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COMMUNITY AFFAIRS REFERENCES COMMITTEE
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COMMUNITY AFFAIRS REFERENCES COMMITTEE
Mr De Bono
ACTING CHAIR (Senator NEAL)
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COMMUNITY AFFAIRS REFERENCES COMMITTEE
- Committee front matter
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ACTING CHAIR (Senator NEAL)
Mr De Bono
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Content WindowCOMMUNITY AFFAIRS REFERENCES COMMITTEE - 21/04/98 - Child[hyphen]care funding
CHAIR —Welcome. The committee has before it submissions from your organisations. I now invite you to make a short opening statement and, at the conclusion of your remarks, I will invite members of the committee to put questions to you.
Mrs Buckley —The Victorian Family Day Care Association would like to make a few comments regarding the submission. In only the last week we have been advised that changes have been made to the method by which the calculations were prepared for that submission and that, in fact, existing family day care children of school age will continue to be treated as they are at the moment. It does mean, however, that new family day care children of school age will be treated as stated in the examples given.
Senator NEAL —Do you mean with the reduced fees?
Mrs Buckley —Yes. This then raises a question from us: if parents are going to be charged more if they have a school age child enter family day care after 27 April, and we have a separate rate for existing school age children of parents who may have the same income level, are we not then being discriminatory to those families?
The second point we would like to make is that in family day care the operational subsidy contributes greatly, if not in some cases wholly, to the operation of the coordination units. These are the coordination units responsible for the training, resourcing and recruiting of care providers. The difference between operational funding for family day care and operational funding for child-care centres is that in child care centres the child-care fee and the child-care assistance flows directly back into that centre as a form of support. In family day care, the child-care fee and the child-care assistance flow directly to the care providers
and back into the community. We feel that, in a lot of the arguments that have been put up, that is being misled.
The third comment we would like to make is to draw the attention of the inquiry to the survey that was undertaken by the Victorian Family Day Care Association in late October last year. Those figures clearly demonstrated the trend across the state of a loss of care across all schemes. We would like to point out that family day care schemes are in the process of producing their annual profiles, which will be the documentation to support their operational funding for 1998-1999. We feel that, once those operational profiles are lodged, they will support the survey that was undertaken.
CHAIR —Mrs Buckley, is the survey that you are referring to attachment 1 in your submission?
Mrs Buckley —Yes. We also would like to draw this committee's attention to the fact that family day care providers across the state, and across Australia, need to be recognised as a formal form of child care for parents. We have concerns that family day care providers are getting lost among the informal care providers registered for the child-care rebate. I can give you an example from my own scheme. Having gone through the process of an assessment of a new care provider, the care provider was rejected on the basis that the police check on her family members was not acceptable. That person then went on to register for child-care cash rebate and advertised in a local paper as a registered carer. That is what we are up against.
CHAIR —Thank you, Mrs Buckley.
Mrs Hodge —Thank you for inviting us to come to speak to you this morning. We have membership across Victoria and we are the state member for the NOSHSA association as well. We have a fairly extensive membership representing about a third of services in Victoria.
We would like to say that this is a very early stage to give some direct evidence on the impacts of loss of operational subsidy and the increased child-care assistance for outside school hours care services as we have not yet moved to implementing the system. That will not happen until 27 April. Many subservices, and block grant services in particular, do not know whether they are yet to go over. We would like to see this committee looking at investigating the impact once the impact has been felt by services.
We are concerned with the four points that we would like to bring up in relation to our submission. Firstly, fee increases will rise in outside school hours care services across the state of Victoria. This rise is directly related to the loss of operational subsidy and most particularly related to an increase in administration time as a result of child-care coordinators or outside school hours care coordinators needing to implement the new child-care assistance arrangements. It is unclear, even at this stage, as to how that process is to be implemented and some changes are still occurring.
Our next point is that we are concerned that services remain not only affordable but also accessible. Small services will have some difficulty in remaining available even with increased affordability being offered through child-care assistance. We are starting a system
where we move in with a substantial gap fee. The ceiling level of $1.95, an available hourly fee, means that services are starting out with an existing gap fee. There are some difficulties with families not being able to access the two levels—two children or three children in care—and arrangements across service types or across age groups. That has some implications in terms of affordability.
