Why are some childcare services asking for money from parents?

Why are some childcare services asking for money from parents?

There are a bunch of reasons, including that the package was poorly explained, writes early childhood education activist and consultant, Lisa Bryant.

“Free Childcare”, screamed the headlines. “Child Care Rescue Package”, read others. 

Why then, are some parents being approached for donations from their childcare centres who are saying they are worse off than were before?

Before the 6th of April, it looked like Australia’s education and care (childcare) system was about to become a big COVID-19 casualty. Parents were pulling their children in droves because they didn’t want their children at risk and could no longer afford the fees for a service they couldn’t use.

The government listened to sustained advocacy and created a rescue package. The package will put about $600 million into the early education and care sector over the next 3 months, in addition to the estimated $1 billion that education and care services are projected to receive from JobKeeper. This totals $1.6 billion of government money that will go towards keeping education and care services across Australia functioning.

How does this compare to what services were getting pre COVID-19? In the September 2019 quarter the total of Child Care Subsidies paid to services was just under $2.2 billion. Services also got fees from parents.

The net result is less money going into the sector but still a significant amount more than would have remained in the system without government intervention. (The Government calculated that subsidies and fees would have dropped to around $1.3 billion because of the number of children being withdrawn.)

The services that recognised this are grateful and have gone, “yes, we can do this”. Even with no parental fees, between the JobKeeper funding, the rescue package and some money through the Boosting Cash Flow for Employers fund, they think they can manage. Liam McNicholas, who works for Northside Community Services in Canberra that runs 4 education and care services put it this way – “We will survive, not thrive.”

So why are some services saying they won’t survive? Why are some services setting up GoFundMe campaigns begging parents to cover their staff wages, or no longer supplying food or nappies on the grounds they can’t afford it? Why are some FDC educators telling families they have taken a 50% cut in their income and that they are having to work for half their usual hourly income to pay for the free childcare the government has promised?

A mix of reasons. Done on the fly, the package was badly explained to the sector by the Government – a lot of services and educators still don’t fully understand the nuances of it, especially how the JobKeeper package will provide the rest of the money they need to survive.

The education and care sector is currently run on a mixed model of for-profit services and not for-profit ones. Most for profit providers run just one service. Some of these are great services run by smart people who can see how they can survive through COVID-19 disruptions. Others are badly managed by people without the necessary financial skills. Some, I’m sad to say, are run by individuals prepared to accept guaranteed government funding during the good times and then fail to accept when government funded profit takes even a small hit. They don’t realise we are in an unprecedented pandemic. They don’t realise how lucky they are to work in an industry that was thrown a lifeline by the Government.

Without a doubt, some services and FDC educators will have cash flow problems until the JobKeeper allowance starts flowing at the beginning of May. And that is a big kicker because we are talking about cash flow problems in one of the most underpaid sectors there is. Educators don’t earn high wages so don’t have the same buffer that other workers might have.

And because educators earn so little, the education and care workforce is full of overseas workers on temporary visas. Unfortunately, these people are not eligible for the JobKeeper package. Some employers seem to think they should only pay employees who are eligible for JobKeeper directly rather than looking it as a subsidy to help continue to pay their entire workforce in these difficult times.

So what should parents do if the centre where their child attends tells them the sky is falling in?

Test it. See if they understand the various components of the package. You can read more about them here. Then ask if they have applied for an Exceptional Circumstances Supplementary Payment. This is the last resort funding package for services that really do fall through the cracks.  If they haven’t, don’t part with a cent of your money.

If they have, but still legitimately believe they will struggle, then parents could consider helping out.

But remember that in order to get funding under the Early Childhood Education and Care Relief Package, services are not allowed to charge families fees. Openly solicited ‘donations’,  which parents are pressured to supply, are pretty much fees by another name.

But the real problem is with a system where people can profit from the supply of early education and care. If our government decided that all early education and care should remain free, even after the pandemic, we would never get into a situation where businesses could beg from parents again.

Radical idea, isn’t it? Government funding and profit making banned. Oh that’s right, that’s exactly how our school funding system already works.

If that is a good enough way to fund our children’s education from the age of 5, why not their early education too?

Maybe then there would be no mess needing special complex handouts from government or donations from parents. Like schools we could have remained open, no matter how many children showed up. And our teachers and educators would have all been paid regardless.

And the real kicker? This kind of system probably wouldn’t have cost governments much more in the first place.

Update: Lisa Bryant and Women’s Agenda are aware that for some FDC educators who are caring for the same number of children as before COVID-19 or who are not eligible for JobKeeper, the money available under the relief package is not enough. These services should be submitting a claim for supplementary relief. Our understanding is that the Government is still exploring other ways to assist these educators. 

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