The Mum Network

What’s more expensive, Childcare or Private Schooling?


I was inspired to write about this topic because a fellow Mum was telling me she didn’t want to go back to work because she was studying, would lose her benefits and she was only paying as little as $1.10 per day for 8am-6pm childcare in facilities that most parents are paying  $90 – $130 per day for (do I mention now that she also said “I couldn’t give up my 2 days a week where I have my freedom, I can’t work, I need to relax – WTF?).

To say I was shocked was an understatement because it means that what some people pay $25,500 (after tax) per annum for (inc the govt rebate) others are paying $275 per year. Call me stupid but that’s a hell of a kicker for ‘disadvantaged’ families, single Mums, the unemployed and Mum’s who are studying.

So I start with the frank admission that thanks to a little scheme that John Howard introduced a few years ago, we receive 50% of child 3’s pre-school fees back up to the amount of $7,000 per year. This is not means tested (no doubt it will be eventually when Julia and Wayne need more money to get us back to surplus but until then it doesn’t matter who you are, you’re entitled to the rebate). Given Child no 3 attends pre-school three days a week at about $90 per day, that’s $12,960 in annual fees that I only have to pay $6,480 for. I’m eternally grateful for that rebate, it’s a lifesaver. It’s the only thing we get from the government and I really appreciate it.

That said, I am entitled to the same for child 4 but we don’t use it. He has a medical condition that means each time he entered a pre-school or day care facility, he’s gets sick from other children’s germs and ends up in hospital so it’s full time non-tax deductible Nanny’s and Babysitters for him. On a full time basis and at anything between $17 and $30 per hour from 8am till 6pm (let’s make it $20 per hour) – you do the math, yep, $46,800 paid out AFTER TAX for no 4 child per year.

So that’s $59,760 a year or $4980 per month for 2 of my 4 kids before I think about what needs to be paid out for before and after school care. But this isn’t about me….it’s about perspective. I always chuckle with other parents who all have kids in childcare as we talk about the concerns over private school fees being so high and if we can afford it. The fees for the private girls high school I attended are currently $19,170 a year. I could have at least 3 and a half kids in private schools for the price we pay for 2 kids in childcare at the moment. That’s perspective!

I have absolutely NO DOUBT there are other families in the same position as us where it’s simply the price you pay for having a big family and decent jobs and I accept that and humbly pay my taxes. BUT there are many who are earning what the government would call a whopper salary and are entitled to nothing. These people are struggling. By struggling I mean they too are making the choice to choose a home brand milk over a branded one. Every light is turned off and heaters are only used when it’s really cold. There are no ‘special treats’ after that soccer game on a Saturday and if they are lucky enough to get up to the Gold Coast for a holiday, they’re in the car for 12 hours and paying with vouchers from a Groupon type deal site, no fancy planes for them. These people are on what the government call big incomes and yet there’s no benefit for them. So what is a big income? Well according to the government, if you have three kids and your ‘family’ are earning $149,000 (eg: Mum’s making $60k and Dad’s on $90k) then you’re doing ok and don’t need their help. Ok, cool, that’s fair enough, I’m all for people working for their dollars and not getting hand outs and I am proud that our country do look after their own BUT why are some people more entitled to 40 hours of childcare than others when it’s SO expensive (my beef here is with heavily subsidized childcare, not welfare or familt tax benefits, they are an entirely different argument that I’ll get to another time!).

If we can choose public (free) schooling over private (paid) schooling and if we can choose public healthcare (Medicare) over private healthcare (HCF, MBF etc etc), why doesn’t the government fund childcare centres but allow privately funded ones to be available too?

Want more perspective? Here are the fees in 2012 for a Year 12 student at some of Sydney’s best private schools compared to the cost of having 1 child in a daycare facility at $130 per day on the Northern Beaches where childcare centres are OVERFLOWING with kids and waitlists are 2 years long:

 

12 month old child in daycare Fees Per year
Northern Beaches, Sydney $32,500 (or $25,500 with $7,000 rebate)
Private School Fees Per year for Year 12 student in 2012
Kings $27,396
SCEGGS Darlinghurst $27395
Knox $24,600
Shore $24,000
Kincoppal $23,514
Riverview $21,090
Loreto Normanhurst $19,170
Loreto Kirribilli $14,145

 

Yes, you see correctly – these are the MAXIMUM in fees for a year 12 student so most schools are charging LESS than it will cost you to put your 1 year old in daycare so you can go back to work! Meantime, daycare fees keep going up and those on whopping great salaries have to keep paying the fees.

