Researchers at the Grattan Institute say this will help some families but not improve affordability for most and, as always, it’s complicated.
The $1.7 billion is over three years – a 6% increase on current expenditure of $9 billion.
The policy has two main components.
First, it drops the “annual cap” that limits the total yearly subsidy to $10,560 per child for families with combined income of more than $189,390. After that – generally if they have their children in care for four or more days a week – they pay the full cost of care. These costs are often a big disincentive for women with high-earning partners to work more than three days a week.
Second, it boosts the subsidy for second and subsequent children in care by up to 30 percentage points (capped at 95%). This means families currently eligible for a 50% subsidy would now be eligible for an 80% subsidy on their second child if both children are aged under six. Older children using after school care are not eligible for any extra subsidy.
This will reduce fees for families paying some of the highest out-of-pocket childcare care costs – those with multiple children in long day care.
It’s not a game-changer but:
Overall, the Coalition’s policy is a helpful and well-targeted package that tackles some of the worst out-of-pocket costs and workforce disincentives. It will mean a real improvement for up to 270,000 families.
What’s missing is support for all the other families using child care. Almost 1 million families now use child care, and many would like to work more if they could afford to do so.
A broader policy supporting more families would have much larger and more widespread economic benefits. Of course, it would cost more too, but our research shows such an investment can be expected to deliver a boost to GDP of at least twice the cost.
This is a step in the right direction, but much more needs to be done to create a system that truly supports women’s workforce participation and long-term economic security.
See here for the Women’s Agenda take on the package.
It’s been a rough year for families, particularly for women when it comes to childcare. Australia can and should do better than this.