The Complicated Issue of Child Care in Australia

The Complicated Issue of Child Care in Australia

What’s one of the Biggest Problems in Child Care Today?

Child care is a hot topic in Australia at the moment. Increasing fees are putting pressure on families while child care providers are struggling to provide the level of care required for our children at an affordable price.

Many people have been calling for the government to intervene in the child care market to regulate prices, subsidise child care providers and/or increase rebates for parents.

At the current time, there is a government rebate scheme in place for parents. It reimburses parents for 50% of child care expenses, up to a maximum value of $7500 per year. This had been increasing each financial year prior to 2011-12 (was previously at $7951 in the 2010-11 financial year) but was reduced as part of government reforms to the child care sector and is now locked at $7500 until 30 June 2014.

At a time when child care fees are approaching or have passed $100, per child, per day, in many places in Australia, the rebate falls far short of covering a significant portion of the total cost of care each year.

For parents working full time (around 200-220 days each year) care costs for a single child can run to $20,000 or more. Less the $7500 rebate, that still leaves the parents $12,500 out of pocket. Multiply this by two or three children and take into account taxes, one parent’s real income can be reduced to a few cents on the dollar; or it may not be economically practical for both parents to work, essentially forcing one parent to stay home and care for the children.

This is particularly difficult reality for single mothers who are sole providers – they have been shown to be the biggest consumers of child care services, largely in order to return to the workplace and earn income.

However, as the cost of child care increases beyond the means of many people on a single income, there may be little incentive, if any at all, to return to the workforce until all their children are at least school age or older.

So why has the government been trying to encourage mothers with young children to return to the workplace?

The benefit to the economy and the nation are enormous, potentially significantly boosting GDP and tax income. Women typically assume the role of the stay-at-home parent, yet women are also increasingly highly skilled and represent an enormous resource of knowledge and abilities that contribute to building a thriving economy.

While putting children into formal care in order to work may not be the preferred path for all mothers or families, from the perspective of the nation, it is important that services are available so that both parents can return to the workforce if that is their choice.

Having more women in formal work is an important component of having a healthy, productive economy. Paying for child care services also creates jobs and business opportunities in the community, increasing taxable income and contributing to prosperity.

So what is driving the fee increases for child care? One oft-cited source is the new regulations being implemented by the State and Federal Governments as part of their widespread child care reforms; the National Quality Framework.

Particularly notable is the new ratio of carers to children that will soon be required. Centres caring for children aged two and three will be required to have a carer to child ratio of 1:5, down from 1:10 today. This will cause labour costs to sky rocket in the coming years.

On the back of the new standards for professional accreditation, there is also significant pressure from United Voice, the major union for child care workers, to increase carers’ salaries in line with other professions that require similar levels of qualification.

While these requirements are understandable – children are our greatest resource and nurturing their early development is incredibly important – it does raise issues of what we can actually afford to provide. Parents already make many sacrifices to provide great opportunities to their children.

  •  Should part of the burden be picked up by the wider community through greater subsidisation of facilities and rebates for fees?
  •  Should regulation and requirements for facilities be reduced to lower cost pressures on fees?
  •  Should the problem be left to the market to resolve and so be it if parents can no longer afford care services and women stay out of the workforce longer?

Have an opinion? Let me know your thoughts!

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