Child Care Assistance Package

DSS1570.04.15

Child Care Assistance Package

The Australian government will spend almost $40 billionon child care support in the 2015-2016 Budget, includingchanging our child care system to better support families with access to quality,flexible, and affordable child care targeted at those who need it most.The changes include anincrease of $3.5 billion
to support implementation of the Child Care Assistance Package, which will assist familieswith their
child care costs.

To ensure all Australian children have a strong start and a bright future, the government will provide
$843 million over two years for preschool programmes across Australia.

The Productivity Commission’s report into Childcare and Early Childhood Learning confirmed the need
for changes to the child care system highlighting the importance of child care to support workforce participation, and to provide quality early learning for low-income families, and disadvantaged and vulnerable families.

The current system is complex and difficult for families to navigate. It is inflexible and lacks available places that meet families’ workforce participation needs. The programmes in place to assist sustainability, access and disadvantage are poorly targeted, subject to rorting and promote poor business practice.

The new child care system will focus on affordable, accessible and flexible child care. It is essential that
the child care system assists families, particularly those on low to middle incomes to enter and remain
in the workforce.

Affordable

From 1 July 2017, the Child Care Subsidy will replace the Child Care Benefit (CCB), the Child Care Rebate (CCR), and the Jobs, Education and Training Child Care Fee Assistance (JETCCFA).
The Child Care Subsidy will provide financial assistance to meet the cost of child care for parents engaged in work, training, study or other recognised activity.

Accessible

From 1 July 2016, elements of the Child Care Safety Net will commence.The Child CareSafety Net
will provide targeted assistance to child care services in disadvantaged communities and also disadvantaged or vulnerable families and children, to address barriers in accessing child care,
while encouraging parents to enter and return to the workforce.

Flexible

From 1 January 2016, the Nanny Pilot Programme will provide care for around 10,000 children whose families cannot easily access mainstream services for reasons such as shift work or living in rural, remote areas, or children with special needs.

New approaches

Affordable— Child Care Subsidy

• The Government will provide over $21 billion over two years from July 2017 for the Child Care Subsidy, whichwill be simpler than the current, multiple payment system and will be paid directly
  to service providers.
• The Child Care Subsidy will be better targeted and provide more assistance for low- to middle-income familiesand will commence on 1 July 2017.
• The subsidy tapers from 85 per cent of the fee (up to the hourly fee cap) for families earning up to approximately $65,000, down to 50 per cent of the fee for families earning approximately $170,000 or more.
• The hourly fee cap will be $11.55 for centre based long day care, $10.70 for family day care, and $10.10 for outside school hours care.
• For families earning approximately $185,000 or more, an annual cap of $10,000 per child will apply.
• Family eligibility will be determined by a three-step activity test which aligns hours of subsidised care with the amount of work, training, study or other recognised activity undertaken.

Step / Hours of activity (per fortnight) / Number of hours of subsidy (per fortnight)
1 / 8 to 16 hours / Up to 36 hours
2 / 17 to 48 hours / Up to 72 hours
3 / 49 or more hours / Up to 100 hours

• Some families who do not meet the activity test will be assisted through the Child Care Safety Net.
• Up to 24 hours per fortnight will also be provided to children from families with incomes less than approximately $65,000 per year who do not meet the activity test to ensure continued access to early childhood learning for these low income families. The 24 hours is equivalent to two six hour sessions, which is the same period provided for K-2 public school education. Service providers will have flexibility to deliver these sessions.

Accessible—Child CareSafetyNet

Additional Child Care Subsidy
Commencing 1 July 2017
(Approximately $156 million over two years) / Inclusion Support Programme
Commencing 1July2016
(Approximately $409 million over three years) / Community Child Care Fund
Commencing 1 July 2017
(Approximately $304 million over two years)
This is fee assistance in addition to the Child Care Subsidy to top up support for:
•children ‘at risk’ of serious
abuse or neglect
•families experiencing
temporary financial hardship
•families transitioning to work
from income support. / This will improve the capacity
and capability of child care
services to include children with additional needs, particularly children with disability or from culturally and linguistically
diverse backgrounds.
Includes:
•practical inclusion advice and support for services
•access to specialist equipment
•additional funding to the service
to assist inclusion of children
with additional needs. / These competitive grants to serviceswill provide:
•community support: to address barriers
for disadvantaged children, or children
in regional or remote areas
•sustainability support: for child care
services experiencing viability issues
•access and affordability support: to
improve affordability for low income
families in high cost areas
•capital support: to increase the supply
of centre-based and mobile services.
As part of the fund, $10 million a year(commencing 1July 2016), will provide for the integration of child care, maternal and child health, and family support services in a number of disadvantaged Indigenous communities, as recommended by Andrew Forrest in his review
of Indigenous Jobs and Training,Creating Parity.