We are very concerned that the target group of our services is not being reached by the increased child-care assistance. Recently we had some comment from the government that about only 26 per cent of families had registered and gone through the process of being assessed for eligibility for child-care assistance. I think some 70,000 families were expected and only about 11,000 had been assessed in March. We are concerned that the families that are to benefit from increased affordability will not be the ones using the services.
The increase in fees will be felt by the majority of service users. If they leave the services, then our fees will need to rise again, and services will become even less viable and eventually close, therefore we will not actually have services open. There is a concern about the loss of any core funding, or any funding to small services, whether they be rural, inner city, outer regional or metropolitan fringe services. Parents having access to child-care assistance will not actually be able to use them.
We are also particularly concerned about the lack of time that services have had to implement the new child-care assistance arrangements and the lack of clear direction from the government about how that is actually to work for services. Training was only completed in March. I think Suzanne has an example to give you of some change that she heard about just yesterday in terms of the way the administration system for outside school hours care will be implemented.
We also have to table a preliminary outcome of a survey that we have conducted across Victoria. We will have some final results by the end of the month, hopefully, to put as a final document to the committee.
CHAIR —Do you wish to submit that interim document, Mrs Hodge?
Mrs Hodge —We have an interim document that we can submit, yes.
CHAIR —We will see that in due course.
Mrs Hodge —Suzanne is going to go over some of the outcomes of the survey.
Miss Adamson —One of the concerns that I have—and this information has not even been released to services but I have been made aware of it—is about some very late changes to be made to how the child-care assistance has to be recorded. Originally we had to do reconciliations at the end of the quarter, based on families. Now they are looking at potentially changing that to individual children, having separate forms for each child instead of each family. In terms of how that affects us, we are looking at having to go to a computerised system, which we have never had to do before—we have been predominantly a manual system administration service.
My concern is that services who are already daunted by these new changing systems are not going to be able to use the computer software packages that they have bought, as of Monday, and that is going to increase the administration time required which has not been accounted for in their marketing. What I want to illustrate is that that is one of the examples of how changes are being made four days before we have to implement this system and we are expected to adapt to that immediately. Marketing and business plan advice has been done on the basis of possibly computerised systems, where maybe the administration time allocated was less than if you needed to do this system manually.
We are concerned that a lot of the changes have come in very late. People did not have the answers to a lot of the questions that we asked during our child-care assistance training sessions, so we are supposed to now implement this system on 27 April with information that is coming in as late as the week before we are supposed to implement it.
With regard to some of the findings from the survey, we sent the survey out to approximately 800 services across Victoria. There were 215 surveys returned, of which we used 212, because some of the surveys returned were state funded programs which obviously were not part of these changes. That represented 383 programs, meaning before school, after school and vacation care. It was a combination of either operating one of those components or two or three components. The survey was made up of 17 questions which went through the number of enrolments; who they were funded by, because some sponsors were funded by state and Commonwealth, or a combination of funds, for example, block grants; what their fees were currently; what they expected their fees to go up to.
Some of the data that we received was that almost three-quarters of the respondents indicated that the main reason for their fee increase was the operational subsidy and, of that, half of those also indicated that the increase in administration was an issue. Out of school hours has predominantly been a service whereby administration has not been paid for. So, in terms of getting business and marketing advice, that administration that historically has not been paid to coordinators, plus the increased child-care assistance administration, has made a major impact on the fees.
Some of the information that we have come up with is that in terms of parents using, say, the individual component on a weekly basis, they are looking at a fee increase for before school care of approximately $10 per child per week. For after school care, they are looking at a $6 increase per child per week. For vacation care, they are looking at an increase of approximately $30 per child per week.
The only other issue is that services were concerned that they would have to move to single staff models, which neither services nor parent users are very happy about. But, in terms of affordability and ensuring that a service is still available in that area, some services, particularly before-school cares which are traditionally lower utilised, may have to move to this model—which is a concern for our association.
