Around 250,000 Australian families will now benefit from increased Child Care Subsidy (CCS) from 7 March 2022, four months earlier than first expected. On average, these families will be more than $2,200 a year better off.
The additional subsidies for families with two or more children in care were due to start on 11 July 2022, but the Morrison Government has been able to work across Departments and service providers to make necessary technical changes sooner.
Families with two or more children aged five years and under in care will have their CCS rate increased by 30 percentage points for their second child and any younger children, up to a maximum rate of 95 per cent.
More than half of eligible families will receive the maximum 95 per cent subsidy.
A family earning $110,000 a year with two kids in care, four days a week, will be better off by around $100 each week.
The $10,655 annual CCS cap will also be scrapped on 10 December 2021 and applied retrospectively for the whole 2021-22 financial year. Anyone who reaches the cap before this date will have any additional out-of-pocket costs for the 2021-22 financial year reimbursed.
Minister for Education and Youth Alan Tudge said the changes would ease pressure on working families and encourage more parents into work.
“These changes are good for families and great for the economy, and it’s significant that we are able to deliver them sooner,” Minister Tudge said.
“Removing the cap and increasing subsidies means more parents, particularly mothers, can return to work or take on more hours if they choose to.
“There are 280,000 more children in child care than when we came to office and this additional support will take our total investment to $11 billion a year.
“Importantly, our support is targeted to those who need it most. We are reducing the out-of-pocket child care costs which really add up when you have two, three or more children in care.”
Minister for Women’s Economic Security Senator Jane Hume said the package would particularly support mothers looking to get back into the workforce or take on more hours.
“Treasury estimates the additional subsidy will mean the equivalent of 40,000 parents are able to work an extra day per week, boosting the economy by up to $1.5 billion per year,” Minister Hume said.
“The Morrison Government is committed to increasing economic opportunities for Australian women and this additional child care support will remove disincentives for primary carers, particularly mothers, to participate in the workforce.
“Under this government women’s workforce participation has increased steadily and reached a record high of 61.9 per cent in March 2021.”
The Family Assistance Legislation Amendment (Child Care Subsidy) Bill 2021, which enables the additional payments, was passed on 12 August 2021.
The changes build on the Morrison Government’s Child Care Package, introduced in 2018, which is still keeping out-of-pocket costs low for families using child care.
Latest data shows the average out-of-pocket cost is just $4 per hour – around 90 cents per hour cheaper than before the Child Care Package was introduced more than three years ago.
More than 70 per cent of families pay less than $5 per hour, while almost a quarter pay less than $2 per hour, thanks to our system of providing the most support to those on lower incomes.
The Morrison Government has also recently paid out around $180 million in support payments to more than 6,000 child care services across areas of New South Wales, Victoria and the ACT impacted by COVID-19 lockdowns.
These payments are keeping services open, staff in work and providing financial relief for families by encouraging services to waive gap fees for children not attending care during COVID lockdowns.