The Real Cost of Universal Free Childcare
China, 1961.
“Let the Children Live Better and Be Better Educated Than At Home” is the caption on posters plastered across rural villages. The posters depict children playing with toy buildings, symbolic of the utopian future their parents are building. Universal childcare is central to Chairman Mao’s Great Leap Forward: the productive potential of mothers must be realised. Cooking at home is banned, made redundant by the advent of collective kitchens which are more efficient. Local factories are installed with creches. The mothers are compelled to work long hours, but they can take pride in their contribution to the collective and find solace in the knowledge their children are cared for and educated in correct Party doctrine.
Australia, 2041.
Universal childcare has been in place for 16 years. “Free Childcare: Labor’s plan for a better future” was the message plastered across social media during the election campaign, and their bold promise was eventually matched by the coalition. Double income families are the new normal, and this has pushed up the cost of living as families bid up the price of larger homes. Raising a family on a single income, once considered difficult but doable, is a now a fantasy. Parents who would rather spend precious early years with their children at home are compelled for financial reasons to go to work and put their infants in childcare for 9 hours a day, 5 days a week. At least they can take pride in their contribution to the economy and find solace in the knowledge their children are cared for and educated in correct doctrine.
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At the heart of the debate about childcare is choice. For many years in Australia there was effectively no choice. Mothers had no choice but to stay home, fathers had no choice but to work. Thankfully, we have come a long way and parents now have genuine choice regarding how they balance work and child-rearing. We have more work to do, and our efforts should be directed towards policies that increase choice.
Opinions are divided on the merits of centre-based childcare versus at-home care, but this is not what I want to argue here. What matters is that parents should be free to choose. Choice over compulsion is the fundamental creed of liberalism, but sometimes we forget that it is not only governments that can compel. Economic circumstances can restrict individual freedom as much as any government and free choice is an illusion when all but one of the choices are unaffordable. It is for this reason that I believe universal free childcare, although done in the name of progress and parental choice, is likely to have the opposite effect. By giving an overwhelming financial advantage to families who put their kids in childcare, we are setting the pace for how much a household needs to earn to keep up. Households typically spend about 30% of their income on rent. We can expect rent to rise to match household incomes, and if every household is on a double income, rent becomes 60% of a single income, i.e. totally unaffordable.
True choice means it is affordable to have children in childcare or at home, and that should be our aim. If we decide to support state-funded childcare, which will cost upwards of $40k each year per child, then we ought to make that funding available to all children regardless of where they are cared for – be that in the home, in family daycare or a childcare centre. Paying a parent to look after their own child sounds ridiculous, but is it really less ridiculous than paying a childcare worker?
The Howard government was lambasted for tax benefits that were pejoratively labelled middle-class welfare, but free childcare is the exact definition of middle-class welfare: using taxpayer funds to help predominantly middle-class families with the cost of raising children. The only difference is the cost is vastly greater, and parents must send their children to childcare in order to receive it.
Behind all the rhetoric about providing the best possible start for young kids is an implicit and pernicious idea: that left to parents, children’s development will suffer, and as the Chinese poster claimed, children in childcare will be “better educated than at home”. It is exactly this kind of state-knows-best mentality that should be anathema to Liberals. While research suggests that there are academic benefits to be gained from early childhood education, and no doubt there are children who are neglected at home, universal childcare is ultimately about shifting the responsibility for bringing up children from parents to the state. We know that Labor uses their influence over the state education system to promote their own ideology and values, and it isn’t a stretch to think they would like this to extend to early childhood education too.
On purely economic grounds, there is a strong case for providing free childcare. It will boost workforce participation and GDP – that much is as obvious today as it was to the Chinese central planners 60 years ago. It will more or less pay for itself through increased income tax. What is not usually considered by economists though are the social consequences of the policy, and whether it serves the broader national interest. Such questions are inherently political and go the core of what we value and what kind of society we want to create.
We should oppose universal free childcare, but we should also offer alternative policies that actually will improve choice. We should focus on boosting flexibility in employment arrangements, so that parents are free to change their workload according to their circumstances. We should encourage and incentivise the provision of generous paid parental leave, and we should do more to help parents cover the costs of raising children. Childcare should be affordable, and free three-year-old kindergarten is a good, evidence-based policy, but universal childcare spells the end of stay-at-home parenting for all but the wealthy.