Flexible—Nanny PilotProgramme

• Supports families who are experiencing difficulties in accessing mainstream services.
• $246 million for a two year pilot from 1 January 2016, evaluated to inform future programmes.
• Approximately 10,000 children to be subsidised for a maximum of 50 hoursof care per week.
• Families with an annual family income of less than $250,000 who meet the programme guideline requirements will be able to express interest in participating in the programme. (Continues on page 3)
• Families will receive a percentage (which varies depending on their family income) of the fixed hourly rate of $7.00 per hour per child, at the same assistance rate as proposed under the Child Care Subsidy, and with the same activity test.
• Nannies will be required to be at least 18 years of age, have a current Working with Children Check, meet first aid requirements and be attached to a government-approved service provider.

Case studies

Affordable:Child Care Subsidy

Jack and Sharonhave one child aged two, currently in long day care for four days per week which costs around $85 per day. By 2017-18 the cost is $98 per child per day.

Jackworks full-time and Sharonworks part-time, working four days a week. Their family income this year is expected to be around $99,500, rising to $105,000 in 2017-18.

Jack and Sharon will receive $10,970 in government fee assistance this year: $4,157 in child care benefit and around $6,813 in child care rebate.

In the first year of the Child Care Subsidy, Jack and Sharonwill receive $14,657, which is $3,687
($71 a week) more than they receive.

Accessible:Child Care Safety Net

Natasha is not currently working but is studying in order to better her chances of future employment. Her two year old daughter attends a local long day care centre which currently charges $78.50 per day. By 2017-18 the cost will be $90 per day.

As Natasha is transitioning to work she will be eligible for assistance under the Additional Child Care Subsidy.

As this assistance is activity tested, Natasha would be able to access 50 hours of child care per week as she is studying for 49 or more hours per fortnight (compared to the current maximum of 36 hours per week allowed for approved study activities under the current system). Natasha would be subsidised for up to 95 per cent of child care costs, leaving her only five per cent ($22.50 per week) out of pocket.

Flexible:NannyPilot Programme

Greg and Sue are shift workers on a combined family income this year of $120,000. Greg is a cleaning supervisor working full time on a rotating roster and Sue is a part-time nurse working with an agency. They both have to work nights sometimes, and their days vary. They have three children, all below school age, one year old twins and a three year old. They currently use a combination of formal care, Greg’s mother and the help of family friends for care as they often need it outside of normal child care hours. This has meant that Sue has often had to turn down additional shifts.

Under the new Nanny Pilot Programme, they will be able to have reliable care for their children in their own home when they need it. The Agency helped them find a nanny and to work out the contractual and insurance arrangements. They have an agreed number of hours per fortnight but the hours are flexible to ensure care can respond to the changing nature of their shifts.

Because they now have reliable care, Sue feels comfortable taking on an extra shift. In 2016-17 Greg and Sue's total income is $130,000.Under the programme in 2016-17 the nanny works a flexible
70 hours per fortnight at $28.00 per hour.

The subsidy supports 70 hours per fortnight for each child and, based on their family income, they receive a percentage (63 per cent) of the fixed hourly rate of $7.00 per hour per child or a total of $13.24 per hour. In total they receive $926.93 in fee relief and have to pay the remaining $1033.07
per fortnight.

Transition

The Government recognises that the transition from the existing child care system to a new system
will be of significant interest to Australian families.

All families who use, or need to use, child care in the future will be kept informed of the progress of the changes and given timely information on how they may be affected.

This information will be available before the implementation of the new changes so parents have time to plan for the changes.

The Department of Human Services (DHS) will contact families directly and provide information on current entitlements and how they may change under new arrangements. This may include asking families for additional information, to ensure that they move onto the new payment system.

Timeline

For more information

Further details on the Child Care Assistance Package and other programmes are available on the website.