Interview on Facebook Live with Babyology
Topics: New child care package
Lucy Kippist: Morning, everyone. Today we’ve got Simon Birmingham joining us today. He’s the Minister for Education and Training and he’s going to talk to us about the Australian Government’s new child care package, which I know is of interest to so many of us working parents. Simon, thank you so much for joining us.
Simon Birmingham: Thank you, Lucy.
Lucy Kippist: So, we’ve got a looming deadline of 2 July, which is not really that far away. And so, what we’re interested in is trying to understand this new package and make it as simple as possible for working families. Let’s get down to the process in a second. But can you start by telling us, in a nutshell, what this new package will do differently to the existing one?
Simon Birmingham: Sure, so what we’re doing is we’re abolishing the Child Care Rebate and the Child Care Benefit, the current mix of different payments, for one new child care subsidy. And that one new subsidy is going to provide more support for more Australian families because it’s increasing the rate of subsidy for most families. For the lowest income families that goes up from 72 per cent or 72 cents in the dollar up to 85 cents in the dollar. We’re also abolishing the $7500 cap on the Child Care Rebate that many families would hit up against. So, for any family earning less than around $187,000 a year, they’re going to have no cap at all, which means there’ll be no more running out of your child care subsidy midway through the financial year, hitting that February-March point and going: ‘do I have to now give up elements of work, or just go to work to pay the child care bills?’
Lucy Kippist: That’s great news, that’s excellent news. So, essentially there’s basically two steps for registering for the subsidy and I guess the first point to mention is that this process isn’t automatic. So everybody needs to actually go on to myGov and actually do this process themselves. I have two young children in day care currently. So I did this process myself the other day. I was prompted through my Centrelink app, through a letter. So I clicked on the letter and it told me exactly what to do. When I went to myGov, and I completed the test, I think it took me about 10 minutes to complete and then I think I received a notification to confirm everything from Centrelink basically the next day. What’s your advice for people who maybe haven’t seen that prompt yet from Centrelink and what they need to do right away to get started?
Simon Birmingham: Absolutely, Lucy. So, more than 850,000 families have made the switch already. So, that’s great news and indeed most people I think have had the same experience that you’ve had. And I have two girls – five and seven – who attend outside school hours care sometimes, and so I made sure that very early on in the process, I sat down on the couch one Saturday night and similarly it was about a 10-minute process. Families should have received information by now if they’ve accessed any form of child care rebate or benefit over the last 12 months. They should have received letters, emails, text messages, prompts and we’ve run a big advertising campaign. But if you haven’t made the step yet, then please do so before 2 July – education.gov.au/childcare – and get all the information about the new package and links through to myGov to be able to help complete it and the process for completing it is largely one of providing information about family income that’s estimated for next year and the activity level in your family. By activity, we mean the estimated number of hours that people work, study, volunteer, train et cetera whilst they’re over an average three-month period.
Lucy Kippist: Okay. Great. So a big focus of the reporting on this child care package has been that it’s said to deliver some extra support to a bigger number of families, or a greater number of families, and particularly families that sort of reflect diversity, so single parents and parents with disabilities. I was just wondering if you could tell us specifically how the package would affect, let’s say a family with single parents and also a family with disabilities, how would that look for them?
Simon Birmingham: Sure. So, overall we estimate around 1 million Australian families will benefit from these changes and we’ve structured it in a way to provide the greatest support to families working the longest hours so that people working, studying, volunteering, or caring, will have the greatest number of hours of subsidised child care available to them, and indeed the greatest rate of subsidy for those in the lowest levels of income. Now, for people in the single parent circumstance, if they are busy working parents, they’re often in a circumstance where they need more days of care than perhaps other families do and they’re often stories I hear of people who’ve run out of Child Care Rebate partway through the financial year. So, the abolition of that cap will make a big difference to them in terms of being able to work the hours or days they choose to without child care costs being a barrier to doing so. And in relation perhaps to families with a child with disability, or somebody else perhaps who they’re caring for, it’s important to understand that the activity test will recognise people who act as carers, that that’s a valid activity in terms of making sure you get the child care subsidy that your family deserves.
Lucy Kippist: And there was something about, that I read about, your grandparents as carers. So where do they fit in terms of this?
Simon Birmingham: So, if grandparents are the primary carer for children, we acknowledge that they need a break sometimes and that’s it’s a wonderful and generous thing they’re doing. And I was raised for a number of years by my grandmother and know how hard she worked in doing so. So, we’ve made sure that grandparents are exempt from the activity test itself. So they don’t need to prove that they’re working or studying or volunteering. They’ll still have the means tested element, that the greater the subsidy they’ll receive depends on being lower income. But that means that if you’re a pensioner who’s looking after, caring for your grandchildren and they’re living with you most of the time, then you’re going to receive the highest rate of subsidy without any activity test.
Lucy Kippist: Okay. Great. Let’s just talk a bit more about the activity test now. All parents have to complete this test and all parents have to complete at least eight hours minimum of activity to register. How will this subsidy be calculated in families where, say, one parent earns more than the other?
