Huge cash windfall for working families in Budget - NEWS.com.au

Working parents will secure childcare for as little as $6 a day for a second child under a major Budget overhaul designed to encourage mothers to re-enter the workforce.

Treasurer Josh Frydenberg will announce the changes to cover up to 95 per cent of childcare fees for second and subsequent children aged five and under, on Sunday.

The changes will leave thousands of working families better off in some cases delivering a cash windfall worth thousands of dollars a year.

For wealthier families on high incomes the government will also abolish the $10,000 cap on childcare fee rebates which means parents will no longer face paying full fees towards the end of the year once they hit the maximum allowable rebate.

Eligible families could pay as little as $6 a day for childcare

For families paying an average of $120 a day in childcare fees the changes mean that some families will pay as little as $6 a day or less for a second child when childcare costs are covered under the new rebate.

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Labor had promised a 90 per cent rebate

The major budget announcement also means the Morrison Government has now matched one of the biggest pre-election policy announcements of Labor leader Anthony Albanese to cover up to 90 per cent of childcare fees for eligible families with a 95 per cent rebate.

Currently, childcare subsidies of up to 85 per cent apply at the same rate per child, no matter how many children a family may have in child care meaning childcare costs double with every second and subsequent child.

Under the changes to be announced, that will increase to 95 per cent for families on lower incomes.

“These changes strengthen our economy and at the same time provide greater choice to parents who want to work an extra day or two a week,’’ Treasurer Josh Frydenberg said.

“This is a targeted and proportionate investment that simultaneously makes child care more affordable, increases workforce participation and boosts the Australian economy by up to $1.5 billion per year.”

Half of all families eligible for 95 per cent rebate

Around half of Australian families will be eligible to receive a 95 per cent subsidy for their second and subsequent children.

That means the changes won’t deliver cheaper care to some older children attending pre-school at childcare but will benefit babies and younger children.

It also means that childcare fees will no longer double with second and subsequent children but will reflect the growing cost of larger families.

The big-spending commitment to ensure it’s economically viable for women to return to work when childcare costs are considered follows the Prime Minister Scott Morrison signalling women will be a major focus of the 2021 budget.

It follows a national debate over the rights of women at work and the impact of violence and sexual violence sparked by former Liberal staffer Brittany Higgins’ account of an alleged rape at Parliament House.

The changes to be announced by the Morrison Government suggest the Prime Minister has dug deep to arrest a slide in the polls with the childcare investment alone amounting to $1.7 billion in the 2021-22 Budget.

How you will be better off

Under the changes if a single parent on $65,500 with two children in four days of long day care, chooses to work a fifth day they will be $71 a week better off compared to the current system.

A family earning $110,000 a year will have the subsidy for their second child increase from 72 to 95 per cent, and would be $95 per week better off for four days of care.

A family with three children on $80,000 would have the subsidy increase from 82 to 95 per cent for their second and third child and be $108 per week better off for four days of

care.

High income families also win

There will also be changes to benefit high income families with combined incomes above $189,390.

These families currently face a child care subsidy cap of $10,560 per child per year.

That means that after they have received over $10,000 a year in childcare care rebates they start paying full fees towards the end of the year.

This cap will be removed under the changes.

Changes designed to help women with re-enter workforce

Minister for Women Marise Payne said the changes were designed to deliver greater choice for Australian women and men as they balance their family and work responsibilities.

“For women in particular, it opens the door for those choosing to work or to work more, which is critical to their own economic security and a prosperous Australian economy,” she said.

“Increasing the Child Care Subsidy is an important measure that will help reduce the disincentives for women to participate in the workforce to the full extent they choose.”

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2021-05-01 20:40:01Z
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