Joint release with Minister for Women Kelly O’Dwyer

Relief is in sight for the thousands of families that have been forking out the full fee for child care after their government subsidies ran out months before the end of the financial year.


Minister for Education and Training Simon Birmingham said new data revealed where the 63,180 families live that hit the dreaded $7613 annual rebate cap on their child care subsidy with a month to go until the new financial year.


Minister Birmingham said many families drop out of work to look after their children when their subsidy runs out making the current system a massive disincentive to work.


“Child care costs shouldn’t be a barrier to work like it has been for thousands of families with the dreaded annual rebate cap,” Minister Birmingham said.


“These families have been hardest hit by the failings in the old broken model of child care support.”


Minister Birmingham said the Turnbull Government’s new child care system would abolish the $7613 annual rebate cap for 85 per cent of families (those earning less than $186,958), and lift the cap to $10,190 a year per child for families earning more than that threshold.


“Our sweeping reforms will deliver more support to more families so they can afford to make choices about their child care,” Minister Birmingham said.


“We’re putting an end to the days when parents face the stress of reaching a funding cliff mid-year when they hit the rebate cap. No longer will people have to quit work or work fewer days because they run out of government support for their child care bills.


“It is expected around 230,000 families will increase their workforce participation thanks to our changes, and nearly one million families are set to benefit overall.


“Analysis shows families on average are set to be $1300 a year better off per child but they need to make the switch to the new system before it starts on 2 July. Just visit or update your details on myGov and you could be hundreds if not thousands of dollars a year better off.”


Minister for Women Kelly O’Dwyer said the Turnbull Government wanted more Australians in work and to keep more of their hard-earned money.


“That is why we’re delivering tax relief for all Australians and making it easier for lower to middle income families to access more affordable child care,” Minister O’Dwyer said.


“We know that access to affordable child care is a really important factor when mums or dads are returning to work, or when they are deciding to pick up an extra shift or an extra day of work. And these decisions have a big impact, both in the short and long term, on family finances and careers.


“With these child care reforms mums and dads and going to have greater capacity to take on work, keep more of their wages and stay engaged or return to the workforce.


“With over one million jobs created under this Government, more women than ever before are working. With a more affordable, accessible child care system, mums have even greater opportunity to undertake paid work and improve their own and their family’s finances.”


State No. of families that have hit the annual rebate cap

(As at 3/6/18)

ACT 3,236
NSW 26,099
QLD 10,147
WA 4,272
NT 840
SA 1,833
Tas 270
VIC 16,483
Total 63,180


Key elements of the Turnbull Government’s reforms

  • We’re increasing Australia’s investment in early childhood education and care by $2.5 billion over the next four years so that almost one million Australian families benefit – Low and middle income families will be the greatest beneficiaries from the package.
  • An activity test will ensure that taxpayer’s support for child care is targeted to those who depend on it in order to work, or work additional hours. It is estimated our reforms will encourage more than 230,000 families to increase their involvement in workforce participation. The activity test includes a minimum of four hours of working, looking for work, training/studying and volunteering
  • Fundamentally fair – this package provides the highest rate of subsidy to those on the lowest income levels and more hours of subsidy to those who work the most. We’re increasing the base subsidy from around 72 per cent to 85 per cent for the more than 370,000 families earning around $66,958 or less a year.
  • Low and middle income families, earning up to around $186,958, will no longer be limited by an annual cap on the amount of child care they can access – that’s more than 85 per cent of families using child care. Families earning more than around $186,958 will also benefit from an increased annual rebate cap of $10,190. 
  • Introducing hourly rate caps recommended by the Productivity Commission to help put downward pressure on fee increases by setting a limit on what hourly fee the Government will subsidise based on an efficient price of what it costs to deliver child care
  • Our $1.2 billion Child Care Safety Net recognises vulnerable children and families need extra support. The safety net includes special funding for regional and Indigenous-focused centres to break down barriers to early learning and child care and 12 hours or around two sessions a week of guaranteed access to care/learning for families earning less than around $66,958 even if they don’t meet the activity test.


Examples of how families are set to benefit:

  • A family on $50,000 – both parent/s working, with two children aged under 6 in long day care two days a week at $100 a day will be around $2,000 better off a year
  • A family on $80,000 – both parent/s working, with two children aged under 6 in long day care three days a week at $100 a day will be over $3,000 better off a year
  • A family on $150,000 – both parent/s working, with two children aged 6 and under in long day care three days a week at $100 a day will be more than $1000 better off a year