Cheaper Childcare Bill Passes Australian Senate Amid Severe Worker Shortages

Australian Prime Minister Anthony Albanese visits a childcare centre in Perth, Australia, on May 16, 2022. Lisa Maree Williams/Getty Images

Over a million Australian families will receive a childcare subsidy from July 2023 as a multi-billion dollar bill has passed the Senate on Nov. 22. However, an acute shortage of workers is threatening to hinder the new policy.

In September, the Labor government introduced the Cheaper Child Care bill to the Australian parliament to implement a major policy proposed during the federal election.

The bill is expected to provide cheaper childcare services to 96 percent (about 1.26 million) of Australian families with young children at a revised cost of $4.7 billion (US$3.1 billion) over a four-year period.

Prior to the passing of the legislation, Prime Minister Anthony Albanese touted the bill as a good policy that boosted the participation of women in the workforce and benefited the development of young children.

Details of the Bill

Most notably, the bill introduces a wide range of subsidy thresholds corresponding to various total family income brackets.

Specifically, a family with a total income of $80,000 will receive a 90 percent childcare subsidy.

The support payment will go down by one percent for every $5,000 increase in family earnings until it reaches the maximum income threshold of $350,000 (no subsidy).

In addition, the bill removes the higher childcare subsidy for younger children under the age of five in families with multiple children. This means all the children are now subject to the same rate of subsidy regardless of their age order.

At the same time, all Indigenous children will be eligible for 36 hours of subsidised childcare per fortnight.

The bill also brings forward more reporting requirements for childcare centres to combat fraud.

A four-year old child is seen at play in Sydney, Australia, on May 3, 2021. Brook Mitchell/Getty Images

At present, the amended legislation has passed the Senate and will be sent to the Labor-controlled lower house for approval before officially becoming law.

Labor senator Nita Green said the bill recognised the importance and value of early childhood education and would make the system more accessible to Australian families.

“Early childhood education gives our youngest Australians the best start to life and it enables parents, especially mothers, to get back into work when they want to,” she said.

On the Opposition side, Liberal senator Jonathon Duniam said while the Coalition would not oppose the bill, it wanted Labor to address the issue of workforce shortage and the pressures being faced by educators in the marketplace.

The senator also noted that the bill did not include any modelling on the number of additional childcare places or additional educators that will be needed.

“Where are these new places going to open for all the new children entering the system?” he questioned at the parliament.

“Where will the educators come from, what cohorts are we looking to fill these spaces, and how will we get them to where they are needed in the community?”

Labour Shortages to Impact the New Policy

While the new legislation may provide some relief to a portion of the Australian population, an acute shortage of childcare workers may put the policy at risk.

The industry reported over 7,000 job vacancies in September alone, a sharp increase compared to just 3,000 vacancies in October 2020.

The Parenthood executive director Georgie Dent told Nine Network that many childcare workers quit during the COVID-19 pandemic due to burnout and low pay.

She said workers had been asking for an interim wage supplement and that this issue needed to be dealt with right now to retain the necessary workforce.

Michele Carnegie, the CEO of Community Early Learning Australia, was concerned that the staff shortages would get worse by the time the new childcare laws came into effect.

“If vacancies continue to grow at this rate, we estimate that there will be over 10,000 vacancies by July 2023,” she told ABC.

“This will see an increase in demand in childcare that simply cannot be matched by workforce supply.”