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Government spending boost will cut childcare costs for 400,000 families

A woman plays with three young children
The Government announced $1.7 billion to be invested into the childcare system (Source: Getty)

The Government has announced a $1.7 billion investment into childcare services in a move set to benefit over 400,000 Aussie families.

The spending boost was announced in a joint statement from the minister for women Marise Payne, the minister for youth and education Alan Tudge and the minister for women’s economic security Jane Hume.

“The investment will add up to 300,000 hours of work per week which would allow the equivalent of around 40,000 individuals to work an extra day per week and boost the level of GDP by up to $1.5 billion per year,” the statement said.

“The changes deliberately target low and middle income earners with around half the families set to benefit having a household income under $130,000.”

Treasury said the aim of the investment is to encourage people to take on an extra day or two of work, that has previously been a disincentive due to the high cost of childcare.

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

  • Increase the child care subsidies available to families with more than one child under five years old and in child care, benefitting around 250,000 families

  • Remove the $10,560 cap on the Child Care Subsidy, benefitting around 18,000 families

This means that for families with more than one child in child care, the level of subsidy will increase by 30 per cent to a maximum subsidy of 95 per cent for their second and subsequent children.

Under the current arrangements the maximum child care subsidy payable is 85 per cent of child care fees.

Under the changes, a single parent on $65,500 with two children in four days of long day care who chooses to work a fifth day will be $71 a week better off compared to the current system.

Meanwhile, a family earning $110,000 a year will 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.

A family with three children on $80,000 would have the subsidy increase from 82 to 95 per cent for their second and third child and be $108 per week better off for four days of care.

Morrison Government targets childcare

Treasurer Josh Frydenberg said the investment builds on the $10.3 billion the government is already investing in child care this year.

“These changes strengthen our economy and at the same time provide greater choice to parents who want to work an extra day or two a week,” Frydenberg said.

“This is a targeted and proportionate investment that simultaneously makes child care more affordable, increases workforce participation and boosts the Australian economy by up to $1.5 billion per year.”

Minister for Women’s Economic Security Jane Hume said these measures will see more women back in the workforce sooner, helping to further close the pay and participation gaps.

"The measures announced today are specific and targeted; designed to help women who have had a second child return to the workforce so they can continue to progress their own careers and contribute to Australia’s economy.”

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