CHAIR —Thank you Miss Adamson. Mr De Bono.
Mr De Bono —Thank you very much. My name is Joseph De Bono. I am the proprietor of the Strawberry Patch Child Care Centre. We provide normal child care and we also provide before and after school services as well.
I am the new president of the Child Care Association of Victoria. The association has 210 members—that is, centres—and we represent about 10,000 places in Victoria. We are considered the peak body representing private child care in Victoria.
I come here with a little bit of trepidation because as I look at the agenda I see that I am the only private person representing child-care centres. I am not paid, I am not funded, I am not supported in any way and, in fact, it is costing me money to be here. The irony of it is that most of the people that have spoken before me have been funded in some way to speak. It is a great job if you can get it.
I am not going to touch on all the subjects. However there are two issues that I would like to concentrate on and then I invite the panel to question me on the issues that they consider important.
With regard to the removal of the operational subsidy, the Child Care Centres Association supports the removal of the operational subsidy. We consider this as an unfair process which supports an enterprise simply based on who owns it. This is not good practice. It is not fair practice and it encourages waste and a bottomless bucket. The notion that community based centres are not allowed to make a profit has now transferred to not having to make a loss.
I would like to relate a story on this. I employed a person in charge of my centre who came to me from another community based centre in Darwin. She related to me that, just before she left, the council came up to her and said, `You have got two weeks to spend the $110,000.' `Why do I have to do that?' `Well if you do not spend it, you will lose it.' So they ripped out all the carpets and threw them out, all the washing machines, the refrigerators, toys, equipment, anything they could throw out, got thrown out and they had to do that in two weeks. They could not even sell the equipment because if they sold it that just added to the problem. I remember hearing somebody else before saying that we charge according to neutral profitability or no profitability. That just exacerbates the problem because you get more money and you can charge whatever you like and spend whatever you like. However the money saved from the removal of the operational subsidy ought, in our opinion, to go back to the parents in the form of child-care assistance. The gap is getting wider between what the parent pays and what the fees are.
The next issue that I want to touch upon is based upon the old saying `A penny saved is a penny earned.' I refer you to the accreditation process that we have got currently. If you can transfer that to modern dollars, if you save $10,000 in operational costs it is equivalent to getting a grant of $10,000. We surveyed our members on their ideas of accreditation. We believe it is the only survey done on accreditation anywhere. I would like to read some of the results to you of this survey.
Senator NEAL —Could you also table that at the end please?
Mr De Bono —I will table that for you. I will not read all the things but it says:
The survey results found that the primary concerns with QIAS were that:
. there are too many Principles.
. the QIAS process is too subjective, complex, awkward and lengthy.
Another point that the survey found is that:
. the level of paperwork required by QIAS, including the level of documentation to prove adherence to the Principles, is too onerous and takes time away from caring for children.
It also places a high level of unacceptable stress on the staff. The survey also went on to say that most people—parents—do not question whether a centre has got high level or medium accreditation. The main factor is the fees charged to come to the centre. That determines where people go.
I do not want to be simply negative and knocking, but I would like to demonstrate to the committee the process that you have to go through just to do the accreditation. That is just a step. In one little block there you may find 20 or 30 different processes that you have to do. One of the blocks says you have got to survey the parents. I have just over 100 parents and I had to survey each and every one of them, collect information and collate it. That simply added to the cost. Then the staff had to produce one of these books. We have not even applied for accreditation yet. This is simply the process that we have to go through, and the paperwork just goes on and on.
However, the state government in Victoria produced its own version of accreditation. In the federal government's accreditation system they tell you what to do and it just goes on and on. One principle might go for three or four pages. Here is principle 18. These are the things that they expect you to do and what they like and what they do not like. These are the guidelines.
The Victorian government did something different. It provided a check list. Simply open it at any page and it says, `Here's the problem.' It is a one liner compared to 100 lines of what the Commonwealth expects. They say, `Do you recognise that you've got a problem? If you do, what are you going to do about it?' That form of accreditation reduces the costs of operating a child-care centre and that will then impact on the fees that you charge parents. Again, I go back to the original point that the money saved by not having to do that ought to be passed on to the parents in the form of reduced fees.
