Young families bear the brunt of cost-of-living crisis

Expenses for families with a child aged younger than five are 27 per cent higher than in 2021, according to research that shows they are suffering most from the cost-of-living crisis.

While headline inflation has fallen to 2.8 per cent, daily out-of-pocket childcare costs are still about $50 per child, analysis by Impact Economics and Policy shows.

This is further proof of the need for serious reform, including the $10-a-day out-of-pocket childcare fee cap the government is reportedly considering as an election promise, Minderoo Foundation’s Thrive by Five campaign says.

Under this model, a family paying $50 out-of-pocket a day with a child attending three days a week could save $120 a week, or $6240 a year.

“Working parents continue to struggle financially while inflation starts to ease for other demographics,” Minderoo Foundation’s Jay Weatherill said.

“This research is yet more evidence of the ineffectiveness of Australia’s current childcare model and the Child Care Subsidy.

“It’s clearly not working, because every time the government raises the subsidy, providers raise their fees and families see little to no savings. Families with young children need it now.”

A month ago, childcare was identified as the third fastest-growing cost in the Consumer Price Index, behind insurance and tobacco.

The cost of childcare increased 10.7 per cent in the 12 months to September.

This is despite increased government spending on the childcare subsidy in July 2023, which has been largely cancelled out by fee rises.

Polling by Essential in October found 71 per cent of parents would prefer a fixed-fee childcare model, in which fees were capped at $10 per day.

“With the election just months out, all sides of politics must commit to reforming the childcare system if they’re serious about financially supporting families,” Mr Weatherill said.

Since mid-2021, the living cost index increases for families with the youngest child under five (27.1 per cent) and the youngest child aged 5-14 (28 per cent) have been well above increases for employee households (21.8 per cent) and self-funded retirees (15.5 per cent).