How do Australian child care costs compare with other countries?

Blog Image for article How do Australian child care costs compare with other countries?

We all want the very best care for our children but there's no doubt that regular support from quality education and care providers comes at a price.

Depending on how much your family earns, the type of child care you use, where you live, how many children you have, and how many hours of care you require each week, you may find you're putting a significant proportion of your income towards child care.

Here we look at some key factors affecting the cost of care in Australia, and see how our child care outlay compares with other countries.

What are four things that affect your family's child care bill?

1. Combined income

As touched on above, your family’s income directly affects how much you pay for early childhood services since the Government's Child Care Subsidy is means-tested, as well as activity-tested.

This means that a family who earns up to $66,958 a year will get 85 per cent of their child care costs back, with a sliding scale for middle income families. While high income families, earning $351,248 or more, will pay full price for child care and receive no subsidy at all.

2. Choice of child care

The Child Care Subsidy also takes into account the type of care your family uses. There are different maximum hourly rate caps depending on whether you choose centre-based care, family day care, outside school hours care or in-home care, see here for more information. These caps represent the maximum amount the Government will pay per hour, with long day care attracting a higher subsidy than family day care.

Different child care providers set their own fees and there can be big disparities in pricing, depending on the type of care chosen. For example, where a preschool may charge $45 to $80 a day, a long day care centre may charge $70 to $185, and if you hire a nanny for eight hours, you could be looking at $136 to $280 for that time, with an agency fee on top.

3. Location

Where you live can also affect how much you are charged. Our Child Care Cost widget shows how much child care might cost in different suburbs, with in-demand inner city services likely to be more expensive than those in regional areas.

Travelling costs also add to your child care outlay, and the further you live from your child’s service, the more you'll be spending on transport.

There are also reports that some services are hiking up their fees above the rate of inflation, so if you're reliant on one of these because of where you live or work, then you'll be feeling the effect on your budget.

4. Family dynamic

The size of your family and the age of your children also affects child care costs, and for working families with several children, the cost of child care represents a significant outlay, even with the Child Care Subsidy.

As such, some families use grandparent care or au pairs to make child care more affordable where they require many hours of care each week for under fives and school-aged children.

How do Australian child care costs compare with other countries?

With the above factors driving up the cost of child care for many families, it can feel like we're paying a lot for our children's care – and that feeling is grounded in fact.

According to Prue Gilbert, founder of the Grace Papers, 'We are one of the higher countries when it comes to the cost of child care.' In fact, Australia is one of only four countries where more than 30 per cent of a couple's average income goes towards child care, following behind New Zealand, the UK and the US.

Ms Gilbert says that, according to an Organisation for Economic Co-operation and Development (OECD) report, "[Australian] parents are paying about 31 per cent of their combined income towards child care [while] the average around the world is about 14.5 per cent."

Out of the 36 countries in the OECD, Australia's child care outlay is only eclipsed by:

  • New Zealand, where couples on an average wage spend 37.6 per cent of their household income on child care
  • The UK, where couples spend 35.8 per cent of their income on child care
  • The US, where couples spend 31.8 per cent on child care

By way of comparison, Norway, Sweden and Finland have high levels of government expenditure on child care and families pay less:

  • In Norway, couples spend 6.3 per cent of their income on child care;
  • In Sweden, couples pay 4.1 per cent of their income (their government invests heavily in child care with its Educare system, meaning that even the wealthiest families pay very little); and
  • In Finland, couples pay 18.7 per cent of their combined income (with children not starting school until they're seven).

What is the broader effect of Australian child care costs?

Back on home soil, the onerous cost of Australian child care is having a flow-on effect, not just for families balancing child care fees with other costs of living, but for society as a whole, with more women working part-time and fewer children benefitting from quality early childhood education.

Ms Gilbert says that many mums are scaling back their workforce participation to about three days a week to ensure their family can access a higher rate of child care subsidy, while only 18 per cent of three-year-olds in Australia are in early childhood education, compared to 70 per cent across the rest of the OECD.

This is all sobering news, and if your child care costs feel high, it’s because they are. We're paying out a large chunk of our income compared to many other parents around the world.

Learn more child care alternatives and costs in the library and hopefully find a workable balance for your family. Good luck!



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