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The new Child Care Package – what it means for Canberra families

By Chris Steel MLA - 28 March 2017 16

Little boy playing in the sand

The Federal Parliament yesterday passed the so called ‘Jobs for Families Package’ – a $1.6 billion investment with a newchild care subsidy that will scrap the current Child Care Benefit and the Child Care Rebate payments.

This Package affects the around 28,230 children who attend child care here in the ACT, across some 379 approved child care services.

Despite being less than half of the investment promised by Government (and delayed by a year), it is the largest reform of child care subsidies since the Child Care Benefit was established.

Not surprisingly the new subsidy is called Child Care Subsidy, and it will have as significant effect on how children can access early learning in Canberra.

But if you thought it was going to be easy to work out if you are better off under the new system then you are very wrong. Despite rolling existing payments into one, the Federal Government has made the job of calculating your child care entitlements even more complex.

Check your subsidy rate

The subsidy rate is based on your income – a flat 85% subsidy for the lowest income families (families on $65,710 or less) tapering down to 50% subsidy for families on 170,710 family income per year.

The subsidy is then provided at a flat 50% for families up to $250,000 tapering down to 20% for families on $340,000. The highest income earners above $350,000 family income will receive 0% subsidy thanks to Derryn Hinch (which is hard to argue with but also doesn’t save that much money).

For some families this subsidy rate will be less than their current entitlements, particularly in Canberra where incomes tend to be higher – and almost everyone used to be eligible for the 50% Child Care Rebate. Other families will receive a slightly higher subsidy rate under the new system more depending on their circumstances, including the price of your current child care provider.

Check your activity

The number of hours of subsidy you are eligible for depends heavily on how much activity you do – the result of a new three tiered activity test. Generally the more hours of activity you do the more subsidised hours you are entitled to.

The first tier of the activity test requires that both parents must work or study for eight hours per fortnight in order to be eligible to receive subsidies. This may be problematic for those families where one parent is unable to work or do other eligible activity, particularly vulnerable families.

The good news is that the definition of activity is broad and includes work, training, study, volunteering and job seeking.

However, a family with one parent not working or doing any other activity – earning less than $65,000 will only get access to 12 hours of subsidy. This essentially means that vulnerable children will have their access cut in half (from the previous 24 hours), though the subsidy rate per hour will be higher.

John Howard’s stay at home parents be warned – the Liberal Party has deserted you. A family with one parent not working may receive no subsidised access to child care at all. Not a single minute!

The experts and the sector have been recommending increasing access from 12 to 15 hours a week minimum access so children can access two days of early learning regardless of their parents’ circumstances.

Australia’s largest child care provider, Goodstart Early learning has claimed that up to 100,000 low income families across Australia could be worse off based on a study by the ANU’s Ben Phillips.

Despite Labor and the Greens supporting an increase to 15 hours base subsidy, a last minute dirty deal between One Nation, Nick Xenophon and the Liberal/National Parties was struck to cut subsidised access for the most vulnerable children.

This is despite research shows that disadvantaged children benefit from up to 30 hours of early learning per week, and 12 hours is often only the equivalent of one day in some child care services.

Rebate cap gone, but more caps introduced

While many Canberra families will be glad to hear the Child Care Rebate Cap has been abolished, the 50% Child Care Rebate has also entirely been abolished.

The new Child Care Subsidy is instead capped on an hourly basis. Canberra families are likely to be the most affected by this as child care prices tend to be higher on average here and perhaps then more likely to be above the cap.

The subsidy rate is applied to a cap of $11.55 per hour for centre based long day care. This is around $115 for 10 hour standard day. It is also less than many long day care services charge in Canberra, with some charging up to $130 per day. So don’t expect to receive your full subsidy rate if you attend a higher fee service.

The hourly cap will help to spread the subsidy through the year at least, except for families earning more than $185,710 who will now be subject to a $10,000 per year cap as well.

Radical reform needed

On one hand, it has been positive to see some extra investment in early childhood, despite the extra complexity involved. Canberra families should seek out the Government’s online child care subsidy calculator as soon as it becomes available.

