompasses both forms of care.120

Transition changes in this sector are somewhat more marked in terms of entries rather than exits. While the rate of exits in 2018 of 14.9 per cent was higher than the 13.7 per cent in 2017 and 14.1 in 2019, the contrast between the 13.6 per cent of the Q3 population being entries in 2018 and the 11.9 per cent in 2017 and 10.8 per cent in 2019, is somewhat larger, see Table 69.

To the extent exits are elevated, the magnitude is relatively small when measured against the 2019 transition rate, suggesting an increase of 0.8 of a percentage point, and it is somewhat larger at 1.2 percentage points when compared with 2017. Further, while there is some sign of an increase in exits immediately before the introduction of the Package, much of the impact appears to be on the group with less immediate contact - those who, while in this form of care in Q2 2018, were not in care in the month prior to 2 July 2018.

Table 69: Outside School Hours Care services, entries and exits from child care between second and third quarters, calendar years 2017, 2018, 2019
Transition status a As share of Q2 populationAs share of Q3 population
201720182019201720182019
 Composition (%)
Continuing - fortnight37.145.149.537.945.851.4
Continuing - month30.220.619.030.921.019.7
Continuing - quarter19.019.417.419.319.718.1
Subtotal continuing86.385.185.988.186.489.2
Before - last fortnight1.11.51.2---
Before - last month1.10.80.8---
Before - in quarter11.512.612.1---
Subtotal exit13.714.914.1---
After - first fortnight---2.53.22.2
After - first month---1.62.21.5
After - in quarter---7.88.17.1
Subtotal entering---11.913.610.8
Total100.0100.0100.0100.0100.0100.0

Note: a See notes Table 65.

Source: DESE administrative data

In Home Care

As discussed in Chapter 10, transition in the In Home Care program was a managed and extended process as a consequence of the significant changes in the program structure, and underlying policy, including restrictions on eligibility. These were expected by the Department to reduce the number of children in receipt of this form of care. This is reflected below in the massive transition effect observed in the data with 40.1 per cent of the children using this form of assistance in Q2 2018 exiting at the end of the quarter. This compares with the more usual levels seen in the 2 comparison years of 16-18 per cent. Particularly marked are the 18.0 per cent of children who had still been receiving care in the last fortnight before the introduction of the new package who then exited - with this proportion contrasting with just 1 or 2 per cent in the other years. Also notable in this sector is a low level of entries in 2018.

Table 70: In Home Care services, entries and exits from child care between second and third quarters, calendar years 2017, 2018, 2019
Transition status a As share of Q2 populationAs share of Q3 population
201720182019201720182019
 Composition (%)
Continuing - fortnight66.743.065.666.462.264.7
Continuing - month8.55.97.18.58.57.0
Continuing - quarter8.511.09.78.515.99.5
Subtotal continuing83.859.982.483.386.681.2
Before - last fortnight2.318.01.2---
Before - last month1.02.51.1---
Before - in quarter12.919.715.4---
Subtotal exit16.240.117.6---
After - first fortnight---2.43.32.9
After - first month---1.71.72.0
After - in quarter---12.68.513.9
Subtotal entering---16.713.418.8
Total100.0100.0100.0100.0100.0100.0

Note: a See notes Table 65.

Source: DESE administrative data

Overall sectoral impact

This sectoral analysis primarily highlights the quite dramatic changes in the In Home Care and Family Day Care sectors. Outside of this, the Centre Based Day Care sector shows elevated exits coincident with the introduction of the Child Care Package, although the magnitude is small, around 0.3-0.6 of a percentage point, with a slightly stronger increase in exits in the Outside School Hours Care sector. Looking at entries, there is some evidence of an increase in entries in 2018, relative to 2017 and 2019, in both Centre Based Day Care and Outside School Hours Care, most prominent in the first fortnight of the quarter, suggesting an increase of 1.4-1.9 percentage points in the number of children recorded as attending over the quarter.

Hours of care and the transition

Another potential area of impact from the introduction of the Package measures was on hours of care. This is considered, again in the short term only, in Table 71. Unlike the above table, it aggregates all of the 3 sub-categories of entrants and exits to consider just 3 groups: those continuing; those exiting ('Before only'); and those entering ('After only').

