Child Care Subsidy 2018

Child Care Subsidy 2018

Author: Sourav Shah, for ‘Spot A Childcare’

Making child care affordable and accessible to Australians is very important for the future of the country and the economy. Child care has a direct correlation to children’s learning and development needs, including the transition to schooling. In addition, it increases workforce participation, particularly for women. There are more than a million children in some form of formal care (child care, long day care, family day care, preschool or after school care) and the number is growing with the increasing population. The number of formal ECEC (Early Childhood Education and Care) services has expanded substantially over the past decade. Over the same period, Australian Government funding has almost tripled to around $7 billion per year, and now covers two thirds of total ECEC costs. Despite this, many parents report difficulties in finding suitable ECEC options. Also, many parents struggle with the out-of-pocket expenses.

Why change from the CCR,CCB regime to the new single Child Care Subsidy ?

There is a lot of confusion around the various rules related to the CCR (Child Care Rebate) and CCB (Child Care Benefit)schemes. According to the recent productivity commission inquiry findings only around 5 per cent of families reach the $7500 per child cap on CCR contributions. Many families cut back on their ECEC needs to reduce their out-of-pocket expenses. Most of these families use ECEC in central Sydney or Canberra and/or have children in care for over 40 hours per week. Also, the cost of administrating the CCR and CCB regime is quite high and having a single simpler system was recommended by the productivity commission. The new Child Care Subsidy system is expected to be easier to understand and administer and more accessible to lower and middle-income families. In addition, it will increase workforce participation further.

Child Care Subsidy: Key highlights

Under the Child Care Subsidy the subsidy rate will be increased for lower and middle-income families (up to 85% for families earning below $66,958) and gradually reduced for families earning above $251,248. The annual cap of $7500 has been removed for lower and middle-income families and the cap has increased to $10,190 for higher income families.An hourly rate cap is also being imposed (eg. $11.77 for Centre Based Day Care). Families with an income of more than $171,958 may be worse off if their choice of child care centre charges more than this cap. This new rule may result in parents favouring child care providers who advertise costs which are equal to or lower than the cap.

Child Care Subsidy Eligibility

Child Care Subsidy eligibility rules are simple and listed below.

  • The child for which the subsidy is intended must have been immunised as per the immunisation requirements
  • The child must be 13 or under and not attending secondary school
  • Claimants must meet the residency requirements
  • The care must be delivered in Australia by an approved child care provider
  • In addition, to be eligible for Child Care Subsidy the claimaint must be liable to pay for care provided by an approved child care provider, and not be part of a compulsory education program

Child Care Subsidy: How does it work?

The Child Care Subsidy depends on three factor’s.

Please click on the above links to get more information on each factor.

Please note that the new Child Care Subsidy Package has additional provisions (Additional Child Care Subsidy ) for those in special circumstances leading to hardship. Please visit the site relating to Additional Child Care Subsidy for more information.

If you believe you will be negatively impacted by the new Child Care Subsidy package and are in any form of hardship, please contact Centrelink to discuss your individual circumstances.

For more information on the Child Care package visit https://docs.education.gov.au/node/38911

Sources / References used :

  • Education.gov.au
  • Based on Productivity Commission data, Childcare and Early Childhood Learning.
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