by Sophie Cross

The cost of child care is a huge point of political and media debate at the moment with politicians promising to "lower the cost of living" and free us from our shackles of child care and other burdens on the working family. But are we really that badly off with the cost of child care, or has the hype simply got out of hand?

Yes, the cost of child care is increasing. Yes, the cost of groceries and the cost of a vaguely normal federation semi on a postage stamp piece of land in most parts of metropolitan Australia is utterly ridiculous.

However, salaries are increasing above inflation (apparently, according to the ABS), and so is the number of dual income households. Interest rates are gradually going down and while the Australian economy is doing well, it will most likely start to slow down in line with the slowing down of China.

Among the seven developed nations covered by the 2013 9th Annual Demographia International Housing Affordability Survey, Australia ranks third as most unaffordable major market. Apparently affordability is slowly increasing, but it's all relative, and still out of kilter with salaries. In Australia the average house price is about 6 times the average salary (5.6 rising to 6.5 in metro areas).

Sophie Cross is a public relations consultant and writer who has publicised and written about everything from makeup to The Muppets, child care to celebrity chefs and perfume to Partners in Population and Development! Originally from the UK and as a languages graduate she has worked around the world, living in Australia for the last 11 years where she runs, PR Chicks.

She lives and works remotely from her little piece of Spanish heaven in Chite, the Lecrin Valley, just south of Granada. And FYI it's pronounced "ch-ee-tay" not shite.

Read Sophie's blog

In the UK the average home is apparently now nine times that of the average salary…

The cost of child care is one of the most heavily felt outgoings for the average Australian family with a normal cost of long day care being around $80 per day, which can rise to $150 in metropolitan areas. This can be viewed as simple economics of supply and demand or child care centres' way of covering the cost of commercial rent in urban areas.

This was shown in the CareforKids.com.au annual survey by the differing child care costs in different states: SA parents pay the least amount in child care with 24% paying under $150 pw compared to just 11% of NSW and VIC based parents; SA parents are most likely (40%) to be paying $150–$200 per week, whereas over half (54%) of parents in NSW and VIC are paying over $300 per week in child care – up by 3% across the country from last year.

Across the country this is having a significant effect on the decisions mothers are making with regards to returning to the workforce. 79% of working mums said they returned to work out of financial necessity, but 26% said that once they got there they found that work was not actually financially viable – up 2% from last year and 31% said that being back at work has brought more financial complications.

George Negus recently wrote an article for the UK's Guardian newspaper regarding the potential myth of the high cost of Australian living. He said that he recently read a report by the National Centre for Social and Economic Modelling (NATSEM) that was headlined "Household incomes outpacing the cost of living – but bigger lifestyles and aspirations adding to cost of living pressures".

Negus reports that according to NATSEM, Australian household incomes have been outpacing the cost of living over the last 27 years. Our disposable incomes have increased by 20%. In real terms, your so-called average family is apparently $224 a week better off.

Hmmm this is pretty hard to believe what with the increase in house prices, utilities and groceries and 'cost of living' most likely doesn't include "non-essentials" such as child care.

Household incomes have of course increased, because most of them are now dual income, and the Australian economy needs it to remain that way, but that brings with it the problem and cost of what to do with the kids while we all work?

This is of course a global phenomenon and one that developed economies need to figure out. Some are doing it better than others. The UK child care crisis is about as bad as it is in Australia with not enough spaces and astronomic fees. According to a recent report, the Government would like to see primary school sites open for more hours in the day, from 8-6 if possible, and for more weeks in the year, offering a blend of education, childcare and extra-curricular activities,' the report said.

According to an article in the Daily Mail, in the UK just half of parents are able to find childcare in term-time to fit with their working hours. However nearly two-thirds of parents of school-age children need before or after school or holiday care in order to combine family and work.

The UK's Daycare Trust and the Family and Parenting Institute's survey shows how much worse things have become. A nursery place now costs 77 per cent more in real terms than it did in 2003, but earnings have stayed still. In 2003, average median earnings in real terms were £11.24 an hour in 2003, and in 2012 they were £11.21.

The average cost of centre-based day-care in the United States is $11,666 per year ($972 a month), but prices range from $3,582 to $18,773 a year ($300 to $1,564 monthly), according to the National Association of Child Care Resource & Referral Agencies (NACCRRA). Parents report higher costs – up to $2,000 a month for infant care – in cities like Boston and San Francisco. A friend of mine who lives in San Francisco told me that not only are fees on a par with private school fees (even if they're only part time) they have got to the point that tots and their parents are being interviewed for these elusive, exclusive places. Literally from months old.