In summary, the private sector is doing it hard, but it is still doing it. We account for about 70 per cent nationally of child-care places in Australia. The removal of the operational subsidy ought to be maintained. It complements the national competition policy that the federal government has introduced and, I understand, all state governments have agreed to. Again, the money saved ought to go back to parents via fee relief.
We provide quality child care; our child care is equivalent to Australia's best practice. But every new regulation means a new cost. It is desirable that there is less government
interference to let us get on with the job. We are proud of what we do and we hope to continue doing it. Thank you.
CHAIR —Thank you, Mr De Bono. We will now go to questions from the committee.
Senator NEAL —Mr De Bono, I must say I was a little bit disappointed that you feel it necessary to compete with community based child care. Obviously there has been competition but, as a committee, we are not here to say one system is better than another; we are here to see what the problems are in child care.
Mr De Bono —I understand that. I do not want to get to a situation of us versus them.
Senator NEAL —That is a very healthy attitude.
Mr De Bono —All we are saying is that it ought to be equal for everybody.
Senator NEAL —I was interested in the evidence you gave on accreditation. I was not completely clear what you were saying. Were you suggesting that there should not be a system of accreditation—
Mr De Bono —No.
Senator NEAL —Or were you suggesting there should be some changes? If so, what sorts of changes were you proposing?
Mr De Bono —I was suggesting the latter option. There should be some form of accreditation. If the government hands out money there ought to be some form of accountability for it. However, the current system is too complex. There is too much emphasis on administration rather than child care and there are, as I pointed out, suitable alternatives to the current system.
Mr Staindl —The cost impact of government regulations has a substantial bearing on the level of fees and charges that are charged by centres. It is not only at the federal government level that that occurs either. I am not sure if you are aware of it but in the latter part of last year the Victorian government released a comprehensive set of draft regulations in the form of a regulatory impact statement affecting all child-care areas in Victoria. If they were implemented in their current form—and we have had the opportunity to comment on those—they will also add considerable costs to the provision of child care.
Every level of government that imposes additional regulations, checks and processes is adding to the cost of child care, which then further removes that affordability. I do not think anybody in the industry is advocating doing away with regulatory checks: they are needed; it is just that if they are going to be changed then careful consideration needs to be given to the cost impact on the management and operation of centres.
—Evidence we received earlier suggests that private centres tend to be, on average, larger than community based centres. Do you support that view? What is the average size of private sector centres?
Mr De Bono —Sixty-five per cent of members of our association have centres with 45 places or fewer. In very recent times there has been a tendency to build mammoth child-care centres, institutions rather than child-care centres, but that is the minority rather than the majority.
Senator NEAL —What is the average?
Mr De Bono —For us it is 45 places.
Senator NEAL —Anecdotally, it has been suggested to me, not so much in Victoria but in other areas, that there has been a major drop in occupancy or usage of centres both in the private sector and in the community based sector. What would you estimate that drop in usage to have been in the last two years? Have you done any survey work to establish that?
Mr De Bono —I will answer your last question first. We have not done any surveys on that yet but we do get anecdotal information coming through. There has been a drop in usage but the drop in usage happened most dramatically at the beginning of this year. It seems as if parents stayed on until the end of last year and then they started to fall off in a dramatic way.
Senator NEAL —Do you have any idea what level we are talking about?
Mr De Bono —No. I can give you some stories where private child-care centres still have waiting lists. I can tell you also of another centre which is registered for 60 places but where they have five kids only. That centre opened in about November of last year.
Senator NEAL —I understand that this is not based on survey material, because you have not done it, but obviously you talk to a lot of people at your centres. You are involved in the organisation so you must have a lot of contact with them. Do you know what reasons are mainly given for people leaving centres?
Mr De Bono —Yes. There are several factors. It is hard to say which ones are more important than the rest but certainly the cost factor, above all things, is the main issue.
Senator NEAL —The cost to parents?
