Mind of Money

September 6, 2018 at 7:12 pm

How Does the New Subsidy Affect Child Care Providers?

Girl holding a teddy bearThe Australian government has implemented a new subsidy for families in July, replacing the Child Care Rebate and Child Care Benefit with the single Child Care Subsidy.

Under the new system, households with up to $66,958 of combined annual income will be eligible for subsidies equal to 85% of fees. With the new subsidy, better child care management solutions are now more necessary.

Subsidised Rates

Families with a combined annual income worth more than $66,958 and up to $171,958 will be subsidised by a stepped reduction of fees, which will be 50%. Any additional income worth $3,000 reduces the subsidy by 1% in this income bracket.

Those who earn between $251,248 and $341,248 per year could avail a stepped reduction to 20% of charges, while families with a higher income are eligible for 20% subsidies. There will be no subsidies for families with at least $351,248 of annual income or more.

Work Hours

The new subsidy also encourages parents to feel more comfortable about going to work and leaving their child to formal care. However, some parents are relying on their kids’ grandparents for informal child care. In Sydney, this trend manifested through seniors who reduce their time from work to take care of their grandchildren.

Still, the new subsidy provides up to 100 hours of subsidised care per child, depending on the number of hours rendered for work or an approved activity. The approved activities include college education, active job searching and volunteer work. The hourly subsidies are available per fortnight.

Child care providers in the country should have already familiarised themselves with the changes of the new subsidy system. While the cost of care for children has increased, companies should consider consulting with experts on how to maintain the continued relevance of their business.