Simon Birmingham: Yep. So, in terms of the subsidy rate, that’s calculated based on family income. So, we’re asking people to estimate their family income for the next year. And that is an aggregate of, obviously, both parents if both parents are working. In terms of the activity rate, the activity test applies to the person in the family with the lowest level of activity. So, if one parent’s a full-time worker, and the other one’s a part-time worker, then it will be those part-time hours that would be the activity test component. But it is just four hours per week on average, working, studying, volunteering, caring et cetera that somebody needs to undertake to get on to that first rung of receiving a subsidy. So, it’s very low level, it’s a light touch activity test, people are able to average that four hours over a three-month period to cater for casual workers. And, indeed, we’ve made sure that you can aggregate as well. So, people can add their hours of volunteering to their hours of work. And volunteering, again, doesn’t just have to be working in a recognised charity, it could also be undertaking volunteering that furthers your own employment prospects or undertaking volunteering for an education purpose, such as in your older child’s school, and reading to the children at that school or the like.
Lucy Kippist: Okay. Well, that’s a good point to mention. The new child care package is also said to be more affordable for middle and lower income families. Can you explain how this works in terms of the income- sorry, the income caps? I know that you mentioned that earlier, if you could just mention it again. So, families earning, was it 185…
Simon Birmingham: [Interrupts] 187,000 thereabouts, under. So, the child care subsidy will be between 85 per cent for families earning less than about $65- or $66,000, and that 85 per cent then essentially take us down to 50 per cent subsidy at the $187,000 range. Fifty per cent is the same as the current Child Care Rebate. Pretty much everybody in that category will be receiving – to some degree – a higher rate of subsidy, and also no longer have that cap that exists under the Child Care Rebate. And then it continues above those income levels at a 50 per cent subsidy all the way up to family incomes of $250-odd-thousand before it then tapers down further from there and ultimately cuts out about $350,000.
Lucy Kippist: Okay, great. So, I know we’ve got a couple of questions from our audience, thanks everyone; we’ll get to them in just a second. The last point that I wanted to get you to reiterate was you mentioned before one of the biggest frustrations for parents is getting to the end of the financial year and running out of your rebate, and then having to work more or not put your kids in day care so you can afford to do that. So, this package, you said, is going to address that issue in a different way. Can you explain again how that happens?
Simon Birmingham: Yep. So, we really have lots of complaints about that. And it’s understandably one of the biggest gripes, that families run out of support and you either choose to work less through the year and have your children in care less during the year so that you can manage to stretch that further, or people sometimes find that come March or April, they just have to go work to pay the child care bills. And obviously that’s unfair and a big strain on the family budget. So, we’ve abolished that cap for all families earning less than around $187,000, and for those above that, we’ve increased it up to a $10,000 dollar limit. So, everybody who finds themselves in that circumstance should be better off, and certainly for low and middle income earning families, it really will empower people to choose to work the hours and days that suit them knowing that their child care costs shouldn’t be a barrier to do so.
Lucy Kippist: Okay. Well, that’s definitely great news. So, just to get a question from our audience, Shevy asks: does it apply to every form of child care; so, school care, vacation care, day care, are all those covered?
Simon Birmingham: Yes. Yep, everything that’s a registered child care activity, so yes long day care services, family day care services ,outside school hours, vacation care during school holidays, they’re all captured.
Lucy Kippist: Okay, great. And Sian asks what do you do if you’ve never claimed for child care but need to from next financial year?
Simon Birmingham: Yep. So, in that circumstance, pretty much go through the standard registration process, get in touch either with Centrelink or go online, you can find information either from education.gov.au/childcare or on the Centrelink web page to guide you through how to register in the first instance. If you’re already a recipient of one of the Family Tax Benefit payments or receive paid parental leave or the like, then many of your details may already be there, you’ve probably already got a myGov account, and should all be pretty straight forward from there.
Lucy Kippist: Okay. Great news. So, I guess to wrap things up, the activity test deadline is for 2 July, which only leaves a couple of more weeks, three more weeks, I think. If we’ve done absolutely nothing yet, what is your best advice for families like that?
Simon Birmingham: Well, if you haven’t done anything yet, then visit education.gov.au/childcare, and update your details, and get it done before 2 July, so there’s no disruption to your payments. We do have a safety net period afterwards where people can claim back pay essentially for three months, but we don’t want to see anybody face that inconvenience, either for the family or for the provider of child care services. So, the best thing to do is make sure you’ve taken the 10 minutes, update your details. Many families will be hundreds, if not thousands, of dollars a year better off. So, it’s well worth the ten minutes it takes to update your details. In fact, of those who have transitioned to date, we estimate that the average family is around $1300 per child per annum better off, so it’s well worth the time and effort.
Lucy Kippist: Okay, great. And just in case you totally missed the deadline, which can happen in a busy life, what’s your advice for people who might fall through that gap?
Simon Birmingham: Get it done as quickly as possible thereafter. As I said, there’s a window, three-month window, where people can be back paid, so we accept that some people won’t quite make it, but best to get it done as quickly as you can, don’t leave it ‘til the last minute in case it then does slip your mind. Do so, if you’re watching this, do so as soon as you finish watching us, log on and follow the links through if you possibly can.
Lucy Kippist: Okay. Thanks so much, Simon, for joining us.
Simon Birmingham: Thanks, Lucy. Pleasure.
Minister Birmingham’s media contact: Nick Creevey 0447 644 957
Benn Ayre 0428 342 325
Department Media: email@example.com