Labor Promises Bigger Childcare Subsidies
The cost of childcare is one of the major expenses for a young family if both parents wish to be in the workforce. Of course, a single parent often has little choice but to use a childcare service. Working parents often have to do the arithmetic to work and pay childcare. Otherwise, a parent has to give up work and take care of the childcare responsibilities. The Labor opposition in the lead up to the federal election on the 18th of May 2019 has announced a significant funding boost to subsidize childcare if they form the government.
Currently, a cap of $11.77 per hour against which a means-tested subsidy percentage applies. That subsidy is currently a maximum of 85% of the total fee or the cap fee which is the lowest. According to Bill Shorten Labor will increase the rebate for families currently entitled to 85% rebate to a 100% rebate. This rebate of 100% will apply to families earning less than $70,000 per year. This will save a family around $1400 per year. A family with an income of less than $70,000 per year using a center charging $100 per day will save $15 per day or about $3,800 per year for a child in full-time care.
Parents will still have to meet a work test known as the activity test.
Both parents have to meet the activity test which depending on the number of hours of care required ranges from eight hours a fortnight for 36 hours of care up to 48 hours per fortnight which provides an entitlement of a hundred hours of subsidized care.
A family will be entitled to 10 days of subsidized care which equates to 2 working weeks if:
A childcare center is charging a 10-hour session
If parents are working a minimum of 48 hours per fortnight or 24 hours per week.
This activity test requirement is the current requirement under the existing Coalition policy. There has been no indication that Labor intends to change this formula.
It is relatively easy for parents to meet this requirement as they can be working at home in the family business or doing voluntary work or studying for work.
Low-income families are entitled to access 24 hours of subsidized childcare for each child per fortnight if their incomes are under $66,958. This is currently provided at the highest rate of subsidy which is expected to continue under Labor. It is with an increase in the minimum income cut off to be increased to almost $70,000 per year.
