As parents, we understand that finding quality and affordable childcare is a top priority. However, the increasing costs of traditional childcare options can often place a significant burden on the financial well-being of families. Fortunately, there is a flexible alternative that offers both cost-effectiveness and personalized care for your little ones. In this article, we will discuss the changes in the Government Child care Subsidy based on income and introduce Au Pairs as a viable solution to help alleviate the financial stress associated with childcare expenses.
Understanding the Government Childcare Subsidy:
As middle and high-income earners with children aged 7 years and younger, it’s important to be aware of both the Child Care Subsidy Increase and the simultaneous rise in childcare costs. The Child Care Subsidy program provides financial support based on income and care requirements, which can significantly reduce out-of-pocket expenses for eligible families. However, it’s crucial to note that while the subsidy increases, childcare costs have also been rising across Australia, potentially resulting in higher out-of-pocket expenses for parents.
Challenges of Rising Childcare Costs:
Simultaneously, there has been a general trend of childcare costs increasing across the country. According to a recent report [source: abc.net.au], childcare fees have been on the rise due to increased Child Care Subsidy (CCS) rates. This trend has been out of control to such an extent that ACCC launched a watchdog to analyse cost increase practices. ACCC interim report, published on July 5, 2023 confirms that childcare fees rose faster than inflation and wage growth during the past four years, rising by between 20 per cent (for centre based day care and outside school hours care) and 32 per cent (for in home care) as highlighted in the table below.
Table: Childcare fees are rising. ACCC analysis of ABS and Department of Education administrative data. July 5, 2023. URL: https://www.accc.gov.au/system/files/Childcare%20inquiry%20-%20Interim%20report%20-%20June%202023_0.pdf
The number of family day care and centre based day care services charging above the hours rate cap (aka family pay 100 per cent out of pocket of that amount) has doubled since 2018.
Table: Childcare inquiry 2023. National average fees and out of pocket expenses. July 5, 2023. URL: https://www.accc.gov.au/inquiries-and-consultations/childcare-inquiry-2023/june-2023-interim-report
As childcare centers receive higher subsidies from the government, some have raised their daily rates. For example, in a study mentioned in the article, it was found that the daily rate for childcare has increased by an average of 5% to 10%.
Considering these developments, it is crucial for parents to carefully evaluate the cost-effectiveness and flexibility of different childcare options. While childcare centers offer reliable care, the increased fees might strain family budgets. On the other hand, utilising the Child Care Subsidy for approved in-home care, such as Au Pairs, can provide greater flexibility and potentially reduce expenses.
The subsidy amount is calculated based on your family’s combined income and activity level. The following table provides an overview of the subsidy rates based on income thresholds:
Table: Services Australia website. Your income can affect it. Last viewed July 2023. URL: https://www.servicesaustralia.gov.au/your-income-can-affect-child-care-subsidy?context=41186
As parents with higher incomes, it is recommended to review your eligibility for the Child Care Subsidy based on the provided income thresholds. By considering the simultaneous increase in childcare costs, you can make informed decisions that suit your family’s needs and financial situation. Stay informed about the specific subsidy rates and be proactive in exploring different childcare options to find the most suitable solution for your family.
The Biggest Losers in 2023. Full time working parents in the prime of their career.
As an exercise we have used the Careforkids childcare care subsidy calculator and tried with three different families to see how their income impacts their out of pocket expenses. Couple, 2 children in long day care, 5 days a week, max activity test. We have picked a childcare centre in Camberwell, Victoria with daily fees of $170/day/child and assumed an increase of 5% as of July 2023.
For this fictional family the out of pocket expenses are up by $125.99 per week despite increased subsidy of 74.01 per week. This is an Increase of 35% vs June 30 2023 and prior to price hike! This is an additional increase of AUD $6,551.48 per annum. Childcare will cost this family AUD $48,151.48 annum out of pocket for the next 12 months.
Table: Care For Kids, Childcare calculator. Input data: Couple, 2 children in long day care, 5 days a week, max activity test, combined taxable income 250k, selected childcare: Camberwell, VIC at $170/day prior to CCS increase VS. same after CCS increase and childcare cost per date increase to $180 (5%).
Last viewed July 2023. URL: https://www.careforkids.com.au/child-care-subsidy-calculator
Considering the significant rise in out-of-pocket childcare fees, it’s crucial for families to explore alternative solutions that offer flexibility, personalization, and convenience. One such solution is the option of hosting an Au Pair. Au Pairs provide live-in child care assistance, allowing families to customize their childcare arrangements according to their specific needs. Au Pairs offer a unique cultural exchange experience for children, fostering a global perspective and language exposure from a young age.
To ensure the safety and well-being of both children and families, it’s essential to choose a reputable Au Pair agency. The Cultural Au Pair Association of Australia (CAPAA) sets high standards for its member agencies, ensuring that they adhere to a strict code of conduct. CAPAA works diligently to promote the well-being of Au Pairs and the families they work with. By partnering with a CAPAA-approved agency, families can have peace of mind knowing that they are accessing Au Pairs who have undergone thorough screening processes and training to meet the highest safety standards.
If you’re interested in exploring Au Pair as a flexible and cost-effective childcare solution, we encourage you to reach out to CAPAA. CAPAA website provides valuable information about Au Pair programs and connects you with trusted agencies that prioritize the welfare and safety of your children. By consulting with CAPAA, you can receive the right guidance and support in finding the perfect Au Pair match for your family’s unique needs.
Don’t let the increasing childcare costs burden your family financially. Consider the option of hosting an Au Pair through CAPAA-approved agencies, benefiting from a personalized and culturally enriching childcare experience. Reach out to CAPAA today to discover how an Au Pair can be the ideal solution for your family.
Book a call with us, we can help you find an aupair!
Sources:
- Your income can affect it – The Child Care Subsidy percentage you’re entitled to depends on your family’s income.
- Concerns childcare fee hikes are ‘opportunistic’ as subsidies set to increase
- Pricing practices and operating costs of childcare services to be examined, as latest ACCC report confirms fees outpaced inflation
- Childcare inquiry 2023
- Child care subsidy calculator
- Welcome to CAPAA