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Cost of childcare

We take a look at how a new report on childcare could make your life cheaper … or more expensive.

A big overhaul of childcare policy may by just around the corner. If you are a working parent on a low or middle income, life may be about to get a bit cheaper for you.

If, on the other hand, your pay packet is in the six figures, you may be about to get less help from the government in paying for childcare.

Recently, Social Services Minister Scott Morrison released the Productivity Commission’s final report into childcare and early childhood learning.

The report recommends a radical overhaul of the way the government funds childcare, including means testing subsidies and helping parents pay for nannies.

New policy for a new era

The report is based on the premise that mothers should be encouraged to work.

In the Productivity Commission’s (PC) words, while there is “a lot that is good” about the current early childhood education and care (ECEC) system, “the current ECEC funding system was largely designed to meet the needs of a different era and the series of incremental additions and amendments mean there is much scope for improvement”.

The ball is now in Mr Morrison’s court. In a statement, his department said:

“Now that the inquiry is complete, the government is taking time to consider its recommendations with a view to developing a new Families’ Stream. In the coming weeks, targeted consultation with parents and the sector will be held to road test options before any policy decisions are finalised.”

But assuming Mr Morrison gives the new plan the go ahead (and that is a big assumption), who will be the winners?

Low-income households

If you have a household income of $60,000 a year or less, then you are a big winner: the government would pay 85 per cent of your childcare. The rate would then steadily decrease as your income rises.

If you are one of the few households with an income of more than $250,000, the government would pay only 20 per cent of your childcare.

An important thing to note is that under the recommendations the government would pay the childcare provider directly, so you would never actually see the money. However, you get to choose the childcare centre.

Working mums

The point of these reforms is to make it easier for both parents to work. With this in mind, the PC recommends what it calls an ‘activity test’, which requires the parent to prove that she or he is working. If you work (or study) at least 24 hours a week, you qualify for a subsidy of up to 100 hours of childcare.

Rushing to pick your children up after school may also be less of a headache, as the PC also recommends more after-school care facilities at schools. It puts the onus on state governments, through public schools, to do this.

Nannies and au pairs

If Scott Morrison gives it the tick, the casual role of nanny could become a certified profession. The report recommends you be allowed to use government subsidies to pay for a nanny. However, you would only be subsidised for a qualified nanny, who would need to have similar qualifications to family day care centre workers.

If you prefer the more budget-friendly option of a foreign au pair, you are unlikely to get a subsidy. However, the PC also recommends relaxing the working holiday visa rules to allow au pairs to work the full 12 months, rather than just six.

The losers

Quite simply, if you are on a very high income, you will get less help from the government. While the Productivity Commission did not give a clear breakdown of how the subsidies would be graded, some reports have put the sweet spot at $160,000 a year. If you earn more than that, you could be worse off.

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