Childcare subsidy changes to improve affordability and work flexibility
Although many Aussies are awaiting the full details of the Federal Budget, many schemes have already been announced, one of which surrounds the childcare subsidy.
The Federal Government has revealed it will add an extra $1.7 billion to the current childcare subsidy, currently $10.3 billion a year.
The new addition is said to specifically target low to middle-income families earning less than $130,000 a year. It’s also estimated that around 40,000 parents will now have the chance to work one extra day a week.
At the moment, the current arrangement for the maximum childcare subsidy for families with two or more children under the age of five is 85%, this now jumps to 95% for incomes between $40,000 and $110,000, benefitting half of Australian families.
“This is a targeted and proportionate investment that simultaneously makes childcare more affordable, increases workforce participation and boosts the Australian economy by up to $1.5 billion per year,” said Treasurer, Josh Frydenberg.
“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.”
Benefit for families with two children in childcare four days a week
| Family income | Current out of pocket childcare cost per week | Current subsidy | New second child subsidy | Future out of pocket childcare cost per week | Total better off per week |
| $40,000 | $124.60 | 85% | 95% | $83.20 | $41.60 |
| $80,000 | $149.18 | 82% | 95% | $95.39 | $53.79 |
| $110,000 | $232.38 | 72% | 95% | $136.99 | $95.39 |
| $140,000 | $315.58 | 62% | 92% | $190.78 | $124.80 |
| $180,000 | $416.00 | 50% | 80% | $291.20 | $124.80 |
Source: https://nsw.liberal.org.au
Additionally, the Federal Government will remove the $10,560 cap for families with combined incomes of more than $189,390, benefitting approximately 18,000 families.
It’s hoped that these changes will provide financial relief for women specifically, as last year’s budget was criticised for leaving women behind.
“For women in particular, it opens the door for those choosing to work or to work more, which is critical to their own economic security and a prosperous Australian economy,” said Minister for Women, Marise Payne.
“Increasing the Child Care Subsidy is an important measure that will help reduce the disincentives for women to participate in the workforce to the full extent they choose.”
If you’d like a summary of all the changes introduced in this year’s budget, have a read of our Budget 2021 article.
Or if you’re interested in learning more about how the average Aussie family fared during the 2020 free childcare program, have a read of our Childcare Costs Report.