Advertisement

‘A disaster’: childcare services may be forced to close despite government funding due to pandemic

<span>Photograph: Dean Lewins/AAP</span>
Photograph: Dean Lewins/AAP

Some childcare services may face closure or staff cuts, despite the Australian government’s pledge to scrap fees for parents during the coronavirus crisis, according to operators.

The operator of a long day care centre described the situation as “a disaster” while a family day care provider said it was “nothing short of a nightmare”.

The key problem is that the funding on offer from the government may, in many cases, be less than the revenue childcare services were receiving before the crisis began, so some operators are contemplating closure or changes to staff hours or enrolments.

Related: Free childcare is too good to be true. But could this start a revolution? | Eva Cox

Scott Morrison announced on Thursday that the entire funding system would be overhauled from next week to ensure parents who needed to keep sending their children to childcare did not have to pay any fees during the pandemic.

The new funding is estimated to be worth $1.6bn in total over the next three months. In order to receive it, services will be prohibited from charging families a fee – including an out-of-pocket or gap fee – and must stay open unless forced to shut on public health advice.

Centres have been told to prioritise care to essential workers, vulnerable and disadvantaged children and previously enrolled children. Parents who maintain enrolments but choose to keep their children home for the duration of the pandemic will not have to pay fees and will still have a place afterwards, the government says.

The education department has clarified that the new weekly payments to services will be about 50% of their recent fee revenue or 50% of the existing hourly childcare subsidy rate cap, “whichever is lower”.

The owner of a long day care centre in NSW – who did not want to be named because of the sensitivity of the issue for educators and parents – said this meant that their revenue would drop by nearly two-thirds overnight.

“I can sustain some losses for a short period of time ... but for how long? It was all taken away overnight,” the owner told Guardian Australia.

“It’s a disaster.”

One issue is uncertainty over the eligibility of workers for the jobkeeper wage subsidy of $1,500 per person per fortnight, which the government has promoted as a way to supplement the other childcare funding.

Some educators are on temporary work visas which means they cannot access the wages subsidy. Casuals who have been with a service for less than 12 months are also ineligible.

Darcy Byrne, the mayor of Inner West council in Sydney, said there was also a “glaring hole in the package which leaves council-run childcare services unsupported”.

“The new system of free childcare is predicated on 50% funding for service costs from the commonwealth and the rest being sourced from the jobkeeper payments – but local government workers are still not eligible for jobkeeper payments,” he said.

“Councils are the largest providers of early childhood education and childcare in NSW but without this flaw being fixed their future is threatened.”

After a meeting of the national cabinet on Friday, Morrison confirmed councils were not eligible for federal jobkeeper payments, but added: “If there is support necessary for local governments that will be provided by the state and territory governments.”

Kathi Hewitson, the coordinator of Foundations Family Day Care, which serves 100 children in Melbourne’s north and east, estimated her service would experience a 58% decrease in revenue under the new funding arrangements.

While many – but not all – of her educators would be eligible for the additional jobkeeper payments, that money was not due to flow until May.

Hewitson told Guardian Australia the government’s announcement of free childcare was wonderful for parents but “nothing short of a nightmare” for family day care services like hers.

“Educators are going to have their incomes slashed from Monday, and somehow they’re going to have all of the increased costs of cleaning, [and] they need to feed the children that are in care, as well as their own families,” she said.

“We actually had an emergency Zoom meeting [with 11 educators] last night, to try to work out what we can do. There were a lot of tears. It was very emotional. There were a lot of scared people.”

Hewitson said she had explained the service’s financial challenges to its families, some of whom had offered to keep making payments. However, under the government’s conditions for the new funding, services are prohibited from charging any fees.

“What I would really like to happen from here is for the services to be able to apply for the jobkeeper payment on behalf of any educators and for every educator to be eligible to get it,” she said.

“And I would like the families, if they were to volunteer to make payments, as so many have offered, even begged me, that we would be allowed to accept them to supplement the educators’ income.”

Andrew Paterson, the chief executive officer of Family Day Care Australia, a peak body, said he was hopeful that the vast majority of family day care educators would be eligible for the jobkeeper payment.

“There are some specific nuances around the issue of ABNs but we’ve asked the department to work with us in finding a solution to that problem,” he said.

Meanwhile, Goodstart Early Learning, the nation’s largest childcare provider with 665 centres, remained in talks with the government about its eligibility for the jobkeeper scheme, which sets a higher bar for big organisations.

A spokesperson said Goodstart was yet to receive confirmation “but thank the minister and the treasurer for working with us to help find a solution”.

Related: Free childcare: what do the Australian government's coronavirus changes mean for my family?

Labor’s early childhood education spokesperson, Amanda Rishworth, said the government “must provide some clarity and ensure the new system does not threaten the viability of centres and potentially force them to shut their doors”.

The Australian Tax Office commissioner will be allowed to exercise discretion in dealing with “unique cases” under the jobkeeper scheme, the government says.

Childcare services may also be able to access payments of greater than the new 50% rate in exceptional circumstances “such as where greater funding is required due to an increase in enrolments to meet demand to address the needs of essential workers or vulnerable children”.

The education minister, Dan Tehan, told the ABC the government was “doing everything we can to put in place new arrangements which mean that as many centres can stay open as they possibly can, and as many workers will keep their jobs”.