Families with one child in full-time day care are devoting about 9 per cent of their disposable incomes to childcare fees even though the federal government spends more than $5 billion a year subsiding parents.
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A new Productivity Commission issues paper says families earning $35,000 a year with one child in long day care for 50 hours a week are receiving nearly $18,000 a year in government assistance. But they are still spending 9.1 per cent of their disposable income on childcare. Without government assistance they would be spending 40 per cent of their income on childcare, the paper says.
Families across the income scale with one child in full-time long day care spend about 9 per cent of their disposable incomes on childcare fees after subsidies. Out-of-pocket expenses are almost double that for families with two children in full-time care. The issues paper says many families have difficulty paying for childcare despite recent increases in direct subsidies to parents. Federal support for childcare has grown from $1.5 billion a year in the early 2000s to an estimated $5.2 billion this financial year. The paper is the first publication from a commission review of the childcare sector ordered by the Abbott government.
The paper highlights concerns about excessive regulation of childcare. Even though a new national quality framework was adopted in 2012 ''there are concerns in the sector about the cumulative impact of regulation and the ability of services (particularly smaller operators) to cope with new regulatory requirements'', it said.
However, childcare experts have warned that any push to reduce regulation, especially the level of staff training or educator-to-child ratios, could seriously compromise the quality of childcare services.
The commission was asked to recommend ways to improve childcare, although the cost of any changes must remain broadly within the government's existing financial commitment to the sector. The review will canvass whether support should be extended to childcare not now subsidised by governments, including nannies.
The commission says fees for long day care rose by an average of 7 per cent a year in the decade to 2011-12, well above the rate of inflation. However, an increase in childcare assistance in 2008 meant that average out-of-pocket costs to families in 2012 were similar to 2008. Nationally, the average fee for long day care and family day care was just over $7 an hour in the March quarter 2013, before subsidies.
