Child care costs are just one part of the puzzle of getting back to work

Amongst all the talk of simplicity, flexibility and affordability of the new Child Care Assistance package is an expectation that 240,000 families will be encouraged to increase their involvement in paid employment.

 

How and why this is the case is worth looking at more closely, and in doing so reveals a deeper challenge for the government, and for families: the complex puzzle of family assistance payments and unusual way that they come together to impact family budgets.

 

In 2012, 660,000 families received child care assistance and at least one other payment - the most common being the Family Tax Benefit Part A.

 

For these families, the financial impact of common family decisions around work and child care is still a mystery until after decisions have been made because getting the the bottom of the net financial impact of these government tax and transfer programs is so incredibly difficult.

 

For those that make it to the Appendix of the Productivity Commission report on Child Care and Early Childhood Learning, they will find out just how complex the decision making for families really is.

 

This section demonstrates very clearly that the decision to increase involvement in paid employment is not just a case of child care support outcomes.

 

It is far more complex. There are several other payments to consider, such as Family Tax Benefit Part A & B, parenting payments, paid parental leave and of course income tax. And each of these components have their own unique criteria.

 

Understanding how they are expected to work together for a unique family situation (and decision), is beyond even the most astute and well resourced decision maker - however those folks at the Productivity Commission are all over it - demonstrating over 10 unique situations just how inconsistent and unpredictable the outcomes can be. 

 

Changes to the way child care payments work will go some of the way to smooth the combined impact of the government tax and transfer system on family budgets across a range of situations. However the result is anything but uniform.

 

What this analysis clearly shows is that for different families and for different situations, the final impact of the various tapers, thresholds and eligibility criteria for these payments is difficult to calculate and inconsistent in its impact.

 

The results are still confusing, and the decisions families face are difficult to consider with clarity around all the financial detail.

 

So where does that leave families after the new Child Care Assistance changes come in?

 

It will still be incredibly difficult to quantify the real financial outcome of returning to work, placing a child in care, or getting a pay rise. 

 

With child care costs a huge impost on family budgets, these changes will do little to provide clear answers - more likely the fact that they are changing will cause anxiety.

 

Probably a reasonable story for the Government Budget, however for the family budget, the story is as confusing as it has ever been - and the ability to make a decision with all the right information is still a way off.