What is the new Child Care Subsidy?
As part of the Turnbull Government’s commitment to improving early learning and child care services for Australian families, an extra $2.5 billion has been committed to improving the outdated and frustratingly complicated existing system.
How is the 2018/2019 Child Care Subsidy different to the existing child care payments?
Under the New Child Care Package, the current Child Care Rebate and Benefit will be replaced by a single, simplified Child Care Subsidy. From 2 July, three things will determine a family’s level of Child Care Subsidy.
The first is a family’s combined annual income. The second is the amount of activity each parent undertakes including how many hours they work, study, train or volunteer. Finally, the type of child care service a family uses will determine what Child Care Subsidy hourly rate cap will apply.
One of the major benefits the New Child Care Package will bring is the removal of the annual subsidy cap for the approximately 85% of families earning $186,958 or less a year. For families earning above this but below $351,248, the cap will be increased from the current $7,613 to $10,190 per child.
How will this new subsidy affect low and middle-income earners?
The New Child Care Package has been designed to offer more support than ever before to low and middle-income families. Under the new arrangements, child care will be more affordable for the majority of Australian families, with most lower and middle-income families to be the greatest beneficiaries.
As mentioned, the removal of the annual subsidy cap will relieve significant cost pressures for those who traditionally hit the cap months before the end of the financial year.
What do parents need to do to be eligible to receive the Child Care Subsidy?
Parents who currently receive child care fee assistance will not automatically roll over to the new system on 2 July. To make the switch, they need to log onto their Centrelink online account through myGov and complete a Child Care Subsidy assessment. I urge all families to complete this process now to ensure a smooth transition to the new subsidy.