The introduction of the package from 1 July next year will reveal the full extent of what these changes mean for families – and for children.

Child care is not just about the workforce participation of parents. This package has still not recognised that early childhood services provide vital early learning for children themselves – amplifying their development with lifelong outcomes for them and our economy. This is particularly the case for vulnerable children who have the most to gain from access to rich learning experiences.

Studies from the United Kingdom (UK) show that children who access a quality early childhood program for 2-3 years have much higher results in literacy and numeracy tests at the end of high school. That’s why the Conservative Government in the UK provides between 15-30 hours of free early childhood access from the age of two.

Apparently that isn’t good enough for many vulnerable Australian children who will be the big losers from this package thanks to the Senate crossbench and the Coalition.

Since these child care changes will cost taxpayers $1.6 billion I think it is reasonable to ask; how can the Government be spending so much money – and justify leaving so many of the most vulnerable and disadvantaged children worse off?

That is to say nothing of the so called ‘zombie measures’ still in the mix from the 2014-15 Budget; to cut family tax benefit, supplements and paid parental leave.

Now that this Package has been passed, the immediate problems with the new Child Care Subsidy must continue to be a point of advocacy. If we want to improve children’s lifelong outcomes in the future, providing two days of early learning for children is crucial.

In the longer term, the Shadow Minister for Early Childhood Kate Ellis MP is right when she says that ‘radical reform’ is needed to build an early childhood system that really delivers in supporting children’s development as well as supporting parents workforce participation.

Over to you. How do you think you will you be impacted by the new child care changes?

What’s Your opinion?


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16 Responses to
The new Child Care Package – what it means for Canberra families
1
wildturkeycanoe 6:41 am
28 Mar 17
#

“A family with one parent not working may receive no subsidised access to child care at all. Not a single minute!”
This bit I support and understand totally. Why should a family which has a completely able non-working parent receive any funding for child care? The parent has all the time in the world to stay at home and look after their child. They do not need to take a spot in an already difficult to get scheme, just so Mommy or Daddy can have a day off. Suck it up and do your job – raising your child.
“This package has still not recognised that early childhood services provide vital early learning for children themselves – amplifying their development with lifelong outcomes for them and our economy.” If a parent is doing their duty correctly, their child would also get that same nurturing at home. Stop putting little Johnny/Jane in front of the TV or giving them 8 hours of ipad time a day, sit down and read them books or teach them how to count. Parenting these days seems to have gone the way of the dodo and families rely on the government to do everything from the age a kid starts to crawl. How about taking some responsibility in raising your own child?
There is one thing I do agree with the article about which is the fact that every time the Liberals are in power, families are worse off. They are like the Sheriff of Nottingham, taxing the poor into poverty. When will Robin come to save us from this evil?

2
Chris Steel MLA 8:24 am
28 Mar 17
#

wildturkeycanoe said :

” Why should a family which has a completely able non-working parent receive any funding for child care? The parent has all the time in the world to stay at home and look after their child.

Because the benefits for children are proven access to at least 15 hours results in improved educational outcomes for the child. There are links to improved job prospects, reduced long term dependence on welfare and improved economic prosperity for us all as a result. See this PWC report ‘Putting a value on early childhood education and care’: http://www.pwc.com.au/publications/early-childhood-education.html.

Some disadvantaged children in particular are not exposed to rich learning experiences in the home which is why early learning in early childhood services is so important. It’s not their fault that their parents aren’t working (and it has to be said sometimes its not even the parents fault that they are unemployed).

3
chewy14 8:57 am
28 Mar 17
#

Hardly surprising to see this kind of article from a local Labor MLA although I would hope for better.

The reforms strike a good balance between the overall aims of the policies and the cost to the taxpayer. The idea that we should be providing subsidies to families who have a parent not working at all is ludicrous and I can’t believe anyone would promote it. If we have problems with unemployed parents being unable to provide “rich learning experiences” then the problem is deeper than simply giving them some more paid childcare, you’ve got to wonder about the effectiveness and design of our welfare system as a whole and the incentives provided to people to have more children who we probably should be encouraging to do the opposite.

