What do childcare changes mean for you?

Latest News | Apr 07, 2017

Originally published at Kids in the City Magazine.

Last week the Turnbull Government’s $1.6 billion childcare package was passed through the Senate. Here’s what it means for you.

While the new scheme isn’t slated to begin until July 2, 2018 and the amended legislation needs to go back to the lower house for approval before it’s officially passed, it’s worth noting the main changes and how they might affect your family.

What happens to the current system?

The current system consisting of the Child Care rebate (which covers up to 50 per cent of child care fees up to an annual cap of $7500) and the means-tested Child Care Benefit will be scrapped and replaced with one payment called the Child Care Subsidy.

How much is the new subsidy?

Well, that depends on how much you earn and how much you work. Both parents have to work, study or volunteer for at least eight hours a fortnight to satisfy the activity test for the new subsidy. Families earning $65,710 or less will have 85 per cent of their child care fees covered by the subsidy. The subsidy then gradually tapers down to 50 per cent once your family income reaches between $170,710 and $250,000. Those earning between $250,000 and $340,000 will get around 20 per cent of their fees covered and families with a combined income of more than $350,000 will not get any payments.

So, is that a percentage of what my child care centre charges me?

Unfortunately not. The fee subsidies are based on a set hourly rate, which is $11.55 for centre-based day-care, $10.70 for family day care and $10.10 for outside school hours care). If you pay more than this, you have to cover the difference.

Where will the subsidy be paid?

The subsidy will be paid directly to child care service providers.

Is there a cap on the subsidy?

Again, this depends on how much you earn. While there’s no annual cap on subsidies for families on $185,710 and under, those earning more than $185,710 will only be able to claim $10,000 per child.

Will I be entitled to the same amount of subsidised care as the current system?

In the current system, you’re entitled to 24 hours a week of subsidised care regardless of whether you work or not. Under the new system, this will be cut to 12 hours and will only be available to those earning less than $65,710 a year.

For more details on the changes, visit www.education.gov.au/jobsforfamilies

How will these child care reforms affect you? Will you be better or worse off?