Childcare subsidies. I was wrong – childcare should be subsidised

In a recent post I listed a range of points which had me convinced that childcare should not be subsidised by the community. Christopher Budd (CB) kindly took the time to counter each of my points in turn, and I gratefully acknowledge that he has convinced me I was wrong. This post summarises the arguments which changed my mind.

Whilst child-bearing is a choice individuals and couples mostly freely make, in doing so they provide a service to society. Consider the consequences for our society if everyone in Australia chose not to bring children into the world (even if some would see that as beneficial to planet earth). So, if society benefits it is valid that the society at large should bear some of the financial and other costs incurred in child raising.

Paraphrasing CB: “People make many bad choices which result in costs to society; smoking, alcohol consumption, excessive consumption of food and ‘stuff’, and many similar choices, all incur costs which society bears the bulk of.” “Clearly, then, a choice which is beneficial to society should also be subsidised. And childcare by others is not just job swapping.” True. I stand corrected.

CB wrote: “It’s not usually ‘parents’ that take on this job. It’s mothers. Society is now structured in a way where some amount of dual income is required for an ordinary existence. If childcare isn’t subsidised, mothers can either work and spend it all on childcare and be financially dependent (and/or poor), or not work and look after the children and be financially dependent (and/or poor). Financial dependence (and/or poverty) should not be a compulsory part of motherhood.” “This leads to all sorts of sexist consequences. For example, a lot less super, making single women of retired age at high risk of homelessness.” It certainly does.

CB (paraphrased): “If the full cost of childcare is close to their income, parents are effectively incentivised to stay home.” “This is bad because it’s effectively long-term unemployment; no tax is paid, no super is received, they would often receive welfare (so they get taxpayer funding anyway – may as well subsidise childcare and have the mother pay tax)…”

“The main reason this appears to be a problem is that society currently gets childcare for free from mothers, and so doesn’t count or value that labour (see above, sexism). The conceptual leap is ascribing a proper value to mothers’ childcare labour.”

“Also, it’s not babysitting that’s being farmed out – it’s early childhood education. Primary and secondary education is already farmed out (it’s compulsory, no less), and no-one really argues that should be undone. Childcare is not different, it’s just younger children.” Valid points.

“…the type of care (young children) receive has significant consequences for them as adult human beings.” Yep!

“…developmentally appropriate education is also key. As above, parents are not necessarily very good at this, especially if they’re low SES or have other vulnerabilities.” Accepted.

“As you note above, the first 1,000 days is vital, and that’s up to approx. 2.5 years. So if you’re OK with publicly funded 3 year old education, why not publicly funded education in the vital first 1,000 days? It’s just that the ‘education’ looks different.” Why not indeed?

“It is near impossible for one parent (Mum, because Dad’s at work), even a rich one, to put in the time and mental effort required to provide the breadth and depth of activities childcare does.” Accepted.

Paraphrasing CB: “Eight hours work requires ten hours of childcare, and there are several other costs associated with paid work – car costs, parking, clothing, etc.” “Not to mention non-economic social expectations.”

“All your assumptions are based on working couples it seems, what about single mothers, deadbeat husbands/fathers…?” Accepted.

Given high levels of unemployment and under-employment, would it not be better to spend the money training the unemployed to take the jobs, or upskilling others so as to create vacancies in low skilled entry level jobs? CB: “How and how much we spend on welfare is not a direct argument against funding childcare, and/or, it’s an argument against childcare only in as much as it’s an argument against buying new submarines, franking credit refunds or giving instant asset write offs or etc., etc.” Agreed.

Grattan says we could have a full national Denticare scheme, the equivalent of Medicare, for $5.3bn p.a. Surely this should be a higher priority than subsidisation of either private health insurance or childcare? CB: “I would suggest the return on investment for childcare is higher than Denticare. Poverty is more expensive than bad teeth. In fact, bad teeth are often a consequence of poverty, so if you reduce poverty you reduce the need for Denticare!” Good point.

On the same Drum programme mentioned above, Danielle Wood drew an analogy with Canada, saying that if Australia could lift the workforce participation rate of women by half the current gap between Australia and Canada, our GDP would increase by some very significant percentage (which she quantified). I questioned that. CB: “It would lift GDP mainly because women’s (or mother’s) work would move from unpaid work we don’t value and isn’t counted in GDP, into paid childcare work we value at least a bit and which does count to GDP.” Can’t argue with that.” “Not to mention arguments above about specialisation being more efficient, later GDP improvements from a better educated populace, mothers paying tax instead of receiving benefits…” All good points.

And so I stand humbled and gratefully convinced. Let’s subsidise childcare – preferably publicly provided as part of the education system (or else by NFP community-based centres like the old Creche and Kindergarten Associations) – using the extra taxes collected as a result of cuts to middle class welfare.

I am most grateful that John Menadue’s Pearls and Irritations blog site gave me the opportunity to have this exchange of views with Christopher Budd, and to Christopher for taking the trouble to reply.

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Ray Bricknell is a retired project management consultant who now tutors classes in Current Affairs and Macroeconomics at the University of the Third Age, Brisbane.

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