All Posts in Category: Childcare Subsidy
Malcolm Turnbull announced in a speech last week that he intends to introduce changes to Childcare funding as soon as parliament resumes. I understand that this will happen next week. If it does pass through parliament early this year, as hoped by the government, it will start at the intended date of 1 July 2018. I have written in the past in detail what those changes will be and you can read my detailed explanation here.
We are well over due a change. I have calculated that my childcare fees have increased by 57% from 2011 when my eldest started long day care to now with my youngest. However there have been no changes AT ALL to the Childcare Rebate cap of $7,500. In 2011 I did not reach the cap with three days a week of childcare, now in 2017 I will reach it at around 10 months into the financial year. This is for the same level of care and probably with our carers receiving similar salaries. Not impressed.
So what is stopping parliament from passing the legislation that will approve these changes? These changes were first introduced in 2013 so what is taking so long? It is that in order to put an extra $3 billion into Childcare funding, the government wants to raid another Family Benefit. Simply, to increase funding for Childcare payments, the government is planning to reduce funding for Family Tax Benefit and this is creating a lot of push back from those that hold the balance of power in our parliament.
And so we remain at a standstill. Again.
It will be interesting to see what the government will be willing to negotiate in order to see these changes implemented. As usual, I’ll keep you updated.
If you are still unsure of how you can take advantage of the current Childcare funding arrangements, my guidebook Your Family Budget tells you how to set up your arrangements to ensure you don’t have to repay Centrelink at the end of the year. Also it includes details of the best way to receive your payments for your situation plus simple calculations that will help you determine how long it will take for you to reach your Childcare Rebate cap of $7,500. You can purchase and quickly download Your Family Budget here.
This week saw the first sitting of parliament since the federal election. The Government didn’t waste any time and reintroduced* the legislation that will make the big changes to Child Care Benefit and Child Care Rebate – the Jobs for Families Child Care Package.
Originally, this package was meant to start on 1 July 2017, but in the Budget delivered in May 2016, its introduction was delayed by one year and will begin on 1 July 2018.
*(Reintroduced as it was introduced in December 2015, but not passed by the Senate, instead it was referred to an inquiry. This inquiry did actually recommend it be passed, but then parliament was dissolved for the election!)
What are the Changes to Child Care and how will it affect you?
Here is a reminder of what this package is going to offer:
1. The Childcare Benefit and Childcare Rebate will disappear and be replaced with one Childcare Subsidy.
2. It is means tested. Here are the combined family income rates:
|Combined Family Income||Subsidy per cent of the actual fee charged (up to relevant percentage of the hourly fee cap)|
|Up to $65,710||85 per cent|
|More than $65,710 to below $170,710||Tapering to 50 per cent*|
|$170,710 to below $250,000||50 per cent|
|$250,000 to below $340,000||Tapering to 20 per cent*|
|$340,000 or more||20 per cent|
*Subsidy tapers down by 1 per cent for each $3000 of family income
3. Notice that it is up to a percentage of an hourly fee cap – not a percentage of the actual rate you pay if your fees are higher than these rates. This is the same system as the current Childcare Benefit standard hourly rate. Currently at $4.30 an hour.
When the subsidy commences the hourly fee caps will be:
|Service type||Maximum hourly fee cap|
|Centre Based Long Day Care||$11.55|
|Family Day Care||$10.70|
|Outside School Hours Care||$10.10|
4. For families earning more than $185,710, an annual subsidy cap of $10,000 per child will apply, similar to the cap of $7,613 we have now.
5. All of these rates will be adjusted for CPI so when 1 July 2018 rolls around they will be slightly higher.
6. You need to be performing an ‘activity’ to be eligible for the Childcare Subsidy, this can include paid work, self employed work, unpaid work in a family business, looking for work, volunteering or studying. (I haven’t found any mention of unpaid maternity leave which is currently eligible for 12 months of Childcare Rebate.)
7. It is the number of hours of that ‘activity’ you perform that gives you a corresponding number of hours of Childcare Subsidy, the Activity Test is:
|Hours of activity (per fortnight)||Maximum number of hours of subsidy (per fortnight)|
|8 hours to 16 hours||36 hours|
|More than 16 hours to 48 hours||72 hours|
|More than 48 hours||100 hours|
It looks like the Hours of Activity will relate to the parent with the lower number of hours. So if your family has a stay at home parent that works less than 8 hours, your family wont be able to access the new Childcare Subsidy.The exception is if your Combined Family Income is less than $65,710. Then you will be able to access 24 hours a fortnight.
Edit: The Bill was passed by the parliament on 9 February 2017. I have made minor updates to this blog post to reflect this and any other rate changes.
It’s tips similar to this one that are included all throughout my instruction manual Your Family Budget. I don’t just tell you what to do and what it all means, but more than that, I actually give you information that makes it relevant for your situation, whether you are applying for Paid Parental leave or Childcare Payments. Save yourself the stress and the wasted hours of time and download Your Family Budget today.