To cut the cost of living for around a quarter of a million families and to help boost workforce participation, the Australian Government has announced it would make an additional $1.7 billion investment in child care as part of the 2021-22 Budget.

The changes will take effect from 1 July 2022 and include:

  • Increase the child care subsidies available to families with more than one child aged five and under in child care, benefitting around 250,000 families;
  • Remove the $10,560 cap on the Child Care Subsidy, benefitting around 18,000 families.

The Treasurer Josh Frydenberg said in a media release the investment builds on the $10.3 billion the Government is already investing in child care this year.

“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.”

“This is a targeted and proportionate investment that simultaneously makes child care more affordable, increases workforce participation and boosts the Australian economy by up to $1.5 billion per year.”

For those families with more than one child in child care, the level of subsidy received will increase by 30 percent to a maximum subsidy of 95 per cent of fees paid for their second and subsequent children.

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 care.

A family with three children on $80,000 would have the subsidy increase from 82 to 95 per cent for their second and third child and be $108 per week better off for four days of care.

According to the Australian Government, these changes will ensure half of Australian families will receive a 95 per cent subsidy for their second and subsequent children.

Under the current arrangements, the maximum child care subsidy payable is 85 per cent of child care fees. These subsidies apply at the same rate per child, no matter how many children a family may have in child care. As a result, for families with more than one child in care this means that their child care costs double when they have a second child.

Additionally, families with combined incomes above $189,390 face a child care subsidy cap of $10,560 per child per year. As a result, these families start paying full fees towards the end of the year which reduces their incentive to participate in the workforce.


Comments are closed.