We have a federal budget in serious deficit and spending is already well above long term averages and simply must be reduced. We cannot pretend that the boom time years of the mid to late 2000’s and the revenue growth that came with it are still occurring and all the concurrent vote buying that went with it.

4
Chris Steel MLA 9:51 am
28 Mar 17
#

chewy14 said :

We have a federal budget in serious deficit and spending is already well above long term averages and simply must be reduced. We cannot pretend that the boom time years of the mid to late 2000’s and the revenue growth that came with it are still occurring and all the concurrent vote buying that went with it.

When the global recession hit – the UK Government chose to take austerity measures. But they kept their commitment to 15 hours early childhood provision and increased it to 30 hours (even under a Tory Government) because they knew it was so important to child development, benefiting the whole of society.

Early childhood is the most effective and efficient way to tackle disadvantage with significant long term returns in terms of Government revenue. Just providing access to disadvantaged children is estimated to return $13 billion according to PWC.

That’s why people are concerned, because these cuts won’t just affect individual children, but they are also short sighted in terms of the long run benefits that accrue from early investment in tackling disadvantage.

5
bj_ACT 10:32 am
28 Mar 17
#

I think Chris has made some good points about Childcare policy, but why he choses to focus and write on Federal issues instead of his own suburb Kambah’s issues, I will never know.

If he wants to raise concerns for Disadvantaged people, he should instead be fighting for his neighbours who were named the most Mortgaged Stressed Suburb in Australia.

Or he should be attacking his Labor colleagues why his local public schools are performing so poorly and getting markedly worse in comparison to other Canberra schools and performing so poorly in comparison to other Cities schools with similar Socio Economic scores.

Chris was all talk about improving Kambah Village shopping centre before the election, but six months in and he has done nothing and said nothing for Kambah residents.

Mortgage Stress: http://www.digitalfinanceanalytics.com/blog/the-top-100-postcodes-at-risk-of-mortgage-default/

School Ratings: http://bettereducation.com.au/school/Primary/act/act_primary_school_rating.aspx
http://www.theaustralian.com.au/national-affairs/in-depth/schools/interactive#browse

6
chewy14 11:10 am
28 Mar 17
#

Chris Steel MLA said :

chewy14 said :

We have a federal budget in serious deficit and spending is already well above long term averages and simply must be reduced. We cannot pretend that the boom time years of the mid to late 2000’s and the revenue growth that came with it are still occurring and all the concurrent vote buying that went with it.

When the global recession hit – the UK Government chose to take austerity measures. But they kept their commitment to 15 hours early childhood provision and increased it to 30 hours (even under a Tory Government) because they knew it was so important to child development, benefiting the whole of society.

Early childhood is the most effective and efficient way to tackle disadvantage with significant long term returns in terms of Government revenue. Just providing access to disadvantaged children is estimated to return $13 billion according to PWC.

That’s why people are concerned, because these cuts won’t just affect individual children, but they are also short sighted in terms of the long run benefits that accrue from early investment in tackling disadvantage.

That $13Billion dollar benefit is a cumulative benefit out to 2050 and uses assumptions that could easily be swamped by other social factors that affect the educational and life outcomes of children. If we’re talking about long term social and welfare policy, the benefits achieved here could be easily exceeded by other changes in those areas and should be considered holistically.

But regardless of this, the modelling you’ve linked shows that the majority of families “worse off” under the changes (78%) earn more than $65k per year, with the biggest number hit being felt by “stay at home” families earning between $65-$175k. Lower income families will still be able to get a couple of days of care and the activity test is not onerous.

I dislike a lot of things that the federal Liberal government is doing in social policy but this is a good and sensible reform that balances benefits and costs. Trying to tackle disadvantage through childcare is shutting the gate long after the horse has bolted.

7
JC 11:58 am
28 Mar 17
#

Re almost everyone under the current system being entitled to a 50% rebate, can I point out one major difference with the new plan?