By sector, the data suggests that there has been little substantive change for Centre Based Day Care services, other than new entrants in 2018 having a marginally greater propensity to use slightly longer charged hours.121

The average hours reported by children attending Family Day Care Services suggest that, while there was a transition effect, this was combined with a shift to a new equilibrium, which as discussed in previous chapters appears to be based on services moving from sessional charges to charging by the hour. That is, while the average hours of continuing children dropped markedly between May and August 2018, this seems to be a drop from the levels that were reported for both May and August 2017 to the levels reported in May and August 2019.

Table 71: Hours charged, children who were continuing, entries, and exits, between second and third quarters, calendar years 2017, 2018, 2019
 ContinuingBefore onlyAfter only
201720182019201720182019201720182019
  Average hours of care charged in month
CBDCMay hours114115117676864---
 August hours116118120---747673
FDCMay hours115102949710370---
 August hours1129596---756362
OSHCMay hours363637191717---
 August hours363636---202119
IHCMay hours108114106769263---
 August hours109101108---766165

Source: DESE administrative data

In contrast, there is almost no impact on the hours in Outside School Hours Care. While there does not seem to be a wholly consistent pattern with respect to In Home Care, one feature is that the hours of care charged for those who exited in 2018 were very much higher than those of the entrants, a pattern not seen in either of the other years. 122

6.5.2 Impact by child and family characteristics

Seeking to identify the small group who may have been affected in the transition is difficult, in large part because of the problem of identifying the incremental population relative to 'background' entries and exits seen in the other years. Table 72 to Table 76 seek to address this by trying to identify whether the transition patterns seen above have had particular deviations across population subgroups. It considers 2 aggregates; the first is the proportion of children in Q2 of each of the 3 years who continue to be in child care in Q3, as a share of those children in child care in Q2; the second is the proportion of children in Q3 who are new entrants. As discussed, however, with respect to these tables relatively little emerges from this analysis.

The population subgroups considered are those based on geographic location, both using the urban structure and SEIFA, family utilisation of government transfer payments, income and child age.

By location, see Table 72, there is little difference in the patterns of exits in 2018, although all years show a pattern of lower levels of retention in more remote relative to more urbanised locations. There is, however, a strong tendency for higher rates of entry in 2018 in outer regional, remote and very remote locations. One potential factor here is the movement of the former BBF services into mainstream CCS funding. The role of these services with regard to estimating changes in access for Indigenous children is discussed in Section 6.5.3, and the services more generally in Chapter 7.

Table 72: Transition entries and exits Q2 to Q3 2017, 2018, 2019, by urban and regional location
 Proportion continuing from Q2 a (%)Proportion entering Q3 b (%)
201720182019201720182019
Capital Cities88.187.089.112.013.411.5
Urban 100k plus89.688.989.812.212.911.1
Urban 50k-<100k87.086.587.714.114.813.1
Urban 20k-<50k86.886.387.113.915.212.5
Urban 10k-<20k86.184.986.915.016.513.4
Inner Regional87.385.787.414.115.913.1
Outer Regional85.885.286.315.618.314.2
Remote86.484.984.917.426.316.3
Very Remote85.784.384.417.632.516.9

Notes: a As a proportion of those in Q2. b As a proportion of those in Q3.

Source: DESE administrative data

Some systematic differences by location are seen when this is analysed on the basis of the socio-economic advantage and disadvantage of the location. As seen in Table 73, there is a very distinct pattern across all years for much higher levels of entries and exits in the more disadvantaged locations. In 2018, while the retention is much lower than in previous years, there is no consistent pattern across the spectrum of levels of disadvantage relative to the other 2 series, which would suggest a different experience in the transition for those in locations with either a higher or lower SEIFA ranking. For example, while a comparison with 2019 alone would suggest lower retention in 2018 at the lower end of the SEIFA ranking, this does not hold in comparison to 2017. There is also no consistent pattern with respect to entries in Q3.

