What’s the story with child care costs?

The last week has seen a flurry of media releases and reports on the cost of child care and whether the new Child Care Subsidy (CCS) is achieving its goals of making childcare more affordable and boosting workforce participation. The conclusions contained in the media releases and reports often don’t seem consistent, and can raise more questions than they answer.

So who’s right? The short answer is: everyone, but some more than others. Let’s take a look at the data to explain.

The cost of child care

The Australian Government announced last weekend that ‘out-of-pocket child care costs for families are down 7.9 per cent’ since the introduction of the CCS on 2 July 2018. This is based on the Consumer Price Index (CPI) for the year to June 2019. The fall in costs is the logical consequence of the Government increasing the rate of child care subsidy for many working families. But let’s also bear in mind that the CPI is calculated using a survey of prices and a sample of households in the state and territory capital cities only. We’ll come back to this point in a moment.

In response, the Federal Opposition immediately pointed out that child care fees are continuing to rise. This is also correct. The Government’s own figures show that, in the year to December 2018, the average hourly fee for long day care rose by 4.8 per cent, and that hourly fees continued to increase (albeit more slowly) in the six months after introduction of the CCS.

The next piece of the puzzle comes in the form of regional data on child care fees. Figures released by the Australian Government show enormous variation in changes to child care fees, with hourly fees in many parts of regional Australia rising much faster than in the capital cities. To take one example, in the Brisbane CBD, child care fees increased by 2.2 per cent in the year to December 2018 – but in regional Gympie, the rise was 18.7 per cent. It’s no wonder that CPI figures – which only cover the capital cities – may fail to reflect the complexity of actual fee changes.

The effects of the new Child Care Package

Sometimes, numbers aren’t enough to tell the full story. In the same week that the CPI and child care fee data appeared, the Australian Institute of Family Studies (AIFS) released its Early monitoring report on the effects of the Child Care Package.

While AIFS was hampered by a lack of hard data (partly due to departmental delays), it did conduct surveys and interviews with families and services using the Child Care Package. The early evidence shows very mixed results: for example, around one-third of families reported lower child care costs after July 2018, but one-third of families were paying more, and another third experienced no change. AIFS cautions that the effects of the new subsidy system are still working their way through the system and ‘will take time to emerge’.

The AIFS report also highlights ongoing concerns about children who may be missing out under the new system, due to the effect of the activity test or poor administration of the Additional Child Care Subsidy. AIFS characterises these as ‘consistent and persistent concerns about the impact of the package on disadvantaged and vulnerable families.’

Over the next 12 months, the effects of the CCS and the Child Care Package on children, families and services will become a lot clearer, as winners and losers emerge. Keeping a close eye on the data will be crucial for those of us who want to ensure that early childhood policy stays focused on the best outcomes for children and families. You can help us keep track of the impact. Tell us what you see happening with the CCS and the Child Care Package in your early learning service. Contact us via: thespoke@earlychildhood.org.au.

Early Childhood Australia

Early Childhood Australia (ECA) has been a voice for young children since 1938. We are the peak early childhood advocacy organisation, acting in the interests of young children, their families and those in the early childhood field. ECA advocates to ensure quality, social justice and equity in all issues relating to the education and care of children aged birth to eight years.

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