Ministerial Release: Family Tax reform to better support Australian children
The Turnbull Government today introduced the Jobs for Families Child Care package and Family Tax Benefit bills to Parliament to encourage workforce participation and provide a more flexible, accessible child care system.
Minister for Education and Training Senator Simon Birmingham said the savings from the Family Tax Benefit bill would be used to fund the $3.2 billion Jobs for Families Child Care package.
Minister Birmingham said the package would provide greater choice for more than 1.2 million families and would take the Government’s investment in child care to almost $40 billion over the next four years.
“Families using child care in 2017 on family incomes of between approximately $65,000 and $170,000 will save an average of $30 a week on their child care bills,” Minister Birmingham said.
“The Jobs for Families Child Care package provides the highest rate of subsidy to those on the lowest income levels and more hours of subsidy to those who work the most.
“Our priority is to increase access to care for those families who need it most, particularly working parents. We know the cost and accessibility of child care is a barrier for parents who want to work or work more.
“Since the Jobs for Families Child Care package was announced in the Budget the Government has consulted widely with parents, child care providers and businesses. We have modified the child care subsidy for two reasons.
“The first being feedback that the previously announced subsidy rate was too generous for high income families and the second being the fact this package was to be funded through Family Tax Benefit reform, where savings have not been realised.
“Accordingly we have reduced the subsidy rate for families on incomes of more than $250,000 and reduced the subsidy floor for higher income families from 50 per cent to 20 per cent.”
Minister Birmingham said the package represents the Government’s response to the recommendations from the Productivity Commission Inquiry into Child Care and Early Childhood Learning, which was the largest review of the child care system since the 1990s.
“The Commission found the current child care system with its numerous payments, is unnecessarily complex and that poorly targeted programmes are failing to support families to be in jobs or provide additional support where it is needed.
“The package includes a strong safety net that will provide additional learning opportunities for children in low income families or at risk or in the care of their grandparents. The package will also support learning opportunities for all pre-school children.
“Consistent with our extensive consultation so far, the Turnbull Government is proposing to refer the legislation to the relevant Senate Committee.”
Minister for Social Services Christian Porter said the Family Tax Benefit bill will put more money in family pockets each fortnight, through increases in the maximum rate of FTB Part A, Youth Allowance, and Youth Disability Support Pension
“These are real and sweeping reforms – but they need to be paid for,” Minister Porter said.
“That’s why we are restructuring family tax benefits and redirecting the funding.”
In addition, the FTB Part B standard rate will be increased by $1,000 each year for eligible families whose youngest child is aged under one year.
The Government will ensure single parents aged over 60 years and grandparent and great-grandparent carers with a youngest child aged 13–18 years will be eligible to receive FTB-B at the standard rate.
The end-of-year supplements will be phased out, given they are no longer fit for purpose.
“The supplements were introduced to fix a FTB debt problem that’s largely resolved,” Minister Porter said. “It makes sense to redirect the money from the supplements back into families but in a way that allows parents to re-enter the workforce. Research says that is the single best way to increase family wealth and prosperity.”
The savings from these changes will fund a child care system that supports parents as they balance work and family, and that continues to give children access to quality early learning to get a head start in their education.
For more information on the Jobs for Families child care package visit: www.education.gov.au
Cameo 1: Two parents, two children
Robert and Julia have two children, Eddie aged 1 and Charlotte aged 3. Robert works full time and Julia works part time 2 days a week. Their combined family income in 2018-19 will be $119,000. Under the new Child Care Subsidy, Eddie and Charlotte attend long day care on the days their mother goes to work, Robert and Julia would be $1,087 better off even after the new Family Tax Benefit changes have been taken into account.
Cameo 2: Single parent, one child
Annette is a single mother with one child. Jeff is 3 years old and attends long day care for 4 days per week while his mother is at work. Annette’s income in 2018-19 will be $68,000. Under the new Child Care Subsidy, Annette would be $2,845 better off even after the new Family Tax Benefit changes have been taken into account.
NOTE: All analysis is provided in 2018-19 terms, as this is the first year that both proposed policies are in effect.