However the Scandinavians are always there to point us in the right direction. Not so much from cost, but from organisation and positive results. Norway is ranked No. 1 in the world for productivity, measured by GDP per total hours worked, according to the Organization for Economic Co-operation and Development.

Many variables affect productivity, and Norway's high oil production contributes significantly to its GDP, and therefore productivity.

Michael Krashinsky, an economist at the University of Toronto says that Norway's universal child care and early education programs are key to Norway's highly productive work force.

"Most people who study education say that the early years matter the most," Dr. Krashinsky says.

"In terms of productivity, subsidized child care has two effects, one is on working mothers and the other is on children down the road," Dr. Krashinsky explains.

For children, his research shows that when they participate in early childhood education and preschool, they are better socialized and more prepared to learn when they enter school.

But in terms of cost, Norway is a leader in delivering affordable child care. Here, child care is heavily subsidised by the government and so fees are capped at 2330 Norwegian Kroner, or around A$425, for an entire month. Yes they do pay more income tax, but the majority goes to the welfare state, meaning Norwegians are much happier to pay it given they benefit directly.

Perhaps Australia would benefit from a more simplified system with capping of fees and more efficient regulation of child care providers instead of the rather convoluted benefit and rebate system which seems to confound Australians to the point they just give up trying to understand it… or perhaps that's the idea.

Another factor with Australian child care is the lack of availability, particularly for the under twos, in urban areas. This inevitably pushes fees up in these areas and also forces parents towards more expensive child care centres or other options such as nannies through simple lack of choice.

So, taking all this into account, it comes down to three key ways the Federal government (whomever that may be) can help Australia sort out the cost, management and understanding of child care for working families:

1. Availability (focus on the provision of more child care for under 2s in key areas)
2. Regulation (cap child care fees at a reasonable level, e.g. $80 per day)
3. Simplification (make it easier for families to understand and claim what's available to them in CCR/CCB)

Or A.R.S. as we like to call it!

Child Care Benefit and Rebate Simplified

If you want to claim either Benefit or Rebate, you must register at the Department of Human Services (Centrelink) even if you don't think you meet income levels.

Eligibility for the Child Care BENEFIT – means tested

• You and your partner (if applicable) must have had work, training, study related commitments (or have an exemption) at some time during the week care is provided.
• You must be using approved child care or registered child care
• You or your partner must meet the residency and child's immunisation requirements
• Child Care Benefit vs Income eligibility is worked out on a sliding scale:
Number of children in care income limits before your payment reduces to $0
1 child < $145,642
2 children < $150,914
3 or more < $170,404 plus $32,219 for each child after the third


• Children under seven years of age must meet the Australian Government's immunisation requirements or have an exemption.
• You must be the one responsible for your child care costs. If your employer contributes to your child care through salary sacrificing or packaging, you should discuss with them who is responsible for the cost.

Child Care REBATE – Not means tested

The Rebate helps families cover the out-of-pocket costs of child care and it is not income tested. All eligible taxpayers in Australia can get it as long as they are working or studying and are using "approved" child care. It covers up to 50 per cent of out-of-pocket costs, up to $7,500 per child, per year.

You may choose to receive the Child Care Rebate paid fortnightly, either directly to your bank account, or through your child care service provider as a fee reduction. You still have the option of having your Child Care Rebate paid quarterly or annually as a lump sum directly to your bank account.

If you currently receive Child Care Rebate and would like to receive fortnightly payments for the next financial year, you will need to make this change with the Department of Human Services.

Out-of-pocket child care costs are calculated after deducting any Child Care Benefit payments that are received.

Eligibility for the Child Care Rebate

• You and your partner (if applicable) must have had work, training, study related commitments (or have an exemption) at some time during the week care is provided.
• You must be using approved child care.
• You or your partner must be an Australian citizen, a permanent resident living in Australia or be exempted from the Australian Government's residency requirements.
• Children under seven years of age must meet the Australian Government's immunisation requirements or have an exemption.
• You must be the one responsible for your child care costs. If your employer contributes to your child care through salary sacrificing or packaging, you should discuss with them who is responsible for the cost.

Find out how much you could receive using the child care estimator on the Department of Human Services website. If you have any questions about the Child Care Benefit or Child Care Rebate contact the Department of Human Services on 13 24 68.