Childcare subsidy increase for families with multiple children under 5 in child care

Date of effect 1 July 2022

From 1 July 2022 the Government will:

  • Increase childcare subsidies available to families with more than one child aged five and under in childcare, and
  • Remove the $10,560 cap on the Child Care Subsidy.

For those families with more than one child in childcare, the level of subsidy received will increase by 30% to a maximum subsidy of 95% of fees paid for their second and subsequent children (tapered by income and hours of care).

Under the current system, the maximum childcare subsidy payable is 85% of childcare fees and it applies at the same rate per child, regardless of how many children a family may have in care.

Why? In October 2020, analysis by the Grattan Institute revealed that mothers lose 80%, 90% and even 100% of their take-home pay from working a fourth or fifth day after the additional childcare costs, clawback of the childcare subsidy, and tax and benefit changes are factored in.

“Unsurprisingly, not many find the option of working for free or close to it particularly attractive. The “1.5 earner” model has become the norm in Australia. And our rates of part-time work for women are third highest in the OECD.

Childcare costs are the biggest contributor to these “workforce disincentives”. The maximum subsidy is not high enough for low-income families, and the steep taper and annual cap limit incentives to work beyond three days, across the income spectrum,” the report said.

 


Click here to learn about other 2021 changes.