Govt. causes increased cost of childcare

The following is a textbook example of how the government (not the market or private business) increases your cost-of-living and lowers your standard-of-living.

New government regulations on childcare will require one staff member to look after four children up to two years old - up from the current ratio of five.

This new regulation will result in up to 4000 childcare places lost across Victoria.

From NewsCorp:

A survey of more than 300 centres by the Herald Sun found fee rises would be between $2 and $25 a day, with most between $5 and $10 ...

Productivity Commission estimates, released yesterday, estimate a 15 per cent rise - or $43.50 on average a week.

But of course:

The Productivity Commission report proposed an overhaul of subsidies to help cushion the blow to low-income parents.

Childcare Minister Kate Ellis said the Government was "investing at record levels in direct payments to families to help them meet the costs of care".

This is the model I call "depress and redistribute" or "depress and compensate", meaning the government will depress some economically beneficial activity with barbaric legislation and regulation, and then "compensate" the victims by redistributing tax-payers money.

It is a model used in many areas of government, for example, the Murray-Darling water buybacks.

It is a eugenic model, in that it depresses economic activity in one way or another, regardless of whether the government does indeed compensate the direct victims of the regulation.

If the government does compensate, the money that is used for that will be confiscated from tax-payers who would have otherwise used the money productively. If the government does not compensate, then the extra resources come from the parents, who will then sacrifice economic activity elswhere in their budget. Otherwise, the childcare is simply foregone.

The point is that government regulation creates an artificial burden on a specific part of an economy, which means resources have to be moved from elswhere, to achieve the same productive result. Government regulations like this affect everyone in an economy via this depression of overall economic activity.

This process also creates a greater constituency of people who mistakenly think they are benefiting from big government, and thus vote in its favour.