Childcare fees: Higher despite social and charitable status?

This is a joint article by Leong Sze Hian, with additional analysis by The Heart Truths.

The article was originally published on The Online Citizen.

I refer to the article “Fee hike planned at PCF centres in Sembawang” (Today, May 13).

Fees increase by 20%

It had stated that “Kindergarten and childcare fees at 22 PAP Community Foundation (PCF) centres in the Sembawang Group Representation Constituency (GRC) will be raised by 20 per cent from January next year.”

Discovered by accident?

According to the report, “The fee hike surfaced yesterday when mother of two Joan Ng called on the PCF to do better in managing fee increases when she spoke during a residents’ dialogue with Acting Minister for Culture, Community and Youth Lawrence Wong, who was on a ministerial visit.

She also cited the lack of childcare places in the area. Currently, the waiting list at some of the centres could stretch to at least a hundred, according to some dialogue participants”

However, if the opportunity had not arisen because of the residents’ dialogue, does it mean that nobody may be the wiser to this fee increase?

Long-time problem?

The issue of the shortage of places has been raised repeatedly over the years, yet why is it that the situation seems to be getting worse? With the acute demand and supply situation, fees may continue to rise because there appears to be a lack of competition.

Do allow me to explain what I mean:

“Rents up as much as 5 times in 5 years?

According to The Straits Times, “The competition for space has jacked up rents at HDB void decks to as high as $50,000 a month in newer estates … About five years ago, the average rent was just $10,000 to $20,000. This has contributed to higher fees. The average childcare centre fee has climbed from $572 a month in 2004 to more than $800 last year”.

What about existing sites’ rent?

It is thus a good move that, “The Change to stop awarding sites … based solely on the highest bid, (is) to be implemented in the next few months”.

Whilst this policy change is a welcomed move, would it help all the centres that are already operating on existing sites?

Concurrently, could the government also reduce the rents of existing centres too? Otherwise, it may take years for fees to be lowered – with only new sites getting “not the highest bidder” rent.

HDB is the root of the problem?

The root of the problem are the high rentals charged by the HDB.

If sites are not given to the highest bidder, will the HDB be willing to accept much lower rentals, as compared to the 2 to 5 times increase relative to about 5 years ago?

2 anchor operators get subsidies?

It was recently announced that private operators can also apply for the subsidies that parents get on fees, which was previously only applicable to the PAP Foundation and NTUC-operated centres (My First Skool).

Open subsidy to all?

This is unfair competition and should be opened up so that parents can choose to go to any centre to get the subsidy – not just some private operators that will be approved after their application.

How many approved already?

By the way, can we be given an update, as to what percentage of all private operators are now approved for the subsidy?” (“Monday morning blues reading the newspapers?: Childcare, Healthcare, HDB, National Con., etc?“, Apr 15)

Non-profit incurring losses?

Acting Minister for Culture, Community and Youth Lawrence Wong, who is also the PCF Executive Committee Chairman, had said that, “the PCF operates on a non-profit basis and is “incurring losses” through its operations.”

So many private centres with lower fees?

Sembawang GRC Member of Parliament Vikram Nair had said that, “The last fee hike for centres in the area took place about five to six years ago and even with next year’s planned increase, the fees are still “well below market rate”” – I searched Child Care Link for Child Full Day – Age 4 – Fee Range: $400 to $500 – which returned 19 Children Centres.

Of this 19, only 6 are PCF centres, with the other 13 being run by various operators. None of the 19 belonged to the other major anchor operator, (NTUC) My first skool.

Despite unfair competition?

This begs the question as to why despite there being only one of two major anchor operators which were the only ones given the special privilege of giving eligible parents – childcare subsidies – and the economies of scale that ought to accrue to its size and dominance in the sector – have higher fees compared to so many more other childcare centres?

As a proportion of the total number of PCF and My first skool centres over the total number centres in Singapore – isn’t 6 to 13 kind of disproportionate?

In this connection, as of March 2013, there were 1,044 childcare (and kindergarten) centres, of which I understand about 328 are PCF and 98 are My first skool.

Social and charitable arm?

Given its social and charitable status (“PCF is the social and charitable arm”) – shouldn’t its fees be lower than other privately run or non-profit childcare centres?

Fees rise faster than wages?

Finally, you can see that the full day fees for the childcare programmes have been increasing every year (Chart 1). This can be partially attributed to the increase in rental.

chart1

Chart 1: Ministry of Community Development, Youth and Sports, Early Childhood Development Agency

In Chart 2, you can see the proportionate change in the fees.

chart2

Chart 2: Ministry of Community Development, Youth and Sports, Early Childhood Development Agency

But do you know that the fees are rising much faster than our wages? In Chart 3, you can see how the fees (in red line) have been increasing by several times faster than our wages (blue line).

chart3

Chart 3: Ministry of Community Development, Youth and Sports, Early Childhood Development Agency, Ministry of Manpower Income

Thus is the government increasing the rental of the childcare centres, at the expense of the parents’ ability to afford quality childcare education?

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One comment

  1. Anon

    When we have 6.9M, HDB will have economy of scale and can bring down rents to less than a tenth currently. I urge everyone to vote for the PAP overwhelmingly in the next GE so that the 6.9M can be realised by 2018 instead of 2030.

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