Your family's financial future: Reducing child care costs vs generous paid parental leave

As a parent, providing the very best for your children is of paramount importance. While it’s accepted that a suitable life insurance policy can help secure your child’s financial future should anything happen to either parent, what is of immediate concern for many Australian families is the sky-rocketing costs of raising children at the start of their life.

This was brought home with the September 2013 Federal Election, where voters were divided on two key issues – is it more beneficial to reduce child care costs OR is it more important to introduce a generous paid parental leave for Australian families?

 

Affordable child care

Why is it important?

It’s no secret to many Australian families that child care fees can take a huge bite out of family budgets. A recent survey of providers put the daily cost for one child at a centre as high as $165 a day per child, depending on the type of child care used, how many days a week the child needs care and whether they can get Child Care Benefit or other child care payments.

It should come as no surprise, then, that according to a Galaxy poll commissioned by Early Childhood Australia, nearly 70 per cent of respondents believed affordable child care was one of the most important issues faced by families with young children.

What does it mean for Australian Families?

Many times, if parents want a good quality child care with friendly and consistent staff in a safe environment, then they have to pay high fees, which means both parents need to be working. However, many working mums find that they are working simply to afford the cost of child care fees.

What is supported by the new Government policy?

The newly elected Government recently released their policy for Better Child Care and Early Learning, stating that Australia’s “child care system should be responsive to the needs of today’s families and today’s economy,” and should be more affordable and accessible, hoping to address a recent Productivity Commission report that stated there is a further unmet demand for about 600,000 child care places around the country.

 

Paid parental leave

Why is it important?

The Government’s Paid Parental leave policy aims to make having children more affordable and accessible. A potential offshoot benefit of this will be to encourage more women to pursue careers and add potentially billions of dollars growth to the economy.

What does it mean for Australian families?

With the “Generous Paid Parental Leave Policy”, the government promises 26 weeks of leave paid at the greater of the primary carer’s replacement wage (capped at $150,000) or minimum wage. This scheme ensures mothers who wish to enter the workforce and also have children will not be penalised financially, and because it removes companies’ requirements to pay parental leave it may also incentives gender neutral employment and promotion.

What is supported by the new Government policy?

While the increase in dollars is large, there are opponents who think that cuts have to be made elsewhere to afford the scheme. However, the Government maintain that the scheme will be funded by a 1.5 per cent levy on big business, offset by a 1.5 per cent company tax cut.

There’s no doubt that child care in Australia is in need of a significant overhaul, something which everyone seems to agree on. Exactly how best to do that – and how it will impact you and your kids – is still undecided.
 

Posted: 23 Sep 2013

This is general information only and does not take into account your personal objectives, financial situation or needs. You should consider the relevant PDS available on this website prior to purchasing any product. Choosi offers insurance products from a range of brands but does not compare all products available in the market.

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