Paul Sainsbury

Family budgets are under pressure with the primary carer, typically the mother, losing about 60 per cent of her gross income when returning to work full-time after having children – when factoring in the cost of child care, loss of Government benefits and increase in tax – according to the latest AMP.NATSEM report.

Middle income mothers who work part-time fare a little better, losing about 45 per cent of their pay; but mums already working part-time who decide to increase their hours to full-time, will lose a massive 75 per cent of their pay for these extra hours of work.

Even though it’s more expensive than ever, child care use has jumped by almost 80 per cent since 1996, with almost a quarter of all children in some sort of formal¹ child care, compared to only 13 per cent in 1996.

These are some of the key findings in the AMP.NATSEM Income and Wealth Report: Child care affordability in Australia.

The report finds Long Day Care is the most common form of formal child care, with 630,000 Australian families using this type of care, but it’s also the most expensive, costing up to $170 a day per child, which is more than a full-time wage for many low income women.

But parents are still more likely to use the services of grandparents, friends and other family members when it comes to caring for their child with 60 per cent opting for this type of informal care.

The average cost of child care has increased by 150 per cent in the last decade, jumping from $30 to $75 a day for Long Day Care.

AMP Chief Customer Officer Paul Sainsbury said affordability and accessibility of child care is critical to supporting a sustainable society, particularly from a workplace participation perspective as our population ages.

“While Government subsidies have meant out-of-pocket child care expenses haven’t increased by much more than the CPI, the big concern is recent growth in the price charged by child care centres, which has increased by more than 44 per cent in the past five years,” Mr Sainsbury said.

“The AMP.NATSEM report shows child care prices increased more than all but two of the household expenditure categories monitored by the Australian Bureau of Statistics, rising more than education, petrol and health costs. Only electricity and tobacco were higher.

“When the time comes for parents to decide whether to return to paid work, it’s not only an emotional consideration, but also an important financial one.  For some, the decision to return to the workforce may not be a choice, so it’s crucial that Australian families understand the costs involved and the potential impacts of a return to work,” Mr Sainsbury said.

Other key report findings

Low income and single parents fair the worst

• Mothers from low income families returning to work full-time, may only keep as little as $4.55 an hour, or 28 per cent of their salary, when factoring in the cost of child care, loss of Government benefits and income tax.
• Mothers from low income families going back to work part-time, will lose a little less of their salary, but still a big chunk at about 69 per cent, and can expect to keep about $5.10 of her $16.37 hourly wage.
• Low income single parents working full-time can expect to lose about 62 per cent of their pay, keeping just $6.25 of their $16.37 minimum wage.  They will lose about 45 per cent of their pay if they work part-time, keeping just $9.09 an hour.

Child care today

• Child care is mostly used by children under five years and peaks for three year olds, where almost 60 per cent of children are in approved child care.
• Only around eight per cent of children younger than one year use approved child care, this increases dramatically to 34 per cent by the age of one.
• Overall 887,000 families use formal child care, with nearly 1.3 million children attending around 13,000 approved child care centres.
• Around 630,000 Australian families use Long Day Care and 109,000 families use Family Day Care (home-based care by registered carers).

Lack of child care vacancies in inner cities

• 11 per cent of child care centres don’t have vacancies.
• Finding child care for school-aged children can be tough, with no vacancies at 13 per cent of before and after care school providers and no free spots in over 30 per cent of vacation care.

Typical child care cost after subsidies

• Government covers about 54 per cent of the cost of child care with the average annual gross cost of child care for an Australian family at $9,315.
• So families are on average $4,352 out of pocket from the cost of child care.

Where a person lives has a big impact on their child care costs

• Capital cities tend to offer less affordable child care than regional areas.
• Outside Western Australian mining centres, Sydney’s affluent Mosman has the least affordable child care, with child care making up 9.3 per cent of disposable income, compared to the 6.5 per cent national average for a family with one child in Long Day Care and one in Outside School Hours Care.
• Queensland has the most affordable child care in Australia, making up about seven per cent of disposable income in inner Brisbane and 3.7 per cent in Far North Queensland.

Informal care still most popular

• Even though a lot more children now use formal child care, informal care remains the most popular option with almost 60 per cent of children being looked after by grandparents, relatives or friends. 
• Grandparents are playing an increasingly vital role in caring for our kids – covering almost a quarter of all child care hours.

