The Productivity Commission has released new research on childcare in Australia, which is estimated to cost families around 9% of their disposable income across the income scale, despite $5.2 billion of subsidies from the Federal Government every year:
Families across the income scale with one child in full-time long daycare spend about 9 per cent of disposable incomes on fees after subsidies. Out-of-pocket expenses are almost double that for families with two children in full-time care.
The issues paper says many families have difficulty paying for childcare despite recent increases in direct subsidies to parents. Federal support for childcare has grown from $1.5 billion a year in the early 2000s to an estimated $5.2 billion this financial year…
The commission says fees for long daycare rose an average of 7 per cent a year in the decade to 2011-12, well above inflation. However, an increase in childcare assistance in 2008 meant that average out-of-pocket costs to families in 2012 was similar to 2008.
I have often wondered whether many dual income families in Australia are that way through choice, or because they require the extra income in order to make ends meet and pay-off their jumbo-sized mortgages. Certainly, I know of a few families in my age group where the mother has been forced to go back to work early, and send their children to childcare, because they cannot afford to live on just one wage.
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To the extent that families are being forced to work longer and harder than they otherwise would if homes were affordable, then surely this is a negative for the family health and well being, let alone that of their children?
Overall, it’s hard not to view expensive housing as a blight on families. It increases their cost of living, forcing them to work longer and harder than would otherwise be the case, with particularly pernicious impacts for those families lower down the income scale.
It is also a reason why I am such a strong advocate for freeing-up the supply-side, as well as winding back tax breaks like negative gearing. It would be a lot easier for people to cut back on work if they weren’t burdened paying-off some of the world’s biggest mortgages or paying high rents.
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
