Launceston families have two weeks to ensure they are switched to the new child care rebate.
The federal government’s child care changes come into effect on July 2 and access to the rebate is not an automatic process.
Federal Education Minister Simon Birmingham said the changes will “deliver more support to more families”.
“Relief is on the way for families who have been struggling with the cost of child care,” Mr Birmingham said.
However, Bass Labor MHR Ross Hart has raised concerns some Launceston families will be worse off.
“With less than one month until the child care changes take place, there are 517 families in Launceston who will be worse off from July 2 under the Turnbull Government’s unfair child care package,” Mr Hart said.
“This shocking number will see 1 in 7 families across the Bass electorate out of pocket when they lose the subsidy. They will have to pay more for early education or keep their kids at home.”
“The new system is extremely complex and will be difficult for many families to understand. Families will need to know how they fit into one of three criteria to understand the rate they are subsided, including combined family income and an activity test, which most affects low income families, Tasmanian families.”
HOW DOES IT WORK?
Government support for child care comes in two forms – the child care benefit for approved care, and the child care rebate.
Parents need to use approved child care centres for long day care, family day care, outside school hours care, vacation care, in home care and occasional care.
CHILD CARE BENEFIT
The child care benefit is a payment made to child care providers that results in lower child care fees for parents.
It can be paid to the child care providers to lower fees or can be given as a lump sum annually at the end of the financial year.
The benefit is activity and income tested – parents need to report their work/volunteer levels.
Child care benefit rates can be received for up to 24 hours a week for all families or up to 50 hours per week on the following conditions:
- if you or your partner are a grandparent with primary care of a grandchild
- if you are your partner are working, looking for work, training or studying at least 15 hours per week or 30 hours per fortnight
- you and your partner meet an exception from that requirement
More than 50 hours per week is available to families in certain circumstances who need extra assistance.
The amount will be deducted from the total child care fees by the child care service. Parents pay the gap in outstanding fees.
CHILD CARE REBATE
The child care rebate is a second payment parents can choose to have paid to their childcare provider to further lower fees or paid as a lump sum directly to them.
You can only receive the child care rebate if you are eligible for the child care benefit.
The child care rebate is not income tested.
It covers up to 50 per cent of out-of-pocket child care expenses up to an annual limit of $7,613 per child.
Out of pocket child care expenses are the total child care fees less any child care benefit and jobs, education and training child care fee assistance.
WHAT WILL CHANGE?
On July 2, the child care rebate and child care benefit will be merged to create the new child care subsidy.
The subsidy is income and activity tested, so the amount of subsidy parents will receive will depend on a family’s income.
The subsidy will be paid directly to approved child care providers to lower fees for parents.
If your family income is:
- $0-66,958 – you will receive 85 per cent of the subsidy
- $66958-171,958 – you will receive between 85 and 50 per cent of the subsidy
- $171,958-$251,248 – you will receive 50 per cent of the subsidy
- $251,248-$351,248 – you will receive 20 per cent of the subsidy
- $351,248 or more – you will receive no subsidy
Another change that will come into effect from July 2 is families earning $186,958 or less will not have an annual cap for approved care.
Families who earn more than $186,958 and under $351,248 care will have an annual cap of $10,190 each financial year.
WHAT DO PARENTS NEED TO DO?
Switch to the new system is not automatic, parents will need to submit their income and work activity data to be reassessed for the subsidy.
Mr Birmingham said more than 800,000 families would be better off nationally under the new system.
“While many families are set to be hundreds if not thousands of dollars a year better off, transitioning to the new system isn’t automatic and families need to make the switch to the new system through myGov. We’re urging families don’t delay, update your details today,” he said.
Families risk disrupting their child care subsidy payments unless they make the switch to the new system before 2 July by visiting www.education.gov.au/childcare or through myGov.