Optimising the Child Care Subsidy will get families back to work and the economy back on track

Optimising the current Child Care Subsidy (CCS) will improve affordability for families, get parents back into the workforce and significantly boost the nation’s GDP.

New analysis by KPMG sets out the costs and benefits of building on the current CCS framework to support families and the national economic recovery.

By lifting the CCS to 95% for households earning up to $80,000, with the taper decreasing by 1% for every additional $4,000 of family income, until a floor of 30% subsidy, we can:

  • Boost affordability and accessibility of early childhood education and care (ECEC)
  • Create up to 210,000 additional working days per week, and
  • Add $5.4 billion to the economy.

The Front Project recommends this measured and evidenced-based approach to making early childhood education more affordable for families.

The Front Project CEO, Jane Hunt, says under this plan, every single Australian family will be better off, with more money in their pockets and more incentive to return to work.

“Australian families are increasingly financially insecure because of COVID-19,” Ms Hunt said.

“Access to affordable and high-quality early childhood education services are vital for parents to be able to return to work to secure their family’s financial situation.

“We need more families, with more money in their pocket and more time to invest in their careers and the economy.

“Currently, we have a system where parents could end up with 30% or less of what they earn that day in their pocket if they want to take on an extra day of work.

“We have an opportunity to address this by building on the current CCS framework and removing some of the disincentives for parents to work.

“This is not free child care, this is a measured, evidenced-based approach, which recognises the huge demands on the Federal Budget.

“This new analysis has shone a spotlight on how crucial a strong, affordable and accessible ECEC sector will be to Australia’s recovery.

“We believe that the most effective way to help the economy right now is to support more families into work by building on the existing CCS framework.”

The additional spend on the CCS is estimated at around $2.5 billion per annum.

The full report, The child care subsidy: Options for increasing support for caregivers who want to work, is available online at www.kpmg.com.au.