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Working parents squeezed: Childcare costs continue to rise amidst cost-of-living crisis

New data released by the Productivity Commission this week shows out-of-pocket costs for childcare continue to rise, as campaigners call on the Federal Government to abolish the childcare subsidy Activity Test to ease families’ cost-of-living pressures.

The data also showed a downward trend in the proportion of children from low-income families attending early childhood education in the last year.

Jay Weatherill of the Minderoo Foundation’s Thrive by Five campaign said the results were concerning but unsurprising.

“More affordable early childhood education and care will ease cost-of-living pressure without driving up inflation. The entire sector in Australia is well overdue for reform, and the Activity Test should be the first thing to go,” said Mr Weatherill.

The Activity Test calculates families’ childcare subsidies based on the number of hours spent working or undertaking other activities and the Productivity Commission and ACCC have both called for it to be abolished or amended.


“Children from disadvantaged backgrounds disproportionately miss out on early childhood education and care. These years are crucial for children’s development and kids shouldn’t be missing out just because of their family circumstances.

“During the height of the pandemic we saw more children from low-income backgrounds attending early learning as a result of government policies that made it more affordable and accessible. This is an example of what we can achieve when governments take action in this space.”

The data also highlighted a decline in the number of early learning workers with Certificate III or above qualifications since 2016.

“Early childhood educators are leaving this vital workforce in vast numbers due to subpar wages and working conditions,” Mr Weatherill said.

The report indicated that it isn’t just lower-income families and educators that are struggling, with the out-of-pocket costs of childcare for middle Australia (families on an average salary of $115,000) continuing to grow.

“The proportion of weekly disposable income spent on early learning for families on a median income with one child in care actually increased by 1.9% since 2022, showing that we’re not yet seeing the impacts of the Albanese Government’s 90% childcare subsidy implemented in July last year.

The figures were released just hours before the Reserve Bank of Australia announced it would leave the cash rate unchanged at 4.35 per cent, meaning families with mortgages were unlikely to get any relief.

Mr Weatherill said making childcare more affordable was a sure-fire way to ease cost-of-living pressures.

“Universally accessible, high-quality early childhood education would help all children to thrive and serve as a solution to the nation’s cost-of-living crisis.

“It’s time for access to early learning to be recognised by systems as a foundational right for every child and an investment in Australia’s future.”


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