Federal Politics

Childcare changes: 45,000 families to lose out because of high childcare fees

About 45,000 families will be worse off under the Coalition's childcare reforms because they pay childcare fees that are higher than the upper limits of the government's new subsidy rate.  

A Senate committee also heard on Wednesday night that a further 37,000 families would be worse off because they did not work enough hours according to the new "activity test".   

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This breakdown comes after the government published modelling late last month that showed overall, about 184,000 families would lose support in the new childcare package that starts in July 2017, while more than 815,000 will be better off. 

Under the reforms, families will receive subsidies based on an hourly fee cap set by the government. For long day care, this is $11.55 an hour and for family day care, $10.70. 

Both parties are promising to spend money on childcare. But neither side is really serious about it.
Both parties are promising to spend money on childcare. But neither side is really serious about it. Photo: Peter Braig

With some childcare centres charging $170 a day and beyond, some families will not be covered by subsidies. 

Education Minister Simon Birmingham told the Senate estimates hearing on Thursday that many of the 45,000 families who would have reduced funding because their childcare fees were more than the cap were earning above $170,000 a year. 

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"That number does tend to be skewed more towards higher income brackets," he said. 

Education Department deputy secretary Jackie Wilson also said that some parents were "quite willing" to pay extra childcare fees for things like Zumba classes for their young children. 

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Education Minister Simon Birmingham has outlined plans to collect HECS debt from deceased estates and graduates now based overseas. Photo: Daniel Munoz

The group of 37,000 who are estimated to lose benefits because they will not meet the activity test tend to be earning less than $170,000 a year, the committee heard. 

Senator Birmingham added that the modelling here was "conservative". It is hoped more people will be encouraged to take up more work, study or volunteer hours as a result of the changes in order to qualify for childcare subsidies. 

Under the new activity test, parents will need to work or study at least eight hours a fortnight to be eligible for 36 hours of subsided childcare; more than 16 hours to be eligible for 72 hours of subsidy and more than 48 hours to be eligible for up to 100 hours.

Families earning about $65,000 will get about 85 per cent of their fees back, up to the government-determined hourly fee cap. This will taper to 50 per cent for families earning about $170,000.

Parents are currently able to access 24 hours of care a week through a means-tested payment, without having to meet a work or study test.

To access an additional non-means tested payment, they need to work or train "at some time" during the week – but there is no minimum number of hours.

The new childcare package was introduced to Parliament late last year. Labor has not declared whether it will support the changes, saying it still has concerns about how it will effect some groups. 

Community and childcare groups have also expressed concerns that the new package is too complicated, with Mission Australia warning some parents may even give up and pull their children out of care.  

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