Out-of-pocket costs cut for families with multiple kids in child care

Some 250,000 families with children in childcare will save $2000 a year under new changes to fees introduced by the Morrison Government.

Some 250,000 families with multiple children in childcare will save $2000 a year under new changes to fees introduced by the Morrison Government.

As of Monday, the rate of Child Care Subsidy (CCS) will be lifted by 30 percentage points for the second child aged five or under and any younger children in childcare, up to a maximum rate of 95 per cent.

The higher subsidy will boost support for working families, bringing the costs down “significantly” for low and middle-income families, Acting Minister for Education and Youth, Stuart Robert, said.

“These measures will ease the cost of childcare for about 250,000 families across Australia who on average will be $2260 a year better off. That means more money in their pocket each week,” Mr Robert said in a joint statement with Government Services Minister Linda Reynolds and Minister for Women’s Economic Security Jane Hume.

“For a family who are charged a typical fee and earn $120,000 a year with two children in child care for five days per week, the saving will be $144 per week compared to current settings.”

Some 250,000 families with multiple children in childcare will save $2000 a year under new changes to fees introduced by the Morrison Government. Photo: iStock

The fee change follows the removal of the annual CCS cap of $10,665 for families earning over $190,015 from December 10 last year and beyond.

Mr Robert said that the move “will make the CCS work harder for low and middle-income families with more than one child in care, bringing their childcare costs down significantly”.

Families earning $180,000 will see the greatest return, with the CCS increase saving them $162 per week, from $540 out-of-pocket to $378. A family with an income of $80,000, meanwhile, will see their out-of-pocket cost drop from $198 to $126.

Mr Robert said the Federal Government is committed to ensuring families can continue to access high quality, affordable early childhood education and care and support parents to engage in work, training and study.

“The average hourly out-of-pocket costs for children using Centre Based Day Care are 18 per cent lower than in 2018; at $4 an hour in March 2021, down from $4.87 in June 2018,” he said.

Acting Minister for Education and Youth, Stuart Robert. Picture: NCA NewsWire/Gary Ramage

The CCS increase was brought forward by four months to maximise savings for eligible families and “ensure families can benefit as soon as possible”, Ms Reynolds said.

She said that the extra funds would flow automatically to parents.

Ms Hume said that childcare “has the potential to remove barriers and to provide opportunities to those who need it most”.

“It’s all about empowerment, not dependence,” she said.

“The Morrison Government is targeting our childcare spend to make sure carers, overwhelmingly women, get the choices and chances they expect and deserve.”

Despite the fee relief, however, rising childcare fees are likely to eat up some of the savings – data from the Australian Bureau of Statistics (ABS) last year revealed family childcare expenses rose at least eight per cent in Sydney, Perth and Canberra.

At the same time, spending on childcare rose by 6.5 per cent in Brisbane and 3.3 per cent in Melbourne.

“Australian parents already pay some of the most expensive out-of-pocket costs for childcare in the world and these costs continue to soar for many families,” Georgie Dent, the executive director of family advocacy group The Parenthood, said.

“The burden of fees forces too many working families into terrible choices, including discouraging women from going back to work and stopping young children from attending early learning programs vital for their development.”