Thought childcare was expensive? Out of pocket expenses rose 48% in 6 years

Thought childcare was expensive? Out of pocket expenses rose 48% in 6 years

More of us are using formal childcare in order to participate in the workforce, yet childcare is still becoming less affordable.

That’s the verdict on the childcare system in a new report by the Centre for Independent Studies.

And it makes clear that the government funding injection the childcare system has had recently is not enough to fix its affordability and accessibility issues. As we’ve written about previously, the most recent changes to the childcare system has seen some women actually reducing their days in the workforce.

The CIS finds the system across Australia is “uneven and fragmented”, noting excessive wait times and rising out-of-cost expenses as being problematic.

Some areas in Australia are experiencing an oversupply of childcare, particularly in urban areas, while other areas are undersupplied. Parents are waiting up to two years to secure spots for their children under the age of two

And out-of-pocket expenses have been going up, significantly. The analysis found a massive 48.7 per cent rise in such costs in the six years from 2011 to 2017.

Taxpayer subsidies have not done enough to contain the price growth, and childcare fees have been growing well above inflation levels — increasing 20.7 per cent in real terms in the six years until 2017.

The study finds that around 50% of young children are attending some kind of childcare — including anything from centre-based care to informal arrangements.

But more children than ever are now in formal childcare, which means that it’s essential that governments get the fight policies in place to ensure the system works for parents.

The report finds that increased regulation is driving up childcare costs, particularly around minimum staff-to-child ratios and qualifications standards for childcare workers. While this has seen fairly significant growth in the childcare workforce, with more than four fifths of childcare contact staff now having relevant qualifications, it’s come at a cost — including financial and time costs for those obtaining the qualifications.

“There is also an inherent tension at work in current government policy: using one hand to reduce childcare costs through price subsidies, while using the other hand to drive up costs through a complex regulatory system,” writes Senior policy analyst Eugenie Joseph in the report.

So what can be done?

The report argues a more flexible approach to regulation is needed, included a decision made on whether the primary policy objective of supporting childcare is to boost female workforce participation, or to improve the early education of children.

The CIS also recommends that COAG revisit the recent Productivity Commissions findings and recommendations to simplify, remove or relax some elements of the National Quality Framework staffing and qualification rules.

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