An evaluation of the new Child Care Package

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  Published on Wednesday, 16 October 2019

An evaluation of the new Child Care Package

Library Home  >  Cost of Child Care
  Published on Wednesday, 16 October 2019
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It's been more than a year since the government introduced its Child Care Package, complete with a single means- and activity-tested Child Care Subsidy, and an Additional Child Care Subsidy to support disadvantaged Australians.

The aim was to create a simpler, more targeted child care payment system that would benefit low and middle income families, boost workforce participation and break down barriers to access, so the big question is – how successful has the new system been?

To answer this, the Australian Institute of Family Studies (AIFS) has evaluated the Child Care Package and released its Early Monitoring Report, with a final report due in 2021. You can read the full report here, but let's look at some of their key findings in relation to families.

What do parents think about the new Child Care Package?

To understand parents' experiences and impressions of the new Child Care Package, the AIFS conducted three different surveys of families and drew on data provided by the Department of Education and Training and other sources.

While many early childhood education and care services felt that the introduction of the package was 'onerous', the AIFS found that parents generally felt prepared for the changes.

The majority transitioned smoothly to the new system, and the AIFS concludes that, 'On balance, [families] consider the package positively, with 40.7 per cent describing it as being mostly or entirely positive, although 23.0 per cent considered it to be mostly or entirely negative.'

Are families now paying more or less for child care?

There were always going to be winners and losers under the new Child Care Package because of differences between families' income and activity levels, and it will take time to truly gauge how child care costs have changed.

However, the AIFS' Early Monitoring Report indicates a three-way split between families' experiences, with 'About one in three reporting they paid about the same amount in child care costs in November as they did prior to the introduction of the package, about one in three reporting lower costs and about one in three reporting higher costs.'

Cost increases were felt more strongly by high-income families, and when the AIFS looked at parents' child care costs from pre-July to November 2018 they found that:

  • 42 per cent of low-income families (earning under $65,000) were paying less under the new system, with 21 per cent of them paying 'a lot less' for child care.

    That said, 24 per cent of low income families reported paying more, with eight per cent of them paying ‘a lot more.’
  • Among middle-income families (earning $65,000 to $170,000), 32 per cent said they were paying 'about the same', 39 per cent were paying less and 28 per cent were paying more.
  • When it came to high-income families (earning over $170,000), 65 per cent said they were paying more, with 35 per cent of that group paying 'a lot more.' Only 10 per cent were paying less.

However, though many high-income families suffered under the new system, it is worth noting that the majority of child care using households are classified under a low or middle income.

According to the Department of Education and Training, three in four families earn less than $170,000 and, overall, the AIFS found that, 'A strong majority of families on incomes below $170,000 reported they were paying about the same or less than they had pre-July.'

Saying that, data was limited for the Early Monitoring Report and the new Child Care Package might not have been the sole cause of a family's increased or decreased costs. Changes to fees charged by their service and changes in their choice and use of child care may have also impacted their budget, and it will be interesting to read the AIFS’ Final Report in 2021.

Have many families changed their use of child care or workplace participation under the new system?

Although the government hoped to erode barriers to child care and increase parents' participation in the workforce, the AIFS says that, 'To date most [families] report no changes in their use of child care, nor in their level of engagement in employment'.

According to the report, almost 71 per cent of parents hadn't made major changes to their formal child care arrangements, though some had shifted to grandparent care and 14 per cent of families had changed their child care because of cost.

Cost-driven changes played out in different ways, depending on each family's income. For example, one high-income family hired a nanny as a cost-effective alternative to long day care, while a middle income family put their child in care for an extra day because of an increase to the Government cap.

The new system has also seen some lower income families cutting back on child care. According to the ABC, Kids Village Early Childhood Centre saw 20 per cent of its families dropping out when the single Child Care Subsidy came into effect.

The centre's Assistant Director, Cassandra Radford says, 'A lot of our families went from having 100 hours access down to having only 24 hours which meant that children who could come four days a week were only able to come one day a week … The families in the [south of Brisbane] area can’t afford to pay the full price fees.'

When it came to parents' involvement with work, study and other activities, the new system did not have a drastic effect. In fact, according to the AIFS, 77.4 per cent of families said the new Child Care Subsidy had had 'no impact,' 14 per cent said it had impacted their work and 4.8 per cent said it had impacted their study.

In summary, this Early Monitoring Report gives us an initial sense of how the new Child Care System has affected families. While it's apparent that some have profited from the changes and some haven't, the AIFS says that it's, 'Too early to draw any significant conclusions.'

Their Final Report will analyse more data and bring us firmer findings, but in the meantime, we hope you find a child care arrangement that suits your family and your finances.

To search for quality child care in your area and compare costs, just click here.

This child care article was last reviewed or updated on Monday, 30 December 2019

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