Mr De Bono —Yes, the cost to parents of child care. After that it breaks down. The bad publicity that child-care centres are getting lately from people who are claiming that child care is becoming too expensive is putting preconceived ideas into parents' heads. They believe that there is no need to apply for child care because it is too dear, which is not necessarily the truth. I know of some private sector centres that have dropped their fees recently, within the last four weeks, in an attempt to attract more custom. I cannot say whether that move has been successful for them or not, but it has happened.
Senator NEAL —Can you tell me how many private centres have closed in Victoria in the last two years?
Mr De Bono —I cannot tell you exactly but I can tell you there have been some. Two years ago the figure was probably none but in the last few months I have been involved with about four, maybe five.
Senator NEAL —So you do not really know?
Mr De Bono —No. There are no statistics on this.
Senator NEAL —I thought you might keep a record of them.
Mr De Bono —No. We keep records of our members—
Senator NEAL —How many of your members have closed?
Mr De Bono —About four.
Senator NEAL —In the last two years?
Mr De Bono —In the last couple of months rather than the last two years.
Senator NEAL —Do you know how many in the last two years?
Mr De Bono —No. As I said, any closures that have occurred have occurred in the immediate past.
Senator NEAL —Mrs Hodge, you gave some evidence about having done a survey. You gave the example of the fee rises. Do you know what proportion of families that are presently accessing outside school hours care would be leaving those centres?
Mrs Hodge —It is very early to say and very difficult to say. We can only go anecdotally on services that we have had direct contact with because services are only just starting to advertise their new fees and promote child-care assistance in an attempt to retain families. We really need some studies done at a later date to see how many parents have been lost. We intend to do some of that, but we also see it as a government responsibility.
Senator NEAL —I have heard that the amount of child-care assistance that is going to be provided for outside school hours care is limited both before and after school.
Mrs Hodge —The number of child-care hours is limited to a maximum of 3.5 hours in after school care and a maximum of two hours of before school care and a maximum of 10 hours in vacational care. I think you can apply to have it extended. Then you get into whether or not those families have actually attended and they have to claim allowable absences. A lot of services are saying that the paperwork that goes with that is too difficult. It is adding a system of attendance versus booked care onto the additional hours that you can apply for.
—You said that a lot of your centres are looking at introducing some sort of computerised system because of the added complication of administration with this new
system. What proportion of your centres would presently have some sort of computer system?
Mrs Hodge —About one per cent. It is very low. It is mostly done by coordinators in their unpaid time. I think some studies done in the past by the government on work force issues have documented some of that unpaid administration time. There have not been the programs available. They are only just coming out now. The ones that were using some form of computerisation had some local government attachment and, therefore, were being run in conjunction with family day care or that sort of thing. Generally, a very small number of services would be computerised.
Senator NEAL —I am interested to know if family day care has seen an increase in usage of those leaving child care centres or whether their usage of child care has remained pretty static.
Mrs Hodge —No. In fact, overall there has been a drop in family day care. Very few children have come from centre based care.
Senator NEAL —It is often said that children are moving from one place to another. I find that particularly interesting. I was not exactly clear on what you were saying about school age children who are presently in the system and school age children who go into family day care from this point.
Mrs Tivendale —The new rules state that children who have been previously in care will be treated as old children and will remain on the same rates that are currently charged for them and the same level of child care. Children who begin from 27 April onwards will become new children and be given the lower rate of child-care assistance. This automatically strikes a two-tier system which we have to cater for in our books. There is also the matter of whether it is a fair thing or not. That can occur within the one family.
Senator SYNON —Mr Staindl, I am interested in considering the issue of the closure of child-care centres and how many closures are related to size. We heard evidence earlier this morning that a number of community based providers are disadvantaged because they are small providers and there are obviously less people to share the overheads with. In your submission, you say that 60 per cent of your centres have 45 places or less. Of the centres which have closed that you are aware of, how many would be centres at the smaller end of the scale?
Mr De Bono —I may be able to answer that more accurately. Keep in mind that I am talking about a small figure and about four or five centres. It is hard to be precise to be of any value in the statistics. One centre had about 90 places and another had about 30 places.
