Paying for Australia’s child care reforms

The Turnbull Government has introduced legislation to the 45th Parliament for early childhood education and care reforms that will benefit around one million Australians.

Minister for Education and Training Simon Birmingham said the Coalition had put in the time to consult with parents, families and child care providers on its child care package and listened to input from the Productivity Commission, a Regulation Impact Statement and a Senate inquiry.

“We put in the work to get our package right and Australians recognised that at the election,” Minister Birmingham said.

“Our reforms would deliver more affordable, accessible and fairer child care with support targeted at families on the lowest incomes and those working the most hours while ensuring vulnerable children get access to the system through a range of measures, including the $1 billion Child Care Safety Net.

“Australians know the current child care system isn’t working for them and is in need of significant reform but we must pay for the additional $3 billion we want to invest.

“The Turnbull Government is committed to living within our means and we will not add the cost of our early childhood education and care reforms to the nation’s credit card. The country backed the Coalition’s election policies and we hope the Parliament listens to the will of Australian families and respects our mandate by passing the savings needed to fund our reforms.”

Minister for Social Services Christian Porter said the Coalition had also introduced the Family Tax Benefit legislation, which would fund the child care reforms that will support parents as they balance work and family and give children access to quality early learning to get a head start in their education.

“The savings will be directed to provide more accessible and affordable child care, encouraging families to re-enter the workforce as their children begin secondary school, while continuing to support vulnerable families and families with children in primary school,” Mr Porter said.

“The Family Payments Reform Bill includes increases to the maximum rate of FTB Part A, Youth Allowance, and Youth Disability Support Pension,” Minister Porter said.

“We’re also increasing the FTB Part B by $1,000 each year for eligible families whose youngest child is aged under one year.”

The Turnbull Government will ensure single parents aged over 60 years and grandparent and great-grandparent carers with a youngest child aged 13-18 years will be exempt from these FTB Part B changes.

The end-of-year supplements will be phased out, given they are no longer fit for purpose.

“The supplements were introduced to help people repay overpayments,” Mr Porter said.

“The majority of FTB families are never overpaid and this will be further reduced through new technology from 2018-19 when the ATO introduces a system which more accurately reports income.

“It makes sense to redirect the money from the supplements back into families but in a way that allows parents to re-enter the workforce. Research says that is the single best way to increase family wealth and prosperity.”

Key features of the Turnbull Government’s child care reforms:

• Commits around $40 billion over the next four years and more than $3 billion in additional early childhood education and care investment that will benefit around one million families and is targeted towards those working the longest hours but earning the least. The package includes abolishing the $7,500 cap to ensure parents on family incomes of $185,710 or less aren’t limited by a cap on the amount of child care they can access. The cap will be increased to $10,000 for families earning more than $185,710
• The subsidy rate for lower income families will be boosted from around 72 per cent now to 85 per cent, and that rate will taper to 20 per cent for high income families from 50 per cent
• The hourly fee cap is designed to put downward pressure on fee increases, which under Labor increased by 53 per cent between 2007 and 2013
• In addition to other government measures to ensure all children have access to child care and early learning in the year before school, the Turnbull Government’s package includes the $1 billion Child Care Safety Net to support vulnerable families and their children