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Australian Government Coat of Arms

Budget | 2015-16

Budget 2015-16
Australian Government Coat of Arms, Budget 2015-16

More affordable child care

A better child care system

The Government’s reforms will provide child care that is simpler, more affordable, accessible and flexible.

The Government will invest an additional $3.5 billion over five years on child care assistance, including a new Child Care Subsidy.

The simplified Child Care Subsidy will be implemented from 1 July 2017 with a single subsidy based on family income, replacing the Child Care Benefit, Child Care Rebate and Jobs, Education and Training Child Care Fee Assistance Programme.

This responds to longstanding community frustration with the current system that is complex and difficult for families to navigate, with many programmes poorly targeted.

The Child Care Subsidy will provide assistance to meet the cost of child care for parents who are working, looking for work, training, studying or undertaking any other recognised activity such as volunteering.

The Child Care Subsidy will be based on a percentage of the actual fee paid, up to a maximum hourly fee cap for each service type, with the level of subsidy based on family income.

These changes will provide more generous assistance for hardworking Australian families

The new Child Care Subsidy

Families earning around $65,000  or less will receive a subsidy of 85 per cent of their child care fees (up to an hourly fee cap).

The subsidy gradually tapers to 50 per cent for families earning around $170,000  or more.

There will be no annual cap for families earning less than around $185,000.  Families earning around $185,000  or more will have a $10,000  annual cap on the total amount of assistance provided per child per year. This is $2,500  more than the current Child Care Rebate annual cap per child.

In 2017‑18,  the hourly fee caps will be set at:

  • $11.55  for Long Day Care;
  • $10.70  for Family Day Care; and
  • $10.10  for Outside School Hours Care.

From 1 July 2018, the income threshold for the maximum subsidy rate will be indexed to the Consumer Price Index, with other thresholds aligned accordingly, therefore increasing over time.

To be eligible for the Child Care Subsidy, children must attend an approved child care service and meet immunisation requirements.

The Child Care Subsidy will be paid directly to providers under these arrangements.

The new Child Care Subsidy will make the decision to return to work, or stay in work, easier

Assistance for working families

Government assistance for child care is to help people get into work and then be able to stay in work.

Eligibility for the Child Care Subsidy will be determined by an activity test that closely aligns the hours of subsidised care with the amount of work, training, study or any other recognised activity such as volunteering by parents.

Eligible activity (per fortnight) Subsidy entitlement (per child per fortnight)
8 to 16 hours Up to 36 hours
17 to 48 hours Up to 72 hours
49 or more Up to 100 hours

Families with incomes of around $65,000  or less in 2017‑18,  who do not meet the activity test, will be eligible to receive up to 24 hours subsidised care per fortnight under the Child Care Safety Net.

Income support recipients with a participation requirement will have their participation count as eligible activity to determine their subsidy entitlement.

Transition

The new Child Care Subsidy will take effect from 1 July 2017.

The existing Child Care Benefit, Child Care Rebate and Jobs, Education and Training Child Care Fee Assistance Programme will continue until the start of the Child Care Subsidy on 1 July 2017.

The Department of Human Services will contact families directly and provide information on current entitlements and how they may change under new arrangements.

The new child care arrangements will be supported by an updated IT system that will streamline administration for services and families.