Senator SYNON —So you cannot really draw any conclusions from that.
Mr De Bono —No, the figure is too small.
Senator SYNON —I understood that it was a lot more private centres than that.
Mr De Bono —I do not doubt that, but I can only speak on behalf of our members. There have been more private centres closed, but we do not have access to that information.
Senator SYNON —My information is that within Victoria over the last year there has only been a net reduction of one child-care centre, considering the number of closures there have been and the number of new centres that have opened in other places.
Senator NEAL —What information is that?
Senator SYNON —I have some information.
Senator NEAL —From where?
Senator SYNON —It is my own research, Senator Neal. I understand that about 85 per cent of the closures happen because of oversupply issues—that is, too many child-care centres in one area. Given that, does your organisation see itself playing a role in advising prospective private providers on location of child-care facilities?
Mr De Bono —Yes, we do. We support the government's move to limit the places to 7,000 because the over-saturation problem is certainly having an impact. I read with interest a newspaper article where a local council, the City of Werribee, closed three of their child-care centres, which accounted for about 90 places, because they could not afford to keep subsidising their losses. It was felt that the private sector had enough places to pick up the 90 children that were left out of care. Obviously, there was a saturation problem happening in Werribee. I am not sure if that answers your question.
Senator SYNON —That is a policy direction that you support and that you would be advising.
Mr De Bono —That is right. If a prospective child-care centre operator approached us, we would have to be fair and point out to him that there are saturation problems. Some centres are running profitably and others are finding it hard.
Senator SYNON —Mr De Bono, you talked about the excessive amount of time required with paperwork regulations and so forth. In your own centre, what percentage of overall staff time would you guesstimate is spent on paperwork management?
Mr De Bono —When I opened my first centre nine years ago, when child-care assistance first started, the paperwork would have been sufficiently covered in about one day a week. Today, with accreditation, fee assistance and all the other regulatory requirements that we have, I would say about three days a week would be taken up in just purely administration work. It would be perhaps 3[half ] days.
—In your submission you talk about the high profile media campaign. You mentioned in your evidence that you felt that it may be counterproductive in that it may be discouraging some needy families from seeking out child care because of the fear around that campaign. That is also something that the government cares about too. Do you see any positive ways that we could get the message out to the community?
Mr De Bono —`We' being government or `we' being private sector?
Senator SYNON —`We' being both. `We' being the collective community.
Mr De Bono —The private sector engages in various forms of advertising and promotion of their business. Some do it through the Yellow Pages and nothing else. Others would have mail drops and newsletter articles and all sorts of things. The government could send out a different message saying, `Yes, child care can be affordable.' It is up to the government and their own market research to decide on how they do that. We would welcome anything that happened along those lines because there is a perception developing, and it is only in embryonic stages, that child care is just becoming too expensive. People are walking away before they even check it.
Senator SYNON —Over what period of time do you feel that perception has been developing?
Mr Staindl —I would say probably the last couple of years. It seems to be that any change to the child-care area now is not a positive, it is a negative. That is the perception that happens. So when people affected by those changes kick up about them, it is going to be a story about, `This is having a negative impact on the cost of child care.'
Senator SYNON —So the story that the government is going to fund an additional 83,000 places in child care does not get out because of the fear and the focus on the negative? Thank you.
ACTING CHAIR (Senator NEAL) —Senator Payne, do you have any questions?
Senator PAYNE —I have one question in relation to outside school hours care and the changes in relation to child-care assistance, if either Mrs Hodge or Miss Adamson would care to comment. As I understand it, from the date of the new changes in excess of 50,000 families who were not previously eligible for child-care assistance will receive assistance and almost 20,000 who were receiving assistance will be eligible for more assistance. What effect do you think that will have in your operations? I note in your submission that you refer to an anecdotal example in eastern Melbourne where somebody will cut child care from five days to three days. I assume that is a person who, for example, would be on a family income in excess of $65,000 or so?
