Government Pays More Than Half Of Child Care Costs For Most Common Family Types and Usage

Overall, the Howard Government will be contributing more than 50 per cent towards the vast majority of families’ approved child care costs following the $2.1 billion additional investment in child care in the recent budget.

While families have varied incomes, fees and patterns of child care usage, post budget modelling by the Department of Families, Community Services and Indigenous Affairs found that:

• the subsidy for common working family types, using approved long day care, will be between 55 per cent and 93 per cent of the fee as a result of increased Child Care Benefit (CCB) and improved Child Care Tax Rebate (CCTR)
• For some low income families returning to work and receiving JET child care fee assistance, the Government contributes more than 98 per cent to the total fee
• Even in a number of higher fee centres, common family types were still likely to receive more than 50 per cent of their child care costs through CCB and the CCTR. Low income families using these higher fee services were only likely to have to contribute about 30 per cent out of their own pockets
• A common example of a working family on combined family income of $60,000 using part-time care for one or two children had between 55 per cent and 79 per cent of their fee subsidised depending on the centre they used

The modelling, using average fees and even the relatively high fee of $350 for several of the most common usage patterns and family types was tested against a range of centres in several regions of Australia. The locations used to test the modelling of average figures included Melbourne CBD, Port Phillip, Sydney CBD, Brisbane CBD, Ballarat, Blacktown and the ACT.

Minister for Families, Community Services and Indigenous Affairs, Mal Brough, said the modelling supported OECD findings that Australia has higher levels of subsidy support for parents’ child care choices than comparable nations.

A report by the non government Taskforce on Care Costs before this year’s Budget showed that many families earning under $80,000 per year were receiving more than 47 per cent of their costs from the taxpayer.

“The OECD estimated that the Government contributed, on average, around 60% of parents’ child care costs where other comparable nations were more likely to contribute about one-third.”

Even families on incomes over $100,000 using child care full time can expect at least $5,000 per child from the Australian Government towards their child care costs.

Mr Brough said updated analysis also shows that the proportion of disposable income that families will pay for childcare, directly as a result of the recent budget changes, has dropped well below the levels of 10 years ago.

“The Howard Government’s approach is a stark contrast to Labor’s plans for child care,” Mr Brough said.

“Labor’s approach includes a requirement that all child care workers have tertiary qualifications – a move that would only increase costs to parents.”