2015 Federal Budget: Child care and health care insights

Changes to the Child care System - What do they mean for you and will they actually happen?

2015-05-13

As announced on Mother’s Day, the Budget contains changes to the child care system under the $3.5 billion ‘Jobs for Families’ package.

The changes are scheduled to commence on 1 July 2017 and are aimed at increasing workforce participation, one of the two key focuses of the Productivity Commission’s Inquiry Report into Child care and Early Childhood Learning (October 2014).

Significantly, the current system (Child care Benefit, Child care Rebate and Jobs, Education and Training Child Care Fee Assistance programs) will be replaced by a single means tested Child Care Subsidy for up to 100 hours of subsidised care per child per fortnight. In another change, the subsidy will be paid directly to approved care service providers.

The key points are:

  • Families earning up to $60,000 will receive 85 per cent of the actual fee paid up to an hourly fee cap. That will reduce to 50 per cent for families with incomes of $165,000.
  • Hourly benchmark prices will be $11.55 (long day care), $10.70 (family day care), $10.10 (out-of-school hours care) and $7.00 (in-home care nanny pilot program due to begin in January 2016).
  • Families on incomes under $180,000 will no longer have a cap on the amount of subsidy they receive. However, a cap of $10,000 per child, at the time of introduction, will be established for the total value of subsidies for family incomes of $180,000 and above.
  • If they work more than 48 hours they will receive more than 100 hours of benefit. Volunteering, paid work and study all count towards the hours required for the activity test.

Furthermore, to assist disadvantaged and vulnerable children the Government has provided funding of $327.7 million over four years, as part of the ‘Jobs for Families’ package to fund up to 24 hours per fortnight to children from families with incomes less than approximately $60,000 per year who do not meet the activity test.

The Government estimates that:

  • Families on incomes of between $60,000 and $165,000 will be around $30 a week better off. Those on higher incomes will, on average, continue to receive the same level of support. 
  • Families on incomes of less than $60,000 per year will receive ongoing access to early childhood learning and can be eligible for additional financial support through the Child Care Safety Net. 
  • The new measures will encourage more than 240,000 families to increase their involvement in paid employment, including almost 38,000 jobless families.

The proposed changes appear to have the initial support of the peak sector bodies including the Early Learning Association Australia and Early Childhood Association.

Given that the package won’t commence until 2017 and is to be funded by savings generated through tightening access to the Family Tax Benefit, as outlined in last year’s budget, there is significant potential for changes before implementation.

Under healthcare the budget includes funding for the “No Jab No Pay” vaccination initiative aimed at increasing the number of children being vaccinated. Exemptions will only apply for medical reasons.