Cost of Childcare to Rise, Employees Left Holding the Bag

The Federal Government has announced plans to cap childcare subsidies after a 16-month political stall.

Initially announced in the 2010 budget and after the Greens gained the balance of power in the Senate, the plans were revived this month signalling the green light for up to $679 added to the annual childcare bill of families due to the rebate decrease.

Under the change, the government will save approximately $81m over the next three years by cutting the childcare rebate back to $7,500 per child per yearfrom where it has sat at $8,179.

The government has said families paying for 10 hours of childcare, four days a week will be hit by the cap. The cuts have reportedly been made in order to provide additional early education teachers in childcare centres, and the minister for childcare, Kate Ellis said the costs will only amount to an extra $8.67 a week by 2014-15, per child in full-time care. Speaking to ABC radio, the minister said, "the parents that I've spoken to have said they'd pay eight dollars for peace of mind that their children are being looked after."

However, families who use childcare just three days a week could also hit the cap if their fees exceed $98 per day; a very real prospect for Sydney families who are charged up to $130 a day for childcare.

But the Government has defended the changes, and childcare Minister Kate Ellis said any cost increases from individual centres would be offset by the child-care rebate, which covers 50% of out-of-pocket costs up to the annual cap.

"There are absolutely no cuts to childcare funding; in fact there has been a 72% increase in the amount of funds available to Australian parents to help them meet the cost of childcare," Ellis said.

She said the transition will take place over a number of years and won't come into effect until 2016.

"It's done because we do have a long-term vision and we want to work there together," she said.

Under the new plans, a parent contemplating a part-time return to the workforce would not have to pay tax until they earned more than $20,000 a year.

A parent could work three days a week at the minimum wage without paying income tax, but would potentially need to pay hundreds of dollars in childcare expenses.

Director Lynn Afotey-Otu of Little Legends Early Learning Centre in Brisbane said their centre had increased fees by 5% and said she knew parents were struggling.

Afotey-Out said "I have one staff member here who pays $900 a fortnight for her two children to be in childcare," and added "You have to earn a lot to be able to justify paying that".

Kate Woo from Sesame Lane Child Care said "award wage increases as well as everyday expenses like food and nappies" have contributed to fee hikes.

Yet, there has been some relief for working parents with children in child care, and from July this year the Government has allowed the Child Care Rebate to be paid directly to child care providers, which has reduced the out of pocket expenses for some families. The government of Western Australia has released a fact sheet on how to create family-friendly workplaces, and offers information relating to the following topics: ·