Productivity Commission Report

Comparison of four parents childcare fees if recommendations are implemented.

For this example I have used a benchmark of $7.50 per hour. A fee of $100 per day in a long day care centre that operates for 12 hours per day and attendance of two days per week.

Parent 1:
Annual salary $250,000
Entitlement 20% of benchmark = $36
Previous entitlement = no childcare benefit, 50% of childcare rebate = $100
Fee increase of $ 64 per week.

Parent 2:
Annual salary $180,000
Entitlement 40% of benchmark = $72
Previous entitlement = no childcare benefit, 50% of childcare rebate = $100
Fee increase of $28 per week

Parent 3:
Annual salary $100,000
Entitlement 65% of benchmark = $117
Previous entitlement = childcare benefit $50.36, childcare rebate $74.82. Fee charged $74.82
Fee increase $8.18

Parent 4:
Annual salary $60,000
Entitlement 85% of benchmark = $153
Previous entitlement = childcare benefit $90.98, childcare rebate $54.57. Fee charged $54.45
Fee reduction $7.45

The benchmark at $7.41 under 3's, $7.20 over 3's, $6.94 FDC's and nannies and $6 outside school care, is too low for it to be of any benefit to parents. Parents with earnings of $60,000 or less will benefit most, but will they meet the criteria for additional care if they chose to enter the workforce and would there be jobs available to them.
Researching fees in Sydney fees range from $165 per day to $79 per day 99.9% of Sydney centres are charging above $105 per day. Regional centres in areas of NSW are charging between $85 - $90 per day.

Nanny agencies in Sydney are advertising positions with salaries between $25 - $30 per hour. Hours advertised range from 4 hours per day to 12 hours. As the nanny subsidy is coupled with the FDC rebate, it would seem that the same ratios of educator to child ratio will apply. Example 4 children in care 4 x $100 = $400 per day less rebate of $5.78 x 4 = total daily fee in long day care for 4 children $376.88. In home nanny 12 hours = $300 less rebate = fee $276.88. Saving in employing a nanny ( based on highest earning bracket). $100 per day.

Corporate childcare must now look at the flexibility their operations are offering parents. The easiest and most effective option would be to increase the licensing hours of those centres where parents travelling/working day exceeds twelve hours. This would increase the amount of rebate claimed which in turn would reduce fees further. Consultation with parents regarding their childcare needs would be a good starting point.

Affinity issued a notice regarding the findings of the commission on Friday, it was barely an acknowledgement though. Hopefully all corporates will be preparing now, and should the government chose to implement some of the recommendations then the most proactive and communicative corporate will win the confidence of shareholders. These findings and the ratio changes in 2016 will challenge corporate childcare and how the corporates meet those challenges will be a deciding factor in where investors (including myself) park their cash.

Islay