Table 73: Transition entries and exits Q2 to Q3 2017, 2018, 2019, by SEIFA decile
SEIFA decileProportion continuing from Q2 a (%)Proportion entering Q3 b (%)
201720182019201720182019
1 (Lowest)81.980.684.313.915.714.3
285.183.486.214.115.813.7
386.784.987.413.514.712.9
487.487.088.413.314.912.8
587.585.888.413.114.712.7
688.887.688.912.714.011.9
788.988.190.012.213.311.2
890.088.890.211.713.210.9
990.689.990.610.812.310.2
10 (Highest)91.690.490.610.412.09.6

Notes: a As a proportion of those in Q2. b As a proportion of those in Q3.

Source: DESE administrative data

Patterns of entry and exit by parental transfer payment receipt are complex, and are not consistent over time. As shown in Table 74, there are also large differences in the patterns for some of the subgroups that tend to overshadow the question of change. For example, couples in receipt of full-rate payments (although a relatively small group) have rates of retention some 15-18 percentage points below those who receive no transfers.

Turning to the inter-year comparisons, all of these groups show elevated rates of entries compared with 2017, and with the exception of couples in receipt of some income support, relative to 2019, suggesting that, to the extent entries into child care increased, they did so relatively uniformly across these groups. There is also a uniform pattern of higher exits, that is lower retention, for all these groups in 2018. While for most of the subgroups this was only a matter of a few percentage points, it was higher for single parents wholly reliant upon income support, and particularly marked for those couples with some income support. For this group, their exit rate in 2018 of 24.1 per cent compares with 20.4 per cent in 2017 and 18.3 per cent in 2019. While this is a shift that needs to be noted, given that children from these families only account for some 3.6 per cent of all children in child care, this is likely to only have a small impact on the population as a whole.

Table 74: Transition entries and exits Q2 to Q3 2017, 2018, 2019, by transfer payment receipt
 Proportion continuing from Q2 a (%)Proportion entering Q3 b (%)
201720182019201720182019
SP full-rate81.178.582.216.818.217.6
SP part-rate88.087.089.612.713.111.0
SP FTB only86.686.188.210.411.18.6
Cpl both full-rate73.572.075.612.814.716.6
Cpl some IS79.675.981.714.216.016.3
Cpl FTB only84.683.187.315.617.816.4
No FTB90.690.090.611.212.69.9

Notes: a As proportion of those in Q2. b As a proportion of those in Q3.

Source: DESE administrative data

Looking at the experience of children by parental income, other than a range of divergent movements among those with reported zero income, and those with missing data, the only anomaly in the 2018 exit transition data is for the very low income group - below $25,000, who have a much higher rate of exits in 2018, with a retention rate of just 73.0 per cent in that year compared with 79.7 per cent in 2017 and 81.0 per cent in 2019, see Table 75. The magnitude, however, of this difference falls when Family Day Care services are excluded, with rates to 82.2 per cent in 2017, 76.8 per cent in 2018 and 82.3 per cent in 2019. This suggests that this group, which represent some 10 per cent of all records, may have had a particular adverse outcome in the transition, although a proportion of this relates to the changes in the Family Day Care sector to which they appear to be particularly exposed. Looking at the pattern of entries, other than at the extremes of the income distribution, there is a generalised incidence of higher than usual entries of around 1.2 percentage points.

Table 75: Transition entries and exits Q2 to Q3 2017, 2018, 2019, by family income
 Proportion continuing from Q2 a (%)Proportion entering Q3 b (%)
201720182019201720182019
Zero80.988.962.416.610.813.7
$1-<25k79.773.081.017.219.618.9
$25-<50k81.280.083.814.415.314.6
$50-<100k85.885.287.614.115.713.7
$100-<150k89.889.090.312.313.111.7
$150-<250k92.492.492.59.49.68.5
$250-<500k93.393.792.78.57.66.9
$500+k91.389.689.59.96.27.3
Missing90.578.472.412.041.125.3

Notes: a As a proportion of those in Q2. b As a proportion of those in Q3.

