Federal government's childcare budget boost divides opinion

Hume MP Angus Taylor. Picture: Supplied

Hume MP Angus Taylor. Picture: Supplied

Hume MP Angus Taylor says families will reap the benefits from an additional $1.7 billion investment in child care as part of the 2021-22 Budget.

However, Macarthur MP Dr Mike Freelander has described the Morrison Government's childcare plans as 'messy' and without prioritising those who need it most.

The changes, which aim to deliberately target low and middle-income earners, are expected to cut childcare costs and lower the disincentive to take on an additional day or two of work for many families.

For example, a single parent on $65,500 with two children in four days of long day care who chooses to work a fifth day is anticipated to be $71 a week better off under the plan.

Mr Taylor said the changes would benefit both the economy and families in this region.

"This is going to give greater choice to local parents who want to work an extra day or two a week," he said.

"This is a targeted investment that makes child care more affordable, increases workforce participation and boosts the economy."

Under the current arrangements, the maximum child care subsidy a family can receive is 85 per cent, and the level is tapered so that those families that earn the least receive the most.

These subsidies apply at the same rate per child, no matter how many children a family may have in child care. As a result, for families with more than one child in care, this means that their child care costs double when they have a second child.

Additionally, families with combined incomes above $189,390 face a child care subsidy cap of $10,560 per child per year.

As a result, these families start paying full fees towards the end of the year, which reduces their incentive to participate in the workforce.

As part of the 2021-22 Budget, and starting on July 1 2022, the government will:

  • Increase the child care subsidies available to families with more than one child aged five and under in child care. Around 7,650 families in Hume are in this position.
  • Remove the $10,560 cap on the Child Care Subsidy, benefitting around 18,000 families.

For those families with more than one child in child care, the level of subsidy received is expected to increase by 30 per cent to a maximum subsidy of 95 per cent of fees paid for their second and subsequent children.

Half of Australian families are expected to receive a 95 per cent subsidy for their second and subsequent children.

A family earning $110,000 a year could 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.

However, Dr Freelander believes that that the Morrison Government has missed an opportunity to provide "long sought and strongly needed reforms to the childcare sector, which would also provide a significant boost to the participation of women in the workforce".

Dr Freelander said under Labor's Cheaper Child Care Plan, the taper rate is smoothed across the board and the subsidy is lifted; regardless of how many children a family has or how old they are.

"Our Cheaper Child Care Plan has been designed after careful research and deliberation with those who are affected most, Australian families and childcare centres," he said.

"I firmly believe our plan provides the support and reforms that are required and reach nearly 100 per cent of Australian families in the system.

"Labor's childcare policy very importantly will provide support for children with special needs no matter their parents economic status, and very importantly, addresses the issues of early intervention as the best management of children with special needs."