The Estimated Costs of Children in Australian Families in 2005-06 

• 4.1 Costs of children by age
• 4.2 Costs of children by number of children

The estimated costs of children in sole parent families are a focus of particular attention, given overseas research which suggests that separated families may face higher child costs than intact families. In interpreting the following figures, it should be recalled that the income quintiles have been separately created for couples with children and sole parents. The lower incomes of sole parent families relative to couple with children families are clear in the average incomes applying within each of the income groups. The average gross incomes of sole parents in the bottom quintile of sole parents are only $284 a week, well below the average $661 a week recorded by the bottom quintile of couple with children families. Similarly, the top quintile of sole parents have gross incomes of only $1 169 a week, less than half the $2 662 received by the top quintile of couples with children.

4.1 Costs of children by age

The costs of children were first estimated for sole parents with a single child in each of the defined age and income ranges.

The results are shown in table 5 and figure 5.

Source: ABS 1998-99 Household Expenditure Survey unit record file and authors' calculations

As expected, the direct costs of children increased with the age of the child and with the level of family income. The lowest direct costs of $77 a week were estimated for children aged between zero and four years living in low income sole parent families (with average gross incomes of $284 a week). The highest costs of $345 a week were estimated for 16 to 17 year old children living in high income sole parent families. Wealthier sole parent families were found to spend a greater amount on their children, whatever their ages. Families in the high income group generally spent at least twice as much on their children as sole parents in the low income group.

Figure 5: Estimated average costs of a single child in sole parent families, by age of child and family income, 2005-06

Source: ABS 1998-99 Household Expenditure Survey unit record file and authors' calculations

[ top ]

Again, while there was a steady rise in the cost of a child as family income increased, when total costs were considered as a proportion of family income, there was a fall as incomes rose (Figure 6).

For sole parent families, the costs of a child as a proportion of their gross income ranged between 16 per cent (for a child aged 0 to 4 years in a high income family with a gross income of $1 169) to 63 per cent (for a child aged 16 to 17 years in a low income family with an income of $284 per week).

Source: ABS 1998-99 Household Expenditure Survey unit record file and authors' calculations

Figure 6: Estimated average costs of a single child in sole parent families as a proportion of gross income, by age of child and family income, 2005-06

Source: ABS 1998-99 Household Expenditure Survey unit record file and authors' calculations

4.2 Costs of children by number of children

Table 6 and Figure 7 show the cost of children in sole parent families by the number of children. Again the cost of each child was found to rise with family incomes. Low income sole parent families with one child were estimated to spend $89 a week on that child, while high income sole parent families with one child spent $204 a week. Where there were one to three children, high income sole parent families spent roughly twice as much on their children as low income sole parent families. However, where there were four children, high income sole parent families spent less than twice as much as low income families.

Source: ABS 1998-99 Household Expenditure Survey unit record file and authors' calculations. Note that there are only 11 sole parent families with four children in our dataset, so the '4 children' estimates should be treated with extreme caution.

[ top ]

Figure 7: Estimated average costs of children in sole parent families, by number of children and family income, 2005-06

Source: ABS 1998-99 Household Expenditure Survey unit record file and authors' calculations. Note that there are only 11 sole parent families with four children in our dataset, so the '4 children' estimates should be treated with extreme caution.

As Figure 8 shows, the cost of a single child amounted on average to between 17 and 31 per cent of family income, for two children 27 to 53 per cent of family income and, for three children, about 35 to 72 per cent. Low income sole parents with four children were on average devoting a very high proportion of their gross income to their children, although the small sample size should be noted, as should the fact that many low income households recorded within the ABS Household Expenditure Survey are apparently dissaving.

Figure 8: Estimated average costs of children in sole parent families as a percentage of gross income, by number of children and family income, 2005-06

Source: ABS 1998-99 Household Expenditure Survey unit record file and authors' calculations. Note that there are only 11 sole parent families with four children in our dataset, so the '4 children' estimates should be treated with extreme caution.

[ top ]

The cost of each additional child in sole parent families with up to four children is shown in Table 7 and Figure 9. The cost of the first child is the greatest across all incomes (between $89 and $204). For an average sole parent family the average cost of a second child was approximately 62 per cent of cost of the first child, while the cost of the third child was approximately 50 per cent of the first. For the fourth child this dropped to 44 per cent.

At low family incomes of $284 the cost of the second child was approximately 70 per cent of that of the first, while the cost of the third child was approximately 60 per cent of the first. For high income families the cost of the second child was approximately 57 per cent of that of the first, while the cost of the third child was approximately 42 per cent of the first.

In general, the cost of children in sole parent families was found to follow similar patterns to those for intact couple families-older children cost more and families with higher incomes spend more on their children, of all ages, but especially the older children.

Source: ABS 1998-99 Household Expenditure Survey unit record file and authors' calculations. Note that there are only 11 sole parent families with four children in our dataset, so the '4 children' estimates should be treated with extreme caution.

Source: ABS 1998-99 Household Expenditure Survey unit record file and authors' calculations. Note that there are only 11 sole parent families with four children in our dataset, so the '4 children' estimates should be treated with extreme caution.