This is one of the questions we get asked by clients and there is no simple answer so we often rely on research to guide us and the AMP.NATSEM Income and Wealth Report Issue 35 – Childcare Affordability in Australia is a good source of background data on the costs and support available and case studies.
The report provides unique research into the affordability of child care in Australia with an overview of the industry in Australia, trends through time, international comparisons and a regional perspective on child care costs and affordability. The report finds that child care costs have increased dramatically over the past 10 years but due to government benefits we find that the out-of-pocket costs remain well contained for families but at a significant cost to the Government.
The report considers the difficult decision that parents make in returning to work and we show that returns to work for a low income mother can be as low as $3.45 per hour once the loss of government benefits, taxation and child care costs are considered. The report finds that the most unaffordable child care is in the Sydney CBD area and some mining communities where the daily rate can be as high as $170 per day.
The least expensive child care is in North Queensland and Brisbane has the most affordable child care of capital cities. The child care benefits system provides significant relief for parents but a larger share of the benefits are received by relatively high income families. The report considers an alternative child care policy of making child care payments tax deductible and the report finds that relative to the current system all families would be worse off but low and middle income families would be significantly disadvantaged.
One of the conclusions to note was:
From a fiscal perspective, women who have children in formal child care are paying $7 billion in taxes and by working save the Government through lower pensions, allowances and family payments.
Taking a long-term perspective would suggest in spite of the high costs most women will ultimately be financially better off by staying in the labour market and using quality child care.
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