Child Care

The Commonwealth’s two main funding supports for child care are the Child Care Benefit (CCB) and the Child Care Tax Rebate (CCTR). The major parties have indicated that they will continue to provide these main funding supports, albeit with some modifications.

Families can claim up to 50 hours of CCB for approved child care if they are: working, looking for work, involved with volunteer work, studying or training, or if they have a disability or are caring for a child that has a disability. Families are able to claim up to 24 hours per week of CCB without having to pass the work/study test.

Families who earn less than $35 478 a year (or families on income support) are eligible for the maximum rate of CCB, which is currently $168.50 per week for one child. This amount rises for families that have additional children in care. Part rates of CCB are paid for families with incomes higher than $35 478 per year, and there is a minimum rate of CCB (up to $28.20 per child per week) for families who have incomes in excess of $108 434 (with one child). Higher income rates apply for families with more than one child.

The Child Care Tax Rebate allows families with children in approved care to claim, through the tax system, 30 per cent of out-of-pocket child-care expenses. The ‘out-of-pocket’ refers to the amount that families have to pay themselves after their CCB entitlement is taken into account. Families first began to receive the 30 per cent rebate when they finalised their 2005–06 taxation returns, and have been able to claim it at the end of each financial year since then.

Affordability

In recent years, child-care fees and costs have risen well in excess of the Consumer Price Index, making it difficult for many families to afford care. The Howard Government recently increased the subsidies available via the CCB by 10 per cent and, in 2004, it introduced the CCTR. However, affordability has continued to be an issue for many families. During the election campaign, the Australian Labor Party promised to increase the CCTR to 50 per cent (up from the present 30 per cent), and this could help families to afford care. A danger with increasing these various forms of subsidy is the upward pressure they may put on child-care costs. It may be that some sort of ‘price justification’ process may help in this regard.

Distribution of places

In many cases, there are child-care places available, but they are not in the areas where families need them. Another problem is that rural and remote areas often do not have enough children wanting child care to make a child-care service viable. While the Commonwealth provides some resources to help in these areas, more could still be done in terms of capital funding and ‘seed support’ to help establish services and maintain viability.

Flexibility

Additional flexibility in the child-care system would help many parents, particularly shift workers and single parent families, to obtain the care they want. Additional in-home care and more long day care and family day care outside of traditional hours would help in this regard. Co-locating child-care centres at or near schools (as Labor has promised) would be a step in the right direction and help parents avoid the problem of ‘double drop off’.

Child-care workforce

There is a shortage of qualified child-care staff across many parts of Australia. Salary and wage levels in the sector are not high enough to attract sufficient numbers of workers, and because wages and conditions in child care are essentially a state and territory responsibility, it is difficult for the Commonwealth to alter this. During the election campaign, Labor promised to provide $73.5 million over four years for initiatives to improve the qualifications for child-care workers.

Alternative types of support

Various quarters have called for alternative types of support for child care. In particular, there have been calls recently to make child-care costs tax deductible. The recent House of Representatives Standing Committee on Family and Human Services report, Balancing Work and Family (December 2006), recommended that working parents should have the choice between claiming the CCB and CCTR, as at present, or claiming work-related child-care costs as a tax deduction—either by making a claim at tax-return time or via salary sacrificing arrangements. The major parties have so far avoided going down the full tax-deduction route for child care, essentially because it would be more advantageous to high-income families.

Library documents

Greg McIntosh, ‘The New Child Care Tax Rebate’, Research Note, no. 3, Parliamentary Library, Canberra, 2005–06.

Documentation

Steering Committee for the Review of Government Service Provision, Report on Government Services 2007, Productivity Commission, Canberra, 2007. See Chapter 14 and attachment.

Australian Institute of Health and Welfare, Australia’s Welfare 2005, AIHW, Canberra, 2005. See Chapter 3.