The Cost of Childcare in Australia

The Coalition has proposed a new paid parental leave scheme, but will that really address the problem of balancing work and children? 

Sao Khemar Wadi never expected to be out of the workforce this long.

Like many soon-to-be mothers, she took maternity leave during her pregnancy with her first child – a little girl named Mae. But Mae is eleven months old now, and Sao misses the successful practice where she previously worked as a GP.

There’s just one thing stopping her from returning to her job: the waiting lists for child care centres. Until a spot opens up, Sao has no choice but to stay at home.


Sao Khemar Wadi and her daughter Mae. Source: Frances Vinall

According to Care for Kids, childcare waiting lists are longer in NSW and Victoria than any other state. In NSW, for example, a fifth of parents sit on waiting lists for over a year. Living in the inner city, and needing to drop off kids who are baby and toddler aged, are also barriers to accessible childcare.

Sao’s been on a waiting list for seven months already, and doesn’t know how much longer it will be until she’s accepted. According to her, a lot of mothers organise their spots when they’re only three or four months pregnant.

“I didn’t even think of that!” she exclaims.

Along with issues of accessibility, childcare can also be expensive, to the point where for many parents, returning to work isn’t worth it.

During their time in power, the Labor government upped the childcare rebate from 30 per cent to 50 per cent of out of pocket costs covered. But according to Live in Victoria, the average cost for centre-based childcare is still 60 to 120 dollars a day.

This means that even with the child care rebate, parents can pay an upwards of $300 a week to have one child in a centre. Double that cost for two kids, triple for three, and it’s clear why many parents don’t see returning to work to be a sound financial decision.

However, accessible and affordable childcare can have positive effects in several spheres.

“Having more children in care is not only of greater benefit to the children but it also increases the productivity of the nation,” says the spokesperson for Early Childhood Australia (ECA), the peak national organisation for young development.

“The first six months are crucial to attachment and bonding between a mother and child. But then you’ve got four and a half years until the child reaches school, and in those years brain development is really significant, they need a proper education.”

“It is an issue, and I think it’s an issue that government is certainly very aware of,” he says.

Mae is with her mother when I speak to Sao at the local park, and she’s the star of the show. Grabbing at the recorder, putting her mum’s phone in her mouth, or burying her head into Sao’s lap, it seems she’ll do anything to interrupt the conversation.

Sao describes Mae as a “bundle of energy,” and it’s clear from her fond smile as her daughter scrambles all over the picnic blanket that she can’t get enough of her baby girl. After a year of being at home, however, she’s starting to get itchy.

“It’s gotten to the stage where I think I need something outside of the baby,” she explains. “I’d like to work a couple of days a week, just for something different for my brain.”

Having Sao working would also contribute to the country’s production as a whole. According to the Grattan Institute, investing in childcare is the single best way to increase female participation in the work force – which would in turn invigorate Australia’s economy.

The Institute estimates that if just 6% more women were working in Australia, our GDP would increase by 25 billion dollars a year. In fact, its research has shown that increasing female participation is in the top three priorities for achieving economic growth in Australia.

“If $25 billion dollars doesn’t instigate change, what will?” asks Yolanda Vega, CEO of the Australian Women Chamber of Commerce and Industry.

“We’ve had the discussion, we’ve got the figures, it’s now time to take action for the good of all Australians.”

Vega echoes the opinion of many writers and academics when she insists that investing in childcare must be done in combination with expanding the paid parental leave (PPL) scheme that Prime Minister Tony Abbot has promised.

Abbott’s proposed initiative offers mothers six months at full pay, capped at a salary of $150, 000 a year. If the father is the baby’s primary carer, he will receive the payment at the mother’s salary.

It’s a sharp increase from the scheme put into place by the Labor government, in which the primary carer receives 18 weeks pay at minimum wage.

“Every working woman will be better off under this policy,” Abbott said at the time of its unveiling. “It shows that the Liberal party gets the reality of the modern family, and the reality of the modern workforce.”

Treasurer Joe Hockey has described the scheme as “the biggest shot in the arm for female job security” in modern times.

It’s aimed at promoting the economy, through greater female participation in the workforce – as well as encouraging population growth in a time when we are steadily ageing.

The amount of Australians aged 65 and up is expected to rise from around 13 per cent to around 25 per cent by 2042, thanks in large part to the declining birth rate. As the segment of the population out of the workforce grows, so too will the strain on government resources.

Screen Shot 2013-11-02 at 12.07.41 PM

Projected increase in government spending due to the ageing population. Source: Australian Government Treasury, Australia’s Demographic Challenges

Using its resources to combat this issue is one of the primary challenges of modern government, and stimulating the birth rate is a logical way to balance the increasing presence of the elderly in Australia.

However, Vega says that the 5.5 billion dollar a year scheme will also lead to more strain being put on the childcare system.

According to her, a more comprehensive approach is needed to truly stimulate the economy.

“A paid parental leave scheme could possibly exacerbate the problem currently experienced with childcare: it’s unaffordable and inaccessible,” says Vega.  “The more children there are, the higher the demand and the price. Today some women have to wait as much as five years to get their child into care.”

“If a PPL scheme costing the tax-payer $5.5 billion is introduced, the childcare system must be changed and holistically fixed prior to the increase of births that will come with the PPL.”

It’s not just advocacy groups who hold that opinion. Research by Early Childhood Australia shows that a majority of Australians also support increasing childcare spending over a more generous paid parental leave scheme.

“During the 2013 federal election we commissioned a Galaxy poll that looked at whether ordinary Australians thought that paid parental leave would be a better outcome for families with young children than affordable child care,” ECA’s spokesman says. “The results were unanimously in favour of affordable early childhood education.”

“If the government’s intention was to force a bit of a baby boom and to have more people having children, more children going into an already stretched sector is going to have a pretty big impact over the next couple of years,” he continues.

“So we’d like to see that addressed, alongside a proper paid parental leave scheme.”

Tony Abbott has said the Paid Parental Leave scheme will come into effect on the 15th of July next year. He has also promised a Productivity Commission review of childcare for some time after the 2015 budget is decided.

In the mean time, Sao Khemar Wadi will keep waiting for her spot in a centre.

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