Childcare fees to ruin small business re-opening plans ahead of September JobKeeper cliff, Kate Carnell warns

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Small business ombudsman Kate Carnell. Source: AAP/Mick Tsikas.

Many business owners relying on free childcare will be unable to re-open in the wake of the COVID-19 pandemic when support measures they’re relying on expire, small business ombudsman Kate Carnell has warned.

The Morrison government brought in free childcare for parents in April, in response to the coronavirus outbreak, but said earlier this month that parents would have to resume paying fees from July 12. This would occur  alongside a $708 million support package for the childcare industry designed in part to replace JobKeeper payments for childcare workers.

But giving evidence to a Senate committee hearing on Wednesday, Carnell warned the reintroduction of childcare fees next month would hit business owners with young children at a crucial time when they were trying to get back on their feet.

In a subsequent interview with SmartCompany, Carnell said the extra subsidies announced by the government would not be enough to prevent business owners from making tough choices.

“If mum is attempting to keep the business afloat and working lots of hours, and her major source of income is JobKeeper, she’s really not in a position to pay for childcare,” Carnell says.

“We want sole traders and small businesses to focus on getting their businesses up and running to get the economy moving.

“We don’t want the impediment of many people not being able to put in the hours they need to put in, simply because they can’t afford childcare.”

About 40% of small businesses in Australia are owned by women, and Carnell fears the imposition of childcare fees will exacerbate the gendered impact of the pandemic, which has seen women lose work disproportionately.

“This policy was put together to save childcare centres, which needed to stay open so frontline workers had somewhere to send their kids, the logic was very solid,” Carnell says.

“The problem is they’ve forgotten it’s not just about childcare facilities, it’s about all the people who use childcare and particularly those small business owners who are women.”

Compounding financial pressures, JobKeeper payments are due to expire in September, pushing more than 900,000 businesses off fortnightly wage subsidy payments all at the same time.

Carnell joined a growing chorus of business advocates on Wednesday calling for government support to be tapered off gradually to avoid a potential financial cliff that could see insolvencies spike.

“I don’t think there’s a choice; it’s not one-size-fits-all at the moment, there are some businesses that are getting back on track and about 20% are actually doing well.

“But if you happen to be in the travel, accommodation or events space, you’re really not up and running at all.”

In addition to JobKeeper payments expiring in September, rent deferrals and a pause on insolvencies brought in by the Morrison government will also fade away.

NOW READ: “Expect to hear from us”: ATO sounds warning on dodgy JobKeeper applications, foreshadowing audits and clawbacks

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