30 March 2015

Is it financially feasible for you to return to work with kids in childcare?

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Mum and Work

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.

Are you looking for an adviser that will keep you up to date and provide guidance and tips like in this blog? then why now contact me at our Castle Hill or Windsor office in Northwest Sydney to arrange a one on one consultation. Just click the Contact us tab for our details or to request a call back.

Verante Pty Ltd is a Corporate Authorised Representative of Viridian Select Pty Ltd, ABN 41 621 447 345, AFSL 515762. This information has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on this information consider its appropriateness, having regard to your objectives, financial situation and needs.