The Parenthood’s Post

Professor Robert Breunig of ANU has written an excellent piece on childcare in the AFR. He argues against Australia moving towards a universal/flat-fee childcare system, challenging some commonly held assumptions. Specifically, he argues it would be ineffective (on labour markets), costly (to government), and regressive (the gains largely accruing to wealthier families). He uses a robust economic logic to make his argument, free of emotive language. To me, as an economist, it’s well informed and intuitive He presents four 'inconvenient truths' against a universal/flat fee policy: 1. Further subsidies won't significantly increase women's workforce participation, as Australia already has high female labour-market participation rates and current data shows minimal response to recent subsidy increases 2. There's limited educational benefit from additional childcare hours beyond 15-20 hours per week, with research suggesting more hours can lead to behavioral problems 3. Expanded subsidies would primarily benefit high-income households while being funded by middle-income taxpayers through bracket creep, making it regressive 4. Price-setting measures (which might be required alongside "$10 a day childcare") would likely drive providers out of the market and require massive government spending But Bob isn’t universally critical. He supports/endorses some recent policies (like ensuring access for disadvantaged children and waiving the activity test, as well as crediting past childcare subsidies with facilitating more gender-balanced labour-market engagement), which I think goes to the point that he’s evaluating things on their merits without an axe to grind There might be emotive arguments in support of universal/flat-fee childcare (and those are fair to make), but Bob makes the point that the economic arguments don't seem to stack up. I think it's important to unpack those various dimensions, to try to have a better informed public discourse on issues like this (rather than both sides trying to jury-rig all the arguments in their favour in this seemingly increasingly partisan world) Link to the article (paywalled) in the comments.

With so many childcare chains on the market, no doubt both vendors and potential investors are keenly observing how the landscape is shaping as ACCC and Productivity Commission's recommendations are being sifted through. There is also no doubt the Australian government will continue to increase its investment in childcare. It has always and Albanese's latest announcement demonstrates that continued commitment, especially in areas where there is market failure - areas deemed too difficult and unprofitable for commercial operators. Multiple studies have shown that parents have repeatedly not been able to reap the benefits of the increased investment over the years. Therefore, in my opinion, the key thing for investors to watch out for is the potential transition into some form of pricing, or margin regulation. https://lnkd.in/gGkDmgMz Emily Readhead Phillip Vrettakis Dan Sunderland Matt Rennie Simone Rennie Ian Rakich Julian Mitton

I’m kicking off a series of light-hearted posts about what I’d do if I were Rachel for a day. These won’t be fully researched or meticulously planned, but they’re meant to spark a thought or two – whether you're in the shower, gearing up for the day ahead, or winding down at the end of it. Enjoy! The first one: Childcare costs for working parents. My kids are sitting GCSEs and A’Levels so I am well beyond the childcare stage, but I still remember how deeply unfair it felt to pay for childcare out of post-tax income. It hit low-income earners especially hard, whether due to their career choices or part-time hours, as childcare costs often swallowed a huge portion of their wages. For many, returning to work simply wasn’t an option. It seems somewhat counterproductive that so many people, particularly women in their prime working years, were kept out of the workforce for this reason. The gender pay gap has many root causes, symptoms and structural challenges, but the stereo-typical gender roles in caring for children, undoubtedly hit women harder. My suggestion? To simply allow third party childcare for children up to the age of 5 to be a tax deductible expense for those employed (to be declared on the highest tax payer). This wouldn’t just bring financial relief—it would improve mental health for those who want to work but are unable to because of childcare costs. While such a change might initially increase pressure on early-years care providers, with sufficient notice, quality providers would have the opportunity to scale up to meet demand. The economic boost from increased workforce participation and higher tax revenue, both in the short and long term, would be substantial. It would certainly help sizable percentage of the population. #workingparent #childcarecosts

Thank you Newsroom NZ for publishing my OpEd. In my (and many others') opinion, early childhood education should again become a public good, community-oriented, representing diversity, and playing an important role in fostering a democratic society. The governments proposed Family Boost scheme will create significant compliance costs, as no ministry currently holds fees information. Currently, the Government has no knowledge of the proportion of early childhood education spend that ends up in corporate shareholder pockets. The Early Childhood Education sector needs fundamental reform. Family Boost is another tinker at the edge. Instead of subsidising childcare fees, the $723m ($7,230 per family) could be given directly to parents in the form of a child benefit (similar to many European countries), cash transfers (similar to Covid and other cost-of-living crisis helicopter payments), or it could simply be added to the Best Start payment for parents of children aged 0-3. We do not need to be paying the corporates for childcare, we need to be paying parents! They are, by nature, the first educators of our next generation. #thinkdifferent #actdifferent #bethechangeyouwanttosee Ministry of Education New Zealand Erica Stanford MP David Seymour https://lnkd.in/gSvGER8H

This week, The White House released a blog summarizing the economic benefit of investing in childcare. Here's what they shared: 1. Underinvestment in Child Care: While high-quality childcare benefits society, the financial burden often falls on individual families. Public subsidies are crucial to ensure adequate provision of care. 2. Unsustainable Business Model: The childcare market is decentralized, with providers in homes, centers, and schools. Yet, quality care is too expensive for families to afford. The whole system is broken. 3. Benefits Beyond Families: Access to quality childcare improves children's academic outcomes and reduces crime in a region. It also helps women join the workforce, benefiting local businesses and the broader economy. 4. Funding Is Needed: Through investments like the American Rescue Plan and the CHIPS and Science Act, the federal government can help support access to high-quality, affordable childcare. 🔗 Read the full post: https://lnkd.in/deqqRCnU #ece #investinchildcare