Miss Adamson —I think the difficulty that there has been with this new child-care assistance system is that it has not been promoted enough to families. They are not aware that this is a new system. They are not aware that they are now eligible for it. An example of that is that I sat down at my service in the last week handing out the brochures from Centrelink saying, `Here, fill this out, get your application form,' and they were saying to me, `I am not eligible.' I had to individually ask each parent, `What do you think is your income approximately?'
The difficulty is going to be that, as of Monday, the new fees start; as of Monday, not every parent who is eligible for child-care assistance has been assessed for child-care assistance. An example is that my service has approximately 200 families and only about 20
assessment notices have been returned to me. So every family that is eligible that has not received an assessment notice will be paying the full fee until they realise that they are eligible. Our concern is that they may not realise and it will be too late—they will move out of the service before they realise that they are eligible because they think they have to pay the full fee.
Our concern is that parents are not aware. They have been on this old system for so long, where a minority of people have been eligible, and it is really only the people that have been eligible in the past that are applying again. With those that are eligible now who do not realise it, we are having trouble, even as services, in getting the message across to them that they are eligible now. I guess the other difficulty—
Senator PAYNE —It is in your interest to do that, though.
Miss Adamson —Oh yes; but that then adds to the cost. Do you pay a staff member to predominantly just sit there every night to talk to parents and sell this point to them? Or do you have someone who is taken away from the children and has to speak to each parent as they come in, and does that then reduce the quality of your service because that person is then not able to be with the children when they should be? Predominantly, the time that we get to talk to parents at the service is when we are interacting with the children at the same time.
Mrs Hodge —In addition to that, services do not have a current methodology for assessing parents' incomes, so we are not sure how many of our parents will be eligible. The other part of our concern is that a majority of our users will be outside the cut-off levels for child-care assistance and that the target group will actually not be benefiting from the child-care assistance. In fact, the work that we have done would show that you have to be on about $46,000 a year or less to actually benefit from increased child-care assistance once you take into account increased fees. So the number of families that are going to be better off gets smaller because of the increased fees.
Senator PAYNE —That is not actually how I understand the figures. Would it be possible for us to have a look at your calculations on that?
Mrs Hodge —Yes; at a later date, we could supply you with something.
Senator PAYNE —Sure, that would be great. Thank you.
Senator O'BRIEN —Mr De Bono, what is the effect of fee relief on the utilisation of private centre places?
Mr De Bono
—Of course it caused the explosion of child-care centres all over the place, both community and private. The fee assistance had a huge effect on it. Mind you, I started to build my centre prior to the knowledge that fee assistance was going to be passed on to the private sector. Once it got passed on to the private child-care centres, in 1991, that opened the opportunity for private operators to come in and for developers to put up centres. That coincided, unfortunately—or fortunately—with the retrenchments that happened, and people often used their packages to buy into child-care centres.
Senator O'BRIEN —What proportion of private centre proprietors who are members of your organisation would have other businesses?
Mr De Bono —Impossible to say. I would say a small minority would have other businesses.
Senator O'BRIEN —So they are mostly single purpose business operators?
Mr De Bono —Yes.
Senator O'BRIEN —Are there any tax benefits which make the entry into a private child-care centre more attractive?
Mr De Bono —No. In the last couple of years we had the introduction of sales tax exemption, but the exemption only applies to items that are purchased for the use of the child-care centre so it gets limited usage. Other than that, there are no taxation benefits that I am aware of.
Mr Staindl —The sales tax exemption is applicable to both community centres and private centres.
Senator O'BRIEN —Yes. Do you have any information on the level of profitability on capital for these centres?
Mr De Bono —If you listen to the estate agents, if they are selling a child-care centre, they will tell you there is a fortune to be made. I have heard some astounding figures, but I have never experienced any of those outstanding figures; I just have not seen that at all. It would be difficult to come up with high profits.
What has happened also with the expansion of the large centres is that the rent component of operating a child-care centre has just become far, far too high and centre operators are struggling just to meet the rent. That provides us with another problem. Most community based centres would pay little or no rent, or a peppercorn rent, and they are able to get away with that because the council provides the facilities. The newer private child-care centres, as an average and as a guide, are paying about $1,000 per child per annum in rent. So if you have a 50-place centre, you are paying about $50,000 a year rent.
