August 30th, 2022

Bringing forward Child Care Subsidy increase would benefit families and the economy.


Bringing forward Child Care Subsidy increase would benefit families and the economy

30 August 2022 – Making childcare more affordable sooner by bringing forward the Federal Government’s proposed changes to the Child Care Subsidy would help address critical workforce shortages and save low income families an additional $295, according to new analysis.

The report titled Bringing Forward Labor’s Changes to Early Childhood Education and Care Subsidies to Hasten the Benefits, was commissioned by Minderoo Foundation’s Thrive by Five initiative and conducted by Per Capita CEO Emma Dawson.

It shows that there would be multiple benefits to bringing Labor’s changes to the Child Care Subsidy forward to January 2023. It would enable workers currently in the workforce to increase their hours, create new opportunities for workers currently locked out of the workforce to re-enter the job market and bring cost of living relief for many families.

“Australia’s early learning and childcare system is in crisis,” Minderoo Foundation’s Thrive by Five Director Jay Weatherill said.

“Despite the fact that it’s absolutely essential to the healthy functioning of the economy, our childcare system has become outdated and expensive and subsidies have not kept pace with the cost of living.

“There are 102,000 parents, mostly women, locked out of the workforce because of the high out of pocket costs of childcare and the early years workforce is in crisis, with a shortage of 39,000 educators.

“The Labor Government has already committed to increasing the maximum Child Care Subsidy rate. This new report shows there are significant benefits for families and for economy to bringing the changes forward by six months.”

The report’s key findings are:

  • Low income families will be better off by a minimum $11.30 per week.
  • There is unlikely to be any impact to CPI as the reduction in childcare costs will largely offset any changes in CPI deriving from changes to spending patterns.
  • Only a 9.24 per cent increase in the budget for childcare is needed to bring forward the change.
  • The equivalent annual benefit to low income households is approximately $590.
  • The subsidisation will improve living standards and contribute to the alleviation of cost of living pressures.

“The urgent need to reform Australia’s early learning and childcare system, including bringing forward Labor’s Child Care Subsidy changes, should be the top priority at the forthcoming Jobs and Skills Summit,” Mr Weatherill said.

Thrive by Five’s three key asks for the Jobs and Skills Summit and upcoming Federal Budget in October are:

  • Bring forward to early 2023 the election commitment to increasing the maximum child care subsidy rate to 90 per cent;
  • Abolish the activity test; and
  • Fund an immediate 10 percent pay rise for early childhood educators and teachers.