High childcare fees expected to hit families hard

IN JUST over a week, thousands of middle-income families will be hit with high child care fees if a new report is adopted.

The Productivity Commission will present Treasurer Joe Hockey with its recommendations for child care fee reform on October 31 and the outcome is looking grim for families earning a combined income of $130,000 or more.

Under the current system, every family can get a 50% rebate on child care fees of up to $7500 a year.

All of the four proposed changes highlighted in the PC draft report released in July call for means testing to determine how much each family would receive.

National organisation The Parenthood has collated modelling around the two recommendations it believes are most likely to be adopted.

Both are means tested.

The first option scales rebates from 90% for those earning $40,000 back to 30% for those earning $300,000.

The second option also starts at 90% but gradually declines to 0% at $300,000.

The modelling highlights how much a family would be out of pocket if their child was in day care three days a week.

In the 90-30 model, a family earning a combined income of $300,000 and sending two children to a centre charging $80 a day would be almost $35 a week worse off.

This escalates to $80 a week under the 90-0 model.


A family earning $120,000 with two children in day care would be $8.62 a week worse off under both models.

The Parenthood acting executive director Jo Briskey said anything less than what was already available to families was unacceptable.

"These are not CEOs of big companies, these are clinical nurses and engineers, professional working people, who will be hit hardest," Ms Briskey said.

"For a number of families the cost of child care is second only to their mortgage in terms of family budget."

Meanwhile, University of the Sunshine Coast associate professor of social work Christine Morley said the cost to families would go far beyond financial strain.

"This might force working parents to make the decision to give up work to stay home," Dr Morley said.

"This would most likely affect women and it may affect whether people can afford to continue to study and better themselves.

"This could result in significantly higher rates of mental illness and potential suicide, but maybe this government doesn't care about that."

Dr Morley said any decrease in the rebate made no economic sense as families with already overstretched budgets would spend less.


How will the linear options affect you?

  • The 90-30 linear option gives a higher subsidy for families at all incomes over $60,000 than the 90-0 linear option.
  • Under the 90-30 linear option, families on incomes of $220,000 will receive a 50% subsidy rate. Families below this income will receive a higher subsidy rate and those above will receive a lower rate.
  • Under the 90-0 linear option the 50% subsidy rate applies to families with an income of $193,000.

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