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Announced May 2021, the Federal Government’s new changes to the Child Care Subsidy (CCS) will slash childcare expenses for around 250,000 lower and middle income families.
As a result, centres are expected to see swelling enrolment numbers from families choosing to work an extra day or two a week – those families who found it financially unfeasible under the old subsidies.
What the subsidy changes look like
Prior to the new reform, children in care are eligible for a maximum subsidy of 85%, meaning a family’s childcare expenses double when a sibling is enrolled.
Additionally, families with a combined income of $189,390 face a subsidy cap of $10,560, which typically means working parents face full fees towards the end of the financial year, and disincentivises women from the workforce.
The new changes will benefit these two cohorts:
- Families with a child in care will receive a 30% subsidy boost for subsequent children, increasing to a maximum of 95% instead of 85%. The Federal Government says this change will benefit half of Australian families.
- The subsidy cap for families with a combined income of $189,390 will be removed, giving them continual access to CCS year-round.
The changes will be significant for many families. For example, according to the Federal Government announcement, a family with three children, earning $80,000 per year will pocket $108 more for four days of childcare under the new 95% subsidy for siblings.
Alan Tudge, Minister for Education and Youth, says the new measures will “help remove the barriers for parents, particularly mothers, to return to the workforce or to increase their hours, as their family grows.”
Historically, and particularly given the lack of paid paternal leave, women are more likely to stay home or work part time, which has caused an estimated $2million lifetime pay gap between men and women.
The scheme aims to help close the gap by giving families more choices in the hours they work, as well as opportunity to follow career goals and give their child a quality pre-school education.
Treasurer Josh Frydenberg says the changes will “strengthen our economy and at the same time provide greater choice to parents who want to work an extra day or two a week.”
New changes part of a greater plan to ease expenses
The CCS reform builds on a $10.3 billion government investment into childcare in 2021. It’s encouraging to see how the enrolment numbers blossomed since 2018, with 280,000 more children having enrolled in early childhood centres after a new government plan was rolled out to cut childcare expenses.
The CCS reform will come into effect July 2022. It will apply to children 0-5 years, but not to Outside School Hours Care.
Ultimately, more affordable childcare benefits Australians across all sectors:
- More income opportunities for families, especially larger families
- Greater country-wide economic growth
- Boosts the relevance and need for more quality child care centres and educators
Focusing on the new way forward for families
As family and workforce patterns continue to shift, we can see once again how important childcare education is for modern households. Early childhood centres are one of the backbones of financial prosperity for families and the future of our national economy.
With waitlists for childcare enrolments a norm, and the Government spotlight on increasing affordability, the goal for ECEC will be providing enough quality centres to keep up with the changes, and the new norm for families.
