Hike in Childcare Fees Following Increase in Government’s Childcare Subsidy

10 Dr Lim Wee Kiak asked the Minister for Social and Family Development since the announcement of the increase in childcare subsidies (a) how many childcare operators have raised their fees; (b) what is the increase quantum; and (c) how much savings can be expected, taking into account the increment and subsidies.

11 Mr Dennis Tan Lip Fong asked the Minister for Social and Family Development how does the Government intend to assist parents who will not benefit from the recent increase in Government childcare subsidies, to cope with childcare fee hikes by the 220 childcare centres as well as possibly other childcare centres.

The Minister for Social and Family Development (Mr Desmond Lee): Mr Speaker, in 2020, 330, or one in five childcare centres —

Mr Speaker: Minister, are you taking both Questions together?

Mr Desmond Lee: I am sorry. Mr Speaker, I am taking Question Nos 10 and 11 together, with your permission, please.

Mr Speaker: Please proceed.

Mr Desmond Lee: Mr Speaker, in 2020, 330 or one in five childcare centres will be increasing their full-day childcare fees for Singapore Citizen children. The other 1,200 childcare centres will not be making any adjustments to their fees. The number of centres increasing fees in 2020 is broadly comparable to previous years. In 2018, 540 centres raised fees. In 2019, 220 did so.

From time to time, pre-schools adjust their fees to keep up with operational costs but most manage their fee increases, in order to remain competitive. In fact, with the large number of operators, every year some operator or other will make some adjustments. Of the centres raising fees in 2020, the median increase is within 5% of fees, comparable to previous years. In absolute terms, the median increase is around $35.

All pre-schools are required to inform parents and ECDA of any increase in fees by 1 September of the preceding year, so that parents can make an informed choice about their child’s pre-school. Of the centres raising fees next year, a large majority had informed ECDA even before subsidy enhancements were announced at the National Day Rally.

Among some of the centres raising fees are those run by Anchor Operators and Partner Operators. These are centres operating below the stipulated fee caps, which have been maintained at their current levels since 2014 for Anchor Operators and 2016 for Partner Operators. The industry median fees have thus remained unchanged at $856 since 2016. In fact, in 2021, we will lower fee caps for Partner Operator centres when their new five-year term begins, further reducing industry median fees.

With enhanced childcare subsidies from January 2020, the majority of working families will pay less for childcare, even with the fee adjustment in one-fifth of the childcare centres. Compared to the median fee increase of about $35, families will see the Additional Subsidy for full-day childcare increase by up to $240 per month from January 2020, depending on their income levels.

Allow me to illustrate what working families will pay for full-day childcare at an Anchor Operator pre-school with the enhanced subsidies. Suppose the fees are below fee cap, say $740, and an increase by 5% to the fee cap of $770 next January, after GST.

Family A earns $3,000 a month. They pay $40 per month at this pre-school today; from January next year, they will pay $3 per month.

Family B earns $5,000 per month. They pay $340 per month today; from January next year, they will pay $130.

Family C earns $8,000 per month. They pay $440 per month today; from January next year, they will pay $280 per month.

As you can see, pre-school expenses should fall for most families receiving Additional Subsidy, even with the fee increase in one-fifth of the childcare centres.

Let me take this opportunity to clarify that the enhancements in Additional Subsidy apply to all eligible families, regardless of the centres their children are enrolled in, as long as these childcare centres are licensed by ECDA. They do not apply only to Anchor Operator or Partner Operator childcare centres.

For families with non-working mothers or those who are earning more than $12,000 a month and hence do not qualify for the enhanced Additional Subsidy, we provide additional help for those who need it. For example, if the mother is not working because she is providing full-time care for a younger child aged 24 months and below, or is looking for employment, she may qualify for higher subsidies under Special Approval. Low-income families who face difficulties paying their monthly childcare fees even after subsidies may also apply for financial assistance.

Over the next few years, parents will increasingly have more affordable and quality pre-school options to choose from, as we increase the number of Anchor Operator and Partner Operator pre-schools, and a few more Ministry of Education (MOE) Kindergartens. By around 2025, the share of Anchor Operator, Partner Operator and MOE pre-school places will rise to 80%, up from just over 50% today.

In the medium term, as Government-supported preschools grow and come under the stipulated fee caps, we will lower their fee caps so that parents will pay around the equivalent of Primary school fees plus after-school student care fees for full-day pre-school, before means-tested subsidies kick in.

These enhancements will more than double annual Government spending on preschool, from $1 billion today. We are committed and will continue to make quality preschool more affordable and accessible to give every child a good start in life.

Mr Speaker: Dr Lim Wee Kiak.

Dr Lim Wee Kiak (Sembawang): Mr Speaker, let me thank the Minister for the clarifications as well as for clearing the air on this issue. In fact, many of us have received feedback from our residents. They have given comments that every time the Government increases subsidies, the childcare operators will increase their fees – it seems to be corresponding. But I think I thank the Minister for producing the data as well as the statistics which are very important.

It is still quite tough for middle-income families which have a few children in childcare centres, especially for those who, even with the subsidy itself, may find it tough with their monthly incomes.

The other group that I am a little bit concerned with is the non-working mothers. I think that I understand there is already additional subsidy for non-working mothers if they fulfil the criteria. My question is, currently, how many of these children who enjoy the subsidies are children of non-working mothers? Can we equalise both groups, instead of making them apply to these criteria? If we were to put working mothers or non-working mothers aside, how much more increase in terms of subsidies would the Government have to bear, rather than make the non-working mothers go and apply for additional subsidies.

Mr Desmond Lee: I thank the Member for his questions. Every year some pre-school operators will make some adjustments to their fees. There are many operators – private, not-for profit, as well as MOE kindergartens. So, every year there will be some adjustments, whether or not we make adjustments to our subsidies. So, I hope that clears the misunderstanding. In fact, the vast majority of households earning $12,000 and below ought to see a reduction in childcare fees.

There are, of course, some centres, private operators, that charge, say thousands of dollars in fees that make adjustments in the hundreds of dollars. That is quite a different situation altogether. But for the vast majority, they should see a fall in childcare fees from January next year. And as I said, from January 2021, for Partner Operators, we will bring down the fee caps even further; and thereafter, the Anchor Operators will see a fall as well. So, that is on the Member's first question.

The second point is on families with many children. Apart from looking at total household income, for families with many dependents and more children in pre-school, we will look at it from a per capita basis, so that they can get even more support.

On non-working mothers, the support provided to them takes into account the fact that because they are working, they will need full-day childcare. By working mother, we are talking about working two days a week and that can include the informal sector as well. So, there is a degree of flexibility. In fact, working mother status is conferred if a mother works for two days a week, or roughly 56 hours a month.

We do grant special approval if mothers have care-giving needs for children younger than 24 months or if they are looking after other dependents. For those who are looking for employment, we make concessions for them and allow them to benefit from the full subsidy. And for those who are non-working mothers, what they can do is, they can go for the basic subsidy for full-day childcare, or if not and they are at home with no other care-giving responsibilities other than their young children, then, there is the option to go for kindergarten with KiFAS subsidies. So for half a day, they get pedagogical support; the other half a day, time with the parents, time with the family, family-bonding time.