With 1.3 million Australian children in registered child care, and the government providing support of almost $5 billion this year, we thought child care a good place to start.
We have built a beta site therealcostofchildcare.com.au to demonstrate and test our technology in taking user data and generating a calculated result.
The legislation covering the calculation of child care entitlements is quite short, but dense, and the government calculator is clunky, times out and limited in its scope.
The actual calculation is a challenge. This calculation involves 17 variables (each mandated by the government), and a circuitous pathway that has variations based on what type of childcare is used, and how many children concurrently use that type of care. Meanwhile, the data that a family needs to provide is simple.
There is a test applied to the activity of the parent/s that is very hard to understand. This test, known as the Work, training, study test has been distilled to a simple drop down menu. This is a good start to the journey of improving the way this data is collected.
Even with considerable support available, Australian families are not understanding eligibility, meaning many Australian families are not making a claim. In 2011, MP Kate Ellis even publicly announced that more than 100,000 families were missing out on what was theirs.
Meanwhile, families are concerned about child care costs, and justifiably so. A Commonwealth Bank study found a 13% increase in the cost of childcare amongst its credit card users. They found child care costs spend via credit card growing 50% faster than other spending, and that a quarter of parents spend as much on child care as the parent returning to work earns.
Choice Magazine found that 47% of parents are concerned about child care fees, and for those with kids under age 5, the number is 67%.
When we spoke to child care providers, we found frustration with the lack of resources available to help families make informed decisions around child care costs.
We also found that most providers were considering building resources to help, but progress has been slow. In the meantime, even providers looking after thousands of children simply point families to the government websites for help.
We found that key friction points for child care providers centred around the following:
- An inability to help families clarify a final “cost” of care when taking into account government support.
- A poor understanding of the ability of the family to channel child care support payments direct to the provider (thus improving cash flow outcomes for families AND providers).
- Frustration felt by families as support reaches cap (in the case of the Child Care Rebate) unexpectedly.
We also found childcare providers were very interested in building resources to offer a differentiated service to their competitors.
Our calculator is the result of Innovate NSW support, and many, many hours getting to the bottom of Legislation. We have the functionality to calculate Family Tax Benefit entitlements, and we have started on help for families sharing custody of children – these will all be coming to the website soon.
This is only a first step. The real cost of childcare is not just measured by the impact of childcare rebate and child care benefit support. There is also a complex interplay between Family Tax Benefit eligibility, parenting payments, rent assistance and of course tax. It is only when a family can easily understand the combined result of decisions in all of these calculations that a family can make an informed decision on childcare and work decisions.
This is covered in depth in the recent productivity commission report into child care and early learning . Wouldn't it be great if we good bring this expertise to the kitchen table? We think so.
We seek to become the trusted name in eligibilty. Independent, intelligent and with a single focus on improving the way we help our users.