Many Australian families have been holding their breath, waiting to see what the governments proposed changes to childcare rebates would be. Well today (Mother’s Day ironically), the secrets were revealed.
The good news is that it doesn’t look as bad as many expected, in fact, for most families things are looking pretty good.
(Note this is general information only and you should seek specific advice on your own situation. These are proposed changes and have not yet passed the senate.)
Here are what the changes to child care rebates will look like for different families.
Double income family, combined income between $65,000 & $185,000
There will no longer be a $7500 cap on rebates each year and families will receive between 50% and 85% of their child care fees back as a rebate with no cap (paid directly to child care centres). Most families will be $30-50 a week better off.
There will be a daily capped fee rate, above which no further rebate will be payable. This will be $127 a day for long day care.
Double income family, combined income over $165,000
Families will receive 50% of their childcare costs back with the yearly cap increased from $7500 to $10,000 per year.
There will be a daily capped fee rate, above which no further rebate will be payable. This will be $127 a day for long day care.
Single income family, combined income over $65,000
Families with a stay at home parent will lose eligibility for the new rebates due to the introduction of a stricter work/study/training test requiring a minimum of 8 hours per fortnight.
Single income family, combined income under $65,000
There will be a safety net in place to allow up to 12 hours a week of childcare for low-income families without the need to meet a work/study/training test. The purpose behind this is to ensure children from low income and disadvantaged families still have access to early learning.
Single parent family family
I wasn’t able to find any specific information on single parent families but based on what is available, I would assume they would be treated the same as a two parent family i.e. Family income limits as above, rebates only available where the parent is working.
Key changes
- Introduction of a minimum 8 hours a fortnight of work/study to qualify for any rebate, meaning families with a stay at home parent will no longer be able to claim a rebate. Currently many of these families are able to claim the rebate by doing a very small amount of volunteer work as there is no minimum work/study hours set.
- Increase in the yearly cap for the rebate to $10,000 for high income earners and unlimited for all other families who are eligible. Previously this was $7500 per child per year for all families.
- Introduction of a per day cap in the rebate, effectively meaning any fees above $122 a day will not receive additional rebate funding. For most families this will be balanced out by the removal of the $7500 yearly cap.
Unknowns
- It isn’t clear what this means for registered care services who are only eligible for child care benefit (at a reduced rate) but not child care rebate. The proposed changes roll both payments into a single payment so it isn’t clear what happens in this situation.
- It hasn’t been explicitly stated whether maternity leave (paid and unpaid) will continue to count as fulfilling the work/study test but it could be assumed that it will.
My thoughts
Overall the changes seem quite positive. They are particularly generous to high income earners, where a family with two kids in long day care could be $5000 a year better off! While hardly surprising, I do feel it is disappointing that these families gain a lot more where most single income families lose out significantly.
You can read all about the changes from the horses mouth so to speak on Scott Morrison’s very own page here 😉
What are your thoughts? How will the changes affect you?
I still think that scrapping the Paid Parental leave doesn’t mean we end up better off. Weekly we may have an extra $30 in our pockets but the extra few weeks that allowed me with my child were priceless. I’m so gutted. I’ve never been so furious about a complete backflip on a policy before
I agree, it’s pretty disappointing. That one took me by surprise I have to say. They put up such a fuss about introducing better paid maternity leave only to go and make it worse!
Thanks for your article. I think it is so sad that single income families are not really supported at all. Not even the change to income split for tax purposes. We have sacrificed financially so that one of us can stay home with the kids while they are small and not use childcare, but it is difficult. I’d prefer a system where families had a certain amount of support and they could choose to either spend it on childcare or use it for a parent staying at home (or some combination). I expect the current and planned measures cost the government way more than they earn in tax revenue etc.