The vast majority of childcare centres in Melbourne are charging well above the Productivity Commission's proposed "benchmark" fees, a new analysis reveals, as the federal government prepares to overhaul its $7 billion-a-year policy.
In a report released last month, the commission recommended that childcare funding be set by a benchmark based on the median of childcare prices around the country, but the government has rejected the suggestion, arguing it was not the fairest way to fund the sector.
It suggested that, for a child under three in long day care, the benchmark would be $7.40 an hour, and for a child between three and five it would be $7.20. Families who earned $60,000 and under would get 85 per cent of the benchmark, while those who earned $250,000 or more would get 20 per cent back from the government.
Analysis by advocacy group The Parenthood, based on data from the MyChild website, shows most Melbourne childcare centres charge well above the suggested benchmark. Centres in the CBD charge an average $10.70 an hour for three-to-five-year-olds.
Under the current system, parents can qualify for a 50 per cent rebate up to $7500 a year. It is not means tested. There is also an additional means-tested per hour payment.
The commission's suggestion has been widely rejected by childcare groups, who argue it would inevitably leave thousands of families worse off.
According to the new analysis, the average price for long day centre care for three to five year olds in the CBD is $107 a day, while for inner Melbourne it is $105. Outer western suburbs centres average $90, while those in the outer northern and east average $93.
Parenthood Analysis executive director Jo Briskey said the outer south east was cheaper, with an average of $83. But that was still higher than the commission's benchmark.
"The government has a responsibility to rein in unjustifiably high childcare fees, but a set benchmark figure does run the risk of leaving thousands of families worse off, depending on where they live and the centre they access," she said.
Social Services Minister Scott Morrison has now said that there are "serious weaknesses" in the commission's approach. But he told Fairfax Media that the government was still considering benchmarking childcare funding, saying there were better and fairer ways that benchmark pricing could be achieved.
Government officials have been consulting with childcare services around the country. While it is understood the Coalition has moved away from the median benchmark price, it faces a rough task in trying to minimise the number of losers under its promised families package while starting to reduce the social services budget.
Mr Morrison said he had "cleared some hurdles" within the government, having been cleared to consult on different reform options.
He said the new childcare policy would be announced before the May 12 budget.