Under the old it was 50% capped at $7500 per child per year. New system I don’t beleive there is such a cap.

So under old if you had one child in full time care paying the going rate of about $100 per day you would be paying about $23,000 less $7500 so $15,500 per year.

Under new with no cap $11,500 so $4000 better off.

8
Chris Steel MLA 12:29 pm
28 Mar 17
#

bj_ACT said :

I think Chris has made some good points about Childcare policy, but why he choses to focus and write on Federal issues instead of his own suburb Kambah’s issues, I will never know.

If he wants to raise concerns for Disadvantaged people, he should instead be fighting for his neighbours who were named the most Mortgaged Stressed Suburb in Australia.

Or he should be attacking his Labor colleagues why his local public schools are performing so poorly and getting markedly worse in comparison to other Canberra schools and performing so poorly in comparison to other Cities schools with similar Socio Economic scores.

Chris was all talk about improving Kambah Village shopping centre before the election, but six months in and he has done nothing and said nothing for Kambah residents.

Mortgage Stress: http://www.digitalfinanceanalytics.com/blog/the-top-100-postcodes-at-risk-of-mortgage-default/

School Ratings: http://bettereducation.com.au/school/Primary/act/act_primary_school_rating.aspx
http://www.theaustralian.com.au/national-affairs/in-depth/schools/interactive#browse

I think we’ve made the point that we can walk and chew gum at the same time in the election just past!

The fact is that early childhood is a shared responsibility of Federal and State/Territory Governments. The strong correlation between what happens in early childhood and NAPLAN/TIMSS/PISA scores is well established. And these changes will impact on student outcomes in the school system. I also made this link in my Maiden speech here where I also talked about school education: http://www.chrissteel.com.au/inaugural_speech

We have progressed on Kambah Village. You might remember that Labor committed $2.3 million to upgrade the Village at the election following the petition I ran (and the Liberals $0). Ap ublic tender for construction of Kambah Village upgrades opened on 10 March 2017, I invite you to come and view the plans consulted on for Kambah down at my shopping centre stall on Saturday morning at Kambah Village.

I have also spoken in the Assembly on housing affordability on the recent Bill we passed to do just that.

9
Chris Steel MLA 12:31 pm
28 Mar 17
#

JC said :

Re almost everyone under the current system being entitled to a 50% rebate, can I point out one major difference with the new plan?

Under the old it was 50% capped at $7500 per child per year. New system I don’t beleive there is such a cap.

So under old if you had one child in full time care paying the going rate of about $100 per day you would be paying about $23,000 less $7500 so $15,500 per year.

Under new with no cap $11,500 so $4000 better off.

That’s right though there’s a cap of $10,000 for people earning over around $180,000. And not everyone eligible for CCR is eligible for CCS because of the activity test.

10
bj_ACT 3:52 pm
28 Mar 17
#

Chris Steel MLA said :

bj_ACT said :

I think Chris has made some good points about Childcare policy, but why he choses to focus and write on Federal issues instead of his own suburb Kambah’s issues, I will never know.

If he wants to raise concerns for Disadvantaged people, he should instead be fighting for his neighbours who were named the most Mortgaged Stressed Suburb in Australia.

Or he should be attacking his Labor colleagues why his local public schools are performing so poorly and getting markedly worse in comparison to other Canberra schools and performing so poorly in comparison to other Cities schools with similar Socio Economic scores.

Chris was all talk about improving Kambah Village shopping centre before the election, but six months in and he has done nothing and said nothing for Kambah residents.

Mortgage Stress: http://www.digitalfinanceanalytics.com/blog/the-top-100-postcodes-at-risk-of-mortgage-default/

School Ratings: http://bettereducation.com.au/school/Primary/act/act_primary_school_rating.aspx
http://www.theaustralian.com.au/national-affairs/in-depth/schools/interactive#browse

I think we’ve made the point that we can walk and chew gum at the same time in the election just past!

