From July 2, Australian parents will be getting a new package of child care subsidies. What will the changes mean for you?

What the child care changes mean for you

Childcare is shaping up to be a key election issue, with Labor promising a massive $4 billion early education package if it wins on May 18.

But while Opposition Leader Bill Shorten says his policy will help ease the financial burden facing nearly one million Aussie families, Prime Minister Scott Morrison has attacked the proposal as a “fantasy” the country can’t afford.

THE COALITION’S POLICY:

At the moment, the Coalition seems to be sticking with the Child Care Subsidy it introduced in July 2018, with no new childcare policies on the horizon.

Since that policy was rolled out, the party claims a typical family is around $1300 better off a year, and that childcare out of pocket costs have dropped by more than 10 per cent within the first six months of its introduction.

The Coalition’s system in place today offers a tapered reduction in subsidies the more a household earns, with families making up to $67,000 now getting a subsidy rate of 85 per cent.

Those making above that threshold to $172,000 are entitled to a subsidy which gradually reduces to 50 per cent, while families earning from $172,000 to $251,000 receive a subsidy rate of 50 per cent, which is gradually reduced to 20 per cent for those earning $251,000 to $341,000.

Combined family incomes from that amount to $351,000 receive a 20 per cent subsidy while those earning over that receive nothing.

LABOR’S $4 BILLION PLAN

Meanwhile, the ALP announced on Sunday it will increase the subsidy rate to 100 per cent up to the hourly fee cap for eligible families earning up to $69,000, while those earning between $69,000 and $100,000 will receive a subsidy rate between 100 per cent and 85 per cent up to the hourly fee cap, and families earning between $100,000 and $174,000 will receive a subsidy rate between 85 per cent and 60 per cent up to the fee cap.

A Labor spokesman told news.com.au families on incomes above $174,000 will continue to receive the same support that exists at the moment, meaning the “current arrangements will remain”.

In a nutshell, that means a family with a combined income of up to $251,000 would be eligible for a subsidy rate of 50 per cent, which is gradually reduced to 20 per cent for those earning up to $341,000.

Combined family incomes from that amount to $351,000 receive a 20 per cent subsidy while those earning over that amount would receive no subsidy.

The plan would make childcare free or almost free for an estimated 887,000 low-income families, while those earning more than $174,000 would, under a Shorten government, receive the same level of support as they do now.

When the new policy was announced, Mr Shorten vowed that “no family will be worse off” under the ALP and that it would “save people up to $2100 per child per year”.

Labor has also vowed to fight “excessive fee increases” and will give the Australian Competition and Consumer Commission a new role of investigating “unscrupulous providers”, with findings to be made publicly available.

It will also give childcare workers a pay rise of 20 per cent over the next eight years, with salaries to rise by more than $11,000 in that time frame.

At the moment, around 96 per cent of childcare workers are women, with an average wage of just $45,000.

THE REACTION

So far, Labor’s announcement has been mostly welcomed by parents and interest groups, who have long complained about long waiting lists, unfair pricing policies, skyrocketing costs and the providers hiking up fees at the same time as new government subsidies are announced, wiping out any benefits.

But the Coalition has slammed the ALP’s proposed policy, with Treasurer Josh Frydenberg likening plans to boost child care wages to a “socialist experiment”.

“The queue outside Bill Shorten’s office is growing by the minute, from unions who are emboldened by this announcement by the Labor Party,” he said.

“Today aged care, tomorrow disability, then retail unions, all wanting a taxpayer-funded payout.”

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