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Childcare cost barriers and the effects on working mothers

· Emily Clifford,Childcare,Subsidies,Analysis

With high living costs, unaffordable housing prices and stagnant wages in Australia there is continued pressure for dual incomes within a household and increasing dependence on paid care so that both parents can participate meaningfully in the workforce. However, the high cost of childcare creates significant barriers to employment, especially for women who statistically earn less than men and remain the primary care-givers.

According to the World Economic Forum, Australians spend 15% of their income on care, ranking amongst the most expensive in the world. In both Victoria and New South Wales, the average weekly cost of care is $490 per child. Childcare in the Australian Capital Territory continues to hold the nation’s highest weekly rate at $560 per child.

The expense of having children in high cost care is a particularly important issue for women as, due to the national (full-time) gender pay gap remaining at 14.1%, with women on average earning $239.80 per week less than men, more women are likely to sacrifice work for childcare responsibilities. According to the Australian Government Workplace Gender Equality Agency, women on average earn approximately $1455.80 per week, or the equivalent cost of having three children in care. care. The expense of having children in high cost care highlights the tension between professional and family life for working mothers. Legacy social norms and expectations in heterosexual households that the mother will be the primary care giver whilst the father remains at work have compounded the likelihood of women staying at home.

In July last year, the Australian Federal Government amalgamated the existing Child Care Benefit and Child Care Rebate to create a streamlined ‘Child Care Subsidy’ with the promise to make the growing cost of care more affordable to Australian families. The Child Care Subsidy (‘CCS’) is a single, mean-tested salary, targeted in favour of low-middle income earners (and single parent families) designed to streamline payments that go directly to child care providers, with parents paying a ‘gap’ between the fee charged and their entitled subsidy amount. The $1.6 billion-dollar package was designed to create significant savings per household, ensuring that families earning a combined amount of $186,958 or less per year would not be subject to an annual cap on the amount of CCS they can access. To further support low income earners, according to the combined family income test, families earning under $66,958 per year are intitled to a subsidy rate of 85%.

The Australian Labor Party has, in the lead up to the Federal Election this year, announced a $4 billion child care package to reduce fees, particularly for those on lower incomes with families earning up to $69,000 likely to receive their childcare for free.

While progress has been made, Australia needs to continue to focus on creating greater access and affordability for working mothers, particularly low-income earners, who want to work and who feel the financial burden of this care the most. In addition, policy makers must continue to bridge the gender pay gap, challenge the current status quo and develop innovative ways in which workplaces can become more flexible, progressive and inclusive spaces so that the choice for women between work and family can be more easily made in absence of significant cost barriers.

Emily Clifford is a Policy Analyst at FPL Advisory.

FPL Advisory is a team of specialists resolving risks and creating opportunities with respect to government. We work with public sector and corporate clients to execute strategies for owning and managing change.

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