Overview

This snapshot presents findings from the 2018–2021 evaluation of the Australian Government's Child Care Package.

A key outcome for the evaluation of the Child Care Package was the impact of the Package on access and outcomes for vulnerable families.¹ This snapshot presents evaluation findings related to a range of family and child characteristics that are typically associated with experiences of vulnerabilities. These include low-income families, families from non-English speaking backgrounds, Aboriginal and/or Torres Strait Islander families and families in remote areas of Australia.² Another cohort of families is that of children with additional needs.

See also the snapshots on the Additional Child Care Subsidy (ACCS), In Home Care and the Inclusion Support Program for more evaluation findings relevant to vulnerable families.

This snapshot also includes a brief summary of findings relevant to the former Budget Based Funded (BBF) services.

The Child Care Subsidy supporting vulnerable families

The key component of the Child Care Package was the introduction of the Child Care Subsidy (CCS), which replaced the Child Care Benefit/Child Care Rebate (CCB/CCR). The CCS amount families can receive is based on an income test and activity test and is also supplemented by support through the Child Care Safety Net, described below.

• The income test means that lower income families receive the highest subsidy percentage.
  • This has contributed to lower child care costs for many low-income families. See the affordability snapshot and Cost of care for vulnerable families below.
• The activity test includes an exemption for low-income families, so that those who do not meet the activity test can access 24 hours of subsidised child care per fortnight if their income is below the threshold (those with annual incomes up to $70,015 in 2021-22).
  • There was extensive feedback that 24 hours of subsidised child care was not enough for families (discussed further below, see Activity testing and 24 allowed hours).
• As well as the low-income exemption, there are other exemptions to the activity test that can provide high levels of support (up to 100 hours of subsidised child care per fortnight) to vulnerable families in particular circumstances (see The Activity Test snapshot).
  • Exemptions cover, for example, parents on Disability Support Pension or Carer Payment, and grandparent carers who are not on income support payments. Waiving the activity test has also been used by the Government as a way to support families living in areas that have experienced hardship such as bushfires and drought. Data were not available for the evaluation on the numbers of children or families covered by exemptions.

Access to CCS is through MyGov or through Services Australia. Concerns were expressed in the evaluation that some vulnerable cohorts have had challenges with this process, particularly when faced with barriers related to English literacy and access to technology. (See also the Understanding the Child Care Subsidy snapshot.) This was particularly relevant to families from non-English speaking backgrounds and Aboriginal and/or Torres Strait Islander families.

The Child Care Safety Net

The Child Care Safety Net provides extra support to families and services if they are experiencing a vulnerability or disadvantage, or are located in a regional or remote community. It includes the Additional Child Care Subsidy (ACCS), Inclusion Support Program (ISP) and Community Child Care Fund (CCCF). The ISP and CCCF support services to improve access to child care. We report on the ISP and CCCF in other snapshots.

See the Additional Child Care Subsidy snapshot for more information and evaluation findings about ACCS. These findings show a strong increase in the take up of ACCS since the commencement of the Child Care Package. ACCS supported about 34,100 children to access child care in the December 2019 quarter. There are different streams to the ACCS program.

• Most of those accessing ACCS were supported under the ACCS (Child Wellbeing) stream.
  • Eligibility is based on the parent/carer being eligible for the CCS and the child being vulnerable or at risk of harm, abuse or neglect. The application for this stream is made to Services Australia by the child care service, with the family involved in discussions about eligibility and in providing information about the child's circumstances.
• For the other streams of ACCS, the application is made by the family to Services Australia. To be eligible, a parent/carer must be eligible for CCS and meet one of the following criteria:
  • an eligible grandparent getting an income support payment (ACCS (Grandparent))
  • experiencing temporary financial hardship (ACCS (Temporary Financial Hardship))
  • transitioning from certain income support payments to work (ACCS (Transition to Work)).

The evaluation found that ACCS was operating effectively to support vulnerable families but with a significant administrative overhead to services for ACCS (Child Wellbeing). There were also some operational aspects of ACCS (Child Wellbeing) that had caused issues for services and families, including some challenges for services needing to identify that a child might meet the eligibility criteria for being at risk of abuse or neglect.

Vulnerable families and access to child care

Detailed modelling of administrative data was undertaken to explore whether there were any significant changes in access to child care among cohorts of vulnerable families. Focusing on families in which one or both parents received an income support payment or Family Tax Benefit (FTB), these analyses indicated that, overall, there was little significant impact on the extent to which children accessed child care. Some slight changes were apparent but were considered marginal, rather than indicating any significant shifts.

