How to Build a Brighter Future: Provide More Affordable Childcare

My first child was born in 1990. Mortgage interest rates in 1990 were around 17%, and despite having a modest mortgage, my mortgage payments ate up a large proportion of my income. I knew I had to return to the paid workforce after my son was born because our family could not survive solely on the low income of my child's father.

I remember it being stressful because I could not find a childcare place for my son. I had to rely on a friend to pitch in and look after him whilst I waited interminably for a place with a childcare provider. 

When I finally secured a place, I was in for another shock. The cost of childcare was astronomical. But what could I do? I needed to work, so I just sucked it up and tried to make things work. 

4 years later, my daughter was born. This time, I put my name down at childcare providers the minute she was born, and I took a deep breath, thinking about how much my childcare would cost. 

I created a financial plan for my year-long maternity leave after my daughter was born. Fortunately, my then employer, Telstra, provided 12 weeks paid maternity leave, which I could take at half pay for 6 months. I had saved enough money to take a year of unpaid work. My savings and childcare allowance stretched me to 12 months out of the workforce.

When I was ready to return to the paid workforce, my son was in kindergarten, and my daughter had a place at a childcare centre. Through good fortune or good planning, I narrowly avoided the eyewatering cost of two kids in daycare; however, I had the costs of after-school care for my son and daycare for my daughter. 

One day, I sat down, added up all my costs, and realised that I was forking out the equivalent of a private school education each year on childcare fees, all for the privilege of working. 

I am sharing my story about parenting, working and finances now because, in 33 years, nothing has changed for working parents in Australia. Childcare is scarce and, in many cases, barely affordable for working families. 

Childcare Reform is Decades Overdue in Australia

Earlier this year, Prime Minister Anthony Albanese outlined an ambitious vision to reform childcare in Australia. The cornerstone of his policy was a reform that would provide hundreds of thousands of families with expanded access to subsidies. According to Albanese, this move isn't just about early childhood development; it's also an economic reform designed to boost productivity, workforce participation, and gender equality.

"Allowing women to go back into the workforce earlier, allowing them to progress their careers, and of course that flowing - that benefit flowing right through - to better retirement incomes, as well. This policy will help families, but it will (also) help communities and help our national economy."

While the full impact of this expansion remains unclear, Education Minister Jason Clare believes they're already seeing positive effects. 

"The good news is the cheaper childcare laws that we passed through the parliament last year, that have started in July of this year, are now starting to have an effect. On average, the cost of childcare per hour dropped by 14%. In July, that's a good thing. But there's a lot more work that needs to be done here, and this report zeroes in on 'what are the next stage - what's the next stage of reform that's needed?'"

Women Are Still Being Locked Out of the Workforce

The reality is that Australian families still grapple with the financial burden of early childhood education and care. In fact, a recent ACCC report reveals that Australians pay more for childcare than anywhere else in the world. 

According to the ACCC, the average Australian household with two incomes and two children in care spends around 16 per cent of its budget on childcare, significantly higher than the OECD average of nine per cent. This financial strain puts many parents, particularly women, in an impossible situation. 

Jessica Rudd, CEO of The Parenthood, says:

"The juggle is ridiculous, and it's certainly not in line with the rest of the OECD. You're begging, borrowing and stealing care where you can get it; you're leaning on family, you're leaning on friends, and you just feel like something's going to have to give. And that's why a lot of women decide not to go back to work - because they feel like they can't. Even if they know that their family budget relies on it, they feel like they just can't make it work. And so, therefore, they slip behind in terms of their overall earnings."

Women want choice, particularly when it comes to parenting and working. However, many women feel like they can't return to work because they simply can't make it work with the high cost of childcare. This means a lifetime of reduced earnings and superannuation, significantly contributing to the poverty gap and why women 55 years and older are the fastest-growing group of homeless people in Australia. 

It is disheartening to see that even after three decades of my own experience dealing with the challenges of making tough and stressful decisions, paying exorbitant amounts in childcare fees, and facing a lifelong financial penalty due to lost income, women are still grappling with the same problems of having limited choices when it comes to parenting and working. The burden of emotional and financial stress that comes with the lack of options in this regard is unacceptable and needs to be addressed urgently.

The System Must Be Fixed to Enable Gender Equality

ACCC Chair Gina Cass-Gottlieb claims that the current policy settings are not providing affordability and accessibility to all Australians. The report suggests more transparency in the childcare industry, urging providers to reveal their profit margins to parents and childcare staff. 

Low-income families are disproportionately affected by rising childcare costs, with providers incentivised to target wealthy areas in major cities. The ACCC report recommends greater regulation and direct subsidies for under-served communities and Indigenous children.

Jason Clare supports this recommendation and believes that exposing providers who overcharge for their services is reasonable.

However, Jessica Rudd emphasises the need for holistic reform. She envisions "affordable, universal, quality early childhood education and care for every child in Australia," focusing on those crucial first five years of a child's development to ensure no child misses out. The necessary bonus here is that no woman will miss out on choosing how she wants to do work, parenting and life.

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The system also includes the system of workplaces. Employers who want to attract, retain and engage the best and brightest people must look to creating family friendly workplaces to help ease the burden of work, life conflict. I am on the advisory board of Family Friendly Workplaces and can recommend the free benchmarking tool for employers who want to take their first steps towards a family friendly workplace. For employers further along the journey, consider becoming a Certified Family Friendly as part of your DEI, wellbeing and talent management strategies.

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Meanwhile, the ACCC isn't done; they are set to deliver their third and final report by December 31st. Submissions can be made via the ACCC website until October 29th.

As we wait for further developments, it is clear that we must all advocate for affordable childcare as a crucial factor in achieving gender equality, addressing women's lifetime economic wellbeing, fostering economic growth, and securing a brighter future for all Australians.