The cost of raising children has risen 50 per cent in the past five years with a middle-income family now spending $812,000 on two children, new modelling shows.
In 2007, the same family spent $537,000 on children from the time they were born until they left home. The jump in cost largely comes from increased childcare and education costs.
''The cost of raising children is significant, however, the report also shows that much of this cost is discretionary with high-income families spending much more on their children than low-income families,'' a principal research fellow with the National Centre for Social and Economic Modelling, Ben Phillips, said.
The cost of supporting two children from the ages of 0 to 24 for a low-income family last year was $474,280, and $1.1 million for high-income families.
Food and transport remained the biggest costs for families, according to the report, which was done by NATSEM and AMP.
Low-income families spent a greater proportion of their income on the costs of children. However, those families were also receiving greater amounts of government assistance. Once that was factored in, the cost for a low-income family dropped to $55,392. For middle-income families the cost came down to $449,513 and for those on high income it fell to $878,862.
AMP managing director of financial services Craig Meller said some of the increased costs could be put down to personal choice.
''The drivers of this increase are complex but two important factors are that families are devoting more resources to private school education and childcare and the prices paid for these services are also increasing steeply,'' Mr Meller said.
The report found that although the start-up costs of having children might feel high to parents they were outstripped by the costs of older children.
Higher food, energy, transport and education costs meant 18- to 24-year-olds cost five times as much as newborns to four-year-olds for low-income families. The cost was four times as much for high earners.
The report also highlighted the difficulty many two-income families faced when deciding how many hours a week the second earner - usually the mother - should work because of the rate at which government assistance stops.
For example, a stay-at-home mother whose husband earned $70,000 a year would receive just under $15,000 a year in assistance. If she worked 19 hours a week at a full-time salary equivalent of $70,000 her take home pay would be $28,000 a year, an effective tax rate of 60 per cent after childcare costs and the loss of government payments.
From: The Sydney Morning Herald