Sustained low rates of child care participation, relative to population-level rates, were apparent for some cohorts, including Aboriginal and Torres Strait Islander children, some children with specific non-English speaking backgrounds, and children in remote and very remote locations.

Cost of care for vulnerable families

If supported by ACCS, ACCS covers all of the fees charged, up to 120% of the hourly rate cap, for 100 hours per fortnight without an activity test for most streams (the subsidy is 95% for ACCS (Transition to Work)). This provides substantial levels of access to subsidised care for vulnerable children, resulting in very low costs of child care and supporting these children to engage in child care at significant levels.

Families not supported by ACCS but covered by the exemptions to the activity test are able to access 100 subsidised hours under normal CCS rules.

Detailed modelling of child care costs for the evaluation showed that the Child Care Package resulted in lower child care costs for lower income families. In fact, reductions in child care costs were apparent for families on incomes up to about $150,000, with bigger reductions for the lower income families. This was reflected in survey data also. For example, in the November 2019 DESE/ORIMA Parent Survey,³ among those using child care with family incomes below $30,000, when asked for their agreement with the statement, 'I am better off under the new CCS than under the old CCB/CCR', 34% reported agreement, significantly outweighing the 13% who disagreed. This was true for those with family incomes up to the $65,000-$125,000 bracket, after which respondents were more likely to disagree.

Subsidised child care hours for vulnerable families

The number of hours of child care that can be subsidised depends on whether children are supported by ACCS and on families' activity test results (including any exemptions). Figure 1 shows the proportion of children using child care that had different amounts of subsidised hours, according to whether parents were on any income support payment, on Family Tax Benefit (but not an income support payment), or on neither.

• Across all groups, most commonly children had access to 100 subsidised hours per fortnight via the activity test, although we note that we could not distinguish between those who reported activity versus those who had an exemption that resulted in 100 subsidised hours.
• The proportion with access to 100 subsidised hours via ACCS was highest for children with one or both parents on an income support payment. The proportion of children with a maximum of 24 or 36 subsidised hours per fortnight was also highest for this group.

Figure 1: Subsidised hours for children with parents on income support payments, FTB only or neither, December quarter 2019

Source: Department of Education, Skills and Employment (DESE) and Department of Social Services (DSS) administrative data (December quarter 2019)

Patterns of allowed hours also varied for other cohorts. For example, focusing on children with parents on FTB or an income support payment, Figure 2 shows that children from Aboriginal and/or Torres Strait Islander families had a higher proportion with access to 24 or 36 subsidised hours, although there was also a relatively high proportion with access to 100 subsidised hours via ACCS.

Figure 2: Subsidised hours by whether children are from Aboriginal and/or Torres Strait Islander families, families on an income support payment or FTB, December quarter 2019

Source: DESE and DSS administrative data (December quarter 2019)

Activity testing and 24 allowed hours

A significant change with the Child Care Package was the tighter activity testing. There was general concern that this activity testing and the related focus on parental employment diminished the important role that early childhood education can play for children's development. This was particularly relevant in considering disadvantaged and vulnerable children, with child care having a role in addressing their disadvantage and in preparing them for education.

While the proportion of children entitled to only 24 hours of subsidised care per fortnight was small (about 1.6% of child care users), recipients were concentrated within a number of vulnerable and marginalised groups (as shown in Figure 1 and Figure 2).

Of all the issues raised about vulnerable children through the evaluation data collections, concerns about the adequacy of 24 subsidised hours were most prominent.

More specifically, there was widespread concern, expressed through evaluation data collections, about the 24 hours per fortnight subsidised child care hours for those on low incomes and not meeting the activity test, instead of the 24 hours per week it had been previously. Depending on how services charge (see the Service Charging Practices and Sessions of Care snapshot), 24 subsidised hours may only cover one day of Centre Based Day Care (CBDC) per week. This has implications for costs of child care if families use more child care than this, and stakeholders and services expressed concerns about this being a deterrent to these families using more than one day a week of child care.

For example, among children attending CBDC with a maximum entitlement to 24 hours of CCS per fortnight in the December 2019 quarter:

• 49% used one day a week of child care, 38% used 2 days a week, 8% used 3 days and 5% used 4 or 5 days of child care.
• The out-of-pocket cost of child care for those attending one day a week was just over $19 per week, on average. Costs rose to almost $69, on average, for those attending 2 days, and around $164 per week for those using 4 or 5 days a week.

