Child Care Costs: Who Should Carry The Financial Burden?

Increasing Cost of Child Care in Australia

Rising child care costs for Australian families have been a hot topic in 2012, a problem mirrored in many other developed nations. A drive to decrease the ratio of children to carers, improve the pay of child care workers and set minimum standards for education for workers is coming at a high financial cost and is expected to continue increasing the price of child care services. Reports indicate that child care costs are already over $100 per child, per day, in many centres and are expected to continue to rise.


Child Care Cost Pressures

Child Care Cost Pressure is Rising in Australia

There are already major concerns regarding the pay of child care workers, with pay cited as the main cause of high turnover rates in the industry. Increasing levels of responsibility and the new requirements for workers to hold either a Certificate III in Children’s Services or Diploma of Children’s Services from the start of 2014 are also contributing factors.  Each centre will also need to have at least one university qualified early childhood teacher by 2014.

However, the existing wage structure is inadequately low for professional workers. Yet any increase in wages will put more pressure on families to pay higher child care costs.

The government does offer a 50% child care rebate worth up to $7500 per child per year. The value of this rebate used to be tied to the rate of inflation; however last year the rebate was reduced to $7500 and locked at that level until 2014.

Consumer prices rose just 1.6% in the year to March 2012, compared to an almost 10% increase in the cost of childcare. This means that increases to child care costs are significant and being borne solely by parents.


Current Pricing Of The Child Care Industry

If a woman wished to return to the workforce full time, working 5 days a week with 4 weeks of vacation time per year, the child care costs would be:

Cost per child per day Total cost/child After $7500 rebate 2 children 3 children 4 children
$90 $21,600 $14,100 $28,200 $42,300 $56,400
$100 $24,000 $16,500 $33,000 $49,500 $66,000
$110 $26,400 $18,900 $37,800 $56,700 $75,600
$120 $28,800 $21,300 $42,600 $63,900 $85,200
$130 $31,200 $23,700 $47,400 $71,100 $94,800

With Australia’s minimum wage for workers over 21 set at $606.40 per 38 hour week, equating to approximately $31,500 for a 52 week year – less taxes – there would be little incentive for unskilled workers to return to the workforce if it required them to place two children into day care.

Even on the median full time wage in 2011* – $54,750 less tax – it would be difficult for a woman to justify placing 2 or more children into day care as fees increase over $100 and top $110 or more in some places. In many cases, particularly with 2 or more children in care, it may be more cost effective for parents to hire their own in-home nanny; yet rebates are not available to defray costs in those cases.


Who Should Pay The Costs

Many people would consider it the parents’ responsibility to bear the costs of child care and Government assistance for child care is often labelled ‘middle class welfare’. However, one Grattan Institute study suggests that if 6% more women were to join the workforce, it would equate to an increase of $25 billion (approximately 1.4%) each year to GDP.

Who should pay the cost for child care?

Therefore the benefit of having women returning to the workforce after giving birth is significant to the Australian economy and does partially justify the $22.3 billion injected into the child care sector over the next 4 years.

With studies showing that women with young children respond negatively to increases in childcare prices, continued and increased childcare subsidies may be required to encourage female workforce participation.

What’s your opinion? Should the Australian Government continue or increase subsidies or is it the responsibility of parents to provide for their own children?

Inspire Education also offers child care courses, including the Certificate III in Early Childhood Education and Care and the Diploma in Children’s Services courses so you can get the qualifications you need today.

For more information on Australian incomes, check out Matt Cowgill’s article for ABC Drum.


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