Child Care Assistance Package

Child Care Assistance Package
DSS1570.04.15
The Australian government will spend almost $40 billion on child care support in the 2015-2016 Budget,
including changing our child care system to better support families with access to quality, flexible, and
affordable child care targeted at those who need it most. The changes include an increase of $3.5 billion
to support implementation of the Child Care Assistance Package, which will assist families with their
child care costs.
To ensure all Australian children have a strong start and a bright future, the government will provide
$843 million over two years for preschool programmes across Australia.
The Productivity Commission’s report into Childcare and Early Childhood Learning confirmed the need
for changes to the child care system highlighting the importance of child care to support workforce
participation, and to provide quality early learning for low-income families, and disadvantaged and
vulnerable families.
The current system is complex and difficult for families to navigate. It is inflexible and lacks available
places that meet families’ workforce participation needs. The programmes in place to assist sustainability,
access and disadvantage are poorly targeted, subject to rorting and promote poor business practice.
The new child care system will focus on affordable, accessible and flexible child care. It is essential that
the child care system assists families, particularly those on low to middle incomes to enter and remain
in the workforce.
Affordable
From 1 July 2017, the Child Care Subsidy will replace the Child Care Benefit (CCB), the Child Care
Rebate (CCR), and the Jobs, Education and Training Child Care Fee Assistance (JETCCFA).
The Child Care Subsidy will provide financial assistance to meet the cost of child care for parents
engaged in work, training, study or other recognised activity.
Accessible
From 1 July 2016, elements of the Child Care Safety Net will commence. The Child Care Safety Net
will provide targeted assistance to child care services in disadvantaged communities and also
disadvantaged or vulnerable families and children, to address barriers in accessing child care,
while encouraging parents to enter and return to the workforce.
Flexible
From 1 January 2016, the Nanny Pilot Programme will provide care for around 10,000 children whose
families cannot easily access mainstream services for reasons such as shift work or living in rural,
remote areas, or children with special needs.
New approaches
Affordable — Child Care Subsidy
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The Government will provide over $21 billion over two years from July 2017 for the Child Care
Subsidy, which will be simpler than the current, multiple payment system and will be paid directly
to service providers.
The Child Care Subsidy will be better targeted and provide more assistance for low- to middle-income
families and will commence on 1 July 2017.
The subsidy tapers from 85 per cent of the fee (up to the hourly fee cap) for families earning up to
approximately $65,000, down to 50 per cent of the fee for families earning approximately $170,000 or more.
The hourly fee cap will be $11.55 for centre based long day care, $10.70 for family day care, and
$10.10 for outside school hours care.
For families earning approximately $185,000 or more, an annual cap of $10,000 per child will apply.
Family eligibility will be determined by a three-step activity test which aligns hours of subsidised care
with the amount of work, training, study or other recognised activity undertaken.
Step
Hours of activity (per fortnight)
Number of hours of subsidy (per fortnight)
1
8 to 16 hours
Up to 36 hours
2
17 to 48 hours
Up to 72 hours
3
49 or more hours
Up to 100 hours
Some families who do not meet the activity test will be assisted through the Child Care Safety Net.
Up to 24 hours per fortnight will also be provided to children from families with incomes less than
approximately $65,000 per year who do not meet the activity test to ensure continued access to early
childhood learning for these low income families. The 24 hours is equivalent to two six hour sessions,
which is the same period provided for K-2 public school education. Service providers will have
flexibility to deliver these sessions.
Accessible — Child Care Safety Net
Additional Child Care
Subsidy
Inclusion Support
Programme
Community Child Care Fund
Commencing 1 July 2017
Commencing 1 July 2016
Commencing 1 July 2017
(Approximately $156 million over two years)
(Approximately $409 million over three years)
(Approximately $304 million over two years)
This is fee assistance in addition
to the Child Care Subsidy to top
up support for:
This will improve the capacity
and capability of child care
services to include children with
additional needs, particularly
children with disability or from
culturally and linguistically
diverse backgrounds.
These competitive grants to services will provide:
Includes:
• access and affordability support: to
improve affordability for low income
families in high cost areas
• children ‘at risk’ of serious
abuse or neglect
• families experiencing
temporary financial hardship
• families transitioning to work
from income support.
• practical inclusion advice and
support for services
• access to specialist equipment
• additional funding to the service
to assist inclusion of children
with additional needs.
