Analysis shows Labor’s child care plan rewards working families

Wednesday, 21 October 2020

New research by the Grattan Institute shows the significant financial barriers many Australian parents currently face to work full time.

Under Scott Morrison’s child care system, a family with two children in child care and a primary earner earning $100,000, the gain to the disposable income for the secondary earner to work a fourth day in the week is zero.

Under Labor’s child care plan, the same family will be better off by up to $2,100 per annum if the second income earner works a fourth day.

Current child care system            
                 
FTE salary
Primary earner / secondary earner
Disposable income net of childcare cost
Secondary earner works:
  Return from 4th day Return from 5th day
  3 days 4 days 5 days   $ % $ %
$60k/$40k 74,377 74,342 74,586   -35 0% 243 3%
$80k/$40k 80,588 78,990 79,002   -1,598 -20% 12 0%
$100k/$40k 87,080 87,120 87,539   39 0% 419 5%
$180k/$40k 128,503 126,460 121,115   -2,043 -26% -5,345 -67%
                 
$100k/$70k 97,651 100,394 101,669   2,743 20% 1,275 9%
$100k/$100k 107,562 113,336 111,978   5,774 29% -1,358 -7%
$180k/$180k 179,598 188,452 187,005   8,853 25% -1,447 -4%
                 
Labor’s Working Family Child Care Boost          
                 
FTE salary
Primary earner / secondary earner
Disposable income net of childcare cost
Secondary earner works:
  Return from 4th day Return from 5th day
  3 days 4 days 5 days   $ % $ %
$60k/$40k 77,309 78,739 80,691   1,430 18% 1,953 24%
$80k/$40k 84,435 84,607 86,634   172 2% 2,026 25%
$100k/$40k 91,842 93,957 96,696   2,115 26% 2,739 34%
$180k/$40k 133,398 134,388 135,296   990 12% 908 11%
                 
$100k/$70k 103,236 108,695 113,114   5,459 39% 4,418 32%
$100k/$100k 113,971 122,059 128,448   8,088 40% 6,389 32%
$180k/$180k 182,794 194,909 205,917   12,115 34% 11,008 31%

Notes: Primary earner works full-time. Two children, both require childcare. Every day of work for the second earner results in exactly one day of approved child care.
Source: Grattan Institute

This analysis confirms Labor’s child care plan will reward working families, and allow more second income earners, usually women, to work more and contribute to our economic recovery.

An Albanese Labor Government will introduce the Working Family Childcare Boost, which will:

  • Scrap the $10,560 child care subsidy cap which often sees women losing money from an extra day’s work;
  • Lift the maximum child care subsidy rate to 90 per cent; and
  • Increase child care subsidy rates and taper them for every family earning less than $530,000.

Importantly, Labor will keep working to fix Australia’s broken child care system, which currently locks out more than 100,000 families because they just can’t afford it.

The Productivity Commission will conduct a comprehensive review of the sector with the aim of implementing a universal 90 per cent subsidy for all families. The ACCC will also design a price regulation mechanism to shed light on costs and fees and drive them down for good.

The evidence is overwhelming that removing the financial disincentives for women to work more is great for families and great for the economy.

That is why Labor has a plan to fix it.

More News

Tuesday, 20 October 2020
ABC Capital Hill – Leppington land sale, child care, multicultural Australians
Monday, 19 October 2020
Doorstop Interview with Anthony Albanese and David Smith – Labor’s Working Family Childcare Boost
Thursday, 15 October 2020
Sky News Alan Jones – child care