Proposed new childcare cost changes may just leave you worse off – again!

Childare reform

It’s a serious economic issue. Affordable childcare means more primary carers (usually women) can return to work, boosting the national economy. It’s an educational issue too. According to a long running study commissioned by the British government, two years of quality education for children aged three and up dramatically improves their grades in year 10.

Childcare costs are on the government’s radar, but it seems that proposed reforms will leave many working families paying more for childcare.

What childcare costs us now

The current system is confusing at best. It has two components: the Child Care Rebate and the Child Care Benefit. The rebate is available to everyone, and is capped at $7,500 per year. Fifty per cent of fees are paid by the rebate for as long as the $7,500 lasts. After that, families pay full fees for the rest of the year. The benefit is means-tested and covers a percentage of the hourly childcare rates depending on family income.

The proposal on the table

Currently, the government is proposing a $3 billion childcare package to make care more affordable and accessible. A stalemate in the last sitting of parliament means the changes will be delayed to July 2018.

If reforms are passed, the benefit and the rebate will be rolled into one means-tested subsidy. The government believes reforms will result in a $30 per week savings for families earning between $65,000 and $170,000.

Real affordability is a different story though, because rates for many centres are much higher than those used by the govenment in their modelling.

What childcare could cost us in the future

The proposed reforms mean that the new subsidy would apply to a maximum of $11.55 per hour for long daycare. That means if your daycare centre is open for 12 hours a day, and your day rate is more than $138.60, you won’t be eligible for any rebate for a portion of the daily fees.

According to the National Centre for Social and Economic Modelling (NATSEM), the day rate for childcare centres in cities can be higher than $170. For a centre open 12 hours a day, $31.40 of daily fees won’t have a rebate applied.

The families most affected will be those that don’t reach the current $7,500 cap each year, probably because their children attend childcare fewer than three days a week.  The Sydney Morning Herald uses this example:

“…a family on $175,000 that accesses two days of care at $144 a day for one child would see their annual government assistance drop from $7,488 to $6,006, or $14.25 a day (assuming the centre is open 10 hours a day).”

It seems that while governments understands and acknowledges that affordable childcare is essential for driving a growing economy, the fact that the real costs for so many families are not fully factored into policy making means that we seem destined to, once again, have a childcare policy that offers far less than is needed to give families real financial relief.

Subscribe to Babyology

Our email newsletters keep you up to date with what’s happening on Babyology.

We also have special newsletter-only offers and competitions that are exclusive to Babyology subscribers.

Sign up below:

  • This field is for validation purposes and should be left unchanged.

Send this to a friend