Monday, March 17, 2008

How 20 hours free childcare could cost more than already subsidised childcare

The Government's 20 hours free early childcare policy is being blasted as a con to low income families who have always got nearly all of the 20 hours free subsidy that the Government provides for childcare - through Work and Income.

In other words for low income families who have kids aged three and four, a Work and Income child care subsidy for "childcare" has now morphed into a subsidy for childhood "education" that the Government is calling free. And some places are asking for more donations for 20 hours free than others are charging as a top up fee over the maximum childcare subsidy - meaning 20 hours free effectively makes you worse off.

I`ll explain.

Low income families who want childcare are eligible for a childcare subsidy from Work and Income and pay the top-up themselves. Higher income families have to pay for their own childcare.That hasn't changed for parents of children who are not three or four.

But what the government has effectively done is taken the income test away from the childcare subsidy, topped treh subsidy up a little for low income families and called it 20 hours free ECE for all. The one distinction is that the childcare subsidy is granted to a limited number of parents and applies to all childcare centres whereas 20 hours free is extends to all parents whose kids go to a limited number of centres.

Formerly a two year old's parents got a subsidy of $3.40 an hour via Work and Income, now their centre gets a subsidy of $4.00 an hour through the Ministry of Education as part of 20 hours free. But the Government not only calls this subsidy free childcare, it calls it free education. But a child of low income parents who has transferred from a childcare subsidy to 20 hours free ECE because he or she has turned three is not transferred from a creche to childhood education. All it means is that a different Government department is paying the subsidy with a slight increase. In some cases there is no "education" provided - it is simply a place to take your kids while you work.In both cases it is parents who are topping up the balance - except the top up is classed as a donation over ECE and a fee over the childcare subsidy.

But you have to shop around - particularly when childcare provider A who opts into 20 hours free charges top up compulsory donation of $2.50 an hour - while childcare provider B refuses to opt in to 20 hours free and may charge the equivalent of $2.12 an hour - which is what we were paying for our two year old over the maximum childcare subsidy provided by Work and Income.

So isn't it great that if you are entitled to the full WINZ subsidy it is possible to pay less in one provider than choose 20 hours free in another. You're worse off with 20 hours free.




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