Source: DESE administrative data

Table 76 presents the transition by the age of children. In the populations classified in this manner there are again very marked differences in the underlying patterns. Retention for the youngest age group is relatively low, but then becomes very high for ages 1-3, in particular. After a decline from these high rates, it then remains relatively stable in the first years of school education before again declining as children age. This has echoes in the entry data, with very high entry rates in the under one year age group, with the rate of entry then declining up to the 3 years age group, after which there is high stability in both entries and exits.

While the under one year category shows a very marked fall in retention in 2018, this appears to be impacted by changes in the Family Day Care sector. Excluding Family Day Care produces retention rates for this youngest age group of 64.0 per cent, 62.8 per cent and 68.0 per cent respectively for 2017, 2018 and 2019. With respect to entries, the data suggests that while 2018 entries were higher across all age groups, this was most marked for those aged 8 years and over.

Table 76: Transition entries and exits Q2 to Q3 2017, 2018, 2019, by child age
Child age (years)Proportion continuing from Q2 a (%)Proportion entering Q3 (%)
201720182019201720182019
065.157.565.686.589.088.7
193.092.094.433.836.434.0
295.094.595.912.813.811.8
393.592.794.47.38.56.8
489.588.889.84.45.54.2
587.084.985.76.67.65.8
688.886.687.912.613.611.7
788.386.187.911.913.111.0
887.784.886.711.313.210.7
986.283.384.911.113.410.3
1084.380.782.610.912.910.3
1179.775.177.810.212.69.8
1268.968.975.69.311.49.1
13+28.047.463.09.918.316.2

Notes: a As a proportion of those in Q2. b As a proportion of those in Q3.

Source: DESE administrative data

This analysis has identified some persistent traits in both entries to and exits from child care, including some groups who would appear to have quite high levels of volatility. As to the extent to which the transition may have had a negative impact, the overall effect of this is low. The analysis does suggest that some low income households, and some families such as couples on income support, appear to have left child care at a disproportionate rate prior to the implementation of the Package, with the magnitude being in the order of some 4-5 percentage points. Relative to other years, the overall magnitude of this higher inflow was 1.5-1.8 percentage points. This increase was more marked for older children. Interpretation of this though is complicated by the issue of the extent to which some of this was due to better recording rather than substantive change.

6.5.3 Transition and access by Indigenous Australians

More detailed analysis of the provision of child care to Indigenous Australians is presented in Chapter 7. The focus here is on seeking to identify quantitatively the actual change in Indigenous children's use of child care at the point of transition as the 'headline data' is significantly affected by 2 factors:

  • changes in the recording of Indigeneity in the child care data
  • the shift, under the Package, of a number of services from being supported by grants through Budget Based Funding to funding based on user charges offset by subsidies through the CCS.

In the 3 months prior to July 2018 there were 34,039 children in child care who were identified as Indigenous or as members of an Indigenous family. In the following 3 months this figure was 43,307. While notionally indicating a 27.2 per cent increase, these figures, as seen in Table 77, comprise a series of elements, including the effects of re-classification,123 and the entry into the data of those attending the former BBF services.124 A consequence of this is that the net number of additional Indigenous children in child care between Q2 and Q3 of 2018 is substantially less than the 9,269 difference in the total numbers recorded. Using the detail of flows shown in the table, the number would be 1,728, that is the turnover, 5,647 new, less the 3,919 ceasing.

However, this number still overstates the extent of change as there are 2 additional elements of change that need to be accounted for. The first is the extent to which, with changes to the BBF services, some Indigenous children, who had attended these services up to transition and under the old funding arrangements where fees were not generally charged, may have shifted to mainstream services. This group cannot be identified within the available data, but rather simply appear as being 'new' entrants. The second is that to calculate growth relative to the number of children previously identified, it is necessary to adjust the number of 'additional' Indigenous children to reflect the previous understating of this group in the population. Applying the ratio of previous to new identification would suggest that the actual increase is around 1,130.

