The government will spend $3.5bn over the next four years on the childcare package – which takes effect after the next election in July 2017 – in addition to the about $7bn a year already budgeted for childcare spending. The new system will:
• offer more generous payments of 85% of the cost of care to all families earning up to $65,000;
• remove the $7,500 a year each child cap on payments to all families earning up to $185,000 a year;
• continue to offer the 50% rebate to families earning over $185,000 and increase the annual cap for each child for these families to $10,000.
But to save money it will also:
• remove all childcare subsidies for families earning more than $65,000 where both parents are not in the workforce, replacing them with a sliding scale of payments to encourage parents to increase their hours of casual or part-time work;
• reduce the number of hours of subsidised childcare offered to non-working families earning under $65,000 to 12 hours a week, but continue to subsidise those hours recognising that children from these families may have particular need of the pre-school education that childcare provides;
• Stop parents from “double-dipping” by accessing both government- and employer-funded paid parental leave.
And the entire package depends upon the Senate passing the cuts to family tax benefits proposed in last year’s budget but rejected by the Senate. They included:
• ending family tax benefit B (paid to single-income families) when the youngest child turns six, saving $1.9bn over five years;
• freezing all family tax payments for two years, saving $2.6bn over four years;
• cutting end-of-year family tax benefit supplements, saving $1.2bn over four years.