kids

The new Child Care Subsidy is means-tested, and so it bloody should be.

This author is known to Mamamia and has requested to remain anonymous to protect their family’s privacy. 

If you’re not spending most of your income on people who aren’t you, how do you even know you’re a parent?

It’s just one of the things parents accept about parenting: kids are expensive, and they will regularly deplete your energy – and your wallets. (But it’s all worth it for those darling angels, of course.)

We are very lucky in this country that if you’re a parent, there are different sorts of government supports available, whether you work or not. In terms of child care, the Department of Education and Training has published this table to demonstrate what the new Child Care Subsidy, which comes into effect today, means for families:

This table shows the percentage of child care fees the Government will contribute based on a family's combined income. Source: https://www.education.gov.au
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It's also important to know that there will be no cap on the amount of Child Care Subsidy for families earning less than $185,710 per year. Currently, many families have their Child Care Rebate capped at around $7500 a year per child.

But, there's a big fat zero on that table, and it's something we need to talk about.

Families that have a combined taxable income of $350, 000 will get no rebate at all.

Is that fair enough? Yes.

Is it a disincentive for women in those families to work? It shouldn't be.

Here's why.

Firstly, let's take a look at the cut-off value: $351, 248 before tax. (Even after tax, that's a lot of money.) It's more money than most Australians earn in one year. According to the Australian Bureau of Statistics, "The Full-Time Adult Average Weekly Total Earnings in November 2017 was $1,628.10", which is approximately $85, 000.

So, undoubtedly, if your family has a combined income of $351 000, you are amongst the wealthiest families in Australia. And sure, it's your money, and you earned it. You deserve it.

Every single one of us wants a system that's fair to all. But the fact of the matter is, life isn't fair - and that's what our system acknowledges. That many Australians will work just as hard as a family with a combined income of almost half a million dollars, and never see anywhere near that sort of annual income.

And so, our entire tax system is built on this basic premise: with great wealth comes great responsibility. The more you earn, the more you are expected to contribute to taxes - a pool of money that supports the wider community.

And one of the ways you are expected to contribute financially is to pay for some things for yourself, so that there is more money in that pool.

We have Medicare thresholds, and most welfare payments are asset-based, so why not for child care?

Means-testing is actually a form of equality, so that there is enough to go around for everyone - not a punishment for the rich. It's a threshold that is being set for the greater good.

If the $350, 000 cut off means that one of the parents in a family is deciding whether it's "worth it" for them to work, because the cut-off means childcare fees will almost outweigh their potential earnings, that is still an extremely privileged position to be in.

If a parent is making that choice, there is still an enormous six figure salary as their back-up plan, that puts food on their table and houses their family. So if they make the decision that it's not "worth it" for them to work, that's a privilege that most Australians don't have.

And it's a huge indication of where resources need to be allocated.

There are, of course, non-economic benefits of work - the use of learned skills, career progress, the accrual of superannuation, and important role-modelling for their kids.

This becomes problematic for women with partners who don't value that - and there are many who don't. Many who are told, "It's not worth it for you to work." And whilst that is a great shame, it's also a different issue. That's someone else keeping a woman down. Society devaluing women in the workplace, and/or a potential financial abuse situation. That is a serious situation that needs to be addressed, and needs support from the community.

But if a woman is freely choosing to forgo the non-financial benefits of working because her family simply does not want to use their other resources to pay full fees for child care - then that is a choice.

It is not a situation created by the $350, 000 threshold of the Child Care Subsidy.

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