Treasurer to announce $1.7b measure to ease childcare costs for families

A $1.7 billion Budget boost designed to ­encourage mums back into the workforce will slash the costs of childcare for 250,000 families. SEE HOW MUCH YOU’LL SAVE.

Working families with two or more children will see big cuts to their childcare bills from July under a radical Budget change designed to ­encourage mums back into the workforce.

Under the changes, to be unveiled on Sunday, half of Australia’s families with one child in care will have 95 per cent of their out-of-pocket expenses for any additional kids paid for by the government.

Victoria Young, with daughters Hannah, four, and Courtney, two, says the cost of childcare can stop parents returning to work. Picture: Annette Dew

This will end the current situation that can see childcare costs for families double when they put a second child in care.

The government is also junking the cap of $10,560 on childcare subsidies, after which parents earning more than $189,390 have to pay 100 per cent of childcare fees.

Together the changes will go a long way to ending disincentives for parents, ­especially mothers, to work extra days because their wages are eaten up by childcare costs.

It will also ago a long way to trumping Opposition Leader Anthony Albanese’s promise earlier this year to increase childcare subsidies.

The cost of the reforms, which will cut the cost of childcare for more than 250,000 families, has been budgeted at $1.7 billion.

Benefit: 2 kids in childcare for 4 days

Family income	Current out of pocket cost	Current subsidy	New 2nd child subsidy	Future out of pocket cost	Total better off per week
$40,000	$124.60	85%	95%	$83.20	$41.60
$80,000	$149.18	82%	95%	$95.39	$53.79
$110,000	$232.38	72%	95%	$136.99	$95.39
$140,000	$315.58	62%	92%	$190.78	$124.80
$180,000	$416.00	50%	80%	$291.20	$124.80

A family earning $140,000 year with two children in care four days a week, who are ­currently paying $316 a week, will be $125 better off each week under the changes.

A family on $80,000 with three children in four days of care will be $108 per week ­better off.

Treasurer Josh Frydenberg said the money was in addition to the $10.3 billion the government would spend on childcare this year.

“These changes strengthen our economy and at the same time provide greater choice to parents who want to work an extra day or two a week,” he said.

“This is a targeted and proportionate investment that simultaneously makes childcare more affordable, increases workforce participation and boosts the Australian economy by up to $1.5 billion per year.”

Treasurer Josh Frydenberg wants the $1.7 billion measure to increase workforce participation rates. Picture: Gary Ramage

The changes have been welcomed by business leaders, with Business Council of Australia boss Jennifer Westacott saying they would go a long way towards fixing some of the financial cliffs and disincentives that stop women working to their full potential and hold back our economic growth.

“Today’s announcement will make a huge difference to many of the 90,000 people across Australia who said they weren’t in the workforce last year because of the high cost of childcare,” she said.

“This isn’t just making a fairer society, it’s also an economic imperative.”

The government estimates the changes will mean about 40,000 people will work an extra day per week, boosting GDP by up to $1.5 billion.