Child care costs a lower proportion of income than 10 years ago

The Department of Families, Community Services and Indigenous Affairs has provided new data showing changes to out of pocket child care costs as a proportion of disposable income.

The tables attached show:

• Most families have to contribute less of their disposable income to child care, after Government subsidies, than they did ten years ago.
• Families earning between $30,000 a year and $80,000 per year, with one child in full time child care, paid less of their take-home disposable pay for child care than in 1996. Families in this band currently contribute 10 per cent or less of their disposable income toward child care compared to up to 13 per cent in 1996.
• Costs are even lower for part-time care at around 6% of disposable income (Most parents use part-time rather than full-time care).
• The out of pocket costs are based on actual costs after the impact of Child Care Benefit (CCB) and Child Care Tax Rebate (CCTR).

This new child care cost data is supported by other information and studies:

• Parents who qualify for Jobs, Education and Training (JET) child care assistance can have out of pocket costs as low as 10 cents per hour.
• The Australian Institute of Health and Welfare found that a single income family on average weekly earnings with one child in 20 hours of care was paying 3.9 per cent of their weekly net income in 2004 compared to 5.8 per cent in 1995.
• The OECD found that the Australian Government provided higher cash support toward families’ child care and other needs than comparable countries.
• Family assistance payments have increased from $14 billion 1996/97 to $28 billion in 2006/07.
• The interaction between family benefits and the tax system meant families with two children pay no net tax until they earn more than $50,000, even before direct child care assistance.
• Howard Government support for families using child care had doubled, to around $10 billion over four years, and the number of subsidised places has doubled since 1996.

Tables: Gap Fees As a Proportion of Disposable Income After Government Assistance

1 Child – Long Day Care – 50 hours

1 child – part time Long day care – 30 hrs

(source: Department of Families, Community Services and Indigenous Affairs)