License article

New figures show income of parents goes backwards when children are in care

A woman on a low income with two children would lose almost her entire wage if she put her children in care in order to return to full-time work, according to new research.

The study by the National Centre for Social and Economic Modelling was commissioned by non-profit childcare giant Goodstart Early Learning, which is calling for increased subsidies to cover the cost of care.

It comes after the union representing childcare workers, United Voice, urged the federal government to maintain quality standards ahead of Tuesday's release of the Productivity Commission's draft report into the sector.

The NATSEM data found women on the minimum wage of $43,000 would be the most vulnerable to any reduction of the means-tested Child Care Benefit, or the Child Care Rebate, which is not means-tested, but capped at $7500 a year.

The figures show that a woman on $43,000 working full-time would retain 36 per cent of her income with one child in care, but that drops to just 1 per cent if she has two children in care.

A woman earning the average female income of $66,000 would keep 44 per cent of her income with one child in care, and 15 per cent with two children in care.


Goodstart Early Learning's advocacy manager, John Cherry, said the government made more in taxes and saved more family benefits payments than it spent in childcare subsidies when a parent returned to work.

"Increased investment in childcare assistance for low-income families will save the government many billions of dollars in the longer term and boost Australia's productivity and economic growth,'' he said.

NATSEM figures show that women with children in care pay $7 billion in taxes each year, exceeding the $6 billion paid towards childcare subsidies.

Subsidies have not kept up with the cost of childcare over the past decade, with out-of-pocket expenses rising from 17.5 per cent of fees in 2004 to 25 per cent in 2014, or $28.60 a week.

Australian families have the highest out-of-pocket childcare costs of any country in the OECD.

"Australia's subsidies for childcare are well below those of most other developed countries," Mr Cherry said.

"This is contributing to our low level of female workforce participation and denying too many children from low-income households the opportunity to access quality early learning."

United Voice has also raised concerns about the potential erosion of quality under any reforms.

The Quality Matters survey of more than 1500 educators conducted by the union found that more than 90 per cent had either attained or were working towards a formal qualification, and the majority believed a roll-back of qualification requirements and adult-to-child ratios would damage the sector.

David O'Byrne, the union's acting national secretary, said any reforms should focus on improving the sector.

"Quality for children must be at the centre of all government decisions on early childhood education and care," he said. "Quality cannot be negotiable."

Jemma Carlisle, general manager of childcare at the University of NSW, said workers would leave the sector if quality was diminished.

"It's disappointing to think the current government would consider rolling back any improvements in the sector,'' she said.