You compare that with a community based centre that is getting an operational subsidy and is paying little or no rent. It gave the impression initially that there was huge money to be made here, because the private sector would normally operate at a lower cost. That may have been there for a very short period of time, but I do not think it is there any longer, particularly in view of the fact that it is difficult to fill a child-care centre.
On the point of filling a child-care centre, and in terms to my learned colleagues alongside me, many child-care centres that used to never take part in providing before and after school services are now providing those services, so there has been a shift from the people on my right to move across to the child-care centres that have now got the openings and the vacancies to be able to take up the slack that is happening over there.
Senator O'BRIEN —How important is proximity to schools?
Mr De Bono —If you do not have a bus, it is an extremely important factor. In fact, it is probably the total factor. In my centre we provide an after school service, but we had to purchase a minibus to take the kids to school and pick them up and bring them back. That is a cost—a cost to buy the bus, a cost to staff it and a cost to run it.
Senator O'BRIEN —In terms of that level of utilisation, is there a connection between use of the centre by children pre-school and a continuation in after school care, or is it just a growth that has occurred independently of the children using the private centres?
Mr De Bono —I am not sure if I am going to answer your question precisely the way you would like me to. Traditionally, child-care centres used to look after children until they went to school and then that was that. Only a minority provided some before and after school services. But before and after school care is now growing because there are vacancies at centres. They can now take the children whereas before they were running at capacity and they would have gone past their allowable number of children at the centre.
Also, if a child has been attending a particular child-care centre and is familiar with the routine, familiar with the staff and familiar with the service, parents have a tendency to have the child stay there for before and after school care. It is an ongoing process. You drop the child off at the centre and you take the child to school and then you pick up the child from there after school. The child usually fits in a lot better that way because he or she is used to the surroundings.
Senator O'BRIEN —Do you have any knowledge of differences between staff to child ratios as between the community based sector centres and the private sector centres?
Mr De Bono —The regulations are exactly the same.
Senator O'BRIEN —I know that, but the regulations are a minimum, not—
Mr De Bono —Anecdotal experience is that the community based sector centres have far more staff than private child-care centres.
Senator O'BRIEN —When you say `anecdotal', is that what your members tell you?
Mr De Bono —Yes. I talk to centres and ask how many they have. Quite often you will find that in private centres the proprietor does the administration work whenever he or she can squeeze it in and when they are needed on the floor they go out onto the floor. Quite often not every community based centre will have a person in charge of the centre overall; they just handle the administration, talk to the parents, shuffle the papers and those sorts of things, which we have to do as well.
Senator O'BRIEN —When you say `shuffle the papers' do you mean do the administrative work out of hours?
Mr De Bono —I was not being facetious, but that is the point I wish to make. The administrative paperwork burden is growing and we have to face that as well as other centre. In terms of administration, our requirements are exactly the same as theirs. I hate shuffling papers, but I find myself doing it too.
Senator O'BRIEN —This may be a question which you may or may not be able to answer. How many of your members would operate their staff to child ratios at the regulation level?
Mr De Bono —All of them.
ACTING CHAIR —So it is 15 to one?
Mr De Bono —I do. We find that in the busy times of the day we need a few more hands than what the regulations require. I run my business on the basis that if the children are happy then the parents are going to be happy and the staff is going to be less stressed out. But that adds to the costs, unfortunately.
ACTING CHAIR —I have a question that I forgot to ask Mrs Buckley. In relation to accreditation being extended to family day care, does your organisation support that happening?
Mrs Buckley —The Victorian Family Day Care Association supports wholeheartedly the extension of the accreditation to family day care.
ACTING CHAIR —I was aware of that but I wanted to get it on the record. That will basically end this session. We are having the forum for providers next and we might have a short break to get ourselves prepared.
Mr De Bono —Could I ask a question of the committee?
ACTING CHAIR —Not really. You can ask me individually if you want. Could we be provided with the documents that were tabled?
Proceedings suspended from 12.04 p.m. to 12.18 p.m.