Childcare win as federal Budget promises 95 per cent subsidy and subsidy cap lifting

How working parents will be able to cut their childcare costs down to just $6 a day under a major Budget rebate – and what it will mean for your family

  • Treasurer Josh Frydenberg expected to announce changes to childcare system 
  • A 95 per cent subsidy will be provided to families cutting fees to just $6 a day
  • Federal government will also lift $10,000 subsidy cap for high income earners 

Working parents with two children aged under five could soon be paying as little as $6 a day in childcare fees as part of the federal 2021-22 Budget.

Treasurer Josh Frydenberg will announce on Sunday a $1.7billion package that will bring in several sweeping changes to the childcare system.

Among the changes include providing a 95 per cent subsidy for second and subsequent children aged five and under, and lifting the $10,000 subsidy cap for high income earners.

‘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,’ Mr Frydenberg said.

Working parents could soon be paying as little as $6 a day in childcare fees as part of the federal 2021-22 Budget (stock image)

Treasurer Josh Frydenberg is expected to announce on Sunday a $1.7billion package that will bring in several sweeping changes to the childcare system

Treasurer Josh Frydenberg is expected to announce on Sunday a $1.7billion package that will bring in several sweeping changes to the childcare system

‘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.’    

Families with two or more children aged five and under will be able to access the 95 per cent subsidy – a boost on the current 85 per cent.  

Around 250,000 families are expected to save $2,260 a year on childcare fees. 

Families who earn a combined $110,000 and have two kids in childcare four days a week will save $95.39 a week.

Parents who earn $140,000 altogether will be able to save $124.80 per week.

Around 18,000 families are also set to benefit when the $10,560 subsidy cap is lifted.

The change will be available for families who earn a combined $189,390 a year. 

Under the current plan, high-income earners have been forced to pay the full childcare fees after passing the $10,560 threshold. 

Business Council of Australia chief executive Jennifer Westacott praised the package as a step in the right direction.

‘Today’s announcement will make a huge difference to many of the 90,000 people across Australia who said they weren’t in the workforce last year because of the high cost of child care,’ she said. 

Among the changes include providing a 95 per cent subsidy for second and subsequent children aged five and under, and lifting the $10,000 subsidy cap for high income earners (stock image)

Among the changes include providing a 95 per cent subsidy for second and subsequent children aged five and under, and lifting the $10,000 subsidy cap for high income earners (stock image)

Australian Childcare Alliance president Paul Mondo pointed out the changes overlooked families with one children and said there were ‘opportunities for further enhancements of the package – to cover every child in every family’. 

Shadow treasurer Jim Chalmers was also critical of the childcare overhaul. 

‘The big problem here is this childcare announcement is about getting the Liberals through the election, it’s not about getting women back to work,’ he said.

‘It makes it more complex and misses the chance to do a key economic reform.’

But Mr Frydenberg believes the changes will strengthen the economy.

‘And at the same time provide greater choice to parents who want to work an extra day or two a week,’ he said.

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