It’s no wonder people stop at 2 kids!

So if you’re a Mum and you’re earning $90,000 a year, you qualify for nothing from the government. If you have one child in childcare at $130 per day, you’re paying out a big portion of your salary to simply go to work. The most frightening thing is, your single Mum mate who’s possibly getting a few more tax benefits from Julia as well as a payment from the ex for the child is allowed to pay $1.10 per day for childcare and she’s walking home with more money than you!

So here’s a scenario:

*Both Mums have 1 x child aged 24 months Mum no 1 Mum No 2
Marital Status Married Single
Her Annual Salary (not including superannuation) $90,000 $50,000
Take Home pay per month after tax $5729 $3,454
Monthly Childcare Fees Per month based on 5 days $2,708 $22.92
Take home pay AFTER childcare $3,021 $3,431
Based on 40 hour week she works for: $17.43 per hour $19.79 per hour

Based on Mum no 1 trying to get ahead, do the right thing and work hard, climb the corporate ladder and really push herself professionally, she is potentially working for LESS than minimum wage despite earning $40,000 more than Mum no 2 – I’m sorry but that just doesn’t make sense to me. WOuld love to hear your thoughts in the comments bar below:

 

4 comments

  1. Matt

    There is LOADS that Mum no1 can do to legally reduce her taxable income so she can get some of the love that Mum 2 receives. Hopefully in all her corporate ladder climbing, she has had the time to educate herself in tax minimisation.

  2. Stacey

    Here are some facts: A salary of $100k puts an Australian in the top 4.5 of earners nation wide. A salry of $150k p.a, in the top 1.5%. A household income of $150k puts a person in the top 10%. So not even remotely ‘average’, regardless of your perspective. The mean Australian income is sub $60k.

    As for your Mum 1 vs Mum 2 example, you do realise that Mum 2 not only has to shoulder the burden of every joy, every sorrow, every significant decision, every dirty dish, every load of washing, every school dance recital, every childcare pick up etc ENTIRELY on her own AND she doesn’t have the benefit of the second income coming into Mum 1’s home? So not only are the two financial example entirely unrelated, the harsh practicalities makes the comparison appear cheap and unseemly. I’m also not sure that your figures stand up as the full CCB starts to cut out at the truly whopping salary of $40k. Also, any support payments from the non custodial parent are included in benefit calculations. Lastly, single mothers are also ‘doing the right thing’ and ‘attempting to get ahead’, often in ‘corporate’ environments. Salary is not a reflection of hard work or work.

    Do you believe that those earning $150k should have access to greater taxpayer funded benefits or do you believe that those single mothers raising families on $50k per year should have their benefits cut? Do you believe those working single Mums on low single incomes are to be envied and those on $150k to be pitied? Do you realise that access to childcare is an enormous privilege and that many Australian women on low incomes have little choice but to allow their skills to lapse and their superannuation to go untouched whilst they raise children as they are priced out of childcare? Similarly that sending your child to an elite private school is a choice only available to a very privileged few?

    As Matt points out, those on high incomes have access to all sorts of taxpayer funded perks (as a dual high income household my husband and I take advantage of many including tax breaks for superannuation contributions, negative gearing and other tax breaks across our investments, private healthcare subsidies [and perhaps private schooling subsidies in the future] the CCR etc) as well as all the other benefits (roads, functional government, law enforcement etc) we all enjoy thanks to the taxes of honest citizens. Perhaps instead of pouting about all the things the poor get that the rich don’t, it would be healthier to reflect upon the enormous privilege’s available to those who are wealthier than at least 90% of their fellow citizens in one of the richest counties on earth.

  3. Angela

    I believe it is mum number 2’s attitude that does not help with the negative conclusion drawn over this situation. She doesn’t want to give up her 2 free days without the children? That’s not exactly an ideal reason for higher wage earning families to be taxed more and given less breaks so that the government can afford to help cover her child care costs – just so she can have a break 2 days a week. My husband and I are a dual income high earning household as well. We are so because we have worked hard in our lives to get where we are , and no one gave that to us. We are also raising a young family without the help of any family in this country. So, when our children are in day care we are at work making a better life for our little unit. And when they are not in day care, we are at home with them. And we don’t get a break from this because we have no one around to help us. We have no problem with this because it is the life we chose and we are happy with our little family. But gee whiz, ti would sure be nice to have a break sometimes. So, I don’t apologies for being a little annoyed that mom number 2 is paying less than $2 a day for child care when I’m paying close to $100 and not even being afforded the luxury of having any time down for doing so.

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