Most mothers work part-time

• Around 42 per cent of mothers with kids in child care work part-time and 29 per cent work full-time.

More females in the workforce, only moderate by international standards

• Female workforce participation has increased from around 44 per cent to 59 per cent over the past 35 years, but Australia is still well behind the United Kingdom, Canada and Sweden when it comes to the number of women working compared to men.
• Australia also sits in the middle of international rankings for the number of families using child care, with Denmark and the Netherlands well ahead of the pack.

Women who return to work after children are hit with a triple financial whammy

• When women go back to work after having children, they’re not only faced with covering the cost of child care, but as they increase their working hours, they lose child care benefits and pay more income tax.

Mothers can take home next to nothing after paying for child care

• The short-term financial gain of returning to work after having kids can be negligible with a mother from a middle income family only taking home $12.32 of her $30.70 hourly wage when returning to work full-time.
• Middle income mothers will keep slightly more of their pay if they go back to work part-time – about $16.80 an hour.

NATSEM Principal Research Fellow, and author of the report, Ben Phillips said the report shows Government subsidies such as the Child Care Benefit and Child Care Rebate have helped keep a lid on families’ out-of-pockets child care costs.

“Without Government assistance, the gross cost of child care would have doubled compared to incomes and would be 182 per cent above current levels,” Mr Phillips said.

“But it’s likely that – along with higher standards, lack of supply, and Australia’s strong economy – child care subsidies have also helped drive up prices, which means people need more assistance, and so the cycle continues.”

Since 2002, AMP and NATSEM have produced a series of reports that open windows on Australian society, the way we live and work and our financial aspirations.  AMP publishes these reports to help the community make informed financial and lifestyle decisions and to contribute to important social and economic policy debate.

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¹ Formal child care is regulated child care that takes place away from the child’s home

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One in four Australian households now have a female as their breadwinner.

More than half a million or one in four Australian households now have a female as their major breadwinner – 140,000 more households than 10 years ago, according to the latest AMP.NATSEM report.

The proportion of families with both parents working has risen dramatically, with 58 per cent of all ‘couple with children’ families having both parents in the workforce, compared to 40 per cent in the 1980s.

Australians are more likely to swap house keys than wedding rings with 78 per cent of people living together before marriage, up from 72 per cent 10 years ago, and a drop in the nation’s annual marriage rate from 6.6 marriages per 1,000 people to 5.5 in the past decade.

These are some of the key findings in the AMP.NATSEM Income and Wealth Report Modern Family which explores the changing shape of Australian families. The report analyses data from a variety of sources spanning from 2001 to 2011.

According to the report, the number of blended and step-families has doubled in recent decades, together making up almost 11 per cent of Australian families with dependent children, compared to 6.8 per cent in 1986.

While blended and step-families are on the increase, divorce rates in Australia have stabilised at 2.2 divorces per 1,000 people and marriages are lasting longer – on average 12 years, up from 10 years in 1991.

The report finds more than half of all Australians support equal rights for same-sex couples in relation to marriage and children, an increase of 14 percentage points in just over five years. A belief in equality for all extends across the generations, with 42 per cent of Baby Boomers and three in 10 older Australians supporting equal rights for same-sex couples.

The number of same-sex couples has increased 72 per cent in 10 years from 19,594 in 2001 to 33,714 in 2011, with most of this growth coming from non-metropolitan areas. This significant increase is likely to be driven by same-sex couples being more comfortable about disclosing their relationship.

AMP Chief Customer Officer Paul Sainsbury said today’s modern family is almost unrecognisable from the Mum, Dad and a couple of children households of recent decades.

“Today’s modern family is complex and diverse.  Living alongside more traditional families are blended and step-families, single parent families, de facto couples and same-sex families,” Mr Sainsbury said

“The report shows the divorce rate has stabilised, and divorces involving children have actually declined, perhaps because Australians are getting married later and the financial and psychological impact of relationship breakdowns is causing people to think twice.

“The cost of raising children, financial stress from divorce or coping in challenging economic times can have a significant impact on family stability, so it’s important that Australian families have their finances in order before challenges crop up,” Mr Sainsbury added.

The AMP.NATSEM Modern Family report analyses data from a variety of sources, including the 2011 Australian Census and the Household, Income and Labour Dynamics in Australia Survey, which spans from 2001 to 2011.

