Public childcare needs overhaul

By Jason Yeh 葉家興  / 

Sun, Mar 31, 2013 - Page 8

In agricultural societies, the traditional concept of raising a son as insurance in old age was very important. However, as national health, civil servant, labor and national pension insurances have been established, and governments have begun to give subsidies to the old, sick and retired, the economic significance of having children has diminished.

Modern governments do not have financial surpluses and they need to raise funds to finance social insurance, which means borrowing money from the next generation to look after the current generation. In other words, the responsibility for insurance in old age has shifted from the family to the government.

When government spending exceeds revenue, it should focus on investing in and looking after future generations to prevent itself from going bankrupt further down the line, but what is happening is that the public is having to shoulder the cost.

Although the nation’s declining birth rate has become a threat to national security, a look at recent government policies shows that most have been about handing out money.

The vast sums the government spent on a recent competition to create a slogan to encourage procreation, and the childbirth and childcare subsidies provided by the central and local governments, as well as the subsidies being discussed for artificial reproduction, ignore the main point made in the Control Yuan’s report on the evaluation of measures in response to the declining birth rate and Academia Sinica’s Recommendations for Population Policies: that childbirth subsidies will not encourage the younger generation to have children.

In the past decade, public daycare center enrollment has dropped by 50 percent, while private daycare center enrollment has increased 1.6 times. With fees at private daycare centers between 20 and 30 percent higher than at public daycare centers, and average incomes having been stagnant for some time, it is easy to understand the heavy burden placed on younger married couples raising children.

If younger couples need to relocate to find work they may have no choice but to entrust their young children to their grandparents, causing problems that stem from having an older generation raise young children.

To make matters worse, the enforcement of the Child Education and Care Act (幼兒教育及照顧法) in January last year resulted in many public daycare centers in townships and communities closing because they could not improve fire safety and teacher-student ratios due to a lack of funding. In the space of one year, almost 200 such centers shut down. The problem is especially serious in remote areas, Aboriginal areas and the countryside.

The act calls for the government to provide young children with high-quality, universal, affordable and conveniently located educational and care services, and for children who are at a disadvantage because of economic, cultural, ethnic or regional factors, or due to a physical or mental disability, to be given preference when it comes to receiving these services.

This all seems ironic when looking at what is really going on.

Is it because those in power do not understand where the problem lies?

During a legislative question-and-answer session, Minister of the Interior Lee Hong-yuan (李鴻源) said that inadequate childcare policies were the biggest obstacle to increasing the birth rate.

Is it because of a lack of funding?

Last year, the government budgeted NT$3.2 billion (US$110 million) for various incentives to increase the birth rate.

However, the use of cash subsidies pushed up the cost of childcare, despite the good intentions behind the government’s policies. The government spent a lot, yet parents did not feel they received any benefit.

In addition to operators having profit expectations, private childcare centers are so expensive because of the high costs for land, buildings and equipment.

Given government streamlining and frozen budgets, there are also practical problems in meeting the demand for wider establishment of public daycare centers.

If the above-mentioned NT$3.2 billion in various forms of subsidies could be used to rebuild idle public facilities to meet legal regulations, if the expertise of non-profit organizations could be put to good use and if unemployed young people could be given specialized training, it might be possible to establish more publicly owned, privately run childcare centers.

Without having to carry the cost for building such centers — there are many unused or underused public buildings — it is likely that childcare fees could be lowered and the problems of youth unemployment and the low fertility rate could be solved.

The best way to deal with the problems associated with the nation’s declining birth rate would be for the government to invest in childcare services and promote lower costs and improved quality, making the fees of childcare a public instead of a private cost, perhaps even changing its policies by applying the 12-year compulsory education program to children between the ages of three and 15 instead of between six and 18.

However, if the government continues to think it is doing the nation a favor solving problems by merely spending money and giving out small benefits here and there, it will never be able to effectively increase the willingness of Taiwanese to have children.

Jason Yeh is an associate professor of finance at the Chinese University of Hong Kong.

Translated by Drew Cameron