The fact is that early childhood is a shared responsibility of Federal and State/Territory Governments. The strong correlation between what happens in early childhood and NAPLAN/TIMSS/PISA scores is well established. And these changes will impact on student outcomes in the school system. I also made this link in my Maiden speech here where I also talked about school education: http://www.chrissteel.com.au/inaugural_speech

We have progressed on Kambah Village. You might remember that Labor committed $2.3 million to upgrade the Village at the election following the petition I ran (and the Liberals $0). Ap ublic tender for construction of Kambah Village upgrades opened on 10 March 2017, I invite you to come and view the plans consulted on for Kambah down at my shopping centre stall on Saturday morning at Kambah Village.

I have also spoken in the Assembly on housing affordability on the recent Bill we passed to do just that.

Hi Chris, Can you provide the time on Saturday morning and I will gladly say hello at Kambah Village. I will give you a big wrap if you can ‘deliver’ on your promises to improve things for Kambah and its residents. My experience has been years of promises by ACT Government, but very little actually delivery.

When I saw Mick Gentleman at Erindale about the terrible lack of car parking spaces, he promised how through the Erindale Master Plan that he will be generating an extra 1215 Car Spaces by 2031. Considering it is now 5 years since that plan and promise that there are now ‘less car spaces’ than there used to be at Erindale, I have become a tad sceptical when local politicians make claims for Tuggeranong that never actually eventuate.

11
Aldavies 8:27 pm
28 Mar 17
#

Thanks Chris, I’ve read a few articles and this is one of the more comprehensive and easy to follow ones. Good to hear about the Kambah shops plan.

12
Ian 11:32 pm
28 Mar 17
#

Beats me why any government subsidies are going to families earning $150k+ per year.

13
TuggLife 6:36 am
29 Mar 17
#

Aldavies said :

Thanks Chris, I’ve read a few articles and this is one of the more comprehensive and easy to follow ones. Good to hear about the Kambah shops plan.

I agree – this is the first article on the new subsidy that I’ve actually understood.

I am curious why rates vary so much – up to $130 a day in Canberra, but as low as $80-85 a day in Cooma and Goulburn. Why such a big difference? The educators are paid the same, and the rent difference can’t be that significant.

As an aside, Goodstart have a calculator for the new subsidy on their website, so you can tell if you’re better or worse off with the new deal: https://www.goodstart.org.au/rebate-estimator

14
TuggLife 6:43 am
29 Mar 17
#

Ian said :

Beats me why any government subsidies are going to families earning $150k+ per year.

To have 2 children in childcare, 3 days a week, at $110 a day works out to be $34,000 with no subsidy. That’s a about 1/3 of the post-tax income for families on $150,000. Between childcare and rent/mortgage, that doesn’t leave a lot of money left for everything else.

15
wildturkeycanoe 7:00 am
29 Mar 17
#

Whilst there are plenty of scholary articles pointing to the fact that early intervention is beneficial for children and supporting statements such as “Early childhood interventions are programs designed to shift disadvantaged children’s life trajectories by providing targeted support to children and their families.” I have a point of contention with the government’s policy around this.
If the truly underprivileged are the ones who benefit from early childhood intervention, why are the rebates applicable to families who quite obviously are not in a “struggling” demographic? Anybody earning over $100k a year should be able to afford to pay for an early intervention program for their toddler without tax payer assistance. By awarding payments to wealthy families, the care institutions will have less available spaces for the children who would most benefit.
Also, a stay at home parent should not be excused from the responsibility of teaching their kids to read and write, by giving the problem to the government to look after. It is a parent’s job, not the tax payers’.
Before child care centers began “intervening” in small children’s lives, were people turning out to be incompetent, illiterate imbeciles? No. The world produced quite satisfactory human beings without these classes. What has changed to make it necessary for special help for young children across the community? Is it the convenience of giving them an electronic game toy to shut them up when a parent is bombarded by cries for attention? Is it the Lack of decent educational material on the television, where crass and foul mouthed characters scream abuse at each other rather than conveying some useful skills such as reading and counting? I think that early intervention is definitely needed in the community, but should instead be directed at parents to educate them on how to spend one on one time with their children.

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