Australia Lags in Childcare Funding

Australia continues to lag other developed countries in childcare funding. This is even taking into account reforms promised by the Morrison government in this year’s budget.

Australia spends well below the OECD average on early childhood education and childcare. Our spending is on par with Chile, Hungary and Lithuania, countries whose governments have far fewer financial resources than Australia.

The government announced a $566 million per year increase in childcare funding in the most recent budget. The changes were legislated in August and their introduction moved forward to March.

The government has claimed the subsidy was set to benefit ‘low- and middle-income earners,” as “half” the families to benefit have combined income below $130,000. 

What about the other half? Many will benefit handsomely, thanks to the government scrapping the subsidy cap which affects families bringing in $190,000 or more.

According to Kate Noble and Peter Hurley of Victoria University, Australia has no set standard against which childcare is considered “unaffordable.” In the US, the standard threshold is 7% of after-tax income, and the Democrats are putting forward a bill to ensure no family pays above that amount.

On that measure, 41% of Australian families with a child under 5 will still find childcare “unaffordable.” “A family with a combined gross annual income of A$102,000 will still face out-of-pocket costs for full-time child care of about A$11,000 a year,” the researchers say.

Often underappreciated is the impact a lack of affordable childcare has on grandparents. One study found 70% had altered the days they worked and over half had reduced their hours to accommodate caring for young children. A third said childcare changed the time they intended to retire.

Proposals from the opposition

The ALP advocates making childcare “cheaper.” By “cheaper,” they mean, “slightly cheaper than under the Liberals.”

Projected childcare subsidies under the ALP (via

The Australian Greens are advocating for “universal access to free early childhood education and care.” They also want to phase out for-profit centres in favour of government-run and community, non-profit centres.

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