How much you’ll save on childcare after Federal Budget helps families

Families will be better off by $2200 under childcare changes in the federal budget. But there are some families who will miss out.

Treasurer Josh Frydenberg has raised hopes childcare fee relief for larger families could be fast-tracked after blaming “IT” dramas for the 2022 start date.

In a big spending budget that offers little in the way of budget savings to pay down the nation’s deficit, the Morrison Government has devoted another $1.7 billion to improving childcare affordability.

The policy will offer rebates of up to 95 per cent if you have two kids in daycare.

“250,000 families will be better off by an average of $2200 each year,’’ the Treasurer told Parliament on Tuesday night in his budget speech.

“Giving more parents, especially women, the choice to take on extra work.”

But it’s been slammed as too little, too late because it won’t deliver a dollar of relief for over a year with the policy starting in July, 2022.

Why childcare changes won’t come in until 2022

Defending the delay, Mr Frydenberg told reporters in the budget lock up that he hoped the policy could be introduced sooner if possible.

“But again there are technical issues …with regard to changing IT and computer systems,’’ he said.

One of the issues is the complexity of the policy because it only applies to children aged 5 and under and only when you have two kids in care at the same time.

That means if your older children starts attending school you miss out on the 95 per cent rebate.

The Treasurer said he made no apologies for targeting the extra cash at larger families. He said Treasury forecasts suggested it could lead to parents collectively working an extra 300,000 hours a year, boosting productivity.

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Critics say the changes further complicate an already complicated system.

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“We have targeted our $1.7 billion commitment at families that have more than one child in childcare,’’ Mr Frydenberg.

“These are significant reforms. Now, we would like to introduce it into effect earlier than mid next year.”

As revealed by news.com.au last month, parents with two children or more in day care at the same time will secure generous new rebates covering up to 95 per cent of fees for eligible parents.

You could pay just $6 a day under the changes

Eligible families could pay as little as $6 a day for childcare under the changes.

But they will have to wait for over a year and vote in a federal election to qualify for relief which doesn’t come into force until July, 2022.

It’s a reform that promises to save families with two kids in care up to $125 a week in fees.

For wealthier families on high incomes the government will also abolish the $10,000 cap on childcare fee rebates which means parents will no longer face paying full fees towards the end of the year once they hit the maximum allowable rebate.

High-income families are the big winners under the policy.

The losers in the childcare plan

The Morrison Government estimates up to half of Australian families will be eligible to receive a 95 per cent subsidy but only for their second and subsequent children.

But the new policy doesn’t apply to “afters” fees for working parents regardless of how many kids you have and only applies when you have two or more children in daycare at the same time.

The news is even worse for parents with only one child - they will secure no fee relief under the plan that is geared towards taking the pressure off parents struggling with childcare fees for multiple children.

Early Childhood Australia CEO, Samantha Page has previously warned there’s no good reason for the government delaying relief for over a year.

“We are disappointed that changes are planned to come into effect in 2022, meaning many families currently using child care won’t have any relief,” she said.

“The changes announced add complexity to an already complex system – therefore clear information must be available to families and providers.”

Labor leader Anthony Albanese has also slammed the government for the delayed start date warning the Coalition had failed to fix childcare in nearly a decade in government.

“Families desperately need immediate relief from soaring child care costs, yet these changes are not even set to come in for over a year,” Labor leader Anthony Albanese said.

Labor is offering to cover up to 90 per cent of childcare fees for all parents regardless of how many kids are in childcare. That’s less than the 95 per cent offered by the Coalition for some families but it’s more generous over all because the ALP’s plan is for all children in childcare regardless of age. It also applies to ‘afters’ care for primary school children.

Currently, the maximum child care subsidy payable is 85 per cent of child care fees for low income families.

Under the Coalition’s changes a single parent on $65,500 with two children in four days of long day care who chooses to work a fifth day will be $71 a week better off compared to the current system.

A family earning $110,000 a year will have the subsidy for their second child increase from 72 to 95 per cent, and would be $95 per week better off for four days of care.

A family with three children on $80,000 would have the subsidy increase from 82 to 95 per cent for their second and third child and be $108 per week better off for four days of

High income families with combined incomes above $189,390 are winners however under the changes.

These families currently face a child care subsidy cap of $10,560 per child per year.

That means that after they have received over $10,000 a year in childcare care rebates they start paying full fees towards the end of the year.