Childcare is a crucial aspect of many working families’ lives, and the cost of child care can often be a significant burden. To alleviate this financial strain and support workforce participation, the Australian government provides childcare subsidies. However, changes to the child care subsidy system are on the horizon, aiming to make it even more accessible and affordable for families. It is forecast that approximately 96 per cent of families will be better off with the new funding.

What is the Child Care Subsidy?

The child care subsidy is an Australian government initiative designed to assist families with the costs of childcare. Its primary goals are to reduce out-of-pocket expenses, promote workforce participation, and support the early learning and development of children. The subsidy is calculated based on various factors, including the cost of care, the number of hours parents are active in the workforce, family income, the number and age of children in care, the family’s activity level, and the type of care utilized. It applies to different types of childcare, such as Centre Based Day Care, Outside School Hours Care, Family Day Care, and In-Home Care.

Eligibility and Requirements for the Child Care Subsidy

To qualify for the child care subsidy, parents must meet the outlined criteria. They must care for their child at least two nights per fortnight or have a 14% share of care. Additionally, they must be liable for child care fees at an approved childcare service and meet residency requirements. The child in care must meet immunization requirements, not attend secondary school (unless exempt), and be 13 years old or younger (with certain exceptions). It is important to note that if a child doesn’t attend a session of care at least once in 26 consecutive weeks, they may become ineligible for the subsidy.

What are the changes to the Child Care Subsidy?

From July 10, 2023, changes to the child care subsidy will come into effect. Key changes are:

• The income threshold for families eligible for the child care subsidy will increase from $356,756 to $530,000
• Families with an income below $80,000 per year subsidy will increase from 85% to 90%

No changes to the higher Child Care Subsidy

Families with two or more children under the age of five currently receive an additional 30% on top of their income-tested rate, up to a maximum of 95% with the higher Child Care subsidy. This higher subsidy rate will continue to apply for the second and subsequent children aged five and under in care.

Review into child care affordability

To further improve affordability, the Australian Competition and Consumer Commission (ACCC) is conducting a 12-month inquiry into pricing drivers and the impact of subsidy increases on out-of-pocket fees for families. Share your feedback and experiences by completing this survey: Link to ACCC survey on childcare price and availability (open 18 April – 31 May)

Still a way to go to improve the child care system

The upcoming changes to the childcare subsidy system in Australia aim to alleviate the financial burden on families, promote workforce participation, and support early childhood education and development. With higher subsidy rates for low-income families and continued support for families with multiple children, the new system promises increased affordability and accessibility. Although, there is still work to be done to improve access to child care across Australia especially in regional areas, burnout of childcare educators, and the affordability of child care.

Useful resources for further information

Service Australia website

Starting Blocks Childcare subsidy calculator

Working Mumma podcast

Listen to episode 95 Working Mumma podcast for more information on the upcoming child care subsidy changes on Apple Podcast or Spotify