Australia markets closed

    -83.90 (-1.04%)
  • ASX 200

    -84.20 (-1.08%)

    +0.0022 (+0.33%)
  • OIL

    +0.93 (+1.21%)
  • GOLD

    -2.00 (-0.09%)
  • Bitcoin AUD

    +1,848.70 (+1.81%)
  • CMC Crypto 200

    -23.45 (-1.60%)

    +0.0005 (+0.08%)

    -0.0005 (-0.04%)
  • NZX 50

    -26.09 (-0.22%)

    +184.96 (+0.99%)
  • FTSE

    -21.64 (-0.26%)
  • Dow Jones

    +4.33 (+0.01%)
  • DAX

    +2.05 (+0.01%)
  • Hang Seng

    -259.77 (-1.38%)
  • NIKKEI 225

    -457.11 (-1.17%)

$104 a day: Overhaul of crippling childcare costs urged in Budget

Mum carrying a little kid
The Government has been urged to prioritise the childcare sector in the upcoming Budget. (Image: Getty). (franckreporter via Getty Images)

Australia’s childcare system delivers the fourth most expensive fees in the OECD, a problem that is preventing women from achieving their full potential and slowing the economic recovery, several groups are warning.

Australian parents using full-time childcare are charged an average $104 a day. If a household earns more than $190,000 a year, subsidies are capped at $10,560 per child per financial year.

That means that for those families, they end up paying full fees for three months of the year.

Furthermore, 90,000 Australians weren’t in paid work last year due to the cost of childcare, according to the Productivity Commission


Currently, the maximum childcare subsidy available to Australian families is 85 per cent for those earning less than $80,000.

The Business Council of Australia (BCA) is pushing for this to be increased to 95 per cent, and for the annual cap to also be removed in order to boost women’s workforce participation.

The Government is reportedly considering the BCA’s proposal ahead of the May Federal Budget.

"Our child care and paid parental leave systems are a barrier to women who want to get back into work and they don't work for modern families," BCA chief executive Jennifer Westacott said.

It’s pushing for a childcare overhaul as part of the 2021 Federal Budget, along with several other business and childhood education groups.

Under its proposal, the childcare subsidy would increase from 85 per cent to 95 per cent for lower income households. The subsidy would then taper off by 1 percentage point for every $4,000 in additional family income above $80,000.

That would mean that a family taking home $80,000 would receive 95 per cent subsidies and families earning $84,000 would receive 94 per cent childcare subsidies.

Overhaul in thinking required as much as policy

Woman put dollar australia money into wallet.
(Image: Getty). (pada smith via Getty Images)

Reforming the childcare subsidy scheme also requires a radical rethink about how Australia values early childhood education, executive director of The Parenthood Georgie Dent said.

“The reason families pay such high fees here is that it is complex, but it is also predominantly because we have not conceived of early learning and early education and care as a fundamental component of our education system,” Dent told Yahoo Finance.

And until it’s perceived in this way, the burden of funding childcare will fall to parents.

Childcare fees are projected to rise 4.1 per cent a year over the coming four years, more than eclipsing projected inflation, according to Education Department documents.

From mid-2018 to March 2020, childcare centre fees increased 6.1 per cent while consumer price inflation increased 2.7 per cent.

A KPMG study released in 2018 also found that for many Australian mothers, the benefits of returning to paid work for more than three days a week are outweighed by the costs of childcare.

However, KPMG analysis of the BCA’s proposal found that reforming the scheme would cost around $2.5 billion but ultimately deliver an annual GDP boost of up to $5 billion as more women returned to paid work.

$953 a week: Pay rises for childcare workers a crucial element

Children drawing with smiling preschool teacher assisting them. Early education. Harnessing creativity and support.
(Image: Getty). (Lordn via Getty Images)

Dent said the BCA’s proposal, if accepted by the Government in the 2021 Budget, would be a “significant and necessary” step forward.

Changing the scheme in this way would also require a huge recruitment drive for the childcare sector, she added.

“There’s no point rolling out early education and care if it’s not quality. Quality is very closely linked with workforce retention, and the early childhood education and care workforce is one of the lowest paid workforces in the country,” she said.

Childcare workers, who require a Certificate 3, are paid $953 a week, Thrive by Five CEO Jay Weatherill has noted.

That’s compared to building labourers who earn $1,458 a week with entry level skills, and concreters who make $2,100 a week.

“We [need the Government] to fund a decent workforce strategy. There are massive issues around the way we value educators and the whole workforce that looks after little children,” he said.

“We need to do more to support them and recognise them.”

Increasing the amount of time these workers have to allocate to professional development is also important.

However, Weatherill is hopeful.

“[The BCA’s proposal] would be a very positive step in the right direction,” he said.

“The first five years of life establish the trajectory for health, welfare, learning and behaviour for the rest of the child’s life and throughout their life course. There couldn’t be a more important investment.”

Take control of your money and learn to maximise it with the Women’s Money Movement! Join the club on LinkedIn and follow Yahoo Finance Australia on Facebook, Twitter and Instagram, and subscribe to the free Fully Briefed daily newsletter.

Image: Yahoo Finance
Image: Yahoo Finance