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‘Scrapping free childcare will hurt small business’

Maja Garaca Djurdjevic
Maja Garaca Djurdjevic
13 July 2020 2 minute readShare
childcare

Childcare has just become unaffordable for many small-business owners, the small business ombudsman has warned, following the end of the government’s free childcare measure which could be detrimental to business.

The government’s free childcare measure, enacted at the height of the coronavirus crisis to help the sector, is now a thing of the past, with the Education Minister defending the government’s decision to withdraw the measure in July and return to the old fee-and-subsidy model.

But the Australian Small Business and Family Enterprise Ombudsman, Kate Carnell, has warned that with many women in small businesses relying on JobKeeper for their income, they will be forced to pull their children from childcare over unaffordability.

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“For small-business owners — many of which are mothers — who have been working tirelessly to get back on their feet, childcare has just become unaffordable,” Ms Carnell has said.

“Many of these young families working in small businesses are relying on JobKeeper, which will not cover childcare fees reinstated from today.”

 

This, Ms Carnell opined, could force parents — mothers more often than not — out of their jobs, which is detrimental to their business, their families and even worse for the economy.

Women make up more than a third of Australia’s small-business owners (38 per cent), with more than 5 million women employed in these businesses. And according to recent ABS labour force data, women have been among the hardest hit by the pandemic, with the female participation rate falling dramatically.

“The government should be monitoring this situation very closely and be considering innovative ways to increase the participation rates for women to ensure productivity gains and to help those in their efforts to get their businesses back on track,” Ms Carnell urged.

The ASBFEO’s COVID-19 Recovery Plan makes the point that childcare is an essential service for parents in small businesses and needs to be affordable.

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“There are a number of ways the government can do this, including making childcare tax-effective or by phasing in an expanded subsidy scheme, which the Grattan Institute estimates would deliver an $11 billion economic boost,” Ms Carnell explained.

“Economists have long referred to the ‘double dividend’ of childcare increasing workforce participation rates and providing early education.

“Equally, the government should be monitoring the impact that the reinstatement of fees is having on childcare centres, many of which are small businesses, which have warned of dire consequences of the so-called snap-back to the previous system.”

However, speaking on ABC News Breakfast on Monday morning, Education Minister Dan Tehan said that the free childcare measure had to go because it was putting increased pressure on the childcare providers.

“As the economy continues to open up, we’ve seen demand for places increase. And that’s why we’ve moved back to our old system, but with transition arrangements in place,” Mr Tehan said.

Asked about parents who have seen their hours of work cut and those that may have lost work, Mr Tehan said that the system is designed to cope with that.

He said: “It manages that, because if you get a reduction in hours, obviously, the amount of out-of-pocket expenses that you pay comes down, and for those parents in real financial hardship, we have the Additional Childcare Subsidy.

“So, I would say to all parents who have lost work or who have seen reduced hours, please get in touch with your provider to see what assistance is there for you.”

The federal government is offering fee help for parents in Melbourne and Mitchell Shire by allowing all services located in areas subject to stage 3 COVID-19 restrictions to waive parent gap fees if children are not attending childcare for COVID-related reasons from Monday, 13 July.

‘Scrapping free childcare will hurt small business’
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Maja Garaca Djurdjevic
Maja Garaca Djurdjevic

Maja Garaca Djurdjevic is the editor of My Business. 

Maja has a decade-long career in journalism across finance, business and politics. Now a well-versed reporter in the SME and accounting arena, prior to joining Momentum Media, Maja reported for several established news outlets in Southeast Europe, scrutinising key processes in post-conflict societies and enabling citizens to influence decision-making.

You can email Maja on [email protected] 

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