The operator of a rapidly growing network of high-end childcare centres has urged the federal government not to means test the childcare rebate as part of its long-awaited family policy announcement.
Brendan McAssey, the owner and chief executive of Only About Children, said a recommendation from the Productivity Commission's draft report into the $9 billion sector to means test the childcare rebate was not sophisticated policy.
"The difficulty that I have with the proposal ... is it's a one size fits all," he said.
The federal government pays 50 per cent of the cost of childcare, up to a cap of $7500 a year. The total subsidy to the sector, from the rebate and the childcare benefit, is $5 billion a year and growing. The commission recommended combining the rebate and the benefit to be paid as one payment, which would be means tested.
Mr McAssey said this was not fair, because in high-income areas where his centres were located families also had a higher cost of living.
"[Means testing] would no doubt impact on my families materially," he said. "At the moment the $7500 rebate, what that does for a lot of families, particularly in Sydney and Melbourne, is it burns out after nine months of the year and then people have to adjust their work life to cope with that.
"This idea of standardised means testing without any reference to cost of living in particular areas, what it does is it discourages people who live in those areas from going back to work."
Only About Children has 28 centres, a number Mr McAssey wants to boost to about 45 by the end of 2015. The company will concentrate on Melbourne, where it has fewer centres. It targets wealthier suburbs like Neutral Bay in Sydney and Armadale in Melbourne, where parents can afford to pay up to $170 a day for care.
The centres are marketed on their premium services, such as regular health check-ups for children, , nutritional food, physical activities like Zumba and language lessons. The company will have revenue of $90 million in 2014-15.
New Social Services Minister Scott Morrison is expected to reveal the government's family policy as early as next week. Mr McAssey looks to be on his own in strongly opposing means testing.
In a submission to the commission, non-profit operator Goodstart Early Learning proposed reducing the level of the rebate for very high-income families.
"It would help fund increased assistance for low to middle families and they're the ones where you're going to get the biggest workforce benefit," Goodstart advocacy manager John Cherry said.
Jenny Hutson, chairwoman of $1.5 billion listed childcare operator G8 Education, said bringing together the childcare benefit and rebate under one payment "has administrative appeal for everybody".
"If [the means testing] is what we saw in the draft Productivity Commission report, that looks balanced," she said.
Even if he does not get his way on the rebate, it is talk of government subsidies for nannies that has Mr McAssey most worried.
"What I see is a drain of staff out of the childcare space into the nanny industry," he said, adding this would dramatically increase the cost of labour.
