Working families with two or more children in childcare will see significant cuts in childcare costs from July onwards due to radical budget changes intended to move mothers back to work.
According to the changes, due to be announced on Sunday, half of Australian families with one child cared for will have 95 percent of their expenses on additional children paid for by the government.
This will end the current situation where childcare costs for families can double when they have a second child.
The government is also overriding the $ 10,560 childcare allowance cap, which requires parents who earn more than $ 189,390 to pay 100 percent of childcare fees.
Together, the changes will also help deter parents, especially mothers, from working extra days as their wages are being eaten up by childcare costs.
It will also go a long way in surpassing opposition leader Anthony Albanese’s promise last year to increase childcare subsidies.
The total cost of reforms, which will reduce childcare costs for more than a quarter of a million families, has been estimated at $ 1.7 billion.
As part of the reforms, a family that has two cared-for children four days a week makes $ 140,000 a year and is currently paying $ 316 a week will be better off under the changes.
A family with three children with $ 80,000 is better off for four days of care $ 108 a week.
Treasurer Josh Frydenberg said the money was on top of the $ 10.3 billion the government will spend on childcare this year.
« These changes are strengthening our economy while also offering more choice for parents who want to work an extra day or two per week, » he said.
« This is a targeted and proportionate investment that will also make childcare more affordable, increase labor force participation and boost the Australian economy by up to $ 1.5 billion a year. »
The changes were welcomed by the managing directors with Jennifer Westacott, Head of the Business Council of Australia. They would go a long way towards resolving some of the financial cliffs and disincentives that prevent women from reaching their full potential and stunt our economic growth.
« Today’s announcement will make a big difference to many of the 90,000 people across Australia who said they were inactive last year because of the high cost of childcare, » she said.
Ms. Westacott said the BCA looks forward to working with the government and the Cabinet Women Task Force to address the remaining issues in the system so that people can return to work, family decisions, and build on our momentum on the path to recovery can.
The government estimates the changes will incentivize around 40,000 people to work an extra day per week, increasing GDP by up to $ 1.5 billion a year.
Mr Albanese has also pledged to remove the annual subsidy cap of $ 10,560 per child, which ranges from $ 189,390 to $ 353,680 per year when Labor comes to power
Labor has also committed to increasing the maximum childcare subsidy rate from 85 percent to 90 percent.
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