Help is on the way for families feeling the hip-pocket pressure of child care fees with the Turnbull Government introducing sweeping reforms and investing an additional $2.5 billion to deliver more support for more families.

Minister for Education and Training Simon Birmingham said too many families struggle with the costs of rising child care fees but some reports today based on limited anecdotal evidence did not match official research from the OECD about out of pocket costs (Figure 1.14 on page 30) or the average Australian daily fee rate of $87.50 (page 11).

“Families are feeling the pinch but OECD data shows child care in Australia is more affordable than the US, UK, New Zealand, Canada and Ireland and that’s before Turnbull Government reforms put more money back in the pockets of parents,” Minister Birmingham said.

“Data shows child care fees spiked up to 14 per cent under Labor and increased by an average of 7.4 per cent each year. Our actions have helped bring those fee increases down to an average of 5.2 per cent, but it’s clear that our further reforms, which commence next year, are desperately needed.

“Our reforms will help fix the broken child care system with a complete overhaul. Help is on the way from the Turnbull Government.

“We’re overhauling the system and we’re going to invest an additional $2.5 billion, subsidies will be better targeted to people earning the least and to families working the most, our hourly fee cap will put downward pressure on prices and we’re ending that stress families face mid-year by removing the annual rebate cap.

“We’re acting on the recommendations from the Productivity Commission and our hourly rate cap will drive behaviour change in the child care sector by helping Australians hold providers to account for the fees they charge.

“Creating less scope for taxpayer subsidies to underpin big profits is another reason why Bill Shorten and Labor should be ashamed they voted against our reforms.

“I urge families to visit our child care estimator to plug their details in and see exactly how they’re set to benefit.”

The Turnbull Government’s child care package includes:

  • Increasing Australia’s investment in early childhood education and care by $2.5 billion so that almost one million Australian families benefit.
  • Introducing an activity test to ensure taxpayer subsidised child care places aretargeted to those who depend on it in order to work, or work more hours. It is estimated our reforms will encourage more than 230,000 families to increase their involvement in workforce participation.
  • Delivering 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 $65,000 or less a year.
  • Low and middle income families, earning up to around $185,000, will no longer be limited by an annual $7,613 cap on the amount of child care they can access – that’s more than 85 per cent of families using child care and means families won’t run out of subsidy mid-year as happens now. Families earning more than around $185,000 will also benefit from an increased cap of $10,000.
  • A $1.2 billion Child Care Safety Net will support vulnerable children and families who need extra support.

Next year the Government will be in touch with families to give them more details and to help them transition to the new system.