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OSHC industry facing challenging future

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Adam Pease, CEO of Camp Australia, discusses the five key challenges facing OSHC operators.

Outside School Hours Care (OSHC) has grown substantially over the last decade. Successive governments and schools have recognised the growing need of working parents for a safe, fun and engaging place for children after the school bell. The OSHC industry has also evolved through legislative and funding changes and increased professionalism transforming what had been a cottage industry. However, the biggest challenges may still be ahead as a number of key changes combine to put real pressure on OSHC operators. Listed below are five of the key challenges.

1. Government rebates

The Productivity Commission has recommended changes to the current rebate structure which will directly impact on both the cost to parents and the potential viability of some services. Under the current arrangements there are two rebates, CCB and CCR. The first is applied on a per hour basis based on the annual income of the parent, with low income earners receiving higher rebates and high income earners not receiving anything. The second is a 50% rebate on the cost of care once the first rebate has been applied. The outcome of this system is all Australian tax payers pay a maximum of 50% of the cost of care, with those most in need of financial assistance paying the least. For OSHC providers it also ensures that additional costs like incursions and excursions are included in the rebate structure so that the cost to parents does not become prohibitive.

Under the proposed structure the two rebates will be combined into a single rebate. This rebate will be meanstested and based on a nominal cost per hour. As this is not related to the actual fee charged, families paying higher fees will be worse off. The unintended flow on effect of this is likely to see a reduction in incursions and excursions, among other items, limiting the variety and enjoyment for children as providers try to keep prices low.

Changes in rebates may also see a rise in the number of families electing not to use OSHC – possibly resulting in a rise in ‘key-latch kids’, (those that walk home unsupervised and let themselves into a vacant dwelling). This would be an increased safety concern in our society for these young children.

2. Availability of qualified staff

The Productivity Commission have also recommended that Nannies be eligible for the same rebates as other childcare services such as Day Care and OSHC, provided that they have the same qualifications and abide by the NQF (National Quality Framework). This change in government funding may result in an increase in the use of Nannies, increasing the demand for qualified childcare workers. This may further increase the shortage in skilled workers in the OSHC industry an issue some state governments are already attempting to address through career promotion initiatives.

The timing of these potential departures of skilled labour from the OSHC industry is likely to coincide with an increase in demand due to legislative changes that require a higher level of skilled workers and in some states higher staff to children ratios. The combination of all of these challenges will ensure that OSHC workers are highly sought after – and if usual rules of supply and demand apply then the wages of OSHC workers are also likely to rise.

3. Cost of Compliance

The National Quality Framework is about to complete its three year trial period. One of the outcomes of the trial is a greater awareness of the challenge of assessment, not only for the providers, but also the resource requirements of the government assessors. With some services still to be assessed after nearly three years, it is clear that the government need more assessors. In order to obtain the necessary resources, the authorities are looking to pass on some of the cost of assessment to the providers. Estimated at up to $12,000 per service, this is a cost few providers will have budgeted for. This alone could make some smaller services unviable.

4. School Licence fees

The OSHC industry has grown in the last decade (see Productivity chart above). The number of commercial providers has also grown rapidly with school tenders in some states regularly receiving more than a dozen responses. In this competitive market, some providers are trying to entice schools by offering exorbitant licence fees. These fees have made headlines in NSW and resulted in policy changes in Queensland as the government tries to restore some sanity to the industry. In the meantime, some schools may soon find out the truth in the old saying: ‘if it looks too good to be true, it probably is’. Parents are footing the bill as providers increase the cost to parents to cover the increase in licence fees to schools.

5. Economic conditions

Australia has famously avoided an economic downturn for nearly two decades. This is longer than many of the OSHC providers have been in business. Subsequently few have any idea what impact an economic downturn may have on the demand for OSHC. Given that it is underpinned by the needs of working parents, demand for OSHC will fall as employment rates fall. Currently 62% of Australian families have both parents working.

Conclusion

Each of the challenges facing the OSHC industry outlined above can be overcome by experienced OSHC providers. However, various combinations of these challenges may well be too much for some school community run programs and/or individual OSHC providers. This is a common phase of most industries as they move from years of growth into a maturity and consolidation phase. Schools are key stakeholders and partners in the provision of this important service to their communities; they need to be mindful of the challenges ahead when considering how best to meet their own OSHC needs.

Adam Pease is an experienced education, technology, administration and communications professional. A passionate industry advocate, Adam has worked in the education and early childhood care sector for 15 years and is focused on bringing out the best in kids. Adam, like all members of the Camp Australia team, takes great pride in leading the industry in best practice, working with all levels of Government and Education to ensure children get the care they need and deserve.

If you would like any further information with regard to this article or other OSHC related matters we would be happy to help. Please contact Camp Australia on 1300 792 668.

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