The current childcare system is hideously complex. Child Care Benefit, Child Care Rebate and a perverse system of means- and activity-testing combine to create an expensive ($10 billion a year and counting…) behemoth that still just doesn’t deliver for families. Here’s what the Turnbull Government have put on the table – and what should be there.
The Jobs for Families package, first announced in last year’s Budget, brings much-needed simplification of existing policy. Instead of two different payments – one calculated as a dollar figure and the other as a percentage of fees – both Child Care Benefit and Child Care Rebate will be combined for a simply subsidy based on a percentage.
The package delivers for low- and middle-income families, particularly those who work. It includes new spending, which is largely targeted at low- and middle-income earners. The lowest-income families will have their childcare subsidised up to 85%, and the $7,500 cap on the Child Care Rebate will be abolished for middle-income families.
The activity test has been tightened to provide more support for working families. Eight hours of work, study, training or volunteering a fortnight will enable families to claim 36 hours of subsidised care. For low-income families who do not meet this test, 24 hours a fortnight of subsidised care can be claimed.
There is also a Nanny Pilot Programme for families who cannot access standard hours of care. This year’s Budget announced there will be a second round of applications to take part, subject to strict parental eligibility criteria. The amount of subsidy per child will also be increased from $5.95 to $8.50 an hour, in a change that will hopefully make the program more accessible to more families.
With a package that’s more generous to the majority of families, there needs to be a way to control costs. One measure is to implement caps on hourly fees. Subsidies will be paid based on a benchmark price for fees, rather than the actual fee charged. This will make providers think twice about over-charging parents, and prevents people who choose premium services from passing that cost on to the taxpayer — leaving less funding to improve access for those who need it most.