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Budget 2022: Billions expected for child care, but will it be enough?

Children playing with blocks and childcare worker
Australia's fees for early-childhood care and education are the fourth most expensive in the OECD. (Source: Getty)

Last week, Treasurer Josh Frydenberg signalled “record investments” in child care of more than $10 billion a year in the 2022 Budget.

Funding for child care was one of several government spending priorities flagged by the Treasurer to help alleviate growing cost-of-living pressures.

This will likely be welcomed by parents, with Australia’s child care some of the most expensive in the OECD.

The nation’s fees for early-childhood care and education are the fourth most expensive of developed nations.

According to advocacy group The Parenthood, out-of-pocket fees for early-childhood education and care absorb about a quarter of household income for an average-earning couple in Australia with two young children.

The cost of child care is so high that 2018 KPMG research found it was more expensive for many working mothers to work four or more days a week and pay for child care than it was to stay home to look after their children.

Amanda Roberts, founder and director of Equity Economics, said investing in child care was “a win-win policy for women, children, the workforce and the economy”.

She said investing in child care also played a role in the pandemic response.

“We have seen significant impacts on mental health and education, including for children," Roberts said.

“Prioritising early learning and support for families through improved childcare policies is something we can only hope to see more of in the forthcoming budget.”

What women’s advocacy groups would like to see in the 2022 Budget

The Parenthood’s pre-budget submission called for free, high-quality early-childhood education and care for all families.

“Even before the COVID pandemic hit and the economy contracted, half of Australian parents with children under five struggled with the cost of early-childhood education and care,” the submission stated.

“In addition to boosting educational achievement, making quality ECEC accessible is a critical policy lever for increasing women’s workforce participation.”

The Equality Rights Alliance pre-budget submission called for the Government to build on the work of the 2021 Budget to increase the Child Care Subsidy to 95 per cent for low-income households (earning up to $80,000 per annum) and a flattened and simplified taper rate for the subsidy.

“Under this scheme, 60 per cent of families would pay less than $20 a day for child care,” the submission stated.

“ERA asks that the subsidy also apply to families with just one child.”

The ERA said these changes would cost $5 billion but deliver a boost to GDP of $11 billion a year.

“Therefore, for every dollar spent on subsidising child care, the government recoups more than double its investment through higher workforce participation,” the submission stated.

Childcare wins from last year

The 2021 Federal Budget made some progress towards more affordable child care.

The Government pledged to increase the Child Care Subsidy for families with two or more children aged five or under.

Starting from July, the subsidy will increase by up to 30 percentage points, taking the upper subsidy from 85 per cent to 95 per cent.

The annual subsidy cap of $10,560 was also removed.

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