Australian families struggling as they run out of rebate support
Australian families say they are delaying having more children and postponing buying homes as increasing numbers hit the Child Care Rebate cap and have to pay the full cost of care.
A survey of more than 2000 families, commissioned by Goodstart Early Learning found 55 per cent of respondents would do more work and study if the cap on the rebate was lifted.
More than half of the respondents had run out of rebate support before the end of June this year, highlighting a growing childcare affordability crisis that is gripping families as the childcare reforms continue to languish in Parliament.
Goodstart’s advocacy manager John Cherry said the passage of the legislation was becoming increasingly urgent with reforms likely to be pushed back to 2019 if the Jobs for Families bill did not pass both houses before Christmas.
The Child Care Rebate cap has been frozen at $7,500, 2008 levels, under successive governments, failing to take into account rising costs of living and stagnant wages over the same period.
More than 110,000 families, or about one in six in long day care centres, are expected to exceed the cap this year.
“This survey shows Australian families are struggling to meet the cost of childcare with more than half left without support because the rebate has not kept pace with their out of pocket costs,” Mr Cherry said.
“In 2008, the $7500 cap covered 50 weeks of childcare for a family using a typical service full time. By 2016, that has fallen to around 30 weeks of childcare.
“That means that families face a doubling of their out of pocket costs for many more weeks of the year, putting a serious strain on the family budget.
“The survey findings on the lives of more than two thousand families sends a clear message to Australian politicians that it’s vital the Jobs for Families childcare reform package is passed urgently.
“The Bill must be debated in the final weeks of this year to ensure Australian families get the increased help they need.
“Under the proposed new subsidy scheme the cap is removed for 85 per cent of families and the Government’s own figures show families on average will be about $30 per week better off.
“For a family earning $150,000 with a child in a typical child care centre five days a week, removal of the cap will reduce their out of pocket expenses by around $5000 a year, or $97 a week.
“The new survey shows some 60 per cent of families are struggling after reaching the $7,500 rebate cap weeks and sometimes months before the end of the financial year – reform is needed urgently.”
Most families hit the cap in April (22 per cent) with a further 19 per cent running out of support in either March or May.Hitting the cap in March for a family with two children in care five days a week paying the Australian average daily cost of childcare ($90 per day) means finding $14,400 for the quarter.
Conducted over a four week period in October* the survey found of the 2353 parents with children in childcare found many were struggling with the gap.
- 83 per cent of the 2,353 parents who responded were from working couples.
- 68 per cent of them had one child in childcare and a further 29 per cent had two.
- Most children attend childcare for five days (29 per cent) or three days (29 per cent) a further 20 per cent attend for four.
- 54 per cent of respondents hit the cap in the last financial year – most of them (60 per cent) in either March, April or May.
- 64 per cent of those families who hit the cap were forced to reduce their discretionary spending, cutting back on family outings, meals and entertainment.
- If the cap were removed 55 per cent of respondents said they would consider more work or study.
“While most families reported that they cut back their discretionary spending, others reported more difficult financial issues including struggling to pay their mortgage, education costs and household bills.
Others reported that they had been forced to stop savings for a home or delayed having another child,” Mr Cherry said.
“In good news for the Government, more than 55 per cent of respondents would sign up for more work or study if the cap were removed.
“This should spur the Government on to get its reforms through the Senate during November as the changes will be good for working families and for the nation.”
*About the survey:
Conducted during October 2016 the survey asked supporters of the Smart Start campaign www.thesmartstart.com.au , supported by Goodstart Early Learning, to answer a series of questions about the number of children they had in care, how many days they spent there, their family circumstances, if and when they hit the Federal Government’s rebate cap.
Total responses: 2426. 2353 had children in formal childcare. State figures – Qld – 689, Vic – 576, NSW – 532, WA – 213, SA – 128, Tas – 8 and NT – 5. No postcode supplied by 275 respondents
To estimate your rebate under the Jobs for Families bill, visit: https://www.goodstart.org.au/rebate-estimator