Albanese Government’s $5.6b childcare package set to save parents $1700 on average

The Albanese Government’s new $5.6 billion scheme will bring the cost of child care down for 95 per cent of parents, but the relief won’t come straight away.

Parents of young children are set to save an average of $1700 a year on child care, after the Albanese Government passed one of its first election commitments.

The $5.6 billion scheme will bring the cost of child care down for 95 per cent of parents, including those earning up to $530,000 a year, but it won’t kick in until July 1 next year.

The reforms passing through parliament follow the Labor Government in late October ordering an Australian Competition and Consumer Commission inquiry into the cost and availability of child care.

Prime Minister Anthony Albanese, who announced the policy in his first Budget reply speech in October 2020, said the development was not just about easing cost-of-living pressures for parents but about economic reform as well.

“It boosts productivity. It boosts workforce participation but it is also positive for our youngest Australians,” he said on Wednesday after the bill passed the Senate late Tuesday night.

“So many parents who you meet around the country say they‘re relieved when their child reaches the age of five and goes to school because all of a sudden their family income is much better off because they‘re not paying childcare fees.”

Prime Minister Anthony Albanese says the scheme will boost productivity and is economic reform. Picture: NCA NewsWire / Martin Ollman

From July 1, the maximum child care subsidy will be increased from 85 per cent to 90 per cent, with the top rate applying to parents earning a combined $75,000 a year.

The existing child care scheme provides an 85 per cent subsidy for families earning up to $70,000 a year, tapering down to no subsidy at a $354,000 household income

The new subsidy rate will start at 90 per cent, then taper down as parents’ combined income increases, falling to 82 per cent for those on $120,000, 37 per cent for those in $350,000 and to zero for those earning more than $530,000.

Education Minister Jason Clare said it meant that the average Australian family earning a combined $120,000 annually, with a child in care three days a week, would save $1700 a year.

“It makes it easier to be able to return to work or to work more hours or to work more days. And that means more skilled workers back in the workforce at a time when businesses are screaming out for more skilled workers,” Mr Clare said.

Parents on a combined income of $72,000 will save $600 a year, those earning up to $177,406 will save up to $2000 and those earning up to $356,000 will save about $2900.