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Preschool fee hikes and affordability

Question

Dr Lim Wee Kiak
MP for Sembawang GRC

To ask 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.

Mr Dennis Tan Lip Fong
Non-Constituency Member of Parliament


To ask 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.

Answer

1   In 2020, 330, or 1 in 5 childcare centres will be increasing their full-day childcare fees for Singapore Citizen children. The other 1,200 childcare centres will not be adjusting 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.

2   From time to time, preschools adjust their fees to keep up with operational costs but most manage their fee increases, in order to remain competitive. 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.

3   All preschools 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 preschool. Of the centres raising fees, a large majority had informed ECDA even before subsidy enhancements were announced at the National Day Rally.

4   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 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 5-year term begins, further reducing industry median fees.

5   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 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. 

6   Allow me to illustrate what working families will pay for full-day childcare at an Anchor Operator preschool with the enhanced subsidies. Suppose the fees are $740 (below fee cap), and increase by 5% to the fee cap of $770 next year (after GST). 
  a. Family A earns $3,000 per month. They pay $40 per month at this preschool today, and will pay $3 per month from next year. 
  b. Family B earns $5,000 per month. They pay $340 per month today, and will pay $130 per month from next year. 
  c. Family C earns $8,000 per month. They pay $440 per month today, and will pay $280 per month from next year. 
As you can see, preschool expenses should fall for most families receiving Additional Subsidy, even with the fee increase. 

7   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 centres are licensed by ECDA. They do not apply only to AOP and POP centres.

8   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.

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

10   In the medium term, as government-supported preschools grow, 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 preschool, before means-tested subsidies.

11   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.

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Published On Mon, Oct 7, 2019
Last Reviewed On Wed, Oct 9, 2019

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