It’s around this time of year, February-March onwards depending on your circumstances, that most families are slugged with childcare fees twice what they are during the first part of the year.
The Child Care Rebate, 50 per cent of your childcare fee capped at $7,500 per child, tends to run out well before the end of the financial year for most families.
Child care costs are a critical issue for working families, and according to a report by the ABC analysing figures from the Education Department, it’s major factor in marginal seats.
That’s no surprise.
Affordable and quality child care is what allows (mostly) women to work and to support their families, as well as stay connected to the workforce and increase their future earnings power and superannuation.
It’s also a critical part of our nation’s productivity – if only one parent for each family works, it would have a massive downward impact on our economy.
But mostly, child care is just really bloody expensive and families are looking for a bit more help than they’re getting now.
Today, the ALP announced their child care policy.
The Coalition’s existing child care policy announced during the 2015 Budget won’t change between now and the election, a spokesperson for the Government confirmed to Mamamia today.
Here’s everything you need to know.
Simplifying the system.
Anyone involved in child care knows that the child care subsidies are complicated to understand, apply for and administer.
The Coalition’s policy rolls both the Child Care Rebate (available to all families with children in approved child care) of 50 per cent of fees capped at $7,500 and the Child Care Benefit (a means tested payment available to low income earners to provide further assistance) into one.
It applies a means test to that one payment for higher income earners. The means test kicks in at a family income of $65,710 (we’re not making that number up – that’s direct from the Department of Education. We know, it’s a bit strange) and tapers off gradually to a subsidy of 20 per cent for families with an income of $340,000 or more.
The Coalition’s policy removes the choice to have the rebate paid annually or quarterly to families or direct to early childhood education centres each fortnight, and pays the subsidy directly to child care centres. This is not critical but will be a change for some parents.
Labor’s policy does not propose reform to the payments system.
Mostly, it's just really bloody expensive and families are looking for a bit more help.
Increases to payments.
Both the Labor party and the Coalition are proposing increases to payments.
The Labor Party today promised to increase the cap on the Child Care Rebate to $10,000 per child. That's an additional $2,500 for each child to help families pay for early childhood education.
The Labor Party also promised to increase the Child Care Benefit, stating that low and middle income earners could expect up to an extra $31 a week. Depending on your circumstances, this would be mean recipients would be up to $3254 a year better off.
The Coalition policy also increases the payment to families. Their single payment will cover 85 per cent of the actual child care fees, with no cap, for families on up to $65,710 a year. The rate of the rebate decreases by 1 per cent per $3000 of family to 20 per cent for families on $340,000. Families on more the $180,000, the rebate is capped at $10,000 per child.
The Coalition's proposal rests on a new hourly fee cap. That is, their subsidy will only be paid on $11.55 per hour of child care fees, and won't be available on any child care fee over that amount. The rate is slightly less for occasional and family day care, and increases in line with CPI.
Timing.
The Coalition say their changes will commence in July of 2018, just over two years from now.
The Labor Party propose to implement their funding increases in January 2017.
Activity test.
The Coalition plans to strengthen the activity test for parents accessing child care assistance. In simple terms, parents will have to work or study more in order to access their proposed Child Care Subsidy.
Child care advocacy groups, including The Parenthood and Early Childhood Australia have expressed concern about the increased activity test, on the basis that early childhood education provides long term and ongoing benefits to children and the community. It's well known that the earlier children are included in an education setting the better off they are, and there are concerns that some children may become further entrenched in disadvantage by an increased parental activity test.
The Labor Party's announcement today doesn't address the activity test.
Keeping child care fees low.
The Labor Party policy announced today includes new measures to apply downward pressure on child care fees. They include mandatory reporting of child care fees, and making this child care fees publicly available to parents to compare and contrast. They also include independent price monitoring by the Australian Competition and Consumer Commission and new investigative powers for the Education Department to stamp out price gouging.
These are important measures to include, as the Coalition today highlighted that previous straight increases to child care payments saw accelerated price hikes to child care fees.
The Coalition says that the hourly fee cap included in their proposal is the key measure to put downward pressure on child care fees.
Confused?
Yep. Us too.
Here it is in simple terms. The Coalition is offering you more but says you'll have to wait for over two years to get it. The ALP, who say they'll get this done by January next year, is offering you more than you're getting now, but not as much as the Coalition.
Ultimately, families are crying out for help. With child care fees hitting upwards of $150 per child per day in Sydney and Melbourne CBDs and several years with no reform or extra assistance, whoever wins this election needs to prioritise child care for the good of kids, the economy and especially working mothers.