24/03/2017

Child care cost relief for families

Families across the Wide Bay will soon benefit from more affordable, accessible and flexible child care after the biggest reforms to child care and early learning in 40 years passed the Australian Parliament on Thursday night.

Federal Member for Wide Bay Llew O’Brien said the Coalition Government’s reforms would assist families who were finding that child care fees and early learning expenses strained the household budget.

“Child care is a significant part of many families’ budgets. The Government is taking action to overhaul the system to deliver child care cost relief and more early learning opportunities for children,” Mr O’Brien said.

“These changes will inject an extra $1.6 billion into the system – with around one million families across the country to be better off – including many of the 6,460 families in Wide Bay that use child care and early learning services.

“The Government is targeting support to people working the most and earning the least. It is estimated these reforms will encourage more than 230,000 families to return to the workforce or increase their involvement in paid employment.”

The reforms come into effect from 1 July 2018. There are three key features:

1.       Better support for people working the most and earning the least – The changes simplify the current complicated rebate system by replacing payments with a single, means-tested Child Care Subsidy that boosts the current flat 50 per cent rebate rate to 85 per cent for families earning up to $65,710 and then tapers down to 20 per cent for families earning more than $250,000 and cuts out for families earning more than $350,000. The reforms also introduce a three-step activity test with an entry point of four hours a week that gives families eligibility for 18 hours a week of subsidised child care. This will align hours of care with the combined amount of work, training, study, volunteering or other recognised activity being undertaken by parents.

2.       Relief from the rebate cap – We will abolish the $7,500 rebate cap to ensure families on incomes of $185,710 or less aren’t limited by a cap on the amount of child care they can access and the cap will be increased to $10,000 for families earning more than $185,710, overall offering relief to the approximately 100,000 families that hit the current $7,500 rebate cap.

3.       Downward pressure on incessant fee increases – The reforms introduce an ‘hourly rate cap’ on the subsidies the Government will pay that will set a benchmark price so Australians have a reference point to hold providers accountable and from which they can expect prices shouldn’t dramatically exceed. We will also slash red tape so services can be more flexible in the hours they deliver instead of the current system where families who routinely need and use only four, six or eight hours of care, are charged for 10 or 12 hours.

The reforms also include initiatives to encourage workforce participation, stronger compliance powers to stamp out rorting, more flexibility for the hours child care centres open and additional investment for services to support children from disadvantaged backgrounds or with additional needs such as disability.

For further information on the reforms, visit https://www.education.gov.au/jobsforfamilies 

•        Our reforms also include a ‘Child Care Safety Net’ that represents additional investment for services to support children from disadvantaged backgrounds or with additional needs such as disability.

•        The Child Care Safety Net will also ensure families who do not meet the activity test and are earning $65,710 or less have access to 24 hours of subsidised care per fortnight so they have opportunities to look for employment or more work if they are in a position to do so, and so that their children have access to early learning opportunities.

•        Other elements of our reforms will deliver stronger compliance powers that build on the $1 billion our actions and other legislation have stopped going out the door to people attempting to rort the child care system.

•        These detailed reforms are the result of consultation with experts, input from the Productivity Commission and three Senate inquiries and they are the most significant improvements to the system in 40 years.

•        Examples of benefits:

o        A family on $50,000 – both parent/s working, with two children aged under 6 in long day care three days a week at $100 a day will be $3,295 better off a year

o        A family on $80,000 – both parent/s working, with two children aged under 6 in long day care three days a week at $100 a day will be $3,424 better off a year.

o        A family on $94,000 – both parent/s working, with two children aged under 6 in long day care two days a week at $100 a day will be $1,771 better off a year.

o        A family on $150,000 – both parent/s working, with two children aged 6 and under in long day care three days a week at $100 a day will be $1,626 better off a year.