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Federal Budget 2021: Government proposes $1.7b injection into child care

A $1.7 billion Child Care Subsidy package has been announced as part of the Federal Government’s 2021 budget in an attempt to lower the cost of child care for many Australian families.

Under the proposal, caps on childcare subsidies for higher-income earners will be removed and child care costs will be reduced for families with two or more children.

Treasurer Josh Frydenberg says about 250,000 families will be better off under the changes, which will come into effect in July 2022.

Changes to the Child Care Subsidy in the 2021 Budget

Removing rebate cap

Under the current Child Care Subsidy scheme, there is an annual rebate cap of $10,560 per child for families earning more than $189,390 a year. This cap will be removed under the changes announced in the 2021 Budget.

Increased subsidy for second and consequent children

Under the current scheme, your Combined Family Income is how the government determines how much of your child care costs it will cover. The lower the family income, the higher the percentage they will cover.

A family earning up to $69,390 a year will have 85 per cent of their fees covered by the Subsidy. This rate gradually reduces to 0 per cent for families who earn more than $353,680 a year.

From July 2022, the Government will increase a family’s Child Care Subsidy if they have more than one child under 6 in care (and earn less than $353,680).

The subsidy will increase by 30 per cent (capped at 95 per cent) for their second child and subsequent children.

The increased subsidy will not apply to In Home Care as it is subsidised on a family basis, rather than per child.

Other Budget measures aimed at young families

The Government has also announced a new funding agreement for preschool. Usually the Government provides annual funding but under the 2021 Budget has promised $1.6 billion over the next four years.

The funding agreement, which still has to be worked out with the states and territories, will pay for at least 15 hours a week of preschool for children in the year before they start school.

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To learn more about the Australian Government’s new Enhanced Child Care Subsidy visit www.dese.gov.au/child-care-subsidy/enhanced-child-care-subsidy

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