Around 126,000 children from some of the most disadvantaged families in Australia could benefit if the federal government abolished its activity test for the Child Care Subsidy.
A new report from Impact Economics and Policy shows that the activity test is creating major uncertainty for parents in casual employment, with the most vulnerable families more likely to be subject to limited access to early childhood education and care.
The activity test is based on the “recognised activity” parents are engaged in, and restricts the number of hours of Child Care Subsidy a family is entitled to accordingly. Essentially, the fewer hours of “activity” parents engage in, the less they are able to access subsidised care.
A 2018 change to the system cut the minimum amount of care that low-income families are entitled to from two to one day per week. This change saw a reduction of 42,000 families receiving the minimum entitlement of one day per week of care.
Single parent families, Aboriginal and Torres Strait Islander families, non-English speaking families and low-income families are now more likely to be limited to one day of subsidised early childhood education and care per week.
“There’s been a real increase in casual employment across the economy, so for low-income families where they are engaging in casual work, it creates a lot of uncertainty because they have to update their activity very regularly. If they get that wrong, they can incur a Centrelink debt,” Dr Angela Jackson, lead economist at Impact Economics and Policy, told RN Breakfast.
“Aboriginal and Torres Strait Islander kids are five times more likely to only be receiving one day of care, than wealthier households. People from non-English speaking background families are six times more likely to only receive that one day of care a week and low-income families where they earn between $50,000 and $100,000 a year are also about six times more likely [to receive one day of care per week].
“It’s really the kids from the most disadvantaged and vulnerable families that are missing out on care.”
The report states that 340,00 children in the two lowest income quintiles are currently not attending early childhood education and care. If these children had access to childcare at the same rate as wealthier children, 126,000 children would be engaged in the early childhood education and care system.
Research shows that children are better off if they attend early childhood education and care before they start primary school.
Four in five children are developmentally on track if they attend early childhood education and care before they start school, while just three in five who do not attend are developmentally on track.
Activity test should be on the table at Jobs and Skills Summit
The report from Impact Economics and Policy comes ahead of the government’s Jobs and Skills Summit. Thrive by Five Director Jay Weatherill says the activity test is one of the major barriers facing families when accessing early childhood education and care, and should be discussed at the summit as a way to increase the workforce participation of parents.
“This week’s Jobs and Skills Summit has the potential to change the early learning sector by removing the activity test,” Weatherill said.
“Doing so will expand the scope of the Child Care Subsidy and provide families better opportunities to access early learning services for children and increase workforce participation of parents.
“Government reform of the Child Care Subsidy will be a critical first step, but this can only happen if the activity test, as it currently stands, is removed.
“Abolishing or simplifying this test would ensure that children and their families have greater access to early learning and childcare that positively supports their development and continued learning.”
The report from Impact Economics and Policy recommends the activity test is either simplified or abolished by the government, so that families are better able to access quality early childhood education and care.