This week, The White House released a blog summarizing the economic benefit of investing in childcare. Here's what they shared: 1. Underinvestment in Child Care: While high-quality childcare benefits society, the financial burden often falls on individual families. Public subsidies are crucial to ensure adequate provision of care. 2. Unsustainable Business Model: The childcare market is decentralized, with providers in homes, centers, and schools. Yet, quality care is too expensive for families to afford. The whole system is broken. 3. Benefits Beyond Families: Access to quality childcare improves children's academic outcomes and reduces crime in a region. It also helps women join the workforce, benefiting local businesses and the broader economy. 4. Funding Is Needed: Through investments like the American Rescue Plan and the CHIPS and Science Act, the federal government can help support access to high-quality, affordable childcare. 🔗 Read the full post: https://lnkd.in/gT_jkgPC #ece #investinchildcare

📢 Public Accounts Committee update 📢 The Public Accounts Committee (PAC) has published correspondence to the Department for Education (DfE) following its inquiry into preparations to extend childcare entitlements for working parents in England. The PAC finds that the DfE made good progress getting the programme off the ground but now faces huge challenges in increasing the number of places available for children. The DfE estimates that the early years workforce needs to grow by around 40,000 between now and September 2025, a 12% increase compared to July 2023. Early year providers will also have to create 15,500 more new places nationally rising sharply to 84,500 by September 2025. PAC Recommendations: 1. DfE should urgently develop interim milestones to provide assurance to Parliament that the expansion is on track 2. DfE should build a clear understanding of how providers have used the additional funding and whether it has incentivised the market to expand 3. DfE needs to take a holistic approach to early years workforce growth, develop and publish a long-term workforce strategy and delivery plan to address recruitment challenges and, working with stakeholders, the root causes of poor retention. 4. DfE should put in place a system to monitor and report on whether the programme is delivering the intended benefits including if parents are getting access to the early years hours required to support either a return to work or increase in working hours. 5. DfE should make clear how it plans to track how the new entitlements will specifically impact access to places and the attainment of disadvantaged children and those with SEND. 6. DfE should continuously monitor the impact of extended entitlements on the quality of childcare provision and be prepared to act if there is evidence that quality is falling. #earlyyears #entitlements #capacity #impact #SEND #providers #quality #incentives #funding #expansion #benefits #strategy #childcare #parents https://lnkd.in/ewdNkxeS

This week, The White House released a blog summarizing the economic benefit of investing in childcare. Here's what they shared: 1. Underinvestment in Child Care: While high-quality childcare benefits society, the financial burden often falls on individual families. Public subsidies are crucial to ensure adequate provision of care. 2. Unsustainable Business Model: The childcare market is decentralized, with providers in homes, centers, and schools. Yet, quality care is too expensive for families to afford. The whole system is broken. 3. Benefits Beyond Families: Access to quality childcare improves children's academic outcomes and reduces crime in a region. It also helps women join the workforce, benefiting local businesses and the broader economy. 4. Funding Is Needed: Through investments like the American Rescue Plan and the CHIPS and Science Act, the federal government can help support access to high-quality, affordable childcare. 🔗 Read the full post: https://lnkd.in/ehe6wKKc #ece #investinchildcare

Today’s #BeigeBook by the Federal Reserve included details about how the #childcarecrisis is negatively affecting the US economy. Many of the takeaways are not new, but the details provide additional evidence of the ongoing crisis. The Cleveland Fed described some of these challenges in the Community Conditions section. ▪️ “Workforce challenges persisted in the childcare sector. One childcare provider indicated that finding and retaining quality workers was difficult.” ➡️ One main reason is that low wages in the childcare sector affect hiring and retention. This leads to providers needing to shut down, harming communities. High employee turnover also affects care quality and thus children’s safety and development. ▪️ “In addition, because of declining enrollment, the provider's childcare center was expected to increase its fees in January by 20 to 40 percent above the current level, as operating costs will be shared among fewer customers. ➡️ This can become a downward spiral, which has happened in public transportation: e.g., ridership decreases so they raise prices; those higher prices lead to reduced ridership; that then results in additional price increases. This is alarming and affects access to affordable childcare. ▪️ “Another contact explained that fewer childcare providers in rural communities contributed to lower workforce participation for women.” ➡️ The lack of access to childcare, especially in “childcare deserts,” negatively affects women’s labor force participation. This hurts productivity and overall economic growth. #BeigeBook #FederalReserve #ChildCare #Labor #Economics

It is particularly difficult for women in regional and rural areas to return to work after leave because many live in 'childcare deserts'. A 'childcare desert' is when more than three families are bidding for one early learning spot. In Broken Hill, there can be seven families vying for one position. When Sarah Vlatko became pregnant with her first child nearly two years ago, she and her husband hadn't taken much notice of warnings from other parents about the childcare shortage. But then Bonnie was born, her first birthday came and went, and now, as she approaches her second birthday, the family is still waiting for a early learning place to become available. Access to early learning services is notably challenging in Australia's regional areas, and has ripple effects on entire communities. Children are deprived of educational, social, health and wellbeing benefits while parents face difficulties in securing employment due to the lack of local childcare options. This shortage leads to workforce deficits and economic decline in some regions. The Federal Government has committed to a universal early education system. That means every child - regardless of location - can access affordable, high-quality early learning services. Achieving this will require a tailored approach that includes collaboration with state, territory, and local governments, and community. We have formed a broad and powerful coalition of like-minded stakeholders, an alliance of 52 organisations who are calling on governments to ensure every single child has access to early childhood education and care, no matter where they live. Find out more here: https://buff.ly/4cO3izg Read the full article on the ABC website: