Childcare costs to be cheaper for families

Childcare will be cheaper for many families from July 2022.

By Melissa Grant

Families with two or more children in childcare are set to save thousands of dollars in fees each year.

Childcare subsidies for second and subsequent children will be increased to as high as 95 per cent and the subsidy cap removed for high income earners as part of a $1.7m spend on childcare included in the federal budget.

The changes aren’t due to begin until July 2022, however Prime Minister Scott Morrison says they could be implemented earlier “if possible”.

The fee overhaul means families with two children aged five and under in childcare four days a week, for example, would save between $41 and $125 each week.

Treasurer Josh Frydenberg says the policy is designed to make childcare more affordable and give parents the choice to work extra hours.

Currently, parents are given the same subsidy for their second child, which means the cost of childcare doubles. Childcare subsidies are also capped at $10,560 per child, with families earning more than $189,390 having to pay full fees once the subsidy runs out.

Under the new subsidy system, childcare fees would be subsidised between 80 per cent and 95 per cent for second and subsequent children. The subsidy cap would also be scrapped.

For example, 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 childcare.

Education Minister Alan Tudge said the measures would further ease the cost of childcare and encourage workforce participation, particularly for larger families.

“These measures will help remove the barriers for parents, particularly mothers, to return to the workforce or to increase their hours, as their family grows,” he said.

Minister for Women Marise Payne said the investment in the Child Care Subsidy would 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.

“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.”

However, Opposition Leader Anthony Albanese says the federal government has “missed an opportunity” to reform childcare and boost women’s workforce participation.

Mr Albanese said “Labor’s cheaper childcare plan” lifts the subsidy and “smooths” the taper rate across the board, regardless of how many children a family has and how old they are.

He also claimed Labor’s childcare plan would assist 1 million families instead of 250,000.

“The many Australian families struggling under the cost of out of school hours and vacation care will not benefit at all from the Morrison government’s lift in subsidy,” he said .

“Families desperately need immediate relief from soaring childcare costs, yet these changes are not even set to come in for over a year.”

Mr Morrison said the changes required to the current system were quite complex, while giving some hope fee relief could come sooner.

“If it’s possible to do these things earlier then we will certainly look at that,” he told Sunrise.