One small step by Government – one giant leap for working mums
There has been much talk, much dithering and many ineffectual attempts to address the escalating problem of providing affordable and quality childcare. The non-deductibility of childcare expenses in the computation of assessable income has been the subject of much debate in Australia. Technically such expenses are not deductible because they are viewed as private or domestic, and not expenses incurred in gaining or producing assessable income. So while cars and parking can be claimed as a tax deduction, the courts cannot see that childcare expenses are inextricably linked to the production of income. Put simply, without childcare, many mothers would not be able to participate in the paid labour force.
The current tax rules are designed to target employers who provide childcare on the premises or who pay for childcare for the children of their employees at an eligible childcare centre. These employers receive an exemption from the Fringe Benefits Tax. There are several problems with making this the primary tax relief for childcare. First, in the context of the employment relationship, the relief goes to the employer rather than the employee. The theory is that directing tax relief to the employer will be an incentive that will persuade employers to either provide or pay for childcare for the children of their employees but only a handful of employers have taken advantage of this ruling.
The story so far
Working mothers are faced with the soaring costs of childcare—rising by 10.2 per cent in 2005. In the December 2005 quarter, child-care prices rose seven times faster than the inflation rate of 0.5 per cent. Then there is frightening gap between demand and supply; a distinct lack of long or short-term planning in recognition of this gap; and the surge of for-profit childcare businesses that by their nature can potentially put upward pressure on prices. Those few eligible parents who can claim the childcare subsidy are forced to put their children into centre based care as private in-home care is not covered under the subsidy.
Dena Blackman who established DIAL-AN-ANGEL® in 1967, has written to numerous MPs and made an annual trip to Canberra for the past 17 years to champion the cause that ALL childcare should be made tax deductible again!
Dena believes that if we are going to use the tax system to enhance the availability and accessibility of childcare, it could be done in a far more effective manner. If the tax system is to be used to subsidise child care that, in addition to incentives for employers to provide this service, the subsidy should also be directed to those who need child care - the primary caregivers of children. Dena would argue that the tax relief be in the form of a tax rebate which is worth the same in terms of tax dollars saved to all taxpayers. Furthermore, those caregivers who have such low incomes that they do not pay tax should be compensated in a more direct manner or by way of a refundable tax rebate.
Childcare is about the children
There is an added benefit to making childcare a tax deduction that cannot be measured in financial terms, and that is the right to choose in-home care as well as centre-based care. Parents should have the right to choose how their children are cared for and where. Childcare is about our most vulnerable and fragile members of the community - babies, toddlers and young children – and decisions need to be made their best interests.
Dena has met with parents and canvassed each of the 12 offices in the DAA Group. The message is this:
- Parents around Australia have become disillusioned with childcare centres and are obliged to consider alternate arrangements for the care of their children;
- Some are unable to secure a place in any type of childcare centre;
- Most are not happy with the quality of care in group situations;
- Caregivers are obliged to pay even when they are not using the centre in order to retain the place;
- Many caregivers are concerned that their children tend to contract more illnesses at an earlier age due to the contagion factor in group settings.
Most would be receptive to in-home Nanny care (especially where there are two or more children involved) but are unable to meet the costs associated with this service in the long-term. They question why they are able to receive a subsidy from the government for day care centres and such a small consideration for care undertaken in the child/ren's familiar and secure environment at home. Given that many of them have to enrol their child/ren into day care prior to their birth in order to try to ensure a placing suggests that the issue should be tackled at a higher level.
A societal benefit from Government making appropriate changes to childcare subsidies is that such a move would effectively encourage suitably motivated young people to view 'nannying' as professional employment for which they would pursue certification or qualification - and not view childcare at home as simply 'something to do' when they cannot obtain other work. This would ensure higher calibre applicants and more appreciative families.
When clients offer low rates of pay to child carers (because they simply cannot afford to pay what the position and responsibility warrant) they come to accept sub-standard performance as the norm and some child carers feel that they are being exploited.
In accordance with the law, DIAL-AN-ANGEL informs its clients in all States and Territories that they are required to register for PAYG tax and deduct tax from all payments made to persons performing home care services. Private arrangements made between clients and workers (often engaged from advertisements on local community boards or from newspapers) result in non-payment of income tax or Superannuation - nor do the carers receive any benefits enjoyed by workers in other occupations.
Those who have been engaged through reputable agencies know that they will have prompt recourse to an independent Third Party for conciliation where they would not feel confident about approaching a public servant of a Government department .
Governments refuse to grant income tax deductions for private childcare believing it to would favour the wealthier families in the community. This is a short sighted and negative approach. By allowing income tax deductions for carers engaged through reputable, authorised agencies, the cash economy would be better controlled and superior childcare for the next generation would automatically ensue.
Dena believes the fight is a long way from over. Women are no longer content to sit back and watch governments make determinations that they have no say in, women are finding that their place is “in the struggle” not just “in the home.”
Dena Blackman established DIAL-AN-ANGEL in 1967 when she found herself with three young children and unable to source suitable child care and home care support services. Today DIAL-AN-ANGEL is the only national agency specialising in the provision of home and family care. DIAL-AN-ANGEL Pty Limited places more than 17,000 household workers into Australian households each year (approximately 85% casually, 10% regularly and 5% permanently). The company provides child care, nannies, babysitting, before and after-school care, emergency 'fill-in' child carers, as well as housekeeping services, eldercare-at-home®, angelcare-at-home®; in-home nursing, handyman-gardener services, in-home entertaining and corporate functions. www.dialanangel.com