Cheaper childcare for 85,000 in SA after Labor promise passes

Labor says up to 85,000 South Australian families will be better off under a major increase to childcare subsidies that passed parliament on Wednesday.

Up to 85,000 South Australian families will have access to cheaper childcare after Labor passed a flagship election promise to raise subsidies.

From July next year, the childcare subsidy for families earning $80,000 or less will increase from 85 per cent to 90 per cent.

The subsidy will decrease by one per cent for every additional $5000 of income, stopping at a threshold of $530,000.

A couple with a combined annual income of $120,000 and one child in care will save $1780 in the first year.

Further subsidies will be available for families sending a second child to care.

The federal government predicts about 85,000 South Australian families will have their childcare bills slashed as a result of the reform, which Labor promised before the May federal election.

The policy will cost $5.4bn a year nationally.

Prime Minister Anthony Albanese during Question Time at Parliament House in Canberra. Picture: NCA NewsWire / Martin Ollman

Prime Minister Anthony Albanese said it would “widen further the doors of opportunity for more Australians” – referring to the number of women Labor expected would be able to work more hours due to more affordable childcare.

“It boosts productivity, it boosts workforce participation, but it is also positive for our youngest Australians,” Mr Albanese said during Question Time on Wednesday.

As part of the reforms, which passed parliament on Wednesday, Indigenous children will receive 36 hours of subsidised care per fortnight.

Early Childhood Education Minister Anne Aly said it would provide “household budget relief for families struggling with the rising cost of living, while also improving the economic security of women”.

SA senator Karen Grogan said 96 per cent of families with kids in childcare would be better off under the new reforms.

“Last month I visited Hillbank Community Children’s Centre and heard first-hand from their early educators how important this legislation is for families,” Senator Grogan said.

SA senator Karen Grogan said 85,000 SA families will be better off. Picture: NCA NewsWire / Gary Ramage

Dr Aly said about 1.2m families Australia-wide would benefit from the new measures.

As part of Labor’s childcare package, the Australian Competition and Consumer Commission will design a “price regulation mechanism” aimed to stop price gouging, while the Productivity Commission will launch a review of the entire sector.

The childcare subsidy reform was one of the major election promises Mr Albanese hoped to pass before the end of the parliamentary sitting year next week.

Labor is considering forcing parliament to sit for extra days in order to pass its contentious industrial relations reform, which would open up multi-employer bargaining to thousands of businesses.

The opposition has attacked Labor for the move, saying the policy was not an election promise and was only designed after the September Jobs and Skills Summit.