New analysis of Labor’s childcare plan reveals long-term cost of introducing a 90 per cent subsidy

Figures reveal the huge cost of Labor’s proposed childcare subsidy as the federal government blasts the plan as “ill-considered and reckless”.

Labor’s universal 90 per cent childcare subsidy would cost taxpayers an extra $63bn over a decade, according to a government analysis of Anthony Albanese’s key election promise.

The Labor leader made the commitment in his budget reply speech in 2020 without detailing the bill, saying the “long-term goal” would first be examined by the Productivity Commission.

But a government analysis, seen by the Herald Sun, reveals requiring all families to pay just 10 per cent of their childcare fees would cost $213bn over 10 years.

Maintaining the Coalition’s existing scheme would cost $150bn over the same period, as it cuts off subsidies for families earning more than $354,305 a year.

Under Labor’s universal plan, even the richest families would receive the 90 per cent subsidy, meaning they would pay $3195 annually for two kids in childcare three days a week while taxpayers covered the remaining $28,755.

Labor’s proposed childcare subsidy would cost an extra $63bn over 10 years, an analysis shows.

Finance Minister Simon Birmingham said Labor was being “sneaky” by describing the plan as aspirational to avoid accounting for it in their official costing.

“Labor’s policy that would see other taxpayers cop the bill for millionaire families to send their kids to child care is ill-considered and reckless,” he said.

But opposition early childhood education spokeswoman Amanda Rishworth accused the government of “trying to cook up scare campaigns to distract from their incompetence, wastefulness and complacency”.

“Childcare reform is an economic powerhouse that has the potential to unleash huge returns to our GDP, by getting more parents working the hours they want and need,” she said.

If Labor wins the election, it will increase childcare subsidies from July 1 for 97 per cent of families, including by lifting the rate and extending it to those on incomes up to $530,000. This would cost $6.2bn over three years and save families between $600 and $2900 annually.

The Productivity Commission would then be asked to investigate the universal 90 per cent subsidy plan. The government’s analysis assumed this reform would lead to a 10 per cent spike in demand for childcare.

“Labor is not going to redesign Scott Morrison’s broken childcare system from opposition. We want to fix his mess properly,” Ms Rishworth said.

Women’s Economic Security Minister Jane Hume said the government’s policy was “affordable and targeted to those families … who need it most” and had helped lift female workforce participation to a record level of 62.1 per cent.

The government will pump an extra $1.7bn into childcare from Monday in changes that increase the subsidies available to families with more than one child in care.

Originally published as New analysis of Labor’s childcare plan reveals long-term cost of introducing a 90 per cent subsidy