There is an urgent need for workable solutions to the many persistent problems which plague children's services in Australia. Unfortunately after an 18-month parliamentary inquiry on ‘Balancing Work and Family', the Federal Government still has not managed to address issues such as limited supply, the poor distribution of centre based services, unmet needs in some age groups, high costs, overly complex funding and subsidy arrangements, questions of quality and staff supply, continuity of care, and inflexible and inappropriate hours and types of services. Instead the Inquiry, which was chaired by Bronwyn Bishop and released its report last week, came up with a set of proposals whose main effect would simply be to reduce cost pressures for higher income earners and mitigate some of the limits of centre-based services.

With its focus on market based models, this report fails to address the inadequate supply of children's services, which is undermining choice and leading to ever-rising costs. To fix this problem the Government would need to intervene through the allocation of service funding, targeted and differential capital and recurrent funding that reflects both the needs of and for services. The report offers 17 recommendations relating to children, six of which are actual proposals for policy change.

Of these proposals, there are two that may be acceptable on principles of equity and benefit to society in general. The first is the proposal to freeze the interest on HECS debts of second earners till their youngest child reaches school age and thus reduce the excessive burden of HECS debt in small ways. The second is the removal of fringe benefit taxes on child care – but this should only apply when the employer has funded additional places, not just to existing child care places. The other proposals should be rejected, namely; reclassifying nannies as approved carers so they can be subsidised to the level of other child care services; the provision of an au pair visa system for importing carers and tax deductibility for care expenses. This last proposal is simply an expensive way of reducing costs to high income earners who are already in an advantaged position – it offers no community benefit.

Proposals for funding nannies and admitting au pairs are particularly problematic, as they involve the possible exploitation of women as carers and put the basic principle of public protection of vulnerable children at risk. There are two primary stakeholders in child care issues: the children who need to have access to quality care programs that help them grow and the parents who need the time to take part in other activities. In order to ensure quality of care, a third party is the child care worker, the non parental carer whose competencies and continuities are essential to maintaining standards that meet both child and parent needs.

The question for policy makers is what role the state, versus the market, needs to play in ensuring the quality of child care services. As children are vulnerable and cannot advocate on their own behalf, they need to be considered the primary focus of policy in the ‘public interest'. Decisions need to be taken on how to register, accredit and fund services in ways that recognise and uphold the public protection of children. As a child reaches the age of six, governments intervene through educational programs which are funded and regulated by law. However, governments' role in early childhood services is not so clear. States already take on the regulation of formal services to ensure that they are offering appropriately planned and supervised care. The Federal government requires that those funded by them are accredited. These requirements cover qualifications, care ratios and supervision and offer parents and the community at large some official warranty of quality and safety.

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It is therefore clear that a proposal to offer substantial public subsidies to essentially unregulated individual carers raises serious issues. Bishop's report puts forward the radical suggestion that the same funding available for supervised care should be available for in-home care by unsupervised ‘nannies'. In effect, this equates the existing accredited centre and service based care with independent unqualified child care.

At present, there is a small rebate for ‘registered carers'; non service based carers such as a nanny or grandparent with a maximum of $24 per week. This amount is not enough to be seen as valuing or endorsing the service in any way. The only additional proposed requirement for receiving the new nanny payments is a Certificate Two in child care, (a very limited qualification) a police check and a first aid certificate. A web search shows no educational institutions are offering less than a Certificate Three course which is itself about as basic as it gets. There are no educational prerequisites or required experience in any forms of care, just the assumption that employment during the learning period will allow for work based assessments of how well the students apply their lessons.

The assumption behind the above proposals is that child care is just another market in which parents are the best and most obvious arbiters and choosers of the quality of care their child needs. However, if the accessible services are inadequate, parental ‘choice' becomes meaningless. In these situations of ‘market failure' sheer financial necessity may drive parents to use a home based carer for the private care of their children albeit unsupervised or unsupported by any external agencies. Such a shift is especially likely if governments are seen to approve this system by funding it.

This contrasts with current Family Day Care system which provides home based care in the carer's own home. The skills of the carer are assessed; there is training, support and relief if there are crises and group activities for carers (e.g. playgroups). Even then, there is difficulty in retaining and recruiting enough quality carers because the work is not well paid and not attractive in the long term. The new forms of care suggested by Bishop's report will have no such vetting or access to support or supervision. The suggestion of special visas for ‘au pairs' raises the further danger that young women may be underpaid and exploited, or that people without the necessary skills may be entrusted with the care of children.

The report is filled with market-centric assumptions; the focus is entirely on access to care so that parents can trade time and education into money earned and taxation paid. The stated aim is to get more mothers of young children into the workforce and the assumption is that increased care and more flexibility would translate into more full time workers. Women's rights to paid work need to be tempered by recognition of the social and emotional tensions involved: full time work and the parenting of young children are often not a comfortable mix. There is a need for legislated policies with flexible and funded options for parental leave and part time work, options which are not supported in this report. Therefore the policies on offer should be regarded with deep suspicion. The needs of children at their most vulnerable stage should not be left to markets and put at risk because the government is not prepared to use its funding to benefit them. The additional spending that would be needed to implement these proposals could be more usefully deployed to fund policies that would actually ensure that the costs of care for the most vulnerable can be met.