With the handing down of the 2015 Federal Budget came some significant changes in childcare subsidies. Here’s what you need to know to get the most financial benefit.
What is the Child Care Subsidy?
From 1 July 2017 the Child Care Subsidy (CCS) will be implemented, with a single subsidy based on family income. It will replace the Child Care Benefit, Child Care Rebate and Jobs, Education and Training Child Care Fee Assistance Programme.
According to the Government, it is designed to help meet the cost of childcare for parents who are:
- looking for work
- studying, or
- undertaking any other recognised activity such as volunteering.
What are families entitled to?
According to the Australian Government, a single means test will apply, with the level of support dependent upon family income.
- Families with an annual income of up to $65,000 will receive 85 per cent of the childcare fee paid, with no cap.
- Families earning between $65,000 and $170,000 will receive between 50 per cent and 85 per cent subsidy (dependent upon income), with no cap.
- Families earning between $170,000 and $185,000 are entitled to 50 per cent subsidy of fees, with no cap.
- Families with an annual income of over $185,000 can receive a 50 per cent subsidy, capped at $10,000 per annum.
In simple terms, families earning between $65,000 and $170,000 will be around $30 a week better off.
The number of hours families can have subsidised will depend upon how many hours parents are working, studying or training. For example:
- Families with 8-16 hours of activity a fortnight are entitled to up to 36 hours of subsidised childcare.
- Families with 17-48 hours of activity per fortnight can receive up to 72 hours of subsidised care.
- Those putting in 49 hours per fortnight are entitled to up to 100 hours of subsidy per fortnight.
This subsidy will be paid directly to approved childcare centres, meaning fewer upfront expenses for families.
However, in line with the Government’s “No Jab, No Pay” rule (effective from 1 January 2016), only parents who vaccinate their children will be eligible for these subsidies. Families choosing not to vaccinate will also be ineligible for the Family Tax Benefit Part A end of year supplement payment.
What about the Nanny Program?
There has been some talk about the Nanny Trial, outlined in the budget. In real terms, the Nanny Trial is designed to care for around 10,000 children whose families have difficulty in accessing regular childcare services.
The trial will run for two years — beginning on 1 January, 2016 and ending on 31 December, 2017, and only families earning less than $250,000 a year can apply. Under the program, nannies must be attached to an approved service, be at least 18 years of age, have a current Working with Children check and be qualified to administer first aid. Grandparents who currently care for children will not be considered ‘nannies’.
The bigger picture
According to the Government, these changes will encourage families to increase involvement in paid employment. Estimated figures indicate this translates to around 240,000 families and includes almost 38,000 jobless families (where no one is currently employed).
Ms Maria Renouf, Operations Manager at a leading Melbourne-based childcare centre, welcomes the changes handed down in the budget.
She says that it is vital to increase funding to encourage people to go back to work or study.
“The increase in Government funding for early learning and childcare will have a positive impact upon female work participation,” she says.
“The future of our economy relies upon some mothers getting back to the workforce. The boost in funding of quality early learning has a clear return on investments for the Australian economy,” she says.
Along with funding for families, Ms Renouf believes it is important care and early education provided to children are of the highest quality, to ensure our future generations will be confident and equipped individuals.
Under the new scheme, the Government will maintain support for the implementation of the National Quality Framework (NQF) to ensure standards of care are maintained. It is particularly important that parents feel confident about their children’s care and development.
Ms Renouf agrees that the protection of quality standards is of paramount concern for families and believes the Government has an obligation to continue to support quality care and working families.
“These changes to the budget will hopefully reflect and deliver a strong commitment to quality early childhood education and care for all Australians,” she says.
As part of the package, the Child Care Safety Net will deliver more funding to childcare centres supporting children with disabilities, and children from culturally or linguistically diverse backgrounds.
Regional and remote centres will be able to apply for grants and disadvantaged Indigenous communities will see childcare services better integrated with maternal and child health programs.
How can parents access the new subsidy?
It is important to remember that these changes will take place over time with the Child Care Subsidy replacing the current system as of 1 July 2017 — that’s two years from now. Obviously, a period of transition will occur between now and then.
The Department of Social Services has advised of the following timeline:
- January 2016: Commencement of the Nanny Pilot Programme
- July 2016: Commencement of some elements of the Child Care Safety Net
- July 2017: Child Care Subsidy will come into effect.
Families who currently use, or need to use, childcare in the future will be informed of changes to the current arrangement and be given timely information on how they may be affected.
In the meantime, further details can be found at www.dss.gov.au