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| Child care subsidy changes
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What does the new Jobs for Families package mean for you?
As anticipated, the budget has delivered confirmation of Scott Morrison's Jobs for Families child care package, containing financial and other support measures that aim to streamline child care payments to provide a simpler child care subsidy; be more helpful to mums who want to get back into the workforce; and to support disadvantaged families.
Based on 2011 Census data, the government believes that its new Jobs for Families measures will encourage over 240,000 "to increase their involvement in paid employment". The total number of families encouraged to work would also include almost 38,000 jobless families, where no one is in work.
Morrison says that the Jobs for Families child care package aims to make it easier for families to get back to and stay in work, especially for middle and low income families. "We want these families to be able to choose to work, we don't want that choice denied because of complex, inflexible and unaffordable child care arrangements", he said.
Key components of the new measures are:
- A new means tested, single child care payment to replace the child care benefit and child care rebate
- Removal of cap for child care subsidy for parents earning under $185,000
- Benchmarking of child care fees
- New In home Care (nannies) pilot scheme
- A new child care safety net to help support vulnerable and disadvantaged families
- Minimum hours activity test (the former work/study test) which will require parents to work at least 24 hours in a two-week period in order to qualify for the new child care subsidy
While the new financial components will officially come into play from July 2017, there are a number of measures that form Morrison's "Jobs for Families" programmes that come into effect sooner:
- Establishment of a two year In Home Care (Nannies) Pilot scheme
- A new Child Care Safety Net, to support families who are vulnerable and disadvantaged, and three new programmes to support Aboriginal children and families that have children with special needs.
- Continuation of funding for preschool programmes in 2016 and 2017
The Jobs for Families main changes will take effect from 1 July 2017 and include:
- Abolition of the Child Care Benefit, Child Care Rebate and Jobs, Education and Training Child Care Fee Assistance programmes.
- Introduction of a single means tested Child Care Subsidy for all families, subject to a new activity test for up to 100 hours of subsidised care per child per fortnight, paid directly to approved care service providers.
- For family incomes up to $65,000 the Child Care Subsidy will be 85% per child of the actual fee, or a benchmark price, whichever is lower. This will reduce to 50% for family incomes of $170,000 and above at the time of implementation.
- Families on incomes under $185,000 will no longer have a cap on the amount of subsidy they receive.
- A cap of $10,000 per child will be established for the total value of subsidies for family incomes of $185,000 and above.
- Hourly benchmark prices for care at $11.55 for Long Day Care, $10.70 for Family Day Care, $10.10 for Out of School Hours Care and $7.00 for the In Home Care (Nannies) Pilot commencing in January 2016.
(The benchmark price has been based on the projected mean price at the time of implementation plus 17.5% for Long Day and Out of School Hours Care and 5.75% for Family Day Care, recognising their lower cost of overheads).
Less complication - one payment
One of the main motives behind this one payment subsidy, which was proposed following the Productivity Commission's report earlier this year, is that the previous means-tested child care benefit and non-means-tested child care rebate was too confusing and complex, leading to many families being unsure if they were eligible or not.
Currently all parents, even those zero rated for child care benefit due to income, receive a flat 50 per cent rebate for care at approved centres, family day care and selected in home care. For higher income earners this will stay at 50% with a $10,000 per child per year cap and no cap for those earning under $185,000, but low income earners (under $65,000 will receive up to 85% back per child of the actual fee, or a benchmark price, whichever is lower.
Clearly the new means test is designed to make child care more affordable to low and middle income earners and to give a fairer spread of funds.
Will the new Activity Test make part time work more achievable?
The confirmation of the new Activity Test will now mean that parents will have to prove they are working or studying for 24 hours in a two-week period in order to qualify for the new child care subsidy.
The new test aims to enable mothers to carry out part time work and get back into the workforce and to access pre-school and child care for their children, while imposing clearer cut parameters means people cannot take unfair advantage of the subsidy.
Currently, parents qualify for the rebate if they participate in any kind of work or study, with no minimum number of hours of work or study required. From July 2017 the following activity to subsidy parameters will apply:
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| Activity (per fortnight) |
Number of hours of subsidy (per fortnight) |
| 8-16 hours |
Up to 36 hours |
| 17-48 hours |
Up to 72 hours |
| 49 hours |
Up to 100 hours |
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Up to 24 hours per fortnight will also be provided to children from families with incomes less than approximately $65,000 per year who do not meet the activity test to ensure continued access to early childhood learning. The 24 hours is equivalent to two six-hour sessions, which is the same period provided for K-2 public school education. Service providers will have full flexibility and discretion in how these hours of support are delivered.
No Jab, No Pay from January 2016
As of January 1 2016, all child care subsidies and support will remain linked to immunisation requirements. The 'no jab, no pay' policy will mean that the only reason that a child who is not fully vaccinated may enter child care is on medical grounds, e.g. allergy to vaccine or other medical condition that makes vaccinations unviable. Conscientious objection is no longer a valid reason. The child care subsidy will not be paid to parents of children who have not been vaccinated unless they have medical exemption.
A partial victory for the nanny campaigners and more child care flexibility for shift workers
As previously announced the new jobs for families package recognises the need for child care flexibility and nannies to fill the short fall of long day care centres and family day care for shift workers, families who have irregular working hours and those with children with special needs.
Nannies working for the above types of families will be deemed "approved" child care and their employers may claim child care means tested subsidy for them.
Nannies will need to work for an approved service provider (i.e., an agency) and be at least 18 years old. Parents will not be able to use the subsidy to pay a family member.
The two-year pilot, $246million nannies program, which comes into effect in January 2016 would provide in-home care for about 10,000 children, many from low to middle-income households.
Eligible working parents will include Police officers, nurses and emergency services workers.
While this does not allow every family using a nanny to be able to claim child care subsidies, it does go a long way to promoting the use of in home care and giving more options to families with legitimate shift work, unsociable working hours and children with special needs.
The measure that precludes the ability to claim for a family member is designed to help those claiming legitimately and stamp out the child care benefit claims rort that is happening in some areas of child care.
Supporting disadvantaged families
The Federal Government has made another pre-budget announcement, confirming it'll spend about $850 million to help disadvantaged children get child care. This child care safety net will include a community fund to support services in remote areas or suburbs where child care is very expensive.
The new Child Care Safety Net, to support families who are vulnerable and disadvantaged, and three new programmes to support Aboriginal children and families that have children with special needs will come into effect over the next two years.
The child care safety net aims to cover a broad range of circumstances for families who would otherwise find it hard to access child care. Scott Morrison confirmed in an interview on the ABC that "'Disadvantaged' can relate to people being in rural and remote areas, where it's difficult to have viable services. In other places it'll be children with disabilities. In other occasions it'll be families suffering temporary financial disadvantage…"
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How will the new families package affect you?We'd love to know so give us your feedback on our forum below
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