Australian Child Care Subsidy Fast-Tracked by Four Months

Children play on the branch of a tree at Hyde Park in Sydney, Australia, on July 13, 2019. Jenny Evans/Getty Images

Families with two or more children will be able to benefit from an increased Child Care Subsidy (CCS) from March 7, 2022, four months earlier than initially planned.

The annual $10,655 cap will also be removed on Dec. 10, 2021 and retrospectively applied for the current financial year, so families do not have to worry about rationing childcare. Families who reach the cap before this date will have any additional out-of-pocket costs reimbursed.

Eligible families will see their CCS rate increase by 30 percent, up to a maximum rate of 95 percent. This will leave them $700 better off during this financial year and $2,200 in the subsequent financial years.

Minister for Education Alan Tudge said these changes would help ease pressure on working families and encourage more parents to go back to work.

The country is currently experiencing a major skill shortage after the international border has been closed for 19 months, cutting of the stream of migrant workers.

“These changes are good for families and great for the economy, and it’s significant that we are able to deliver them sooner,” Tudge said. “Removing the cap and increasing subsidies means more parents, particularly mothers, can return to work or take on more hours if they choose to.

Minister for Women’s Economic Security Jane Hume said according to the Business Council of Australia, around 90,000 people last year cited childcare as the reason why they weren’t in the workforce.

“We know that the most effective way to improve women’s economic security is by increasing participation in the workforce,” Hume said. “Reducing the cost of childcare and removing those disincentives to increasing the number of days or hours that you work, removes one of the major barriers to women’s workforce participation.”

Modelling by Treasury found that the changes would allow 40,000 parents to work an additional day on average, boosting the economy by up to $1.5 billion a year.

Tudge and Hume said these extra benefits were targeted towards families with two or more children because analysis showed that they experience the greatest workforce disincentives.

“In some cases, you’re more or less working those extra days for no financial benefit at all, once you net out your childcare costs and maybe some loss of your family tax benefits,” Tudge said.

Tudge said the federal government was able to bring forward the changes after legislation moved forward faster than anticipated.