Analysis by the Australian National University finds large differences between the financial impact of Coalition and Labor’s policies depending on household income

This article is more than 4 years old

This article is more than 4 years old

A majority of families would be better off under Labor’s childcare and family payments policy than under the Coalition’s plans, according to new modelling.

Under the Coalition’s plans single-income families who do not meet the new childcare activity test will be hit hardest, losing as much as $115 a week.

Families with incomes above $100,000 a year, and who pay high fees for full-time childcare, will be much better off under the Coalition’s policies.

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The modelling was conducted by Ben Phillips from the Australian National University’s Centre for Social Research and Methods, and commissioned by parent advocacy group The Parenthood.

Phillips, one of Australia’s most respected economic modellers, compared Labor’s childcare and family payment changes to the Coalition’s to see what financial impact they would have on a number of “typical family” types over the next two years, 2017-18 and 2018-19.The five family types were:

Two-parent family, both working, two children, one child in two days of long-day care, one child in primary school

Two-parent family, both working, two children, one child in five days of long-day care, one child in primary school



Two-parent family, at least one not working, two children, one child in two days of long-day care, one child in primary school (will fail the Coalition’s activity test)



Single parent, working, two children, one child in two days of long-day care, one child in primary school

Single parent, working, two children, one child in five days of long-day care, one child in primary school



For each family structure the modelling shows results for household income levels between $40,000 and $340,000 per year, with intervals of $10,000. .

Childcare prices for the modelling exercise were set at $80, $100, $120, and $140 per day. It assumes each family uses 11 hours of care for each day.

Since the Coalition’s policy for child care begins in 2018-19, the results of the impact of its total policy package in 2017-18 are impacted only by its proposed family payment changes.

The modelling found a marked difference between the financial impact of the parties’ policies on different household budgets.

Overall, it found that in 2017-18, families on incomes at or below $100,000 a year will be better off under Labor by between $1,099 and $1,504 a year compared with the Coalition.

After July 2018, when the Coalition’s childcare policy kicks in, families on lower incomes that use childcare full-time and pay $100 a day or less for childcare will be up to $2,395 a year better off under Labor than the Coalition.

The modelling also found that families that will be better off under the Coalition’s policies will be on higher incomes, using childcare full time and using high fee paying centres.

“Families with incomes above $100,000 a year and paying high fees for full time childcare are much better off under the Coalition,” Jo Briskey, executive director of The Parenthood, said.

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“Families under these scenarios would be as much as over $6,000 a year better off under the Coalition.

“But at the same time, a working family on $70,000 paying $80 a day for full time childcare will be over $1,200 a year worse off under the Coalition,” she said.

Briskey said she commissioned the modelling so that parents knew, before the election, how both parties’ polices would affect their households budgets.

“The reality is all families will be better off overall under Labor because their support for childcare costs come in from 1 January 2017 – a full 18 months before the Coalition plan to do anything,” she said.

“And by the time the Coalition’s childcare reforms start in July 2018 many families would still be better off under Labor because Mr Turnbull insists that the only way he will pay for his childcare reforms is by making significant cuts to family payments.

“When you take into account the Coalition’s plans for Family Tax Benefit cuts, a large number of families using childcare, especially those on lower incomes, won’t actually benefit from any increase in childcare subsidy, in fact they are likely be significantly worse off under the Coalition,” she said.

The government will defer start of its childcare package by one year to 1 July 2018 due to the Family Tax Benefit reforms required to fund it not being passed by the Senate.

Starting in July 2018, its new Child Care Subsidy will replace the current Child Care Benefit and Child Care Rebate with a single, means-tested payment.

Phillips told Guardian Australia that as soon as the hourly rate for childcare rises above $10-12, parents were much better off under the Coalition’s policies.

“When it’s around $10-12 it’s fairly line-ball, but when it’s below that it’s quite clear that Labor that will have you ahead,” he said.

“At the moment the average price is about $8 an hour, or thereabouts, and it is increasing. It could be that well down the track more families will be better off under the Coalition, but at the moment it seems that in combination with family payments most families will be better off under Labor.