Despite the lead-up mutterings that the budget was going to be “dull and boring”, there were a few surprises contained in the pages of the budget papers. The budget announcement which will have the most significant impact on middle Australia is the child care reform package. What does the Budget mean for families?
Child care measures
The government announced a child care package, which includes the following measures.
i. New Child Care Subsidy
A new single Child Care Subsidy (CCS) will be introduced from July 1, 2017 for changes to the existing child care payments. The CCS will replace the current child care fee assistance provided by the Child Care Benefit, Child Care Rebate and the Jobs, Education and Training schemes. Child Care Fee Assistance payments which will cease on June 30, 2017.
Specifically, under the (CCS):
- families meeting an “activity test” with annual incomes up to $60,000 (based on 2013-14 income) will be eligible for a subsidy of 85% of the actual fee paid, up to an hourly fee cap
- the subsidy will taper to 50% for eligible families up to annual income of $165,000
- the CCS will have no annual cap for families with annual incomes below $180,000. For families with annual incomes of $180,000 and above, the CCS will be capped at $10,000 per child per year
- the income threshold for the maximum subsidy will be indexed to the CPI with other income thresholds aligned accordingly
- eligibility will be linked to a new activity test to better align receipt of the subsidy with hours of work, study or other recognised activities
- the hourly fee cap in 2017-18 will be set at $11.55 for long day care, $10.70 for family day care, and $10.10 for outside school hours care. The hourly fee caps will be indexed to CPI.
Note: In 2017-18, the family income thresholds will be $65,710 (maximum subsidy), $170,710 (minimum subsidy) and $185,710 (application of the annual cap of $10,000). The annual cap will be indexed to CPI from July 1, 2018.
ii. Interim Home Based Carer Subsidy Program
A new Interim Home Based Carer Subsidy Program will subsidise care provided by a nanny in a child’s home from January 1, 2016.
The pilot program will extend fee assistance to the parents of approximately 10,000 children. Families selected to participate will be those who are having difficulty accessing child care with sufficient flexibility (such as nurses, shift workers, police, etc). Support for families will be based on the CCS parameters, but with a fee cap of $7.00 per hour per child.
iii. Child Care Safety Net
The government will provide additional funding from 2015-16 to provide targeted support to disadvantaged or vulnerable families to address barriers to accessing child care. The assistance will be provided through the Child Care Safety Net, which consists of three programs:
Additional Child Care Subsidy (ACCS) The ACCS will provide additional assistance to supplement the Child Care Subsidy for eligible disadvantaged or vulnerable families.
Inclusion Support Program (ISP) The new ISP will assist families with children with additional needs to access child care. The ISP will provide more funding for services to get the necessary skilled staff and equipment to support children with special needs.
Community Child Care Fund (CCCF) The CCCF will provide grants to child care services to improve access to child care in disadvantaged communities, increase the supply of child care places in areas of high demand and low availability, and improve affordability for low income families in areas where the average fees are greater than the CCS fee cap.
iv. No Jab No Pay
The government will ensure that children fully meet immunisation requirements before their families can access certain government payments. From January 1, 2016, families will no longer be eligible for subsidised child care or the Family Tax Benefit (FTB) part A end-of-year supplement unless their child is up-to-date with all childhood immunisations. Exemptions will only apply for medical reasons.
The government will amend parental income testing arrangements to provide more support for families with dependent young people who qualify for certain income support payments, including Youth Allowance, ABSTUDY Living Allowance, and the Assistance for Isolated Children Scheme.
From January 1, 2016
- Families with dependent children receiving income support payments would be subject to the Parental Income Test arrangements currently in place for FTB Part A and will no longer be subject to the Family Assets Test or Family Actual Means Test.
- Where a family has a dependent child who receives an individual income support payment and younger siblings who qualify the family to receive FTB Part A, a single Parental Income Test will be applied taking into account all income support benefits the family receive.
From January 1, 2017
- A Maintenance Income Test will be introduced for dependent children receiving individual income support payments. This test will apply to that child only and not include other child support amounts provided in relation to other children in the family. This will be of particular benefit to rural and regional families whose children continue to study beyond Year 12.
Family Tax Benefit Part A
The government will reduce the amount of time FTB Part A will be paid to recipients who are outside Australia. From January 1, 2016, families will only be able to receive FTB Part A for six weeks in a 12 month period while they are overseas. Currently, FTB Part A recipients who are overseas are able to receive their usual rate of payment for six weeks and then the base rate for a further 50 weeks.
Portability extension and exception provisions which allow longer portability under special circumstances will continue to apply.