Former Budget Based Funded (BBF) services

Before July 2018, some child care services, including non-mainstream services in rural, remote and Aboriginal and/or Torres Strait Islander communities, were directly funded under the Budget Based Funded (BBF) Program. Just over half of the former BBF services transitioned to mainstream child care funding with the commencement of the Child Care Package. With this, their funding arrangements changed to be based on income derived from the CCS, ACCS and parent fees, and supported through the Community Child Care Fund-Restricted grants.

About 117 former BBF services were providing child care in 2019. More than 3,600 children were using these services in December 2019.

While these services play a relatively small role in the total provision of care to Aboriginal and/or Torres Strait Islander children (4% of Aboriginal and/or Torres Strait Islander children using child care did so at a former BBF service in the December 2019 quarter), in some locations they were the only service available. In many cases, they had been developed to specifically meet the needs of Aboriginal and/or Torres Strait Islander communities and the children who lived in them. These services played a particularly significant role in remote and very remote locations.

The former BBF services, in evaluation data collections, commonly reported about their experiences in providing child care to vulnerable families. Concerns around parents' understanding of the CCS and the activity test, and the adequacy of 24 subsidised hours were key issues. Services themselves underwent significant changes to ensure they could support families through these processes, while also needing to change their business model. In addition, there was concern that the transition to the new funding model and alignment to the Child Care Package took away from the focus on child wellbeing, and the focus of many of these services in providing a culturally appropriate service for the community.

Service approaches to supporting vulnerable families

While government provides different means of supporting vulnerable families' access to child care, child care providers/services had their own approaches to this support. When asked in a services survey, in July 2019, what policies or procedures they had to support vulnerable families, there were some commonly used approaches.

• The most common form of assistance provided by services was alternative payment plans (58%) with 12% saying they offered lower fees. We note that with the Child Care Package, there is a new requirement that parents make a co-contribution to the cost of care.⁴
• The next most common form of assistance provided by services was helping with Centrelink (Services Australia) applications (41%). This relates to the finding, reported above, that the CCS application process was difficult for some vulnerable families. See the Understanding the Child Care Subsidy snapshot.
• Over a third of services reported that they provided some form of priority access. This was despite the changes brought in with the Child Care Package that removed the requirement for services to allocate places according to Priority of Access Guidelines.
• One in 3 CBDC services offered different session lengths for vulnerable families. This relates to how service charging interacts with the CCS and the activity test (see above on 24 allowed hours).

The evaluation also considered children with additional needs and their access to child care. Services reported on the challenges that can be faced in including children with additional needs, which resulted in children sometimes being excluded from child care services. This was explored in the evaluation of the ISP (see the Inclusion Support Program snapshot).

Summary

The evaluation found that the Child Care Package had not had any significant negative impacts on access to child care for most vulnerable children. At the same time, it found that the Child Care Package had not addressed the lower levels of participation by some groups. Particular issues arose for Aboriginal and/or Torres Strait Islander children, children living in more remote locations and some children with a non-English speaking background. One relevant issue that was that the application for the CCS was considered difficult for some cohorts of vulnerable and disadvantaged families who faced barriers related to English literacy and technology.

While ACCS was found to be broadly effective, specific aspects of ACCS were considered to add to the administrative load of services, with some operational aspects proving challenging for services and families, including the language around the identification of children 'at risk'. See also the Additional Child Care Subsidy snapshot for more information.

The aspect of the Child Care Package that drew most attention, with regard to vulnerable families, was the tighter activity testing and the change in the number of subsidised hours available through the Safety Net. There were widespread concerns over the adequacy of 24 hours of subsidised care per fortnight, particularly in light of service charging practices that meant this may only cover one day a week of child care. This had implications for access and cost of care. Overall, the 24 hours limit on subsidised care under the safety net relative to previous settings raised questions on the adequacy, targeting and effectiveness of this provision. Beyond this, there were concerns that the focus on the activity test, and parents' work, took away from the important role that child care has in addressing child wellbeing for vulnerable and disadvantaged families.

Child Care Package evaluation

In July 2018 the Australian Government introduced the Child Care Package. The Australian Institute of Family Studies in association with the Social Research Centre, the UNSW Social Policy Research Centre and the ANU Centre for Social Research and Methods were commissioned by the Australian Government Department of Education, Skills and Employment to undertake an independent evaluation of the new Child Care Package. Findings presented here are based on data collected and analysed for the Child Care Package evaluation. The evaluation commenced in December 2017 prior to the introduction of the Package and reported on data collected up to December 2019. The evaluation was impacted by external events, particularly COVID-19, which resulted in the suspension of the child care funding system for a period during 2020. As a result, the evaluation only draws on data to the end of 2019 and does not include data from 2020.