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Childcare costs double in 12 years

Childcare costs have soared putting more pressure on society’s most vulnerable, writes Heather Jacobs.

The share of family income spent on childcare rose substantially between 2002 and 2014, putting financial pressure on working families and single parents. In 2002, median weekly expenditure on childcare was $53 for couple families and $28 for single parents. In 2014, this rose to $111 for couples, an increase of 109 per cent and $65 for single parents, an increase of 132 per cent.

These findings come from the most recent Household, Income and Labour Dynamics in Australia Survey (HILDA), whereby 17,000 Australians are interviewed each year to understand family life, economic wellbeing, total household wealth, as well as wealth in property and superannuation.

 “Parents using childcare are, in real terms, paying more than double the fees they were paying in 2002,” says the report’s author, Professor Roger Wilkins from the University of Melbourne. “This is despite 25 per cent of families relying on grandparents for childcare, who provide an average of 14 hours of care per week.”

The report shows that between 2001 and 2014, the most common ages to start a family was 30 to 34 for men and 25 to 29 for women. However, women are now having children later – from 2012 to 2014 the average age group to start a family jumped to the 30 to 34 age group, with 12.7 per cent of women in this age range giving birth each year.

  

The Cost of Kids: The Cost of Raising Children in Australia report, written by the National Centre for Social and Economic Modelling at the University of Canberra, estimates that from birth to leaving home, raising two children in a typical, middle-income family, will cost around $812,000.

Despite this, the HILDA report shows people with kids have a higher-than-average home ownership with 58 per cent living in their own homes compared to 46 per cent of childless people aged 25 to 34 years. There was also a positive association between wealth accumulation and dependent children.

Women’s satisfaction with their partner and their financial situation are decisive factors in whether or not they want to start a family. Their partner’s opinion on these matters does not influence this, suggesting women are the primary decision-maker on whether to start a family.

Employed women are less likely to start a family, because they’re concerned about losing that income. But if they work for a large employer (500 or more employees) then they’re more inclined to get pregnant, possibly because of better maternity-leave entitlements.

Single mothers most vulnerable to poverty

For women – who make up 88 per cent of single-parent families – the differences between those who remain partnered and those who become single parents is striking. 

“The data exposes some painful realities in many of the nation’s households,” says Wilkins. “We’re seeing high poverty rates for single parent families.”

The HILDA report shows that in 2014, an estimated 21.5 per cent of those living in single-parent families were in poverty. On almost all measures, wellbeing deteriorates considerably on becoming a single mother (the proportion employed decreases and income falls substantially) whereas for mothers who remain partnered these increase. Furthermore, the number of indicators of financial stress increases for newly single mothers, but decreases slightly for partnered mothers.

Overall life satisfaction and satisfaction with one’s financial situation, amount of free time and one’s relationship with the children all declined on becoming single parents, compared with little change for partnered mothers, according to the HILDA report.

It’s also worth bearing in mind that most single-parents didn’t choose to be so, with most living with a partner at the time their children were born – 90 per cent of single parents were previously married or in a de facto relationship.

The HILDA Survey is funded by the federal Department of Social Services and managed by the Melbourne Institute of Applied Economic and Social Research at the University of Melbourne.