Taking all of this into account suggests that, while there was an increase quarter to quarter in the number of Indigenous children in child care, this was in the range of 3.3-5.1 per cent, rather than the headline 27.2 per cent. This increase is not inconsistent with, and is indeed a little below, the rate of increase for this population between Q2 and Q3 in the previous year of 6.0 per cent. This, in turn, is likely to reflect both the usual pattern of increase over the calendar year seen across the population and growth in the Indigenous population, and suggests relatively little actual change in access occurred with the introduction of the Package. More specific analysis of the impact of the Package on the participation of Aboriginal and Torres Strait Islander children is presented in Chapter 7.

Table 77: Indigenous children in child care, transition and recoding of Indigenous family type, Q2 & Q3 2018
 Indigenous children in child care
Q2 2018 
Continuing to Q3 2018 classified as Indigenous26,932
Continuing to Q3 2018 but reclassified as non-Indigenous in Q3 20183,188
Ceased child care3,919
Total Q2 201834,039
Q3 2018 
Continuing previously identified as Indigenous26,932
Continuing - previously classified as non-Indigenous now reclassified as Indigenous9,101
New: Attending a former BBF service1,626
New: Indigenous in quarter5,647
Total Q3 201843,307

Source: DESE administrative data

6.6 Parental experience of access

The DESE/ORIMA survey included a set of questions related to ease of finding appropriate care. These are considered here; however, some caution needs to be exercised in the interpretation of these results, particularly, over time. Two key issues are:

  • The retrospective nature of the questions. In many cases a child may have been in their child care service for a considerable period of time and hence the date of the survey is not aligned with their experience of 'ease of finding', which could be some years prior. The survey design does not allow the separate analysis of those who have only recently sought to find care.125
  • There may be a selection effect in that those who have had more difficult experiences in finding care may have failed to access it, and hence not be part of the population under study.

The specific questions involved respondents indicating their degree of agreement, or disagreement, with 6 statements:

  • It was easy to find good quality child care for my child.
  • It was easy to find a child care service in a convenient area.
  • It was easy to get the hours of child care needed.
  • It was easy to get child care during school holidays (for reference children aged 4 years and over, except November 2018, when it was limited to those aged 5 years and over).
  • It was easy to find culturally appropriate care for my child.
  • If they have a child with additional needs: It was easy to find a child care service that caters for my child's additional needs.

As with similar questions in the survey, these were specifically focused on the experiences of a 'reference child' and their 'reference care'. In analysis here, the responses to these questions have been recoded to a scale of -2 to +2, where +2 represents strong agreement.

6.6.1 Access over time

Analysis of the time series has been undertaken separately for children aged 5 years and under and those aged 6-13 years. Considering the younger age group, Figure 97, there is little evidence of any consistent pattern of change across the 6 questions over time. Specifically:

  • Reported ease of finding quality care fluctuated over the period with no consistent trend and none of the movements, either between surveys, or over time, were statistically significant at the 95 per cent confidence level.
  • Parents initially reported an improvement in ease of finding care in a convenient location, with the June 2019 rating being statistically higher than that in June 2018. It, however, then declined in November 2019 to a level not statistically different to that in June 2018.
  • There was no significant change, and indeed very little change, in the reported ease of finding care for the hours needed by parents of children in this age group.
  • Ease in finding care during school holidays was initially significantly higher than satisfaction with the other elements about which parents were questioned. This then declined over the period with a statistically significantly lower rating in November 2019 than in either June 2018 or June 2019.
  • Reported ease of finding culturally appropriate child care was significantly lower in June 2018 than in any of the subsequent surveys. It is unclear what factors related to the more positive rating of this dimension of access and, as discussed in Chapter 2, this element was rated as relatively unimportant by parents.
  • While only a subset of parents reported on ease of finding care for children with additional needs, the overall reporting of this dimension of accessibility was low, and, in general, statistically significantly lower, than other dimensions, remaining as such over time.

Figure 97: Parents, 'It was easy to find child care', reference child aged 0-4 years, mean response value, DESE/ORIMA Parent Survey, June 2018-November 2019

fig097.png

Notes: Relates to reference care of the reference child. Mean rating is average of recoded responses: Strongly disagree: -2; Disagree: -1; Neither agree nor disagree: 0; Agree: +1; Strongly agree: +2. Error bars on the chart show the 95 per cent confidence interval. a Note different scale. Question not asked of 4-year-olds in November 2018. b Question asked of parents with a child with additional needs only.

