Huge catch in PM’s new childcare scheme: ‘The devil’s in the detail’

A childcare relief package is promising to save families up to $125 a week, but there’s a sting in the tail for parents currently paying high fees.

Parents with two kids in childcare won’t secure a dollar of fee relief under Prime Minister Scott Morrison’s proposed overhaul for over a year and families with only one child will get nothing.

Experts have warned the devil is in the detail of Prime Minister Scott Morrison’s new $1.7 billion boost to childcare spending.

It’s promising to save families with two kids in care up to $125 a week in fees but the majority of parents currently struggling to pay high fees today are unlikely to secure any benefits.

Working parents could secure childcare for as little as $6 a day for a second child under the plan.

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Under the plan around half of Australian families will be eligible to receive a 95 per cent subsidy but only for their second and subsequent children.

But the fine print confirms the policy won’t start until July, 2022, suggesting the big-spending budget announcement is more of an election promise than a plan for urgent relief.

Treasurer Josh Frydenberg in Parliament House Canberra. Picture: Gary Ramage

CEO of Early Childhood Australia Samantha Page, says the devil is in the detail. Picture: supplied

Early Childhood Australia CEO, Samantha Page said while the new investment was welcome the devil is in the detail.

“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.”

Working parents will secure childcare for as little as $10 a day for a second child under the planned changes.

But there’s a sting in the tail as soon as your oldest child leaves childcare and starts school because the policy only applies if you have two children in childcare.

That means as your older child reaches school age you are no longer eligible for the rebate because it requires two children to be in daycare at the same time.

It also means there’s nothing in the policy for families with only one child or one child in childcare.

There are also rules that restrict the 95 per cent rebate to children aged five and under.

That means the changes won’t deliver cheaper after school care for big families with more than one child.

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“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.

“The Government’s child care proposal will only lift the child care subsidy rate for families who have a second or subsequent child under five years old in the system.

“By only providing increased subsidies for a second or subsequent child in the system, the announcement will make an already complicated system more complicated, and will cause confusion for families as to whether this reform will leave them any better off.”

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

Under the changes to be announced that will increase to 95 per cent for around half of all families but only if you have two kids in childcare at the same time.

The major budget announcement means the Morrison Government has now partly matched one of the biggest pre-election policy announcements of Labor leader Anthony Albanese to cover up to 90 per cent of childcare fees for eligible families.

While the Morrison Government’s plan is more generous at 95 per cent it only applies to second and subsequent children.

By contrast, Labor is offering to cover up to 90 per cent of childcare fees for all parents regardless of how many kids are in childcare.

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Anthony Albanese called for more immediate relief for parents. Picture: NCA NewsWire/Flavio Brancaleone

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Under the 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

care.

There will also be changes to benefit high income families with combined incomes above $189,390.

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.

Treasurer Josh Frydenberg said the changes will boost the $10.3 billion that is already spent on child care 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.