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The secret of 'free' childcare: grandparents
Every day of every week of every year parents turn to grandparents to look after the kids so they can go to work. Until COVID-19 struck – and suddenly grandparents were taken out of the care equation. So what will happen to women’s workforce participation in the post-COVID economic reconstruction if this vital (and free) input is advised to remain socially distant? Perhaps now is precisely the right time to reform the overly complicated childcare sector.
In the topsy turvy world in which we currently live, COVID-19 has forced a massive re-evaluation of what is essential – and what isn’t – in life. In most people’s estimation, childcare would come somewhere near the top of the list.
It’s been deemed so essential that the federal government went so far as to make it free for six months as we negotiate the biggest disruption to the economy in history.
And while formal childcare is temporarily free, another equally important form of informal childcare - which is usually free - has been removed from the equation. Grandparents, the sticky tape that holds Australia’s overly complicated childcare system tenuously together, have been unable to play their usual – and mostly unacknowledged – role in allowing parents to work.
Grandparents [are] the sticky tape that holds Australia’s overly complicated childcare system tenuously together.
An estimated 865,000 children receive care from a grandparent in any given week, according to Myra Hamilton, principal research fellow at the Centre of Excellence on Population Ageing Research at the University of Sydney.
“More parents use grandparents than any other form of childcare such as long day care or after school care,” says Dr Hamilton.
“Yet they are completely invisible when it comes to policy making in the early childhood and care space. As formal childcare has a range of barriers, grandparents have become the backstop.”
Those barriers are well known to working parents, says Marian Baird, professor of gender and employment relations at the University of Sydney. High costs, low supply and inflexibility is the triple whammy that makes childcare inaccessible for many parents. And this is after a major $4 billion overhaul of the sector by the Federal government in 2019.
In an article published in The Conversation last week, researchers from the Grattan Institute spelled out just how prohibitive costs can be.
The article described a ‘workforce disincentive rate’ – or “the proportion of income from an extra day’s work lost through higher taxes, reduced family payment and childcare costs for second earners”.
If the mother were to increase her work from three days a week to four, she would lose about 90% of the income for that additional day.
It showed that in a family where both parents earn $60,000 each, if the mother were to increase her work from three days a week to four, she would lose about 90% of the income for that additional day.
“That leaves mum working for about $2 an hour on her fourth day and nothing on her fifth. Is it any wonder the ‘1.5 earner model' – where dad works full time and mum part time – has become the norm in Australia?” the authors ask.
Indeed, is it any wonder that grandparents are being asked to reorganise their post-retirement lives to take up the slack in a system that does not support full-time labour force participation by mothers.
“My research suggests that many grandparents completely transform what they envisage for their retirement to accommodate their grandchildren. They will rearrange when they take their holidays or move closer to their adult children instead of to the beach as they had hoped. It’s quite interesting the lengths they go to,” Dr Hamilton says.
The sector is designed to deal only with parents who work 9am-5pm – with almost no provision of care for the children of shift workers and those who don’t have consistent working hours.
Professor Baird notes that costs can be prohibitive, especially in inner city locations, with parents forking out up to $170 a day. These areas are also plagued by low supply, due to high overheads such as rent. But the sector is also designed to deal only with parents who work 9am-5pm – with almost no provision of care for the children of shift workers (such as nurses and doctors) and those who don’t have consistent and stable working hours.
Elizabeth Hill, co-convenor of the Australian Work + Family Policy Roundtable, says it is significant that the Prime Minister Scott Morrison publicly acknowledged the early childhood and education and care sector (ECEC) as an “an essential input for women and households to work and to work productively”.
She says the six-month “nationalisation” of the ECED sector is far from perfect - after all it’s a crisis response - but says the move is important for the symbolism it imparts.
The Grattan Institute has estimated that a simplifying the current child care subsidy to meet 95% of child care costs in low income families and tapering down to zero as family income increases would cost the government an extra $5bn a year on top of the $4bn it currently spends. (Grattan also estimated a universal scheme that was not means-tested would cost $14bn more a year).
But Grattan also estimates that the simplified, tapered subsidy would boost GDP by about $11bn a year in the medium term as more women engaged more fully in the labour force.
The argument for childcare reform would seem like a no-brainer for a government desperate to get the economy back on its feet post-lockdown. But Dr Hill is not optimistic it will happen.
“The most recent changes saw huge political capital being spent, so the idea that any government in the near future would go back to reforming childcare – given how complicated it is – is highly unlikely,” she says.
And it’s not just the formal childcare sector that is complicated. Both the pre-school and after school care sectors are in disarray, says Professor Baird. Streamlining the whole shebang, which is 70% run by the private sector, is just a road too politically rocky to travel.
Which is why grandparents are so critically important to rebuilding the economy after COVID. But what happens if medical advice is for older Australians to remain socially distanced for the foreseeable future? What happens to those workers who can’t work because they don’t have access to affordable and accessible childcare?
Perhaps childcare reform should be at the top of the post-COVID economic reform list after all.