• community support: to address barriers
for disadvantaged children, or children
in regional or remote areas
• sustainability support: for child care
services experiencing viability issues
• capital support: to increase the supply
of centre-based and mobile services.
As part of the fund, $10 million a year
(commencing 1 July 2016), will provide for the
integration of child care, maternal and child
health, and family support services in a number
of disadvantaged Indigenous communities, as
recommended by Andrew Forrest in his review
of Indigenous Jobs and Training, Creating Parity.
Flexible —Nanny Pilot Programme
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Supports families who are experiencing difficulties in accessing mainstream services.
$246 million for a two year pilot from 1 January 2016, evaluated to inform future programmes.
Approximately 10,000 children to be subsidised for a maximum of 50 hours of care per week.
Families with an annual family income of less than $250,000 who meet the programme guideline
requirements will be able to express interest in participating in the programme. (Continues on page 3)
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Families will receive a percentage (which varies depending on their family income) of the fixed hourly
rate of $7.00 per hour per child, at the same assistance rate as proposed under the Child Care
Subsidy, and with the same activity test.
Nannies will be required to be at least 18 years of age, have a current Working with Children Check,
meet first aid requirements and be attached to a government-approved service provider.
Case studies
Affordable:
Child Care Subsidy
Jack and Sharon have one child aged two, currently in long day care for four days per week which
costs around $85 per day. By 2017-18 the cost is $98 per child per day.
Jack works full-time and Sharon works part-time, working four days a week. Their family income this
year is expected to be around $99,500, rising to $105,000 in 2017-18.
Jack and Sharon will receive $10,970 in government fee assistance this year: $4,157 in child care
benefit and around $6,813 in child care rebate.
In the first year of the Child Care Subsidy, Jack and Sharon will receive $14,657, which is $3,687
($71 a week) more than they receive.
Accessible:
Child Care Safety Net
Natasha is not currently working but is studying in order to better her chances of future employment.
Her two year old daughter attends a local long day care centre which currently charges $78.50 per day.
By 2017-18 the cost will be $90 per day.
As Natasha is transitioning to work she will be eligible for assistance under the Additional Child Care Subsidy.
As this assistance is activity tested, Natasha would be able to access 50 hours of child care per week
as she is studying for 49 or more hours per fortnight (compared to the current maximum of 36 hours per
week allowed for approved study activities under the current system). Natasha would be subsidised for
up to 95 per cent of child care costs, leaving her only five per cent ($22.50 per week) out of pocket.
Flexible:
Nanny Pilot Programme
Greg and Sue are shift workers on a combined family income this year of $120,000. Greg is a cleaning
supervisor working full time on a rotating roster and Sue is a part-time nurse working with an agency.
They both have to work nights sometimes, and their days vary. They have three children, all below
school age, one year old twins and a three year old. They currently use a combination of formal care,
Greg’s mother and the help of family friends for care as they often need it outside of normal child care
hours. This has meant that Sue has often had to turn down additional shifts.
Under the new Nanny Pilot Programme, they will be able to have reliable care for their children in their
own home when they need it. The Agency helped them find a nanny and to work out the contractual
and insurance arrangements. They have an agreed number of hours per fortnight but the hours are
flexible to ensure care can respond to the changing nature of their shifts.
Because they now have reliable care, Sue feels comfortable taking on an extra shift. In 2016-17 Greg
and Sue's total income is $130,000. Under the programme in 2016-17 the nanny works a flexible
70 hours per fortnight at $28.00 per hour.
The subsidy supports 70 hours per fortnight for each child and, based on their family income, they
receive a percentage (63 per cent) of the fixed hourly rate of $7.00 per hour per child or a total of
$13.24 per hour. In total they receive $926.93 in fee relief and have to pay the remaining $1033.07
per fortnight.
Transition
The Government recognises that the transition from the existing child care system to a new system
will be of significant interest to Australian families.
All families who use, or need to use, child care in the future will be kept informed of the progress of the
changes and given timely information on how they may be affected.
This information will be available before the implementation of the new changes so parents have time to
plan for the changes.
The Department of Human Services (DHS) will contact families directly and provide information on current
entitlements and how they may change under new arrangements. This may include asking families for
additional information, to ensure that they move onto the new payment system.
Timeline
For more information
Further details on the Child Care Assistance Package and other programmes are available on the website.
www.dss.gov.au