Source: DESE/ORIMA Parent Survey, June 2018, November 2018, June 2019, and November 2019

Turning to parents with an older reference child, see Figure 98, a number of more distinct patterns of more positive ease are reported. Specifically:

  • Parents report a statistically significant greater ease in finding quality child care, and child care in a convenient location, in November 2019 than they did in June 2018, with a relatively consistent upward trend over the period, although none of the individual shifts, or those up to June 2019, were statistically significant.
  • While there was also an upward trend in ease of finding hours of care needed, this was not significant over any time period.
  • After an initial, but statistically insignificant, increase in reported ease of finding care during school holidays between June 2018 and November 2018, this has remained flat.
  • Reported ease of finding culturally appropriate care increased significantly between June 2018 and November 2018 and has increased in subsequent surveys, although none of the latter movements are statistically significant.
  • There has been, as with parents of younger children with an additional need, no significant shift in the average level of ease of finding appropriate care for an older child with additional needs, with this aspect of satisfaction remaining well below, and in most cases statistically significantly lower, than ease of access relative to the other dimensions.

Figure 98: Parents, 'It was easy to find child care', reference child aged 5-12 years, mean response value, DESE/ORIMA Parent Survey, June 2018-November 2019

fig098.png

Notes: Relates to reference care of the reference child. Mean rating is average of recoded responses: Strongly disagree: -2; Disagree: -1; Neither agree nor disagree: 0; Agree: +1; Strongly agree: +2. Error bars on the chart show the 95 per cent confidence interval. a Question asked of parents with a child with additional needs only. Note different axis.

Source: DESE/ORIMA Parent Survey, June 2018, November 2018, June 2019, and November 2019

Access by type of service

The mean ratings of parents on these questions, by type of service, in November 2019, are shown in Figure 99. This data shows 3 significant differences in levels of reported ease between the child care sectors considered here. These related to ease in finding quality care, care in a convenient location, and care for the hours needed. In all of these, parents rate access to Outside School Hours Care more positively than Centre Based Day Care, or Family Day Care.

While not significant relative to Centre Based Day Care, the chart does suggest that satisfaction with Family Day Care is consistently lower with respect to all dimensions, other than meeting the needs of children with additional needs relative to these other sectors.

Figure 99: Parents, ease of finding appropriate care, by type of child care, mean response value, DESE/ORIMA Parent Survey, November 2019

fig099.png

Notes: Relates to reference care of the reference child. Mean rating is average of recoded responses: Strongly disagree: -2; Disagree: -1; Neither agree nor disagree: 0; Agree: +1; Strongly agree: +2. Error bars on the chart show the 95 per cent confidence interval. In Home Care excluded due to small sample size.

Source: DESE/ORIMA Parent Survey, November 2019

Parent characteristics and access

Analysis of parental reporting in November 2019 of ease of access to quality care, in a convenient location, and for the hours needed, on the basis of state, family labour force status, gross family income and whether or not people lived in capital cities or other locations, identified no statistically significant differences, other than those living in Queensland reporting greater ease of accessing care in a convenient location, relative to those in New South Wales.

Summary - Parents' experience of access

Overall, there has been little change in parents' reported perception of the ease of accessing child care for children under the age of 5 years. For those with older children, there has been a reported increase in the ease of obtaining access to quality care, along with some upward, although not statistically robust, trends in some of the other dimensions of access. It is, though, noted that these results do not necessarily reflect a contemporaneous assessment of ease of access but may reflect earlier experiences.

6.6.2 Exclusion and access

The above analysis highlights, on average, the greater difficulty reported by parents in accessing child care for children with additional needs. A related issue is the capacity of parents to then maintain this access. This is considered here in terms of parental reports of having to change services because of the exclusion of their child, and the extent to which services report having denied access to some children. These issues are considered further in Chapter 7 with respect to some of the specific implications for children from co