Other key report findings

There are more female breadwinners than ever before

• One in four or 521,000 Australian ‘dual-earner’ families now have a female as their major breadwinner, up from 22% or 385,000 families 10 years ago.
• A female breadwinner household is one where the female earns more in wages than her male partner.

Families on lower incomes are more reliant on female breadwinners

• About 27% of dual-earner families with low household earnings and 25% of middle income dual-earner families have a female breadwinner. Only 17% of high income families have a female breadwinner.
• Tasmania has the most female breadwinners at 35%^[1] of all dual-earner households and WA has the lowest proportion at just 18%.

Women come to the rescue when times get tough

• The number of female breadwinners rose across all income levels during the recent global financial crisis, from 22% to 24%. 

Australian first-time mums are approaching 30

• First time mothers are on average 29 years old, compared to 30 years ago when they were just over 25 years of age.
• Almost one in four babies are born to mums aged 35 or over.

NSW is Australia’s marriage capital

• NSW has the highest annual marriage rate at 5.7 marriages per 1,000 people, followed closely by Qld at 5.6 while the NT at 3.9 marriages has the lowest.

The popularity of church weddings has taken a dramatic dive

• The number of Australians marrying in civil ceremonies has almost doubled since 1991 – up from 38% to 70%.
• NT has the highest number of civil ceremonies at almost 80%, followed by Qld at 75%, while NSW and the ACT have the equal lowest rate of civil ceremonies at 66%.

More people live together prior to marriage in Tasmania than anywhere else

• More than 87% of people in Tas live together before marriage, compared to NSW with the lowest rate of 72%.

Australia’s fertility rate is below the population replacement level but trending up

• The fertility rate for Australian women has increased from 1.8 births per 1,000 women in 2001 to 1.9 births in 2011, but this is still below the replacement level of 2.1.

We’re not the USA – the divorce rate in Australia has steadied at 2.2 per 1,000 people

• Divorces are least common in the NT with 1.5 divorces per 1,000 people, followed by NSW at 1.9, while Qld has the highest divorce rate in Australia at 2.5.
• Australia’s divorce rate is similar to the UK and Canada, but much lower than in the USA which has 3.4 divorces per 1,000 people.

The proportion of blended and step-families is on the rise

• The most common type of family are those with two natural parents and two kids which make up 28% of all families with kids. Intact couple families with one child are the second most common at 23%, followed by single parents with one child at 15%.

• The number of blended families with dependent children has increased from 2.5 to 4% since the 1980s and the number of step-families with kids has increased, from 4.3 to 6.9% over the same period.

Blended and step-families are financially worse off

• The average weekly wage for blended and step-families is $195 less than intact families – $1,878 compared to $2,073.
• Blended and step-families are less likely to own their own home compared to intact families.

The majority of Australians support equal rights for same-sex couples

• Nearly two-thirds (64%) of Gen Y, 53% of Gen X and 42% of Baby Boomers support equal rights for same sex couples and more than 30% of older Australians (born between 1906 and 1945) also support same-sex equality.
• Recent consumer attitude polls show about 65% of Australians support same-sex marriage.

More than 22 per cent of female same-sex couples have children

• Female same-sex couples have about the same number of dependent children as single parents.

Inner Sydney is the number one location for same-sex couples

• 10% of male same-sex couples live in the inner Sydney suburbs of Darlinghurst, Potts Point and Surry Hills and overall make up around 18% of all couples in each of those suburbs.
• The 10 suburbs with the highest percentage of female same-sex couples are all in Sydney’s inner west.
• Outside Sydney, the Melbourne suburb of Collingwood has the highest proportion of male same-sex couples and the Victorian town of Daylesford has the highest proportion of female same-sex couples.

NATSEM Principal Research Fellow Rebecca Cassells, and lead author of the report, said young people are no longer expected to marry in their early twenties, in a religious ceremony, and have three or four kids cared for at home by the mother while the husband heads off to work.

“Today’s modern family usually starts with a couple living together before marriage, perhaps deciding to delay having children, and when they do start a family, while it’s more common for women to be the primary carer, most mothers will quickly return to work, at least part-time,” Ms Cassells said.

“Given the enormous changes that have occurred over the past century, we can only begin to imagine how families will evolve in coming years,” said Ms Cassells.

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