Childcare subsidy payment blunder leaves families in financial limbo

Families are being left in financial limbo as changes to Centrelink’s childcare subsidy causes mass confusion over rebates, with many told they owe thousands - find out about the massive flaws in the system here.

Mums and dads have been wrongly ordered to pay back up to $5000 in childcare subsidy payments while thousands remain in financial limbo as a new rebate system causes chaos.

Outraged families have slammed Centrelink after they were told they had been overpaid the federal government subsidy, only to have cases reviewed and massive bills wiped.

Meanwhile some parents owed money by the government — because they were underpaid the subsidy last year — still haven’t got their cash.

A Sunday Herald Sun investigation has found serious issues plaguing a new system set up last year when two childcare rebates were replaced with a single means-tested payment.

Melbourne mum Jess Hunter, from Botanic Ridge, was stunned to get a debt notice of more than $5000 and was one of 248 parents across the country who challenged the system and won.

Nicole Kenway and with her children Alannah, 11, Jenna, 6 and Piper, 4. They copped a $500 debt from Centrelink because they were told they had received too much childcare subsidy during the year. Picture: Tony Gough

An “internal error” was discovered and Ms Hunter was instead owed $1000.

“How many other people have been affected and completely overlooked it? I spoke to a few other mums and they said ‘oh, I would not have questioned it’,” she said.

Most childcare subsidies are now paid directly to centres, which subtract it from their fees.
Parents estimate their annual income in order to set a subsidy level, and at the end of the year this estimate is “balanced” against tax returns.

Those who underestimate earnings are likely to get a debt, while parents who over-estimate get money back.

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The agency keeps 5 per cent of the parents’ subsidy during the year to cover gaps, but 117,000 of 833,000 families with earnings so far “balanced” still owe money.

Chirnside Park mum of three Nicole Kenway said she had to repay $500, and working nine days a fortnight with three kids meant she did not give time to sit on hold for hours with Centrelink and had now “given up” fighting it.

The chaos comes as the government reels from its Robodebt debacle, which saw thousands of welfare recipients issued automatic debt notices based on invalid income-averaging technology.

Adelaide mother-of-two Courtney Swansson was slugged debt notices under both schemes. Ms Swansson said she challenged her $1800 childcare debt and “after many tears and endless phone calls” found she was actually owed $750.

“While I am forever grateful for any assistance I receive. I worry that an agency that is a lifeline for many has the ability to scare or bully people into paying big debts that are generated by computers with incorrect data,” she said.

Amanda Rishworth is worried families might be paying debts they don’t actually owe. Picture Kym Smith

Opposition early childhood education spokeswoman Amanda Rishworth said families shouldn’t have to complain to get the right outcome.

“I worry how many families are currently paying off debts they don’t actually owe,” she said.

A Department of Human Services spokesperson said a delay in processing outcomes was because “we’ve taken a measured and careful approach to this process”.

But mother of four Michelle Warren said this had left her in “financial limbo”.

“We do not go over the top at Christmas, but we do have four children to buy for as well as nieces and nephews. It would be nice not to worry about paying the gas bill at this time of year,” she said.

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Originally published as Childcare subsidy payment blunder leaves families in financial limbo